SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
F O R M 8-K
Current Report
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 1, 1998
BOSTON CAPITAL TAX CREDIT FUND IV L.P.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
0-26200 04-3208648
(Commission File Number) (IRS Employer Identification No.)
c/o Boston Capital Partners, Inc.,
One Boston Place, Boston, Massachusetts 02108-4406
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 624-8900
None
(Former name or former address, if changed since last report)
Item 5. Other Events
As of May 1, 1998 Boston Capital Tax Credit Fund IV L.P., a
Delaware limited partnership, specifically Series 32 thereof
(the Partnership) entered into various agreements relating to
Pyramid Four Limited Partnership, a Missouri limited partnership
(the Operating Partnership), including the Agreement of Limited
Partnership of the Operating Partnership dated as of May 1, 1998
(the Operating Partnership Agreement), pursuant to which the
Partnership acquired a limited partner interest in the Operating
Partnership. Capitalized terms used and not otherwise defined
herein have their meanings set forth in the Operating Partnership
Agreement, a copy of which is attached hereto as Exhibit (2)(a).
The Operating Partnership owns and has constructed a forty-
eight (48) - unit apartment complex located at 3302-3310 South
Sterling Avenue, Independence, Missouri, which is known as
Sterling Creek Apartments (the Apartment Complex). The Apartment
Complex consists of six (6) buildings containing twenty-four
(24) 2-bedroom units (one unit has been designated a manager
unit) and twenty-four (24) 3-bedroom units. Amenities include a
playground and washer/dryer connections in all of the units.
Construction of the Apartment Complex was completed in May, 1999,
with 100% Occupancy projected for December, 1999.
The Operating Partnership is receiving construction
financing in the amount of $1,328,315 (the Construction Mortgage)
from Midland Mortgage Investment Corporation. The Construction
Mortgage carries an interest rate of prime plus two percent (2%)
and has a twenty-four (24) month term. The Operating Partnership
expects to receive permanent financing in the amount of $685,000
(the Permanent First Mortgage) from Midland Mortgage Investment
Corporation. The Permanent First Mortgage is expected to bear
interest at the Fannie Mae LIHTC rate plus fifty (50) basis
points and to have a thirty (30) - year term. Finally, the
Missouri Housing Development Commission provided a HOME grant to
the Operating Partnership in the amount of $200,000.
It is expected that 100% of the rental apartment units in
the Apartment Complex will qualify for the low-income housing tax
credit (the Tax Credits) under Section 42 of the Internal Revenue
Code of 1986, as amended (the Code).
The General Partner of the Operating Partnership is Phillips
Development Corporation, an Arkansas corporation. The Principals
of the General Partner are Chester D. Phillips (95%) and
Elizabeth S. Small (5%). Phillips Development Corporation served
as the Developer of the Apartment Complex and serves as the
Management Agent for the Apartment Complex. In addition, Chester
Phillips Construction Company, Inc., a wholly-owned subsidiary of
Phillips Development Corporation, served as the Builder of the
Apartment Complex. Phillips Development Corporation (and related
subsidiaries) has extensive development, construction and project
management experience. As of April, 1998, Phillips Development
Corporation had developed and managed in excess of 1,400 multi-
family units, 1,006 of which qualified for low income housing tax
credits.
The Partnership acquired its interest in the Operating
Partnership directly from the Operating Partnership in
consideration of an agreement to make a Capital Contribution of
$2,073,594 to the Operating Partnership in three installments as
follows:
(1) $1,693,431 (the First Installment) on the latest to
occur of (A) the Admission Date; (B) receipt of the
Permanent Mortgage Commitment and the Grant Commitment; or
(C) closing of the Construction Mortgage;
(2) $-0- (the Second Installment) on the latest to occur
of (A) the Completion Date; (B) Cost Certification; (C)
receipt of a current endorsement Title Policy; (D) receipt
of the Construction Contract Payment Letter; (E) receipt of
an estoppel letter from the Construction Lender; (F)
compliance with Due Diligence recommendations; (G) or
satisfaction of all the conditions to the payment of the
First Installment;
(3) $239,044 (the Third Installment) on the latest to
occur of (A) Initial 100% Qualified Occupancy Date; (B)
achievement of the Rental Achievement; (C) Permanent
Mortgage Commencement; (D) State Designation; or (E)
satisfaction of all the conditions to the payment of the
First and Second Installments; and
(4) $141,119 (the Fourth Installment) on the latest to
occur of (A) Rental Achievement Confirmation or (B)
satisfaction of all the conditions to the payment of the
First Second and Third Installments.
All Installments have been paid in by the Partnership.
The total Capital Contribution of the Partnership to the
Operating Partnership is based on the Operating Partnership
receiving $2,880,280 of Tax Credits during the 11-year period
commencing in 1999 of which 99.99% ($2,879,990) will be allocated
to the Partnership as the Investment Limited Partner of the
Operating Partnership.
The total Capital Contribution of Missouri Affordable
Housing Fund IX, L.P. (the Missouri Limited Partner) to the
Operating Partnership is $748,790; $654,827 of which is payable
for the Second Installment and $93,958 of which is payable for
the Third Installment ($5.00 was paid to the Operating
Partnership on the Admission Date). The total contribution of
the Missouri Limited Partner to the Operating Partnership is
based on the Missouri Limited Partner receiving $2,879,990 of
Missouri Tax Credits during the 11-year period commencing in 1999
of which all 100% will be allocated to the Missouri Limited
Partner.
The Partnership believes that the Apartment Complex is
adequately insured.
Ownership interests in the Operating Partnership are as
follows, subject in each case to certain priority allocations and
distributions as set forth in the Operating Partnership
Agreement:
Profits, Losses and
Tax Credits from Capital Cash Missouri
Normal Operations Transactions Flow Credits
General Partner .01% 80% 80% 0%
Investment
Limited
Partner 99.99% 19.998% 20% 0%
Special
Limited
Partner 0% .001% 0% 0%
Missouri Limited
Partner 0% .001% 0% 100%
The Special Limited Partner of the Operating Partnership is BCTC
94, Inc., (an affiliate of the Partnership).
The Partnership used the funds obtained from the payments of
the holders of its beneficial assignee certificates to make the
acquisition of its interest in the Operating Partnership.
BCCLP or an Affiliate thereof, will receive an Asset
Management Fee commencing in 2000 from the Operating Partnership
for services in connection with the Operating Partnership's
accounting matters and the preparation of tax returns and reports
to the Partnership in the annual amount of $2,000. The Asset
Management Fee for each Fiscal Year will be payable from Cash
Flow in the manner and priority set forth in Section 10.2(a) of
the Operating Partnership Agreement; provided, however, that if
in any fiscal year, Cash Flow is insufficient to pay the full
amount of the Asset Management Fee, the unpaid portion thereof
shall accrue and be payable on a cumulative basis in the first
fiscal year in which there is sufficient Cash Flow or Capital
Proceeds as provided in Article X of the Operating Partnership
Agreement.
The Operating Partnership shall pay to the General Partners
a non-cumulative fee (the Annual Partnership Management
Fee) commencing in 2000 for services in connection with the
administration of the day-to-day business of the Operating
Partnership in an annual amount equal to $2,000. The Partnership
Management Fee for each fiscal year of the Operating Partnership
shall be payable from Cash Flow in the manner and priority set
forth in Section 10.2(a) of the Operating Partnership Agreement
to the extent Cash Flow is available therefor for such year.
In consideration of its consultation, advice and other
services in connection with the construction and development of
the Apartment Complex, the Operating Partnership will pay the
General Partners a fee (the Construction and Development Fee) in
the principal amount of $474,121 pursuant to the terms of a
Development Agreement dated April 30, 1998 as modified from time
to time. The Construction and Development Fee shall be payable
$333,002 from the proceeds of the Third Installment and the
Missouri Capital Contribution and $141,119 from the proceeds of
the Fourth Installment.
The Builder of the Apartment Complex will receive a total
compensation of $2,706,800 which includes Builder's Profit of
$95,000. The Management Agent of the Apartment Complex will
receive a Management Fee equal to $30.00 per occupied unit mer
month.
Item 7. Exhibits.
(c) Exhibits.
(1) (a)* Form of Dealer-Manager Agreement between Boston
Capital Services, Inc. and the Registrant (including, as
an exhibit thereto, the form of Soliciting Dealer Agreement)
(2) (a) Pyramid Four Limited Partnership Agreement of Limited
Partnership
(2) (b) Pyramid Four Limited Partnership Certification and
Agreement.
(2) (c) Development Agreement by and between Pyramid Four
Limited Partnership and Phillips Development Corporation
(4) (a)** Agreement of Limited Partnership of the Partnership
(16) None
(17) None
(20) None
(23) None
(24) None
(27) None
* Incorporated by reference to Exhibit (1) to Registration Statement
No. 33-70564 on Form S-11, as filed with the Securities and Exchange
Commission.
** Incorporated by reference to Exhibit (4) to Registration Statement
No. 33-70564 on Form S-11, as filed with the Securities and Exchange
Commission.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereto duly authorized.
Dated: February 16, 2000
BOSTON CAPITAL TAX CREDIT FUND IV
L.P.
By: Boston Capital Associates IV
L.P.,
its General Partner
By: C&M Associates, d/b/a Boston
Capital Associates, its
General Partner
By: /s/ Herbert F. Collins
Herbert F. Collins, Partner
PYRAMID FOUR LIMITED PARTNERSHIP
AGREEMENT OF LIMITED PARTNERSHIP
Dated as of May 1, 1998
PYRAMID FOUR LIMITED PARTNERSHIP
AGREEMENT OF LIMITED PARTNERSHIP
Preliminary Statement
PYRAMID FOUR LIMITED PARTNERSHIP (the Partnership) is being
formed as a Missouri limited partnership pursuant to this
Agreement of Limited Partnership dated as of May 1, 1998 by and
among Phillips Development Corporation as General Partner, Boston
Capital Tax Credit Fund IV, L.P. as Investment Limited Partner,
BCTC 94, Inc. as Special Limited Partner and Missouri Affordable
Housing Fund IX, L.P., as Missouri Limited Partner and a
Certificate of Limited Partnership with respect hereto filed or
to be filed in the Filing Office on or about the date hereof.
In consideration of mutual agreements set forth herein, it
is agreed and certified as follows:
ARTICLE I
Defined Terms TC ARTICLE I Defined Terms \f C \l 1
The defined terms used in this Agreement shall have the
meanings specified below:
Actual Credit means, with respect to a particular year, the
total amount of Tax Credit properly allocable by the Partnership
to the Investment Limited Partner for such year. The Actual
Credit shall be retroactively revised if the amount of Tax Credit
properly allocable to the Investment Limited Partner is revised
after audit or recaptured.
Additional Limited Partner means any holder of an Interest
designated as an Additional Limited Partner pursuant to
Section 4.5(b) or Section 7.4.
Admission Date means the first date on which all parties
hereto execute this Agreement, or, if, pursuant to the Uniform
Act, the Investment Limited Partner shall not be deemed admitted
to the Partnership on such date, then the next date thereafter on
which the Investment Limited Partner shall be deemed to be
admitted to the Partnership under the Uniform Act.
Affiliate means as to any named Person (or as to every
Partner if no Person is specifically named): (i) such Person or
any member of his Immediate Family; (ii) the legal
representative, successor or assignee of, or any trustee of a
trust for the benefit of, any such Person or member of his
Immediate Family; (iii) any Entity of which a majority of the
voting interests is owned by any one or more of the Persons
referred to in the preceding clauses (i) and (ii); (iv) any
officer, director, trustee, employee, stockholder (10% or more)
or partner of any Person referred to in the preceding clauses
(i), (ii) and (iii); and (v) any Person directly or indirectly
controlling, controlled by or under direct or indirect common
control with, any Person referred to in any of the preceding
clauses.
Agency means, as applicable, the MHDC and/or any other
governmental agency which may provide governmental assistance to
the Apartment Complex.
Agreement means this Agreement of Limited Partnership,
including Schedule A, as amended from time to time.
Annual Partnership Management Fee means the fee payable to
the General Partners pursuant to the provisions of
Section 6.12(c).
Apartment Complex means the real property located in
Independence, Jackson County, Missouri, and known as Sterling
Creek Apartments, as more fully described in the Mortgages,
together with (i) all buildings and other improvements
constructed or to be constructed thereon and (ii) all
furnishings, equipment and personal property covered by the
Mortgages.
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(a).
Auditors means Little, Shanneyfelt & Co., or such other firm
of independent certified public accountants as may be engaged by
the General Partners with the consent of Boston Capital for the
purposes of preparing the Partnership income tax returns,
auditing the books and records of the Partnership and certifying
financial reports of the Partnership.
Available Debt Service Funds means, for any period of six
consecutive calendar months after Permanent Mortgage
Commencement, the excess of (i) all cash actually received by the
Partnership on a cash basis from normal operations during such
period, but specifically excluding the proceeds of insurance
other than business or rental interruption insurance), loans,
Capital Transaction proceeds and Capital Contributions over
(ii) all cash requirements of the Partnership properly allocable
to such period of time on an accrual basis (not including
distributions to Partners out of Cash Flow or the Annual
Partnership Management Fee and Asset Management Fee) and, on an
annualized basis, all projected expenditures, including those of
a seasonal nature, which might reasonably be expected to be
incurred on an unequal basis during a full annual period of
operation, all as set forth in an audited financial statement of
the Partnership, but specifically excluding any required payments
on the Mortgages.
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 4.1(b).
Capital Contribution means the total value of cash or
property contributed and agreed to be contributed to the
Partnership by each Partner, as shown in Schedule A. Any
reference in this Agreement to the Capital Contribution of a then
Partner shall include a Capital Contribution previously made by
any prior Partner for the Interest of such then Partner.
Capital Transaction means any transaction the proceeds of
which are not includable in determining Cash Flow including,
without limitation, the sale or other disposition of all or
substantially all of the assets of the Partnership.
Carryover Certification means the date upon which the
Investment Limited Partner shall have received, in a form and in
substance satisfactory to the Investment Limited Partner, the
certification of the Auditors that as of the date no later than
December 31, 1998, the Partnership had incurred capitalizable
costs with respect to the Apartment Complex of at least 10% of
the Partnership's reasonably expected basis in the Apartment
Complex as of December 31, 2000, so that each building in the
Apartment Complex constitutes a qualified building for the
purposes of Section 42(h)(1)(E)(ii) of the Code.
Cash Flow means the profits or losses of the Partnership
from and after the Commencement Date subject to any applicable
Agency or Lender requirements and to the following adjustments:
(a) Cost recovery deductions of buildings,
improvements and personal property and amortization of any
financing fees shall not be deducted;
(b) Mortgage amortization shall be deducted;
(c) Mortgage interest which is included in determining
profits and losses but which is not currently payable in
cash shall be deducted when actually paid;
(d) Payments to reserves under Section 6.5(e) shall be
deducted;
(e) Any amounts paid for capital expenditures shall be
deducted, unless paid from any replacement reserve or funded
through insurance;
(f) The proceeds of any Construction Mortgage or
Permanent Mortgage refinancing, any sale, exchange, eminent
domain taking, damage or destruction (whether insured or
uninsured), or other disposition, of all or any part of the
Apartment Complex (other than the proceeds of any business
or rental interruption insurance) shall not be included;
(g) Any rent or interest subsidy payments shall be
included;
(h) The fees set forth in Sections 6.12 and any fee
payable in connection with any transaction referred to in
clause (f) above shall not be deducted; and
(i) Prior to Permanent Mortgage Commencement, an
amount equal to the amount, if any, of net rental income
applied to complete the construction of the Apartment
Complex pursuant to Section 6.11(a) shall be deducted.
Certificate means the Certificate of Limited Partnership of
the Partnership, as amended from time to time.
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 Missouri
Limited Partner, the Special Limited Partner or any Additional
Limited Partner).
Code means the Internal Revenue Code of 1986, as amended
from time to time, and the regulations (permanent or temporary)
issued thereunder. References herein to any Code section shall
include any successor provisions.
Commencement Date means the first day of the month in which
the Admission Date occurs.
Competitive Real Estate Commission means that real estate or
brokerage commission paid for the purchase or sale of the
Apartment Complex or other Partnership property which is
reasonable, customary and competitive in light of the size, type
and location of the Apartment Complex or other property.
Completion Date means the date upon which the Apartment
Complex has been completed, as evidenced by the issuance by the
inspecting architect and by each Agency, Lender and other
governmental agency having jurisdiction of certificates of
substantial completion or occupancy (or local equivalents) with
respect to all 48 apartment units in the Apartment Complex, as
well as satisfaction of all due diligence requirements of the
Limited Partners.
Compliance Period means the fifteen (15) year period
commencing with the first year of the Credit Period.
Consent of the Investment Limited Partner means the prior
written consent or approval of the Investment Limited Partner.
Construction Contract means the contract by and between the
Partnership and the Contractor providing for the construction of
the Apartment Complex.
Construction Contract Payment Certificate means a
certificate from the Contractor in form and substance
satisfactory to the Investment Limited Partner certifying that
all amounts payable under the Construction Contract have been
paid in full and the Partnership has fully performed all of its
obligations thereunder.
Construction and Development Fee has the meaning given to it
in Section 6.12(b).
Construction Lender means Midland Mortgage Investment
Corporation, in its capacity as holder of the Construction
Mortgage, or its successors or assigns in such capacity.
Construction Mortgage means the financing for the
construction of the Apartment Complex provided by the
Construction Lender in a principal amount of up to $1,328,315.
Contractor means Chester Phillips Construction Company,
Inc., of Little Rock, Arkansas.
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 and the Application to the Agency for Form 8609 as to
the itemized amounts of the construction and development costs of
the Apartment Complex and the Eligible Basis and Applicable
Percentage pertaining to each building in the Apartment Complex.
Credit Period has the meaning given to it in
Section 42(f)(1) of the Code.
Credit Recovery Loan means a constructive interest-bearing
advance of the Investment Limited Partner as more fully
described in Section 5.1(f). Credit Recovery Loans and interest
thereon shall not be treated as loans or interest, respectively,
for accounting, tax or liability purposes or for the purposes of
Section 6.2(a)(1). For the purposes of Article X, the term
Credit Recovery Loan shall not include any portion of such an
advance which shall have theretofore been paid to an Investment
Limited Partner.
Credit Shortfall has the meaning given to it in
Section 5.1(f).
Debt Service Coverage Ratio means, for any period in
question, a fraction, the numerator of which is the Available
Debt Service Funds for such period and the denominator of which
is the amount which will necessary to service the Permanent
Mortgages for such period.
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.
Due Diligence Recommendations means the recommendations of
the Investment Limited Partner, if any, made in connection with
its admission to the Partnership in writing to the General
Partners relating to the Apartment Complex.
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,
corporation, joint venture, trust, business trust, cooperative or
association.
Event of Bankruptcy means with respect to any Person,
(i) the entry of a decree or order for relief by a
court having jurisdiction in respect of such Person 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 for any substantial part of his property, or the issuance
of an order for the winding-up or liquidation of his affairs
and the continuance of any such decree or order unstayed and
in effect for a period of 60 consecutive days, or
(ii) the commencement by such Person of a proceeding
seeking any decree, order or appointment referred to in
clause (i), the consent by such Person to any such decree,
order or the appointment, or taking of any action by such
Person in furtherance of any of the foregoing.
Filing Office means the Secretary of State of the State.
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.
General Partner Economic Interest means each General
Partner's proportionate share of the profits, losses, tax-exempt
income, non-deductible non-capitalizable expenditures, tax
credits, Cash Flow and Capital Transaction proceeds of the
Partnership, all as set forth in Article X herein.
Grant means the grant to be provided by the Agency to the
Partnership in the amount of $200,000.
Hazardous Material shall have the collective meanings given
to the terms hazardous material, hazardous substances and
hazardous wastes in the Federal Comprehensive Environmental
Response, Compensation and Liability Act of 1980, 42 U.S.C.
Sec. 9601 et seq., as amended, and to the term radioactive
materials in the context of the Atomic Energy Act, 28 U.S.C. Sec.
2344 and shall also include any meanings given to such terms in
any similar state or local statutes, ordinances, regulations or
by-laws. In addition, the term Hazardous Material shall also
include 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, his
spouse, parents, parents-in-law, descendants, nephews, nieces,
brothers, sisters, brothers-in-law, sisters-in-law, children-in-
law and grandchildren-in-law.
Initial 100% Occupancy Date means the first date upon which
47 apartment units in the Apartment Complex shall have been
leased to and occupied by qualified tenants on such date meeting
the terms of the Minimum Set-Aside Test under executed leases
which shall have received any necessary Agency or Lender
approval, at rentals meeting the requirements of the Rent
Restriction Test.
Installment means an installment of the Investment Limited
Partner's Capital Contribution paid or payable to the Partnership
pursuant to Section 5.1.
Interest means the entire interest of a Partner in the
Partnership at any particular time, including the right of such
Partner to any and all benefits to which a Partner may be
entitled hereunder and the obligation of such Partner to comply
with the terms of this Agreement.
Invested Amount means (i) as to the Investment Limited
Partner, an amount equal to the quotient of (a) the paid-in
Capital Contribution of the Investment Limited Partner, divided
by (b) 73% and (ii) as to any other Partner, an amount equal to
its paid-in Capital Contribution.
Investment General Partner means Boston Capital Associates
IV L.P., a Delaware limited partnership, in its capacity as the
general partner of the Investment Limited Partner, and any other
Person who may become a successor or additional general partner
of the Investment Limited Partner.
Investment Limited Partner means Boston Capital Tax Credit
Fund IV L.P., a Delaware limited partnership, 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 Amended and
Restated Agreement of Limited Partnership of the Investment
Limited Partner, as amended from time to time.
Lenders means the Construction Lender and the Permanent
Lender, 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
Missouri Limited Partner, the Special Limited Partner and any
Additional Limited Partner.
Management Agent means the management and rental agent for
the Apartment Complex.
Management Agreement means the agreement between the
Partnership and the Management Agent providing for the management
of the Apartment Complex.
Management Fee means the Management Fee to which reference
is made in Article XI.A.
MHDC means the Missouri Housing Development Commission, a
public corporation existing under the laws of the State.
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, together with any additional
set aside test selected by the Partnership in connection with the
Permanent Second Mortgage.
Missouri Annual Credit means, with respect to a particular
year, the total amount of Missouri Tax Credits properly allocable
by the Partnership to the Missouri Limited Partner for such year.
The Missouri Actual Credit shall be retroactively advised if the
amount of Missouri Tax Credit properly allocable to the Missouri
Limited Partner is revised after audit or recaptured.
Missouri Capital Contribution means the Capital Contribution
payable by the Missouri Limited Partner pursuant to Section
5.1(a).
Missouri Limited Partner means Missouri Affordable Housing
Fund IX, L.P.
Missouri Projected Credit means $71,000 for 1999, $287,999
per annum for each of the years 2000 through 2008 (inclusive) and
$216,999 for 2009; provided, however, that the Missouri Projected
Credit for 2008 shall be reduced correspondingly by the amount,
if any, by which the Missouri Actual Credit for 1999 exceeds
$71,000; and provided, further, that upon the occurrence of any
of the events described in clauses (i) and (ii) of Section
5.1(h), the Missouri Projected Credit shall thereafter be the
Revised Missouri Projected Credit.
Missouri Tax Credits means the Missouri tax credits which
are expected to be allocated by the State to the Partnership
pursuant to Section 135.350 RSM.
Mortgages means the mortgage indebtedness of the Partnership
to the Construction Lender and the Permanent Lender; and where
the context permits Mortgage shall mean and include the mortgage
note evidencing any 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 without
limitation any Agency documentation related thereto.
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),
1.704-2(g)(3) and 1.704-2(k).
Partnership means the limited partnership formed pursuant to
this Agreement.
Partnership Minimum Gain means the amount determined by
computing, with respect to each Partnership Non-Recourse
Liability, the amount of gain, if any, that would be realized by
the Partnership if it disposed of (in a taxable transaction) the
property subject to such liability in full satisfaction of such
liability, and by then aggregating the amounts so computed. Such
computations shall be made in a manner consistent with Treasury
Regulation Sections 1.704-2(d) and 1.704-2(k).
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 First Mortgage Commitment means the written
commitment of the Permanent First Lender to make the Permanent
Mortgage.
Permanent Lender means Midland Mortgage Investment
Corporation, in its capacity as holder of the Permanent Mortgage,
or its successors or assigns in such capacity.
Permanent Mortgage means the permanent financing to be
provided by the Permanent Lender for the Apartment Complex
following the completion thereof in the maximum principal amount
of $685,000 pursuant to the Permanent Mortgage Commitment.
Permanent Mortgage Commencement means the first date on
which all of the following shall have occurred: (a) the
Completion Date; (b) the principal amount and maturity date of
the Permanent Mortgage shall have been finally determined; and
(c) amortization of the Permanent Mortgage shall have commenced
(to the extent required by the terms thereof).
Person means any individual or Entity.
Project Documents means and includes any and all
documentation evidencing the Construction Mortgage, the Grant,
the Permanent Mortgage, the Management Agreement, all other
instruments delivered to (or required by) any Lender or Agency
and all other documents relating to the Apartment Complex and by
which the Partnership is bound, as amended or supplemented from
time to time.
Projected Credit means $71,000 for 1999, $287,999 per annum
for each of the years 2000 through 2008 (inclusive) and $216,999
for 2009; provided, however, that the Projected Credit for 2009
shall be reduced correspondingly by the amount, if any, by which
the Actual Credit for 1999 exceeds $71,000; and provided,
further, that upon the occurrence of any of the events described
in clauses (i) and (ii) of Section 5.1(g), 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.
Related Person means a person related to a Partner within
the meaning of Treasury Regulation Section 1.752-4(b).
Rental Achievement means the first time that the Partnership
has attained the Required Debt Service Coverage Ratio for the
Permanent Mortgage.
Rental Achievement Confirmation means the receipt by the
Investment Limited Partner of the tax return of the Partnership
for the fiscal year in which Rental Achievement has occurred.
Rent Restriction Test means the test pursuant to Section 42
of the Code whereby the gross rent charged to tenants of the low-
income units in the Apartment Complex may not exceed 30% of the
qualifying income levels applicable to those units.
Required Debt Service Coverage Ratio means a Debt Service
Coverage Ratio of not less than 1.15 for six consecutive calendar
months.
Schedule A means Schedule A to this Agreement as amended
from time to time.
Service means the Internal Revenue Service.
Site has the meaning given to it in the Federal
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, 42 U.S.C. Sec. 9601 et seq., as amended, and shall
also include any meaning given to it in any similar state or
local statutes, ordinances, regulations or by-laws.
Special Limited Partner means BCTC 94, Inc., a 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 State of Missouri.
State Designation means the date upon which the Partnership
receives the allocation by the authorized agency of the State of
Missouri of Tax Credit for the building(s) constituting the
Apartment Complex in an annual dollar amount of not less than
$288,028, as evidenced by the execution by or on behalf of such
agency of Form(s) 8609. For the purposes of determining State
Designation, each building in the Apartment Complex shall be
treated as having received an allocation of Tax Credit in an
amount equal to the lesser of (i) the amount of the Tax Credit
carryover allocation received from the authorized agency of the
State of Missouri as to such building or (ii) the amount of the
Tax Credit set forth on the Form 8609 as to such building.
Subordinated Loan means any loan made by the General
Partners to the Partnership pursuant to Section 6.10.
Substituted Limited Partner means any Person who is admitted
to the Partnership as Limited Partner under Section 8.2 or
acquires the Interest of a Limited Partner pursuant to
Section 5.2.
Tax Accountants means Reznick, Fedder & Silverman of
Bethesda, Maryland or such other firms of independent certified
public accountants as may be engaged by Boston Capital to review
the Partnership income tax returns.
Tax Credit means the low-income housing tax credit pursuant
to Section 42 of the Code.
Title Policy means 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 $3,678,592
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 and stipulations as shall be acceptable to
the Investment Limited Partner, in its sole discretion.
Uniform Act means the Revised Missouri Uniform Limited
Partnership Act as adopted by the State.
Vessel has the meaning given to it in the Federal
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, 42 U.S.C. Sec. 9601 et seq., as amended, and shall
also include any meaning given to it in any similar state or
local statutes, ordinances, regulations or by-laws.
Withdrawal (including the forms Withdraw, Withdrawing and
Withdrawn) means, as to a General Partner, the occurrence of
death, adjudication of insanity or incompetence, Event of
Bankruptcy, dissolution, liquidation, or voluntary or involuntary
withdrawal or retirement from the Partnership for any reason,
including whenever a General Partner may no longer continue as a
General Partner by law or pursuant to any terms of this
Agreement. Withdrawal shall also mean the sale, assignment,
transfer or encumbrance by a General Partner of its interest as a
General Partner. A General Partner which is a corporation or
partnership shall be deemed to have sold, assigned, transferred
or encumbered its interest as a General Partner in the event of
any sale, assignment or other transfer (but specifically
excluding any transfer occurring pursuant to the laws of descent
and distribution) or encumbrance of a controlling interest in a
corporate 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; Formation TC 2.1 Name; Formation \f C \l 2
The name of the Partnership is Pyramid Four Limited
Partnership. The Partners agree to form the Partnership pursuant
to the provisions of the Uniform 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 1501 N.
University, Suite 740, Little Rock, Arkansas 72207 at which
office there shall be maintained those records required by the
Uniform Act to be kept by the Partnership. The Partnership may
have such other or additional offices as the General Partners
shall deem desirable. The General Partners may at any time
change the location of the principal office and shall give due
notice thereof to the Limited Partners.
(b) The registered agent in the State for the Partnership
for service of process is as follows:
Phillips Development Corporation
c/o CT Corporation
120 South Central
Clayton, MO 63105
2.3 Purpose TC 2.3 Purpose \f C \l 2
The purpose of the Partnership is to acquire, hold, invest
in, construct, develop, improve, maintain, operate, lease and
otherwise deal with the Apartment Complex. The Partnership shall
operate the Apartment Complex in accordance with any applicable
Agency regulations and Lender 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 October 31, 2046, except that the Partnership shall be
dissolved and its assets liquidated prior to such date upon:
(a) The sale or other disposition of all or substantially
all of the assets of the Partnership;
(b) A General Partner dying, being adjudicated bankrupt,
insane or incompetent, (if a corporation or partnership) being
dissolved or liquidated, or voluntarily or involuntarily
withdrawing from the Partnership for any reason, including an
inability to continue serving as a General Partner by law or
pursuant to the terms of this Agreement, if (i) the remaining
General Partner(s), if any, shall fail to continue the business
of the Partnership and reconstitute the Partnership as a
successor limited partnership as provided in Section 7.2 and
(ii) the Investment Limited Partner shall fail to exercise the
right provided in Section 7.3;
(c) The election to dissolve the Partnership made in
writing by the General Partners with the Consent of the
Investment Limited Partner and the approval (if required) of each
Lender and (if required) each 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 Uniform Act if the Partnership is not
reconstituted pursuant to Section 7.2 or Section 7.3.
Upon dissolution of the Partnership, the General Partners
(or for purposes of this paragraph, their trustees, receivers or
successors) shall cause the cancellation of the Certificate,
liquidate the Partnership assets and apply and distribute the
proceeds thereof in accordance with Section 10.3.
Notwithstanding the foregoing, if, during liquidation, the
General Partners shall determine that an immediate sale of part
or all of the Partnership's assets would be impermissible,
impractical or cause undue loss to the Partners, the General
Partners may defer liquidation of, and withhold from distribution
for a reasonable time, any assets of the Partnership except those
necessary to satisfy Partnership debts and obligations (except
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.
B. The Partnership may decrease, increase or refinance any
Permanent Mortgage and may make any required transfer or
conveyance of Partnership assets for security or mortgage
purposes, provided, however, any such decrease, increase or
refinancing of the Permanent Mortgage may be made by the General
Partners only with the Consent of the Investment Limited Partner.
C. The Partnership may sell, lease, exchange or otherwise
transfer or convey all or substantially all the assets of the
Partnership only with the Consent of the Investment Limited
Partner. Notwithstanding the foregoing and except as set forth
in Section 6.2(a)(6), no Consent of the Investment Limited
Partner shall be required for the leasing of apartments to
tenants in the normal course of operations or the leasing of all
or substantially all the apartments to a public housing authority
at rents satisfactory to each applicable Agency and Lender as
expressed in writing.
D. The total compensation to all Persons for the sale of
the Apartment Complex shall be limited to a Competitive Real
Estate Commission, not to exceed six per cent (6%) of the
contract price for the sale of the Apartment Complex.
ARTICLE IV
Partners; Capital TC ARTICLE IV Partners; Capital \f C \l 1
4.1 Capital and Capital Accounts TC 4.1 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 4.1(b) shall affect the limitations on
transferability of Interests set forth in Article VII or
Article VIII.
4.2 General Partners TC 4.2 General Partners \f C \l 2
The name, address and Capital Contribution of each General
Partner is as set forth on Schedule A.
4.3 Limited Partners TC 4.3 Limited Partners \f C \l 2
(a) The Investment Limited Partner, the Missouri Limited
Partner and the Special Limited Partner are hereby admitted to
the Partnership as the sole Limited Partners and agree to be
bound by the terms and provisions of the Project Documents and
this Agreement. The name, address and Capital Contribution of
each of the Investment Limited Partner, the Missouri Limited
Partner and the Special Limited Partner are as set forth on
Schedule A.
(b) The General Partners shall have no authority to admit
additional Limited Partners without the Consent of the Investment
Limited Partner.
4.4 Liability of the Limited Partners TC 4.4 Liability
of the Limited Partners \f C \l 2
None of the Investment Limited Partner, the Missouri 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 its respective Capital Contribution
as and when the same is due hereunder and under the Uniform Act.
4.5 Special Rights of the Investment Limited Partner and
the Special Limited Partner TC 4.5 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 each
Agency and Lender (if such consent is required) to:
(i) dissolve the Partnership;
(ii) remove any General Partner and elect a new General
Partner (A) for any intentional misconduct or failure to
exercise reasonable care with respect to any material matter
in the discharge of its duties and obligations as a General
Partner (provided that such violation results in a material
detriment to or an impairment of the Apartment Complex or
assets of the Partnership), or (B) upon the occurrence of
any of the following: (1) such General Partner shall have
violated any material provisions of any Agency regulations
applicable to the Apartment Complex; (2) such General
Partner shall have violated any material provision of this
Agreement, or such General Partner shall have violated any
material provision of applicable law; (3) an event of
default shall have occurred under any Mortgage; or (4) such
General Partner shall have conducted its own affairs or the
affairs of the Partnership in such a manner as would
(a) cause the termination of the Partnership for Federal
income tax purpose; or (b) cause the Partnership to be
treated for Federal income tax purposes as an association
taxable as a corporation; provided, however, that with
respect to subsections (B)(1),(2) and (4) preceding, prior
to exercising its rights the Investment Limited Partner
and/or the Special Limited Partner shall first give notice
to the General Partner of such event and the General Partner
shall have thirty (30) days to cure such violation;
(iii) continue the business of the Partnership with
a substitute General Partner; or
(iv) approve or disapprove the sale of all or
substantially all of the assets of the Partnership.
(b) Upon the removal of a General Partner pursuant to
Section 4.5(a)(ii) above, (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 a 0.01% interest in the
profits, losses, tax credits, Cash Flow and Capital Transaction
distributions of the Partnership or 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 removed General Partner
Economic Interest shall automatically be converted to an equal
economic Interest as an Additional Limited Partner, (iii) the
economic Interest of the Special Limited Partner as the Special
Limited Partner shall continue unaffected by the new status of
the Special Limited Partner or its designee as a General Partner,
and (iv) the new General 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 Interest of any removed General
Partner upon payment of the agreed or then present fair market
value of such Interest. Any dispute as to such value shall be
submitted to a committee composed of three qualified real estate
appraisers, one chosen by the removed General Partner, one chosen
by the successor General Partner and the third chosen by the two
so chosen. The proceedings of such committee shall conform to
the rules of the American Arbitration Association, as far as
appropriate, and its decision shall be final and binding. The
expense of arbitration shall be born equally by the removed
General Partner and the Partnership. The method of payment to
the removed General Partner shall be fair and must protect the
solvency and liquidity of the Partnership. The method of payment
will be deemed presumptively fair where it provides for an
interest-bearing promissory note coming due in five (5) years
with equal installments of principal and interest each year.
Interest shall be equal to the prime rate of the BankBoston plus
one percent. 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 so removed 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 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
as the Special Limited Partner may deem to be necessary or
appropriate in order to effect the provisions of this Section 4.5
and to enable the new General Partner to manage the business of
the Partnership.
4.6 Meetings TC 4.6 Meetings \f C \l 2
The General Partners or Limited Partners holding more than
10% of the then outstanding Limited Partner Interests may call
meetings of the Partnership for any matters for which the Limited
Partners may vote as set forth in this Agreement. A list of the
names and addresses of all Limited Partners shall be maintained
as part of the books and records of the Partnership and shall be
made available upon request to any Limited Partner or his
representative at his cost. Upon receipt of a written request
either in person or by certified mail stating the purpose(s) of
the meeting, the General Partners shall provide all Limited
Partners within ten (10) days after receipt of said request,
written notice (either in person or by certified mail) of a
meeting and the purpose of such meeting to be held on a date not
less then fifteen (15) nor more than sixty (60) days after
receipt of said request, at a time convenient to the Limited
Partners. All meetings shall be held at the principal office of
the Partnership.
ARTICLE V
Capital Contributions of the Investment Limited Partner
and the Special Limited Partner 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 of
$10 shall be paid 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 Missouri Limited Partner
will make a Capital Contribution in the aggregate amount of
$748,790, of which $5.00 has been paid to the Partnership as of
the Admission Date. The balance of its Capital Contribution will
be paid to the Partnership in the amount of $654,827 on the due
date for the Second Installment and $93,958 on the due date for
the Third Installment. The Investment Limited Partner's Capital
Contribution shall be paid in cash installments (the
Installments), as follows:
(1) $1,693,431 (the First Installment) shall be paid
on the latest of (i) the Admission Date, (ii) receipt of the
Permanent Mortgage Commitment and the Grant commitment, and
(iii) closing of the Construction Mortgage;
(2) $ -0- (the Second Installment) shall be paid on
the latest of (i) the Completion Date, (ii) Cost
Certification, (iii) receipt of a current endorsement to
Title Policy, (iv) receipt of the Construction Contract
Payment Letter, (v) receipt of an estoppel letter from the
Construction Lender, (vi) compliance with Due Diligence
Recommendations and (vii) satisfaction of all the conditions
to the payment of the First Installment;
(3) $239,044 (the Third Installment) shall be paid on
the latest of (i) the Initial 100% Qualified Occupancy Date,
(ii) achievement of the Rental Achievement, (iii) Permanent
Mortgage Commencement, (iv) State Designation or
(v) satisfaction of all the conditions to the payment of the
First and Second Installments; and
(4) $141,119 upon the later to occur of (i) Rental
Achievement Confirmation or (ii) satisfaction of all the
conditions to the payment of the First Second and Third
Installments;
provided, however, that the General Partners shall give to the
Investment Limited Partner not less than 21 days' written notice
prior to the due date of each Installment subsequent to the First
Installment.
(b) The obligation of the Investment Limited Partner to pay
each Installment is conditioned upon delivery by the General
Partners to the Investment Limited Partner of a written
certificate (the Payment Certificate) stating that as of the date
of such certificate (i) all the conditions to the payment of such
Installment have been satisfied and (ii) all representations and
warranties of the General Partners contained in this Agreement
are true and correct. Except as provided in the final sentence
of this Section 5.1(b), acceptance by the Partnership of any
Installment shall constitute a confirmation that, as of the date
of payment, all such conditions are satisfied and all such
representations and warranties are true and correct. The
obligation of the Investment Limited Partner to pay the First
Installment is also conditioned upon delivery by the General
Partners to the Investment Limited Partner of (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 the Title
Policy. In no event shall any Installment become due until all
Installments listed prior to the Installment in question in
Section 5.1(a) shall have become due. Notwithstanding the
foregoing, however, if at any time prior to the date when an
Installment becomes due and payable, the Partnership has an
Operating Deficit (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 Operating Deficit; provided,
however, that if the proceeds of such amount so paid are
designated in Section 6.12 to be used to pay fee(s), then such
proceeds shall be utilized to pay such fee(s) and the
recipient(s) thereof shall be required to, and hereby agree to,
utilize the proceeds of such fee(s) to fund such Operating
Deficit, in which case the Investment Limited Partner is hereby
authorized to directly fund such Operating Deficits with such
funds then being deemed to have been paid as aforesaid.
(c) The Payment Certificate for each Installment shall be
dated and delivered not less than 10 nor more than 30 days prior
to the due date for such Installment.
(d) If, as of the date when an Installment would otherwise
be due, any statement required to be made in the Payment
Certificate for such Installment cannot be truthfully made, the
General Partners shall notify the Investment Limited Partner of
the reason why such statement would be untrue if made, and such
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 has not 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 30 days after
delivery by the General Partners to the Investment Limited
Partner of the Payment Certificate together with an explanation
of the manner in which each such statement had become true.
(e) If with respect to any fiscal year all or a portion of
which occurs during the 60-month period commencing on the later
of (i) 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 Capital
Contribution of the Investment Limited Partner shall be reduced
by the Reduction Amount. The Reduction Amount shall be equal to
the sum of (A) the excess of the Projected Credit for such year
over the Actual Credit for such year multiplied by .986 plus (B)
the amount of any recapture, interest or penalty payable by the
limited partners and/or holders of beneficial assignee
certificates of the Investment Limited Partner as a result of
such shortfall, assuming that each limited partner and/or holder
of a beneficial assignee certificate in the Investment Limited
Partner used all of the Tax Credits allocated to him in the year
of allocation and that each such Person was subject to interest
at the rate set forth in Section 6621(a)(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 30 days following the end of such year. The Capital
Contribution of the Investment Limited Partner shall be subject
to reduction as hereinabove described with respect to each
Reduction Year. Any Reduction Amount shall, at the option of the
Investment Limited Partner, either first be applied to reduce the
Installment next due to be paid by the Investment Limited
Partner, with any portion of such reduction in excess of the
amount of such Installment then being applied to reduce
succeeding Installments, provided that if no further Installments
remain to be paid or if the Reduction Amount shall exceed the sum
of the amounts of the remaining Installments, then the entire
Reduction Amount or the balance of the Reduction Amount, as the
case may be, shall be paid by the General Partners to the
Investment Limited Partner promptly after demand is made
therefor, as a payment of damages for breach of warranty or (ii)
be paid in its entirety by the General Partners to the Investment
Limited Partner promptly after demand is made therefor, as a
payment of damages for breach of warranty, regardless of the
reason for such reduction.
(f) In the event that, for any reason, at any time after
the end of the fiscal year during which there occurs the 60-month
anniversary of the later of (i) the Admission Date or (ii) the
date on which the first building in the Apartment Complex is
placed in service for the purposes of Section 42 of the Code, the
amount of the Actual Credit shall be less than the Projected
Credit with respect to any fiscal year of the Partnership (such
difference being hereinafter referred to as a Credit Shortfall),
the Investment Limited Partner shall be treated as having made a
constructive advance to the Partnership with respect to such year
(a Credit Recovery Loan), which shall be deemed to have been made
on January 1 of such year in an amount equal to the sum of
(i) the Credit Shortfall for such year plus (ii) the amount of
any recapture, interest or penalty payable by the limited
partners and/or holders of beneficial assignee certificates of
the Investment Limited Partner as a result of the Investment
Limited Partner's Credit Shortfall for such year, assuming that
each limited partner and/or holder of a beneficial assignee
certificates in the Investment Limited Partner used all of the
Tax Credits allocated to him in the year of allocation and that
each such Person was subject to interest at the rate set forth in
Section 6621(a)(2) of the Code and to the penalty for
understatement of tax set forth in Section 6662(d) of the Code.
The Credit Recovery Loans shall be deemed to bear simple (not
compounded) interest from the respective dates on which such
principal advances shall have been deemed to have been made under
this Section 5.1(f) at 9% per annum. Credit Recovery Loans shall
be payable by the Partnership as provided in Section 10.2(b),
Clause Fourth.
(g) In the event that at any time after the Completion Date
the product of the Apartment Complex's qualified basis and its
applicable percentage (as such terms are defined in Section 42 of
the Code) is determined by the Auditors, Tax Accountants or the
Service to be such that the Partnership will not be eligible to
receive Tax Credit in an annual dollar amount of at least
$288,028, then (a) the General Partners shall pay to the
Investment Limited Partner promptly after demand is made
therefor, as a payment of damages for breach of warranty, an
amount equal to 9.86 multiplied by the difference between
(i) $288,028 and (ii) 99.99% of the total amount of Tax Credit
allocated and available to the Partnership and (b) the Projected
Credit for each year shall thereafter be redefined to mean 99.99%
of the total amount of Tax Credit actually so allocated and
available to the Partnership for such year (the Revised Projected
Credit).
(h) If with respect to any fiscal year all or a portion of
which occurs during the 60-month period commencing on the later
of (i) 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 Missouri Reduction Year)
the Missouri Actual Credit is or was less than the Projected
Missouri Credit, then the Capital Contribution of the Missouri
Limited Partner shall be reduced by the Missouri Reduction
Amount. The Missouri Reduction Amount shall be equal to the sum
of (A) the excess of the Missouri Projected Credit for such year
over the Actual Missouri Credit for such year multiplied by .26
plus (B) the amount of any recapture, interest or penalty payable
by the limited partners and/or holders of beneficial assignee
certificates of the Missouri Limited Partner as a result of such
shortfall, assuming that each limited partner and/or holder of a
beneficial assignee certificate in the Missouri Limited Partner
used all of the Missouri 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 Missouri Actual Credit with respect to each
Missouri Reduction Year within 30 days following the end of such
year. The Capital Contribution of the Missouri Limited Partner
shall be subject to reduction with respect to each Missouri
Reduction Year. Any Missouri Reduction Amount shall either first
be applied to reduce the installment or installments of Capital
Contributions next due to be paid by the Missouri Limited
Partner; provided that if no further installment remains to be
paid or if such installment is less than the Missouri Reduction
Amount, then the Missouri Reduction Amount (or unpaid portion
thereof) shall be paid by the General Partners to the Missouri
Limited Partner promptly after demand is made therefor, as a
payment of damages for breach of warranty or (ii) be paid in its
entirety by the General Partners to the Missouri Limited Partner
promptly after demand is made therefor, as a payment of damages
for breach of warranty, regardless of the reason for such
reduction.
(i) In the event that at any time after the Completion Date
the product of the Apartment Complex's qualified basis and its
applicable percentage (as such terms are defined in Section 42 of
the Code) is determined by the Auditors, Tax Accountants or the
Service to be such that the Partnership will not be eligible to
receive Missouri Tax Credit in an annual dollar amount of at
least $288,028, then (a) the General Partners shall pay to the
Missouri Limited Partner promptly after demand is made therefor,
as a payment of damages for breach of warranty, an amount equal
to 2.6 multiplied by the difference between $288,028 and (b) the
Missouri Projected Credit for each year shall thereafter be
redefined to mean the total amount of Missouri Tax Credit
actually so allocated and available to the Partnership for such
year (the Revised Missouri Projected Credit).
5.2 Return of Capital Contributions TC 5.2 Return of
Capital Contributions \f C \l 2
(a) Failure to Complete and Loss of the Tax Credit. If
(i) all 48 apartment units in the Apartment Complex shall not
have been placed in service by December 31, 1999 (or any later
date fixed by the General Partners with the consent of the
Investment Limited Partner), or (ii) within twelve (12) months
from the Completion Date (or any later date fixed by the General
Partners with the Consent of the Investment Limited Partner) less
than 47 apartment units in the Apartment Complex shall have been
initially occupied by tenants meeting the terms of the Minimum
Set-Aside Test under executed leases which shall have received
any necessary Agency or Lender approvals at rental levels meeting
the requirements of the Rent Restriction Test, or (iii) Permanent
Mortgage Commencement shall not have occurred prior to June 30,
2000 (or any later date fixed by the General Partners with the
Consent of the Investment Limited Partner), or (iv) State
Designation shall not have occurred by December 31, 1999 (or any
later dates fixed by the General Partners with the Consent of the
Investment Limited Partner), or (v) the Partnership shall fail to
meet the Minimum Set-Aside Test or the Rent Restriction Test as
to any building in the Apartment Complex by December 31st of the
first year of the compliance period (as defined in Section 42(i)
of the Code) for such building and/or fails to continue to meet
either such Test at any time during the 60-month period
commencing on such date, or (vi) Rental Achievement has not been
achieved within twelve months from the Completion Date, or
(vii) prior to Permanent Mortgage Commencement, (a) foreclosure
proceedings shall have commenced under the Construction Mortgage
and such proceedings shall not have been dismissed within 60
days, (b) any of the commitments of the Permanent Lender or any
Agency to provide the Permanent Mortgage and/or any subsidy
financing shall have been terminated or withdrawn and not
reinstated or replaced within 90 days with terms equally or more
favorable to the Investment Limited Partner or terms for which
the Consent of the Investment Limited Partner and (to the extent
required) the approval of each Agency and 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 60 days, (viii) if at any
time it shall be determined by the Service or by the Tax
Accountants that as of December 31, 1998 the Partnership had not
incurred capitalizable costs with respect to the Apartment
Complex of at least 10% of the Partnership's reasonably expected
basis in the Apartment Complex as of December 31, 2000, or
(ix) by June 30, 1999, the Partnership shall not have received
from MHDC a carryover allocation of Tax Credit pursuant to
Section 42(h)(1)(E) of the Code dated no later than December 31,
1998 in an annual dollar amount of not less than $288,028, then
the General Partners shall, within 15 days of the occurrence
thereof, send to the Investment Limited Partner, the Missouri
Limited Partner, and the Special Limited Partner notice of such
event and of their obligation to repurchase the Interest of the
Investment Limited Partner, the Missouri Limited Partner, and the
Special Limited Partner by paying to the Investment Limited
Partner and the Special Limited Partner an amount equal to each
such Partner's Invested Amount in the event the Investment
Limited Partner, the Missouri Limited Partner, and the Special
Limited Partner so require. If either the Special Limited
Partner, the Missouri 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 Invested Amount, it shall
send notice thereof to the Partnership within 30 days after the
mailing date of the General Partners' notice (or at any time
after the occurrence of any of the foregoing if the General
Partners shall not have sent such a notice thereof), and the
General Partners shall within 30 days thereafter repurchase the
Interest of such Partner by paying to such Partner an amount
equal to its Invested Amount plus the amount of any third party
costs incurred by or on behalf of such Partner in implementing
this Section 5.2(a).
(b) Lender or Agency Disapproval. If any Lender or Agency
shall disapprove, or fail to give any required approval of, the
Investment Limited Partner or the Special Limited Partner as a
Limited Partner hereunder within 180 days of its admission to the
Partnership, then such Partner shall, effective as of such time
or such later time as may be selected by the Investment General
Partner (or such other time as may be specified by the Lender or
Agency in its disapproval), at the option of the Partner being
disapproved or not approved (if not directed by a Lender or
Agency to withdraw) cease to be a Limited Partner. The General
Partners shall, within 10 days of the effective date of the
termination, pay to the Partner being disapproved or not approved
an amount equal to its Invested Amount.
(c) Substitution and Indemnification. Upon receipt by the
Investment Limited Partner and/or the Special Limited Partner of
the amount due to it pursuant to either Section 5.2(a) or
Section 5.2(b), the Interest of such Partner shall terminate, and
the General Partners shall indemnify and hold harmless such
Partner from any losses, damages, and liabilities to which such
Partner (as a result of its participation hereunder) may be
subject.
(d) Waiver of Repurchase Right. The Investment Limited
Partner shall have the right to irrevocably waive its right to
have its Interest repurchased pursuant to any clause or clauses
of Section 5.2(a), or any portion thereof, at any time during
which any of such rights shall be in effect (the Repurchase
Period). Such a waiver shall be exercised by delivery to the
General Partners of a written notice stating that the rights
being waived pursuant to any specified clause or clauses of
Section 5.2(a), or any specified portion thereof, are thereby
waived from that date forward.
(e) Additional General Partner. If the General Partners
shall fail to make on the due date therefor any payment required
under Section 5.2(a) or Section 5.2(b), time being of the
essence, then the Special Limited Partner, in its sole
discretion, may cause itself or its designee to be admitted as an
additional General Partner without any further action by any
other Partner. Upon any such admission of an additional General
Partner, each pre-existing General Partner shall be deemed to
have assigned proportionally to the additional General Partner,
automatically and without further action, such portion of its
General Partner Economic Interest so that the additional General
Partner shall receive not less than a one hundredth of one
per cent (0.01%) interest in the profits, losses, tax credits,
Cash Flow and Capital Transaction distributions of the
Partnership in consideration of $10 and any other consideration
which may be agreed upon. The pre-existing General Partners
shall retain the remaining portion of the General Partner
Economic Interest. An additional General Partner so admitted
shall automatically become the Managing General Partner and be
irrevocably delegated all of the power and authority of all of
the General Partners pursuant to Section 6.13. Any such
additional General Partner shall have the right to withdraw as a
General Partner at any time, leaving the pre-existing General
Partners once again as the only General Partners, the provisions
of Article VII notwithstanding. Each Partner hereby grants to
the Special Limited Partner a special power of attorney,
irrevocable to the extent permitted by law and coupled with an
interest, to amend the Certificate and this Agreement and to do
anything else which, in the view of the Special Limited Partner,
may be necessary or appropriate to accomplish the purposes of
this Section 5.2(e) or to enable any additional General Partner
admitted pursuant to this Section 5.2(e) to manage the business
of the Partnership. The admission of an additional General
Partner shall not relieve any other General Partner of any of its
economic obligations hereunder, and each other General Partner
shall fully indemnify and hold harmless the additional General
Partner from and against any and all losses, judgments,
liabilities, expenses and amounts paid in settlement of any
claims sustained in connection with its capacity as a General
Partner, which claims result from the actions or omissions of the
General Partners prior to the admission of the additional General
Partner.
5.3 Default by Investment Limited Partner or Missouri
Limited Partner TC 5.3 Default by Investment Limited Partner or
Missouri Limited Partner \f C \l 2
(a) In the event that the Investment Limited Partner shall
fail to pay any Installment which shall become due to the
Partnership or the Missouri Limited Partner shall fail to make
any installment of its Capital Contribution pursuant to Section
5.1 and, in either case, such failure shall continue for 21 days
(or such additional time as may be provided pursuant to
Section 5.3(b) below) following the receipt of written notice of
such failure by the Investment Limited Partner or Missouri
Limited Partner (the Cure Period), then the Investment Limited
Partner or the Missouri Limited Partner (the Defaulting Limited
Partner) shall be in default hereunder (a Default) and the
Partnership shall be entitled to exercise all remedies at law and
in equity, including without limitation exercise of its rights as
a secured creditor as referred to below. Interest on any amounts
in default shall accrue from and after the Default at the
Applicable Federal Rate.
(b) In the event the Defaulting Limited Partner shall
dispute the claim by the General Partners that a particular
Installment or amount is currently due and payable, it may send
notice to such effect to the General Partners stating the basis
for its dispute and offering to submit such dispute to
arbitration as provided in subparagraph (c) below. The Cure
Period referred to in subparagraph (a) above shall be suspended
by the sending of such notice and (i) shall recommence at the
point of suspension (i.e., beginning with the number of days
elapsed when such suspension occurred) upon delivery to the
Defaulting Limited Partner of the arbitrator's final
determination (if adverse to the Defaulting Limited Partner) as
provided in subparagraph (c) below or (ii) shall begin anew
(i.e., a new 21-day Cure Period shall begin to run) upon receipt
by the Defaulting Limited Partner of notice from the General
Partners to the effect that the General Partners have eliminated
the cause for the dispute and that the Installment or amount in
question is now due and payable.
(c) In the event the Defaulting Limited Partner elects to
arbitrate a dispute relating to the payment of an Installment or
amount hereunder, such matter shall be submitted to arbitration
in the manner provided under the Commercial Arbitration Rules of
the American Arbitration Association then in effect. Such
arbitration shall be conducted in Little Rock, Arkansas, before a
single arbitrator chosen in accordance with such rules and shall
be binding on all parties to the dispute. Judgment on the award
of such arbitrator may be rendered by any court having
jurisdiction of such parties on the subject matter. All
reasonable out-of-pocket costs and expenses of arbitration shall
be borne by the losing party thereto unless the arbitrator shall
expressly determine that a different allocation of such cost is
equitable under the circumstances. Further, in the event that
the Defaulting Limited Partner is the losing party, interest
shall be payable to the Partnership on the amount of the Capital
Contribution determined by the arbitrator to be payable from the
original due date of such Capital Contribution to the actual
payment date at the prime rate of BankBoston, plus 1% per annum.
(d) The Investment Limited Partner and the Missouri Limited
Partner shall each execute a separate security agreement and
financing statements pursuant to which a security interest will
be granted to the Partnership in the Interests of the Limited
Partner and the Missouri Limited Partner hereunder to secure the
obligation of each such Limited Partner to pay all of its Capital
Contribution to the Partnership.
(e) During the period the Defaulting Limited Partner is in
Default hereunder, the Defaulting Limited Partner shall not be
entitled to participate in the sharing of any of the profits,
losses or tax credits deriving from Partnership operations during
such period of Default or from sales, exchanges or refinancings
of Partnership property effected during such period of Default,
nor (except as provided below) shall such Defaulting Limited
Partner be entitled to receive Partnership distributions
attributable to such period of Default. Any allocation of
profits, gains, losses or credits which would have been allocable
to the Defaulting Limited Partner (but for its default) shall be
allocated to the General Partners on a pro rata basis in
accordance with their respective Interests; any distributions
which would have been distributable to the Defaulting Limited
Partner in respect of such period of Default shall be retained by
the Partnership and applied to the amount in Default (and
interest thereon, as provided in subparagraph (a)) until such
Default shall have been cured and any balance thereof shall be
remitted to the Defaulting Limited Partner.
(f) This Section 5.3 shall be void and of no further force
or effect as to each of the Investment Limited Partner or
Missouri Limited Partner from and after the date upon which the
Partnership receives the Fourth Installment of the Capital
Contribution (in the case of the Investment Limited Partner) or
the balance of its Capital Contribution pursuant to Section 5.1
(in the case of the Missouri Limited Partner).
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, Section 6.5(j) and all
other provisions of this Agreement, the General Partners for, in
the name and on behalf of the Partnership are hereby authorized
to do the following in furtherance of the purposes of the
Partnership:
(1) To acquire by purchase, lease, exchange or
otherwise any real or personal property;
(2) To construct, 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 Project Documents and all such other
documents as the General Partners deem necessary or
appropriate in connection with the acquisition, development
and financing of the Apartment Complex;
(5) To prepay in whole or in part, refinance or modify
the 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 any Agency, the State or
any subdivision or agency thereof or any other government
agency to make apartments or tenants in the Apartment
Complex eligible for any public-subsidy program;
(9) To execute leases of some or all of the apartment
units of the Apartment Complex to a public housing authority
and/or to a non-profit corporation, cooperative or other
non-profit Entity; and
(10) To enter into any kind of activity and to perform
and carry out contracts of any kind which may be lawfully
carried on or performed by a partnership and to file all
certificates and documents which may be required under the
laws of the State.
6.2 Restrictions on Authority TC 6.2 Restrictions on
Authority \f C \l 2
(a) 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 any Lender, the terms of such
regulations or requirements shall govern. Neither shall the
General Partners have any authority to do any of the following
acts without the Consent of the Investment Limited Partner:
(1) To have borrowings (which shall not be deemed to
mean trade payables) in excess of $20,000 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) Following Permanent Mortgage Commencement, to
increase, modify the terms of or refinance the Permanent
Mortgage;
(6) To rent apartments in the Apartment Complex such
that the Apartment Complex would not meet the requirements
of the Minimum Set- Aside Test or the Rent Restriction Test;
(7) To sell, exchange or otherwise convey or transfer
the Apartment Complex or substantially all the assets of the
Partnership;
(8) To terminate any agreement with an 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 pledge or assign any of the Capital
Contribution of the Investment Limited Partner or the
proceeds thereof;
(11) To do any act required to be approved or ratified
by all limited partners under the Uniform Act; or
(12) To amend the Construction Contract, except for
change orders approved by the Lender.
(b) In the event that any General Partner violates any
provision of Section 6.2(a), the Special Limited Partner shall
give notice to the General Partners of such violation. If such
violation has not been cured within five (5) business days of
receipt of such notice, then the Special Limited Partner, in its
sole discretion, may cause itself or its designee to be admitted
as an additional General Partner without any further action by
any other Partner. Upon any such admission of an additional
General Partner, each pre-existing General Partner shall be
deemed to have assigned proportionally to the additional General
Partner, automatically and without further action, such portion
of its General Partner Economic Interest so that the additional
General Partner shall receive not less than a one hundredth of
one per cent (0.01%) interest in the profits, losses, tax
credits, Cash Flow and Capital Transaction distributions of the
Partnership in consideration of $100.00 and any other
consideration which may be agreed upon. The pre-existing General
Partners shall retain the remaining portion of the General
Partner Economic Interest. An additional General Partner so
admitted shall automatically become the Managing General Partner
and be irrevocably delegated all of the power and authority of
all of the General Partners pursuant to Section 6.13. Any such
additional General Partner shall have the right to withdraw as a
General Partner at any time, leaving the pre-existing General
Partners once again as the only General Partners, the provisions
of Article VII notwithstanding. Each Partner hereby grants to
the Special Limited Partner a special power of attorney,
irrevocable to the extent permitted by law and coupled with an
interest, to amend the Certificate and this Agreement and to do
anything else which, in the view of the Special Limited Partner,
may be necessary or appropriate to accomplish the purposes of
this Section 6.2(b) or to enable any additional General Partner
admitted pursuant to this Section 6.2(b) to manage the business
of the Partnership. The admission of the Special Limited Partner
or its designee as an additional General Partner shall not
relieve any other General Partner of the Special Limited Partner
or its designee as any of its economic obligations hereunder, and
each other General Partner shall fully indemnify and hold
harmless the additional General Partner from and against any and
all losses, judgments, liabilities, expenses and amounts paid in
settlement of any claims sustained in connection with its
capacity as a General Partner, which claims result from the
actions or omissions of the General Partners prior to the
admission of the additional General Partner.
(c) Neither the Investment General Partner nor any
Affiliate thereof shall be given an exclusive right to sell, or
exclusive employment to sell, the Apartment Complex.
6.3 Personal Services TC 6.3 Personal Services \f C \l
2
No General Partner or Affiliate thereof shall receive any
salary or other compensation except as may be provided in
Section 6.12 and Article XI or as to which the prior written
consent of the Special Limited Partner shall have been obtained
to the precise terms thereof prior to the commencement of such
services or the provision of such goods. Any Partner may engage
independently or with others in other business ventures of every
nature and description including the ownership, operation,
management, syndication and development of competing real estate;
neither the Partnership nor any other Partner shall have any
rights in and to such independent ventures or the income or
profits derived therefrom.
6.4 Business Management and Control; Tax Matters Partner
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. The Investment Limited Partner and the
Special Limited Partner hereby consent 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. All Partners hereby agree that
Phillips Development Corporation shall serve as the Tax Matters
Partner. In the case of litigation, the Tax Matters Partner is
required to file suit in the United States Tax Court unless the
Consent of the Investment Limited Partner is obtained to file
suit in the United States Claims Court or the United States
District Court. Nothing herein shall be construed to restrict
the Partnership from engaging the Auditors to assist the Tax
Matters Partner in discharging its duties hereunder.
6.5 Duties and Obligations 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 are
responsible for the management and operation of the Partnership,
including the oversight of the rent-up and operational stages of
the Apartment Complex.
(b) The General Partners shall use their best efforts to
cause the Partnership to generate Cash Flow for distribution to
the Partners at the maximum realizable level in view of (i) any
applicable Agency regulations, (ii) all Lender requirements,
(iii) the Minimum Set-Aside Test and (iv) 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 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 each Agency and Lender, or, if the Apartment
Complex is no longer subject to Agency or Lender regulation or
requirements, as shall be customary for apartment complexes such
as the Apartment Complex and (ii) in amounts which shall be
(A) no less than those amounts which are customary in the area
for apartment complexes similar to the Apartment Complex, (B) no
less than such amounts as may be reasonably requested by the
Investment Limited Partner from time to time, and (C) in any
event, sufficient to prevent the Partnership from becoming a co-
insurer under any such policies. No deductibles on such policies
may exceed $1,000. The public liability insurance in favor of
the Partnership shall be in an amount not less than $6,000,000
(of which up to $5,000,000 may be provided under an umbrella
policy). Through the Completion Date, or such later date as may
be required by the Construction Lender, 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 the Construction Lender.
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.
(d) The obligations of the General Partners hereunder shall
be the joint and several obligations of each General Partner.
Except as otherwise provided in Sections 4.5(b) and 7.1, such
obligations shall survive any Withdrawal of a General Partner
from the Partnership.
(e) 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, beginning at the time of Permanent
Mortgage Commencement, the General Partners shall cause the
Partnership to annually deposit $9,600 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. Further, the General Partners shall establish an operating
reserve account on or prior to the Completion Date in the amount
of $24,000.
(f) Each General Partner shall be bound by the Project
Documents, and no additional General Partner shall be admitted if
he, she or it has not first agreed to be bound by this Agreement
(and assume the obligations of a General Partner hereunder) and
by the Project Documents to the same extent and under the same
terms as the other General Partners.
(g) The General Partners shall take all actions necessary
to ensure that the Investment Limited Partner receives the full
amount of the Projected Credit, including, without limitation,
the rental of apartments to appropriate tenants, 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 end of the first
year of the compliance period (as defined in Section 42(i) of the
Code) of its respective building so as to permit the Partnership
to be entitled to the Tax Credit throughout the compliance period
specified in the Code, (ii) the Partnership to comply with all
State Tax Credit monitoring procedures, (iii) all dwelling units
in the Apartment Complex to be leased for periods of not less
than six months to persons satisfying the Rent Restriction Test,
(iv) the Partnership to make all appropriate Tax Credit elections
in a timely fashion, and (v) all rental units in the Apartment
Complex to be of equal quality with comparable amenities
available to low-income tenants on a comparable basis without
separate fees.
(h) On or before the Admission Date, the General Partners
shall provide to the Investment Limited Partner either (i) an
appraisal of the Apartment Complex prepared by a competent
independent appraiser or (ii) completed Farmers Home
Administration Forms 1924-13 (estimate and certificate of actual
cost) and 1930-7 (statement of budget, income and expense) or HUD
project cost and budget analysis on Form 2264, or any successor
Farmers Home Administration, HUD or Agency form, any comparable
form of a state or other governmental agency, including any
applicable Tax Credit allocation agency, setting forth estimates
with respect to construction and mortgage financing costs and
initial rental income and operating expense figures for the
Apartment Complex.
(i) The General Partners shall (i) not store (except in
compliance with all laws, ordinances, and regulations pertaining
thereto) or dispose of any Hazardous Material at the Apartment
Complex, or at or on any other Site or Vessel owned, occupied, or
operated either by any General Partner, any Affiliate of a
General Partner, or any Person for whose conduct any General
Partner is or was responsible; (ii) neither directly nor
indirectly transport or arrange for the transport of any
Hazardous Material (except in compliance with all laws,
ordinances, and regulations pertaining thereto); (iii) provide
the Investment Limited Partner with written notice (x) upon any
General Partner's obtaining knowledge of any potential or known
release, or threat of release, of any Hazardous Material at or
from the Apartment Complex or any other Site or Vessel owned,
occupied, or operated by any General Partner, any Affiliate of a
General Partner or any Person for whose conduct any General
Partner is or was responsible or whose liability may result in a
lien on the Apartment Complex; (y) upon any General Partner's
receipt of any notice to such effect from any Federal, state, or
other governmental authority; and (z) upon any General Partner's
obtaining knowledge of any incurrence of any expense or loss by
any such governmental authority in connection with the
assessment, containment, or removal of any Hazardous Material for
which expense or loss any General Partner may be liable or for
which expense or loss a lien may be imposed on the Apartment
Complex.
(j) The General Partners shall use their best efforts to
cause the Investment Limited Partner to be named as an interested
party in the Permanent Mortgage documents, so that the Permanent
Lenders will be required to notify the Investment Limited Partner
of any default or other problem under the Permanent Mortgage.*
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, the Missouri 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 to preserve the limited liability of
the Investment Limited Partner, the Missouri 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 in such manner as to stay the effect of
the proceedings or otherwise have been adequately provided
for. This subparagraph shall be deemed to include, without
limitation, the following: (x) legal actions or proceedings
before any court, commission, administrative body or other
governmental authority having jurisdiction over the zoning
applicable to the Apartment Complex; (y) labor disputes; and
(z) acts of any governmental authority.
(3) No default (or event which, with the giving of
notice or the passage of time or both, would constitute a
default) has occurred and is continuing under this Agreement
or under any material provision of the Project Documents,
and the same are in full force and effect.
(4) No Partner or Related Person bears the Economic
Risk of Loss with respect to the Permanent Mortgage. No
General Partner has, either on its own behalf or on behalf
of the Partnership, incurred any financial responsibility
with respect to the Partnership prior to the Admission Date,
other than as disclosed in writing to the Investment Limited
Partner prior to the Admission Date.
(5) The Apartment Complex is being or has been
completed 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. All permits necessary to begin construction have been
obtained and all appeal periods have expired.
(6) The Partnership owns good and marketable fee
simple title to the Apartment Complex, subject to no
material liens, charges or encumbrances other than those
which (a) are both permitted by the Project Documents and
are noted or excepted in the Title Policy and (b) do not
materially interfere with use of the Apartment Complex (or
any part thereof) for its intended purpose or have a
material adverse effect on the value of the Apartment
Complex.
(7) The execution and delivery of all instruments and
the performance of all acts heretofore or hereafter made or
taken pertaining to the Partnership or the Apartment Complex
by each Affiliate of a General Partner which is a
corporation have been or will be duly authorized by all
necessary corporate or other action, and the consummation of
any such transactions with or on behalf of the Partnership
will not constitute a breach or violation of, or a default
under, the charter or by-laws of such Affiliate or any
agreement by which such Affiliate or any of its properties
is bound, nor constitute a violation of any law,
administrative regulation or court decree.
(8) Any General Partner which is a corporation (a
Corporation) has been duly organized, is validly existing
and in good standing under the laws of its state of
incorporation and has all requisite corporate power to be a
General Partner and to perform its duties and obligations as
contemplated by this Agreement and the Project Documents.
Neither the execution and delivery by any Corporation of
this Agreement nor the performance of any of the actions of
any Corporation contemplated hereby has constituted or will
constitute a violation of (a) the articles of organization
or by-laws of such Corporation, (b) any agreement by which
such Corporation is bound or to which any of its property or
assets is subject, or (c) any law, administrative regulation
or court decree.
(9) No Event of Bankruptcy has occurred with respect
to any General Partner.
(10) All accounts of the Partnership required to be
maintained under the terms of any agreement with any Agency
or Lender, including, but not necessarily limited to, any
account for replacement reserves, are currently funded to
the levels required by such Agency or Lender.
(11) All payments and expenses required to be made or
incurred in order to complete construction of the Apartment
Complex in conformity with the Project Documents, to fund
any reserves hereunder or under any other Project Document
required to be funded at or prior to the later of the
Admission Date or Permanent Mortgage Commencement to satisfy
all requirements under the Project Documents and/or which
form the basis for determining the principal sum of the
Permanent Mortgage and to pay the Construction and
Development Fee have been or will be paid or provided for
utilizing only (a) the funds available from the Construction
Mortgage and the Grant, (b) the Capital Contribution of the
Investment Limited Partner and the Missouri 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
each applicable Agency and Lender), (e) any insurance
proceeds and (f) the funds furnished by the General Partners
pursuant to Sections 6.5(a) and 6.11(a).
(12) The total amount of Tax Credit which is expected
to be allocated by the Partnership to the Investment Limited
Partner is $71,000 for 1999, $287,999 per annum for each of
the years 2000 through 2008 (inclusive) and $216,999 for
2009.
(13) The Apartment Complex is being developed in a
manner which satisfies and shall continue to satisfy, all
restrictions, including tenant income and rent restrictions,
applicable to projects generating Tax Credits.
(14) To the best of the General Partners' knowledge, 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,
transportation or disposition was or is at all times in
compliance with all laws, ordinances, and regulations
pertaining thereto; (ii) directly or indirectly transported,
or arranged for transport, of any Hazardous Material (except
if such transport was or is at all times in compliance with
all laws, ordinances and regulations pertaining thereto);
(iii) caused or was legally responsible for any release or
threat of release of any Hazardous Material; (iv) received
notification from any Federal, state or other governmental
authority of (x) any potential, known, or threat of release
of any Hazardous Material from the Apartment Complex or any
other Site or Vessel owned, occupied, or operated either by
any General Partner, Affiliate of a General Partner, or
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.
(15) 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.
(16) The General Partners have fulfilled and will
continue to fulfill all of their duties and obligations
under Section 6.5.
6.7 Liability on the Permanent Mortgage TC 6.7 Liability
on the Permanent Mortgage \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 Mortgage, and the General Partners shall not
permit any other Partner or any Related Person to bear the
Economic Risk of Loss for the payment of any portion of any
Mortgage, except as may be expressly permitted with respect to
the Construction Mortgage 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, the Massachusetts Securities
Division, the Tennessee Securities Division, and any other
applicable state securities administrator with respect to the
issue of indemnification for securities law violations.
(d) The Partnership shall not incur the cost of the portion
of any insurance, other than public liability insurance, which
insures any party against any liability as to which such party is
herein prohibited from being indemnified.
(e) The Partnership may indemnify Affiliates of 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 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 the 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 the Limited Partners 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 with-
drawal of any General Partner and/or the termination of this
Agreement.
6.10 Operating Deficits TC 6.10 Operating Deficits \f C
\l 2
Subject to the prior written consent of each Lender (if such
consent shall be required under applicable Lender regulations),
the General Partners shall be obligated for a period of five
years beginning on Permanent Mortgage Commencement to promptly
advance funds to meet operating expenses (including, without
limitation, for the Asset Management Fee) and debt service of the
Partnership which exceed operating income available for the
payment thereof.
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, (including, without limitation,
payment of the Asset Management Fee) and debt service, 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 the Affiliates thereof
pursuant to Section 6.12 and/or Article X, and (b) the Special
Limited Partner, in its sole discretion, may cause itself or its
designee to be admitted as an additional General Partner without
any further action by any other Partner. Upon any such admission
of an additional General Partner, each pre-existing General
Partner shall be deemed to have assigned proportionally to the
additional General Partner, automatically and without further
action, such portion of its General Partner interest so that the
additional General Partner shall receive not less than a one
hundredth of one per cent (0.01%) interest in the profits,
losses, tax credits, Cash Flow and Capital Transaction
distributions of the Partnership in consideration of $10 and any
other consideration which may be agreed upon. The pre-existing
General Partners shall retain the remaining portion of the
General Partners Economic Interest. An additional General
Partner so admitted shall automatically become the Managing
General Partner and be irrevocably delegated all of the power and
authority of all of the General Partners pursuant to Section
6.13. Any such additional General Partner shall have the right
to withdraw as a General Partner at any time, leaving the pre-
existing General Partners once again as the only General
Partners, the provisions of Article VII notwithstanding. Each
Partner hereby grants to the Special Limited Partner a special
power of attorney, irrevocable to the extent permitted by law and
coupled with an interest, to amend the Certificate and this
Agreement and to do anything else which, in the view of the
Special Limited Partner, may be necessary or appropriate to
accomplish the purposes of this Section 6.10 or to enable any
additional General Partner admitted pursuant to this Section 6.10
to manage the business of the Partnership. The admission of the
Special Limited Partner or its designee as an additional General
Partner shall not relieve any other General Partner of any of its
economic obligations hereunder, and each other General Partner
shall fully indemnify and hold harmless the additional General
Partner 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, which claims result from the actions or omissions of the
General Partners prior to the admission of the additional General
Partner.
For the purpose of this Section 6.10, all expenses shall be
paid on a sixty (60) day current basis. Moreover, the General
Partners may in their sole discretion at any time advance funds
to the Partnership to pay operating expenses of the Partnership
in order to facilitate the Partnership's compliance with the Rent
Restriction Test. All advances pursuant to this Section 6.10
(including any Applied Fees) shall be Subordinated Loans
repayable with interest at 6% per annum in accordance with the
provisions of Article X. The form and provisions of all
Subordinated Loans shall conform to applicable Agency rules and
regulations.
6.11 Obligation to Complete the Construction of the
Apartment Complex TC 6.11 Obligation to Complete the
Construction of the Apartment Complex \f C \l 2
(a) The General Partners shall complete the construction of
the Apartment Complex substantially in accordance with the plans
and specifications approved by each Agency and Lender whose
approval is required and all requirements necessary to obtain the
required certificates of occupancy for dwelling units, or cause
the same to be completed, in a good and workmanlike manner, free
and clear of all mechanics', materialmen's or similar liens, and
shall equip the Apartment Complex or cause the same to be
equipped with all necessary and appropriate fixtures, equipment
and articles of personal property, including refrigerators and
ranges, and shall cause all necessary certificates of occupancy
for all apartment units in the Apartment Complex to be obtained,
all in accordance with the Project Documents. If the proceeds of
the Permanent Mortgage and the Grant, the net rental income, if
any, of the Apartment Complex generated prior to Permanent
Mortgage Commencement and which is permitted by each applicable
Agency and Lender to be utilized for any of the purposes
hereinafter set forth, the Capital Contribution of the Investment
Limited Partner and the Missouri 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 Permanent Mortgage
Commencement as available from time to time are insufficient to
(i) acquire and complete the construction of the Apartment
Complex and satisfy all other obligations all as provided in the
first sentence of this Section 6.11(a), (ii) 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 the later of Permanent Mortgage
Commencement or the Admission Date, including the funding of any
reserves required hereunder or under any Project Document, the
General Partners shall make an additional Capital Contribution in
the amount of such deficiencies which shall be repaid as provided
in Section 10.2. In the event that the General Partners shall
fail to fund any such deficiency as required by this
Section 6.11(a), an amount not in excess of the next installment
of the Construction and Development Fee due to the General
Partners or any of their Affiliates under Section 6.12 or any
other provision hereof shall be applied by the Partnership to
meet such obligation of the General Partners. Any such
application of funds as described in the immediately preceding
sentence shall constitute a payment of the amount of the Fee or
such other item which such funds had been earmarked to pay, and
the obligation of the General Partners to advance such amount
under this Section 6.11(a) shall be satisfied to the extent of
such application.
(b) The completion of the Apartment Complex shall be
secured by a completion bond in an amount at least equal to the
full amount of the construction contract for the Apartment
Complex or by other security satisfactory to the Investment
Limited Partner, which other security may include, but shall not
be limited to, the following:
(i) a written guaranty of completion by a Person,
supported by financial statements demonstrating
sufficient net worth or adequately collateralized by
other real or personal properties or other Persons'
guarantees; and/or
(ii) a retention of a reasonable portion of the
Capital Contribution of the Investment Limited Partner
and/or fees to the General Partners as a potential
offset in the event the General Partners do not perform
in accordance with this Agreement.
By execution of this Agreement, each Limited Partner agrees
that it is satisfied by the completion guaranty set forth in this
Agreement and that the obligations under this Section 6.11(b) are
satisfied.
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 Boston Capital or an
Affiliate thereof a fee (the Asset Management Fee) commencing in
2000 for its services in connection with the Partnership's
accounting matters relating to the Investment Limited Partner and
assisting with the preparation of tax returns and the reports
required by Section 12.7 in the annual amount of $2,000. The
Asset Management Fee shall be payable from Cash Flow in the
manner and priority set forth in Section 10.2(a).
(b) In consideration of their consultation, advice and
other services in connection with the construction and
development of the Apartment Complex, the Partnership shall pay
to the General Partners a construction and development fee (the
Construction and Development Fee) in the amount of $474,121
pursuant to the terms of a Development Agreement dated April 30,
1998 as modified or amended from time to time. The Construction
and Development Fee shall be payable $333,002 from the proceeds
of the Third Installment and the Missouri Capital Contribution
and $141,119 from the proceeds of the Fourth Installment.
(c) The Partnership shall pay to the General Partners a
non-cumulative fee (the Annual Partnership Management Fee)
commencing in 2000 for their services in connection with the
administration of the day to day business of the Partnership in
an annual amount equal to the $2,000 per annum. The Annual
Partnership Management Fee for each fiscal year of the
Partnership shall be payable from Cash Flow in the manner and
priority set forth in Section 10.2(a) to the extent Cash Flow is
available therefor for such year.
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.
Such writing may fully authorize such General Partner (the
Managing General Partner) to act alone without the requirement of
any act or signature of the delegating General Partner and to
take any action of any type and to do anything and everything
which a General Partner may be authorized to take or do
hereunder, and the delegating General Partner thereafter shall
have no right, power or authority to act for the Partnership with
respect to the powers or authority so delegated.
Every contract, deed, mortgage, lease and other instrument
executed by any General Partner shall be conclusive evidence in
favor of every Person relying thereon or claiming thereunder that
at the time of the delivery thereof (a) the Partnership was in
existence, (b) this Agreement had not been amended in any manner
so as to restrict the delegation of authority among General
Partners (except as shown in certificates or other instruments
duly filed in the Filing Office) and (c) the execution and
delivery of such instrument was duly authorized by the General
Partners. Any Person may always rely on a certificate addressed
to him and signed by any General Partner hereunder:
(1) As to who are the General Partners or Limited
Partners hereunder;
(2) As to the existence or nonexistence of any fact
which constitutes a condition precedent to acts by the
General Partners or in any other manner germane to the
affairs of the Partnership;
(3) As to who is authorized to execute and deliver any
instrument or document of the Partnership;
(4) As to the authenticity of any copy of this
Agreement and amendments thereto; or
(5) As to any act or failure to act by the Partnership
or as to any other matter whatsoever involving the
Partnership or any Partner.
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
No General Partner shall Withdraw from the Partnership
(other than by reason of death or adjudication of incompetence or
insanity) or sell, assign or encumber its Interest without the
Consent of the Investment Limited Partner and all the other
General Partners, except that if the Special Limited Partner or a
designee thereof becomes a General Partner pursuant to
Section 4.5(b), Section 5.2(e), Section 6.2(b) or Section 6.10,
it shall not require the consent of any other General Partner to
transfer all or any portion of its interest as a General Partner,
other than as may be required under the Uniform Act. In the
event of any Withdrawal by a General Partner in violation of this
Section 7.1, such General Partner, in addition to being subject
to any and all other legal remedies which may be pursued by the
Partners, shall forfeit to the remaining General Partners or, if
there are none, 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 his obligations under
this Agreement. In addition, upon such Withdrawal and transfer,
the Special Limited Partner or its designee shall automatically
become a General Partner without further action by the
Withdrawing General Partner or any other Partner, and each
Partner hereby consents to such transfer and to the admission of
the Special Limited Partner or its designee as a General Partner
in such a situation. Such transfer shall occur automatically
upon such Withdrawal without further action by such Withdrawing
General Partner.
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 Uniform Act. Within 30 days after
they obtain knowledge of the Withdrawal of a General Partner, the
remaining General Partners shall notify the Investment Limited
Partner 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 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 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 4.5(b), the Withdrawing General Partner hereby covenants
and agrees to transfer to the remaining General Partners or to a
successor General Partner selected in accordance with
Section 7.3, as the case may be, such portion of the Withdrawing
General Partner's Interest as such remaining or successor General
Partners may designate, such transfer to be made in consideration
of the payment by the transferee of either the agreed value of
such Interest or, if such value is not agreed to, the fair
market value of such Interest as determined by a committee of
three qualified real estate appraisers, one selected by the
Withdrawing General Partner, one selected by the transferee and a
third selected by the other two. The portion of the Withdrawing
General Partner's Interest designated to be transferred in
accordance with the provisions of this Section 7.4 shall be
sufficient to ensure the continued treatment of the Partnership
as a partnership under the Code and as a limited partnership
under the Uniform Act, and, for the purposes of Article X, shall
be deemed to be effective as of the date of Withdrawal, but the
Partnership shall not make any distributions to the designated
transferee until the transfer has 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 each Agency
and Lender (if required) and the Consent of the Investment
Limited 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) or Section 8.1(b), no Limited Partner
may assign all or any part of its Interest without the written
consent of the General Partners, the giving or withholding of
which is exclusively within their discretion.
(b) A Limited Partner, without the consent of the General
Partners, may assign to any Person all or any portion of the
economic benefits of the ownership of its Interest; provided,
however, that such assignment shall not be binding on the
Partnership until there shall have been filed with the
Partnership by registered mail certified copies of an executed
and acknowledged assignment and the written acceptance by the
assignee of all the terms and provisions of this Agreement; if
such assignment and acceptance are not so filed, the Partnership
need not recognize such assignment for any purpose. An assignee
of a Limited Partner who does not become a Substituted Limited
Partner shall have, and shall only have, the right to receive the
share of allocations and distributions of the Partnership to
which the assigning Limited Partner would have been entitled with
respect to the Interest (or portion thereof) so assigned if no
such assignment had been made by such Limited Partner. Any
assigning Limited Partner whose permitted assignee becomes a
Substituted Limited Partner shall thereupon cease to be a Limited
Partner and shall no longer have any of the rights or privileges
of a Limited Partner. Where the assignee does not become a
Substituted Limited Partner, the Partnership shall recognize such
assignment not later than the last day of the calendar month
following receipt of notice of assignment and all documentation
required in connection therewith.
(c) Every assignee of a Limited Partner Interest (or any
portion thereof) who desires to make a further assignment of its
Interest shall be subject to all the provisions of this
Article VIII.
8.2 Substituted Limited Partner 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
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 each
Agency and Lender (if required under applicable Agency and/or
Lender regulations or requirements). If any Partner shall lend
any monies to the Partnership, the amount of any such loan shall
not be an increase of such Partner's Capital Contribution. If
any Partner shall so lend monies, such loans shall be an
obligation of the Partnership and (except for advances required
by Section 6.11(a) and Subordinated Loans) shall be repayable to
such Partner on the same basis and with the same rate of interest
as would be applicable to a comparable loan to the Partnership
from a third party.
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 Profits, Losses and Tax Credits TC 10.1 Profits,
Losses and Tax Credits \f C \l 2
(a) Subject to Sections 10.1(c) and 10.4, for each
Partnership fiscal year or portion thereof, (i) all profits, tax-
exempt income, losses, non-deductible noncapitalizable
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 and (ii) all Missouri
Tax Credits allocated on or after the Commencement Date shall be
allocated 100% to the Missouri Limited Partner. Notwithstanding
the foregoing, however, to the extent that the Auditors, the Tax
Accountants and/or the Service reach the conclusion that the
allocation of 100% of the Missouri Tax Credits to the Missouri
Limited Partner could lead to the allocation or distribution of
any Partnership item in a ratio different from that otherwise
provided herein, the allocation of the Missouri Tax Credits shall
be altered so as to eliminate any such effect upon the allocation
or distribution of any other Partnership item.
(b) Except as otherwise specifically provided in this
Article, all profits and losses arising from a Capital
Transaction shall be allocated to the Partners as follows:
As to profits:
First, that portion of profits (including any
profits treated as ordinary income for Federal income
tax purposes) shall be allocated to the Partners who
have negative Capital Account balances in proportion to
the amounts of such balances, provided that no profits
shall be allocated to a Partner under this Clause First
to increase any such Partner's Capital Account above
zero;
Second, profits in excess of the amounts allocated
under Clause First above shall be allocated to the
Investment Limited Partner in an amount equal to the
amount of cash required to pay to the Investment
Limited Partner the full amount (including interest) of
the Credit Recovery Loans;
Third, profits in excess of the amounts allocated
under Clauses First and Second above shall be allocated
(i) to the Investment Limited Partner in an amount
equal to the sum of (a) its Invested Amount plus (b)
the full amount (including interest) of any Credit
Recovery Loans and (ii) to each other Limited Partner
in an amount equal to the amount of its respective
Invested Amount, reduced (but not below zero) in the
case of each Limited Partner (whether under clause (i)
or clause (ii)) by the sum of (A) the total amount of
all prior cash distributions made to such Limited
Partner pursuant to Section 10.2(b), Clause Seventh
plus (B) the positive balance in the Capital Account of
such Limited Partner prior to the allocation made
pursuant to this Clause Third;
Fourth, profits in excess of the amounts allocated
under Clauses First, Second and Third above shall be
allocated to the General Partners in the amount of
their Capital Contributions reduced (but not below
zero) by the sum of (i) the total amount of
distributions previously made to them pursuant to
Section 10.2(a), Clause Second and Section 10.2(b),
Clause Eighth plus (ii) the positive balance in the
General Partners' respective Capital Accounts prior to
the allocations made pursuant to this Clause Fourth;
and
Fifth, profits in excess of the amounts allocated
under Clauses First, Second, Third and Fourth above
shall be allocated to each class of Partners with the
percentage shares set forth in Section 10.2(b) Tenth.
As to losses:
First, an amount of losses shall be allocated to
the Partners to the extent and in such proportions as
shall be necessary such that, after giving effect
thereto, the respective balances in all Partners'
Capital Accounts shall be in the ratio of 99.99% for
the Investment Limited Partner and 0.01% for the
General Partners;
Second, an amount of losses shall be allocated to
the Partners until the balance in each Partner's
Capital Account equals the amount of such Partner's
Capital Contribution (after the allocation under Clause
First above);
Third, an amount of losses shall be allocated to
the Partners to the extent of and in proportion to such
Partners' Capital Account balances (after the
allocations under Clauses First and Second above); and
Fourth, any remaining amount of losses after the
allocations under Clauses First, Second and Third above
shall be allocated to the Partners in accordance with
the manner in which they bear the economic risk of loss
associated with such loss; provided, however, that in
the event that no Partner bears an economic risk of
loss, then any remaining losses shall be allocated
99.99% to the Investment Limited Partner and 0.01% to
the General Partners.
(c) Notwithstanding the foregoing provisions of
Sections 10.1(a) and 10.1(b), in no event shall any losses be
allocated to the Investment Limited Partner if and to the extent
that such allocation would cause, as of the end of the
Partnership taxable year, the negative balance in such Investment
Limited Partner's Capital Account to exceed the Investment
Limited Partner's share of Partnership Minimum Gain plus the
Investment Limited Partner's share, if any, of Partner Non-
Recourse Debt Minimum Gain. Any losses which are not allocated
to the Investment Limited Partner by virtue of the application of
this Section 10.1(c) shall be allocated to the General Partners.
For purposes of this Section 10.1(c), a Partner's Capital Account
shall be treated as reduced by Qualified Income Offset Items.
10.2 Cash Distributions Prior to Dissolution TC 10.2 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 as follows:
First, on a pari passu basis, to the payment of the Asset
Management Fee and Annual Partnership Management Fee for such
year and for any previous year(s) as to which the Asset
Management Fee and Annual Partnership Management Fee shall not
yet have been paid in full;
Second, to the repayment of any Subordinated Loans; and
Third, the balance thereof, if any, shall be distributed
annually, within 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 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, in the event of a refinancing of the Permanent
Mortgages, to the payment of the Refinancing Fee, minus the
amount of any prior distributions made to the General Partners
under Section 10.2 (a), Clause Second;
Third, to the payment of the Asset Management Fee for such
year and for any previous year as to which the Asset Management
Fee has not been paid in full;
Fourth, to the payment to the Investment Limited Partner of
the full amount (including interest) of any Credit Recovery
Loans;
Fifth, to the repayment of any Subordinated Loans;
Sixth, to the repayment of any then-unpaid debts and
liabilities owed to Partners or Affiliates thereof by the
Partnership for Partnership obligations (exclusive of Credit
Recovery Loans and Subordinated Loans) to any of them, including,
but not limited to, the Annual Partnership Management Fee for the
year of the Capital Transaction; provided, however, that any
debts or obligations to be repaid to any Limited Partner or
Affiliate thereof pursuant to this Clause Sixth shall be repaid
prior to the repayment of any such debts or obligations to any
General Partner or Affiliate thereof;
Seventh, to the payment to each Limited Partner of an amount
equal to the Invested Amount of such Limited Partner, minus the
amount of any prior distributions made to such Limited Partner
under this Clause Seventh, but never an amount less than zero;
Eighth, to the payment to the General Partners of an amount
equal to their paid-in Capital Contributions minus the amount of
any prior distributions made to them under this Clause Eighth,
but never an amount less than zero;
Ninth, except in the case of a refinancing of any Permanent
Mortgage, to each Partner in an amount equal to the positive
balance, if any, in such Partner's Capital Account as of the date
of the Capital Transaction which shall have given rise to the
distribution, adjusted for operations and distributions to that
date, after the allocation of any profits realized from the
Capital Transaction which shall have given rise to the
distribution; and
Tenth, any balance thereof shall be distributed 19.998% to
the Investment Limited Partner, .001% to the Missouri Limited
Partner, .001% to the Special Limited Partner and 80% to the
General Partners.
(c) Unless otherwise provided for in this Agreement
distributions to the General Partners as a class under
Sections 10.2(a) and 10.2(b) shall be shared in proportion to
their respective Capital Contributions to the Partnership.
10.3 Distributions Upon Dissolution TC 10.3 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 10.1(b) and 10.3(b). In the event that a General
Partner or an Additional Limited Partner has a negative balance
in its Capital Account following the liquidation of the
Partnership or such Partner's Interest, after taking into account
all Capital Account adjustments for the Partnership taxable year
in which such liquidation occurs, such Partner shall pay to the
Partnership in cash an amount equal to the negative balance in
such Partner's Capital Account. Such payment shall be made by
the end of such taxable year (or, if later, within 90 days after
the date of such liquidation) and shall, upon liquidation of the
Partnership, be paid to recourse creditors of the Partnership or
distributed to other Partners in accordance with the positive
balances in their Capital Accounts.
(b) With respect to assets distributed in kind to the
Partners in liquidation or otherwise, (i) any unrealized
appreciation or unrealized depreciation in the values of such
assets shall be deemed to be profits and losses realized by the
Partnership immediately prior to the liquidation or other
distribution event; and (ii) such profits and losses shall be
allocated to the Partners in accordance with Section 10.1(b), and
any property so distributed shall be treated as a distribution of
an amount in cash equal to the excess of such fair market value
over the outstanding principal balance of and accrued interest on
any debt by which the property is encumbered. For the purposes
of this Section 10.3(b), unrealized appreciation or unrealized
depreciation shall mean the difference between the fair market
value of such assets, taking into account the fair market value
of the associated financing (but subject to Section 7701(g) of
the Code), and the Partnership's adjusted basis for such assets
as determined under Regulation Section 1.704-1(b). This
Section 10.3(b) is merely intended to provide a rule for
allocating unrealized gains and losses upon liquidation or other
distribution event, and nothing contained in this Section 10.3(b)
or elsewhere herein is intended to treat or cause such
distributions to be treated as sales for value. The fair market
value of such assets shall be determined by an appraiser to be
selected by the General Partners with the Consent of the
Investment Limited Partner.
10.4 Special Provisions TC 10.4 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 shall be allocated
to the General Partners; and second, the balance of such
deductions shall be allocated as provided in
Section 10.1(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
10.4(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 10.1(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 10.4(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 10.2(b) or Section 10.3, the distributions of the
cash portion of such purchase price and the principal amount
of such purchase money indebtedness hereunder shall be
allocated among the Partners in the following manner. On
the basis of the sum of the principal amount of the purchase
money indebtedness and cash payments received on the sale
(net of amounts required to pay Partnership obligations and
fund reasonable reserves), there shall be calculated the
percentage of the total net proceeds distributable to each
class of Partners based on Section 10.2(b) or Section 10.3,
as applicable, treating cash payments and purchase money
indebtedness principal interchangeably for this purpose, and
the respective classes shall receive such respective
percentages of the net cash purchase price and purchase
money principal. Payments on such purchase money
indebtedness retained by the Partnership shall be
distributed in accordance with the respective portions of
principal allocated to the respective classes of Partners in
accordance with the preceding sentence, and if any such
purchase money indebtedness shall be sold, the sale proceeds
shall be allocated in the same proportion.
(iv) Income, gain, loss and deduction with respect to
any asset which has a variation between its basis computed
in accordance with Treasury Regulation Section 1.704-1(b)
and its basis computed for Federal income tax purposes shall
be shared among the Partners so as to take account of such
variation in a manner consistent with the principles of
Section 704(c) of the Code and Treasury Regulation Section
1.704-1(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 tax purposes shall be
allocated in the same manner as set forth in this Article X,
except as provided in Section 10.4(b)(iv).
(vi) If there is a net decrease in Partnership Minimum
Gain during a Partnership taxable year, each Partner will be
allocated items of income and gain for such year (and, if
necessary, subsequent years) in 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 10.4(b)(vi) shall be in accordance with
Treasury Regulation Section 1.704-2(f). This provision is a
minimum gain chargeback within the meaning of Treasury
Regulation Section 1.704-2(f) and shall be construed so as
to be interpreted 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. Notwithstanding the foregoing, however,
unless the Consent of the Investment Limited Partner is
received permitting a different cost recovery schedule, the
Partnership shall depreciate its personal and real property
utilizing the alternative depreciation system of
Section 168(g)(2) of the Code. 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, if any, to restore a
negative balance in such Partner's Capital Account plus
(iii) such Partner's share of Partner Non-Recourse Debt
Minimum Gain with respect to which such Partner or a Related
Person to such Partner bears the Economic Risk of Loss, then
such Partner shall be allocated items of income and gain in
an amount and manner sufficient to eliminate such negative
balance as quickly as possible. For purposes of this
Section 10.4(b)(viii), a Partner's Capital Account shall be
treated as reduced by Qualified Income Offset Items.
(ix) In the event that any fee payable to any General
Partner or any Affiliate thereof shall instead be determined
to be a non-deductible, non-capitalizable distribution from
the Partnership to a Partner for Federal income tax
purposes, then there shall be allocated to such General
Partner an amount of gross income equal to the amount of
such distribution.
(x) In applying the provisions of Article X with
respect to distributions and allocations, the following
ordering of priorities shall apply:
(1) Capital Accounts shall be deemed to be reduced
by Qualified Income Offset Items.
(2) Capital Accounts shall be reduced by
distributions of Cash Flow under Section 10.2(a).
(3) Capital Accounts shall be reduced by
distributions from Capital Transactions under
Section 10.2(b).
(4) Capital Accounts shall be increased by any
minimum gain chargeback under Section 10.4(b)(vi) or
10.4(b)(vii).
(5) Capital Accounts shall be increased by any
qualified income offset under Section 10.4(b)(viii).
(6) Capital Accounts shall be increased by
allocations of profits under Section 10.1(a).
(7) Capital Accounts shall be reduced by
allocations of losses under Section 10.1(a).
(8) Capital Accounts shall be reduced by
allocations of losses under Section 10.1(b).
(9) Capital Accounts shall be increased by
allocations of profits under Section 10.1(b).
(xi) To the maximum extent permitted under the Code,
allocations of profits and losses shall be modified so that
the Partners' Capital Accounts reflect the amounts they
would have reflected if adjustments required by
Sections 10.4(b)(vi), 10.4(b)(vii) and 10.4(b)(viii) had not
occurred.
10.5 Authority of the General Partners to Vary Allocations
to Preserve and Protect the Partners' Intent TC 10.5 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 and the Treasury
Regulations promulgated thereunder. Any allocation made pursuant
to this Section 10.5 shall be deemed to be a complete substitute
for any allocation otherwise provided for in this Agreement, and
no amendment of this Agreement or approval of any Partner shall
be required.
(b) In making any allocation (the New Allocation) under
Section 10.5(a), the General Partners are authorized to act only
after having been advised in writing by the Tax Accountants that,
under Section 704(b) of the Code and the Treasury Regulations
thereunder, (i) the New Allocation is necessary, and (ii) the New
Allocation is the minimum modification of the allocations
otherwise provided for in this 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 and the Treasury Regulations
thereunder.
(c) If the General Partners are required by Section 10.5(a)
to make any New Allocation in a manner less favorable to the
Limited Partners than is otherwise provided for herein, then the
General Partners are authorized and directed, only after having
been advised in writing by the Tax Accountants that such an
allocation is permitted by Section 704(b) of the Code, to
allocate profits, tax-exempt income, losses, non-deductible non-
capitalizable expenditures, and credits (and any item thereof)
arising in later years in such manner so as to bring the
allocations of profits, tax-exempt income, losses, non-deductible
non-capitalizable expenditures, and credits (and each item
thereof) to the Limited Partners as nearly as possible to the
allocations thereof otherwise contemplated by this Agreement.
(d) New Allocations made by the General Partners under
Section 10.5(a) and Section 10.5(c) in reliance upon the advice
of the Tax Accountants shall be deemed to be made pursuant to the
fiduciary obligation of the General Partners to the Partnership
and the Limited Partners, and no such allocation shall give rise
to any claim or cause of action by any Limited Partner.
ARTICLE XI
Management Agent 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 and/or Lender whose
consent thereto is required or, when the Apartment Complex is not
subject to any such Agency or Lender consent, in accordance with
a reasonable and competitive fee arrangement. From and after the
Admission Date, the Partnership shall not enter into any
Management Agreement or modify or extend any Management Agreement
unless (i) the General Partners shall have obtained the prior
written consent of the Special Limited Partner to the identity of
the Management Agent and the terms of the Management Agreement or
the modification or extension thereof and (ii) such new
Management Agreement or modified or extended Management Agreement
provides that it is terminable by the Partnership on thirty (30)
days' notice by the Partnership in the event of any change in the
identity of the General Partners.
B. Notwithstanding the foregoing, however, should the
Investment General Partner or an Affiliate thereof perform
property management services for the Partnership, property
management, rent-up or leasing fees shall be paid to the
Investment General Partner or such Affiliate only for services
actually rendered and shall be in an amount equal to the lesser
of (i) fees competitive in price and terms with those of non-
affiliated Persons rendering comparable services in the locality
where the Apartment Complex is located and which could reasonably
be available to the Partnership, or (ii) $30 per occupied unit
per month, provided, however, that the fee payable pursuant to
clause (ii) may be increased with the Consent of the Investment
Limited Partner. 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 Apartment
Complex is operating at a deficit and the General Partners have
not met their obligations under Section 6.10 herein, 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, then, upon request by
the Special Limited Partner and subject to any Agency and/or
Lender approval, if required, the General Partners must promptly
terminate the Management Agreement with the Management Agent and
appoint a new Management Agent selected by the Special Limited
Partner, which new Management Agent shall not be not an Affiliate
of 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 any Agency and/or Lender approval,
if required, the Partnership shall not enter into any future
management arrangement unless such arrangement is terminable 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. 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 any Agency or Lender) 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, Lender 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 1st 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,
which cannot be resolved, then the Tax Accountants shall make the
final decision on whether any changes are necessary. The
Partnership shall reimburse BCCLP for all costs and expenses paid
to the Tax Accountants for the aforementioned services.
(b) The Auditors shall 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 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 and/or holders of beneficial assignee certificates
thereof.
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 an Investment Limited Partner or a transfer of all or
any part of an interest of a partner and/or a holder of a
beneficial assignee certificate of an Investment Limited Partner,
the Partnership shall elect upon the request of such Investment
Limited Partner, pursuant to Section 754 of the Code, to adjust
the basis of the Partnership property. Any adjustments made
pursuant to said Section 754 shall affect only the successor in
interest to the transferring Partner or partner or holder of
beneficial assignee certificate thereof. Each Partner will
furnish the Partnership all information necessary to give effect
to such election.
12.6 Fiscal Year 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 sixty (60) days after the end of each
fiscal year of the Partnership, all information which is
necessary, in the view of the Tax Accountants, for the
preparation of the Limited Partners' Federal income tax
returns.
(iii) Within thirty (30) days after the end of
each quarter of a fiscal year of the Partnership, a report
containing:
(A) a balance sheet, which may be unaudited; and
(B) a statement of income for the quarter then
ended, which may be unaudited; and
(C) a Cash Flow statement for the quarter then
ended, which may be unaudited; and
(D) a certification of the General Partners that
the Apartment Complex and its tenants are in compliance
with all applicable federal, state and local
requirements and regulations;
(E) a low-income housing tax credit monitoring
form, a copy of the rent roll for the Apartment
Complex, a statement of income and expenses, an
operating statement and an Occupancy/Rental Report, all
in the form prepared by the General Partners; and
(F) all other information which would be
pertinent to a reasonable investor regarding the
Partnership and its activities during the quarter
covered by the report.
(b) Within sixty (60) days after the end of each fiscal
year of the Partnership a copy of the annual report to be filed
with the United States Treasury concerning the status of the
Apartment Complex as low-income housing and, if required, a
certificate to the appropriate state agency concerning the same.
(c) Upon the written request of an Investment Limited
Partner for further information with respect to any matter
covered in item (a) or item (b) above, the General Partners shall
furnish such information within 30 days of receipt of such
request.
(d) Prior to October 15 of each year, the Partnership shall
send to each 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.
(e) Within 15 days after the end of any calendar quarter
during which:
(i) there is a material default by the Partnership
under the Project Documents or in payment of any mortgage,
taxes, interest or other obligation on secured or unsecured
debt,
(ii) any reserve has been reduced or terminated by
application of funds therein for purposes materially
different from those for which such reserve was established,
(iii) any General Partner has received any notice
of a material fact which may substantially affect further
distributions, or
(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.
(f) After the Admission Date, the Partnership shall send to
each Investment Limited Partner, on or before the tenth day of
each quarter, the quarterly housing credit monitoring form, and
copies of all applicable periodic reports covering the status of
project operations from the previous period, as may be required
by any Agency or Lender (such form and reports to be on forms
prepared by the General Partners).
(g) On or before May 1st of each year, the Partnership
shall send to each Investment Limited Partner a report on
operations, in the form supplied by BCCLP.
(h) The General Partners shall cause the Partnership to
send to each Investment Limited Partner a copy of each
Construction Loan draw requisition and any notification or
correspondence from the Construction Lender indicating that any
such draw will not be paid as requisitioned. Upon receipt, the
Partnership shall send to the Investment Limited Partner copies
of the Form(s) 8609 evidencing the Tax Credit allocation.
(i) If the earlier of (A) the Completion Date or (B) the
date upon which tenants first occupied apartment units in the
Apartment Complex 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 such Investment Limited
Partner within 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 and (B) the date upon which such
Investment Limited Partner acquired its Interest in the
Partnership.
(j) Within thirty (30) days of the Completion Date, the
General Partners shall prepare, or cause the Auditors to prepare,
and deliver to each Limited Partner a Tax Credit basis worksheet
for each building in the Apartment Complex, all in a form
specified by BCCLP.
(k) 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 $500 per day
(plus interest at a rate equal to the general base rate of
interest established by BankBoston, N.A. or its successors and
assigns and announced by it as the rate charged by it to its
prime commercial customers on short-term unsecured borrowings as
its base rate from time to time in effect plus 3%) to the
Investment Limited Partner until such obligations shall have been
fulfilled. Such damages shall be paid forthwith by the General
Partners, and failure to so pay shall constitute a material
default of the General Partners hereunder. In addition, if the
General Partners shall so fail to pay, the General Partners and
their Affiliates shall forthwith cease to be entitled to the
Annual Partnership Management Fee and the payment of any Cash
Flow or Capital Transaction proceeds to which they may otherwise
be entitled hereunder. Such payments shall be restored only upon
the payment of such damages in full, and any amount of such
damages not so paid shall be deducted against payments of the
Annual Partnership Management Fee and Cash Flow or 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
(a) All expenses of the Partnership shall be billed
directly to and paid by the Partnership.
(b) Except in extraordinary circumstances, neither the
Investment General Partner nor any Affiliate thereof shall be
permitted to contract or otherwise deal with the Partnership for
the sale of goods or services or the lending of money to the
Partnership or the General Partners, except for (i) management
services, subject to the restrictions set forth in Article XI.B.,
(ii) loans made by, or guaranteed by, the Investment General
Partner or any of its Affiliates, and (iii) those dealings,
contracts or provision of services described in the Investment
Partnership Agreement or in the 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.
(c) In the event extraordinary circumstances arise, the
Investment General Partner and its Affiliates may provide
construction services in connection with the Apartment Complex.
Neither the Investment General Partner nor any of its Affiliates
shall provide such services unless it believes it has an adequate
staff to do so and unless such provision of goods and
construction services is part of its ordinary and ongoing
business in which it has previously engaged, independent of the
activities of the Investment Limited Partner. Any such services
must be reasonable for and necessary to the Investment Limited
Partner, actually furnished to the Investment Limited Partner,
and provided at the lower of 10% of the construction contract
rate with respect to the Apartment Complex or 90% of the
competitive price charged for such services by independent
parties for comparable goods and services in the same geographic
location (except that in the case of transfer agent, custodial
and similar banking-type fees, and insurance fees, the
compensation, price or fee shall be at the lesser of costs or the
compensation, price or fee of any other Person rendering
comparable services as aforesaid). Cost of services as used
herein means the pro rata cost of personnel, including an
allocation of overhead directly attributable to such personnel,
based on the amount of time such personnel spent on such services
or other method of allocation acceptable to the accountants for
the Investment Limited Partner.
(d) All services provided by the Investment General Partner
or any Affiliate thereof pursuant to Section 12.8(c) must be
rendered pursuant to the Investment Partnership Agreement or a
written contract which precisely describes the services to be
rendered and all compensation to be paid and shall contain a
clause allowing termination without penalty upon sixty (60) days'
notice to the Investment General Partner by a vote of a majority
in interest of the limited partners and assignees of beneficial
interests in each Investment Limited Partner.
(e) No compensation or fees may be paid by the Partnership
to the Investment General Partner or its Affiliates except as
described in the Investment Partnership Agreement or in the
Prospectus.
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 a 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, each 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 120 days after the end of any Partnership fiscal year
in which an 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 each Investment Limited Partner as stated in the
last previous amendment to the Certificate. However, Schedule A
shall not be amended on account of any such distribution.
The Partnership shall amend the Certificate at least once
each calendar quarter to effect the substitution of substituted
Limited Partners, although the General Partners may elect to do
so more frequently. In the case of assignments, where the
assignee does not become a Substituted Limited Partner, the
Partnership shall recognize the assignment not later than the
last day of the calendar month following receipt of notice of
assignment and all documentation required in connection therewith
hereunder.
Notwithstanding the foregoing provisions of this
Section 13.2, no such amendments to 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, or by an express overnight mail delivery service, 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, except that no
counterpart shall be binding unless signed by a General Partner.
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 and other
Agency or Lender documents in a manner satisfactory to the
applicable Agency or Lender; (d) no amendment to any provision of
the Project Documents shall become effective without the prior
written consent of each Agency and Lender (if required); and
(e) the affairs of the Partnership shall be subject to Agency and
Lender regulation and no action shall be taken which would
require the consent or approval of any Agency or Lender unless
the same is first obtained. No new Partner shall be admitted to
the Partnership, and no Partner shall withdraw from the
Partnership or be substituted for without the consent of each
Agency and Lender (if such consent is then required). No
amendment to this Agreement relating to matters governed by
Agency or Lender regulations or requirements shall become
effective until the prior written consent of each Agency and
Lender (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 and Lender
requirements 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 with
the Consent of the Investment Limited Partner.
13.12 Time of Admission TC 13.12 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 hereof; provided,
however, that if regulations are issued under the Code or an
amendment to the Code is adopted which would require, in the
opinion of the Auditors, that the Investment Limited Partner be
deemed admitted on a date other than as of the Commencement Date,
then the General Partners shall select a permitted admission date
which is most favorable to the Investment Limited Partner.
13.13 Construction of Agreement TC 13.13
Construction of Agreement \f C \l 2
Wherever the intent of the parties shall be relevant in
construing any ambiguity arising under this Agreement, evidence
of such intent shall be sought in the first instance from the
terms and provisions of the syndication agreement attached hereto
as Exhibit 1.
WITNESS the execution hereof under seal as of the 1st day of
May, 1998
GENERAL PARTNER:
PHILLIPS DEVELOPMENT
CORPORATION
By: /s/ Chester D. Phillips
Attest: /s/ Pat Bess
Its: Secretary
MISSOURI LIMITED PARTNER:
MISSOURI AFFORDABLE HOUSING
FUND IX, L.P.
By: Jeffrey E. Smith
Partnerships, L.L.C.
its general partner
By: /s/ Pat Bess
Pat Bess, Vice President
INVESTMENT LIMITED PARTNER:
BOSTON CAPITAL TAX
CREDIT FUND IV L.P.
By: Boston Capital Associates IV L.P.
its general partner
By: C&M Associates d/b/a Boston
Capital Associates, its general
partner
By /s/ Bonnie Kate Fox
Bonnie Kate Fox,
Attorney-In-Fact for
John P. Manning, a
Partner
SPECIAL LIMITED PARTNER:
BCTC 94, INC.
By: /s/ Bonnie Kate Fox
Bonnie Kate Fox, Attorney-In-Fact
for John P. Manning, its President
PYRAMID FOUR LIMITED PARTNERSHIP
Schedule A TC Schedule A \f C \l 1
As of
May 1, 1998
General Partners: Capital Contributions
Phillips Development Corporation $100
1501 N. University, Suite 740
Little Rock, AR 72207
Special Limited Partner:
BCTC 94, Inc. $10
c/o Boston Capital Partners, Inc.
One Boston Place, Suite 200
Boston, MA 02108
Paid-In
Investment Limited Total Agreed-to Capital
Partner Capital Contribution Contribution
Boston Capital
Tax Credit Fund IV L.P. $2,073,594 $1,016,059
c/o Boston Capital
Partners, Inc.
One Boston Place, Suite 200
Boston, Massachusetts 02108
Missouri Limited Partner
Missouri Affordable Housing. $748,790 $5.00
Fund IX, L.P.
11000 South Airport Drive
P.O. Box 7688
Building No. 1, South Wing
Columbia, MO 65205
BOSTON CAPITAL TAX CREDIT FUND IV, L.P.
CERTIFICATION AND AGREEMENT
OF
PYRAMID FOUR LIMITED PARTNERSHIP
CERTIFICATION AND AGREEMENT made as of May 1, 1998, by
PYRAMID FOUR LIMITED PARTNERSHIP, a Missouri limited partnership
(the Operating Partnership); PHILLIPS DEVELOPMENT CORPORATION, an
Arkansas corporation (referred to herein, even if only one, as
the Operating General Partners); for the benefit of BOSTON
CAPITAL TAX CREDIT FUND IV, L.P. (the Investment Partnership),
Boston Capital Associates IV, L.P., a Delaware limited
partnership (the Investment General Partner), PEABODY & BROWN and
certain other persons or entities described herein.
WHEREAS, the Operating Partnership proposes to admit the
Investment Partnership as a limited partner thereof pursuant to
an Agreement of Limited Partnership of the Operating Partnership
dated as of May 1, 1998 (the Operating Partnership Agreement), in
accordance with which the Investment Partnership will make
substantial capital contributions to the Operating Partnership;
WHEREAS, the Investment Partnership and Investment General
Partner have relied upon certain information and representations
described herein in evaluating the merits of investment by the
Investment Partnership in the Operating Partnership; and
WHEREAS, Peabody & Brown, as counsel for the Investment
Partnership, will rely upon such information and representations
in connection with its delivery of certain opinions with respect
to this transaction;
NOW, THEREFORE, to induce the Investment Partnership to
enter into the Operating Partnership Agreement and become a
limited partner of the Operating Partnership, and for $1.00 and
other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the Operating Partnership and
the Operating General Partners hereby agree as follows for the
benefit of the Investment Partnership, Investment General
Partner, Peabody & Brown and certain other persons hereinafter
described.
1. Representations, Warranties and Covenants of the
Operating Partnership and the Operating General
Partners
The Operating Partnership and the Operating General Partners
jointly and severally represent, warrant and certify to the
Investment Partnership, Investment General Partner and Peabody &
Brown that, with respect to the Operating Partnership, as of the
date hereof:
A. The Operating Partnership is duly organized and in good
standing as a limited partnership pursuant to the laws of the
state of its formation with full power and authority to own its
apartment complex (the Apartment Complex) and conduct its
business; the Operating Partnership, the Operating General
Partners have the power and authority to enter into and perform
this Certification and Agreement; the execution and delivery of
this Certification and Agreement by the Operating Partnership and
the Operating General Partners have been duly and validly
authorized by all necessary action; the execution and delivery of
this Certification and Agreement, the fulfillment of its terms
and consummation of the transactions contemplated hereunder do
not and will not conflict with or result in a violation, breach
or termination of or constitute a default under (or would not
result in such a conflict, violation, breach, termination or
default with the giving of notice or passage of time or both) any
other agreement, indenture or instrument by which the Operating
Partnership or any Operating General Partner is bound or any law,
regulation, judgment, decree or order applicable to the Operating
Partnership or any Operating General Partner or any of their
respective properties; this Certification and Agreement
constitutes the valid and binding agreement of the Operating
Partnership and the Operating General Partners, enforceable
against each of them in accordance with its terms.
B. The Operating General Partners have delivered to the
Investment Partnership, the Investment General Partner or their
affiliates all documents and information which would be material
to a prudent investor in deciding whether to invest in the
Operating Partnership. All factual information, including
without limitation the information set forth in Exhibit A hereto,
provided to the Investment Partnership, the Investment General
Partner or their affiliates either in writing or orally, did not,
at the time given, and does not, on the date hereof, contain any
untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances
under which they are made. The financial statements for the
Operating General Partners and their affiliates previously
delivered fairly present the financial condition of such parties
as of the dates of said financial statements and since the date
of such financial statements there has been no material adverse
change in the financial position of any of the Operating General
Partners or such affiliates. The estimates of occupancy rates,
operating expenses, cash flow, depreciation and tax credits set
forth on Exhibit A are reasonable in light of the knowledge and
experience of the Operating General Partners.
C. As of the date hereof, each of the representations
contained in Exhibit B attached hereto is true, accurate and
complete as to each of the Operating Partnership and the
Operating General Partners and as to any of their affiliates, any
of their predecessors and their affiliates' predecessors, any of
their directors, officers, general partners and/or beneficial
owners of ten per cent (10%) or more of any class of their equity
securities (beneficial ownership meaning the power to vote or
direct the vote and/or the power to dispose or direct the
disposition of such securities), as the case may be, and any
promoters presently connected with them in any capacity.
D. Each of the representations and warranties contained in
the Operating Partnership Agreement is true and correct as of the
date hereof.
E. Each of the covenants and agreements of the Operating
Partnership and the Operating General Partners contained in the
Operating Partnership Agreement has been duly performed to the
extent that performance of any covenant or agreement is required
on or prior to the date hereof.
F. All conditions to admission of the Investment
Partnership as the investment limited partner of the Operating
Partnership contained in the Operating Partnership Agreement have
been satisfied.
G. No default has occurred and is continuing under the
Operating Partnership Agreement or any of the Project Documents
(as said term is defined in the Operating Partnership Agreement)
for the Operating Partnership.
H. The Operating General Partners agree to take all
actions necessary to claim the Projected Credit, including,
without limitation, the filing of Form(s) 8609 with the Internal
Revenue Service.
I. No person or entity other than the Operating
Partnership holds any equity interest in the Apartment Complex.
J. The Operating Partnership has the sole responsibility
to pay all maintenance and operating costs, including all taxes
levied and all insurance costs, attributable to the Apartment
Complex.
K. The Operating Partnership, except to the extent it is
protected by insurance and excluding any risk borne by lenders,
bears the sole risk of loss if the Apartment Complex is destroyed
or condemned or there is a diminution in the value of the
Apartment Complex.
L. No person or entity except the Operating Partnership
has the right to any proceeds, after payment of all indebtedness,
from the sale, refinancing, or leasing of the Apartment Complex.
M. No Operating General Partner is related in any manner
to the Investment Partnership, nor is any Operating General
Partner acting as an agent of the Investment Partnership.
N. The Apartment Complex contains no substance known to be
hazardous, such as hazardous waste, lead-based paint, asbestos,
methane gas, urea formaldehyde insulation, oil, toxic substances,
underground storage tanks, polychlorinated biphenals (PCBs), and
radon; the Apartment Complex is not affected by the presence of
oil, toxic substances, or other pollutants that could be a
detriment to the Apartment Complex nor is the Operating
Partnership in violation of any local, state, or federal law or
regulation; and no violation of the Clean Air Act, Clean Water
Act, Resource Conservation and Recovery Act, Toxic Substance
Control Act, Safe Drinking Water Control Act, Comprehensive
Environmental Resource Compensation and Liability Act, or
Occupational Safety and Health Act has occurred or is continuing.
Neither the Operating Partnership nor any Operating General
Partner or Original Limited Partner has received any notice from
any source whatsoever of the existence of any such hazardous
condition relating to the Apartment Complex or of any violation
of any local, state or federal law or regulation with respect to
the Apartment Complex.
O. The fair market value of the Apartment Complex exceeds
the total amount of indebtedness encumbering the Apartment
Complex and is expected to continue to do so throughout the term
of such indebtedness.
P. The Apartment Complex does not receive assistance under
the HUD Section 8 Moderate Rehabilitation Program, other than
under the Stewart B. McKinney Homeless Assistance Act of 1988.
Q. The Apartment Complex is not in violation of any State
or local health or building code or regulation.
R. 1998 low-income housing tax credit authorization in the
amount of at least $288,028 per annum and $288,028 per annum in
Missouri Tax Credits for the Apartment Complex have been obtained
by the Operating Partnership from the tax credit agency of the
State of Missouri and is in full force and effect.
S. The Operating Partnership has validly elected under
Section 42(b)(2)(A)(i) of the Code to apply the credit percentage
determined for the month the Property is placed in service with
respect to the qualified basis of the Property.
T. All 47 low-income dwelling units in the Property will
be leased to persons who satisfy the income restrictions under
Section 42(g)(1) of the Code at rents satisfying the rent
restrictions of Section 42(g)(2) of the Code.
U. All qualified low income dwelling units in the Property
will be occupied by tenants under leases with terms of not less
than six months.
V. The Operating General Partners agree to take all
actions necessary to claim the Projected Credit, including,
without limitation, the filing of Form(s) 8609 with the Internal
Revenue Service.
2. Indemnification
A. The Operating General Partners (for purposes of this
Section 2.A, the Indemnifying Parties or, individually, an
Indemnifying Party) agree to indemnify and hold harmless the
Investment Partnership, Investment General Partner (for purposes
of this Section 2.A, the Indemnified Parties or, individually, an
Indemnified Party) and each officer, director, employee and
person, if any, who controls any party against any losses,
claims, damages or liabilities (collectively, Liabilities), joint
or several, to which any Indemnified Party or such officer,
director, employee or controlling person may become subject,
insofar as such Liabilities or actions in respect thereof arise
out of or are based upon (i) a breach by such Indemnifying Party
of any of his representations, warranties or covenants to such
Indemnified Party or any such of its officers, directors,
employees or controlling persons under this Certification and
Agreement or (ii) liability under any statute, regulation,
ordinance, or other provision of federal, state, or local law or
any civil action pertaining to the protection of the environment
or otherwise pertaining to public health or employee health and
safety, including, without limitation, protection from hazardous
waste, lead-based paint, asbestos, methane gas, urea formaldehyde
insulation, oil, toxic substance, underground storage tanks,
polychlorinated biphenals (PCBs), and radon; and to reimburse
each such Indemnified Party and each such officer, director,
employee or controlling person for any legal or other expenses
reasonably incurred by it or them in connection with
investigating or defending against any such Liability or action;
provided, however, that the Indemnifying Party shall not be
required to indemnify any Indemnified Party or any such officer,
director, employee or controlling person for any payment made to
any claimant in settlement of any Liability or action unless such
payment is approved by the Indemnifying Party or by a court
having jurisdiction of the controversy. This indemnity agreement
shall remain in full force and effect notwithstanding any
investigation made by any party hereto, shall survive the
termination of any agreement which refers to this indemnity and
shall be in addition to any liability which the Indemnifying
Party may otherwise have.
B. No Indemnifying Party shall be liable under the
indemnity agreements contained in Section 2.A unless the
Indemnified Party shall have notified the Indemnifying Party in
writing within forty-five (45) business days after the summons or
other first legal process giving information of the nature of the
claim shall have been served upon the Indemnified Party or any
such of its officers, directors, employees or controlling
persons, but failure to notify an Indemnifying Party of any such
claim shall not relieve it from any liability which it may have
to the Indemnified Party or any such of its officers, directors,
employees or controlling persons against whom action is brought
otherwise than on account of its indemnity agreement contained in
Section 2.A. In case any action is brought against any
Indemnified Party or any such of its officers, directors,
employees or controlling persons upon any such claim, and it
notifies the Indemnifying Party of the commencement thereof as
aforesaid, the Indemnifying Party shall be entitled to
participate at its own expense in the defense, or, if it so
elects, in accordance with arrangements satisfactory to any other
Indemnifying Party or parties similarly notified, to assume the
defense thereof, with counsel who shall be satisfactory to such
Indemnified Party or any such of its officers, directors,
employees or controlling persons and any other Indemnified
Parties who are defendants in such action; and after notice from
the Indemnifying Party to such Indemnified Party or any such of
its officers, directors, employees or controlling persons of its
election so to assume the defense thereof and the retaining of
such counsel by the Indemnifying Party, the Indemnifying Party
shall not be liable to such Indemnified Party or any such of its
officers, directors, employees or controlling persons for any
legal or other expenses subsequently incurred by such Indemnified
Party or any such of its officers, directors, employees or
controlling persons in connection with the defense thereof, other
than the reasonable costs of investigation.
3. Miscellaneous
A. This Certification and Agreement is made solely for the
benefit of the Operating Partnership, the Operating General
Partners, Investment General Partner, Peabody & Brown and the
Investment Partnership (and, to the extent provided in Section 2,
the officers, directors, partners, employees and controlling
persons referred to therein), and their respective successors and
assigns, and no other person shall acquire or have any right
under or by virtue of this Agreement.
B. This Certification and Agreement may be executed in
several counterparts, each of which shall be deemed to be an
original, all of which together shall constitute one and the same
instrument.
C. Terms defined in the Operating Partnership Agreement
and used but not otherwise defined herein shall have the meanings
given to them in the Operating Partnership Agreement.
IN WITNESS WHEREOF, the undersigned have set their hands and
seals as of the date first above written.
OPERATING PARTNERSHIP:
PYRAMID FOUR LIMITED
PARTNERSHIP
By: Phillips Development
Corporation,
its general partner
By: /s/ Elizabeth Small
Its President
OPERATING GENERAL PARTNER:
PHILLIPS DEVELOPMENT
CORPORATION
By: /s/ Elizabeth Small
Its President
Attachments
Exhibit A Fact Sheet
Exhibit B Certificate re: Lack of Disqualifications
Exhibit A
PYRAMID FOUR LIMITED PARTNERSHIP
FACT SHEET
1. Construction Financing
A. Lender: Midland Mortgage Investment
Corporation
B. Mortgage Amount: Up to $1,328,315
C. Note Date: Not yet closed
D. Interest Rate: prime + 2% or 10.5%
E. Guarantor: Phillips Development
Corporation
F. Term: 24 months
G. Fee: 1%
2. Permanent Financing
A. Lender: Midland Mortgage Investment
Corporation
B. Amount: Up to $685,000
C. Note Date: Not yet closed
D. Interest Rate: 50 Basis Points Over
Fannie Mae LIHTC
percentage
E. Term: 360 months
Fee: 1.5%
3. Grant
A. Grantor: Missouri Housing Development
Commission
B. Grant Amount: $200,000
C. Grant Date: Not yet closed
4. Eligible Basis $3,232,793
5. Qualified Basis: $3,232,793
6. GP Capital Contribution $100
7. Type of Credit: 9%
8. Rent-up Schedule (47 Units):
19% occupancy by August, 1999
40% occupancy by September, 1999
59% occupancy by October, 1999
80% occupancy by November, 1999
100% occupancy by December, 1999
(One additional unit is for resident manager)
9. Projected Credit to the
Investment Partnership: $2,879,990 (99.99% total credit)
A. $71,000 for 1999;
B. $287,999, per annum for each of the years 2000 through
2008; and
C. $216,999 for 2009.
10. Total Projected Credit: $2,880,280 (100% of total credit)
A. $71,007 for 1999;
B. $288,028 per annum for each of the years 2000 through
2008 (inclusive); and
C. $217,021 for 2009.
11. Missouri Projected Credit:
A. $71,007 for 1999;
B. $288,028 for each of the years 2000 through 2008
(inclusive); and
C. $217,021 for 2009.
12. Tax Credit Approval:
A. Application
1. Date: November 24, 1997
2. Credit Amount Requested: $303,080
3. Missouri Credit Amount
Requested $303,080
B. Reservation
1. Date:
2. Credit Amount Reserved: $288,028
3. Missouri Credit Amount
Reserved $288,028
13. Apartment Complex
A. Name: Sterling Creek Apartments
Address: 3302-3310 South Sterling
Avenue, Independence, Missouri
B. County Jackson
C. Type of Project: Family
14. Area Median Income
(1998): $49,500
15. Type of Apartments:
Utility
Unit Size Number Square Feet Rent Allowance
2 bedroom 1 1040 manager unit
2 bedroom 23 1040 $383 $63
3 bedroom 24 1186 $475 $85
16. Rental Assistance: N/A
17. Annual Operating Expenses
(2000): $127,396
18. Annual Replacement Reserve
Account Deposit: $13,600
19. Amount of Annual Reporting Fee
(commencing in 2000): $2,000
20. Amount of Annual Partnership
Management Fee (commencing
in 2000) $2,000
21. Amount of Total Depreciable
Base Allocated to Personal
Property: $53,672
22. Projected Completion Date: May 1999
23. Total Capital Contribution of
Investment Partnership: $2,073,594
24. Schedule of Investment Partnerships Capital Contributions:
A. $1,693,431 on the latest of (i) the Admission Date, ,
(ii) closing of the Construction Mortgage or (iii)
receipt of Permanent Mortgage Commitment and the Grant
commitment;
B. $0 on the latest of (i) the Completion Date, (ii) Cost
Certification, (iii) State Designation, (iv) receipt of
a current endorsement to Title Policy, (v) receipt of
the Construction Contract Payment Letter, (vi) receipt
of an estoppel letter from the Construction Lender,
(vii) compliance with Due Diligence Recommendations and
(viii) satisfaction of all the conditions of the
payment of the First Installment;
C. $239,044 on the latest of (i) the Initial 100%
Qualified Occupancy Date, (ii) Permanent Mortgage
Commencement, (iii) State Designation, (iv) Rental
Achievement or (v) satisfaction of all conditions to
the payment of the First and Second Installments; and
D. $141,119 upon the later to occur of (i) Rental
Achievement Confirmation or (ii) satisfaction of all
the conditions of payment of the First Installment,
Second Installment and Third Installment.
25. Missouri Limited Partner: Missouri Affordable Housing
Fund IX, L.P.
26. Missouri Capital Contribution: $748,790 (payable in
installments as provided in Section 5.1(a) of the Partnership
Agreement)
27. Construction and Development Fee: $474,121
28. General Partner: Phillips Development Corporation
A. Address: 1501 N. University, Suite 740
Little Rock, AR 72734
B. Telephone
Number: (501) 666-9629
C. Fax
Number: (501) 666-3559
D. Contact
Person: Chester D. Phillips
29. Investment Special Missouri
. Ownership General Limited Limited Limited
Interests Partner Partner Partner Partner
A. Profits
Losses and
Credits 0.01% 99.99% 0% 0%
B. Missouri Credits: 0% 0% 0% 100%
C. Cash Flow 80.0% 20.000% 0% 0%
D. Capital
Transactions 80.0% 19.998% 0.001% 0.001%
29. Management Agent: Phillips Development Corporation
A. Contact Person: Chester D. Phillips
B. Address: 1501 N. University, Suite 740
Little Rock, AR 72207
C. Telephone Number: (501) 666-9629
D. Amount of Fee: $30 per occupied unit per month
30. Builder: Chester Phillips Construction
Company, Inc.
A. Address: 1501 N. University, Suite 740
Little Rock, AR 72207
B. Contract Price: $2,706,800
31. Architect: Williams & Dean Associates Arch.
A. Address: 18 Corporate Hills Dr.
Suite 210
Little Rock, AR 72205
B. Amount of
Architectural Fees: $43,200
32. Auditor and Tax Return
Preparer: Little Shaneyfelt & Company
A. Contact Person Marion Little
B. Address: 3rd Floor - Prospect Building
1501 N. University
Little Rock, AR 72207
C. Telephone Number: (501) 666-2879
33. Federal Taxpayer ID Number: 71-0723030
34. Operating Deficit Guaranty: The General Partner shall be
obligated for a period of five years beginning on Permanent
Mortgage Commencement to advance funds necessary to meet
cash operating expenses which exceed cash operating income.
35. Operating Reserve: The General Partner shall establish an
operating reserve account in the amount of $24,000 on or
prior to the Completion Date.
36. Replacement Reserve: Beginning on Permanent Mortgage
Commencement, the General Partners shall cause
thePartnership to deposit at least $13,600 annually into the
Replacement Reserve.
37. Building Breakdown: (Not available at this time)
cc: Boston Capital Communications Limited Partnership
Accounting Department
Exhibit B
Certificate of Operating Partnership and
Operating General Partners Re: Lack of Disqualifications
The Operating Partnership and its Operating General Partners
(as identified on the Certification and Agreement to which this
Certificate is attached as Exhibit B) hereby represent to you
that neither (i) the Operating Partnership, (ii) any predecessor
of the Operating Partnership, (iii) any of the Operating
Partnership's affiliates (affiliate meaning a person that
controls or is controlled by, or is under common control with,
the Operating Partnership), (iv) any sponsor (meaning any person
who (1) is directly or indirectly instrumental in organizing the
Operating Partnership or (2) will directly or indirectly manage
or participate in the management of the Operating Partnership or
(3) will regularly perform, or select the person or entity who
will regularly perform, the primary activities of the Operating
Partnership), (v) any officer, director, principal or general
partner of the Operating Partnership or of any sponsor, (vi) any
officer, director, principal, promoter or general partner of any
Operating General Partner, (vii) any beneficial owner of ten per
cent or more of any class of the equity securities of the
Operating Partnership or of any sponsor (beneficial ownership
meaning the power to vote or direct the vote and/or the power to
dispose or direct the disposition of such securities), (viii) any
promoter of the Operating Partnership (meaning any person who,
acting alone or in conjunction with one or more other persons,
directly or indirectly has taken, is taking or will take the
initiative in founding and organizing the business of the
Operating Partnership or any person who, in connection with the
founding and organizing of the business or enterprise of the
Operating Partnership, directly or indirectly receives in
consideration of services or property, or both services and
property, ten per cent or more of any class of securities of the
Operating Partnership or ten per cent or more of the proceeds
from the sale of any class of such securities; provided, however,
a person who receives such securities or proceeds either solely
as underwriting commissions or solely in consideration of
property shall not be deemed a promoter if such person does not
otherwise take part in founding and organizing the enterprise)
presently connected with the Operating Partnership in any
capacity:
(1) Has filed a registration statement which is the
subject of any pending proceeding or examination under the
securities laws of any jurisdiction, or which is the subject of a
any refusal order or stop order thereunder entered within five
years prior to the date hereof;
(2) Has been convicted of or pleaded nolo contendere
to a misdemeanor or felony or, within the last ten years, been
held liable in a civil action by final judgment of a court based
upon conduct showing moral turpitude in connection with the
offer, purchase or sale of any security, franchise or commodity
(which term, for the purposes of this Certificate shall
hereinafter include commodity futures contracts) or any other
aspect of the securities or commodities business, or involving
racketeering, the making of a false filing or a violation of
Sections 1341, 1342 or 1343 of Title 18 of the United States Code
or arising out of the conduct of the business of an issuer,
underwriter, broker, dealer, municipal securities dealer, or
investment adviser, or involving theft, conversion,
misappropriation, fraud, breach of fiduciary duty, deceit or
intentional wrongdoing including, but not limited to, forgery,
embezzlement, obtaining money under false pretenses, larceny
fraudulent conversion or misappropriation of property or
conspiracy to defraud, or which is a crime involving moral
turpitude, or within the last five years of a misdemeanor or
felony which is a criminal violation of statutes designed to
protect consumers against unlawful practices involving insurance,
securities, commodities, real estate, franchises, business
opportunities, consumer goods or other goods and services;
(3) Is subject to (a) any administrative order,
judgment or decree entered within five years prior to the date
hereof entered or issued by or procured from a state securities
commission or administrator, the Securities and Exchange
Commission (SEC), the Commodities Futures Trading Commission or
the U.S. Postal Service, or to (b) any administrative order or
judgment, arising out of the conduct of the business of an
underwriter, broker, dealer, municipal securities dealer, or
investment adviser, or involving deceit, theft, fraud or
fraudulent conduct, or breach of fiduciary duty, or which is
based upon a state banking, insurance, real estate or securities
law or (c) has been the subject of any administrative order,
judgment or decree in any state in which fraud, deceit, or
intentional wrongdoing, including, but not limited to, making
untrue statements of material fact or omitting to state material
facts, was found;
(4) Is subject to any pending proceeding in any
jurisdiction relating to the exemption from registration of any
security or offering, or to any order, judgment or decree in
which registration violations were found or which prohibits,
denies or revokes the use of any exemption from registration in
connection with the offer, purchase or sale of securities, or to
an SEC censure or other order based on a finding of false filing;
(5) Is subject to any order, judgment or decree of any
court or regulatory authority of competent jurisdiction entered
within five years prior to the date hereof, temporarily,
preliminary or permanently restraining or enjoining such persons
from engaging in or continuing any conduct or practice in
connection with any aspect of the securities or commodities
business or involving the making of any false filing or arising
out of the conduct of the business of an underwriter, broker,
dealer, municipal securities dealer, or investment adviser, or
which restrains or enjoins such person from activities subject to
federal or state statutes designed to protect consumers against
unlawful or deceptive practices involving insurance, banking,
commodities, real estate, franchises, business opportunities,
consumer goods and services, or is subject to a United States
Postal Service false representation order entered within five
years prior to the date hereof, or is subject to a temporary
restraining order or preliminary injunction with respect to
conduct alleged to have violated section 3005 of Title 39, United
States Code;
(6) Is suspended or expelled from membership in, or
suspended or barred from association with a member of, an
exchange registered as a national securities exchange, an
association registered as a national securities association, or
any self-regulatory organization registered pursuant to the Secu-
rities Exchange Act of 1934, or a Canadian securities exchange,
or association or self-regulatory organization operating under
the authority of the Commodity Futures Trading Commission, or is
subject to any currently effective order or order entered within
the past five years of the SEC, the Commodity Futures Trading
Commission or any state securities administrator denying
registration to, or revoking or suspending the registration of,
such person as a broker-dealer, agent, futures commission
merchant, commodity pool operator, commodity trading adviser or
investment adviser or associated person of any of the foregoing,
or prohibiting the transaction of business as a broker-dealer or
agent;
(7) Has, in any application for registration or in any
report required to be filed with, or in any proceeding before the
SEC or any state securities commission or any regulatory
authority willfully made or caused to be made any statement which
was at the time and in the light of the circumstances under which
it was made false or misleading with respect to any material
fact, or has willfully omitted to state in any such application,
report or proceeding any material fact which is required to be
stated therein or necessary in order to make the statements made,
in the light of the circumstances under which they are made, not
misleading, or has willfully failed to make any required
amendment to or supplement to such an application, report or
statement in a timely manner;
(8) Has willfully violated any provision of the
Securities Act of 1933, the Securities Exchange Act of 1934, the
Trust Indenture Act of 1939, the Investment Advisers Act of 1940,
the Investment Company Act of 1940, the Commodity Exchange Act of
1974 or the securities laws of any state, or any predecessor law,
or of any rule or regulation under any of such statutes;
(9) Has willfully aided, abetted, counseled,
commanded, induced or procured the violation by any other person
of any of the statutes or rules or regulations referred to in
subsection (8) hereof;
(10) Has failed reasonably to supervise his agents, if
he is a broker-dealer, or his employees, if he is an investment
adviser, but no person shall be deemed to have failed in such
supervision if there have been established procedures, and a
system for applying such procedures, which would reasonably be
expected to prevent and detect, insofar as practicable, any
violation of statutes, rules or orders described in subsection
(8) and if such person has reasonably discharged the duties and
obligations incumbent upon him by reason of such procedures and
system without reasonable cause to believe that such procedures
and system were not being complied with;
(11) Is subject to a currently effective state
administrative order or judgment procured by a state securities
administrator within five years prior to the date hereof or is
subject to a currently effective United States Postal Service
fraud order or has engaged in dishonest or unethical practices in
the securities business or has taken unfair advantage of a custo-
mer or is the subject of sanctions imposed by any state or
federal securities agency or self-regulatory agency;
(12) Is insolvent, either in the sense that his
liabilities exceed his assets or in the sense that he cannot meet
his obligations as they mature, or is in such financial condition
that he cannot continue his business with safety to his
customers, or has not sufficient financial responsibility to
carry out the obligations incident to his operations or has been
adjudged a bankrupt or made a general assignment for the benefit
of creditors; or
(13) Is selling or has sold, or is offering or has
offered for sale, in any state securities through any
unregistered agent required to be registered under the
Pennsylvania Securities Act of 1972, as amended (the Pennsylvania
Act) or for any broker-dealer or issuer with knowledge that such
broker- dealer or issuer had not or has not complied with the
Pennsylvania Act.
(14) If the Operating Partnership is subject to the
requirements of Section 12, 14 or 15(d) of the Securities
Exchange Act of 1934, then the Operating Partnership has filed
all reports required by those Sections to be filed during the 12
calendar months preceding the date hereof (or for such shorter
period that the Operating Partnership was required to file such
reports).
DEVELOPMENT AGREEMENT
THIS DEVELOPMENT AGREEMENT (this Agreement) is made and
entered as of the 30th day of April, 1998, by and between
PHILLIPS DEVELOPMENT CORPORATION, an Arkansas Corporation
(hereinafter referred to as the Developer) and PYRAMID FOUR
LIMITED PARTNERSHIP, an Missouri limited partnership
(hereinafter referred to as the Partnership).
WITNESSETH:
WHEREAS, the Partnership is the owner of or has right to
purchase certain unimproved real property lying and being in
Jackson County, Missouri, and more fully described in Exhibit A
attached hereto and made a part hereof by reference (hereinafter
referred to as the Property); and
WHEREAS, the Partnership desires that the Developer assume
responsibility for the improvement, development and construction
of an apartment complex to be built on the Property (such
improvements, including all appurtenances thereto collectively
referred to as the Project). Pursuant to the terms hereof; and
WHEREAS, Developer is willing to accept such responsibility
and to perform the duties contained herein in consideration of
the compensation set forth herein;
NOW, THEREFORE, for and in consideration of Ten Dollars
($10.00) and other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties
hereto agree as follows:
1. Engagement of the Developer. The Partnership does hereby
engage the Developer, as developer, and the Developer hereby
accepts such engagement as the developer for the Project and
agrees to perform the duties set forth in Paragraph 2 of this
Agreement.
2. Development Duties. The Developer hereby agrees to
assume responsibility for and faithfully perform, or cause to be
performed, the improvement, development and construction of the
Project to be built on the Property, including the installation
of all materials, fixtures, appliances and equipment on the
Property in accordance with the plans and specifications from
time to time agreed to between the Developer and the Partnership,
including but in no way limited to
(a) Preparation of specific plans and specification for
site improvements, roads, utilities, recreational facilities,
buildings and other improvements, when required;
(b) Preparation of detailed budget projections for the
cost of construction and development of the Project as are
required from time to time;
(c) Obtaining all necessary governmental approvals and
permits;
(d) Negotiation of contracts with architects,
contractors, vendors, and other suppliers and servicers utilized
in the design, construction and development of Project;
(e) Supervision of performance of architects,
contractors, vendors and other suppliers and servicers utilized
in construction of the Project;
(f) Review of invoices for payment of architects,
contractors, subcontractors, vendors and other suppliers and
servicers for the Project;
(g) Maintenance of financial records and preparation of
periodic updating and revision of cost projections;
(h) Reporting to the Partnership monthly regarding
progress of construction of the Project;
(i) Ensure that all contractors, vendors and other
suppliers have adequate general liability insurance and workmen's
compensation insurance, and that all performance bonds are in
force and legally effective in all respects;
(j) Negotiate and engage, on behalf and with the
approval of the Partnership, all attorneys, accountants, and
other professionals to handle all legal, accounting or other
matters in connection with the development of the Project;
(k) Negotiating and arranging financing for and
syndication of the Project, and
(l) Perform all other duties, upon written request of
the Partnership, which are reasonably related to the improvement,
construction, or development of the Project.
3. Compensation and Reimbursement of the Developer. As
compensation for the performance of all of its duties hereunder,
the Developer shall be entitled to a development fee (the
Developers Fee) in the total amount of Four Hundred Seventy Four
Thousand and One Hundred Twenty One Dollars ($474,121) earned by
the Developer and payable in accordance with a schedule attached
hereto and made a part hereof, but not later than completion of
the Project and issuance of a certificate of occupancy for all
units thereof (hereinafter referred to as the Completion Date.)
The Partnership shall further reimburse the Developer on a
monthly basis for any and all amounts disbursed by the Developer
on behalf of the Partnership, including, but not limited to, all
direct and indirect costs for labor and materials incurred in the
construction and development of the Project and all amounts paid
for taxes, utilities, assessments and the like on behalf of the
Partnership; provided however, that nothing in this Agreement
shall obligate Developer to make such payments, it being the
intent of the parties that such costs will be the responsibility
of the Partnership.
The Developers fee shall be payable only if a syndication
occurs and the total fees paid shall be adjusted by the total
credit delivered and the percentage of payment agreed to in the
syndication agreement, and in accordance with any reducers
contained in the syndication agreement and the completed
partnership agreement. In no event will the Developer's fee be
more than payments received by the partnership for sale of tax
credits.
4. Terms of Engagement. The engagement of Developer shall
commence upon the effective date of this Agreement as first above
written and shall continue until the last building constructed on
the Property is placed in service.
5. Performance of the Developer. While performing its
duties hereunder, the Developer shall diligently endeavor to
protect the property rights and interests of the Partnership as
vested in the Property and the Project; to perform all of its
duties hereunder in a good, diligent and workmanlike manner; to
employ skilled agents, lawyers, accountants and to supervise them
diligently; and to comply with all laws, ordinances, rules,
regulations and orders of any public authority bearing on the
performance of the Developer's duties. The Developer may engage
in other development, construction and similar activities on its
own behalf or for other entities; provided, however, that any
such other activities do not interfere with the performance of
its obligations hereunder.
6. Assignment. The Developer shall not assign this
Agreement in whole or in part without the consent of the
Partnership; provided however, that the Developer may employ such
agents as it shall deem necessary in the performance of its
duties contemplated hereunder. Notwithstanding any such
delegation, the Developer shall remain fully responsible for
performance of its duties set out hereunder.
7. Miscellaneous.
(a) At all times this Agreement shall inure to the
benefit of and constitute a binding obligation upon each of the
parties hereto and their respective successors and, where
permitted, their assigns.
(b) All notices, consent, approvals, acceptances and
other communications given or made under this Agreement shall be
in writing, duly signed by the party giving or making the same,
and shall be deemed to have been properly given or made if
personally delivered or five (5) days after deposit in the United
States certified mail, return receipt requested, addressed as
follows (or any subsequent address provided to all parties):
If to Developer:
Phillips Development Corporation
1501 N. University
Suite 740
Little Rock, AR 72207
If to Partnership:
Pyramid Four Limited Partnership
1501 N. University
Suite 740
Little Rock, AR 72207
Attn: General Partner
(c ) If any provision hereof is adjudged to be
invalid, the other provision hereof shall be enforceable.
(d) This Agreement contains the entire understanding
between the parties and supersedes any prior understandings or
agreements among them. There are no representations, agreements,
arrangements or understandings, oral or written, between and
among the parties hereto relating to any of the provisions of
this agreement which are not fully expressed and incorporated
herein.
(e) This Agreement may not be modified or amended except
with the written consent of all the Parties.
(f) This Agreement shall be governed by and construed in
accordance with the laws of the State of Missouri.
(g) The relationship between Partnership and Developer
is that of independent contracting parties. This Agreement shall
not in any manner be construed as a joint venture or partnership.
(h) Section titles or captions contained in this
Agreement are inserted as a matter of convenience and for
reference and in no way define, limit, extend or describe the
scope of this Agreement or the intent of any provision thereof.
(i) All pronouns and any variation thereof shall be
deemed to refer to the masculine, feminine, neuter, singular or
plural as the identity of the person or persons may require.
(j) This Agreement may be signed by each party hereto
upon a separate copy, in which event all of said copies shall
constitute a single counterpart of this Agreement. This
Agreement may be executed in any number of counterparts and all
of such counterparts shall for all purposes constitute one
agreement, binding on the parties hereto.
IN WITNESS WHEREOF, the parties have hereunto set their
hands and seals the year and day first above written.
(THE REMAINDER OF THIS PAGE IS LEFT BLANK INTENTIONALLY.)
DEVELOPER:
PHILLIPS DEVELOPMENT CORPORATION
By: ___________________________
Chairman/Phillips Development
Corp.
Attest:
______________________________
Secretary
(CORPORATE SEAL)
PARTNERSHIP:
PYRAMID FOUR LIMITED PARTNERSHIP
By: Phillips Development
Corporation
General Partner
By:/s/ Chester D. Phillips
Chester D. Phillips/Chairman
(CORPORATE SEAL
DEVELOPMENT FEE SCHEDULE
Option on property in place 5
Market analysis done 5
Evidence of all utilities 3
Evidence of zoning 4
Preliminary plans 1
Environmental reports 2
Syndication contract 5
PERMANENT/Construction applicatio 5
Tax Credit Reservation 6
Final Plans 4
Water permit 1
Sewer permit 1
Building permit 2
Construction loan commitment 4
Permanent loan commitment 6
Syndication agreement executed 6
Receipt of the C.O.'s 10
Receipt of tax credit allocation 15
Close permanent loan 15
100%
EXHIBIT A
All of Lots 18, 19, 20 and 21, COUNTRY CLUB ACRES, a subdivision
in Independence, Jackson County, Missouri, except that part in
Sterling Avenue, according to the recorded plat thereof.
synd.17537.1260.BOS2.78293_8
