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) July 10,
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 July 10, 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 Pineridge Apartments Partnership, a Louisiana
Partnership In Commendam (the Operating Partnership),
including the First Amended and Restated Articles of
Partnership In Commendam of the Operating Partnership dated
as of July 10, 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 (40) - unit apartment complex located at the
intersection of Dutch Wood Road and Hamilton Street in
Franklinton, Louisiana, which is known as Pineridge
Apartments (the Apartment Complex). The Apartment Complex
consists of twelve (12) buildings containing twelve
(12) 1-bedroom units, twenty-two (22) 2-bedroom units and
six (6) 4-bedroom units. Amenities include a community
building/clubhouse and washer/dryer connections in all of
the units. Construction of the Apartment Complex was
completed in January, 1999, with 100% Occupancy achieved in
April, 1999.
On May 12, 1998, the Operating Partnership received
construction financing in the amount of $850,000 (the
Construction Mortgage) from Hibernia National Bank. The
Construction Mortgage carried an interest rate of 8.95% and
had a twelve (12) - month term. The Construction Mortgage
has now been repaid. The Operating Partnership is receiving
permanent financing from both Hibernia National Bank and the
Louisiana Housing Finance Agency. Hibernia National Bank is
providing a permanent first mortgage (the Permanent First
Mortgage) in the amount of $93,806. The Permanent First
Mortgage bears interest at a variable rate initially set at
8.80% and has a twenty-five (25) year amortization period
and a fifteen (15) - year term. The Louisiana Housing
Finance Agency is providing a permanent second mortgage (the
Permanent Second Mortgage) in the amount of $400,000. The
Permanent Second Mortgage bears an interest rate of 5.88%
and has a forty (40) year amortization period and a forty
(40) - year term.
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 Managing General Partner of the Operating
Partnership is M. Riemer Calhoun, Jr. Mr. Calhoun is the
president and owner of Calhoun Builders, Inc., which was the
Builder of the Apartment Complex, and Chairman, CEO and
owner of Calhoun Property Management, Inc., which is the
Management Agent of the Apartment Complex. Mr. Calhoun also
served as the Developer of the Apartment Complex. Mr.
Calhoun and his various entities have extensive development,
construction and project management experience. As of June,
1998, Mr. Calhoun and his various entities had completed
approximately 110 multifamily housing projects in Louisiana
and Texas, of which more than 65 qualified for 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 $1,501,914 to the Operating Partnership in three
installments as follows:
$1,126,436 (the First Installment) on the latest to occur of
(A) the Admission Date; (B) the Tax Credit Set-Aside; (C)
Construction Mortgage Closing; (D) Permanent Mortgage
Commitment; or (E) Permanent Second Mortgage Closing;
$150,191 (the Second Installment) on the latest to occur of
(A) the Completion Date; (B) Cost Certification; or (C)
State Designation; and
$225,287 (the Third Installment) on the latest to occur of
(A) Initial 100% Occupancy; (B) Permanent Mortgage
Commencement; (C) receipt by the Limited Partners of a copy
of the Operating Partnership's owner's title insurance
policy, as endorsed through Permanent Mortgage Commencement,
with such policy and endorsement in form and substance
satisfactory to the Special Limited Partner; (D) delivery of
an opinion of counsel to the Operating Partnership
concerning the Permanent Mortgages, including the non-
recourse nature thereof, satisfactory as to form, content
and counsel to the Special Limited Partner; and (E)
Breakeven Point.
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 $2,086,201 of Tax Credits during the
11-year period commencing in 1999 of which 99.99%
($2,085,993) will be allocated to the Partnership as the
Investment Limited Partner of the Operating Partnership.
The Partnership believes that the Apartment Complex is
adequately insured.
Ownership interests in the Operating Partnership are as
follows, subject in each case to certain priority
allocations and distributions as set forth in the Operating
Partnership Agreement:
Profits, Losses and
Tax Credits from Capital
Normal Operations Transactions Cash Flow
Managing General
Partner .01% 50% 50%
Partnership 99.99% 49.999% 50%
Special Limited Partner 0% .001% 0%
The Special Limited Partner of the Operating Partnership is
BCTC 94, Inc., an affiliate of the Partnership.
The Partnership used the funds obtained from the
payments of the holders of its beneficial assignee
certificates to make the acquisition of its interest in the
Operating Partnership.
BCCLP or an Affiliate thereof, is receiving a fee (the
Asset Management Fee) (which commenced in 1999) 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 $4,000. The Asset Management Fee
for each Fiscal Year will be payable from Cash Flow in the
manner and priority set forth in Section 10.3(a) of the
Operating Partnership Agreement; provided, however, that if
in any fiscal year, Cash Flow is insufficient to pay the
full amount of the Asset Management Fee, and the shortfall
is not paid from funds advanced pursuant to Section 6.11,
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 is paying the Managing
General Partner a fee (the Partnership Management
Fee) (which commenced in 1999) for services in connection
with the administration of the day-to-day business of the
Operating Partnership in an annual amount equal to $4,000.
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 10.3(a) of the
Operating Partnership Agreement. If for any reason the
Partnership Management Fee is not paid in any fiscal year,
the unpaid portion thereof shall accrue and be payable on a
cumulative basis in the first fiscal year in which there is
sufficient Cash Flow or Capital Proceeds as provided in
Article X of the Operating Partnership Agreement.
In consideration of its consultation, advice and other
services in connection with the construction and development
of the Apartment Complex and as consideration for the
assignment described in Section 6.13 of the Operating
Partnership Agreement, the Operating Partnership will pay
the Managing General Partner and Quad Area Community Action
Agency, Inc. a fee (the Construction and Development Fee) in
the principal amount of $160,000, which fee shall be earned
in full as to each building in the Apartment Complex as of
the date such building is completed. The Construction and
Development Fee shall be payable $160,000 at the time of the
payment of the Third Installment.
The Builder of the Apartment Complex will receive a
total compensation of $2,721,391 which includes Builder's
Profit of $89,000. The Management Agent of the Apartment
Complex will receive a Management Fee equal to 5% of
collected rents.
Item 7. Exhibits.
(c) Exhibits.
(1) (a)* Form of Dealer-Manager Agreement between Boston
Capital Services, Inc. and the Registrant (including, as
an exhibit thereto, the form of Soliciting Dealer Agreement)
(2) (a) First Amended and Restated Articles of Partnership
of Pineridge Apartments Partnership.
(2) (b) Pineridge Apartments Partnership Certification and
Agreement.
(2) (c) Development Services Agreement by and between
Pineridge Apartments Partnership and M. Riemer Calhoun, Jr.
(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 7, 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
PINERIDGE APARTMENTS PARTNERSHIP, A
LOUISIANA PARTNERSHIP IN COMMENDAM
FIRST AMENDED AND RESTATED
ARTICLES OF PARTNERSHIP IN COMMENDAM
Preliminary Statement
Pineridge Apartments Partnership, A Louisiana Partnership In
Commendam (the Partnership), was formed as a Louisiana
partnership in commendam pursuant to Articles of Partnership
In Commendam dated February 2, 1998 (the Original
Agreement), by and among M. Riemer Calhoun, Jr., as the
Managing General Partner (the Managing General Partner),
Quad Area Community Action Agency, Inc., as a general
partner (the General Partner) and T.F. Management, Inc., as
the limited partner (the Withdrawing Original Limited
Partner). The Original Agreement was filed and registered in
the Filing Office on March 25, 1998 (as so filed and
registered, the Original Certificate. By a First Amendment
to Articles of Partnership In Commendam dated July 10, 1998,
and filed with the Filing Office on July ___, 1998, Quad
Area Community Action Agency, Inc. withdrew as a general
partner. Certain capitalized terms used herein shall have
the respective meanings specified in Article I.
The parties hereto now desire to enter into these First
Amended and Restated Articles of Partnership In Commendam
to: (i) continue the Partnership; (ii) admit Boston Capital
Tax Credit Fund IV, L.P., a Delaware limited partnership
(specifically Series 32 thereof), to the Partnership as its
Investment Limited Partner; (iii) admit BCTC 94, Inc., a
Delaware corporation, as Special Limited Partner; (iv)
acknowledge the withdrawal of the Withdrawing Original
Limited Partner; (v) reassign the Interests in the
Partnership; and (vi) set forth all of the provisions
governing the Partnership and the Partners herein.
In consideration of mutual agreements set forth herein, it
is agreed and certified, and the Original Agreement and the
Original Certificate are hereby amended and restated in
their entireties, as follows:
ARTICLE I Defined Terms
The following defined terms used in this Agreement shall
have the meanings specified below:
Act means Article 2801 et seq. of the Louisiana Civil Code
and Louisiana Revised Statutes 9:3401 et seq., as amended
from time to time.
Actual Credit means, with respect to a particular year, the
total amount of Tax Credit properly allocable by the
Partnership to the Investment Limited Partner for such year.
The Actual Credit for a year shall be retroactively revised
if the amount of Tax Credit properly allocable to the
Investment Limited Partner for such year is revised after
audit or recaptured.
Additional Limited Partner means any holder of an Interest
designated as an Additional Limited Partner pursuant to
Section 4.4(b) or Section 7.4.
Admission Date means the first date on which all parties
hereto shall have executed this Agreement, or, if, pursuant
to the Act, the Investment Limited Partner shall not be
deemed admitted to the Partnership on such date, then the
next date thereafter on which the Investment Limited Partner
shall be deemed to be admitted to the Partnership under the
Act.
Affiliate means (A) as to the Investment Limited Partner or
Boston Capital: (i) such Person; (ii) each member of the
Immediate Family of such Person; (iii) each legal
representative, successor or assignee of any Person referred
to in the preceding clauses (i) or (ii); (iv) each trustee
of a trust for the benefit of any Person referred to in the
preceding clauses (i) or (ii); or (v) any other Person (a)
who directly or indirectly controls, is controlled by, or is
under common control with such Person, (b) who is an officer
of, director of, partner in or trustee of, or serves in a
similar capacity, (c) who, directly or indirectly, is the
beneficial owner of ten percent (10%) or more of any class
of equity securities of such Person of which such Person is
directly the owner of ten percent (10%) or more of any class
of securities, (d) who is an officer, director, general
partner, trustee or holder of ten percent (10%) or more of
the voting securities or beneficial interests of any Person
referred to in the foregoing clauses (v)(a), (v)(b) or
(v)(c) or (e) who, whatever his title, performs functions
for such Person or any Affiliate of such Person similar to a
Chairman or member of the Board of Directors, or executive
officer such as the President, Executive Vice President or
Senior Vice President, Corporate Secretary, or Treasurer, or
any Person holding a five percent (5%) or more equity
interest in such Person, or any Person having the power to
direct or cause the direction of such Person whether through
the ownership of voting securities, by contract or
otherwise; and (B) as to any other named Person or Persons:
(i) such Person; (ii) each member of the Immediate Family of
such Person; (iii) each legal representative, successor or
assignee of any Person referred to in the preceding clauses
(i) or (ii); (iv) each trustee of a trust for the benefit of
any Person referred to in the preceding clauses (i) or (ii);
or (v) any other Person(a) who directly or indirectly
controls, is controlled by, or is under common control with
such Person, (b) who owns or controls ten percent (10%) or
more of the outstanding voting securities of such Person,
(c) of which ten percent (10%) or more of the outstanding
voting securities is owned by such Person or any of the
Persons referred to in the foregoing clauses (i) through
(iii), (d) who is an officer, director, partner or trustee
of such Person, or (e) for which such Person acts in the
capacity of the officer, partner or trustee of such Person,
or (e) for which such Person acts in the capacity of the
officer, director, partner or trustee. An affiliate of the
Investment limited Partner does not include a Person who is
a partner in a partnership or joint venture with the
Investment Limited Partner or any other Affiliate of the
Investment Limited Partner if such Person is not otherwise
an Affiliate of the Investment Limited Partner. For the
purposes of this definition, the term Affiliate shall not be
deemed to include any law firm (or member or associate
thereof) providing legal services to the Investment Limited
Partner or any Affiliate.
Agency means, as applicable, the Credit Agency and/or any
other governmental agency having jurisdiction over the
particular matter to which reference is being made.
Agency Regulatory Agreement means the HOME Affordable Rental
Housing Program Regulatory Agreement to be entered into
between the Permanent Second Lender and the Partnership.
Agreement means these First Amended and Restated Articles of
Partnership In Commendam, including Schedule A, as amended
from time to time.
Apartment Complex means the real property located in
Franklinton, Livingston Parish, Louisiana, 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, fixtures and
personal property covered by the Mortgages, known or to be
known as the Pineridge Apartments.
Applicable Federal Rate means the applicable federal rate as
defined in Section 1274(d) of the Code.
Applicable Percentage has the meaning given to it in Section
42(b) of the Code.
Asset Management Fee means the fee payable to BCCLP or an
Affiliate thereof pursuant to Section 6.12(c).
Auditors means Todd Little & Company, or such other firm of
independent certified public accountants as may be engaged
by the General Partners with the consent of the Special
Limited Partner for the purposes of preparing the
Partnership income tax returns, auditing the books and
records of the Partnership and certifying financial reports
of the Partnership.
BCCLP means Boston Capital Communications Limited
Partnership, a Massachusetts limited partnership, and its
successors and assigns.
Boston Capital means Boston Capital Partners, Inc., a
Massachusetts corporation, and its successors and assigns.
Breakeven Confirmation means the date upon which each of the
Limited Partners receive a copy of the federal income tax
return of the Partnership for the Partnership fiscal year in
which the Breakeven Point shall have occurred, evidencing to
the satisfaction of the Special Limited Partner that the
Breakeven Point occurred in such year.
Breakeven Point means thirty (30) days after the first time
at which, as certified by the Managing General Partner to
the Limited Partners in writing together with a statement
fully disclosing the basis therefor and the manner of
calculation thereof, there have been an average of three (3)
consecutive full calendar months of Partnership operations
occurring after the later to occur of (i) the Admission Date
or (ii) Permanent Mortgage Commencement, during which
Revenues for each of such months shall have exceeded all the
Partnership's expenses for such month on an accrual basis
(including, but not limited to, (a) all operational costs
and expenses, (b) all items payable in connection with the
Permanent Mortgages, and (c) the funding of any reserves
required by any Lender or Agency and/or pursuant to the
terms of this Agreement), except for depreciation,
amortization and other non-cash charges, distributions of
Cash Flow and Capital Transaction proceeds to the Partners
and the fees payable pursuant to this Agreement. If free
rent or other rental concessions shall have been granted to
tenants, the calculation of income pursuant to the preceding
sentence shall be adjusted so that the effect of such
concessions is amortized equally over the term of all leases
(excluding renewal periods) to which it applies. For
purposes of the foregoing, expenses shall (i) include
monthly payments of principal and interest in the amount
specified in the Permanent Mortgages regardless of any
forbearance thereof, (ii) include a ratable portion of the
annual amount (as estimated by the Managing General Partner)
of those seasonal expenses (such as utilities and
maintenance expenses) which might reasonably be expected to
be incurred on an unequal basis during a full annual period
of operation, and (iii) be adjusted, if necessary, so that
the expenses of real estate taxes and insurance are based on
the Managing General Partner's reasonable estimate of the
full assessed value of the Apartment Complex after
completion of construction.
Capital Account has the meaning specified in Section
10.1(b).
Capital Contribution means the total value of cash or
property contributed and agreed to be contributed to the
Partnership by each Partner, as shown in Schedule A. Any
reference in this Agreement to the Capital Contribution of a
then Partner shall include a Capital Contribution previously
made by any prior Partner for the Interest of such then
Partner.
Capital Transaction means any transaction the proceeds of
which are not includable in determining Cash Flow,
including, without limitation, the sale or other disposition
of all or substantially all of the assets of the
Partnership, casualty where any insurance proceeds are not
to be used for reconstruction, condemnation or refinancing
of the Apartment Complex, but excluding the payment of
Capital Contributions.
Carryover Certification means the date upon which the
Limited Partners shall have received, in a form and in
substance satisfactory to the Special Limited Partner, the
certification of the Auditors that as of a date no later
than December 31, 1998, the Partnership had owned land or
depreciable property constituting part of the Apartment
Complex and had incurred capitalizable costs with respect to
the Apartment Complex of at least ten per cent (10%) of the
Partnership's reasonably expected basis in the Apartment
Complex as of December 31, 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, with respect to any fiscal year of the
Partnership, or any other applicable period, from and after
the Commencement Date, subject to any applicable Agency
requirements (a) all Revenues received by the Partnership
during such period plus (b) any amounts which the Managing
General Partner, with the prior written consent of each
Lender or Agency whose consent may be required and the
Consent of the Investment Limited Partner, releases from any
Partnership reserve account as no longer being necessary to
be held as part of such reserve account, less (i) operating
expenses of the Partnership paid from Revenues during the
applicable period, (ii) all cash payments made from Revenues
during such period to discharge interest and/or principal
obligations of Partnership indebtedness, and (iii) all
amounts from Revenues, if any, added to Partnership reserves
during such period; provided, however, that in no event will
the deductions in determining Cash Flow pursuant to clauses
(i) and (ii) above include payments made on account of the
Asset Management Fee, the Partnership Management Fee or
Subordinated Loans. Cash Flow Shall be determined separately
for each fiscal year and shall not be cumulative.
Certificate means the Original Certificate as amended from
time to time (including any amendment thereto effected by or
in connection with this Agreement).
Class Contribution means the aggregate Capital Contributions
of all members of a particular class of Partners (i.e., the
General Partners, the Investment Limited Partner, the
Special Limited Partner or any Additional Limited Partner).
Code means the Internal Revenue Code of 1986, as amended
from time to time, and the regulations (permanent and
temporary) issued thereunder. References herein to any Code
section shall include any successor provisions.
Commencement Date means the first day of the month in which
the Admission Date occurs.
Competitive Real Estate Commission means that real estate or
brokerage commission paid for the purchase or sale of the
Apartment Complex or other Partnership property which is
reasonable, customary and competitive in light of the size,
type and location of the Apartment Complex or other
property.
Completion Date means the latest of (a) the date upon which
the Apartment Complex has been completed as evidenced by the
issuance by the inspecting architect and by each
governmental agency having jurisdiction of certificates of
substantial completion or occupancy (or local equivalents)
with respect to all apartment units in the Apartment Complex
and (b) the Partnership shall have obtained and furnished to
the Investment Limited Partner all due diligence
documentation with respect to the construction and
development of the Apartment Complex (which documentation
shall be satisfactory in form and content to the Investment
Limited Partner in its sole discretion), including without
limitation (i) an estoppel letter from each of the Lenders
stating that the Mortgages are in full force and effect and
no defaults have occurred thereunder (provided, however,
that if an estoppel letter is not obtainable from the Agency
notwithstanding the best efforts of the Managing General
Partner, then the Investment Limited Partner shall be
provided with such certification and other evidence as it
may request to the effect that the Permanent Second Mortgage
is in full force and effect and no defaults have occurred
thereunder), and (ii) a letter from the contractor stating
all amounts due to it pursuant to the construction contract
and otherwise in connection with the construction and
development of the Apartment Complex have been paid in full
and the Partnership is not in default under said
construction contract (or, instead of such payoff letter,
submission to the Investment Limited Partner of other
evidence demonstrating the truth of said payoff letter
statements).
Compliance Period means the fifteen (15)-year period
commencing with the first year of the Credit Period.
Consent of the Investment Limited Partner means the prior
written consent or approval of the Investment Limited
Partner.
Construction and Development Fee means the fee described in
Section 6.12(b).
Construction Lender means the Hibernia National Bank, 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 $850,000.
Construction Mortgage Closing means the first date upon
which (i) the Partnership shall have received all necessary
governmental and other permits and approvals for the
construction and operation of the Apartment Complex in
accordance with the plans and specifications therefor and
(ii) the Construction Mortgage shall have closed and the
initial draw thereunder shall have been disbursed.
Construction Permitting Date means the first date upon which
the Partnership shall have received all necessary
governmental and other permits and approvals for the
construction and operation of the Apartment Complex in
accordance with the plans and specifications therefor.
Controlling Person has the meaning given to it in the
context of Section 15 of the Securities Act of 1933, as
amended.
Cost Certification means the date upon which each Limited
Partner shall have received the written certification of the
Auditors, in a form and in substance satisfactory to the
Special Limited Partner, as to the itemized amounts of the
construction and development costs of the Apartment Complex
and the Eligible Basis and Applicable Percentage pertaining
to each building in the Apartment Complex.
Credit Agency means the Louisiana Housing Finance Agency.
Credit Period has the meaning given to it in Section
42(f)(1) of the Code.
Credit Recovery Loan means a constructive interest-bearing
advance of the Investment Limited Partner, as more fully
described in Section 5.1(g). Credit Recovery Loans and
interest thereon shall not be treated as loans or interest,
respectively, for accounting, tax or liability purposes or
for the purposes of Section 6.2(1). For the purposes of
Article X, the term Credit Recovery Loan shall not include
any portion of such an advance which shall have theretofore
been paid to the Investment Limited Partner.
Credit Shortfall has the meaning given to it in Section
5.1(g).
Developer's Overhead Reimbursement means the reimbursement
to the Managing General Partner described in Section
6.12(d).
Disposition (including the forms Dispose and Disposing)
means, as to a Limited Partner, the assignment, sale,
transfer, exchange or other disposition of all or any part
of its Interest.
Economic Risk of Loss has the meaning set forth in Treasury
Regulation Section 1.752-2.
Eligible Basis has the meaning given to it in Section 42(d)
of the Code.
Entity means any general partnership, limited partnership,
limited liability company, limited liability partnership,
corporation, joint venture, trust, business trust,
cooperative or association.
Event of Bankruptcy means with respect to any Person:
(i) the entry of a decree or order for relief by a court
having jurisdiction in respect of such Person or in respect
of any Controlling Person of such Person in a case under the
federal bankruptcy laws, as now or hereafter constituted, or
any other applicable federal or state bankruptcy, insolvency
or other similar law, or the appointment of a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or
similar official) of such Person or of any Controlling
Person of such Person or for any substantial part of such
Person's property or of the property of any Controlling
Person of such Person, or the issuance of an order for the
winding-up or liquidation of such Person's affairs or the
affairs of any Controlling Person of such Person and the
continuance of any such decree or order unstayed and in
effect for a period of sixty (60) consecutive days; or
(ii) the commencement by such Person or by any Controlling
Person of such Person of a proceeding seeking any decree,
order or appointment referred to in clause (i), the consent
by such Person or by any Controlling Person of such Person
to any such decree, order or the appointment, or the taking
of any action by such Person or by any Controlling Person of
such Person in furtherance of any of the foregoing.
Filing Office means the Office of the Secretary 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.
Hazardous Material has the collective meanings given to the
terms hazardous material, hazardous substances and hazardous
wastes in the Federal Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. Sec. 9601
et seq., as amended, and to the term radioactive materials
in the context of the Atomic Energy Act, 28 U.S.C. Sec.
2344, and also includes any meanings given to such terms in
any similar state or local statutes, ordinances, regulations
or laws. In addition, the term Hazardous Material also
includes oil and any other substance known to be hazardous.
HUD means the United States Department of Housing and Urban
Development.
Immediate Family means with respect to any Person, such
Person's spouse, parents, parents-inlaw, 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
not less than 100% of the 40 apartment units in the
Apartment Complex shall have been leased to and physically
occupied by Qualified Tenants.
Installment means an installment of the Investment Limited
Partner's Capital Contribution paid or payable to the
Partnership pursuant to Section 5.1.
Interest means the entire interest of a Partner in the
Partnership at any particular time, including the right of
such Partner to any and all benefits to which a Partner may
be entitled hereunder and the obligation of such Partner to
comply with the terms of this Agreement.
Invested Amount means (i) as to the Investment Limited
Partner, an amount equal to the quotient of (a) the paid-in
Capital Contribution of the Investment Limited Partner,
divided by (b) 73% and (ii) as to any other Partner, an
amount equal to its Capital Contribution.
Investment General Partner means Boston Capital Associates
IV, L.P., in its capacity as the general partner of the
Investment Limited Partner, and any other Persons who may
become successor or additional general partners of the
Investment Limited Partner.
Investment Limited Partner means Boston Capital Tax Credit
Fund IV, L.P., a Delaware limited partnership (specifically
Series 32 thereof), and any Person or Persons who replace it
as Substituted Limited Partner, but shall not include any
Special Limited Partner or Additional Limited Partner.
Investment Partnership Agreement means the Amended and
Restated Agreement of Limited Partnership of the Investment
Limited Partner, as amended from time to time.
Lenders means the Construction Lender, Permanent First
Lender and the Permanent Second Lender, each in its capacity
as maker of a Mortgage loan and their successors and assigns
in such capacity.
Limited Partners means the Investment Limited Partner, the
Special Limited Partner and any Additional Limited Partner.
Low-Income Apartment Units means the 40 units in the Project
with respect to which the Partnership has agreed to comply
with the requirements for the Tax Credit under Section 42 of
the Code.
Management Agent means 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.
Managing General Partner means M. Riemer Calhoun, Jr. and
his successors and assigns.
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, or
any more restrictive requirements required by the Credit
Agency.
Mortgages means the mortgage indebtedness of the Partnership
to the Construction Lender, the Permanent First Lender and
the Permanent Second Lender; where the context admits,
Mortgages shall mean the Construction Mortgage, the
Permanent First Mortgage and the Permanent Second Mortgage
and include, with respect to the Construction Mortgage and
the Permanent First Mortgage, the Promissory Note, the
Multiple Indebtedness Mortgage and Security Agreement, the
Loan Agreement, the Assignment of Leases and Rentals, the
Guaranty Agreement, the Security Agreements, the UCC-1
Financing Statements, and, with respect to the Permanent
Second Mortgage, the Note, the Mortgage, the Agency
Regulatory Agreement, the Assignment of Leases and Rents and
the UCC-1 Financing Statement, and all other documentation
related thereto which evidence and secure such indebtedness,
including any Agency documentation related thereto.
Original Agreement has the meaning specified in the
Preliminary Statement.
Original Certificate has the meaning specified in the
Preliminary Statement.
Partner means any General Partner or Limited Partner.
Partner Non-Recourse Debt means any Partnership liability
(a) that is considered non-recourse under Treasury
Regulation Section 1.1001-2 or for which the creditor's
right to repayment is limited to one or more assets of the
Partnership and (b) for which any Partner or Related Person
bears the Economic Risk of Loss.
Partner Non-Recourse Debt Minimum Gain means the amount of
partner nonrecourse debt minimum gain and the net increase
or decrease in partner nonrecourse debt minimum gain
determined in a manner consistent with Treasury Regulation
Sections 1.704-2(d) and 1.704-2(g)(3).
Partnership means the limited partnership continued pursuant
to this Agreement.
Partnership Management Fee means the fee payable to the
Managing General Partner pursuant to the provisions of
Section 6.12(a).
Partnership Minimum Gain means the amount determined by
computing, with respect to each Partnership Non-Recourse
Liability, the amount of gain, if any, that would be
realized by the Partnership if it disposed of (in a taxable
transaction) the property subject to such liability in full
satisfaction of such liability, and by then aggregating the
amounts so computed. Such computations shall be made in a
manner consistent with Treasury Regulation Section
1.704-2(d).
Partnership Non-Recourse Liability means any Partnership
liability (or portion thereof) for which no Partner or
Related Person bears the Economic Risk of Loss.
Permanent Lenders mean, collectively, the Permanent First
Lender and the Permanent Second Lender.
Permanent First Lender means Hibernia National Bank, in its
capacity as maker and holder of the Permanent First
Mortgage, together with its successors and assigns in such
capacity.
Permanent First Mortgage means the permanent financing
provided, or to be provided, by the Permanent First Lender
for the Apartment Complex following the completion thereof
in the initial principal amount of up of $93,806.
Permanent Mortgages means the Permanent First Mortgage and
the Permanent Second Mortgage.
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 Mortgages shall have been finally
determined; and (c) amortization of the Permanent Mortgages
shall have commenced.
Permanent Mortgage Commitment means the first date on which
the Partnership receives the written commitment of the
Permanent Lenders to make the Permanent Mortgages.
Permanent Second Lender means the Agency, in its capacity as
maker and holder of the Permanent Second Mortgage, together
with its successors and assigns in such capacity.
Permanent Second Mortgage means the permanent financing
provided by the Permanent Second Lender for the Apartment
Complex following the completion thereof in the initial
principal amount of up of $400,000.
Person means any individual or Entity.
Project Documents means and includes all documents
evidencing or relating to the Construction Mortgage and the
Permanent Mortgages, the Construction Contract, the
Architect Agreement, the Payment and Performance Bond, the
Title Policy, the Survey, the Building Permit, the
Management Agreement, and all other instruments delivered to
(or required by) the Construction Lender and/or the
Permanent Lenders 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 to the Investment Limited Partner means
$182,524 for 1999, $208,599 per annum for each of the years
2000 through 2008 (inclusive) and $26,075 for 2009;
provided, however, that the Projected Credit for 2009 shall
be reduced by the amount, if any, by which the Actual Credit
for 1999 exceeds $182,524; and provided further that upon
the occurrence of any of the events described in clauses
(i), (ii) and (iii) of Section 5.1(e), the Projected Credit
shall thereafter be the Revised Projected Credit.
Qualified Basis has the meaning given to it in Section 42(c)
of the Code.
Qualified Income Offset Item means (1) an allocation of loss
or deduction that, as of the end of each year, reasonably is
expected to be made (a) pursuant to Section 704(e)(2) of the
Code to a donee of an interest in the Partnership, (b)
pursuant to Section 706(d) of the Code as the result of a
change in any Partner's Interest, or (c) pursuant to
Regulation Section 1.751-1(b)(2)(ii) as the result of a
distribution by the Partnership of unrealized receivables or
inventory items and (2) a distribution that, as of the end
of such year, reasonably is expected to be made to a Partner
to the extent it exceeds offsetting increases to such
Partner's Capital Account which reasonably are expected to
occur during or prior to the Partnership taxable year in
which such distribution reasonably is expected to occur.
Qualified Tenant means a tenant (i) with income not
exceeding that permitted by the Minimum Set-Aside Test who
leases a Low-Income Apartment Unit in the Apartment Complex
at a rent which satisfies the Rent Restriction Test and (ii)
complying with any other requirements imposed by the Project
Documents.
Related Person means a Person related to a Partner within
the meaning of Treasury Regulation Section 1.752-4(b).
Rent Restriction Test means the test pursuant to Section 42
of the Code whereby the gross rent (as defined therein)
charged to tenants of the Low-Income Apartment Units may not
exceed thirty per cent (30%) of the qualifying income
levels.
Revenues means all cash receipts (actually received) of the
Partnership during a specified period of time, including
rental assistance payments, operating subsidies and the
proceeds of rental interruption insurance receipts, but
excluding the proceeds of Capital Contributions, the
proceeds of the sale or other disposition of Partnership
assets, liquidation proceeds, loan or refinancing proceeds,
casualty proceeds, condemnation or eminent domain proceeds.
Any net rental income applied to complete the construction
of the Apartment Complex pursuant to Section 6.11 prior to
the later of the Admission Date or Permanent Mortgage
Commencement shall not be included when determining
Revenues. For the purposes of computing Revenues, rental
receipts shall not include prepaid rent and, if attributable
to Low-Income Apartment Units, shall be included only if
attributable to Qualified Tenants.
Revised Projected Credit has the meaning given to it in
Section 5.1(e).
Schedule A means Schedule A to this Agreement, as amended
from time to time.
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 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 Louisiana.
State Designation means the date upon which the Partnership
receives the final allocation from the Credit Agency for the
building(s) constituting the Apartment Complex in an annual
dollar amount of not less than $208,620, as evidenced by the
execution by or on behalf of said agency of Form(s) 8609.
For the purposes of determining State Designation, each
building in the Apartment Complex shall be treated as having
received an allocation of Tax Credit in an amount equal to
the lesser of (i) the amount of Tax Credit carryover
allocation received from the Credit Agency as to such
building or (ii) the amount of Tax Credit set forth on the
Form 8609 as to such building.
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.
Tax Credit Set-Aside means the date upon which the
Partnership receives a reservation, effective for the year
1998, in an annual dollar amount of not less than $208,620,
which reservation shall not have expired or been revoked
prior to the date on which the First Installment is paid.
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 laws.
Withdrawal (including the forms Withdraw, Withdrawing and
Withdrawn) means, as to a General Partner, the occurrence of
death, adjudication of insanity or incompetence, Event of
Bankruptcy, dissolution, liquidation, or voluntary or
involuntary withdrawal or retirement from the Partnership
for any reason, including whenever a General Partner may no
longer continue as a General Partner by law or pursuant to
any terms of this Agreement. Withdrawal shall also mean the
sale, assignment, transfer or encumbrance by a General
Partner of its interest as a General Partner. A General
Partner which is a corporation or partnership shall be
deemed to have sold, assigned, transferred or encumbered its
interest as a General Partner in the event (as a result of
one or more transactions) of any sale, assignment or other
transfer (but specifically excluding any transfer occurring
pursuant to the laws of descent and distribution) or
encumbrance of a controlling interest or the interest of a
Controlling Person in a corporate General Partner or of a
general partner interest in a General Partner which is a
partnership. For purposes of this definition of Withdrawal,
controlling interest shall mean the power to direct the
management and policies of such person, directly or
indirectly, whether through the ownership of voting
securities, by contract or otherwise.
Withdrawing Original Limited Partner has the meaning
specified in the Preliminary Statement.
ARTICLE II Name and Business
2.1 Name; Continuation
The name of the Partnership is Pineridge Apartments
Partnership, A Louisiana Partnership In Commendam. The
Partners agree to continue the Partnership which was formed
pursuant to the provisions of the Act.
2.2 Office and Resident Agents
(a) The principal office of the Partnership is:
907 Polk Street
P.O. Box 799
Mansfield, Louisiana 71052
at which office there shall be maintained those records
required by the Act to be kept by the Partnership.
The Partnership may have such other or additional offices as
the Managing General Partner shall deem desirable. The
Managing General Partner may at any time change the location
of the Partnership offices and shall give due notice thereof
to the Limited Partners.
(b) The resident agent in the State for the Partnership for
service of process is as follows:
M. Riemer Calhoun, Jr.
907 Polk Street
P.O. Box 799
Mansfield, Louisiana 71052
2.3 Purpose
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
requirements. The Partnership shall not engage in any other
business or activity.
2.4 Term and Dissolution
The Partnership shall continue in full force and effect
until December 31, 2040, except that the Partnership shall
be dissolved and its assets liquidated prior to such date
upon:
The sale or other disposition of all or substantially all of
the assets of the Partnership;
The Withdrawal of a General Partner if (i) the remaining
General Partner(s), if any, shall fail to continue the
business of the Partnership and reconstitute the Partnership
as a successor limited partnership as provided in Section
7.2 and (ii) the Investment Limited Partner and the Special
Limited Partner shall fail to exercise the right provided in
Section 7.3;
The election to dissolve the Partnership made in writing by
the Managing General Partner with the Consent of the
Investment Limited Partner and the approval (if required) of
each applicable Agency;
The entry of a final decree of dissolution of the
Partnership by a court of competent jurisdiction; or
(e) Any other event which causes the dissolution of the
Partnership under the Act if the Partnership is not
reconstituted pursuant to Section 7.2 or Section 7.3.
Upon dissolution of the Partnership, the Managing General
Partner (or for purposes of this paragraph, his trustees,
receivers or successors) shall cause the cancellation of the
Certificate, liquidate the assets of the Partnership and
apply and distribute the proceeds thereof in accordance with
Section 10.3. Notwithstanding the foregoing, if, during
liquidation, the Managing General Partner shall determine
that an immediate sale of part or all of the Partnership's
assets would be impermissible, impractical or cause undue
loss to the Partners, the Managing General Partner may defer
liquidation of, and withhold from distribution for a
reasonable time, any assets of the Partnership except those
necessary to satisfy Partnership debts and obligations
(other than Subordinated Loans).
ARTICLE III Mortgages; Refinancing and Disposition
of Property
A. The Managing General Partner and his Affiliates, jointly,
severally, and in solido, is 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 the Managing General Partner
nor any Related Person shall at any time bear, nor shall the
Managing General Partner permit any other Partner or any
Related Person to bear, the Economic Risk of Loss for the
payment of any portion of the Permanent Mortgages.
B. The Partnership may amend, modify, decrease, increase or
refinance the Construction or Permanent Mortgages and may
make any required transfer or conveyance of Partnership
assets for security or mortgage purposes; provided, however,
any such amendment, modification, decrease (except through
the Permanent Mortgage amortization schedule anticipated at
Permanent Mortgage Commencement), increase or refinancing of
the Construction or Permanent Mortgages may be made by the
Managing General Partner only with the Consent of the
Investment Limited Partner.
C. The Partnership may sell, lease, exchange or otherwise
transfer or convey all or any substantial part of the assets
of the Partnership only with the Consent of the Investment
Limited Partner. Notwithstanding the foregoing and except as
set forth in Section 6.2(6), no Consent of the Investment
Limited Partner shall be required for the leasing of
apartments to tenants in the normal course of operations.
D. The total compensation to all Persons for the sale of the
Apartment Complex shall be limited to a Competitive Real
Estate Commission, not to exceed three percent (3%) of the
contract price for the sale of the Apartment Complex.
ARTICLE IV Partners
4.1 General Partner
The name, address and Capital Contribution of the Managing
General Partner is as set forth on Schedule A. The Managing
General Partner shall make additional Capital Contributions
to the Partnership in an amount sufficient to enable the
Partnership to pay any deferred portion of the Construction
and Development Fee not paid by December 31, 2009.
4.2 Investment Limited Partner, Special Limited Partner and
Withdrawing Original Limited Partner
The Withdrawing Original Limited Partner hereby withdraws as
a limited partner of the Partnership and acknowledges that
the Withdrawing Original Limited Partner no longer has any
Interest in, or rights or claims against, the Partnership as
a Limited Partner as of the Admission Date. The Investment
Limited Partner and the Special Limited Partner are hereby
admitted to the Partnership as the sole Limited Partners in
substitution for the Withdrawing Original Limited Partner as
of the Admission Date and agree to be bound by the terms and
provisions of the Project Documents and this Agreement. The
names and addresses of the Investment Limited Partner and
the Special Limited Partner are as set forth on Schedule A.
The Managing General Partner shall have no authority to
admit additional Limited Partners without the Consent of the
Investment Limited Partner.
4.3 Liability of the Limited Partners
None of the Investment Limited Partner, the Special Limited
Partner and any Person who becomes an Additional Limited
Partner shall be liable for any debts, liabilities,
contracts or obligations of the Partnership and shall only
be liable to pay their respective Capital Contributions as
and when the same are due hereunder and under the Act.
4.4 Special Rights of the Investment Limited Partner and the
Special Limited Partner
(a) Notwithstanding any other provision herein, to the
extent the law of the State is not inconsistent, each of the
Investment Limited Partner and the Special Limited Partner
shall have the right, subject to the prior written consent
of any Lender or Agency (if such consent is required) to:
amend this Agreement in any particular, subject to the
reasonable consent of the General Partners so long as the
Managing General Partner is not subject to the removal
provisions pursuant to Section 4.4(a)(ii);
remove any General Partner and elect a new General Partner
(A) on the basis of the performance and discharge of any
General Partner's obligations constituting fraud, bad faith,
negligence, misconduct or breach of fiduciary duty, or (B)
upon the occurrence of any of the following: (1) a General
Partner shall have materially violated any provisions of any
Project Document or other document required in connection
with any Mortgage, or any provisions of any Agency
regulations applicable to the Apartment Complex; (2) a
General Partner shall have materially violated any provision
of this Agreement, including, but not limited to, any
obligation to fund any Partnership expenses under Section
6.10, or a General Partner shall have materially violated
any provision of applicable law; (3) any Mortgage shall have
gone into default; (4) the termination of the Partnership
for Federal income tax purposes; (5) the treatment of the
Partnership for federal income tax purposes as an
association taxable as a corporation; or (6) the Partnership
failing to pay on a timely basis any of its real estate or
personal property tax obligations to any county, city, town
or other local government;
continue the business of the Partnership with a substitute
General Partner; and
approve or disapprove the sale of all or substantially all
of the assets of the Partnership.
Upon the removal of a General Partner, (i) without any
further action by any Partner, the Special Limited Partner
or its designee shall automatically become a General Partner
and acquire in consideration of a cash payment of $100 such
portion of the Interest of the removed General Partner as
counsel to the Investment Limited Partnership shall
determine is the minimum appropriate interest in order to
assure the continued status of the Partnership as a
partnership under the Code and under the Act, (ii) the
remaining portion of the Interest of the removed General
Partner shall automatically be converted to an equal
Interest as an Additional Limited Partner, (iii) the
Interest of the Special Limited Partner as the Special
Limited Partner shall continue unaffected by the new status
of the Special Limited Partner or its designee as a General
Partner, and (iv) the new General Partner shall
automatically be irrevocably delegated all of the powers and
duties of the General Partners pursuant to Section 6.4. The
Special Limited Partner or any successor General Partner
proposed by the Special Limited Partner shall have the
option, exercisable in its sole discretion, to acquire the
Additional Limited Partner Interest, or any portion thereof,
of any removed General Partner upon payment of the agreed or
then present fair market value of such Interest or portion
thereof. Any dispute as to the value of the Interest or
portion thereof to be acquired pursuant to the immediately
preceding sentence shall be submitted to a committee
composed of three qualified real estate appraisers, one
chosen by the removed General Partner, one chosen by the
successor General Partner, and the third chosen by the two
so chosen. The committee of appraisers shall meet in
Shreveport, Louisiana, and the proceedings of such committee
shall conform to the rules of the American Arbitration
Association, as far as appropriate, and its decision shall
be final and binding. The expense of arbitration shall be
born equally by the removed General Partner and the
Partnership. The method of payment to the removed General
Partner shall be fair and must protect the solvency and
liquidity of the Partnership. The method of payment will be
deemed presumptively fair where it provides for an
interest-bearing promissory note coming due in no less than
five (5) years with equal installments each year. In
addition, upon removal, the Partnership must promptly pay to
the removed General Partner all amounts then accrued and
owing to the removed General Partner; provided, however,
that notwithstanding the language of Section 6.12, Article
X, Article XI and any other provision hereof, no removed
General Partner or any Affiliate thereof shall be entitled
to receive any fee, compensation or other remuneration from
the Partnership, other than (i) the above-described payment
for the Interest, or portion thereof, of the removed General
Partner, and (ii) any such fee, compensation or other
remuneration which had already been earned in full prior to
the date of such removal. The Partnership is not authorized
to enter into any arrangement whereby any fee, compensation
or other remuneration could be payable directly or
indirectly to any General Partner or Affiliate thereof in a
manner inconsistent with the immediately preceding sentence
unless the prior written consent of the Special Limited
Partner shall have been obtained to such particular
arrangement. The Partnership may offset against any payments
to a General Partner removed under this Section 4.4 any
damages suffered by the Partnership as a result of any
breach of the obligations of such General Partner hereunder.
A General Partner so removed will not be liable as a general
partner for any obligations of the Partnership incurred
after the effective date of its removal. Each General
Partner hereby grants to the Special Limited Partner an
irrevocable (to the extent permitted by applicable law)
power of attorney coupled with an interest to execute and
deliver any and all documents and instruments on behalf of
such General Partner and the Partnership as the Special
Limited Partner may deem to be necessary or appropriate in
order to effect the provisions of this Section 4.4 and to
enable the new General Partner to manage the business of the
Partnership.
In order to implement Section 4.4(a)(iv), the Managing
General Partner is hereby required, within five (5) days
after his receipt of any offer to purchase the Apartment
Complex or all of the Interests in the Partnership, to send
a copy of such offer (or a written description of any such
oral offer) to each of the Limited Partners. If, within
thirty (30) days of its receipt of any such copy of such an
offer, the Special Limited Partner shall send notice to the
Managing General Partner that the Special Limited Partner
desires that the Partnership accept such offer, then the
Managing General Partner shall be required to accept such
offer on behalf of the Partnership and proceed promptly to
close such transaction unless otherwise instructed by the
Special Limited Partner at any point prior to the closing of
such transaction. To the extent, if any, that the Special
Limited Partner shall determine, in its discretion, that the
Managing General Partner is not proceeding in a manner
satisfactory to it with respect to any such offer or
closing, each Partner hereby grants to the Special Limited
Partner an irrevocable (to the extent permitted by law)
power of attorney coupled with an interest to execute and
deliver any and all documents and instruments on behalf of
the Partnership and any Partner as the Special Limited
Partner may deem to be necessary or appropriate in order to
effect the acceptance of and/or closing pursuant to any such
offer in such a manner as the Special Limited Partner shall,
in its discretion, determine to be satisfactory.
4.5 Meetings
The Managing General Partner or Limited Partners holding
more than ten per cent (10%) of the then outstanding Limited
Partner Interests may call meetings of the Partnership for
any matters for which the Limited Partners may vote as set
forth in this Agreement. A list of the names and addresses
of all Limited Partners shall be maintained as part of the
books and records of the Partnership and shall be made
available upon request to any 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 Managing General Partner
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
5.1 Payments
(a) The Special Limited Partner's Capital Contribution
shall be $10, payable in full in cash on the Admission Date.
The Investment Limited Partner may deliver to the
Partnership, on behalf of the Special Limited Partner, the
Special Limited Partner's Capital Contribution. The
Investment Limited Partner's Capital Contribution shall be
paid in cash installments (the Installments), as follows:
(1) $1,126,436 (the First Installment) on the latest of (i)
the Admission Date, (ii) Tax Credit Set-Aside, (iii)
Construction Mortgage Closing, (iv) Permanent Mortgage
Commitment, or (v) Permanent Second Mortgage closing;
(2) $150,191 (the Second Installment) on the latest of (i)
the Completion Date, (ii) Cost Certification, or (iii) State
Designation; and
(3) $225,287 (the Third Installment) on the latest of (i)
the Initial 100% Occupancy Date, (ii) Permanent Mortgage
Commencement, (iii) receipt by the Limited Partners of a
copy of the Partnership's owner's title insurance policy, as
endorsed through Permanent Mortgage Commencement, with such
policy and endorsement in form and substance satisfactory to
the Special Limited Partner, (iv) delivery of an opinion of
counsel to the Partnership concerning the Permanent
Mortgages, including the non-recourse nature thereof,
satisfactory as to form, content and counsel to the Special
Limited Partner and (v) Breakeven Point; provided, however,
that the Managing General Partner shall give the Investment
Limited Partner not less than twenty-one (21) days written
notice prior to the due date of each Installment subsequent
to the First Installment.
The obligation of the Investment Limited Partner to pay each
Installment is conditioned upon delivery by the Managing
General Partner to the Investment Limited Partner of a
written certificate (the Payment Certificate) stating that
as of the date of such certificate (i) all the conditions to
the payment of such Installment have been satisfied and (ii)
all representations and warranties of the General Partners
contained in this Agreement are true and correct. Except as
provided in the final sentence of this Section 5.1(b),
acceptance by the Partnership of any Installment shall
constitute a confirmation that, as of the date of payment,
all such conditions are satisfied and all such
representations and warranties are true and correct. In
addition, the obligation of the Investment Limited Partner
to pay the First Installment is also conditioned upon
delivery by the Managing General Partner to the Investment
Limited Partner of (i) a legal opinion of independent
counsel to the Partnership, which opinion must be
satisfactory to the Investment Limited Partner as to form,
content and identity of counsel and (ii) a photocopy of an
owner's title insurance policy, or an endorsement thereto,
issued to the Partnership with respect to the Apartment
Complex with an effective date on or after the Admission
Date, in an insured amount of not less than $1,995,820, from
a title insurance company reasonably satisfactory to the
Investment Limited Partner and evidencing the Partnership's
ownership of the Apartment Complex subject only to such
exclusions, exceptions, conditions and stipulations as shall
be acceptable to the Investment Limited Partner, in its sole
discretion. In no event shall any Installment become due
until all of the conditions for all of the Installments
listed prior to the Installment in question in Section
5.1(a) shall have been satisfied and all of such prior
Installments shall have become due. Notwithstanding the
foregoing, however, if at any time prior to the date when an
Installment becomes due and payable, the Partnership has any
unpaid items enumerated in the numbered clauses of the
second sentence of Section 6.11 or an Operating Deficit
(expenses in excess of revenues which the Managing General
Partner would be required to fund pursuant to Section 6.10),
then the Investment Limited Partner may, at its option,
waive the requirement of the delivery of the Payment
Certificate or any other condition with respect to part or
all of such Installment and pay such part or all of such
Installment, provided that the proceeds of the amount so
paid are used by the Partnership to fully fund such unpaid
item and/or Operating Deficit; provided, however, that if
the proceeds so paid are designated in this Agreement to be
used to pay fee(s) or distributions to the Managing General
Partner or his Affiliates, then such proceeds shall be
deemed to have first been paid to the Managing General
Partner or his Affiliates as such fees or distributions and
then applied by the Managing General Partner to fund such
unpaid item and/or Operating Deficit as provided in said
Section 6.10 or 6.11, as the case may be.
The Payment Certificate for each Installment shall be dated
and delivered not less than ten (10) nor more than thirty
(30) days prior to the due date for such Installment.
(d) If, as of the date when an Installment would otherwise
be due, any statement required to be made in the Payment
Certificate for such Installment cannot be truthfully made,
the Managing General Partner shall notify the Investment
Limited Partner of the reason why such statement would be
untrue if made, and the Investment Limited Partner shall not
be required to pay such Installment; provided, however, that
if (i) any such statement can subsequently be truthfully
made and (ii) the Investment Limited Partner shall not have
irrevocably lost, in the good faith judgment of the
Investment General Partner, any material tax or other
benefits hereunder, then the Investment Limited Partner
shall pay such Installment to the Partnership thirty (30)
days after delivery by the General Partners to the
Investment Limited Partner of the Payment Certificate
together with an explanation of the manner in which each
such statement had become true.
(e) In the event that (i) State Designation does not occur
by May 31, 1999, or (ii) by May 31, 1999, the Limited
Partners shall not have received a written certification of
the Auditors in a form and in substance satisfactory for the
purpose of achieving Cost Certification and indicating that
the product of the Apartment Complex's Qualified Basis and
its Applicable Percentage is such that the Apartment Complex
will be eligible to receive Tax Credit in an annual amount
of at least $208,620, or (iii) at any time after the
Completion Date the product of the Apartment Complex's
Qualified Basis and its Applicable Percentage is determined
by the Auditors, the Tax Accountants or the Service to be
such that the Apartment Complex will not be eligible to
receive Tax Credit in an annual dollar amount of at least
$208,620, then (a) the Managing General Partner shall pay to
the Investment Limited Partner an amount equal to 99.99% of
the product of (A) the excess of $2,086,200 over the total
amount of Tax Credit actually allocated or expected to be
allocated to the Partnership over the entire Credit Period
and (B) 0.72, and (b) the Projected Credit for each year
shall thereafter be redefined to mean 99.99% of the annual
amount of Tax Credit actually so allocated to the
Partnership (the Revised Projected Credit). Any amount
payable by the Managing General Partner to the Investment
Limited Partner pursuant to this Section 5.1(e) shall, at
the option of the Investment Limited Partner, (i) be applied
first to the Installment, if any, next due to be paid by the
Investment Limited Partner, and any balance of such amount
payable by the Managing General Partner in excess of the
amount of such Installment shall be applied to succeeding
Installments, if any, and/or (ii) be paid in its entirety by
the Managing General Partner directly to the Investment
Limited Partner promptly after demand is made therefor, as a
payment of damages for breach of warranty, regardless of the
reason for the occurrence of such event.
(f) If with respect to any fiscal year commencing during the
sixty (60)-month period commencing on the later of (i) the
Admission Date or (ii) the date on which the first building
in the Apartment Complex is placed in service for the
purposes of Section 42 of the Code (a Reduction Year) the
Actual Credit is or was less than the Projected Credit to
the Investment Limited Partner, then the Managing General
Partner shall pay to the Investment Limited Partner the
Reduction Amount. The Reduction Amount shall be equal to the
sum of (A) 72% of the excess of the Projected Credit to the
Investment Limited Partner for such year over the Actual
Credit for such year, plus (B) the amount of any recapture,
interest or penalty payable by the limited partners of the
Investment Limited Partner as a result of such shortfall,
assuming that each limited partner in the Investment Limited
Partner used all of the Tax Credits allocated to it in the
year of allocation and that each such Person was subject to
interest at the rate set forth in Section 6621(a)(2) of the
Code and to the penalty for understatement of tax set forth
in Section 6662(d) of the Code. The Auditors shall make
their determination of the amount of the Actual Credit with
respect to each Reduction Year within thirty (30) days
following the end of such year but such amount shall be
subject to later adjustment by the Auditors or by the
Service in connection with an audit. The Investment Limited
Partner shall be eligible to be paid a Reduction Amount as
hereinabove described with respect to each Reduction Year
and may receive multiple payments of Reduction Amounts in
the event of multiple changes in the Actual Credit. Any
Reduction Amount shall, at the option of the Investment
Limited Partner, (i) first be applied to the Installment
next due to be paid by the Investment Limited Partner, with
any portion of such Reduction Amount in excess of the amount
of such Installment then being applied to succeeding
Installments, and/or (ii) be paid in its entirety by the
Managing General Partner directly to the Investment Limited
Partner promptly after demand is made therefor, as a payment
of damages for breach of warranty, regardless of the reason
for the occurrence of such event.
In the event that, for any reason, with respect to any
fiscal year following the fiscal years referred to in
Section 5.1(f), the amount of the Actual Credit shall be
less than the Projected Credit to the Investment Limited
Partner (such difference being hereinafter referred to as a
Credit Shortfall), the Investment Limited Partner shall be
treated as having made a constructive advance to the
Partnership (a Credit Recovery Loan), which shall be deemed
to have been made on January 1 of such year in an amount
equal to the sum of (i) the Credit Shortfall for such year
plus (ii) the amount of any recapture, interest or penalty
payable by the limited partners of the Investment Limited
Partner as a result of the Credit Shortfall for such year,
assuming that each limited partner in the Investment
Partnership used all of the Tax Credits allocated to it in
the year of allocation and that each such Person was subject
to interest at the rate set forth in Section 6621(a)(2) of
the Code and to the penalty for understatement of tax set
forth in Section 6662(d) of the Code. Credit Recovery Loans
shall be deemed to bear simple (not compounded) interest
from the respective dates on which such constructive
advances shall have been deemed to have been made under this
Section 5.1(g) at 9% per annum. Credit Recovery Loans shall
be payable by the Partnership as provided in Section
10.3(b), Clause Fourth.
5.2 Return of Capital Contributions
(a) Failure to Achieve Developmental and/or Tax Credit
Benchmarks and Standards. If:
(1) all of the Low-Income Apartment Units shall not have
been placed in service by May 31, 1999 (or any later date
fixed by the Managing General Partner with the Consent of
Investment Limited Partner), or
(2) by May 31, 1999 (or any later date fixed by the Managing
General Partner with the Consent of the Investment Limited
Partner) less than 40 apartment units in the Apartment
Complex shall have been occupied by Qualified Tenants, or
(3) Permanent Mortgage Commencement shall not have occurred
prior to May 31, 1999 (or any later date fixed by the
Managing General Partner with the Consent of the Investment
Limited Partner), or
(4) State Designation shall not have occurred by May 31,
1999 (or any later date fixed by the General Partners with
the Consent of the Investment Limited Partner), or
(5) the Partnership shall fail to meet the Minimum Set-Aside
Test or the Rent Restriction Test by the close of the first
year of the Credit Period and/or fails to continue to meet
either of those Tests at any time during the sixty
(60)-month period commencing on such date, or
(6) prior to Permanent Mortgage Commencement, (a)
foreclosure proceedings shall have commenced under the
Construction Mortgage and such proceedings shall not have
been dismissed within thirty (30) days, (b) any of the
commitments of any Lender or Agency to provide the Permanent
Mortgages and/or any subsidy financing shall be terminated
or withdrawn and not reinstated or replaced within sixty
(60) days with terms equally or more favorable to the
Investment Limited Partner or terms for which the Consent of
the Investment Limited Partner and (if required) the
approval of any Agency or other Lender shall have been
obtained, or (c) the Construction Lender shall have
irrevocably refused to make any further advances under the
Construction Mortgage and such decision shall not have been
reversed or the Construction Lender replaced within thirty
(30) days, or
(7) if by May 31, 1999 (or any later date fixed by the
Managing General Partner with the Consent of the Investment
Limited Partner), the Investment Limited Partner shall not
have received, in form and substance satisfactory to the
Investment Limited Partner, the certification of the
Auditors that as of a date no later than December 31, 1998,
the Partnership will have had incurred capitalizable costs
with respect to the Apartment Complex of at least ten per
cent (10%) of the Partnership's reasonably expected basis in
the Apartment Complex as of December 31, 2000, so that each
building in the Apartment Complex is a qualified building
for the purposes of Section 42(h)(1)(E)(ii) of the Code, or
(8) 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 ten per cent
(10%) of the Partnership's reasonably expected basis in the
Apartment Complex as of December 31, 2000, or
(9) if by May 31, 1999 (or any later date fixed by the
Managing General Partner with the Consent of the Investment
Limited Partner) Cost Certification shall not have occurred,
or
(10) if by August 31, 1999 (or any later date fixed by the
Managing General Partner with the Consent of the Investment
Limited Partner) Breakeven shall not have been achieved, or
(11) the Managing General Partner fails to make any advances
necessary to fund payment of the Asset Management Fee
pursuant to Section 6.12,
then the Managing General Partner shall, within five (5)
days of the occurrence thereof, send to the Investment
Limited Partner and the Special Limited Partner notice of
such event and of the Managing General Partner/s obligation
to repurchase the Interests of the Investment Limited
Partner and the Special Limited Partner by paying to the
Investment Limited Partner and the Special Limited Partner
an amount (the Repurchase Amount) equal to each such
Partner's Invested Amount minus the amount, if any, of such
Partner's Capital Contribution which shall not yet have been
paid (or deemed to have been paid) to the Partnership plus
the amount of any third-party costs, including, but not
limited to, attorney's fees incurred by or on behalf of such
Partner in implementing this Section 5.2(a) in the event the
Investment Limited Partner and/or the Special Limited
Partner requires such a repurchase. If either the Special
Limited Partner or the Investment Limited Partner elects to
require a repurchase of its Interest and the payment to it
of an amount equal to its Repurchase Amount, it shall send
notice thereof to the Partnership within thirty (30) days
after the mailing date of the Managing General Partner's
notice, or at any time after the occurrence of any of the
foregoing if the Managing General Partner shall not have
sent notice thereof, and the Managing General Partner shall
within ten (10) days after the Partnership receives any such
notice from a Partner requesting the purchase of its
Interest repurchase the Interest of such Partner by paying
to such Partner an amount equal to its Repurchase Amount.
(b) Lender Disapproval. If any Lender and/or Agency shall
disapprove, or fail to give any required approval of, the
Investment Limited Partner and/or the Special Limited
Partner as a Limited Partner hereunder within one hundred
eighty (180) days of the Admission Date, then such Limited
Partner shall, effective as of such time or such later time
as may be selected by such Limited Partner (or such other
time as may be specified by the Lender and/or Agency in its
disapproval), at the option of such Limited Partner, if not
directed by the Lender and/or Agency to withdraw), cease to
be a Limited Partner. The Managing General Partner shall,
within ten (10) days of the effective date of such
cessation, pay to such Limited Partner an amount equal to
its Invested Amount minus the amount, if any, of such
Limited Partner's Capital Contribution which shall not yet
have been paid (or deemed to have been paid) to the
Partnership plus the amount of any third party costs,
including, but not limited to attorney's fees, incurred by
or on behalf of such Partner in implementing this Section
5.2(b).
(c) Substitution and Indemnification. Upon the receipt by
the Investment Limited Partner and/or the Special Limited
Partner of the amount due to it pursuant to either Section
5.2(a) or Section 5.2(b), the Interest of such Partner shall
terminate, and the Managing General Partner shall indemnify
and hold harmless such Partner from any losses, damages, and
liabilities to which such Partner (as a result of its
participation hereunder) may be subject.
(d) Waiver of Repurchase Right. The Investment Limited
Partner shall have the right to irrevocably waive its right
to have its Interest repurchased pursuant to any clause or
clauses of Section 5.2(a), or any portion thereof, at any
time during which any of such rights shall be in effect.
Such a waiver shall be exercised by delivery to the Managing
General Partner of a written notice stating that the rights
being waived pursuant to any specified clause or clauses of
Section 5.2(a), or any specified portion thereof, are
thereby waived from that date forward.
(e) Failure to Perform. If the Managing General Partner
shall fail to make on the due date therefor any payment
required under Section 5.2(a) or Section 5.2(b), time being
of the essence, then, in addition to all other remedies
available for such failure, the Special Limited Partner
shall have the rights set forth in Section 7.5.
ARTICLE VI Rights, Powers and Duties of the
Managing General Partner
6.1 Authorized Acts
Subject to Section 6.2, Section 6.3 and all other provisions
of this Agreement, the Managing General Partner for, in the
name and on behalf of the Partnership, is 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
other Project Documents and all such other documents as the
Managing General Partner deems necessary or appropriate in
connection with the acquisition, development and financing
of the Apartment Complex;
(5) To prepay in whole or in part, refinance or amend or
modify the Construction and Permanent Mortgages or any other
financing affecting the Apartment Complex;
(6) To employ the Management Agent (which may be an
Affiliate of the Managing General Partner) and to pay
reasonable compensation for its services;
(7) To employ his respective Affiliates to perform services
for, or sell goods to, the Partnership;
(8) To execute contracts with the State or any subdivision
or agency thereof or any other government agency to make
apartments or tenants in the Apartment Complex eligible for
any public-subsidy program;
(9) To execute leases of some or all of the apartment units
of the Apartment Complex to 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
Notwithstanding any other Section of this Agreement, the
Managing General Partner shall have no authority to perform
any act in violation of applicable law, Agency or other
government regulations, requirements of any Lender, or the
Project Documents. In the event of any conflict between the
terms of this Agreement and any applicable Agency or other
government regulations or requirements of the Lender, the
terms of such regulations or requirements shall govern.
Neither shall the General Partners have any authority to do
any of the following acts without the Consent of the
Investment Limited Partner and the prior written consent of
the Special Limited Partner, and in the event that any
General Partner violates any provision of this Section 6.2,
the Special Limited Partner shall have the rights set forth
in Section 7.5:
(1) To have borrowings in excess of $10,000 in the aggregate
at any one time outstanding on the general credit of the
Partnership, except borrowings constituting Subordinated
Loans;
(2) To borrow from the Partnership or commingle Partnership
funds with funds of any other Person;
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, excent (a) replacements and
remodeling in the ordinary course of business or under
emergency conditions or (b) construction paid for from
insurance proceeds;
To acquire any real property in addition to the Apartment
Complex;
(5) To increase, decrease (except through the amortization
schedule provided for in the Permanent Mortgages), amend or
modify the terms of or refinance the Construction or
Permanent Mortgages;
(6) To rent apartments in the Apartment Complex such that
the Apartment Complex would not meet the requirements of the
Minimum Set-Aside Test or the Rent Restriction Test;
To sell, exchange or otherwise convey or transfer the
Apartment Complex or all or any substantial part of the
assets of the Partnership;
To terminate any agreement with any Agency;
(9) To cause the Partnership to commence a proceeding
seeking any decree, relief, order or appointment in respect
to the Partnership under the federal bankruptcy laws, as now
or hereafter constituted, or under any other federal or
state bankruptcy, insolvency or similar law, or the
appointment of a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) for the
Partnership or for any substantial part of the Partnership's
business or property, or to cause the Partnership to consent
to any such decree, relief, order or appointment initiated
by any Person other than the Partnership;
(10) To amend the Construction Contract, except for change
orders approved by the Lenders;
(11) To pledge or assign any of the Capital Contribution of
the Investment Limited Partner or the proceeds thereof; or
(12) To do any act required to be approved or ratified by
all limited partners under the Act.
6.3 Personal Services
No General Partner or Affiliate thereof shall receive any
salary or other direct or indirect compensation for any
services or goods provided in connection with the
Partnership or the Apartment Complex, except as may be
specifically provided in Section 6.12 and Article XI or as
to which the prior written consent of the Special Limited
Partner shall have been obtained to the precise terms
thereof prior to the commencement of such services or the
provision of such goods. Any Partner may engage
independently or with others in other business ventures of
every nature and description; neither the Partnership nor
any other Partner shall have any rights in and to such
independent ventures or the income or profits derived
therefrom. Any and all contractual relationships between the
Partnership and any General Partner or Affiliate thereof
must (i) be cancelable upon sixty (60) days' notice from the
Special Limited Partner and (ii) not provided for payments
in excess of those determined by the Special Limited Partner
to be reasonable. Any and all compensation received directly
or indirectly by any General Partner or Affiliate thereof
pursuant to any such relationship must be fully disclosed
and specifically itemized in reports pursuant to Section
12.7.
6.4 Business Management and Control; Tax Matters Partner
Subject to the provisions of this Agreement, the Managing
General Partner 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 Managing General Partner 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 General Partner and each of
the Special Limited Partner and the Investment Limited
Partner hereby consent to the exercise by the Managing
General Partner of the powers conferred on him by law and
this Agreement, and the Managing General Partner agrees to
exercise control of the business of the Partnership only in
accordance with the provisions of this Agreement.
Notwithstanding the foregoing, in no event may the
provisions of this Section 6.4 be invoked by any General
Partner or by any other Person as a defense against or as an
impediment to the ability of the Investment Limited Partner
or the Special Limited Partner to take any action hereunder.
All Partners hereby agree that the Managing General Partner
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 his duties hereunder.
6.5 Additional Duties and Obligations of the Managing
General Partner
(a) The Managing General Partner shall manage the affairs of
the Partnership to the best of his ability, shall use his
best efforts to carry out the purposes of the Partnership,
and shall devote to the Partnership such time as may be
necessary for the proper performance of his duties and the
business of the Partnership. The Managing General Partner
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
Managing General Partner shall be responsible for the
management and operation of the Partnership, including the
oversight of the rent-up and operational stages of the
Apartment Complex.
(b) The Managing General Partner shall use his best efforts
to cause the Partnership to generate Cash Flow for
distribution to the Partners at the maximum realizable level
in view of (i) any applicable Agency and other regulations,
(ii) the Minimum Set-Aside Test and (iii) the Rent
Restriction Test, and, if necessary, the Managing General
Partner shall also use his best efforts to obtain approvals
and implementation of appropriate adjustments in the rental
schedule of the Apartment Complex.
(c) The Managing General Partner shall cause the Partnership
to obtain and keep in force, during the term of the
Partnership, comprehensive casualty insurance, including,
but not limited to, fire and other risks generally included
under extended coverage policies, workmen's compensation and
public liability insurance in favor of the Partnership (i)
with such companies and in such amounts as shall be
satisfactory to the Lenders and any Agency, or, if the
Apartment Complex is no longer subject to Lender or Agency
regulation or requirements, as shall be customary for
apartment complexes similar to the Apartment Complex, and
(ii) in amounts which shall be (A) no less than those
amounts which are customary in the area for apartment
complexes such as the Apartment Complex, (B) in the case of
the extended coverage portion, no less than the full
original replacement value of the Apartment Complex, (C) no
less than such amounts as may be reasonably requested by the
Investment Limited Partner and/or the Special Limited
Partner from time to time, and (D) in any event, sufficient
to prevent the Partnership from becoming a co-insurer under
any such policies. No deductibles on such policies may
exceed $1,000. The public liability insurance in favor of
the Partnership shall be in an amount not less than
$5,000,000. Through the Completion Date, or such later date
as may be required by the Construction Lender or any Agency,
the Managing General Partner shall also cause the
Partnership to obtain and keep in force a builder's risk
policy in favor of the Partnership in an amount not less
than the greater of (i) the full replacement value of the
Apartment Complex (excluding the value of the underlying
land, the site utilities and the foundations) or (ii) such
other amount as shall be required by any Agency or the
Construction Lender. Throughout the term of the Partnership,
the Managing General Partner shall provide copies of all
such policies (or binders) to the Investment Limited Partner
promptly after their receipt thereof or upon request but no
less frequently than annually. The Managing General Partner
shall cause the applicable insurer to name the Investment
Limited Partner as an additional insured on each Partnership
insurance policy. Prior to the expiration date for any such
Partnership insurance policy, the Managing General Partner
shall deliver to the Investment Limited Partner a copy of
the comparable new or replacement policy, including all
endorsements, exhibits and riders thereto.
(d) Except as otherwise provided herein, the obligations of
the Managing General Partner hereunder shall be the joint
and several obligations of each General Partner. Except as
otherwise provided in Sections 4.4(b) and 7.1, such
obligations shall survive any Withdrawal of the Managing
General Partner from the Partnership.
(e) The Managing General Partner shall establish and
maintain reasonable reserves to provide for working capital
needs, improvements, replacements and any other
contingencies of the Partnership. At a minimum, the
Managing General Partner shall cause the Partnership to
annually deposit, commencing in 1999, $8,000 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 Managing General Partner shall fund such shortfall from
its own funds as a Subordinated Loan.
(f) The Managing 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 Partner.
(g) The Managing General Partner shall take all actions
necessary to ensure that the Investment Limited Partner
receives the full amount of the Projected Credit to the
Investment Limited Partner, including, without limitation,
the rental of apartments to Qualified Tenants and the filing
of annual certifications as may be required. In this regard,
the Managing General Partner shall, inter alia, cause (i)
the Partnership to satisfy all requirements imposed from
time to time under the Code with respect to rental levels
and occupancy by Qualified Tenants by the close of the first
year of the Credit Period and throughout the Compliance
Period so as to permit the Partnership to be entitled to the
maximum available Tax Credit, (ii) the Partnership to comply
with all Tax Credit monitoring procedures, (iii) all
Low-Income Apartment Units to be occupied pursuant to leases
to Qualified Tenants for periods of not less than six (6)
months, (iv) the Partnership to make all appropriate Tax
Credit elections in a timely fashion, and (v) all rental
units in the Apartment Complex to be available for rental by
the general public and to be of equal quality and all
Apartment Complex amenities to be made available to all
tenants on a comparable basis without separate fees.
(h) On or before the Admission Date, the Managing General
Partner shall provide to the Investment Limited Partner
either (i) an appraisal of the Apartment Complex prepared by
a competent independent appraiser or (ii) a project cost and
budget analysis on an Agency form or 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 Managing General Partner 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.
6.6 Representations and Warranties
The Managing General Partner represents and warrants to the
Investment Limited Partner and the Special Limited Partner
as follows:
The Partnership is a duly organized limited partnership
validly existing under the laws of the State and has
complied with all filing requirements necessary for its
existence and to preserve the limited liability of the
Investment Limited Partner and the Special Limited Partner.
(2) No event or proceeding has occurred or is pending or
threatened which would (a) materially adversely affect the
Partnership or its properties, or (b) materially adversely
affect the ability of the Managing General Partner or any of
his Affiliates to perform their respective obligations
hereunder or under any other agreement with respect to the
Apartment Complex, other than legal proceedings which have
been bonded against without recourse to Partnership assets
in such manner as to stay the effect of the proceedings or
otherwise have been adequately provided for. This
subparagraph shall be deemed to include, without limitation,
the following: (x) legal actions or proceedings before any
court, commission, administrative body or other governmental
authority having jurisdiction over the zoning applicable to
the Apartment Complex, (y) disputes with suppliers of labor
and/or materials; and (z) acts of any governmental
authority.
(3) No default (or event which, with the giving of notice or
the passage of time or both, would constitute a default) has
occurred and is continuing under this Agreement or under any
provision of the Project Documents, and the same are in full
force and effect.
(4) No Partner or Related Person bears the Economic Risk of
Loss with respect to the Permanent Mortgages, except as may
be expressly permitted by Article III. The Managing General
Partner has not, either on his 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 completed in a timely
manner in conformity with the Project Documents. There is no
violation by the Partnership or the General Partners of any
zoning, environmental or similar regulation applicable to
the Apartment Complex which could have a material adverse
effect thereon, and the Partnership has complied with all
applicable municipal and other laws, ordinances and
regulations relating to such construction and use of the
Apartment Complex. All appropriate public utilities,
including, but not limited to, water, electricity, gas (if
called for in the plans and specifications), and sanitary
and storm sewers, are or will be available and operating
properly for each unit in the Apartment Complex at the time
of the first occupancy of such unit.
(6) The Partnership owns good and marketable fee simple
title to the Apartment Complex, subject to no material
liens, charges or encumbrances other than those which (a)
are both permitted by the Project Documents and are noted or
excepted in title insurance policy delivered to the
Partnership pursuant to Section 5.1(b) and (b) do not
materially interfere with use of the Apartment Complex (or
any part thereof) for its intended purpose or have a
material adverse effect on the value of the Apartment
Complex.
(7) The execution and delivery of all instruments and the
performance of all acts heretofore or hereafter made or
taken pertaining to the Partnership or the Apartment Complex
by each Affiliate of a General Partner which is a
corporation or a limited liability company have been or will
be duly authorized by all necessary organizational action,
and the consummation of any such transactions with or on
behalf of the Partnership will not constitute a breach or
violation of, or a default under, the charter, by-laws or
other organizational documents of such Affiliate or any
agreement by which such Affiliate or any of its properties
is bound, nor constitute a violation of any law,
administrative regulation or court decree.
(8) Any General Partner which is a corporation or limited
liability company has been duly organized, is validly
existing and in good standing under the laws of its state of
organization and has all requisite power to be a General
Partner and to perform its duties and obligations as
contemplated by this Agreement and the Project Documents.
Neither the execution and delivery by such General Partner
of this Agreement nor the performance of any of the actions
of such General Partner contemplated hereby has constituted
or will constitute a violation of (a) the articles of
organization, by-laws, operating agreement or other
organizational documents of such General Partner, (b) any
agreement by which such General Partner is bound or to which
any of its property or assets is subject, or (c) any law,
administrative regulation or court decree.
(9) No Event of Bankruptcy has occurred with respect to any
General Partner or any Controlling Person of a General
Partner.
(10) All accounts of the Partnership required to be
maintained under the terms of the Project Documents,
including, but not necessarily limited to, any account for
replacement reserves, are currently funded to the levels
required by the Lenders and/or any Agency.
(11) 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 Mortgages and to pay the Construction and
Development Fee have been or will be paid or provided for
utilizing only (a) the funds available from the Construction
Mortgage, (b) the Capital Contribution of the Investment
Limited Partner, (c) the Capital Contributions of the
General Partners in the amounts set forth on Schedule A as
of the Admission Date, (d) the available net rental income,
if any, earned by the Partnership prior to Permanent
Mortgage Commencement (to the extent that it is permitted to
be used for such purposes by the Lenders and/or any Agency),
(e) any insurance proceeds and (f) any funds furnished by
the Managing General Partner pursuant to Sections 6.5(a) and
6.10.
(12) The amount of Tax Credit which is expected to be
allocated by the Partnership to the Investment Limited
Partner is $182,524 for 1999, $208,599 per annum for each of
the years 2000 through 2008 (inclusive) and $26,075 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 eligible for Tax Credits and in
accordance with the Agency Regulatory Agreement.
(14) The Managing General Partner has provided to the
Investment Limited Partner a complete copy of a Phase I
hazardous waste site assessment report for the Apartment
Complex, prepared in accordance with ASTM standards. No
General Partner, Affiliate of a General Partner or Person
for whose conduct any General Partner is or was responsible
has ever: (i) owned, occupied, or operated a Site or Vessel
on which any Hazardous Material was or is stored,
transported, or disposed of, except if such storage,
transport or disposition was and is at all times in
compliance with all laws, ordinances, and regulations
pertaining thereto; (ii) directly or indirectly transported,
or arranged for transport, of any Hazardous Material (except
if such transport was and is at all times in compliance with
all laws, ordinances and regulations pertaining thereto);
(iii) caused or was legally responsible for any release or
threat of release of any Hazardous Material; (iv) received
notification from any Federal, state or other governmental
authority of (x) any potential, known, or threat of release
of any Hazardous Material from the Apartment Complex or any
other Site or Vessel owned, occupied, or operated by any
General Partner, by any Affiliate of a General Partner, or
by any Person for whose conduct any General Partner is or
was responsible or whose liability may result in a lien on
the Apartment Complex; or (y) the incurrence of any expense
or loss by any such governmental authonty 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 Managing General Partner's
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 Managing General Partnerhas or will fulfill and
will continue to fulfill all of his duties and obligations
under Sections 6.3 through 6.5.
6.7 Liability on the Permanent Mortgages
Neither any General Partner nor any Related Person shall at
any time bear the Economic Risk of Loss for the payment of
any portion of any Mortgage, 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 pursuant
to Article III.
6.8 Indemnification of the General Partners
(a) No General Partner nor any Affiliate thereof shall have
liability to the Partnership or to any Limited Partner for
any loss suffered by the Partnership which arises out of any
action or inaction of any General Partner or Affiliate
thereof if such General Partner or Affiliate thereof in good
faith determined that such course of conduct was in the best
interest of the Partnership and such course of conduct did
not constitute negligence or misconduct of such General
Partner or Affiliate thereof.
(b) A General Partner or any Affiliate thereof may be
indemnified by the Partnership against losses, judgments,
liabilities, expenses and amounts paid in settlement of any
claims sustained in connection with the Partnership,
provided that all of the following conditions are met: (i)
such General Partner has determined, in good faith, that the
course of conduct which caused the loss, judgment,
liability, expense or amount paid in settlement was in the
best interests of the Partnership; and (ii) such loss,
judgment, liability, expense or amount paid in settlement
was not the result of negligence or misconduct on the part
of such General Partner or Affiliate thereof; and (iii) such
indemnification or agreement to hold harmless is recoverable
only out of the assets of the Partnership, and not from the
Limited Partners.
(c) Notwithstanding the above, no General Partner or any
Affiliate thereof performing services for the Partnership or
any broker-dealer shall be indemnified for any losses,
liabilities or expenses arising from or out of an alleged
violation of Federal or state securities laws unless (i)
there has been a successful adjudication on the merits of
each count involving securities laws violations as to the
particular indemnitee and the court approves the
indemnification of such litigation costs, (ii) such claims
have been dismissed with prejudice on the merits by a court
of competent jurisdiction as to the particular indemnitee
and the court approves the indemnification of such
litigation costs or (iii) a court of competent jurisdiction
approves a settlement of the claims against a particular
indemnitee and the court finds that indemnification of the
settlement and related costs should be made. In any claim
for indemnification for Federal or state securities law
violations, the party seeking indemnification shall, prior
to seeking court approval for such indemnification, place
before the court the positions of the Securities and
Exchange Commission, and any applicable state securities
administrator with respect to the issue of indemnification
for securities law violations.
(d) The Partnership shall not incur the cost of the portion
of any insurance, other than public liability insurance,
which insures any party against any liability as to which
such party is herein prohibited from being indemnified.
(e) The Partnership may indemnify Affiliates of a General
Partner under this Section 6.8 only if the loss involves
activity in which such Affiliates acted in the capacity of a
General Partner.
(f) For purposes of this Section 6.8 only, the term
Affiliate shall mean any Person performing services on
behalf of the Partnership who (i) directly or indirectly
controls, is controlled by or is under common control with a
General Partner; (ii) owns or controls ten per cent (10%) or
more of the outstanding voting securities of a General
Partner; (iii) is an officer, director, partner or trustee
of a General Partner; or (iv) if a General Partner is an
officer, director, partner or trustee, is any company for
which such General Partner acts in any such capacity.
6.9 Indemnification of the Partnership and the Limited
Partners
(a) The Managing General Partner 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 Managing General Partner or any of his 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 Managing General Partner shall indemnify, defend,
and hold the Limited Partners harmless from and against any
claim brought or threatened against any Limited Partner or
loss (as well as from any and all attorneys' fees and
expenses incurred in connection with any such claim or loss)
on account of the presence of any Hazardous Material at the
Apartment Complex. Any claim or loss described in the
immediately preceding sentence may be defended, compromised,
settled, or pursued by the Limited Partners with counsel of
the Limited Partners' selection, but at the expense of the
Managing General Partner. Notwithstanding anything else set
forth herein, this indemnification shall survive the
withdrawal of any General Partner and/or the termination of
this Agreement.
6.10 Operating Deficits
The Managing General Partner shall be obligated to promptly
advance funds to meet operating expenses (including full
payment of the Asset Management Fee and reserve deposits
required pursuant to Section 6.5(e) or by any Lender or
Agency) and debt service of the Partnership following the
later to occur of (i) the Admission Date or (ii) Permanent
Mortgage Commencement which exceed operating income
attributable to such period and available for the payment
thereof. In the event that the Managing General Partner
shall fail to make any such advance as aforesaid, (a) the
Partnership shall utilize amounts (the Applied Amounts)
otherwise payable to the General Partners or Affiliates
thereof under Section 6.12 and/or Article X to meet the
obligations of the Managing General Partner pursuant to this
Section 6.10, with such utilization of Applied Amounts
constituting payment and satisfaction of the corresponding
amounts payable to the General Partners or Affiliates
thereof under Section 6.12 and/or Article X, with the
proceeds thereof being applied to such obligations, and with
the obligation of the Partnership to make such payments to
the General Partners or Affiliates thereof pursuant to
Section 6.12 and/or Article X being deemed satisfied to the
extent thereof and (b) the Special Limited Partner shall
have the rights set forth in Section 7.5. For the purpose of
this Section 6.10, all expenses shall be paid on a sixty
(60)-day current basis. Moreover, the Managing General
Partner may in his sole discretion at any time advance funds
to the Partnership to pay operating expenses and/or debt
service of the Partnership in order to facilitate the
Partnership's compliance with the Rent Restriction Test. All
advances pursuant to this Section 6.10 (including any
Applied Amounts) shall be Subordinated Loans repayable
without interest in accordance with the provisions of
Article X.
6.11 Obligation to Complete the Construction of the
Apartment Complex
The Managing General Partner shall complete the construction
of the Apartment Complex substantially in accordance with
the plans and specifications approved by the Lenders and/or
any Agency and all requirements necessary to obtain the
required certificates of occupancy for dwelling units, or
cause the same to be completed, in a good and workmanlike
manner, free and clear of all mechanics', materialmen's or
similar liens, and shall equip the Apartment Complex or
cause the same to be equipped with all necessary and
appropriate fixtures, equipment and articles of personal
property, including refrigerators and ranges, and shall
cause all necessary certificates of occupancy for all
apartment units in the Apartment Complex to be obtained, all
in accordance with the Project Documents. If the proceeds of
the Construction and Permanent Mortgages, the net rental
income, if any, of the Apartment Complex generated prior to
the later of Permanent Mortgage Commencement or the
Admission Date and which is permitted by the Lenders and/or
any Agency to be utilized for any of the purposes
hereinafter set forth, the Capital Contribution of the
Investment Limited Partner, the Capital Contributions of the
General Partners in the amounts set forth on Schedule A as
of the Admission Date, and any insurance proceeds arising
out of casualties prior to the later of Permanent Mortgage
Commencement or the Admission Date 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, (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 other Project
Document and the repayment in full of all obligations under
the Construction Mortgage, the Managing General Partner in
his capacity as developer shall be responsible for and
obligated to pay such deficiencies and shall, to the extent
permitted under the Project Documents and any applicable
regulations or requirements of the Lenders and/or any
Agency, be reimbursed at or prior to the later of Permanent
Mortgage Commencement or the Admission Date only out of the
proceeds designated in this sentence available from time to
time after payment of all costs described in this sentence.
Any amounts not reimbursed through the later of Permanent
Mortgage Commencement or the Admission Date or from the
proceeds of the Capital Contribution of the Investment
Limited Partner as provided in Section 5.1 shall not be
reimbursable or otherwise change the Interest of any Person
in the Partnership but shall be borne by the Managing
General Partner in his capacity as developer; provided,
however, that, notwithstanding the foregoing, to the extent
any such amounts represent items which are properly included
in the Partnership's Qualified Basis and result in an
increase in the amount of Tax Credit allocated and available
to the Partnership over and above the amount of Tax Credit
required in order to achieve State Designation (Includable
Items), the Managing General Partner shall make an
additional Capital Contribution in the amount of the
Includable Items and the Partnership shall utilize the
proceeds of such additional Capital Contribution to pay the
Includable Items. In the event that the Managing General
Partner and/or the Developer shall fail to fund any such
deficiency as required by this Section 6.11, an amount not
in excess of the unpaid portion of the Construction and
Development Fee due to the Developer, the Managing General
Partners or any of his Affiliates under Section 6.12 or any
other provision hereof shall be applied by the Partnership
to meet such obligation of the Managing General Partner
and/or the Developer, and, to the extent there may still be
a deficiency, any amounts otherwise payable as the
Partnership Management Fee or distributable to the Managing
General Partner pursuant to Article X shall also be so
applied. Any such application of funds as described in the
immediately preceding sentence shall constitute a payment of
the amount of the Fee or such other item which such funds
had been earmarked to pay, and the obligation of the
Managing General Partner and/or the Developer to advance
such amount under this Section 6.11 shall be satisfied to
the extent of such application.
6.12 Certain Payments to the General Partners and Others
(a) The Partnership shall pay to the Managing General
Partner a cumulative fee (the Partnership Management Fee)
commencing in 1999 for his services in connection with the
administration of the day to day business of the Partnership
in an annual amount equal to $4,000 per annum. The
Partnership Management Fee for each fiscal year of the
Partnership shall be payable from Cash Flow in the manner
and priority set forth in Section 10.3(a) to the extent Cash
Flow is available therefor for such year; provided, however,
that if in any fiscal year commencing with 1999, Cash Flow
is insufficient to pay the full amount of the Partnership
Management Fee, the unpaid portion thereof shall accrue and
be payable on a cumulative basis in the first year in which
there is sufficient Cash Flow or from the proceeds of a
Capital Transaction as provided in Article X.
(b) In consideration of his consultation, advice and other
services in connection with the construction and development
of the Apartment Complex and as consideration for the
assignment described in Section 6.13, the Partnership shall
pay to the Managing General Partner (or his designee) a
construction and development fee (the Construction and
Development Fee) in the amount of $160,000, which fee shall
be earned in full as to each building in the Apartment
Complex as of the date such building is completed. The
Construction and Development Fee shall be payable $160,000
at the time of the payment of the Third Installment.
(c) The Partnership shall pay to BCCLP or an Affiliate
thereof a fee (the Asset Management Fee) commencing in 1999
for its services in connection with the Partnership's
accounting matters relating to the Investment Limited
Partner and assisting with the preparation of tax returns
and the reports required by Section 12.7 in the annual
amount of $4,000. The Asset Management Fee shall be payable
from Cash Flow in the manner and priority set forth in
Section 10.3(a); provided, however, that if in any fiscal
year commencing with 1999, Cash Flow is insufficient to pay
the full amount of the Asset Management Fee and the
shortfall is not paid from funds advanced pursuant to
Section 6.11, the unpaid portion thereof shall accrue and be
payable on a cumulative basis in the first year in which
there is sufficient Cash Flow or from the proceeds of a
Capital Transaction as provided in Article X.
(d) As reimbursement for costs incurred in connection
with the development of the Apartment Complex, the
Partnership shall pay to the Managing General Partner (or
his designee) an overhead reimbursement (the Developer's
Overhead Reimbursement) in the amount of $11,100, which
amount shall be earned in full as to each building in the
Apartment Complex as of the date such building is completed.
The Developer's Overhead Reimbursement shall be payable in
the amount of $11,100 at the time of the payment of the
Third Installment.
6.13 Assignment to Partnership
The Managing General Partner hereby transfers and assigns to
the Partnership all of their right, title and interest in
and to the Apartment Complex and in and to all of the
Project Documents, including, but not limited to, the
following: (i) all contracts with architects, supervising
architects, engineers and contractors with respect to the
development of the Apartment Complex; (ii) all plans,
specifications and working drawings heretofore prepared or
obtained in connection with the Apartment Complex; (iii) all
governmental commitments and approvals obtained, and
applications therefor, including, but not limited to, those
relating to planning, zoning, building permits and Tax
Credit; (iv) any and all commitments with respect to any
Mortgage(s); (v) any and all contracts or rights with
respect to any agreements with the Lenders and any Agency;
and (vi) any other work product related to the Apartment
Complex and/or the Partnership, all of which shall have an
agreed to value of $1.00 for purposes of determining the
opening Capital Account of the Managing General Partner.
ARTICLE VII Withdrawal of a General Partner; New
General Partners
7.1 Withdrawal
No General Partner shall Withdraw from the Partnership
(other than by reason of death or ad)udication of
incompetence or insanity) or sell, assign or encumber his or
its Interest without the Consent of the Investment Limited
Partner and any other General Partners, if any, except that
if the Special Limited Partner or a designee thereof becomes
a General Partner, it shall not be required to obtain the
consent of any other General Partner to transfer all or any
portion of its interest as a General Partner, other than as
may be required under the Act. In the event of any
Withdrawal by a General Partner in violation of this Section
7.1, such General Partner, in addition to being subject to
any and all other legal remedies which may be pursued by the
Partners, shall forfeit to the Special Limited Partner or
its designee, such General Partner's Interest and all unpaid
fees from the Partnership and shall remain liable for all of
the Withdrawing General Partner's obligations under this
Agreement. In addition, upon such Withdrawal and transfer,
the Special Limited Partner or its designee shall
automatically become a General Partner on the terms set
forth in Section 7.5 without further action by the
Withdrawing General Partner or any other Partner, and each
Partner hereby consents to such transfer and to the
admission of the Special Limited Partner or its designee as
a General Partner in such a situation. Such transfer shall
occur automatically upon such Withdrawal without further
action by such Withdrawing General Partner.
7.2 Obligation to Continue
Upon the Withdrawal of a General Partner, the remaining
General Partner, if any, shall have the right and obligation
to continue the business of the Partnership employing its
assets and name, all as contemplated by the Act. Within
thirty (30) days after they obtain knowledge of the
Withdrawal of a General Partner, the remaining General
Partner, if any, shall notify the Limited Partners of such
Withdrawal.
7.3 Withdrawal of All General Partners
If, following the Withdrawal of a General Partner, there is
no remaining General Partner, the Investment Limited Partner
and the Special Limited Partner may elect to reconstitute
the Partnership and continue the business of the Partnership
for the balance of the term specified in Section 2.4 by
selecting a successor General Partner. If the Investment
Limited Partner and the Special Limited Partner elect to
reconstitute the Partnership pursuant to this Section 7.3
and admit the designated successor General Partner, the
relationship among the then Partners shall be governed by
this Agreement.
7.4 Interest of General Partner After Permitted Withdrawal
In the event of the Withdrawal of a General Partner not in
violation of Section 7.1 and except as otherwise provided in
Section 4.4(b), the Withdrawing General Partner hereby
covenants and agrees to transfer to the remaining General
Partner, if any, or to a successor General Partner selected
in accordance with Section 7.3, as the case may be, such
portion of the Withdrawing General Partner's Interest as
such remaining or successor General Partners may designate,
such transfer to be made in consideration of the payment by
the transferee of either the agreed value of such Interest
or, if such value is not agreed to, the fair market value of
such Interest as determined by a committee of three
qualified real estate appraisers, one selected by the
Withdrawing General Partner, one selected by the transferee
and a third selected by the other two. The portion of the
Withdrawing General Partner's Interest designated to be
transferred in accordance with the provisions of this
Section 7.4 shall be sufficient to ensure the continued
treatment of the Partnership as a partnership under the Code
and as a limited partnership under the Act, and, for the
purposes of Article X, shall be deemed to be effective as of
the date of Withdrawal, but the Partnership shall not make
any distributions to the designated transferee until the
transfer shall have been made. Any holder of any portion of
the Interest of a Withdrawing General Partner which is not
designated to be transferred to the remaining or successor
General Partners pursuant to the provisions of this Section
7.4 shall become an Additional Limited Partner but (i) with
the same share of the profits, losses, tax credits, Cash
Flow and other distributions to which the holder of such
Interest was entitled when held as a General Partner
Interest, and (ii) shall not participate in the votes or
Consents of the Investment Limited Partner hereunder. The
admission of any successor or additional General Partner
shall be subject to the consent of the Lenders and any
Agency (if required) and the Consent of the Investment
Limited Partner.
7.5 Admission of Additional General Partner(s) under Certain
Circumstances
In the event that a General Partner violates any provision
of this Agreement, the Special Limited Partner, in its sole
discretion, shall have the option at any time thereafter to
cause itself or its designee to be admitted as an additional
General Partner on the terms set forth herein without any
further action by any other Partner. Upon any such admission
of an additional General Partner and in consideration of the
payment of $10, all pre-existing General Partners shall be
deemed to have transferred (ratably in accordance with their
respective Interests) to the additional General Partner such
portion of their respective General Partner interests so
that the additional General Partner shall receive not less
than a one percent (1%) interest in all profits, losses, tax
credits and distributions of the Partnership (such transfer
notwithstanding, the Special Limited Partner shall also
retain its status as such, and its interest in the
Partnership as the Special Limited Partner shall not be
affected). An additional General Partner so admitted shall
automatically become the Managing General Partner and be
irrevocably delegated all of the power and authority of all
of the other General Partners pursuant to Section 6.4. Any
such additional General Partner shall have the right to
withdraw as a General Partner at any time, leaving the
pre-existing General Partners once again as the only General
Partners, the provisions of this Article VII
notwithstanding. Each Partner hereby grants to the Special
Limited Partner a special power of attorney, irrevocable to
the extent permitted by law and coupled with an interest, to
amend the Certificate and this Agreement and to do anything
else which, in the view of the Special Limited Partner, may
be necessary or appropriate to accomplish the purposes of
this Section 7.5 or to enable any additional General Partner
admitted pursuant to this Section 7.5 to manage the business
of the Partnership. The admission of an additional General
Partner shall not relieve any other General Partner of any
of its obligations hereunder, and each other General Partner
shall fully indemnify and hold harmless the additional
General Partner from and against any and all losses,
judgments, liabilities, expenses and amounts paid in
settlement of any claims sustained in connection with its
capacity as a General Partner.
ARTICLE VIII Transferability of Limited Partner
Interests
8.1 Assignments
(a) Except by operation of law (including the laws of
descent and distribution), no Limited Partner may assign all
or any part of its Interest without the written consent of
the General Partners, the giving or withholding of which is
exclusively within their discretion.
(b) An assignee of a Limited Partner who does not become a
Substituted Limited Partner shall have, and shall only have,
the right to receive the share of allocations and
distributions of the Partnership to which the assigning
Limited Partner would have been entitled with respect to the
Interest (or portion thereof) so assigned if no such
assignment had been made by such Limited Partner. Any
assigning Limited Partner whose permitted assignee becomes a
Substituted Limited Partner shall thereupon cease to be a
Limited Partner and shall no longer have any of the rights
or privileges of a Limited Partner. Where the assignee does
not become a Substituted Limited Partner, the Partnership
shall recognize such assignment not later than the last day
of the calendar month following receipt of notice of
assignment and all documentation required in connection
therewith.
(c) Every assignee of a Limited Partner Interest (or any
portion thereof) who desires to make a further assignment of
its Interest shall be subject to all the provisions of this
Article VIII.
8.2 Substituted Limited Partner
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
(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
All Partnership borrowings shall be subject to the terms of
this Agreement, including, but not limited to, the
restrictions of Section 6.2, and may be made from any
source, including Partners and their Affiliates. Any
Partnership borrowings from any Partner shall be subject to
the prior written consent of the Special Limited Partner and
any Lender or Agency (if required under applicable Lender or
Agency regulations or requirements). If any Partner shall
lend any monies to the Partnership, the amount of any such
loan shall not be an increase of such Partner's Capital
Contribution. If any Partner shall so lend monies, each such
loan shall be an obligation of the Partnership and (except
for Subordinated Loans) shall be repayable to such Partner
on the same basis and with the same rate of interest as
would be applicable to a comparable loan to the Partnership
from a third party. Funds provided by the Managing General
Partner to the Partnership pursuant to Section 6.10 shall
not constitute borrowings for the purposes of this Article
IX or for any other purposes.
ARTICLE X Profits, Losses, Tax Credits,
Distributions and Capital Accounts
10.1 Capital and Capital Accounts
(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-l(b), the Capital Account
of each partner shall consist of (i) the amount of cash such
Partner has contributed to the Partnership plus (ii) the
fair market value of any property such Partner has
contributed to the Partnership net of any liabilities
assumed by the Partnership or to which such property is
subject plus (iii) the amount of profits or income
(including tax-exempt income) allocated to such Partner less
(iv) the amount of losses and deductions allocated to such
Partner less (v) the amount of all cash distributed to such
Partner less (vi) the fair market value of any property
distributed to such Partner net of any liabilities assumed
by such Partner or to which such property is subject less
(vii) such Partner's share of any other expenditures which
are not deductible by the Partnership for Federal income tax
purposes or which are not allowable as additions to the
basis of Partnership property and shall be (viii) subject to
such other adjustments as may be required under the Code.
The Capital Account of a Partner shall not be affected by
any adjustments to basis made pursuant to Section 743 of the
Code but shall be adjusted with respect to adjustments to
basis made pursuant to Section 734 of the Code.
The original Capital Account established for any Substituted
Partner (as hereinafter defined) shall be in the same amount
as, and shall replace, the Capital Account of the Partner
which such Substituted Partner succeeds, and, for the
purposes of this Agreement, such Substituted Partner shall
be deemed to have made the Capital Contribution, to the
extent actually paid in, of the Partner which such
Substituted Partner succeeds. The term Substituted Partner,
as used in this paragraph, shall mean a Person who shall
become entitled to receive a share of the allocations and
distributions of the Partnership by reason of such Person
succeeding to all or any part of the Interest of a Partner
by assignment of all or any part of a Partner's Interest. To
the extent a Substituted Partner receives less than 100% of
the Interest of a Partner he succeeds, the original Capital
Account of such transferee Substituted Partner and his
Capital Contribution shall be in proportion to the portion
of the transferor Partner's Interest prior to the transfer
which the transferee receives, and the Capital Account of
the transferor Partner who retains a portion of his former
Interest and his Capital Contribution shall continue, and
not be replaced, in proportion to the portion of the
transferor Partner's Interest prior to the transfer which
the transferor Partner retains. Nothing in this Section
10.1(b) shall affect the limitations on transferability of
Interests set forth in Article VII or Article VIII.
10.2 Profits, Losses and Tax Credits
(a) Except as otherwise specifically provided in this
Article, for each Partnership fiscal year or portion
thereof, all profits, tax-exempt income, losses,
non-deductible non-capitalizable expenditures and tax
credits incurred or accrued on or after the Commencement
Date, other than those arising from a Capital Transaction,
shall be allocated 99.99% to the Investment Limited Partner
and .01% to the Managing General Partner.
Except as otherwise specifically provided in this Article,
all profits and losses arising from a Capital Transaction
shall be allocated to the Partners as follows:
As to profits:
First, an amount of profit equal to the aggregate negative
balances (if any) in the Capital Accounts of all Partners
having negative balance Capital Accounts shall be allocated
to such Partners in proportion to their negative Capital
Account balances until all such Capital Accounts shall have
zero balances; and
Second, an amount of profits shall be allocated to each of
the Partners until the positive balance in the Capital
Account of each Partner equals, as nearly as possible, the
amount of cash which would be distributed to such Partner if
the aggregate amount in the Capital Accounts of all Partners
were cash available to be distributed in accordance with the
provisions of Clauses Fourth, Sixth, Seventh, Eighth and
Ninth of Section 10.3(b).
As to losses:
First, an amount of losses equal to the aggregate positive
balances (if any) in the Capital Accounts of all Partners
having positive balance Capital Accounts shall be allocated
to such Partners in proportion to their positive Capital
Account balances until all such Capital Accounts shall have
zero balances; provided, however, that if the amount of
losses so to be allocated is less than the sum of the
positive balances in the Capital Accounts of those Partners
having positive balances in their Capital Accounts, then
such losses shall be allocated to the Partners in such
proportions and in such amounts so that the Capital Account
balances of each Partner shall equal, as nearly as possible,
the amount such Partner would receive if an amount equal to
the excess of (a) the sum of all Partners' balances in their
Capital Accounts computed prior to the allocation of losses
under this clause First over (b) the aggregate amount of
losses to be allocated to the Partners pursuant to this
clause First were distributed to the Partners in accordance
with the provisions of Clauses Fourth, Sixth, Seventh,
Eighth and Ninth of Section 10.3(b); and
Second, the balance, if any, of such losses shall be
allocated .01% to the General Partners and 99.99% to the
Investment Limited Partner.
(c) Notwithstanding the foregoing provisions of Sections
10.2(a) and 10.3(b), in no event shall any losses be
allocated to the Investment Limited Partner, the Special
Limited Partner, or to any additional General Partner
admitted pursuant to any of Section 4.4(b), Section 5.2(e),
Section 7.1(a) or Section 7.5, if and to the extent that
such allocation would cause, as of the end of the
Partnership taxable year, the negative balance in such
Partner's Capital Account to exceed such Partner's
obligation (actual or deemed under Treasury Regulation
Section 1.704-l(b)(2)(ii)(c)) to restore a deficit balance
in such Partner's Capital Account plus such Partner's share
of Partnership Minimum Gain plus such Partner's share of
Partner Non-Recourse Debt Minimum Gain. Any losses which are
not allocated to a Partner by virtue of the application of
this Section 10.2(c) shall be allocated to the General
Partners. For the purposes of this Section 10.2(c), a
Partner's Capital Account shall be treated as reduced by
Qualified Income Offset Items.
10.3 Cash Distributions Prior to Dissolution
(a) Cash Flow
Subject to Agency and Lender approval (if required), Cash
Flow for each fiscal year or portion thereof of the
Partnership shall be applied in the following priority:
First, to the payment of the Asset Management Fee for such
year and for any previous year(s) as to which the Asset
Management Fee shall not yet have been paid in full;
Second, to the repayment of any Subordinated Loans;
Third, to the payment of the Partnership Management Fee
attributable to such year and for any previous year(s) as to
which the Partnership Management Fee shall not yet have been
paid in full; and
Fourth, any balance 50% to the Managing General Partner and
50% to the Investment Limited Partner;
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 Managing General Partner 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 Managing General Partner or his
Affiliates; and to the establishment of any reserves which
the Managing General Partner and the Auditors shall deem
reasonably necessary for contingent, unmatured or unforeseen
liabilities or obligations of the Partnership;
Second, to the payment of any accrued and unpaid Asset
Management Fees;
Third, to the payment of any accrued and unpaid Partnership
Management Fees;
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, any accrued and unpaid
Partnership Management Fee for the fiscal 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 the Investment Limited Partner of
an amount equal to its paid-in capital, less any prior
distributions made to such Investment Limited Partner under
this Clause Seventh, but never an amount less than zero;
Eighth, to the repayment to the Managing General Partner of
his paid-in Capital Contributions minus any prior
distributions made to them under this Clause Eighth and
under Section 10.1(b), but never an amount less than zero;
and
Ninth, any balance 49.999% to the Investment Limited
Partner, .001% to the Special Limited Partner and 50% to the
Managing General Partner.
10.4 Distributions Upon Dissolution
(a) Upon dissolution and termination, after payment of, or
adequate provision for, the debts and obligations of the
Partnership, the remaining assets of the Partnership shall
be distributed to the Partners in accordance with the
positive balances in their Capital Accounts after taking
into account all Capital Account adjustments for the
Partnership taxable year, including adjustments to Capital
Accounts pursuant to Sections 10.3(b) and 10.4(b). In the
event that a General Partner, other than a General Partner
admitted pursuant to any of Section 4.4(b), Section 5.2(e),
Section 7.1(a) or Section 7.5, or Additional Limited Partner
has a negative balance in its Capital Account following the
liquidation of the Partnership or such Partner's Interest,
after taking into account all Capital Account adjustments
for the Partnership taxable year in which such liquidation
occurs, such Partner shall pay to the Partnership in cash an
amount equal to the negative balance in such Partner's
Capital Account. Such payment shall be made by the end of
such taxable year (or, if later, within ninety (90) days
after the date of such liquidation) and shall, upon
liquidation of the Partnership, be paid to recourse
creditors of the Partnership or distributed to other
Partners in accordance with the positive balances in their
Capital Accounts.
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
10.2(b), and any property so distributed shall be treated as
a distribution of an amount in cash equal to the excess of
such fair market value over the outstanding principal
balance of and accrued interest on any debt by which the
property is encumbered. For the purposes of this Section
10.4(b), unrealized appreciation or unrealized depreciation
shall mean the difference between the fair market value of
such assets, taking into account the fair market value of
the associated financing (but subject to Section 7701(g) of
the Code), and the Partnership's adjusted basis for such
assets as determined under Regulation Section 1.704-l(b).
This Section 10.4(b) is merely intended to provide a rule
for allocating unrealized gains and losses upon liquidation
or other distribution event, and nothing contained in this
Section 10.4(b) or elsewhere herein is intended to treat or
cause such distributions to be treated as sales for value.
The fair market value of such assets shall be determined by
an appraiser to be selected by the Managing General Partner
with the Consent of the Investment Limited Partner.
10.5 Special Provisions
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.
Notwithstanding the foregoing provisions of this Article X:
If (a) the Partnership incurs recourse obligations or
Partner Non-Recourse Debt (including, without limitation,
Subordinated Loans) or (b) the Partnership incurs losses
from extraordinary events which are not recovered from
insurance or otherwise (collectively Recourse Obligations)
in respect of any Partnership taxable year, then the
calculation and allocation of profits and losses shall be
adjusted as follows: first, an amount of deductions
attributable to the Recourse Obligations (consisting of
deductions other than cost recovery deductions) shall be
allocated to the General Partners; and second, the balance
of deductions (including all cost recovery deductions) shall
be allocated as provided in Section 10.2(a). For purposes of
this section, extraordinary events include casualty losses,
losses resulting from liability to third parties for
tortious injury, losses resulting from a breach of legal
duty by the Partnership or by the General Partners, and
losses resulting from other liabilities which are not
incurred in the ordinary course of business. Nothing in this
Section 10.5(b)(i) shall prevent the Partnership from
recovering an extraordinary loss from a General Partner who
is liable therefor by law or under this Agreement.
(ii) If any Recourse Obligations shall be repaid from Cash
Flow generated in respect of any Partnership taxable year,
then the allocation of profits and losses under Section
10.2(a) for such year shall be adjusted as follows: first,
the General Partners shall be allocated an amount of the
gross income of the Partnership equal to the lesser of (i)
the amount of items of Loss previously allocated to the
General Partner under Section 10.5(b)(i) and not previously
offset by allocations of Profits or items thereof, and (ii)
the amount of the excess expenses repaid in such year.
(iii) If the Partnership shall receive any purchase money
indebtedness in partial payment of the purchase price of the
Apartment Complex and such indebtedness is distributed to
the Partners pursuant to the provisions of Section 10.3(b)
or Section 10.4, the distributions of the cash portion of
such purchase price and the principal amount of such
purchase money indebtedness hereunder shall be allocated
among the Partners in the following manner: On the basis of
the sum of the principal amount of the purchase money
indebtedness and cash payments received on the sale (net of
amounts required to pay Partnership obligations and fund
reasonable reserves), there shall be calculated the
percentage of the total net proceeds distributable to each
Partner based on Section 10.3(b) or Section 10.4 as
applicable, treating cash payments and purchase money
indebtedness principal interchangeably for this purpose, and
the respective Partners shall receive such respective
percentages of the net cash purchase price and purchase
money principal. Payments on such purchase money
indebtedness retained by the Partnership shall be
distributed in accordance with the respective portions of
principal allocated to the respective Partners in accordance
with the preceding sentence, and if any such purchase money
indebtedness shall be sold, the sale proceeds shall be
allocated in the same proportion.
(iv) Income, gain, loss and deduction with respect to any
asset which has a variation between its basis computed in
accordance with Treasury Regulation Section 1.704-l(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-l(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-l(b)(2)(iv). Profits and losses for federal income tax
purposes shall be computed and allocated in the same manner
as set forth in this Article X, except as provided in
Section 10.5(b)(iv).
(vi) If there is a net decrease in Partnership Minimum Gain
during a Partnership taxable year, each Partner will be
allocated items of income and gain for such year (and, if
necessary, subsequent years) in proportion to, and to the
extent of, an amount equal to such Partner's share of the
net decrease in Partnership Minimum Gain during the year,
before any other allocation of Partnership items for such
taxable year. A Partner shall not be subject to this
mandatory allocation of income or gain to the extent that
any of the exceptions provided in Treasury Regulation
Section 1.704-2(f)(2)-(5) applies. All allocations pursuant
to this Section 10.5(b)(vi) shall be in accordance with
Treasury Regulation Section 1.704-2(f). This provision is a
minimum gain chargeback within the meaning of Treasury
Regulation Section 1.704-2(f) and shall be construed as
such.
(vii) If there is a net decrease in Partner Non-Recourse
Debt Minimum Gain during a Partnership taxable year, then
each Partner with a share of the minimum gain attributable
to such debt at the beginning of such year will be allocated
items of income and gain for such year (and, if necessary,
subsequent years) in an amount equal to such Partner's share
of the net decrease in Partner Non-Recourse Debt Minimum
Gain during the year. A Partner is not subject to this
Partner Non-Recourse Debt Minimum Gain chargeback to the
extent that any of the exceptions provided in Treasury
Regulation Section 1.704-2(i)(4) applied consistently with
Treasury Regulation Section 1.704-2(f)(2)-(5) applies. Such
allocations shall be made in a manner consistent with the
requirements of Treasury Regulation Section 1.704-2(i)(4)
under Section 704 of the Code.
(viii) If a Limited Partner unexpectedly receives (a) an
allocation of loss or deduction or expenditures described in
Section 705(a)(2)(B) of the Code made (1) pursuant to
Section 704(e)(2) of the Code to a donee of an Interest, (2)
pursuant to Section 706(d) of the Code as the result of a
change in any Partner's Interest, or (3) pursuant to
Regulation Section 1.751-l(b)(2)(ii) as a result of a
distribution by the Partnership of unrealized receivables or
inventory items or (b) a distribution, and such allocation
and/or distribution would cause the negative balance in such
Partner's Capital Account to exceed (i) such Partner's share
of Partnership Minimum Gain plus (ii) the amount of such
Partner's obligation (actual or deemed), to restore a
negative balance in such Partner's Capital Account plus
(iii) such Partner's share of Partner Non-Recourse Debt
Minimum Gain, then such Partner shall be allocated items of
income and gain in an amount and manner sufficient to
eliminate such negative balance as quickly as possible. For
purposes of this Section 10.5(b)(viii), a Partner's Capital
Account shall be treated as reduced by Qualified Income
Offset Items.
(ix) In the event that any fee payable to any General
Partner or any Affiliate thereof shall instead be determined
to be a non-deductible, non-capitalizable distribution from
the Partnership to a Partner for Federal income tax
purposes, then there shall be allocated to such General
Partner in the year(s) of payment an amount of gross income
equal to the amount of such distribution in such year.
(x) In applying the provisions of Article X with respect to
distributions and allocations, the following ordering of
priorities shall apply:
(1) Capital Accounts shall be deemed to be reduced by
Qualified Income Offset Items.
(2) Capital Accounts shall be reduced by distributions of
Cash Flow under Section 10.3(a).
(3) Capital Accounts shall be reduced by distributions from
Capital Transactions under Section 10.3(b).
(4) Capital Accounts shall be increased by any minimum gain
chargeback under Section 10.5(b)(vi) or Section
10.5(b)(vii).
(5) Capital Accounts shall be increased by any qualified
income offset under Section 10.5(b)(viii).
(6) Capital Accounts shall be increased by allocations of
profits under Section 10.2(a).
(7) Capital Accounts shall be reduced by allocations of
losses under Section 10.2(a).
(8) Capital Accounts shall be reduced by allocations of
losses under Section 10.2(b).
(9) Capital Accounts shall be increased by allocations of
profits under Section 10.2(b).
(xi) To the maximum extent permitted under the Code,
allocations of profits and losses shall be modified so that
the Partners' Capital Accounts reflect the amounts they
would have reflected if adjustments required by Sections
10.5(b)(vi), 10.5(b)(vii) and 10.5(b)(viii) had not
occurred.
10.6 Authority of the General Partners to Vary Allocations
to Preserve and Protect the Partners' Intent
(a) It is the intent of the Partners that each Partner's
distributive share of profits, tax-exempt income, losses,
non-deductible non-capitalizable expenditures and credits
(and items thereof) shall be determined and allocated in
accordance with this Agreement to the fullest extent
permitted by Section 704(b) of the Code. In order to
preserve and protect the determinations and allocations
provided for in this Agreement, the General Partners are
hereby authorized and directed to allocate profits,
tax-exempt income, losses, non-deductible non-capitalizable
expenditures and credits (and items thereof) arising in any
year differently than otherwise provided for in this
Agreement to the extent that allocating profits, tax-exempt
income, losses, non-deductible non-capitalizable
expenditures or credits (or any item thereof) in the manner
provided for herein would cause the determinations and
allocations of each Partner's distributive share of profits,
tax-exempt income, losses, non-deductible non-capitalizable
expenditures or credits (or any item thereof) not to be
permitted by Section 704(b) of the Code. Any allocation made
pursuant to this Section 10.6 shall be deemed to be a
complete substitute for any allocation otherwise provided
for in this Agreement, and no amendment of this Agreement or
approval of any Partner shall be required.
(b) In making any allocation (the New Allocation) under
Section 10.6(a), the General Partners are authorized to act
only after having been advised in writing by the Tax
Accountants or the Special Limited Partner that, under
Section 704(b) of the Code, (i) the New Allocation is
necessary, and (ii) the New Allocation is the minimum
modification of the allocations otherwise provided for in
this Agreement necessary in order to assure that, either in
the then-current year or in any preceding year, each
Partner's distributive share of profits, tax-exempt income,
losses, non-deductible noncapitalizable expenditures and
credits (or any item thereof) is determined and allocated in
accordance with this Agreement to the fullest extent
permitted by Section 704(b) of the Code.
(c) If the General Partners are required by Section 10.6(a)
to make any New Allocation in a manner less favorable to the
Limited Partners than is otherwise provided for herein, then
the General Partners are authorized and directed, only after
having been advised in writing by the Tax Accountants or the
Special Limited Partner that such an allocation is permitted
by Section 704(b) of the Code, to allocate profits,
tax-exempt income, losses, non-deductible non-capitalizable
expenditures and credits (and any item thereof) arising in
later years in such manner so as to bring the allocations of
profits, tax-exempt income, losses, non-deductible
non-capitalizable expenditures and credits (and each item
thereof) to the Limited Partners as nearly as possible to
the allocations thereof otherwise contemplated by this
Agreement.
(d) New Allocations made by the General Partners under
Section 10.6(a) and Section 10.6(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
A. The Managing General Partner shall engage the Management
Agent to manage the Apartment Complex pursuant to the
Management Agreement. The initial Management Agent shall be
Calhoun Property Management, L.L.C. 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 the Agency and Lenders (if such approval is
required) or, when the Apartment Complex is not subject to
Agency and Lender regulation, in accordance with a
reasonable and competitive fee arrangement and in no event
in excess of 5% of gross rental income from the Apartment
Complex. From and after the Admission Date, the Partnership
shall not enter into any Management Agreement or modify or
extend any Management Agreement unless (i) the Managing
General Partner shall have obtained the prior written
consent of the Special Limited Partner to the identity of
the Management Agent and the terms of the Management
Agreement or the modification or extension thereof and (ii)
such new Management Agreement or modified or extended
Management Agreement provides that it is terminable by the
Partnership on thirty (30) days' notice by the Partnership
in the event of any change in the identity of the General
Partners.
B. No duplicate property management fees shall be paid
to any Person.
C. If (i) the Management Agent is the Managing General
Partner or an Affiliate of the Managing General Partner, and
(a) the Apartment Complex shall be subject to a substantial
building code violation which shall not have been cured
within six months after notice from the applicable
governmental agency or department or (b) the Partnership
shall not have Cash Flow of at least $8,000 during any year
after 1999, or (ii) an Event of Bankruptcy shall occur with
respect to the Management Agent, or (iii) the Management
Agent shall commit willful misconduct or gross negligence in
its conduct of its duties and obligations under the
Management Agreement or (iv) there is any change in the
identity of the Managing General Partner, or (v) (subject to
the last sentence of Article XI.C.) the Management Agent is
cited by any Agency, including the Credit Agency or any
other governmental agency, for a material violation or
alleged material violation of any applicable rules,
regulations or requirements, including, but not limited to,
non-compliance with the Minimum Set-Aside Test, the Rent
Restriction Test or any other Tax Credit-related provision,
then, upon request by the Special Limited Partner and
subject to Agency approval, if required, the Managing
General Partner must cause the Partnership to promptly
terminate the Management Agreement with the Management Agent
and appoint a new Management Agent selected by the Special
Limited Partner, which new Management Agent shall not be an
Affiliate of the Managing General Partner. Each General
Partner hereby grants to the Special Limited Partner an
irrevocable (to the extent permitted by applicable law)
power of attorney coupled with an interest to take any
action and to execute and deliver any and all documents and
instruments on behalf of such General Partner and the
Partnership as the Special Limited Partner may deem to be
necessary or appropriate in order to effectuate the
provisions of this Article XI.C. Subject to Agency approval,
if required, the Partnership shall not enter into any future
management arrangement or renew or extend any existing
management arrangement unless such arrangement is terminable
without penalty upon the occurrence of the events described
in this Article XI. Notwithstanding the foregoing, with
respect to any material violation or alleged violation of
clause (v) above, the Managing General Partner shall be
given a period of 60 days after notice of any violation to
cure the event or condition cited by any such agency prior
to any removal by the Special Limited Partner.
D. The Managing General Partner shall have the duty to
manage the Apartment Complex during any period when there is
no Management Agent.
ARTICLE XII Books and Records, Accounting, Tax
Elections, Etc.
12.1 Books and Records
The Partnership shall maintain all books and records which
are required under the Act by any governmental agency having
jurisdiction and may maintain such other books and records
as the Managing General Partner in his discretion deems
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.
The Managing General Partner shall maintain and store all
original Qualified Tenant files in fire-proof storage
facilities in a secure location. Subject to the consent of
the Investment Limited Partner, the Managing General Partner
may utilize microfiche or other similar storage technologies
to maintain the integrity of the original Qualified Tenant
files.
12.2 Bank Accounts
The bank accounts of the Partnership shall be maintained in
the Partnership's name with such financial institutions as
the Managing General Partner shall determine; provided,
however, that no such account may be held in a bank which is
an Affiliate of any General Partner unless the prior written
consent of the Special Limited Partner shall have been
received thereto. Withdrawals shall be made only in the
regular course of Partnership business on such signature or
signatures as the Managing General Partner may determine.
All deposits (including security deposits and other funds
required to be escrowed by the Lenders) and other funds not
needed in the operation of the business shall be deposited,
if required by applicable law and to the extent permitted by
applicable Agency or Mortgage requirements, in
interestbearing accounts or invested in United States
Government obligations maturing within one year.
12.3 Auditors
(a) The Auditors shall prepare, for execution by the
Managing General Partner, all tax returns of the
Partnership. Prior to the filing of the Partnership tax
returns, and in no event later than February 1 of each year,
the Auditors shall deliver the tax returns for such year to
the Tax Accountants for their review and comment. If a
dispute arises between the Auditors and the Tax Accountants
over the proper preparation of the tax returns and such
dispute cannot be resolved by the Auditors and the Tax
Accountants by March 1 of such year, then the Tax
Accountants shall make the final decision on whether any
changes are necessary. The Partnership shall reimburse BCCLP
for all 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 Managing General Partner, on behalf of the
Partnership, shall promptly terminate the Partnership's
engagement of the Auditors, and the written consent of the
Special Limited Partner must be received to the appointment
of replacement Auditors. If no such consent is received to
the appointment of replacement Auditors within thirty (30)
days of the notice from the Special Limited Partner to
replace the Auditors, then the Special Limited Partner shall
appoint replacement Auditors of its own choosing, the cost
of which shall be borne by the Partnership as a Partnership
expense. All Partners hereby grant to the Special Limited
Partner a special power of attorney, irrevocable to the
extent permitted by law, coupled with an interest, to so
appoint replacement Auditors and to do anything else which
in the view of the Special Limited Partner may be necessary
or appropriate to accomplish the purposes of this Section
12.3(c).
12.4 Cost Recovery and Elections
(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 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 Managing
General Partner in such manner as will, in the opinion of
the Auditors, be most advantageous to the Investment Limited
Partner and the limited partners thereof.
12.5 Special Basis Adjustments
In the event of a transfer of all or any part of the
Interest of the Investment Limited Partner or a transfer of
all or any part of an interest of a partner of the
Investment Limited Partner, the Partnership shall elect,
upon the request of the Investment Limited Partner, pursuant
to Section 754 of the Code, to adjust the basis of the
Partnership property. Any adjustments made pursuant to said
Section 754 shall affect only the successor in interest to
the transferring Partner or partner thereof. Each Partner
will furnish the Partnership all information necessary to
give effect to such election.
12.6 Fiscal Year
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
(a) The Managing General Partner shall cause to be prepared
and distributed to all Persons who were Partners at any time
during a fiscal year of the Partnership:
(i) Within forty-five (45) days after the end of each fiscal
year of the Partnership, (A) a balance sheet as of the end
of such fiscal year, a statement of income, a statement of
partners' equity, and a statement of cash flows, each for
the year then ended, all of which, except the statement of
cash flows, shall be prepared in accordance with generally
accepted accounting principles and accompanied by a report
of the Auditors containing an opinion of the Auditors, and
(B) a report of the activities of the Partnership during the
period covered by the report. With respect to any
distribution to the Investment Limited Partner, the report
called for shall separately identify distributions from (1)
Cash Flow from operations during the period, (2) Cash Flow
from operations during a prior period which had been held as
reserves, (3) proceeds from disposition of property and
investments, (4) lease payments on net leases with builders
and sellers, (5) reserves from the gross proceeds of the
Capital Contribution of the Investment Limited Partner, (6)
borrowed monies, and (7) transactions outside of the
ordinary course of business with a description thereof.
(ii) Within thirty (30) days after the end of each fiscal
year of the Partnership, all information relating to the
Partnership and/or the Apartment Complex which is necessary,
in the view of the Tax Accountants, for the preparation of
the Limited Partners' Federal income tax returns together
with a draft of the Partnership's Federal income tax return
and, promptly following the filing thereof with the Service,
a final copy of such return as filed.
(iii) Within thirty (30) days after the end of each
quarter of a fiscal year of the Partnership, a report
containing:
(A) a balance sheet, which may be unaudited;
(B) a statement of income and expenses for the quarter then
ended, which may be unaudited, in the form specified by
BCCLP;
(C) a statement of cash flows for the quarter then ended,
which may be unaudited;
(D) a certification of the Managing General Partner that the
Apartment Complex and its tenants are in compliance with all
applicable federal, state and local requirements and
regulations;
(E) a low-income housing tax credit monitoring form and an
Occupancy/Rental Report, all in the form specified by BCCLP;
(F) a copy of the rent roll for the Apartment Complex; and
(G) all other information which would be pertinant to a
reasonable investor regarding the Partnership and its
activities during the quarter covered by the report.
(iv) Within forty five (45) days after the end of each
fiscal year of the Partnership a copy of the annual report
or Form(s) 8609 to be filed with the United States
Department of the Treasury concerning the status of the
Apartment Complex as low-income housing and any reports
filed in connection with the compliance monitoring conducted
by the Credit Agency.
(b) Upon the written request of the Investment Limited
Partner for further information with respect to any matter
covered in item (a) above, the Managing General Partner
shall furnish such information within thirty (30) days of
receipt of such request.
(c) Within ninety (90) days after the end of each fiscal
year of the Partnership, the Managing General Partner shall
provide to the Limited Partners:
a certification from the Managing General Partner that (A)
all Construction and/or Permanent Mortgage payments and
taxes and insurance with respect to the Apartment Complex
are current as of the date of the year-end report, (B) there
is no default under the Project Documents or this Agreement,
or if there is any such default, a detailed description
thereof, and (C) there is no building, health or fire code
violation or similar violation of a governmental law,
ordinance or regulation against the Apartment Complex or, if
there is any such violation, a detailed description thereof;
and
(ii) a descriptive statement of all transactions during the
fiscal year between the Partnership and General Partners or
any Affiliate thereof, including the nature of the
transaction and the payments involved.
(d) Within fifteen (15) days after the end of any calendar
quarter during which:
(i) there is a material default by the Partnership under any
Project Document or in the payment of any mortgage, taxes,
interest or other obligation on secured or unsecured debt,
(ii) any reserve has been reduced or terminated by
application of funds therein for purposes materially
different from those for which such reserve was established,
(iii) any General Partner has received any notice of a
material fact which may substantially affect further
distributions or Tax Credit allocations to any Limited
Partner, or
(iv) any Partner has pledged or collateralized its Interest
in the Partnership,
the Managing General Partner shall send the Investment
Limited Partner a detailed report of such event.
(e) After the Admission Date, the Partnership shall send to
the Investment Limited Partner, on or before the tenth day
of each month, the monthly housing credit monitoring form in
a form prescribed by BCCLP, as well as copies of all
applicable periodic reports covering the status of project
operations from the previous period, as may be required by
the Credit Agency or any other Agency.
(f) On or before ninety (90) days after the expiration of
each fiscal year of the Managing General Partner, the
Managing General Partner shall send to the Investment
Limited Partner copies of the balance sheet and income
statement of the Managing General Partner for such fiscal
year, which financial statements shall be reviewed by an
independent certified public accountant.
(g) The Managing General Partner shall cause the Partnership
to send to the Investment Limited Partner a copy of each
Construction Mortgage 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 all documents evidencing any
carryover allocation pursuant to Section 42(h)(1)(E) of the
Code and the Form(s) 8609 evidencing the Tax Credit
allocation. Promptly after Permanent Mortgage Commencement,
the Managing General Partner shall send to BCCLP a closing
binder containing photocopies of the fully-executed versions
of all documents signed in connection with the Permanent
Mortgages. The Managing General Partner hereby consents to
any Agency's providing BCCLP with copies of all material
communications between any such office and the Managing
General Partner and/or the Partnership, including, but not
limited to, any notices of default. From and after any date
upon which the Managing General Partner receives notice from
the Investment Limited Partner that the Investment Limited
Partner would like copies of the monthly rent rolls for the
Apartment Complex to be sent to BCCLP, the Managing General
Partner shall send copies of the rent rolls to BCCLP no
later than ten (10) days after the expiration of each month.
(h) If either (A) the Completion Date or (B) the date upon
which tenants first occupied apartment units in the
Apartment Complex 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 Managing
General Partner shall cause to be prepared and delivered to
the Investment Limited Partner within sixty (60) days of the
Admission Date the following items:
(i) An unaudited statement of income of the Partnership for
the year (or such shorter period as there may be from the
date of the most recent audited statement of income of the
Partnership) ended on the date upon which the Investment
Limited Partner acquired its Interest in the Partnership;
and
(ii) An audited statement of income of the Partnership for
any fiscal year of the Partnership ending between (A) the
earlier of (1) the Completion Date or (2) the date upon
which tenants first occupied apartment units in the
Apartment Complex (after the construction of such units) and
(B) the date upon which the Investment Limited Partner
acquired its Interest in the Partnership.
(i) Within thirty (30) days of the Completion Date, the
Managing General Partner shall prepare, or cause the
Auditors to prepare, and deliver to each Limited Partner a
Tax Credit basis worksheet for each building in the
Apartment Complex, all in a form specified by BCCLP.
(j) Prior to October 15 of each year, the Partnership shall
send to the Investment Limited Partner an estimate of the
Investment Limited Partner's share of the tax credits,
profits and losses of the Partnership for Federal income tax
purposes for the current fiscal year. Such estimate shall be
prepared by the Managing General Partner and the Auditors
and shall be in the form specified by BCCLP.
On or before January 31st of each Partnership fiscal year,
the Partnership shall send to the Investment Limited Partner
copies of the complete insurance policies satisfactory to
the Investment Limited Partner so that the Investment
Limited Partner will be able to determine that insurance
policies required to be maintained on the Apartment Complex
pursuant to Section 6.5(c) are in force, accompanied by a
certificate of the Managing General Partner stating that
such insurance policies satisfy the requirements of Section
6.5(c).
(l) On or before December 1 of each Partnership fiscal
year, the Partnership shall send to the Investment Limited
Partner a proposed budget for the up-coming fiscal year
setting forth the anticipated rental income and operating
expenses for the Apartment Complex.
(m) If the Managing General Partner does not cause the
Partnership to fulfill his obligations under Section
12.7(a)(i) and/or Section 12.7(a)(ii) within the time
periods set forth therein and after notice by the Investment
Limited Partner of its failure to fulfill his obligations,
the ManagingGeneral Partners shall pay as damages the sum of
$100 per day to the Investment Limited Partner until such
obligations shall have been fulfilled. Such damages shall be
paid forthwith by the Managing General Partner, and failure
to so pay shall constitute a material default of the
Managing General Partner hereunder. In addition, if the
Managing General Partner shall fail so to pay, the Managing
General Partner and his Affiliates shall forthwith cease to
be entitled to the Partnership Management Fee and to the
payment of any Cash Flow or Capital Transaction proceeds to
which he may otherwise be entitled hereunder. Such payments
of the Partnership Management Fee, Cash Flow and Capital
Transaction proceeds shall be restored only upon the payment
of such damages in full, and any amount of such damages not
so paid shall be deducted against payments of the
Partnership Management Fee, Cash Flow and Capital
Transaction proceeds otherwise due to the Managing General
Partners or his Affiliates.
12.8 Expenses of the Partnership
All expenses of the Partnership shall be billed
directly to and paid by the Partnership.
ARTICLE XIII General Provisions
13.1 Restrictions by Reason of Section 708 of the Code
No Disposition may be made if the Interest sought to be
Disposed of, when added to the total of all other Interests
Disposed of within the period of twelve consecutive months
prior to the proposed date of the Disposition, could, in the
opinion of tax counsel to the Partnership, result in the
termination of the Partnership under Section 708 of the
Code. This Section 13.1 shall have no application to any
required repurchase of the Investment Limited Partner's
Interest. Any Disposition in contravention of any of the
provisions of this Section 13.1 shall be void ab initio and
ineffectual and shall not bind or be recognized by the
Partnership. Notwithstanding the foregoing provisions of
this Section 13.1, however, the Investment Limited Partner
may waive the provisions of this Section 13.1 at any time as
to a Disposition or series of Dispositions, and in the event
of such a waiver, this Section 13.1 shall have no force or
effect upon such Disposition or series of Dispositions.
13.2 Amendments to Certificate
Within one hundred twenty (120) days after the end of any
Partnership fiscal year in which the Investment Limited
Partner shall have received any distributions under Article
X, the Managing General Partner shall file an amendment to
the Certificate reducing by the amount of its allocable
share of such distribution the amount of Capital
Contribution of the Investment Limited Partner as stated in
the last previous amendment to the Certificate. However,
Schedule A shall not be amended on account of any such
distribution. The Partnership shall amend the Certificate as
necessary to effect the substitution of substituted Limited
Partners.
Notwithstanding the foregoing provisions of this Section
13.2, no such amendments to the Certificate need be filed by
the Managing General Partner if the Certificate is not
required to and does not identify the Limited Partners or
their Capital Contributions in such capacity.
13.3 Notices
Any notice called for under this Agreement shall be in
writing and shall be deemed adequately given if actually
delivered or if sent by registered or certified mail,
postage prepaid, to the party for whom such notice is
intended at such party's last address of record on the
Partnership books.
13.4 Word Meanings
The words such as herein, hereinafter, hereof and hereunder
refer to this Agreement as a whole and not merely to a
subdivision in which such words appear unless the context
otherwise requires. The singular shall include the plural,
and vice versa, and each gender (masculine, feminine and
neuter) shall include the other genders, unless the context
requires otherwise. Each reference to a Section or an
Article refers to the corresponding Section or Article of
this Agreement, unless specified otherwise. References to
Treasury Regulations (permanent or temporary) or Revenue
Procedures shall include any successor provisions.
13.5 Binding Effect
The covenants and agreements contained herein shall be
binding upon and inure to the benefit of the heirs,
executors, administrators, successors and assigns of the
respective parties hereto.
13.6 Applicable Law
This Agreement shall be construed and enforced in accordance
with the laws of the State.
13.7 Counterparts
This Agreement may be executed in several counterparts and
all so executed shall constitute one agreement binding on
all parties hereto, notwithstanding that all the parties
have not signed the onginal or the same counterpart.
13.8 Financing Regulations
So long as any of the Project Documents are in effect, (a)
each of the provisions of this Agreement shall be subject
to, and the General Partners covenant to act in accordance
with, the Project Documents; (b) the Project Documents shall
govern the rights and obligations of the Partners, their
heirs, executors, administrators, successors and assigns to
the extent expressly provided therein; (c) upon any
dissolution of the Partnership or any transfer of the
Apartment Complex, no title or right to the possession and
control of the Apartment Complex and no right to collect the
rent therefrom shall pass to any Person who is not, or does
not become, bound by the Project Documents in a manner
satisfactory to each Agency; (d) no amendment to any
provision of the Project Documents shall become effective
without the prior written consent of each Agency (if
required); and (e) the affairs of the Partnership shall be
subject to Agency regulation, and no action shall be taken
which would require the consent or approval of any Agency
unless the prior consent or approval of such Agency shall
have been obtained. No new Partner shall be admitted to the
Partnership, and no Partner shall withdraw from the
Partnership or be substituted for without the consent of
each Agency (if such consent is then required). No amendment
to this Agreement relating to matters governed by Agency
regulations or requirements shall become effective until the
prior written consent of each Agency (if required) to such
amendment shall have been obtained.
Any conveyance or transfer of title to all or any portion of
the Apartment Complex required or permitted under this
Agreement shall in all respects be subject to all
conditions, approvals and other requirements of Agency rules
and regulations applicable thereto.
13.9 Separability of Provisions
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
All article and section headings in this Agreement are for
convenience of reference only and are not intended to
qualify the meaning of any article or section.
13.11 Amendment Procedure
This Agreement may be amended by the Managing General
Partner only with the Consent of the Investment Limited
Partner and the prior written consent of the Special Limited
Partner.
13.12 Extraordinary Limited Partner Expenses
Any and all costs and expenses incurred by the Investment
Limited Partner and/or the Special Limited Partner in
connection with exercising rights and remedies against the
Managing General Partner with respect to this Agreement,
including without limitation, reasonable attorneys' fees,
shall be paid by the Managing General Partner on demand. All
amounts due to the Investment Limited Partner and/or the
Special Limited Partner pursuant to this provision shall
bear interest from demand at a rate of 9%.
If the Managing General Partner breaches any provision of
this Agreement, the Investment Limited Partner and/or the
Special Limited Partner may employ an attorney or attorneys
to protect its rights hereunder, and the Managing General
Partner shall pay on demand the reasonable attorneys' fees
and expenses incurred by the Investment Limited Partner
and/or the Special Limited Partner, whether or not a legal
action is actually commenced against the Managing General
Partner by reason of such breach. All amounts due to the
Investment Limited Partner and/or the Special Limited
Partner pursuant to this provision shall bear interest from
demand at a rate equal to 9%.
13.13 Time of Admission
The Investment Limited Partner shall be deemed to have been
admitted to the Partnership as of the Commencement Date for
all purposes of this Agreement, including Article X;
provided, however, that if regulations are issued under the
Code or an amendment to the Code is adopted which would
require, in the opinion of the Auditors, that the Investment
Limited Partner be deemed admitted on a date other than as
of the Commencement Date, then the Managing General Partner
shall select a permitted admission date which is most
favorable to the Investment Limited Partner.
[INTENTIONALLY LEFT BLANK; SIGNATURE PAGES FOLLOW]
EXECUTED this 10th day of July, 1998.
PARTNERSHIP: PINERIDGE APARTMENTS
PARTNERSHIP, A LOUISIANA
PARTNERSHIP IN COMMENDAM
By: M. Riemer Calhoun, Jr.
Its: Managing General Partner
/s/ M. Riemer Calhoun, Jr.
GENERAL PARTNER: M. RIEMER CALHOUN, JR.
/s/ M. Riemer Calhoun, Jr.
WITHDRAWING ORIGINAL T.F. MANAGEMENT, INC.
LIMITED PARTNER:
By: Thomas L. Frye
Its: President
/s/ Thomas L. Frye
INVESTMENT LIMITED BOSTON CAPITAL TAX
PARTNER: TAX CREDIT FUND IV, L.P.
a Delaware limited partnership
By: Boston Capital Associates
IV., L.P., its general partner
By: C&M Associates d/b/a Boston
Capital Associates,
its general partner
By: /s/ Bonnie Kate Fox
Bonnie Kate Fox, Attorney-In-
Fact
for John P. Manning,
its general partner
SPECIAL LIMITED BCTC 94, INC.
PARTNER:
By: /s/ Bonnie Kate Fox
Bonnie Kate Fox, Attorney-In-
Fact
for John P. Manning, its
President
CONSENT AND AGREEMENT
The undersigned hereby executes this Agreement for the sole
purpose of agreeing to the provisions of Article XI of the
foregoing First Amended and Restated Articles of Partnership
In Commendam notwithstanding any provision of the Management
Agreement to the contrary.
Management Agent: CALHOUN PROPERTY
MANAGEMENT, L.L.C.
By: Thomas A. Calhoun
Its: Managing Member
/s/ Thomas A. Calhoun
PINERIDGE APARTMENTS PARTNERSHIP, A
LOUISIANA PARTNERSHIP IN COMMENDAM
Schedule A
As of July 10, 1998
General Partners Capital Contribution
M. Riemer Calhoun, Jr. $100
907 Polk Street
P.O. Drawer 799
Mansfield, LA 71052
Special Limited Partner Capital Contribution
BCTC 94, Inc. $10.00
One Boston Place
Boston, MA 02108-4406
Investment Limited Partner
Total Agreed-to Paid-In
Capital Contribution Capital
Contribution*
Boston Capital Tax $1,501,914 $1,126,436
Credit Fund IV, L.P. (Series 32)
c/o Boston Capital Partners, Inc.
One Boston Place
Boston, Massachusetts 02108-4406
*Paid-in Capital Contribution as of the date of this
Schedule A. Future Installments of Capital Contribution are
subject to adjustment and are due at the times and subject
to the conditions set forth in the Agreement to which this
Schedule is attached.
PINERIDGE APARTMENTS PARTNERSHIP, A
LOUISIANA PARTNERSHIP IN COMMENDAM
CERTIFICATION AND AGREEMENT
CERTIFICATION AND AGREEMENT made as of July 10, 1998, by
Pineridge Apartments Partnership, A Louisiana Partnership In
Commendam (the Partnership); M. Riemer Calhoun, Jr., as its
Managing General Partner (the Managing General Partner); and
T.F. Management, Inc., its limited partner (the Withdrawing
Original Limited Partner) for the benefit of Boston Capital
Tax Credit Fund IV, L.P., a Delaware limited partnership
(specifically Series 32 thereof) (the Investment Limited
Partner); BCTC 94, Inc., a Delaware corporation, and Peabody
& Brown, and certain other persons or entities described
herein.
WHEREAS, the Partnership proposes to admit the Investment
Limited Partner and the Special Limited Partner as limited
partners thereof pursuant to First Amended and Restated
Articles of Partnership In Commendam of the Partnership,
dated as of July 10, 1998 (the Partnership Agreement), and
in accordance with which the Investment Limited Partner will
make substantial capital contributions to the Partnership;
WHEREAS, the Investment Limited Partner, the Special Limited
Partner and Boston Capital have relied upon certain
information and representations described herein in
evaluating the merits of investment by the Investment
Limited Partner in the Operating Partnership; and
WHEREAS, Peabody & Brown, as counsel for the Investment
Limited Partner, will rely upon such information and
representations in connection with its delivery of certain
opinions with respect to this transaction;
NOW, THEREFORE, to induce the Investment Limited Partner and
the Special Limited Partner to enter into the Partnership
Agreement and become limited partners of the Partnership,
and for $1.00 and other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the
Partnership, the Managing General Partner and the
Withdrawing Original Limited Partner hereby agree as follows
for the benefit of the Investment Limited Partner, the
Special Limited Partner, Boston Capital and Peabody & Brown,
and certain other persons hereinafter described.
1. Representations, Warranties and Covenants of the
Partnership and the Managing General Partner
The Partnership and the Managing General Partner jointly and
severally, and in solido, represent, warrant and certify to
the Investment Limited Partner, the Special Limited Partner,
Boston Capital, and Peabody & Brown that, with respect to
the Partnership, as of the date hereof:
1.01 The Partnership is duly organized as a limited
partnership pursuant to the laws of the State of Louisiana
with full power and authority to own the apartment complex
(the Apartment Complex) and conduct its business; the
Partnership, the Managing General Partner and the
Withdrawing Original Limited Partner have the power and
authority to enter into and perform this Certification and
Agreement; the execution and delivery of this Certification
and Agreement by the Partnership, the Managing General
Partner and the Withdrawing Original Limited Partner have
been duly and validly authorized by all necessary action;
the execution and delivery of this Certification and
Agreement, the fulfillment of its terms and consummation of
the transactions contemplated hereunder do not and will not
conflict with or result in a violation, breach or
termination of or constitute a default under (or would not
result in such a conflict, violation, breach, termination or
default with the giving of notice or passage of time or
both) any other agreement, indenture or instrument by which
the Partnership or Managing General Partner or Withdrawing
Original Limited Partner are bound or any law, regulation,
judgment, decree or order applicable to the Partnership or
the Managing General Partner or the Withdrawing Original
Limited Partner or any of their respective properties; this
Certification and Agreement constitutes the valid and
binding agreement of the Partnership, the Managing General
Partner and the Withdrawing Original Limited Partner,
enforceable against each of them in accordance with its
terms.
1.02 The Managing General Partner has delivered to the
Investment Limited Partner, the Special Limited Partner and
Boston Capital or their affiliates all documents and
information which would be material to a prudent investor in
deciding whether to invest in the Partnership. All factual
information, including without limitation the information
set forth in Exhibit A hereto, provided to the Investment
Limited Partner, the Special Limited Partner, Boston Capital
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
statement for the Managing General Partner and his
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 the Managing General Partner 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 Managing General Partner.
1.03 As of the date hereof, each of the representations
contained in Exhibit B attached hereto is true, accurate and
complete as to each of the Partnership, the Managing General
Partner and the Withdrawing Original Limited Partner and as
to any of their affiliates, any of their predecessors and
their affiliates, predecessors, any of their directors,
officers, general partners and/or beneficial owners of ten
percent (10%) or more of any class of their equity
securities (beneficial ownership meaning the power to vote
or direct the vote and/or the power to dispose or direct the
disposition of such securities), as the case may be, and any
promoters presently connected with them in any capacity.
1.04 Each of the representations and warranties
contained in the Partnership Agreement is true and correct
as of the date hereof.
1.05 Each of the covenants and agreements of the
Partnership and the Managing General Partner contained in
the Partnership Agreement have been duly performed to the
extent that performance of any covenant or agreement is
required on or prior to the date hereof.
1.06 All conditions to admission of the Investment
Limited Partner and the Special Limited Partner as the
limited partners of the Partnership contained in the
Partnership Agreement have been satisfied.
1.07 No default has occurred and is continuing under
the Partnership Agreement or any of the Project Documents
(as said term is defined in the Partnership Agreement) for
the Partnership.
1.08 The Managing General Partner agrees to take all
actions necessary to claim the Projected Credit, including,
without limitation, the filing of a Form 8609 with the
Internal Revenue Service.
1.09 No person or entity other than the Partnership
holds any equity interest in the Apartment Complex.
1.10 The 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.
The Partnership, except to the extent it is protected by
insurance and excluding any risk borne by the Lenders, bears
the sole risk of loss if the Apartment Complex is destroyed
or condemned or there is a diminution in the value of the
Apartment Complex.
1.12 No person or entity except the Partnership has the
right to any proceeds, after payment of all indebtedness,
from the sale, refinancing, or leasing of the Apartment
Complex.
1.13 The General Partners are not related in any manner
to the Investment Limited Partner, the Special Limited
Partner or Boston Capital nor is the Managing General
Partner acting as an agent of the Investment Limited
Partner, the Special Limited Partner or Boston Capital.
1.14 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
biphenyls (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 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
Partnership nor the Managing General Partner nor the
Withdrawing Original Limited Partner have received any
notice from any source whatsoever of the existence of any
such hazardous condition relating to the Apartment Complex
or of any violation of any local, state or federal law or
regulation with respect to the Apartment Complex.
1.15 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.
1.16 The Apartment Complex is not in violation of any
State of local health or building code or regulation.
1.17 The 1998 low-income housing tax credit
authorization in the amount of at least $208,620 per annum
for the Property has been obtained by the Partnership from
the tax credit agency of the State of Louisiana and is in
full force and effect.
1.18 The Partnership has validly elected under Section
42(b)(2)(A)(ii) of the Code to lock in a credit percentage
of 8.45% with respect to the qualified basis of the
Property.
1.19 All 40 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.
1.20 All qualified low income dwelling units in the
Property will be occupied by tenants under leases with terms
of not less than six months.
1.21 All rental units in the Property are of equal
quality with comparable amenities available to low-income
tenants on a comparable basis without separate fees.
1.22 The Apartment Complex does not receive assistance
under HUD Section 8 Moderate Rehabilitation Program.
1.23 The Partnership will, as of December 31, 1998, own
the Apartment Complex and have a basis in the Apartment
Complex equal to at least 10% of its anticipated basis in
the Apartment Complex as of December 31, 2000, and all
buildings in the Apartment Complex will be placed in service
for the purposes of the Code not later than December 31,
2000.
1.24 The allocation of 1998 low income housing tax
credit to the Property was not made pursuant to the
nonprofit set aside provisions of Section 42 of the Code.
1.25 The Apartment Complex is located in a difficult to
develop area for the purposes of Section 42(d)(5)(B) of the
Code.
2. Indemnification
2.01 The Managing General Partner (for purposes of this
Section 2.01, (the Indemnifying Party) agrees to indemnify
and hold harmless the Investment Limited Partner, the
Special Limited Partner and Boston Capital (for purposes of
this Section 2.01, the Indemnified Parties or, individually,
an Indemnified Party) and each officer, director, employee
and person, if any, who controls any 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 biphenyls (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.
2.02 The Indemnifying Party shall not be liable under
the indemnity agreements contained in Section 2.01 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 2.01. In case any action is brought against any
Indemnified Party or any such of its officers, directors,
employees or controlling persons upon any such claim, and it
notifies the Indemnifying Party of the commencement thereof
as aforesaid, the Indemnifying Party shall be entitled to
participate at their own expense in the defense, or, if they
so elect, in accordance with arrangements satisfactory to
the any 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 Party 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
3.01 This Certification and Agreement is made solely for
the benefit of the Partnership, the Managing General
Partner, the Withdrawing Original Limited Partner, the
Investment Limited Partner, the Special Limited Partner,
Boston Capital and Peabody & Brown (and, to the extent
provided in Section 2, the officers, directors, partners,
employees and controlling persons referred to therein), and
their respective successors and assigns, and no other person
shall acquire or have any right under or by virtue of this
Agreement.
3.02 This Certification and Agreement may be executed in
several counterparts, each of which shall be deemed to be an
original, all of which together shall constitute one and the
same instrument.
3.03 Terms defined in the Partnership Agreement and used but
not otherwise defined herein shall have the meanings given
to them in the Partnership Agreement.
IN WITNESS WHEREOF, the undersigned have set their
hands and seals as of the date first above written.
PARTNERSHIP: PINERIDGE APARTMENTS
PARTNERSHIP, A LOUISIANA
PARTNERSHIP IN COMMENDAM
/s/ M. Riemer Calhoun, Jr.
By: M. Riemer Calhoun, Jr.
Its: Managing General Partner
GENERAL PARTNERS: M. RIEMER CALHOUN, JR.
/s/ M. Riemer Calhoun, Jr.
WITHDRAWING ORIGINAL T.F. MANAGEMENT, INC.
LIMITED PARTNER: By: Thomas L. Frye
Its: President
/s/ Thomas L. Frye
Exhibit A
PINERIDGE APARTMENTS PARTNERSHIP, A
LOUISIANA PARTNERSHIP IN COMMENDAM
FACT SHEET
A. Sources
i. Permanent First Mortgage $93,806
ii. Permanent Second Mortgage $400,000
iii. LIHTC Equity $1,501,914
General Partner Equity $100
TOTAL $1,995,820
B. Uses
Acquisition Costs
Land $85,220
Construction Costs
Building Costs $1,235,240
Site Work $251,560
General Requirements $89,100
Bond Premium $15,000
Legal/Organizational
Legal $20,000
Title & Recording $20,000
Construction Financing
Interest during Construction $15,000
Soft Costs
Architect/Engineering $23,600
Taxes during Construction $2,000
Construction Insurance $2,000
Tax Credit Fees $18,500
Appraisal $5,000
Cost Certification $4,500
Contingencies $38,000
Other Costs
Developer Fee $160,000
Developer Overhead Reimbursement $11,100
TOTAL $1,995,820
2. Construction Financing
A. Lender Hibernia National
Bank
B. Mortgage Amount $850,000
i. Note Date May 12, 1998
ii. Interest Rate 8.95%
iii. Term 12 months
3. Permanent Financing
Lender (First Mortgage) Hibernia National
Bank
Mortgage Amount: $93,806
i. Note Date: May 12, 1998
ii. Interest Rate: 8.80% adjusted on
5th and
10th anniversary
iii. Term: 15 years
iv. Amortization: 300 months
Lender (Second Mortgage) Louisiana Housing Finance
Agency
Mortgage Amount $400,000
Note Date: July 10, 1998
i. Interest Rate: 5.88%
Term: 40 years
Amortization 40 years
Total Construction Costs: $1,575,900
5. Construction Commencement: July, 1998
6. Construction Completion: January, 1999
7. Eligible Basis: $1,899,500
8. Qualified Basis: $2,469,350
(130% Basis Multiplier)
9. Capital Contributions:
General Partners $100
Investment Limited Partner $1,501,914
10. Type of Credit: New construction
11. Rent-up Schedule: 100% occupancy by April,
1999
12. Projected Credit to the Investment
Limited Partner (99.99%): $182,524 for 1999
($208,599; new construction) $208,599 for 2000 to
2008
$26,075 for 2009
13. Total Projected Credit to the
Partnership (100%): $182,543 for 1999
($208,620; new construction) $208,620 for 2000 to
2008
$26,078 for 2009
14. Tax Credit Approval:
A. Application
i. Filing Date: March 19, 1997
ii. Credit Amount
Requested: $208,620
B. Reservation
i. Date: October 15, 1997
ii. Credit Amount
Reserved: $208,620
C. Allocation
i. Date: N/A
ii. Credit Amount
Allocated:
15. Apartment Complex
A. Name: Pineridge Apartments
Address: Franklinton, Louisiana
Type of Project: Elderly
16. Area Median Income: $28,000
(4 Person MFI
17. Type of Apartments: Garden Apartments
# Unit Sq. Basic Util
Ft. Rent Allow. Total Rent
1 BR (50% median) 12 800 217 40 257
2 BR (50% median) 4 950 259 50 309
2 BR (60% median) 18 950 320 50 370
4 BR (60% median) 6 1,250 477 70 407
18. Number of Units Receiving
Rental Assistance: -0-
19. Annual Operating Expenses
(beginning 1999): $92,037
20. Replacement Reserve Account
A. Annual: $8,000
B. Required Total Accumulation: $80,000
21. Operating Reserve Account: -0-
22. Amount of Annual Reporting
Fee to Boston Capital: $4,000
23. Amount of Partnership
Management Fee: $4,000
24. Amount of Total Depreciable Base
Allocated to Personal Property: $29,981
25. Total Capital Contribution of
Investment Limited Partner: $1,501,914
26. Schedule of Capital Contributions
$1,126,436 on the latest to occur of:
Tax Credit Set-Aside;
Admission Date;
Construction Loan Closing;
Permanent Mortgage Loan Commitment; or
Permanent Second Mortgage closing.
$150,191 on the latest to occur of:
Completion;
State Designation; or
Cost Certification.
$225,287 on the latest to occur of:
the Initial 100% Occupancy Date;
Permanent Mortgage Commencement;
receipt by the Limited Partners of the Partnership's owner's
title policy;
opinion of counsel to the Partnership; or
Breakeven Point.
27. General Partner: M. Riemer Calhoun, Jr.
907 Polk Street
P.O. Drawer 799
Mansfield, LA 71052
28. Ownership Interests:
Tax Credits Profits &
& Cost Recovery Losses
(depreciation) Other Capital Cash
deductions losses Transactions Flow
A. Managing
G.P.: .001% .001% 50% 50%
B. Investment
L.P.: 99.99% 99.99% 49.999% 50%
C. Special
L.P. -0- -0- .001% -0-
29. Management Agent: Calhoun Property Management,
L.L.C.
Contact Person: Thomas A. Calhoun
Address: 907 Polk Street, P.O. Drawer 799
Mansfield, LA 71052
Telephone Number: 318-872-0286
Fax Number 318-872-0311
Amount of Management Fees: (5% of gross rental receipts)
30. Builder: Calhoun Builders, L.L.C.
Contact Person: Thomas Frye
Address: 907 Polk Street, P.O. Drawer 799
Mansfield, LA. 71052
B. Telephone Number: 318-872-0286
C. Fax Number: 318-872-0311
D. Construction Contract $2,721,391
31. Architect: Gaudet & Tolson Architects, Ltd.
Contact Person: Jerome Gaudet
Address: 361 South Main Street
Opelousas, LA 70570
B. Telephone Number: 318-942-1202
C. Fax Number: 318-942-2768
D. Amount of Fee: $23,600
32. Auditor and Tax Return
Preparer: Little & Banks
Contact Person: Todd Little
Address: P.O. Box 1435
107A Contempo Avenue
West Monroe, LA 71291
B. Telephone Number: 318-361-9600
C. Fax Number: 318-361-9620
D. Fee: $4,500
33. Federal Taxpayer I.D. Number: 72-1377669
34. Operating Deficit Guaranty: M. Riemer Calhoun, Jr.
M. Riemer Calhoun, Jr., individually, and on behalf of
the Partnership, shall be obligated to make Subordinated
Loans to the Partnership to cover debt service, operating
expenses and the Replacement Reserve Fund to the extent
these exceed available operating income.
35. Building Breakdown
A. # of units: 40
B. # of Buildings: 14
C. BIN: LA-98-00163 to 00176
cc: Boston Capital Accounting Department
Exhibit B
Certificate of Partnership, Managing General Partner
and Withdrawing Original Limited Partner
Re: Lack of Disqualifications
The Partnership, its Managing General Partner and its
Withdrawing Original Limited Partner (as identified on the
Certification and Agreement to which this Certificate is
attached as Exhibit B) hereby represent to you that neither
(i) the Partnership, (ii) any predecessor of the
Partnership, (iii) any of the Partnership's affiliates
(affiliate meaning a person that controls or is controlled
by, or is under common control with, the Partnership) , (iv)
any sponsor (meaning any person who (1) is directly or
indirectly instrumental in organizing the Partnership or (2)
will directly or indirectly manage or participate in the
management of the Partnership or (3) will regularly perform,
or select the person or entity who will regularly perform,
the primary activities of the Partnership), (v) any officer,
director, principal or general partner of the Partnership or
of any sponsor, (vi) any officer, director, principal,
promoter or general partner of the Managing General Partner,
(vii) any beneficial owner of ten per cent or more of any
class of the equity securities of the Partnership or of any
sponsor (beneficial ownership meaning the power to vote or
direct the vote and/or the power to dispose or direct the
disposition of such securities), (viii) any promoter of the
Partnership (meaning any person who, acting alone or in
conjunction with one or more other persons, directly or
indirectly has taken, is taking or will take the initiative
in founding and organizing the business of the operating
Partnership or any person who, in connection with the
founding and organizing of the business or enterprise of the
Partnership, directly or indirectly receives in
consideration of services or property, or both services and
property, ten per cent or more of any class of securities of
the 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
Partnership in any capacity:
(1) Has filed a registration statement which is the subject
of any pending proceeding or examination under the
securities laws of any jurisdiction, or which is the subject
of any refusal order or stop order thereunder entered within
five years prior to the date hereof;
(2) Has been convicted of or pleaded nolo
contendere to a misdemeanor or felony or, within the
last ten years, been held liable in a civil action by
final judgment of a court based upon conduct showing moral
turpitude in connection with the offer, purchase or sale of
any security, franchise or commodity (which term, for the
purposes of this Certificate shall hereinafter include
commodity futures contracts) or any other aspect of the
securities or commodities business, or involving
racketeering, the making of a false filing or a violation of
Sections 1341, 1342 or 1343 of Title 18 of the United States
Code or arising out of the conduct of the business of an
issuer, underwriter, broker, dealer, municipal securities
dealer, or investment adviser, or involving theft,
conversion, misappropriation, fraud, breach of fiduciary
duty, deceit or intentional wrongdoing including, but not
limited to, forgery, embezzlement, obtaining money under
false pretenses, larceny fraudulent conversion or
misappropriation of property or conspiracy to defraud, or
which is a crime involving moral turpitude, or within the
last five years of a misdemeanor or felony which is a
criminal violation of statutes designed to protect consumers
against unlawful practices involving insurance, securities,
commodities, real estate, franchises, business
opportunities, consumer goods or other goods and services;
(3) Is subject to (a) any administrative order, judgment or
decree entered within five years prior to the date hereof
entered or issued by or procured from a state securities
commission or administrator, the Securities and Exchange
Commission (SEC), the Commodities Futures Trading Commission
or the U.S. Postal Service, or to (b) any administrative
order or judgment, arising out of the conduct of the
business of an underwriter, broker, dealer, municipal
securities dealer, or investment adviser, or involving
deceit theft, fraud or fraudulent conduct, or breach of
fiduciary duty, or which is based upon a state banking,
insurance, real estate or securities law or (c) has been the
subject of any administrative order, judgment or decree in
any state in which fraud, deceit, or intentional wrongdoing,
including, but not limited to, making untrue statements of
material fact or omitting to state material facts, was
found;
(4) Is subject to any pending proceeding in any
jurisdiction relating to the exemption from registration of
any security or offering, or to any order, judgment or
decree in which registration violations were found or which
prohibits, denies or revokes the use of any exemption from
registration in connection with the offer, purchase or sale
of securities, or to an SEC censure or other order based on
a finding of false filing;
(5) Is subject to any order, judgment or decree of any
court or regulatory authority of competent jurisdiction
entered within five years prior to the date hereof,
temporarily, preliminarily or permanently restraining or
enjoining such persons from engaging in or continuing any
conduct or practice in connection with any aspect of the
securities or commodities business or involving the making
of any false filing or arising out of the conduct of the
business of an underwriter, broker, dealer, municipal
securities dealer, or investment adviser, or which restrains
or enjoins such person from activities subject to federal or
state statutes designed to protect consumers against
unlawful or deceptive practices involving insurance,
banking, commodities, real estate, franchises, business
opportunities, consumer goods and services, or is subject to
a United States Postal Service false representation order
entered within five years prior to the date hereof, or is
subject to a temporary restraining order or preliminary
injunction with respect to conduct alleged to have violated
section 3005 of Title 39, United States Code;
(6) Is suspended or expelled from membership in, or
suspended or barred from association with a member of, an
exchange registered as a national securities exchange, an
association registered as a national securities association,
or any self-regulatory organization registered pursuant to
the Securities Exchange Act of 1934, or a Canadian
securities exchange, or association or self-regulatory
organization operating under the authority of the Commodity
Futures Trading Commission, or is subject to any currently
effective order or order entered within the past five years
of the SEC, the Commodity Futures Trading Commission or any
state securities administrator denying registration to, or
revoking or suspending the registration of, such person as a
broker-dealer, agent, futures commission merchant, commodity
pool operator, commodity trading adviser or investment
adviser or associated person of any of the foregoing, or
prohibiting the transaction of business as a broker-dealer
or agent;
(7) Has, in any application for registration or in any
report required to be filed with, or in any proceeding
before the SEC or any state securities commission or any
regulatory authority willfully made or caused to be made any
statement which was at the time and in the light of the
circumstances under which it was made false or misleading
with respect to any material fact, or has willfully omitted
to state in any such application, report or proceeding any
material fact which is required to be stated therein or
necessary in order to make the statements made, in the light
of the circumstances under which they are made, not
misleading, or has willfully failed to make any required
amendment to or supplement to such an application, report or
statement in a timely manner;
(8) Has willfully violated any provision of the Securities
Act of 1933, the Securities Exchange Act of 1934, the Trust
Indenture Act of 1939, the Investment Advisers Act of 1940,
the Investment Company Act of 1940, the Commodity Exchange
Act of 1974 or the securities laws of any state, or any
predecessor law, or of any rule or regulation under any of
such statutes;
(9) Has willfully aided, abetted, counseled, commanded,
induced or procured the violation by any other person of any
of the statutes or rules or regulations referred to in
subsection (8) hereof;
(10) Has failed reasonably to supervise his agents, if
he is a broker-dealer, or his employees, if he is an
investment adviser, but no person shall be deemed to have
failed in such supervision if there have been established
procedures, and a system for applying such procedures, which
would reasonably be expected to prevent and detect, insofar
as practicable, any violation of statutes, rules or orders
described in subsection (8) and if such person has
reasonably discharged the duties and obligations incumbent
upon him by reason of such procedures and system without
reasonable cause to believe that such procedures and system
were not being complied with;
(11) Is subject to a currently effective state
administrative order or judgment procured by a state
securities administrator within five years prior to the date
hereof or is subject to a currently effective United States
Postal Service fraud order or has engaged in dishonest or
unethical practices in the securities business or has taken
unfair advantage of a customer or is the subject of
sanctions imposed by any state or federal securities agency
or self-regulatory agency;
(12) Is insolvent, either in the sense that his liabilities
exceed his assets or in the sense that he cannot meet his
obligations as they mature, or is in such financial
condition that he cannot continue his business with safety
to his customers, or has not sufficient financial
responsibility to carry out the obligations incident to his
operations or has been adjudged a bankrupt or made a general
assignment for the benefit of creditors; or
(13) If the 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 Partnership was required to file
such reports).
DEVELOPMENT SERVICES AGREEMENT
AGREEMENT made as of May 1, 1998 by and between
PINERIDGE APARTMENTS PARTNERSHIP, a Louisiana Partnership In
Commendam (the Partnership) and M. Riemer Calhoun, Jr. (the
Developer).
RECITALS
1. The Partnership was formed to acquire, construct,
develop, improve, maintain, own, operate, lease, dispose of
and otherwise deal with an apartment complex located in
Franklinton, Louisiana (the Apartment Complex).
2. The Apartment Complex, following the completion of
construction, is expected to constitute a qualified low
income housing project (as defined in Section 42(g)(1) of
the Code).
3. The Developer has provided and will continue to
provide certain services with respect to the Apartment
Complex during the development and construction thereof.
4. In consideration for such services, the
Partnership has agreed to pay to the Developer a fee
computed in the manner stated herein.
NOW, THEREFORE, in consideration of the mutual
covenants and conditions set forth herein and other good and
valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto hereby agree as
follows:
Section 1. Defined Terms
Capitalized terms used in this Agreement and not otherwise
defined herein shall have the meanings specified below:
Completion Date shall mean the date upon which (i) the
Apartment Complex shall have been completed as evidenced by
the issuance by the inspecting architect and by each
governmental agency having jurisdiction, of certificates of
substantial completion or occupancy (or local equivalents)
with respect to all apartment units in the Apartment
Complex, and (ii) each such apartment unit shall have been
placed in service after rehabilitation thereof.
Permanent Mortgage Commencement shall mean the first date on
which all of the following shall have occurred with respect
to the Apartment Complex: (a) Completion Date; (b) the
principal amount and maturity date of the permanent mortgage
loan shall have been finally determined; (c) amortization of
the permanent mortgage loan shall have commenced, and (d)
repayment in full of the construction financing and
discharge of the construction mortgage and all other liens
related thereto.
State means Louisiana.
Section 2. Development Services
(a) The Developer shall oversee the development and
construction of the Apartment Complex, and shall perform the
services and carry out the responsibilities with respect to
the Apartment Complex as are set forth herein, and such
additional duties and responsibilities as are reasonably
within the general scope of such services and
responsibilities and are designated from time to time by the
general partners of the Partnership (the General Partners)
on behalf of the Partnership.
(b) The Developer's services shall be performed in the name
and on behalf of the Partnership and shall consist of the
duties set forth in the following subparagraphs of this
Section 2(b) and as provided elsewhere in this Agreement;
provided, however, that if the performance of any duty of
the Developer set forth in this Agreement is beyond the
reasonable control of the Developer, the Developer shall
nonetheless be obligated to (i) use its best efforts to
perform such duty and (ii) promptly notify the Partnership
that the performance of such duty is beyond its reasonable
control. The Developer has performed or shall perform the
following:
(i) Negotiate and cause to be executed in the name and
on behalf of the Partnership agreements for architectural,
engineering, testing or consulting services for the
Apartment Complex, and any agreements for the construction
of any improvements or tenant improvements to be constructed
or installed by the Partnership or the furnishing of any
supplies, materials, machinery or equipment therefor, or any
amendments thereof, provided that no agreement shall be
executed nor binding commitment made until the terms and
conditions thereof and the party with whom the agreement is
to be made shall have on approved by the Partnership unless
the terms, conditions, and parties comply with guidelines
issued by the General Partners concerning such agreements;
(ii) Assist the Partnership in dealing with neighborhood
groups, local organizations, abutters and other parties
interested in the development of the Apartment Complex;
(iii) Assist the Partnership in identifying sources of
construction financing for the Apartment Complex and
negotiate the terms of such financing with lenders;
(iv) Establish and implement appropriate administrative and
financial controls for the design and construction of the
Apartment Complex, including but not limited to:
(A) coordination and administration of the Apartment
Complex architect, the general contractor, and other
contractors, professionals and consultants employed in
connection with the design of the Apartment Complex;
(B) administration of any construction contracts on behalf
of the Partnership;
(C) participation in conferences and the rendering of such
advice and assistance as will aid in developing economical,
efficient and desirable design and construction procedures;
(D) the rendering of advice and recommendations as to the
selection procedures for and selection of subcontractors and
suppliers;
(E) the review and submission to the Partnership for
approval of all requests for payments under any
architectural agreement, general contractor's agreement, or
any loan agreements with any lending institutions providing
funds for the benefit of the Partnership for the design or
construction of any improvements;
(F) the submission of any suggestions or requests for
changes which could in any reasonable manner improve the
design, efficiency or cost of the Apartment Complex;
(G) applying for and maintaining in full force and effect
any and all governmental permits and approvals required for
the lawful construction of the Apartment Complex;
(H) compliance with all terms and conditions applicable to
the Partnership or the Apartment Complex Contained in any
governmental permit or approval required or obtained for the
lawful construction of the Apartment Complex, or in any
insurance policy affecting or covering the Apartment
Complex, or in any surety bond obtained in connection with
the Apartment Complex;
(I) furnishing such consultation and advice relating to the
construction and development of the Apartment Complex as may
be reasonably requested from time to time by the
Partnership;
(J) keeping the Partnership fully informed on a regular
basis of the progress of the design and construction of the
Apartment Complex, including the preparation of such reports
as are provided for herein or as may reasonably be requested
by the Partnership;
(K) giving or making the Partnership's instructions,
requirements, approvals and payments provided for in the
agreements with the Apartment Complex architect, general
contractor, and other contractors, professionals and
consultants retained for the Apartment Complex; and
(L) at the Partnership's expense, filing on behalf of, and
as the attorney fact for, the Partnership, any notices of
completion required or permitted to be filed upon the
completion of any improvements and taking such actions as
may be required to obtain any certificates of occupancy or
equivalent documents required to permit the occupancy of
dwelling units and other space in the Apartment Complex.
(v) Assist the Partnership in obtaining access to utilities
and required zoning approvals;
(vi) Inspect the progress of the course of construction of
the Apartment Complex, including verification of the
materials and labor being furnished to and on such
construction so as to be fully competent to approve or
disapprove requests for payment made by the Apartment
Complex architect and the general contractor, or by any
other parties with respect to the design and construction of
the Apartment Complex, and in addition to verify that the
same is being carried out substantially in accordance with
the plans and specifications approved by the Partnership or,
in the event that the same is not being so carried out, to
promptly so notify the Partnership;
(vii) If requested to do so by the Partnership, perform on
behalf of the Partnership all obligations of the Partnership
with respect to the design and construction of the Apartment
Complex contained in any loan agreement or security
agreement entered into in connection with any financing for
the Apartment Complex, or in any lease or rental agreement
relating to space in the Apartment Complex, or in any
agreement entered into with any governmental body or agency
relating to the terms and conditions of such construction,
provided that copies of such agreements have been provided
by the Partnership to the Developer or the Partnership has
otherwise notified the Developer in writing of such
obligations;
(viii) To the extent requested to do so by the Partnership,
prepare and distribute to the Partnership a critical path
schedule, and periodic updates thereto as necessary to
reflect any material changes, but in any event not less
frequently than quarterly, other design or construction cost
estimates as required by the Partnership, and financial
accounting reports, including monthly progress reports on
the quality, progress and cost of construction and
recommendations as to the drawing of funds from any loans
arranged by the Partnership to cover the cost of design and
construction of the Apartment Complex;
(ix) Assist the Partnership in obtaining and maintaining
insurance coverage for the Apartment Complex, the
Partnership and its employees during the development phase
of the Apartment Complex in accordance with an insurance
schedule approved by the Partnership, which insurance shall
include general public liability insurance covering claims
for personal injury, including but not limited to bodily
injury, or property damage, occurring in or upon the
Property or the streets, passageways, curbs and vaults
adjoining the Property. Such insurance shall be in a
liability amount approvals by the Partnership;
(x) During the construction and development period of the
Apartment Complex, comply with all applicable present and
future laws, ordinances, orders, rules, regulations and
requirements (hereinafter called laws) of all Federal, state
and municipal government courts, departments, commissions,
boards and offices, any national or local Board of Fire
Underwriters or Insurance Services Offices having
jurisdiction in the county in which the Apartment Complex is
located or any other body exercising functions similar to
those of any of the foregoing, or any insurance carriers
providing any insurance coverage for the Partnership or the
Apartment Complex, which may be applicable to the Apartment
Complex or any part thereof. Any such compliance undertaken
by the Developer on behalf of and in the name of the
Partnership, in accordance with the provisions of this
Agreement, shall be at the Partnership's expense. The
Developer shall likewise ensure that all agreements between
the Partnership and independent contractors to comply with
all such applicable laws;
(xi) Assemble and retain all contracts, agreements and
other records and data as may be necessary to carry out the
Developer's functions hereunder. Without limiting the
foregoing, the Developer will prepare, accumulate and
furnish to the General Partners and the appropriate
governmental authorities, as necessary, data and information
sufficient to identify the market value of improvements in
place as of each real property tax lien date, and will make
application for appropriate exclusions from the capital
costs of the Apartment Complex for purposes of real property
ad valorem taxes;
(xii) Coordinate and administer the design and construction
of all interior tenant improvements to the extent required
under any leases or other occupancy agreements to be
constructed or furnished by the Partnership with respect to
the initial leasing of space in the Apartment Complex,
whether involving building standard or non building standard
work;
(xiii) Use its best efforts to accomplish the timely
completion of the Apartment Complex in accordance with the
approved plans and specifications and the time schedules for
such completion approved by the Partnership;
(xiv) At the direction of the Partnership, implement any
decisions of the Partnership made in connection with the
design, development and construction of the Apartment
Complex or any policies and procedures relating thereto,
exclusive of leasing activities; and
(xv) Perform and administer any and all other services and
responsibilities of the Developer which are set forth in
any other provisions of this Agreement or, which are
requested to be performed by the Partnership and are within
the general scope of the services described herein.
Section 3. Obligation to Complete Construction and to Pay
Development Costs
The Developer shall complete the construction of the
Apartment Complex 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, all in accordance with the drawings and
specifications forming a part of the construction contract.
The Developer shall be obligated to pay any costs or
expenses, incurred by the Partnership to fund any Apartment
Complex construction, development or other costs and
expenses in excess of (i) the funds available to the
Partnership for the payment thereof through the later to
occur Completion Date/Permanent Mortgage Commencement or the
date of the admission of an investment limited partner to
the Partnership and (ii) the proceeds of such investment
limited partner's capital contribution to the Partnership
(together, the Designated Proceeds). Any funds provided by
the Developer pursuant to this Section 3 shall not be
reimbursed by the Partnership, nor create any liability on
behalf of the Partnership to the Developer, except that the
Developer may be reimbursed for such items from Designated
Proceeds. No such advance of funds by the Developer shall
change the interest of any partner or be credited to any
partner's capital account or capital contribution for any
purpose. Excess development costs shall be borne solely by
the Developer in its capacity as the developer of the
Apartment Complex.
Section 4. Limitations and Restrictions
Notwithstanding any provisions of this Agreement, the
Developer shall not take any action, expend any sum, make
any decision, give any consent, approval, or authorization
or incur any obligation with respects to any of the
following matters unless and until the same has been
approved by the General Partners:
(a) Approval of all construction and architectural
contracts and all architectural plans, specifications and
drawings prior to the construction of any improvements
contemplated thereby, except for such matters as may be
expressly delegated in writing to the Developer by the
General Partners;
(b) Any proposed change in the work of the
construction of the Apartment Complex, or in the plans and
specifications therefor as previously approved by the
General Partners, or in the cost thereof, or any change
which would affect the design, cost, value or quality of the
Apartment Complex, except for such matters as may be
expressly delegated In writing to the Developer by the
General Partners; or
(c) Expending an amount greater than the amount which the
Developer in good faith believes the fair and reasonable
market value at the time and place of contracting for any
goods purchased or leased or services engaged on behalf of
the Partnership or otherwise in connection with the
Apartment Complex.
Section 5. Accounts and Records
(a) The Developer, on behalf of the Partnership, shall keep
such books of account and other records as may be required
and approvals by the General Partners, including, but not
limited to, records relating to the costs for which
construction advances have been requested and/or received.
The Developer shall keep vouchers, statements, receipted
bills and invoices and all other records, in the form
approved by the General Partners, covering all collections,
if any, disbursements and other data in connection with the
Apartment Complex prior to final completion of construction.
All accounts and records relating to the Apartment Complex,
including all correspondence, shall be surrendered to the
Partnership upon demand without charge therefor.
(b) All books and records prepared or maintained by the
Developer shall be kept and maintained at all times at the
place or places approved by the General Partners, and shall
be available for and subject to audit, inspection and
copying by the management agent for the Apartment Complex,
the General Partners or any representative or auditor
therefor or supervisory or regulatory authority, at the
times and in the manner set forth in the limited partnership
agreement of the Partnership.
Section 6. Compensation
For its services in connection with the development of
the Apartment Complex and the supervision of the
construction of the Apartment Complex, the Developer and
Quad Area Community Action Agency, Inc. shall be entitled to
receive, as and when the same is available from Designated
Proceeds or any other source, but in no event later than
December 31, 2000, a fee (the Development Fee) equal to
$160,000, $72,000 of which has accrued previously for
services rendered through May 1, 1998, prior to the date of
this Agreement. The Development Fee will be or has been
earned by Developer as follows:
(i) Fifteen percent (15%) at such time as the Partnership
shall have obtained satisfactory environmental, title and
survey reports with respect to the Apartment Complex,
obtained all necessary easements for off-site utilities
relating to sanitary sewers and storm water run-off and
obtained (or confirmed) all required zoning approvals to
permit development of the Apartment Complex at the Apartment
Complex site;
(ii) Ten percent (10%) upon finalization of architectural
and engineering service contracts and substantial completion
of architectural and engineering drawings for the Apartment
Complex and required off-site improvements;
(iii) Ten percent (10%) upon finalization of
construction management and general contractor agreements
for the construction of the Apartment Complex;
(iv) Ten percent (10%) upon obtaining a construction loan
commitment and other commitments as required for the
construction of the Apartment Complex;
(v) Forty percent upon the Apartment Complex being 50%
complete as evidenced by a certificate of the Apartment
Complex architect to such effect;
(vi) Fifteen percent (15%) upon the issuance of certificates
of occupancy for all units in the Apartment Complex (or
local equivalent, or a certificate of substantial completion
from the Apartment Complex architect if certificates of
occupancy are not issued by the local governmental
authorities.
The parties confirm that the Development Fee was earned
as of May 1, 1998 to the extent of $72,000 and upon the
Developer having performed the following services for the
Partnership (among other valuable services heretofore
provided by the Developer to the Partnership):
(i) Negotiation with the former land owner with respect to
the contemplated development plans of the Partnership for
the Apartment Complex. Confirmation and/or negotiation of
zoning, utility availability and off-site easements as
required for development of the Apartment Complex;
(ii) Negotiation of engineering and architectural services
agreements required for the development of the Apartment
Complex;
(iii) Overseeing the work of the architect and engineer
in the preparation of design drawings for the development of
the Apartment Complex and coordinating the same with the
Partnership desired budget levels therefor;
(iv) Negotiating, structuring and obtaining a construction
loan commitment in an amount as required to enable the
Apartment Complex to be developed; and
(v) Working with and finalizing agreement with various
professionals in the acquisition, design, financing and
implementation of the Apartment Complex.
The Development Fee shall be paid as nearly as
practicable to the date earned and in no event shall any
portion of the Development Fee be paid later than December
31, 1999.
Section 8. Applicable Law
This Agreement, and the application or interpretation
hereof, shall be governed by and construed in accordance
with the laws of the State.
Section 9. Binding Agreement
This Agreement shall be binding on the parties hereto,
their heirs, executors, personal representatives, successors
and assigns and supersedes any prior agreement for the
development of the Apartment Complex between the parties
hereto.
Section 10. Headings
All section headings in this Agreement are for
convenience of reference only and are not intended to
qualify the meaning of any section.
Section 11. Terminology
All personal pronouns used in this Agreement, whether
used in the masculine, feminine or neuter gender, shall
include all other genders, the singular shall include the
plural, and vice versa as the context may require.
Section 12. Benefit of Agreement
The obligations and undertakings of the Developer set
forth in this Agreement are made for the benefit of the
Partnership and its partners and shall not inure to the
benefit of any creditor of the Partnership other than a
Partner, notwithstanding any pledge or assignment by the
Partnership of this Agreement or any rights hereunder.
IN WITNESS WHEREOF, the parities have caused this Agreement
to be duly executed as of the date first written above.
PARTNERSHIP: PINERIDGE APARTMENTS
PARTNERSHIP, A LOUISIANA
PARTNERSHIP IN COMMENDAM
By: M. Riemer Calhoun, Jr.
Its: Managing General Partner
/s/ M. Riemer Calhoun, Jr.
DEVELOPER: M. RIEMER CALHOUN, JR.
/s/ M. Riemer Calhoun, Jr.
iv
Pineridge Apartments Partnership
Amended Partnership Agreement
Pineridge Apartments Partnership
Amended Partnership Agreement
BOS354861.1
- 120 -
BOS354861.1
