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)
(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 Pecan Manor Apartments Partnership, a
Louisiana Partnership In Commendam (the Operating
Partnership), including the 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 on Fairgrounds
Road in Natchitoches, Louisiana, which is known as Pecan
Manor 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 $69,000. 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 General Partners of the Operating Partnership
are M. Riemer Calhoun, Jr. (the Managing General Partner),
and Community Support Programs, Inc., a Louisiana non-profit
corporation (CSPI). 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 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. CSPI,
incorporated in August, 1990, is a non-profit agency with a
focus on housing for persons who are disenfranchised. Ms.
Margaret G. Shemwell is the chief executive officer and has
an extensive background in psychology and social work.
Their role in the project will be to provide a selection of
support services for the residents of the Apartment Complex.
The programs will include individual budget counseling,
Section 8 assistance, liaison services to link residents
with the various social service agencies that can assist
them, and individualized support services geared to an
individuals specific needs.
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 of the 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 Cash
Normal Operations Transactions Flow
Managing
General Partner .005% 49% 49%
CSPI .005% 1% 1%
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 6.14 of the
Operating Partnership Agreement, the Operating Partnership
will pay the General Partners (or their designee) a fee (the
Construction and Development Fee) in the principal amount
of $160,000 ( of which $26,720 shall be paid to CSPI and
$133,280 shall be paid to the Managing General Partner),
which fee was earned upon the achievement of certain
benchmarks set forth in the Development Services Agreement
dated as of May 1, 1998 by and between the Operating
Partnership and the Managing General Partner, and earned in
full as to each building in the Apartment Complex as of the
date such building was completed. The Construction and
Development Fee was paid in the amount of $160,000 at the
time of the payment of the Third Installment.
In consideration of its services in connection
with any sale of the Apartment Complex in accordance with
the terms of the Operating Partnership Agreement, the
General Partners shall be entitled to a fee (the Sales
Disposition Fee) in the amount of 3% of the sales price of
the Apartment Complex. The Sales Disposition Fee shall be
reduced to the extent necessary so that all fees and
expenses to the Operating Partnership in connection with
such sale will not exceed 3% as required by Article III.D.
of the Operating Partnership Agreement.
The Builder of the Apartment Complex will receive
a total compensation of $2,721,391 which includes Builder's
Profit of $92,000. 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) Amended and Restated Articles of Partnership
in Commendam for Pecan Manor Apartments Partnership
(2) (b) Pecan Manor Apartments Partnership
Certification and Agreement.
(2) (c) Development Services Agreement by and between
Pecan Manor 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 9, 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
PECAN MANOR APARTMENTS PARTNERSHIP, A
LOUISIANA PARTNERSHIP IN COMMENDAM
AMENDED AND RESTATED
ARTICLES OF PARTNERSHIP IN COMMENDAM
Preliminary Statement
Pecan Manor 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 March 17, 1998 (the Original
Agreement), by and among M. Riemer Calhoun, Jr., as the
Managing General Partner (the Managing General Partner),
Community Support Programs, Inc., as the 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 17, 1998 (as so filed and
registered, the Original Certificate. Certain capitalized
terms used herein shall have the respective meanings
specified in Article I.
The parties hereto now desire to enter into these
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 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
Natchitoches, Natchitoches 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 Pecan Manor 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 6.13(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 General Partners) of
those seasonal expenses (such as utilities and maintenance
expenses) which might reasonably be expected to be incurred
on an unequal basis during a full annual period of
operation, and (iii) be adjusted, if necessary, so that the
expenses of real estate taxes and insurance are based on the
General Partners' reasonable estimate of the full assessed
value 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 General Partners,
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 6.13(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 6.13(e).
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.
Incentive Management Fee has the meaning specified in
Article XI.E.
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
General Partners pursuant to the provisions of Section
6.13(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 $69,000.
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 6.12 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).
Sales Disposition Fee has the meaning given to it in
Section 6.13(d).
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 6.11.
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 Pecan Manor 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 agents in the State for the
Partnership for service of process are as follows:
M. Riemer Calhoun, Jr.
907 Polk Street
P.O. Box 799
Mansfield, Louisiana 71052
or
Community Support Programs, Inc.
3811 Gilbert Avenue
Shreveport, Louisiana 71104
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 General Partners 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 any General Partner
nor any Related Person shall at any time bear, nor shall the
General Partners permit any other Partner or any Related
Person to bear, the Economic Risk of Loss for the payment of
any portion of 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 General Partners only with the
Consent of the Investment Limited Partner.
C. The Partnership may sell, lease, exchange or otherwise
transfer or convey all or any substantial part of the assets
of the Partnership only with the Consent of the Investment
Limited Partner. Notwithstanding the foregoing and except as
set forth in Section 6.2(6), no Consent of the Investment
Limited Partner shall be required for the leasing of
apartments to tenants in the normal course of operations.
D. The total compensation to all Persons for the sale
of the Apartment Complex shall be limited to a Competitive
Real Estate Commission, not to exceed three percent (3%) of
the contract price for the sale of the Apartment Complex.
ARTICLE IV Partners
4.1 General Partners
The name, address and Capital Contribution of each
General Partner are as set forth on Schedule A. The General
Partners 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 General Partners shall
have no authority to admit additional Limited Partners
without the Consent of the Investment Limited Partner.
4.3 Liability of the Limited Partners
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
General Partners are 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 6.11, 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 6.13, 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 or (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 $1,971,000, 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 6.12 or an Operating Deficit
(expenses in excess of revenues which the Managing General
Partner would be required to fund pursuant to Section 6.11),
then the Investment Limited Partner may, at its option,
waive the requirement of the delivery of the Payment
Certificate or any other condition with respect to part or
all of such Installment and pay such part or all of such
Installment, provided that the proceeds of the amount so
paid are used by the Partnership to fully fund such unpaid
item and/or Operating Deficit; provided, however, that if
the proceeds so paid are designated in this Agreement to be
used to pay fee(s) or distributions to the General Partners
or their Affiliates, then such proceeds shall be deemed to
have first been paid to the General Partners or their
Affiliates as such fees or distributions and then applied by
the General Partners to fund such unpaid item and/or
Operating Deficit as provided in said Section 6.11 or 6.12,
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 6.13,
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 General Partners shall have no authority to perform any
act in violation of applicable law, Agency or other
government regulations, requirements of any Lender, or the
Project Documents. In the event of any conflict between the
terms of this Agreement and any applicable Agency or other
government regulations or requirements of the Lender, the
terms of such regulations or requirements shall govern.
Neither shall the General Partners have any authority to do
any of the following acts without the Consent of the
Investment Limited Partner and the prior written consent of
the Special Limited Partner, and in the event that any
General Partner violates any provision of this Section 6.2,
the Special Limited Partner shall have the rights set forth
in Section 7.5:
(1) To have borrowings in excess of $10,000 in the
aggregate at any one time outstanding on the general credit
of the Partnership, except borrowings constituting
Subordinated Loans;
(2) To borrow from the Partnership or commingle
Partnership funds with funds of any other Person;
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 6.13 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 Special Duties of Community Support Programs
Community Support Programs is delegated the
following non-exclusive roles and responsibilities:
(i) selection of a site manager with the consent of
the Managing General Partner, which shall not be
unreasonably be withheld;
(ii) selection of the caretaker or maintenance person,
with the consent of the Managing General Partner, which
shall not be unreasonably withheld;
(iii) marketing of the Apartment Complex units;
(iv) tenant eligibility certification;
(v) tenant leasing policies;
(vi) rent collection procedures; and
(vii) tenant participation programs and
tenant/management relations, procedures, arbitrations and
evictions.
6.6 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) Each General Partner shall be bound by the Project
Documents, and no additional General Partner shall be
admitted if he, she or it has not first agreed to be bound
by this Agreement (and assume the obligations of a General
Partner hereunder) and by the Project Documents to the same
extent and under the same terms as the other General
Partners.
(g) The 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.
6.7 Representations and Warranties
The General Partners represent and warrant 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 General Partners or any
of their Affiliates to perform their respective obligations
hereunder or under any other agreement with respect to the
Apartment Complex, other than legal proceedings which have
been bonded against without recourse to Partnership assets
in such manner as to stay the effect of the proceedings or
otherwise have been adequately provided for. This
subparagraph shall be deemed to include, without limitation,
the following: (x) legal actions or proceedings before any
court, commission, administrative body or other governmental
authority having jurisdiction over the zoning applicable to
the Apartment Complex, (y) disputes with suppliers of labor
and/or materials; and (z) acts of any governmental
authority.
(3) No default (or event which, with the giving of
notice or the passage of time or both, would constitute a
default) has occurred and is continuing under this Agreement
or under any provision of the Project Documents, and the
same are in full force and effect.
(4) No Partner or Related Person bears the Economic
Risk of Loss with respect to the Permanent Mortgages, except
as may be expressly permitted by Article III. No General
Partner has, either on his or its own behalf or on behalf of
the Partnership, incurred any financial responsibility with
respect to the Partnership prior to the Admission Date,
other than as disclosed in writing to the Investment Limited
Partner prior to the Admission Date.
(5) The Apartment Complex is being 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 6.6(a) and
6.11.
(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 General Partners' knowledge, no
Hazardous Material was ever or is now stored on,
transported, or disposed of on the land comprising the
Apartment Complex, except to the extent any such storage,
transport or disposition was at all times in compliance with
all laws, ordinances, and regulations pertaining thereto.
(16) The Managing General Partner and the General have
or will fulfill and will continue to fulfill all of their
duties and obligations under Sections 6.3 through 6.6.
6.8 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.
6.9 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 6.9 only if the loss
involves activity in which such Affiliates acted in the
capacity of a General Partner.
(f) For purposes of this Section 6.9 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.
6.10 Indemnification of the Partnership and the Limited
Partners
(a) The General Partners will indemnify and hold the
Partnership and the Limited Partners harmless from and
against any and all losses, damages and liabilities which
the Partnership or any Limited Partner may incur by reason
of the (a) past, present or future actions or omissions of
the General Partners or any of their Affiliates, or (b) any
liabilities to which either the Partnership or the Apartment
Complex is subject; provided, however, that the foregoing
indemnification shall not apply to (i) any Mortgage or (ii)
necessary contractual obligations incurred pursuant to
Agency or Lender requirements in connection with the
operation of the Apartment Complex in the ordinary course of
business.
(b) Notwithstanding the foregoing, no General Partner
shall be liable to a Limited Partner or the Partnership for
any act or omission for which the Partnership is required to
indemnify such General Partner under Section 6.9.
(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.
6.11 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 6.6(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 6.13 and/or Article X to
meet the obligations of the Managing General Partner
pursuant to this Section 6.11, with such utilization of
Applied Amounts constituting payment and satisfaction of the
corresponding amounts payable to the General Partners or
Affiliates thereof under Section 6.13 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 6.13 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 6.11, 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 6.11 (including any
Applied Amounts) shall be Subordinated Loans repayable
without interest in accordance with the provisions of
Article X.
6.12 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 6.12, (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 6.12, 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 6.13 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 General
Partners pursuant to Article X shall also be so applied. Any
such application of funds as described in the immediately
preceding sentence shall constitute a payment of the amount
of the Fee or such other item which such funds had been
earmarked to pay, and the obligation of the Managing General
Partner and/or the Developer to advance such amount under
this Section 6.12 shall be satisfied to the extent of such
application.
6.13 Certain Payments to the General Partners and
Others
(a) The Partnership shall pay to the General Partners a
cumulative fee (the Partnership Management Fee) commencing
in 1999 for their services in connection with the
administration of the day to day business of the Partnership
in an 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 6.14, the
Partnership shall pay to the General Partners (or their
designee) a construction and development fee (the
Construction and Development Fee) in the amount of
$160,000 (of which $26,720 shall be paid to the General
Partner and $133,280 to the Managing General Partner), 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.
In consideration of its services in connection with any
sale of the Apartment Complex in accordance with this
Agreement, the General Partner (or its designee) shall be
entitled to a Sales Disposition Fee (the Sales Disposition
Fee) in the amount of 3% of the sales price of the
Apartment Complex. Such fee will be reduced to the extent
necessary so that all fees and expenses to the Partnership
in connection with such sale will not exceed 6% as required
by Article III.D.
(e) 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
$24,514, 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 $24,514 at
the time of the payment of the Third Installment.
6.14 Assignment to Partnership
The General Partners hereby transfer and assign to the
Partnership all of their right, title and interest in and to
the Apartment Complex and in and to all of the Project
Documents, including, but not limited to, the following: (i)
all contracts with architects, supervising architects,
engineers and contractors with respect to the development of
the Apartment Complex; (ii) all plans, specifications and
working drawings heretofore prepared or obtained in
connection with the Apartment Complex; (iii) all
governmental commitments and approvals obtained, and
applications therefor, including, but not limited to, those
relating to planning, zoning, building permits and Tax
Credit; (iv) any and all commitments with respect to any
Mortgage(s); (v) any and all contracts or rights with
respect to any agreements with the Lenders and any Agency;
and (vi) any other work product related to the Apartment
Complex and/or the Partnership, all of which shall have an
agreed to value of $1.00 for purposes of determining the
opening Capital Account of the General Partners.
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 6.11 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 General Partners.
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, Ninth
and Tenth 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, Ninth and Tenth 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;
Fourth, to the payment of the Incentive Management Fee
of up to $3,000 for such year; and
Fifth, any balance 49% to the Managing General Partner,
1% to Community Support Programs, Inc. 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 General Partners shall
determine from time to time that cash is available for
distribution from a Capital Transaction, such cash shall be
applied or distributed as follows:
First, to the payment of all matured debts and
liabilities of the Partnership (including, but not limited
to, all expenses of the Partnership incident to the Capital
Transaction), excluding (i) debts and liabilities of the
Partnership to Partners or their Affiliates and (ii) all
unpaid fees owing to the General Partners or their
Affiliates; and to the establishment of any reserves which
the General Partners and the Auditors shall deem reasonably
necessary for contingent, unmatured or unforeseen
liabilities or obligations of the Partnership;
Second, 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 General Partners of
their 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;
Ninth, to the payment of the Sales Disposition Fee; and
Tenth, any balance 49.999% to the Investment Limited
Partner, .001% to the Special Limited Partner, 49% to the
Managing General Partner and 1% to Community Support
Programs, Inc.
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 General Partners 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:
(i) If (a) the Partnership incurs recourse obligations
or Partner Non-Recourse Debt (including, without limitation,
Subordinated Loans) or (b) the Partnership incurs losses
from extraordinary events which are not recovered from
insurance or otherwise (collectively Recourse Obligations)
in respect of any Partnership taxable year, then the
calculation and allocation of profits and losses shall be
adjusted as follows: first, an amount of deductions
attributable to the Recourse Obligations (consisting of
deductions other than cost recovery deductions) shall be
allocated to the General Partners; and second, the balance
of deductions (including all cost recovery deductions) shall
be allocated as provided in Section 10.2(a). For purposes of
this section, extraordinary events include casualty losses,
losses resulting from liability to third parties for
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 General Partners 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 General
Partners shall have obtained the prior written consent of
the Special Limited Partner to the identity of the
Management Agent and the terms of the Management Agreement
or the modification or extension thereof and (ii) such new
Management Agreement or modified or extended Management
Agreement provides that it is terminable by the Partnership
on thirty (30) days' notice by the Partnership in the event
of any change in the identity of the General Partners.
B. No duplicate property management fees shall be paid
to any Person.
C. If (i) the Management Agent is 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 General Partners shall have the duty to manage
the Apartment Complex during any period when there is no
Management Agent.
E. The Partnership shall pay to the General Partner
on an annual non-cumulative basis an Incentive Management
Fee for its services in achieving high operating efficiency
of the Apartment Complex (such fee to be treated as a
Partnership expense regardless of its treatment for Lender
purposes), which fee for each fiscal year shall in an amount
be equal to $3,000 and payable only from and to the extent
of Cash Flow, after payment of all other obligations of the
partnership, including the Asset Management Fee.
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 interest bearing accounts or invested in
United States Government obligations maturing within one
year.
12.3 Auditors
(a) The Auditors shall prepare, for execution by the
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 General Partners hereby consent
to any Agency's providing BCCLP with copies of all material
communications between any such office and the General
Partners and/or the Partnership, including, but not limited
to, any notices of default. From and after any date upon
which the General Partners receive notice from the
Investment Limited Partner that the Investment Limited
Partner would like copies of the monthly rent rolls for the
Apartment Complex to be sent to BCCLP, the General Partners
shall send copies of the rent rolls to BCCLP no later than
ten (10) days after the expiration of each month.
(h) If either (A) the Completion Date or (B) the date
upon which tenants first occupied apartment units in the
Apartment Complex 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.
(iii) 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 6.6(c)
are in force, accompanied by a certificate of the Managing
General Partner stating that such insurance policies satisfy the
requirements of Section 6.6(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 General Partners 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 original 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 General Partners only
with the Consent of the Investment Limited Partner and the prior
written consent of the Special Limited Partner.
13.12 Extraordinary Limited Partner Expenses
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 General Partners breach 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 General Partners 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: PECAN MANOR APARTMENTS
PARTNERSHIP, A LOUISIANA
PARTNERSHIP IN COMMENDAM
By: M. Riemer Calhoun, Jr.
Its: Managing General Partner
/s/ M. Riemer Calhoun, Jr.
By: Community Support Programs, Inc.
Its: General Partner
/s/ Margaret G. Shemwell
By: Margaret G. Shemwell
Its: Executive Director
GENERAL PARTNERS: M. RIEMER CALHOUN, JR.
/s/ M. Riemer Calhoun, Jr.
COMMUNITY SUPPORT PROGRAMS, INC.
/s/ Margaret G. Shemwell
By: Margaret G. Shemwell
Its: Executive Director
_______________________________
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 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.
/s/ Thomas A. Calhoun
By: Thomas A. Calhoun
Its: Managing Member
PECAN MANOR APARTMENTS PARTNERSHIP, A
LOUISIANA PARTNERSHIP IN COMMENDAM
Schedule A
As of July 10, 1998
General Partners Capital Contribution
M. Riemer Calhoun, Jr. $50
907 Polk Street
P.O. Drawer 799
Mansfield, LA 71052
Community Support Programs, Inc. $50
3811 Gilbert Avenue
Shreveport, LA 71104
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
Capital Contribution 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.
PECAN MANOR APARTMENTS PARTNERSHIP, A
LOUISIANA PARTNERSHIP IN COMMENDAM
CERTIFICATION AND AGREEMENT
CERTIFICATION AND AGREEMENT made as of July 10, 1998, by
Pecan Manor Apartments Partnership, A Louisiana Partnership In
Commendam (the Partnership); M. Riemer Calhoun, Jr., as its
Managing General Partner; Community Support Programs, Inc., as
its General Partner (the Managing General Partner and the General
Partner are collectively referred as the General Partners); 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 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
General Partners 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 General Partners
The Partnership and the General Partners 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 General Partners 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 General
Partners 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 General Partners or
Withdrawing Original Limited Partner are bound or any law,
regulation, judgment, decree or order applicable to the
Partnership or the General Partners 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 General Partners and the
Withdrawing Original Limited Partner, enforceable against each of
them in accordance with its terms.
1.02 The General Partners have 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
statements for the General Partners and their affiliates
previously delivered fairly present the financial condition of
such parties as of the dates of said financial statements and
since the date of such financial statements there has been no
material adverse change in the financial position of any of the
General Partners or such affiliates. The estimates of occupancy
rates, operating expenses, cash flow, depreciation and tax
credits set forth on Exhibit A are reasonable in light of the
knowledge and experience of the General Partners.
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 General Partners 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 General Partners 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 General Partners agree 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 are the General Partners 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 General Partners 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
8.53% 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 General Partners, 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: PECAN MANOR APARTMENTS
PARTNERSHIP, A LOUISIANA
PARTNERSHIP IN COMMENDAM
/s/ M. Riemer Calhoun, Jr.
By: M. Riemer Calhoun, Jr.
Its: Managing General Partner
By: Community Support Programs,
Inc.
Its: General Partner
/s/ Margaret G. Shemwell
GENERAL PARTNERS: M. RIEMER CALHOUN, JR.
/s/ M. Riemer Calhoun, Jr.
COMMUNITY SUPPORT PROGRAMS,
INC.
/s/ Margaret G. Shemwell
Its: Executive Director
WITHDRAWING ORIGINAL T.F. MANAGEMENT, INC.
LIMITED PARTNER: By: Thomas L. Frye
Its: President
/s/ Thomas L. Frye
Exhibit A
PECAN MANOR APARTMENTS PARTNERSHIP, A
LOUISIANA PARTNERSHIP IN COMMENDAM
FACT SHEET
A. Sources
i. Permanent First Mortgage $69,000
ii. Permanent Second Mortgage $400,000
iii. LIHTC Equity $1,501,914
General Partner Equity $100
TOTAL $1,971,014
B. Uses
Acquisition Costs
Land $60,000
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 $25,000
Other Costs
Developer Fee $160,000
Developer Overhead Reimbursement $24,514
TOTAL $1,971,014
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
A. Lender (First Mortgage) Hibernia National Bank
B. Mortgage Amount: $69,000
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
A. Lender (Second Mortgage) Louisiana Housing Finance
Agency
B. Mortgage Amount $400,000
C. Note Date: July 10, 1998
ii. Interest Rate: 5.88%
iii. Term: 40 years
iv. Amortization 40 years
4. Total Construction Costs: $1,575,900
5. Construction Commencement: July, 1998
6. Construction Completion: January, 1999
7. Eligible Basis: $1,886,500
8. Qualified Basis: $2,452,450
(130% 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: Pecan Manor Apartments
Address: Natchitoches, Louisiana
Type of Project: Elderly
16. Area Median Income: $27,100
(4 Person MFI)
17. Type of Apartments: Garden Apartments
Unit
Square Basic Util
# Feet Rent Allow Total
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 1,250 407 70 477
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: $29,989
25. Total Capital Contribution of
Investment Limited Partner: $1,501,914
26. Schedule of Capital Contributions
A. $1,126,436 on the latest to occur of:
i Tax Credit Set-Aside;
ii Admission Date;
iii. Construction Loan Closing;
iv. Permanent Mortgage Loan Commitment; or
v. Permanent Second Mortgage closing.
B. $150,191 on the latest to occur of:
i. Completion;
ii. State Designation; or
iii Cost Certification.
C. $225,287 on the latest to occur of:
i. the Initial 100% Occupancy Date;
ii. Permanent Mortgage Commencement;
iii receipt by the Limited Partners of the Partnership's owner's
title policy;
iv opinion of counsel to the Partnership; or
v. Breakeven Point.
27. General Partners: Community Support Programs, Inc.
3811 Gilbert Avenue
Shreveport, Louisiana 71104
Riemer Calhoun, Jr.
907 Polk Street
P.O. Drawer 799
Mansfield, LA 71052
28. Ownership Interests:
Tax Credits
& Cost Profits &
Reccovery Losses
(depreciation) other Capital Cash
deductions Losses Transactions Flow
A. Managing G.P.: .005% .005% 49% 49%
B. General Partner .005% .005% 1% 1%
C. Investment L.P.: 99.99% 99.99% 49.999% 50%
D. 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: 72-1377946
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
# of Buildings: 12
BIN: LA-98-00177-00168
cc: Boston Capital Accounting Department
Exhibit B
Certificate of Partnership, General Partners
and Withdrawing Original Limited Partner
Re: Lack of Disqualifications
The Partnership, its General Partners 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 General Partners or
General Partners, (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 PECAN MANOR
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 Natchitoches,
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 Community Support Programs,
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: PECAN MANOR 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.
