XXXXXX PLACE APARTMENTS, L.P.
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
Dated as of November 20, 1996
TABLE OF CONTENTS
Preliminary Statement...........................................1
ARTICLE I.......................................................1
Defined Terms...................................................1
ARTICLE II.....................................................19
Name and Business..............................................19
2.1 Name; Continuation...................................19
2.2 Office and Resident Agent............................20
2.3 Purpose..............................................20
2.4 Term and Dissolution.................................20
ARTICLE III....................................................21
Mortgage, Refinancing and Disposition of Property..............21
3.1 Personal Liability...................................21
3.2 Refinancings.........................................21
3.3 Sale of Assets.......................................21
3.4 Real Estate Commissions..............................22
ARTICLE IV.....................................................22
Partners; Capital..............................................22
4.1 Capital and Capital Accounts.........................22
4.2 General Partner......................................23
4.3 Investment Limited Partner, Special Limited Partner and Original
Limited Partner................................................23
4.4 Liability of the Limited Partners....................23
4.5 Special Rights of the Special Limited Partner........24
4.6 Meetings.............................................26
ARTICLE V......................................................26
Capital Contributions of the Investment Limited Partner
and the Special Limited Partner................................26
5.1 Payments.............................................26
5.2 Return of Capital Contributions......................30
ARTICLE VI.....................................................34
Rights, Powers and Duties of General Partner...................34
6.1 Authorized Acts......................................34
6.2 Restrictions on Authority............................35
6.3 Personal Services; Other Business Ventures...........37
6.4 Business Management and Control......................37
6.5 Duties and Obligations...............................38
6.6 Representations and Warranties.......................41
6.7 Liability on Mortgages...............................45
6.8 Indemnification of the General Partner...............45
6.9 Indemnification of the Partnership and the Limited Partners46
6.10 Operating Deficits...................................46
6.11 Obligation to Complete the Rehabilitation of the Apartment
Complex47
6.12 Certain Payments to the General Partner and Others...47
6.13 Delegation of General Partner Authority..............48
6.14 Assignment to Partnership............................49
6.15 Contracts with Affiliates............................49
6.16 Tax Matters Partner..................................50
6.17 Final Closing of the Bonds...........................51
ARTICLE VII....................................................52
Withdrawal of a General Partner; New General Partners..........52
7.1 Voluntary Withdrawal.................................52
7.2 Reconstitution.......................................52
7.3 Successor General Partner............................52
7.4 Interest of Predecessor General Partner..............53
7.5 Amendment of Certificate; Approval of Certain Events.54
7.6 Valuation and Sale of Interest of Former General Partner54
7.7 Designation of New General Partners..................55
ARTICLE VIII...................................................56
Transferability of Limited Partner Interests...................56
8.1 Assignments..........................................56
8.2 Substituted Limited Partner..........................56
8.3 Restrictions.........................................57
ARTICLE IX.....................................................57
Borrowings.....................................................57
ARTICLE X......................................................58
Profits, Losses, Tax Credits, Distributions and Capital Accounts58
10.1 Profits, Losses and Tax Credits......................58
10.2 Cash Distributions Prior to Dissolution..............59
10.3 Distributions Upon Dissolution.......................61
10.4 Special Provisions...................................61
10.5 Authority of the General Partner to Vary Allocations to Preserve
and Protect the Partners' Intent...................................65
10.6 Recapture Amount.....................................66
ARTICLE XI.....................................................67
Management Agent...............................................67
11.1 General..............................................67
11.2 Fees.................................................68
11.3 Removal and Replacement..............................68
11.4 Lack of Management Agent.............................69
ARTICLE XII....................................................69
Books and Records, Accounting, Tax Elections, Etc..............69
12.1 Books and Records....................................69
12.2 Bank Accounts........................................69
12.3 Auditors.............................................69
12.4 Cost Recovery and Elections..........................70
12.5 Special Basis Adjustments............................70
12.6 Fiscal Year..........................................71
12.7 Information to Partners..............................71
12.8 Expenses of the Partnership..........................73
ARTICLE XIII...................................................74
General Provisions.............................................74
13.1 Restrictions by Reason of Section 708 of the Code....74
13.2 Amendments to Certificates...........................75
13.3 Notices..............................................75
13.4 Word Meanings........................................75
13.5 Binding Effect.......................................76
13.6 Applicable Law.......................................76
13.7 Counterparts.........................................76
13.8 Financing Regulations................................76
13.9 Separability of Provisions...........................77
13.10 Paragraph Titles.....................................77
13.11 Amendment Procedure..................................77
13.12 Extraordinary Partner Expenses.......................77
13.13 Time of Admission....................................77
13.14 Bond Requirements....................................77
XXXXXX PLACE APARTMENTS, L.P.
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
Preliminary Statement
XXXXXX PLACE APARTMENTS, L.P. (the "Partnership") was formed as
an Indiana limited partnership pursuant to an Agreement of Limited
Partnership dated September 26, 1995 (the "Original Agreement") by and
between HENDY ASSOCIATES LIMITED LIABILITY COMPANY, an Ohio limited
liability company ("HALLC"), as general partner (the "General
Partner") and XXXXXX X. XXXXXX ("Xxxxxx"), XXXXXXX X. XXXX ("Xxxx")
and CITY SECURITIES, LTD. (also known as City Securities Limited), a
corporation domiciled in the Turks and Caicus Islands ("CSL"), as the
limited partners (collectively, the "Original Limited Partners"), and
a Certificate of Limited Partnership filed in the Filing Office on
June 12, 1995, as amended by an Amended and Restated Certificate of
Limited Partnership dated September 21, 1995 and filed with the Filing
Office on September 26, 1995 (as amended, the "Certificate").
The parties desire to amend and restate the Original Agreement
to (i) provide for the withdrawal from the Partnership of the Original
Limited Partners, (ii) provide for the admission of BOSTON CAPITAL TAX
CREDIT FUND IV L.P., a Delaware limited partnership ("BCTCF"), as the
Investment Limited Partner, (iii) provide for the admission of BCTC
94, INC., a Delaware corporation as the Special Limited Partner, and
(iv) more fully set forth the rights and obligations of the Partners.
In consideration of the mutual agreements set forth herein, it
is agreed and certified, and the Original Agreement is hereby amended
and restated in its entirety as follows:
ARTICLE I
Defined Terms
The defined terms used in the Agreement shall have the meanings
specified below:
"Act" means the Revised Uniform Limited Partnership Act as in
effect in the State.
"Actual Credit" means, with respect to a particular Fiscal Year,
the total amount of Tax Credit properly allocable by the Partnership
to the Investment Limited Partner for such Fiscal Year. The Actual
Credit shall be retroactively revised if the amount of Tax Credit
properly allocable to the Investment Limited Partner is revised as the
result of an audit or is recaptured.
"Additional Limited Partner" means any holder of an Interest
designated as an Additional Limited Partner pursuant to the provisions
of Section 4.5(b) or Section 7.4.
"Additional Rehabilitation Work" means those items of
rehabilitation work to be completed at the Apartment Complex set forth
in the attached Exhibit E.
"Adjusted Capital Account Deficit" means, with respect to any
Partner, the deficit balance, if any, in such Partner's Capital
Account as of the end of the relevant Fiscal Year, after giving effect
to the following adjustments:
(i) Credit to such Capital Account any amounts
which such Partner is obligated to restore pursuant to any
provisions of this Agreement or is deemed to be obligated
to restore pursuant to the penultimate sentences of
Allocation Regulations Sections 1.704-2(g)(i) and 1.704-
2(i)(5), respectively; and
(ii) Debit to such Capital Account the items
described in Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-
1(b)(2)(ii)(d)(5) and 1.704-1(b)(2)(ii)(d)(6) of the
Allocation Regulations.
The foregoing definition of Adjusted Capital Account Deficit and the
application of such term in the manner provided in this Agreement is
intended to comply with the provisions of Section 1.704-1(b)(2)(ii)(d)
of the Allocation Regulations and shall be interpreted consistently
therewith.
"Admission Date" means the first date on which all parties
hereto shall have executed this Agreement.
"Adverse Consequences" means all actions, suits, proceedings,
hearings, investigations, charges, complaints, claims, demands,
injunctions, judgments, orders, decrees, rulings, damages, dues,
penalties, fines, costs, reasonable amounts paid in settlement,
liabilities, monetary obligations, taxes, liens, expenses and fees
actually incurred, including court costs and reasonable attorneys'
fees and expenses.
"Affiliate" means as to a specified Person, (i) such Person;
(ii) each member of the Immediate Family of such Person; (iii) each
legal representative, successor or assignee of any Person referred to
in the preceding clauses (i) or (ii); (iv) each trustee of a trust for
the benefit of any Person referred to in the preceding clauses (i) or
(ii); or (v) any other Person (a) who directly or indirectly controls,
is controlled by, or is under common control with such Person, (b)
who is an officer of, director of, partner in or trustee of, or serves
in a similar capacity with respect to, such Person or of which such
Person is an officer, director, partner or trustee, or with respect to
which such Person serves in a similar capacity, (c) who, directly or
indirectly, is the beneficial owner of ten percent (10%) or more of
any class of equity securities of such Person or of which such Person
is directly or indirectly the owner of ten percent (10%) or more of
any class of equity securities, (d) who is an officer, director,
general partner, trustee or holder of ten percent (10%) or more of
the voting securities or beneficial interests of any Person referred
to in the foregoing clauses (v) (b) or (v) (c), or (e) who, whatever
such Person's title, performs functions for such Person or any
Affiliate of such Person similar to a Chairman or member of the Board
of Directors, or executive officer such as the President, Executive
Vice President or Senior Vice President, Corporate Secretary, or
Treasurer, or any Person holding a five percent (5%) or more equity
interest in such Person, or any Person having the power to direct or
cause the direction of such Person whether through the ownership of
voting securities, by contract or otherwise. An Affiliate of any
Investment Limited Partner or of any Investment General Partner does
not include a Person who is a partner in a Partnership or joint
venture with any Investment Limited Partner or any other Affiliate of
any Investment Limited Partner if such Person is not otherwise an
Affiliate of any Investment Limited Partner or any Investment General
Partner. For purposes of this definition, the term Affiliate shall
not be deemed to include any law firm (or member or associate thereof)
providing legal services to any Investment Limited Partner, any
Investment General Partner, the General Partner or any Affiliate of
any of them.
"AFR" means the "applicable federal rate" as defined and
determined in the manner set forth in Section 1274 of the Code.
"Agency" means the Credit Agency or any other Governmental
Authority with jurisdiction over the Apartment Complex, or the
business and operations of the Partnership.
"Agreement" means this First Amended and Restated Agreement of
Limited Partnership, including Schedule A, as amended from time to
time.
"Allocation Regulations" means the Treasury Regulations issued
under Sections 704(b) and 752 of the Code, as the same may be modified
or amended from time to time. In the event that the Allocation
Regulations are revised or amended subsequent to the date of this
Agreement, references herein to sections or paragraphs of the
Allocation Regulations shall be deemed to be references to the
applicable sections or paragraphs of the Allocation Regulations as
then in effect.
"Apartment Complex" means the real property located in
Indianapolis, Xxxxxx County, Indiana, as more fully described in
Exhibit A attached hereto, together with (i) all buildings and other
improvements constructed or to be constructed thereon and (ii) all
furnishings, equipment and personal property located thereon or
otherwise covered by the Mortgages.
"Applicable Percentage" has the meaning set forth in Section
42(b) of the Code.
"Applied Amounts" shall have the meaning set forth in
Section 6.10.
"Asset Management Fee" means the fee payable to BCTCF or an
Affiliate thereof pursuant to the provisions of Section 6.12(b).
"Assignee" shall have the meaning set forth in Section 4.1(c).
"Auditors" means Xxxxxxxxx Xxxxx of Xxxxxxxx, Xxxxx & Xxxxx, or
such other firm of independent certified public accountants as may be
engaged by the General Partner with the reasonable Consent of the
Special Limited Partner for the purposes of preparing the
Partnership's income tax returns, auditing the books and records of
the Partnership and certifying financial reports of the Partnership.
"BCTC 94" means BCTC 94, Inc., a Delaware corporation, and its
successors and assigns.
"BCTCF" means Boston Capital Tax Credit Fund IV L.P., a Delaware
limited partnership, and its successors and assigns.
"Best Knowledge" shall mean and include, in the case of a
specified Person, (i) actual knowledge and (ii) that knowledge which a
prudent businessperson (including, in the case of an Entity, the
general or managing partners, officers, directors and members of such
Entity) should have obtained in the management of his or her business
affairs after making due inquiry and exercising due diligence with
respect thereto. In connection therewith, the knowledge (both actual
and constructive) of any general or managing partner, director,
officer or member of an Entity shall be deemed to be the knowledge of
the Entity.
"Bond Documents" means the Indenture, the Bonds, the Permanent
Loan Agreement, the Permanent Mortgage, and all other documents and
instruments executed and delivered in connection with the issuance and
sale of the Bonds.
"Bonds" means the $6,300,000 of Economic Development Revenue
Bonds (Section 8 Substantial Rehabilitation Program -- Xxxxxx Place
Apartments Project) Series 0000X Xxxxx xx xxx Xxxx xx Xxxxxxxxxxxx,
Xxxxxxx.
"CSL" shall have the meaning set forth in the Preliminary
Statement of this Agreement.
"Capital Account" has the meaning set forth in Section 4.1(b).
"Capital Contribution" means the total value of cash or property
contributed and agreed to be contributed to the Partnership by each
Partner, as set forth in Schedule A. Any reference in this Agreement
to the Capital Contribution of a then Partner shall include a Capital
Contribution previously made by any prior Partner for the Interest of
such then Partner.
"Capital Disposition Agreement" means the agreement, dated as of
November 20, 1996, by and between the Developer and the Partnership,
which provides for the payment of the Disposition Fee, as amended.
"Capital Needs Requirements" means those capital repair
requirements set forth on and to be completed in accordance with
Exhibit C hereto.
"Capital Proceeds" means the proceeds of a Capital Transaction.
"Capital Transaction" means a refinancing of any Partnership
indebtedness or a sale, exchange, eminent domain taking, damage or
destruction (whether insured or uninsured), insured title defect or
other disposition of all or any portion of the Apartment Complex
(other than an event generating proceeds of any business or rental
interruption insurance), but excluding the payment of Capital
Contributions.
"Cash Available for Debt Service Requirements" for any period,
means the excess of (i) all cash actually received by the Partnership
on a cash basis from normal operations during such period and interest
earned on reserve deposits required under the Bond Documents and this
Agreement, if any, provided that such interest is available to be used
during such period for the payment of Debt Service Requirements, but
specifically excluding the proceeds of insurance (other than business
or rental interruption insurance), loans, Capital Transactions or
Capital Contributions over (ii) all cash requirements of the
Partnership properly allocable to such period of time on an accrual
basis (not including distributions to Partners out of Cash Flow of the
Partnership or fees payable from Cash Flow including, without
limitation, the Asset Management Fee and the Partnership Management
Fee) and, on an annualized basis, all projected expenditures,
including those of a seasonal nature, which might reasonably be
expected to be incurred on an unequal basis during a full annual
period of operation as determined by the Auditors but specifically
excluding Debt Service Requirements. For purposes of this definition,
(i) cash requirements of the Partnership shall include to the extent
not otherwise covered above, full funding of reserves (including,
without limitation, funding of the Replacement Reserve), normal
repairs, real estate taxes at fully assessed levels assuming a fully
improved property and necessary capital improvements to the extent not
covered by funded reserves, and (ii) if free rent or other rental
concessions shall have been granted to tenants, the calculation of
rental revenues under clause (i) of the preceding sentence shall be
adjusted so that the effect of such concessions is amortized equally
over the term of all leases (excluding renewal periods) to which it
applies.
"Cash Expenditures" means all disbursements of cash during a
specified Fiscal Year (other than distributions to Partners),
including, without limitation, payment of operating expenses, payment
of principal and interest on the Partnership's indebtedness (other
than payments of principal and interest on any Subordinated Loans or
Voluntary Loans), the cost of repairs to the Apartment Complex,
amounts paid in to reserves by the General Partner or the Partnership
pursuant to the Bond Documents and the payment of any fees other than
the Asset Management Fee, the Partnership Management Fee and the
Development Fee. In addition, the net increase during such Fiscal
Year in any escrow account or reserve maintained by or for the
Partnership shall be considered a Cash Expenditure during such Fiscal
Year. The term Cash Expenditures shall not include Development Costs.
Cash Expenditures payable to Partners or Affiliates of Partners shall
be paid after Cash Expenditures payable to third parties.
"Cash Flow" means the excess of Cash Receipts over Cash
Expenditures. Cash Flow shall be determined separately for each
Fiscal Year or portion thereof.
"Cash Receipts" means all cash receipts of the Partnership from
whatever source derived other than from a Capital Transaction,
including, without limitation, rental revenues, government subsidy
payments, Capital Contributions (except to the extent Capital
Contributions are used to pay Development Costs). In addition, the
net reduction in any Fiscal Year in the amounts of any escrow account
or reserve maintained by or for the Partnership (including, without
limitation, the Replacement Reserve) shall be considered a cash
receipt of the Partnership for such Fiscal Year. Notwithstanding the
foregoing, at the election of the General Partner, Cash Receipts
received near the end of a Fiscal Year and intended for use in meeting
the Partnership's obligations (including the cost of acquiring assets
or paying debts or expenses) in the subsequent Fiscal Year shall not
be deemed to be received until such following Fiscal Year.
"Certificate" shall have the meaning set forth in the
Preliminary Statement.
"City" means the City of Indianapolis, Indiana.
"Class Contribution" means the aggregate Capital Contributions
of all members of a particular class of Partners (i.e., the General
Partner, the Investment Limited Partner, the Special Limited Partner
or any Additional Limited Partner).
"Code" means the Internal Revenue Code of 1986, as amended from
time to time, and the regulations (permanent and temporary) issued
thereunder. References herein to any Code section shall include any
successor provisions.
"Commencement Date" means the first day of the month in which
the Admission Date occurs.
"Competitive Real Estate Commission" means that real estate or
brokerage commission paid for the purchase or sale of the Apartment
Complex or other Partnership property which is reasonable, customary
and competitive in light of the size, type and location of the
Apartment Complex or other property.
"Completion Date" means the date as of which, to the reasonable
satisfaction of the Special Limited Partner (which may include a
physical inspection of the Apartment Complex), the Inspecting
Consultant (or if none, then the Special Limited Partner) certifies
that the Additional Rehabilitation Work has been completed in
accordance with the Project Documents.
"Compliance Period" means the fifteen (15)-year period
commencing with the first year of the Credit Period.
"Consent of the Investment Limited Partner" means the prior
written consent or approval of the Investment Limited Partner which,
unless otherwise specifically provided herein, may be given or
withheld in its sole discretion. The Consent of the Investment
Limited Partner shall be exercised by and through the Investment
General Partner, acting in the name and on behalf of the Investment
Limited Partner.
"Consent of the Special Limited Partner" means the prior written
consent or approval of the Special Limited Partner which, unless
otherwise specifically provided herein, may be given or withheld in
its sole discretion.
"Construction Contract" means the construction contract in
respect of the Additional Rehabilitation Work, dated as of
November 21, 1996, by and between the Contractor and the Partnership,
as amended.
"Contractor" means HALLC, in its capacity as an independent
contractor and not as General Partner, and its successors.
"Controlling Person" has the meaning set forth in Section 15 of
the Securities Act of 1933, as amended.
"Cost Certification" means the date upon which each Limited
Partner shall have received the written certification of the Auditors,
in a form and in substance reasonably satisfactory to the Special
Limited Partner, as to the itemized amounts of the construction and
development costs of the Apartment Complex and the Actual Credit
pertaining to each building in the Apartment Complex.
"Credit Agency" means the Indiana Housing Finance Authority, and
its successors.
"Credit Approval" means the written determinations to be issued
pursuant to Sections 42(m)(1)(D) and 42(m)(2)(D) of the Code approving
low-income housing tax credits for the Project in an amount of not
less than $149,363.
"Credit Period" has the meaning set forth in Section 42(f)(1) of
the Code.
"Credit Recovery Loan" means a constructive interest-bearing
advance of the Investment Limited Partner, as more fully described in
Section 5.1(g). Credit Recovery Loans and interest thereon shall not
be treated as loans or interest, respectively, for accounting, tax or
liability purposes or for the purposes of Section 6.2(a)(i). For the
purposes of Article X, the term Credit Recovery Loan shall not include
any portion of such a deemed advance which shall have theretofore been
paid to the Investment Limited Partner.
"Credit Shortfall" shall have the meaning set forth in Section
5.1(g).
"Debt Service Coverage Ratio" means, for any period with each
month considered individually, a fraction, the numerator of which is
the Cash Available for Debt Service Requirements with respect to such
period and the denominator of which is the Debt Service Requirements
for such period. The achievement by the Partnership of a specified
Debt Service Coverage Ratio shall be confirmed by the Auditors and
shall be subject to the approval of the Special Limited Partner, which
shall not be unreasonably withheld, provided, however, that no
objection by the Special Limited Partner to the determination of the
Auditors shall be valid unless the General Partner is notified of such
objection, and the specific reasons therefor, within seven (7)
business days following the receipt by the Special Limited Partner of
the Auditor's determination letter and in the event that the Special
Limited Partner does not so notify the General Partner within such
seven business day period, the Special Limited Partner will be deemed
to have waived its right to object to such determination.
"Debt Service Requirements" means for any period, all debt
service, reserves, mortgage insurance premium, tax and insurance
escrows (if any) and/or other cash requirements imposed with respect
to the Mortgage Loan Documents or any other indebtedness (except for
the Subordinated Loans and Voluntary Loans) properly allocable to such
period of time on an annualized accrual basis as determined by the
Auditors. To the extent the relevant period includes any period prior
to Permanent Mortgage Commencement, Debt Service Requirements for such
period shall be computed by adding to the foregoing amounts the amount
(if any) by which the debt service on such Permanent Loan for such
period beginning after principal amortization has commenced exceeds
the actual debt service on such Permanent Loan (and any previous
Mortgage Loan which may have then been in place) for the relevant
period.
"Deficit Restoration Obligation" means, for each Partner, the
sum of (i) any amounts which such Partner is obligated to restore to
the Partnership in accordance with the provisions of Sections 1.704-
1(b)(2)(ii)(c), 1.704-1(b)(2)(ii)(h) or any other applicable
provisions of the Allocation Regulations, (ii) such Partner's Share of
Partnership Minimum Gain if any, and (iii) such Partner's Share of
Partner Nonrecourse Debt Minimum Gain, if any.
"Developer" means HALLC, in its capacity as an independent
developer and not as a General Partner, and its successors.
"Development Agreement" means the Development Agreement, dated
as of November 20, 1996, by and between the Developer and the
Partnership, as amended.
"Development Costs" means any and all costs and expenses
necessary to (i) cause the rehabilitation of the Apartment Complex to
be completed, in a good and workmanlike manner, free and clear of all
mechanics', materialmen's or similar liens, in accordance with the
Project Documents, (ii) equip the Apartment Complex with all necessary
and appropriate fixtures, equipment and articles of personal property
(including, without limitation, refrigerators and ranges), (iii)
obtain all required certificates of occupancy for the apartment units
and other space in the Apartment Complex, (iv) pay the Development
Fee, (v) finance the rehabilitation of the Apartment Complex and
achieve Permanent Mortgage Commencement in accordance with the
provisions of the Project Documents, (vi) discharge all Partnership
liabilities and obligations arising out of any casualty generating
insurance proceeds for the Partnership, (vii) fund any Partnership
reserves required hereunder or under any of the Project Documents, and
(viii) repay any Partnership debt other than the Permanent Loan and
(ix) pay any other costs or expenses necessary to achieve the
Completion Date and Permanent Mortgage Commencement.
"Development Fee" means the fees payable by the Partnership to
the Developer pursuant to the terms of the Development Agreement for
its services in connection with the development and rehabilitation of
the Apartment Complex.
"Disposition" (including the forms Dispose and Disposing) means,
as to a specified Partner, the assignment, sale, transfer, exchange or
other disposition of all or any part of its Interest.
"Disposition Fee" means the fee payable to the Developer as set
forth in the Capital Disposition Agreement.
"Economic Risk of Loss" has the meaning set forth in Treasury
Regulation Section 1.752-2.
"Eligible Basis" has the meaning set forth in Section 42(d) of
the Code.
"Entity" means any Person, general partnership, limited
partnership, limited liability company, corporation, joint venture,
trust, business trust, cooperative or association.
"Event of Bankruptcy" means with respect to any Person,
(i) the entry of a decree or order for relief by a court
having jurisdiction in respect of such Person in an
involuntary case under the federal bankruptcy laws, as now
or hereafter constituted, or any other applicable federal
or state bankruptcy, insolvency or other similar law, or
appointing a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of such Person
or for any substantial part of his property, or ordering
the winding-up or liquidation of his affairs and the
continuance of any such decree or order unstayed and in
effect for a period of sixty (60) consecutive days;
(ii) the commencement by such Person of a voluntary case under
the federal bankruptcy laws, as now constituted or
hereafter amended, or any other applicable federal or
state bankruptcy, insolvency or other similar law, or the
consent by him to the appointment of or taking possession
by a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or similar official) of such Person or for
any substantial part of his property, or the making by him
of any assignment for the benefit of creditors, or the
taking of corporate action by the Person in furtherance of
any of the foregoing; or
(iii) the commencement against such Person of an involuntary
case under the federal bankruptcy laws, as now constituted
or hereafter amended, which has not been vacated,
discharged or bonded within sixty (60) consecutive days.
"Event of Default" shall have the meaning set forth in
Section 5.1(h).
"Excess Financing Proceeds" means the excess, if any, of the
proceeds of the Permanent Loan over the sum of (i) any amounts
required to pay any Partnership debts or obligations of the
Partnership which are then due (other than the Permanent Loan),
including, without limitation, any construction financing and the
interest thereon, (ii) any costs or expenses incurred in connection
with the Permanent Loan, including without limitation, the funding of
reserves, commitment fees, brokerage commissions, if any, and
attorney's fees, (iii) the payment of all Development Costs and
(iv) any amounts required to be paid or set aside for any other
purpose in order to satisfy conditions to or established pursuant to
the terms of the Bond Documents and any other Project Documents.
"Extended Use Agreement" means the extended use housing
commitment to be executed by the Partnership in accordance with the
requirements of the Credit Agency and the provisions of
Section 42(h)(6)(A) of the Code.
"Filing Office" means the Office of the Secretary of State of
the State of Indiana.
"Fiscal Year" means the twelve (12)-month period which begins on
the first day of January and ends on the thirty-first day of December
of each calendar year (or ends on the date of final dissolution for
the year in which the Partnership is wound up or dissolved).
"Foux" shall have the meaning set forth in the Preliminary
Statement of this Agreement.
"General Partner" means HALLC and any Person who becomes a
General Partner as provided herein, in its capacity as a general
partner of the Partnership. At any and all times where there is more
than one General Partner, the term General Partner shall mean such
General Partners.
"Governmental Authority" means HUD, the City, the Credit Agency
or any other federal, state or local governmental authority having
jurisdiction over the particular matter to which reference is being
made.
"Gross Asset Value" means, with respect to any asset, the
asset's adjusted basis for federal income tax purposes, except as
follows:
(i) The initial Gross Asset Value of any asset contributed by
a Partner to the Partnership shall be the gross fair
market value of such asset, as determined by the
contributing Partner and the Partnership;
(ii) The Gross Asset Values of all Partnership assets shall be
adjusted to equal their respective gross fair market
values, as determined by the General Partner, as of the
following times: (a) the acquisition of an additional
interest in the Partnership by any new or existing Partner
in exchange for more than a de minimis Capital
Contribution; (b) the distribution by the Partnership to a
Partner of more than a de minimis amount of Partnership
property as consideration for an interest in the
Partnership; and (c) the liquidation of the Partnership
within the meaning of Section 1.704-1(b)(2)(ii)(g) of the
Allocation Regulations; provided, however, that the
adjustments pursuant to clauses (a) and (b) above shall be
made only if the General Partner reasonably determines
that such adjustments are necessary or appropriate to
reflect the relative economic interests of the Partners in
the Partnership;
(iii) The Gross Asset Value of any Partnership asset distributed
to any Partner shall be the gross fair market value of
such asset on the date of distribution; and
(iv) The Gross Asset Values of Partnership assets shall be
increased (or decreased) to reflect any adjustments to the
adjusted basis of such assets pursuant to Code Section
734(b) or Code Section 743(b), but only to the extent that
such adjustments are taken into account in determining
Capital Accounts pursuant to Section 1.704-1(b)(2)(iv)(m)
of the Allocation Regulations and Section 4.1 hereof;
provided, however, that Gross Asset Values shall not be
adjusted pursuant to this clause (iv) to the extent that
the General Partner determines that an adjustment pursuant
to clause (ii) hereof is necessary or appropriate in
connection with a transaction that would otherwise result
in an adjustment pursuant to this clause (iv).
If the Gross Asset Value of an asset has been determined or
adjusted pursuant to Section (i), (ii) or (iv) hereof, such Gross
Asset Value shall thereafter be adjusted by the depreciation taken
into account with respect to such asset for purposes of computing
Profits or Losses.
"Guarantors" means Xxxxx X. Xxxxx, Xxxxxxx X. Xxxx and CSL, and
each of their successors.
"Guaranty" means the Guaranty, dated as of November 20, 1996, of
the Guarantors of all of the obligations of the General Partner
hereunder and of the Developer as set forth in the Development
Agreement, as amended.
"HALLC" shall have the meaning set forth in the Preliminary
Statement of this Agreement.
"HAP Contract" means the Housing Assistance Payment Contract,
dated September 22, 1994, by and between Xxxxxx Place Partners, an
Indiana general partnership and HUD, as amended, subsequently assigned
by Xxxxxx Place Partners to the Partnership by assignment instrument
dated September 26, 1995 and as further amended from time to time.
"Hazardous Material" has the collective meanings given to the
terms "hazardous material", "hazardous substances", "hazardous
wastes", toxic substances" and analogous terms, in the Federal
Comprehensive Environmental Response, Compensation and Liability Act
of 1980, 42 U.S.C. Sec. 9601 et seq., as amended, and to the term
"radioactive materials" in the context of the Atomic Energy Act, 28
U.S.C. Sec. 2344, and also includes any meanings given to such terms
in any similar state or local statutes, ordinances, regulations or by-
laws. The term Hazardous Material also includes oil and any other
substance known to be hazardous.
"HUD" means the United States Department of Housing and Urban
Development, and its successors.
"Immediate Family" means with respect to any Person, such
Person's spouse, parents, parents-in-law, descendants, nephews,
nieces, brothers, sisters, brothers-in-law, sisters-in-law, children-
in-law, and grandchildren-in-law and trusts created for the benefit of
any of the foregoing.
"Includable Items" shall have the meaning set forth in
Section 6.11.
"Indenture" means the Amended and Restated Trust Indenture dated
November 21, 1996 by and between the City and the Trustee.
"Initial Adjustment Date" shall have the meaning set forth in
Section 5.1(e).
"Initial 100% Occupancy Date" means the first date on which not
less than 100% of the 360 apartment units in the Apartment Complex
shall have been leased to, and not less than 93% of such apartments
units shall be physically occupied by tenants on such date meeting the
terms of the Minimum Set-Aside Test under executed leases at rentals
meeting the requirements of the Rent Restriction Test. The
achievement of the Initial 100% Occupancy Date shall be confirmed by
the Special Limited Partner's inspection of the rent roll of the
Apartment Complex.
"Initial Operating Period" means the period commencing upon Cost
Certification and ending on the fifth anniversary of the Completion
Date.
"Inspecting Consultant" means the consultant, if any, retained
by the Special Limited Partner to monitor the progress of the
rehabilitation of the Apartment Complex and to certify as to the
completion of the Additional Rehabilitation Work.
"Installment" means an installment of the Investment Limited
Partner's Capital Contribution paid or payable to the Partnership
pursuant to Section 5.1.
"Insurance Requirements" means the insurance which the General
Partner is required to cause the Partnership and the Management Agent
to maintain during the term of the Partnership as set forth on Exhibit
D hereto.
"Interest" means the entire interest of a Partner in the
Partnership at any particular time, including the right of such
Partner to any and all benefits to which a Partner may be entitled
hereunder and the obligation of such Partner to comply with the terms
of this Agreement.
"Invested Amount" means (i) as to the Investment Limited
Partner, an amount equal to the Capital Contribution of the Investment
Limited Partner divided by 0.73 and (ii) as to any other Partner, an
amount equal to its paid-in Capital Contribution.
"Investment General Partner" means Boston Capital Associates IV
L.P., a Delaware limited partnership, in its capacity as the general
partner of the Investment Limited Partner, and any other Person who
may become a successor or additional general partner of the Investment
Limited Partner.
"Investment Limited Partner" means BCTCF and any Person or
Persons who replace it as Substituted Limited Partner, but shall not
include any Additional Limited Partner.
"Investment Partnership Agreement" means the Agreement of
Limited Partnership of the Investment Limited Partner, as amended from
time to time.
"Lender" means any Person (other than the General Partner or its
Affiliates) who makes a loan to the Partnership, whether or not such
loan is secured by a Mortgage, or the successors and assigns of such
Person in such capacity.
"Limited Partners" means the Investment Limited Partner, the
Special Limited Partner and any Additional Limited Partner.
"Liquidating Event" shall have the meaning set forth in Section
2.4.
"Managing General Partner" means any Person designated as such
pursuant to the provisions of Section 6.4.
"Management Agent" means Hendy Management Company, Inc., an Ohio
corporation, in its capacity as the initial management and rental
agent for the Apartment Complex, and any successor management and
rental agent designated or appointed at any time.
"Management Agreement" means the agreement between the
Partnership and the Management Agent providing for the management of
the Apartment Complex.
"Management Fee" means the Management Fee to which reference is
made in Section 11.1.
"Material Agreement" means any agreement to which the
Partnership is a party or to which the Apartment Complex is subject,
the termination of which would have a material adverse impact on the
Apartment Complex or the business and operations of the Partnership.
"Material Event" means the occurrence of any of the following
events:
(i) a material breach by a General Partner (or any
of its Affiliates) in the performance of any of its
obligations under this Agreement, or any of the Material
Agreements;
(ii) a Terminating Event as to any General Partner
or an Event of Bankruptcy as to the Partnership;
(iii) a material violation by any General Partner of
its fiduciary duties as a General Partner of the
Partnership;
(iv) a violation by any General Partner of any law,
regulation or order applicable to the General Partner or
the Partnership which has or may have a material adverse
effect on the Partnership or the Apartment Complex;
(v) a material breach by the Partnership or any
General Partner (or any of their respective Affiliates)
under any Project Document or other material agreement or
document affecting the Partnership or the Apartment
Complex;
(vi) the failure to achieve the Completion Date by
December 31, 1997;
(vii) the failure to begin the Credit Period by
January 1, 1997;
(viii) the commencement of foreclosure
proceedings with respect to any Mortgage, which have not
been withdrawn or dismissed within thirty (30) days after
the date of such commencement;
(ix) the failure of the General Partner to make any
payment required to be made to the Investment Limited
Partner pursuant to the provisions of Section 5.1(e) or
(f);
(x) the fraud, bad faith, gross negligence, or
willful misconduct by a General Partner; or
(xi) the failure of the General Partner to cause
the Partnership to materially satisfy in a timely manner
the Capital Needs Requirements, which failure shall not
have been cured within thirty (30) days.
"Minimum Set-Aside Test" means the set aside test selected by
the Partnership pursuant to Section 42(g) of the Code whereby at least
40% of the units in the Apartment Complex must be occupied by
individuals with incomes equal to 60% or less of area median income,
as adjusted for family size.
"Mortgage" means any mortgage indebtedness of the Partnership
evidenced by any Note and secured by any mortgage on the Apartment
Complex from the Partnership to any Lender; and, where the context
admits, the term "Mortgage" shall mean and include any of the
mortgages securing said indebtedness and any other documents
pertaining to said indebtedness which were required by the Lender as a
condition to making such Mortgage Loan. In case any Mortgage is
replaced by any subsequent mortgage or mortgages, such term shall
refer to any such subsequent mortgage or mortgages. The term
"mortgage" means any mortgage, mortgage deed, deed of trust, deed to
secure debt or any similar security instrument, and "foreclose" and
words of like import include the exercise of a power of sale under a
mortgage or comparable remedies.
"Mortgage Loan" means a loan to the Partnership made by any
Lender and secured by a Mortgage.
"Mortgage Loan Documents" means the Permanent Loan Documents or
the documents executed in connection with any other Mortgage Loan, as
the context may require.
"Nonrecourse Debt" or "Nonrecourse Liability" means any
indebtedness for which none of the Partners has any Economic Risk of
Loss other than through his or its interest in the Partnership
Property securing such indebtedness, as defined in Section 1.752-
1(a)(2) of the Allocation Regulations.
"Nonrecourse Deductions" has the meaning set forth in Section
1.704-2(b)(1) of the Allocation Regulations.
"Note" means and includes any Note from the Partnership to a
Lender evidencing a Mortgage Loan, and shall also mean and include any
Note supplemental to said original Note issued to a Lender or any Note
issued to a Lender in substitution for any such original Note.
"Operating Deficit" means, for any specified period of time, the
amount by which the Cash Receipts of the Partnership are less than the
amount necessary to pay all Cash Expenditures of the Partnership for
the same corresponding period of time.
"Operating Profits or Losses" means, with respect to any Fiscal
Year, the Profits or Losses of the Partnership for such Fiscal Year
other than Profits or Losses from a Capital Transaction.
"Original Agreement" has the meaning set forth in the
Preliminary Statement.
"Original Limited Partners" has the meaning set forth in the
Preliminary Statement.
"Partner" means any General Partner or Limited Partner.
"Partner Nonrecourse Debt" has the meaning set forth in Section
1.704-2(b)(4) of the Allocation Regulations.
"Partner Nonrecourse Debt Minimum Gain" has the meaning set
forth in Sections 1.704-2(i)(2) and (3) of the Allocation Regulations.
"Partner Nonrecourse Deductions" has the meaning set forth in
Section 1.704-2(i)(1) of the Allocation Regulations.
"Partnership" means the limited partnership continued pursuant
to this Agreement.
"Partnership Management Fee" shall have the meaning set forth in
Section 6.12(c).
"Partnership Minimum Gain" has the meaning set forth in Section
1.704-2(d) of the Allocation Regulations.
"Percentage Interests" means the interests of the Partners in
Profits and Losses, tax-exempt income, non-deductible, non-
capitalizable expenditures and Tax Credits, as set forth in
Schedule A.
"Permanent Lender" means the City or any other Lender providing
permanent financing for the Apartment Complex who has been approved by
the Special Limited Partner and the General Partner, except as
otherwise provided in Section 3.2.
"Permanent Loan" means any permanent loan to be provided by the
Permanent Lender to the Partnership pursuant to the terms of the
Permanent Loan Documents.
"Permanent Loan Agreement" means the Amended and Restated Loan
Agreement dated November 21, 1996, by and between the City and the
Partnership, as amended.
"Permanent Loan Documents" means the Bond Documents, the
Permanent Note, the Permanent Mortgage and all other documents
executed and/or delivered in connection with the Permanent Loan.
"Permanent Mortgage" means the Mortgage securing the
Partnership's obligations under the Permanent Note.
"Permanent Mortgage Commencement" means November 21, 1996.
"Permanent Note" means the Promissory Note to be executed by the
Partnership to evidence its obligations with respect to the Permanent
Loan, which Note shall be secured by the Permanent Mortgage.
"Person" means any individual or Entity.
"Phase I Environmental Reports" means that certain environmental
report written and delivered by Astex Environmental Services, Inc.,
dated August 12, 1996, with respect to the Apartment Complex.
"Prime Rate" means the rate of interest announced from time to
time by the Wall Street Journal as its base rate.
"Profits or Losses" shall have the meaning set forth in Section
10.4(b)(v).
"Project Documents" means and includes the Mortgage Loan
Documents, the Construction Contract, the Credit Approval, this
Agreement, the Development Agreement, the Phase I Environmental
Reports, the Extended Use Agreement, the Guaranty, the HAP Contract,
the Capital Disposition Agreement, the Management Agreement, all other
instruments delivered to (or required by) any Lender and all other
documents relating to the Apartment Complex and by which the
Partnership is bound, as amended or supplemented from time to time.
"Projected Credit" means $147,869 per annum for each of the
Fiscal Years 1997 through 2006 (inclusive), provided, however, that
upon the occurrence of any of the events described in Section 5.1(e),
the Projected Credit shall thereafter be the Revised Projected Credit.
"Projected Rents" means the rents described in Exhibit B
attached hereto and made a part hereof.
"Qualified Basis" has the meaning set forth in Section 42(c) of
the Code.
"Qualified Income Offset Item" means (1) an allocation of loss
or deduction that, as of the end of each year, reasonably is expected
to be made (a) pursuant to Section 704(e)(2) of the Code to a donee of
an interest in the Partnership, (b) pursuant to Section 706(d) of the
Code as the result of a change in any Partner's Interest, or
(c) pursuant to Treasury Regulation Section 1.751-1(b)(2)(ii) as the
result of a distribution by the Partnership of unrealized receivables
or inventory items and (2) a distribution that, as of the end of such
year, reasonably is expected to be made to a Partner to the extent it
exceeds offsetting increases to such Partner's Capital Account which
reasonably are expected to occur during or prior to the Partnership
taxable year in which such distribution reasonably is expected to
occur.
"Reconstitution Period" shall have the meaning set forth in
Section 7.2(b).
"Reduction Amount" shall have the meaning set forth in
Section 5.1(f).
"Reduction Year" shall have the meaning set forth in
Section 5.1(f).
"Regulations" means the rules and regulations applicable to the
Apartment Complex or the Partnership of the Credit Agency, HUD, the
City and any other Governmental Authority having jurisdiction over the
Partnership and/or the Apartment Complex.
"Rehabilitation Reserve" shall have the meaning set forth in
Section 6.5(e)(ii).
"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 charged to tenants of the low-income
units in the Apartment Complex may not exceed thirty percent (30%) of
the qualifying income levels.
"Rental Achievement" means the first time following four (4)
consecutive full calendar months of operations after Permanent
Mortgage Commencement (with each month considered individually) that
the Apartment Complex generates a 1.15 to 1.00 Debt Service Coverage
Ratio; provided, however, that the fourth (4th) such consecutive month
must not occur prior to the month immediately preceding the month in
which the Completion Date occurs.
"Replacement Reserve" shall have the meaning set forth in
Section 6.5(e).
"Repurchase Amount" shall have the meaning set forth in
Section 5.2(a).
"Requisite Approvals" means any required approvals of each
Lender and Agency to an action proposed to be taken by the
Partnership.
"Revised Projected Credit" has the meaning set forth in Section
5.1(e).
"Schedule A" means Schedule A to this Agreement, as amended from
time to time.
"Service" means the Internal Revenue Service.
"Share of Partner Nonrecourse Debt Minimum Gain" means, for each
Partner an amount equal to his or its "share of partner nonrecourse
debt minimum gain" as determined in accordance with Section 1.704-
2(i)(5) of the Allocation Regulations.
"Share of Partnership Minimum Gain" means for each Partner, an
amount equal to his or its "share of partnership minimum gain" as
determined in accordance with Section 1.704-2(g) of the Allocation
Regulations.
"Site" has the meaning given to it in the Federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42
U.S.C. Sec. 9601 et seq., as amended, and shall also include any
meaning given to it in any similar state or local statutes,
ordinances, regulations or by-laws.
"Special Limited Partner" means BCTC 94, and any Person who
becomes a Special Limited Partner as provided herein, in its capacity
as a special limited partner of the Partnership.
"Specified Proceeds" means (i) the proceeds of all Mortgage
Loans, (ii) the net rental income, if any, generated by the Apartment
Complex prior to Permanent Mortgage Commencement which is permitted by
the Lenders to be applied to the payment of Development Costs, (iii)
the Capital Contributions of the Investment Limited Partner, (iv) the
Capital Contributions of the General Partner in the amounts set forth
in Schedule A as of the Admission Date, and (v) any insurance
proceeds arising out of casualties occurring prior to Permanent
Mortgage Commencement.
"State" means the State of Indiana.
"State Designation" means the date on which the Partnership
receives an allocation in proper form pursuant to Section 42 of the
Code from the Credit Agency of Tax Credits, as evidenced by the
execution by or on behalf of the Credit Agency of one or more Form(s)
8609. For the purposes of determining State Designation, each
building in the Apartment Complex shall be treated as having received
an allocation of Tax Credit in an amount equal to the amount of Tax
Credits set forth on the Form 8609 as to such building.
"Subordinated Loan" means any loan made by the General Partner
to the Partnership pursuant to Section 6.10, Section 6.12(b) or any
other advance made by the General Partner which is characterized as a
Subordinated Loan herein.
"Subordinated Loan Period" means the period from Rental
Achievement until the fifth (5th) anniversary of Rental Achievement.
"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.
"Syndication Expenses" means all expenditures classified as
syndication expenses pursuant to Treasury Regulation Section 1.709-
2(b). Syndication Expenses shall be taken into account under this
Agreement at the time they would be taken into account under the
Partnership's method of accounting if they were deductible expenses.
"Tax Accountants" means Xxxxxxx, Xxxxxx & Xxxxxxxxx of Bethesda,
Maryland or such other firms of independent certified public
accountants as may be engaged by the Special Limited Partner to review
the Partnership income tax returns.
"Tax Credit" means the low-income housing tax credit described
in Section 42 of the Code.
"Tax Credit Set-Aside" means the date on which the Partnership
receives the Credit Approval in the form reasonably satisfactory to
the Special Limited Partner from the Credit Agency and the City.
"Terminating Event" means the death or permanent disability of,
or a Final Determination of insanity or incompetence as to, an
individual General Partner (unless the Consent of the Special Limited
Partner to a substitute General Partner is received, and such
substitute General Partner is admitted to the Partnership by the first
to occur of (i) the sixtieth day following such event or (ii) such
earlier date as is necessary to prevent a dissolution of the
Partnership under the Act), the Bankruptcy or dissolution of a General
Partner, the transfer of all of its Partnership Interest by a General
Partner, or the voluntary or involuntary withdrawal of the General
Partner from the Partnership. For purposes of the foregoing, an
individual General Partner shall be deemed to be permanently disabled
if he or she becomes disabled during the term of this Agreement
through any illness, injury, accident or condition of either a
physical or psychological nature and, as a result, is unable to
perform substantially all of his or her duties and responsibilities
hereunder for one hundred twenty (120) days during any period of three
hundred sixty-five (365) consecutive calendar days. Involuntary
withdrawal shall occur whenever a General Partner may no longer
continue as a General Partner by law or pursuant to any terms of this
Agreement. In the case of a General Partner which is an Entity, a
transfer of a majority of the voting stock (or other beneficial
interest) of the General Partner to a Person who is not an Affiliate
of the General Partner or any Entity constituting the General Partner
shall be deemed to be a transfer by the General Partner of its
Partnership Interest.
"Title Policy" means the owner's title insurance policy, or at
the option of the Special Limited Partner an endorsement thereto, with
an effective date on or after the Admission Date, in the amount of not
less than the sum of the aggregate expected Capital Contribution of
the Investment Limited Partner as set forth in Section 5.1 and the
principal amount of all Permanent Loans, issued by First American
Title Insurance Company to the Partnership, evidencing the
Partnership's ownership of the Apartment Complex subject only to such
exclusions, exceptions, conditions and stipulations as may be approved
by the Special Limited Partner in its sole discretion and endorsed
with an endorsement insuring against all zoning defects relating to
the Apartment Complex, a Fairway endorsement and a non-imputation
endorsement.
"Trustee" means Bank One, Indianapolis, NA, a national banking
association, and its successors.
"Xxxxxx" shall have the meaning set forth in the Preliminary
Statement of this Agreement.
"Vessel" has the meaning given to it in the Federal
Comprehensive Environmental Response, Compensation and Liability Act
of 1980, 42 U.S.C. Sec. 9601 et seq., as amended, and shall also
include any meaning given to it in any similar state or local
statutes, ordinances, regulations or by-laws.
"Voluntary Loans" shall have the meaning set forth in
Article IX.
"Withdrawal" (including the forms Withdraw, Withdrawing and
Withdrawn) means, as to a General Partner, the occurrence of death,
adjudication of insanity or incompetence, Event of Bankruptcy,
dissolution, liquidation, or voluntary or involuntary withdrawal or
retirement from the Partnership for any reason, including whenever a
General Partner may no longer continue as a General Partner by law or
pursuant to any terms of this Agreement. Withdrawal also shall mean
the sale, assignment, transfer or encumbrance by a General Partner of
its interest as a General Partner other than a pledge of assignment by
a General Partner of its Interest as approved in writing by the
Special Limited Partner. A General Partner which is a corporation,
limited liability company or partnership shall be deemed to have sold,
assigned, transferred or encumbered its interest as a General Partner
in the event (as a result of one or more transactions) of any sale,
assignment or other transfer (but specifically excluding any transfer
occurring pursuant to the laws of descent and distribution) or
encumbrance of a controlling interest in a corporate or limited
liability company General Partner or of a general partner interest in
a General Partner which is a partnership to a Person who is not an
Affiliate of the General Partner. For purposes of this definition of
Withdrawal, the term "controlling interest" shall mean the power to
direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by
contract or otherwise.
ARTICLE II
Name and Business
2.1 Name; Continuation
The name of the Partnership is Xxxxxx Place Apartments, L.P.
The Partners agree to continue the Partnership which was formed
pursuant to the provisions of the Act.
2.2 Office and Resident Agent
(a) The principal office of the Partnership is c/o Hendy
Associates Limited Liability Company, 00 Xxxx Xxxxxx Xxxxxx, Xxxxx
0000, Xxxxxxxxxx, Xxxx 00000, at which office there shall be
maintained those records required by the Act to be kept by the
Partnership. The Partnership may have such other or additional
offices as the General Partner shall deem desirable. The General
Partner may at any time change the location of the principal office
and shall give due notice thereof to the Limited Partners, provided
that doing so shall not adversely affect the Investment Limited
Partner for tax purposes.
(b) The resident agent for the Partnership in the State for
service of process is as follows:
Xxxxxx X. Xxxxxx, Esq.
c/o Bose, XxXxxxxx & Xxxxx
0000 Xxxxxxxx Xxxxxxxx
Xxxxxxxxxxxx, XX 00000
2.3 Purpose
The purpose of the Partnership is to acquire, hold, invest in,
secure financing for, construct, rehabilitate, develop, improve,
maintain, operate, lease and otherwise deal with the Apartment
Complex. The Partnership shall operate the Apartment Complex in
accordance with any applicable Regulations. The Partnership shall not
engage in any other business or activity.
2.4 Term and Dissolution
(a) The Partnership shall continue in full force and effect
until December 31, 2045, except that the Partnership shall be
dissolved and its assets liquidated prior to such date upon the first
to occur of the following events ("Liquidating Events"):
(i) The sale or other disposition of all or
substantially all of the assets of the Partnership;
(ii) The Withdrawal of a General Partner, unless the
Partnership is continued as provided in Section 7.2(a);
(iii) The election to dissolve the Partnership made in
writing by the General Partner with the Consent of the
Investment Limited Partner and any Requisite Approvals;
(iv) The entry of a final decree of dissolution of the
Partnership by a court of competent jurisdiction; or
(v) Any other event which causes the dissolution of the
Partnership under the Act if the Partnership is not
reconstituted pursuant to the provisions of Section 7.2 or
Section 7.3.
(b) Upon the dissolution of the Partnership, the General
Partner (or for purposes of this paragraph, its trustees, receivers or
successors) shall cause the cancellation of the Certificate and shall
liquidate the Partnership assets and apply and distribute the proceeds
thereof in accordance with the provisions of Section 10.3, unless the
Investment Limited Partner elects to reconstitute the Partnership and
continue its business as provided in Section 7.2 or 7.3, in which case
the Partnership assets shall be transferred to the new Partnership as
provided in such Section. Notwithstanding the foregoing, if, during
liquidation, the General Partner shall determine that an immediate
sale of part or all of the Partnership's assets would be
impermissible, impractical or cause undue loss to the Partners, the
General Partner may defer liquidation of, and withhold from
distribution for a reasonable time, any assets of the Partnership
except those necessary to satisfy Partnership debts and obligations
(other than Subordinated Loans).
ARTICLE III
Mortgage, Refinancing and Disposition of Property
3.1 Personal Liability
The Partnership shall be authorized to obtain the Permanent Loan
to finance the acquisition, development and rehabilitation of the
Apartment Complex and shall secure the Permanent Loan by the Permanent
Mortgage. However, neither the General Partner nor any Related Person
shall at any time bear, nor shall the General Partner permit any other
Partner or any Related Person to bear, the Economic Risk of Loss for
the payment of any portion of any Mortgage Loan unless, prior to the
effectiveness of the transaction in which such Economic Risk of Loss
is created or assumed, the General Partner shall have obtained, at the
expense of the Partnership, an opinion from reputable tax counsel, in
form and substance reasonably satisfactory to the Special Limited
Partner, to the effect that such Economic Risk of Loss will not result
in the reallocation of Tax Credits or Losses from the Investment
Limited Partner and the Special Limited Partner to the General
Partner. The General Partner shall cause the Partnership to elect
promptly, to the extent permitted and in the manner prescribed by any
Agency or Lender having jurisdiction, that all debt service payments
made by the Partnership to the holder of the Permanent Mortgage shall
be applied first to interest determined at the stated rate set forth
in the Permanent Note, and then to principal due with respect to the
Permanent Note.
3.2 Refinancings
The Partnership may decrease, increase or refinance any Mortgage
Loan and may make any required transfer or conveyance of Partnership
assets for security or mortgage purposes, provided, however, any such
decrease, increase or refinancing of any Mortgage may be made by the
General Partner only with the Consent of the Special Limited Partner.
3.3 Sale of Assets
The Partnership may sell, lease, exchange or otherwise transfer
or convey all or substantially all the assets of the Partnership only
with the Consent of the Special Limited Partner, which consent shall
not be unreasonably withheld in connection with a sale which occurs
after the Compliance Period. Notwithstanding the foregoing and except
as set forth in Section 6.2(a)(vi), no Consent of the Special Limited
Partner shall be required for the leasing of apartments to tenants in
the normal course of operations or the leasing of all or substantially
all the apartments to a public housing authority at rents satisfactory
to any Agency or Lender as expressed in writing, provided (subject to
the Rent Restriction Test) that such rents are not less than the
Projected Rents.
3.4 Real Estate Commissions
The total compensation to all Persons for the sale of the
Apartment Complex shall be limited to the amount of the Disposition
Fee.
ARTICLE IV
Partners; Capital
4.1 Capital and Capital Accounts
(a) The capital of the Partnership shall be the aggregate
amount of the cash and the Gross Asset Value of property contributed
by the General Partner and by the Limited Partners as set forth in
Schedule A. No interest shall be paid by the Partnership on any
Capital Contribution to the Partnership. Schedule A shall be amended
from time to time to reflect the withdrawal or admission of Partners,
any changes in the Partnership Interests held by a Partner arising
from the transfer of an Interest to or by such Partner and any change
in the amounts to be contributed or agreed to be contributed by any
Partner. No Partner shall have the right to withdraw or receive a
return of any of its Capital Contributions except as set forth in this
Agreement.
(b) An individual Capital Account shall be established and
maintained for each Partner, including any additional or substituted
Partner who shall hereafter receive an interest in the Partnership.
The Capital Account of each Partner shall be maintained in accordance
with the following provisions:
(i) To each Partner's Capital Account there shall be
credited such Partner's Capital Contributions, such Partner's
distributive share of Profits, and any items in the nature of
income or gain that are specially allocated pursuant to Section
10.4 hereof, and the amount of any Partnership liabilities that
are assumed by such Partner or that are secured by any
Partnership Property distributed to such Partner;
(ii) To each Partner's Capital Account there shall be
debited the amount of cash and the Gross Asset Value of any
Partnership Property distributed to such Partner pursuant to any
provision of this Agreement, such Partner's distributive share
of Losses, and any items in the nature of expenses or losses
that are specially allocated pursuant to Section 10.4 hereof,
and the amount of any liabilities of such Partner that are
assumed by the Partnership or that are secured by any property
contributed by such Partner to the Partnership.
In the event that the Gross Asset Values of Partnership
assets are adjusted pursuant to this Agreement, the Capital Accounts
of all Partners shall be adjusted simultaneously to reflect the
aggregate net adjustment as if the Partnership recognized gain or loss
equal to the amount of such aggregate net adjustment.
(c) The original Capital Account established for any Assignee
(as hereinafter defined) shall be in the same amount as, and shall
replace, the adjusted Capital Account of the Partner which such
Assignee succeeds, and, for the purpose of the Agreement, such
Assignee shall be deemed to have made the Capital Contribution, to the
extent actually paid in, of the Partner which such Assignee succeeds.
The term "Assignee," as used in this paragraph, shall mean a Person
who shall become entitled to receive a share of the Profits, Losses,
Tax Credits and distributions of the Partnership by reason of such
Person succeeding to the Interest of a Partner by assignment of all or
any part of an Interest. To the extent an Assignee receives less than
100% of the Interest of a Partner, such Assignee's Capital Account and
Capital Contribution shall be in proportion to the Partnership
Interest such Assignee receives, and the Capital Account and Capital
Contribution of the Partner who retains a partial interest in the
Partnership shall continue, and not be replaced, in proportion to the
Partnership Interest such Partner retains.
(d) The foregoing provisions and other provisions of this
Agreement relating to the maintenance of the Capital Accounts are
intended to comply with the Allocation Regulations, and shall be
interpreted and applied in a manner consistent with such Allocation
Regulations.
4.2 General Partner
The name, address and Capital Contribution of the General
Partner are as set forth on Schedule A.
4.3 Investment Limited Partner, Special Limited Partner and
Original Limited Partner
(a) Each of the Original Limited Partners hereby withdraws as
a limited partner of the Partnership and acknowledges that he or it no
longer has any Interest in, or rights or claims against, the
Partnership as a Partner as of the Admission Date.
(b) Each of the Special Limited Partner and the Investment
Limited Partner is hereby admitted to the Partnership as a Limited
Partner in substitution for the Original Limited Partners as of the
Admission Date and agrees to be bound by the terms and provisions of
the Project Documents and this Agreement. The name and address of the
Investment Limited Partner and the Special Limited Partner are as set
forth on Schedule A.
(c) Except as otherwise specifically set forth in Sections 4.5
or 7.4, the General Partner shall have no authority to admit
additional Limited Partners without the Consent of the Investment
Limited Partner.
(d) Each of the Investment Limited Partners and the Special
Limited Partner represent and warrant that it is acquiring its
Interest for its own account, for investment purposes and not with the
intent to resell such Interest.
4.4 Liability of the Limited Partners
Neither the Investment Limited Partner, the Special Limited
Partner nor any Person who becomes an Additional Limited Partner shall
be liable for any debts, liabilities, contracts or obligations of the
Partnership; such Persons shall be liable only to pay their respective
Capital Contributions as and when the same are due hereunder and under
the Act. After its Capital Contribution shall be fully paid, no
Limited Partner shall, except as otherwise required by the Act, be
required to make any further capital contributions or payments or lend
any funds to the Partnership.
4.5 Special Rights of the Special Limited Partner
(a) Notwithstanding any other provisions herein (other than
Section 13.8), to the extent the law of the State is not inconsistent,
the Special Limited Partner shall have the right, subject to any
Requisite Approvals, to:
(i) amend this Agreement provided, however, that no such
amendment affect the vested rights (including, without
limitation, the right to vote hereunder, the right to receive
any fees, allocable share of Cash Flow or other distributions,
or Profits or Losses and Tax Credits hereunder) or alter any of
the liabilities, obligations or rights of any General Partner
without its prior written consent;
(ii) dissolve the Partnership provided, however, that
such dissolution shall not be caused by the Special Limited
Partner unless the General Partner has violated a material
provision of any Project Document, which violation has a
material adverse effect on the Partnership or any of its
Partners and which violation has not been cured within any
applicable cure period specified;
(iii) remove any General Partner and elect a new General
Partner (A) on the basis of the performance and discharge of
such General Partner's obligations constituting fraud, bad
faith, gross negligence, wilful misconduct or material breach of
fiduciary duty, or (B) upon the occurrence of a Material Event.
(iv) continue the business of the Partnership with a
substitute General Partner, provided that the General Partner
has been removed pursuant to Section 4.5(a)(iii) above; and
(v) approve or disapprove the sale of all or
substantially all of the assets of the Partnership.
(b) Upon the removal of a General Partner,
(i) without any further action by any Partner, the
Special Limited Partner shall cause an Affiliate
automatically to become a General Partner (the "Substitute
General Partner") and acquire in consideration of a cash
payment of $100 such portion of the Interest of the
removed General Partner as counsel to the Special Limited
Partner shall determine is the minimum appropriate
interest in order to assure the continued status of the
Partnership as a partnership under the Code and under the
Act,
(ii) the remaining portion of the economic Interest
of the removed General Partner shall automatically be
converted to an equal economic Interest as an Additional
Limited Partner, and
(iii) the Substitute General Partner shall
automatically be irrevocably delegated all of the powers
and duties and obligations of the General Partners
pursuant to Section 6.13. The Special Limited Partner or
any successor General Partner proposed by the Special
Limited Partner shall have the option, exercisable in its
sole discretion, to acquire the Additional Limited Partner
Interest, or any portion thereof, of any removed General
Partner upon payment of the agreed or then present fair
market value of such Interest or portion thereof. If such
value is not agreed to, the fair market value of the
Interest shall be as determined by a qualified, MAI-
designated state-licensed real estate appraiser selected
by the removed General Partner. If the Special Limited
Partner does not accept such value, it may select a second
similarly-qualified appraiser. If the values determined
by both such appraisers differ by no more than 10%, then
the purchase price shall be the arithmetic mean of the
two. If the values differ by more than 10%, then the two
appraisers shall appoint a third similarly-qualified
appraiser, who shall also determine a value. In such a
case, the final purchase price shall be the arithmetic
mean of the two values closest in absolute dollars. 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 a promissory note
bearing interest at the AFR payable out of the proceeds of
a Capital Transaction as set forth in Section 10.2(b)
hereof. In addition, upon removal, the Partnership must
promptly pay to the removed General Partner all amounts
then accrued and owing to the removed General Partner;
provided, however, that notwithstanding the language of
Section 6.12, Article X, Article XI and any other
provision hereof, no removed General Partner or any
Affiliate thereof shall be entitled to receive any fee,
compensation or other remuneration from the Partnership,
other than any such fee, compensation or other
remuneration (including, without limitation, the
Development Fee) 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 4.5 any monetary damages suffered by the
Partnership as a consequential 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 solely to
execute and deliver any and all documents and instruments
on behalf of such General Partner and the Partnership as
the Special Limited Partner may deem to be necessary or
appropriate in order to effect the provisions of this
Section 4.5 and to enable the new General Partner to
manage the business of the Partnership.
(c) In order to implement the provisions of Section 4.5(a)(v),
the General Partner is hereby required, within five (5) days after its
receipt of any offer to purchase the Apartment Complex or all of the
Interests in the Partnership, to send a copy of such offer (or a
written description of any such oral offer) to each of the Limited
Partners. In connection with any proposed sale of the Apartment
Complex, the Special Limited Partner (or its designee) shall have the
right to (i) receive and review copies of all documents relating to
the proposed sale, (ii) participate in the negotiations of the terms
and conditions of the proposed sale, (iii) meet with the proposed
purchaser, and (iv) provide such other services in connection with the
proposed sale as it deems to be appropriate.
4.6 Meetings
The General Partner or Limited Partners holding more than ten
percent (10%) of the then outstanding Limited Partner Interests may
call meetings of the Partnership for any matters for which the Limited
Partners may vote as set forth in this Agreement. A list of the names
and addresses of all Limited Partners shall be maintained as part of
the books and records of the Partnership and shall be made available
upon request to any Limited Partner or his representative at his cost.
Upon receipt of a written request either in person or by certified
mail stating the purpose(s) of the meeting, the General Partner shall
provide all Limited Partners within ten (10) days after receipt of
said request, written notice of a meeting and the purpose of such
meeting to be held on a date not less than fifteen (15) nor more than
sixty (60) days after receipt of said request, at a time 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 of $10
shall be paid in full in cash on the Admission Date. The Investment
Limited Partner's Capital Contribution in the aggregate amount of
$887,216 shall be paid in cash installments (the "Installments"), as
follows:
(i) $532,330 (the "First Installment") on the later of
(A) the Admission Date and (B) Tax Credit Set Aside;
(ii) $177,443 (the "Second Installment"), on the latest
of (A) the Completion Date, (B) Cost Certification, (C) State
Designation, (D) receipt of an updated Title Policy in form and
substance satisfactory to the Special Limited Partner, which
Title Policy shall not in any event contain a survey exception;
(iii) $168,571 (the "Third Installment") on the latest of
(A) the Initial 100% Occupancy Date, (B) Permanent Mortgage
Commencement, (C) Rental Achievement, or (D) satisfaction of the
Capital Needs Requirements which are required to be completed at
the time the events set forth in (A), (B) and (C) of this
Subsection have been satisfied; and
(iv) $8,872 on the later of (A) the receipt by the
Investment Limited Partner of a copy of the properly filed
Partnership federal tax return for the year in which Rental
Achievement occurs, or (B) the satisfaction of the Capital Needs
Requirements which are required to be completed at the time the
events set forth in (A) of this Subsection have been satisfied;
provided, however, that (x) the 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, and (y) no Installment shall be due unless and
until all conditions to the payment of all prior Installments have
been satisfied.
(b) The obligation of the Investment Limited Partner to pay
each Installment is conditioned upon delivery by the General Partner
to the Investment Limited Partner of a written certificate (the
"Payment Certificate") stating that as of the date of such certificate
(i) all the conditions to the payment of such Installment and each
prior Installment have been satisfied, (ii) all representations and
warranties of the General Partner contained in this Agreement are true
and correct, (iii) no event has occurred which suspends or terminates
the obligations of the Investment Limited Partner to pay Installments
under this Agreement which has not been cured as herein provided and
(iv) no event has occurred which, with the giving of notice, would
oblige the General Partner to repurchase the Interests of the
Investment Limited Partner pursuant to Section 5.2(a). Except as
provided in the final sentence of this Section 5.1(b), acceptance by
the Partnership of any Installment shall constitute a confirmation
that, as of the date of payment, all such conditions are satisfied and
all such representations and warranties are true and correct. The
obligation of the Investment Limited Partner to pay the First
Installment is also conditioned upon delivery by the General Partner
to the Investment Limited Partner of (x) a legal opinion of
independent counsel to the Partnership, the General Partner, the
Developer and the Guarantors, which opinion(s) must be satisfactory to
the Investment Limited Partner as to form, content and identity of
counsel and (y) a photocopy of a binding commitment, in form and
substance satisfactory to the Special Limited Partner, to issue the
Title Policy and endorsements thereto in form and substance
satisfactory to the Special Limited Partner insuring against all
zoning defects of the Apartment Complex, a Fairway endorsement and a
non-imputation endorsement. In no event shall any Installment become
due until all of the conditions for all of the Installments listed
prior to the Installment in question in Section 5.1(a) shall have been
satisfied and all of such prior Installments shall have become due.
Notwithstanding the foregoing, however, if at any time prior to the
date when an Installment becomes due and payable, the Partnership has
an Operating Deficit which the General Partner would be required to
fund pursuant to Section 6.10, then the Investment Limited Partner
may, at its option, waive the requirement of the delivery of the
Payment Certificate or any other condition with respect to part or all
of such Installment and pay such part or all of such Installment,
provided that the proceeds of the amount so paid are used by the
Partnership to fully fund such Operating Deficit; provided, however,
that if the proceeds of such amount so paid are designated in
Section 6.12 to be used to pay fee(s), then such proceeds shall be
utilized to pay such fee(s) and the recipient(s) thereof shall be
required to, and hereby agree to, utilize the proceeds of such fee(s)
to fund such Operating Deficit, in which case the Investment Limited
Partner is hereby authorized to directly fund such Operating Deficit,
with the funds so applied being deemed to have been paid as aforesaid.
(c) The Payment Certificate for each Installment other than
the First 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 General Partner shall
notify the Investment Limited Partner of the reason why such statement
would be untrue if made, and the Investment Limited Partner shall not
be required to pay such Installment; provided, however, that if
(i) any such statement can subsequently be truthfully made and
(ii) the Investment Limited Partner shall not have irrevocably lost,
in the good faith judgment of the Investment General Partner, any
material tax or other benefits hereunder (other than tax benefits for
which the Investment Limited Partner has been fully compensated
pursuant to the provisions of paragraphs (e), (f) and (g) of this
Section 5.1), then the Investment Limited Partner shall pay such
Installment to the Partnership thirty (30) days after delivery by the
General Partner to the Investment Limited Partner of the Payment
Certificate together with an explanation of the manner in which each
such statement had become true.
(e) In the event that as of or any time prior to Cost
Certification (the "Initial Adjustment Date"), the Investment Limited
Partner shall receive a written certification of the Auditors
indicating that the aggregate Actual Credit during the Credit Period
will be less than the aggregate Projected Credit during the Credit
Period, then (i) the next succeeding Installments of the Capital
Contributions of the Investment Limited Partner shall be reduced by an
amount equal to the product of (X) the difference between (1) the
aggregate Projected Credit during the Credit Period and (2) the
aggregate Actual Credit during the Credit Period and (Y) 0.882, and
(ii) the Projected Credit for each Fiscal Year shall thereafter be
redefined to mean the Actual Credit, as so determined (the "Revised
Projected Credit"). Any such reduction pursuant to this Section
5.1(e) shall be made first to the Installment, if any, next due to be
paid by the Investment Limited Partner, and any balance of such amount
payable by the General Partner in excess of the amount of such
Installment shall be applied to succeeding Installments, if any,
provided that if the amount of any such reductions exceeds the sum of
the remaining Installments, if any, then an amount equal to the amount
of such excess shall be paid by the General Partner to the Investment
Limited Partner promptly after demand is made therefor, as a payment
of liquidated damages for breach of warranty, regardless of the reason
for the occurrence of such event (unless such reduction was caused by
an act or omission of the Investment Limited Partner or its Affiliates
or the Tax Accountants, in which event no such reduction or payment
shall be required). No reduction of any Installment or any payment by
the General Partner pursuant to this Section 5.1(e) shall be deemed to
be a Capital Contribution by the General Partner to the Partnership,
nor shall any such payment constitute a return of capital to the
Investment Limited Partner.
(f) If with respect to any Fiscal Year all or a portion of
which occurs during the Initial Operating Period (except as already
provided for in Section 5.1(e)), the Actual Credit is or was less than
the Projected Credit (or the Revised Projected Credit, if applicable)
for such Fiscal Year (a "Reduction Year"), then the Capital
Contributions of the Investment Limited Partners shall be reduced or
the General Partner shall pay to the Investment Limited Partner as
provided herein the Reduction Amount. The Reduction Amount shall be
equal to the sum of (A) the excess of the Projected Credit (or the
Revised Projected Credit, if applicable) for such Fiscal Year over the
Actual Credit for such Fiscal Year multiplied by 0.882 plus (B) the
Recapture Amount as determined pursuant to Section 10.6 and, to the
extent not already accounted for, any interest or penalties payable by
the limited partners and/or holders of beneficial assignee
certificates of the Investment Limited Partner as a result of such
shortfall or Recapture Event, assuming that each limited partner
and/or holder of a beneficial assignee certificate in the Investment
Limited Partner used all of the Tax Credits allocated to it in the
Fiscal Year of allocation. The Auditors shall make their
determination of the amount of the Actual Credit with respect to each
Reduction Year within thirty (30) days following the end of such
Fiscal Year. The Investment Limited Partner shall be eligible to be
paid a Reduction Amount as hereinabove described with respect to each
Reduction Year. Any Reduction Amount shall first be applied to the
Installment next due to be paid by the Investment Limited Partner,
with any portion of such Reduction Amount in excess of the amount of
such Installment then being applied to succeeding Installments,
provided that if no further Installments remain to be paid or if the
Reduction Amount shall exceed the sum of the amounts of the remaining
Installments, then the entire Reduction Amount or the balance of the
Reduction Amount, as the case may be, shall be paid by the General
Partner to the Investment Limited Partner promptly after demand is
made therefor, as a payment of damages for breach of warranty,
regardless of the reason for the occurrence of such event (unless such
reduction was caused by an act or omission of the Investment Limited
Partner or its Affiliates, in which event no Reduction Amount shall be
payable). No payment by the General Partner pursuant to this Section
5.1(f) shall be deemed to be a Capital Contribution to the Partnership
nor shall any such payment constitute a return of capital to the
Investment Limited Partner.
(g) In the event that, for any reason, at any time after the
end of the Initial Operating Period (except as already provided for in
Section 5.1(e)), the amount of the Actual Credit shall be less than
the Projected Credit (or the Revised Projected Credit, if applicable)
with respect to any Fiscal Year of the Partnership (such difference
being hereinafter referred to as a "Credit Shortfall"), the Investment
Limited Partner shall be treated as having made a constructive advance
to the Partnership with respect to such Fiscal Year (a "Credit
Recovery Loan"), which shall be deemed to have been made on January 1
of such Fiscal Year in an amount equal to the sum of (A) the Credit
Shortfall for such Fiscal Year plus (B) the Recapture Amount as
determined pursuant to Section 10.6 and, to the extent not already
accounted for, any interest or penalties payable by the limited
partners and/or the holders of beneficial assignee certificates of the
Investment Limited Partner as a result of the Credit Shortfall for
such Fiscal Year, assuming that each limited partner and/or holder of
a beneficial assignee certificate in the Investment Partnership used
all of the Tax Credits allocated to him in the Fiscal Year of
allocation. Credit Recovery Loans shall be deemed to bear simple (not
compounded) interest from the respective dates on which such principal
advances shall have been deemed to have been made under this Section
5.1(g) at a rate of nine percent (9%) per annum. Credit Recovery
Loans shall be payable by the Partnership as provided in Section
10.2(b), Clause Third.
(h) (i) The Investment Limited Partner hereby grants to the
Partnership a security interest in the Investment Limited Partner's
Interest as collateral security for the payment, when due in
accordance with the terms of this Agreement, of the Capital
Contributions of the Investment Limited Partner. Except as
hereinafter provided in Section 5.1(i), upon any default by the
Investment Limited Partner in the payment of its Capital Contributions
as and when they are due and payable (an "Event of Default"), which
Event of Default has not been cured within ten (10) business days
following notice thereof by the Partnership to the Investment Limited
Partner, the Partnership or its assignee shall have all the rights and
remedies, with respect to the security interest hereby granted by such
Investment Limited Partner, of a secured party under Article 9 of the
Uniform Commercial Code as in effect in the State, as well as those
rights and remedies expressly set forth in Section 5.1(h)(ii). Upon
request, such Investment Limited Partner will execute a UCC-1
financing statement evidencing the security interest granted hereby
and will deliver such statement to the Partnership.
(ii) If, after notice thereof from the General Partner,
such Investment Limited Partner fails to cure the Event of
Default as set forth in Section 5.1(h)(i), such Event of Default
shall be curable by payment of the Installment(s) due under this
Agreement plus interest at the Prime Rate from the date such
Installment(s) was due. All rights and benefits of a defaulting
Investment Limited Partner attributable to such Partner's
Interest in the Partnership shall be suspended during the period
of default, which suspension shall commence on the date of the
Event of Default and shall terminate on the date of the curing
of such Event of Default, or upon the removal of the defaulting
Investment Limited Partner pursuant to a foreclosure of the
security interest granted by Section 5.1(h)(i). If such
suspension is in effect at the end of the Partnership's Fiscal
Year, the profits and losses and tax credits attributable to the
defaulting Investment Limited Partner's Interest during the
period of suspension, which have not been allocated to such
defaulting Investment Limited Partner in a tax return filed by
the Partnership, shall be allocated to the non-defaulting
Partners, pro rata in accordance with their Interests.
(i) Notwithstanding the provisions of Section 5.1(h) above, in
the event of a dispute regarding the existence of an Event of Default,
such dispute shall be resolved by binding arbitration and until the
issuance of a final arbitration award confirming the existence of an
Event of Default, the Partnership shall not be entitled to exercise
any of its rights or remedies under Section 5.1(h) above. Such
arbitration shall be conducted in accordance with the Rules of
Commercial Arbitration of the American Arbitration Association by a
single arbitrator appointed pursuant to those rules. The arbitration
shall take place in the City of Indianapolis, Indiana. The scope of
the arbitrator's award shall be solely limited to a determination of
whether an Event of Default has occurred. If the arbitrator
determines that an Event of Default has occurred, then if requested by
the Investment Limited Partner within twenty (20) days following
receipt of the award, the arbitrator shall provide the parties with a
written explanation of the facts underlying the determination, which
shall become part of the award. The prevailing party shall be awarded
the costs of such arbitration, provided, however, that each party
shall bear the costs of its own attorneys and witnesses.
5.2 Return of Capital Contributions
(a) Failure to Achieve Development and/or Tax Credit
Benchmarks and Standards. Upon the occurrence of any of the events (a
"Repurchase Event") listed below in this Section 5.2(a), within five
(5) days of the occurrence thereof, the General Partner shall send to
the Investment Limited Partner and the Investment Limited Partner
notice of such event and of the General Partner's obligation to
repurchase the Interests of the Investment Limited Partner by paying
to the Investment Limited Partner an amount in cash (the "Repurchase
Amount") equal to each such Partner's Invested Amount minus the amount
of any Tax Credits allocable to such Partner's Interest pursuant to
this Agreement which will not be recaptured as a result of the
disposition of said Partner's Interest or otherwise and minus the
portion, if any, of such Partner's Capital Contribution which shall
not yet have been paid (or deemed to have been paid) to the
Partnership plus the amount of any third-party costs, including,
without limitation, attorney's fees incurred by or on behalf of such
Partner in implementing this Section 5.2(a) in the event the
Investment Limited Partner requires such a repurchase, plus interest
thereon at the AFR commencing on the fifth day after delivery of the
notice referred to in the next sentence. If the Investment Limited
Partner elects to require a repurchase of its Interest and the payment
to it of an amount equal to its Repurchase Amount, it shall send
notice thereof to the Partnership within thirty (30) days after the
mailing date of the General Partner's notice, or at any time after the
occurrence of any of the foregoing if the General Partner shall not
have sent a notice thereof, and the General Partner shall within sixty
(60) days after the Partnership receives any such notice from a
Partner requesting the purchase of its Interest repurchase the
Interest of such Partner by paying to such Partner an amount equal to
its Repurchase Amount. If, following receipt of the General Partner's
notice, the Investment Limited Partner fails to send notice to the
General Partner by the end of such 30-day period requesting the
General Partner to purchase its Interest, the Investment Limited
Partner, as the case may be, shall be deemed to have waived its right
to cause the General Partner to purchase its Interest as a result of
the event described in the General Partner's notice. No such waiver,
however, shall affect the right of the Investment Limited Partner to
cause the General Partner to purchase its Interest upon the occurrence
of any other event described in this Section 5.2(a), or upon any
subsequent occurrence of the event described in the General Partner's
notice. The Repurchase Events are as follows:
(i) each of the acquisition and rehabilitation
buildings in the Apartment Complex shall not have been
placed in service by December 31, 1997; or
(ii) by December 31, 1997, the Completion Date
shall not have occurred; or
(iii) construction or operation of the Apartment
Complex shall have been enjoined by a final order (from
which no further appeals are possible) of a court having
jurisdiction and such injunction shall continue for a
period of ninety (90) days; or
(iv) Permanent Mortgage Commencement shall not have
been achieved prior to May 31, 1997; or
(v) State Designation shall not have occurred by
December 31, 1997 (or any later date fixed by the General
Partner with the Consent of the Investment Limited
Partner) and by said date the General Partner shall not
have made any payment as described in the next to last
sentence of Section 5.1(e) or, if the Investment Limited
Partner shall have elected to have all or a portion of any
payment under Section 5.1(e) applied toward future
Installment obligations of the Investment Limited Partner,
amendments to this Agreement shall not have been adopted
and filed in the Filing Office, reflecting such event; or
(vi) if by the date which is twelve (12) months
following the Completion Date, Rental Achievement shall
not have been achieved; or
(vii) the Partnership shall fail to meet the Minimum
Set-Aside Test or the Rent Restriction Test by the close
of the first year of the Credit Period and/or fails to
continue to meet either of such tests at any time during
the sixty (60)-month period commencing on such date; or
(viii) (A) foreclosure proceedings shall have
commenced under any Mortgage and such proceedings shall
not have been dismissed within thirty (30) days, (B) any
of the commitments of a Lender to provide a Mortgage Loan
and/or any subsidy financing shall be terminated or
withdrawn and not reinstated or replaced within sixty (60)
days with terms at least as favorable to the Partnership
or terms for which the Consent of the Investment Limited
Partner and any Requisite Approvals shall have been
obtained, or (C) the Permanent Lender, acting in good
faith and in accordance with the provisions of the
Permanent Loan Documents, shall have irrevocably refused
to make any further advances under the Permanent Loan
Documents and such decision shall not have been reversed
or the Permanent Lender replaced within thirty (30) days;
or
(ix) at any time the General Partner fails to
advance Subordinated Loans as required by this Agreement
and such failure continues for ten (10) days; or
(x) any action is commenced to foreclose any
mechanics, or any other lien (other than the lien of a
Mortgage) against the Apartment Complex and such action
has not within sixty (60) days been either bonded against
in such a manner as to preclude the holder of such lien
from having any recourse to the Apartment Complex or to
the Partnership for payment of any debt secured thereby,
or affirmatively insured against by the title insurance
policy or an endorsement thereto issued to the Partnership
by a reputable title insurance company (which insurance
company will not have indemnity from or recourse against
Partnership assets by reason of any loss it may suffer by
reason of such insurance) in an amount satisfactory to the
Investment Limited Partner; or
(xi) a casualty occurs resulting in substantial
destruction of all or a portion of the Apartment Complex,
and the insurance proceeds (if any) are insufficient to
restore the Apartment Complex or the Apartment Complex is
not so restored within twenty-four (24) months following
such casualty; or
(xii) if prior to December 21, 1996, the General
Partner has not delivered to the Investment Limited
Partner written confirmation (A) issued by the appropriate
HUD office that indicates a subsidy layering review was
performed in respect of the Apartment Complex and approves
the proposed structure of the transaction as contemplated
in this Agreement, including, without limitation, the
Projected Credit and (B) issued by the City that satisfies
the requirement set forth in Section 42(m)(2)(D) of the
Code.
(b) Lender/Agency Disapproval. If any Agency or Lender shall
disapprove, or fail to give any required approval of, the Investment
Limited Partner and/or the Special Limited Partner as a Limited
Partner hereunder within one hundred eighty (180) days of the
Admission Date, then the Partner being disapproved or not approved
shall, effective as of such time or such later time as may be elected
by the Partner being disapproved or not approved as may be specified
by such Agency or Lender in its disapproval, at the option of the
Partner being disapproved or not approved (if not directed by such
Agency or Lender to withdraw), cease to be a Limited Partner. The
General Partner shall, within ten (10) days of the effective date of
such cessation, pay to the Partner being disapproved or not approved
an amount equal to its Capital Contributions paid in (and those deemed
to have been paid) to the Partnership plus the amount of any third
party costs, including, but not limited to attorney's fees, incurred
by or on behalf of such Partner in implementing this Section 5.2(b).
(c) Substitution and Indemnification. Upon the receipt by the
Investment Limited Partner and/or the Special Limited Partner of the
amount due to it pursuant to either Section 5.2(a) or Section 5.2(b),
the Interest of such Partner shall terminate, and the General Partner
shall indemnify and hold harmless such Partner from and against any
Adverse Consequences to which such Partner (as a result of its
participation hereunder) may be subject, provided that such Adverse
Consequences do not result from such Partner's acts or omissions.
(d) Waiver of Repurchase Right. Each of the Investment
Limited Partner and the Special Limited Partner shall have the right
to irrevocably waive its right to have its Interest repurchased
pursuant to any clause or clauses of Section 5.2(a), or any portion
thereof, at any time during which any of such rights shall be in
effect. Such a waiver shall be exercised by delivery to the General
Partner of a written notice stating that the rights being waived
pursuant to any specified clause or clauses of Section 5.2(a), or any
specified portion thereof, are thereby waived for a specified period
of time.
(e) Additional General Partner. If the General Partner shall
fail to make on the due date therefor any payment required under
Section 5.2(a) or Section 5.2(b), time being of the essence, at any
time thereafter the Special Limited Partner shall have the option,
exercisable in its sole discretion, to cause itself or its designee to
be admitted as an additional General Partner, receiving from the
existing General Partner, in consideration of the payment of ten
dollars ($10.00), a one per cent (1%) interest in the Profits, Losses,
Tax Credits and distributions of the Partnership, with the Special
Limited Partner retaining its status as such and its economic interest
in the Partnership as the Special Limited Partner (or its designee as
an additional General Partner). If the Special Limited Partner
exercises the option described in this Section 5.2(e), each of the
other General Partner hereby agrees that all of its rights and powers
hereunder as a General Partner shall automatically be irrevocably
delegated to the Special Limited Partner pursuant to Section 6.13
without the necessity of any further action by any Partner. Each
Partner hereby grants to the Special Limited Partner an irrevocable
(to the extent permitted by applicable law) power of attorney coupled
with an interest to take any action and to execute, deliver and file
or record any and all documents and instruments on behalf of such
Partner and the Partnership as the Special Limited Partner may deem
necessary or appropriate in order to effectuate the provisions of this
Section 5.2(e) and to allow the additional General Partner to manage
the business of the Partnership. The admission of the Special Limited
Partner or its designee as an additional General Partner shall not
relieve any other General Partner of any of its economic obligations
hereunder in existence at the time of such admission, and each other
General Partner shall fully indemnify and hold harmless the additional
General Partner from and against any and all Adverse Consequences
sustained by such additional General Partner as a result of the
actions of the additional General Partner (other than Adverse
Consequences arising solely from the gross negligence or willful
misconduct of such additional General Partner).
ARTICLE VI
Rights, Powers and Duties of General Partner
6.1 Authorized Acts
Subject to the provisions of Section 6.2, Section 6.3,
Section 6.15 and all other provisions of this Agreement, the General
Partner for, in the name and on behalf of the Partnership, is hereby
authorized, in furtherance of the purposes of the Partnership:
(i) to acquire by purchase, lease, exchange or otherwise
any real or personal property;
(ii) to construct, rehabilitate, operate, maintain,
finance and improve, and to own, sell, convey, assign, mortgage
or lease any real estate and any personal property;
(iii) to borrow money and issue evidences of indebtedness
and to secure the same by mortgage, pledge or other lien on the
Apartment Complex or any other assets of the Partnership;
(iv) to execute the Mortgage Loan Documents and the other
Project Documents and all such other documents as the General
Partner deems to be necessary or appropriate in connection with
the acquisition, development, construction, rehabilitation and
financing of the Apartment Complex;
(v) subject to Section 3.2, to prepay in whole or in
part, refinance or modify any Mortgage Loan or other financing
affecting the Apartment Complex;
(vi) to employ the Management Agent (which may be an
Affiliate of the General Partner) and, subject to the provisions
of Article XI, to pay reasonable compensation for its services;
(vii) to employ its Affiliates to perform services for, or
sell goods to, the Partnership provided that (except with
respect to any contract specifically authorized by this
Agreement) the terms of any such transaction with an Affiliate
shall not be less favorable to the Partnership than would be
arrived at by unaffiliated parties dealing at arms' length;
(viii) to execute contracts with any Agency, the
State or any subdivision or agency thereof or any other
Governmental Authority to make apartments or tenants in the
Apartment Complex eligible for any public-subsidy program;
(ix) to execute leases of some or all of the apartment
units of the Apartment Complex to individuals and/or to a public
housing authority and/or to a non-profit corporation,
cooperative or other non-profit Entity;
(x) to employ or engage such engineers, architects,
technicians, accountants, attorneys and other Persons, as may be
necessary, convenient or incidental to the accomplishment of the
purposes of the Partnership; and
(xi) to enter into any kind of activity and to perform
and carry out contracts of any kind which may be lawfully
carried on or performed by a partnership and to file all
certificates and document which may be required under the laws
of the State.
6.2 Restrictions on Authority
(a) Notwithstanding any other Section of this Agreement, the
General Partner shall have no authority to perform any act in
violation of the Act, any other applicable law, Agency or other
government regulations, the requirements of any Lender, or the Project
Documents. In the event of any conflict between the terms of this
Agreement and any applicable Regulations or requirements of any
Lender, the terms of such Regulations or the requirements of such
Lender, as the case may be, shall govern. Subject to the provisions
of Section 6.2(b), the General Partner, acting in its capacity as
General Partner, shall not have the authority, without the Consent of
the Special Limited Partner:
(i) to have unsecured borrowings in excess of Twenty
Thousand Dollars ($20,000.00) in the aggregate at any one time
outstanding, except borrowings constituting Subordinated Loans
or Credit Recovery Loans;
(ii) to borrow from the Partnership or commingle
Partnership funds with the funds of any other Person;
(iii) following the Completion Date, to construct any new
or replacement capital improvements on the Apartment Complex
which substantially alter the character or use of the Apartment
Complex or which cost in excess of Ten Thousand Dollars
($10,000.00) in a single Fiscal Year, except (x) replacements
and remodeling in the ordinary course of business or under
emergency conditions or (y) construction paid for from insurance
proceeds;
(iv) to acquire any real property in addition to the
Apartment Complex;
(v) to increase, decrease or modify the terms of or
refinance any Mortgage Loan;
(vi) to rent apartments in the Apartment Complex such
that the Apartment Complex would not meet the requirements of
the Minimum Set-Aside Test or the Rent Restriction Test;
(vii) to sell, exchange or otherwise convey or transfer
the Apartment Complex or substantially all the assets of the
Partnership;
(viii) to terminate any Material Agreement;
(ix) to cause the Partnership to commence a proceeding
seeking any decree, relief, order or appointment in respect to
the Partnership under the federal bankruptcy laws, as now or
hereafter constituted, or under any other federal or state
bankruptcy, insolvency or similar law, or the appointment of a
receiver, liquidator, assignee, custodian, trustee, sequestrator
(or similar official) for the Partnership or for any other
substantial part of the Partnership's business or property, or
to cause the Partnership to consent to any such decree, relief,
order or appointment initiated by any Person other than the
Partnership;
(x) with the exception of the HAP Contract, to execute
contracts with any Agency, the State or any subdivision or
agency thereof or any other Governmental Authority to make
apartments or tenants in the Apartment Complex eligible for any
public-subsidy program;
(xi) to amend any construction or rehabilitation contract
if such amendment will result in an aggregate change in the
contract price of more than $5,000;
(xii) to pledge or assign any of the Capital Contributions
of the Investment Limited Partner or the proceeds thereof;
(xiii) except as otherwise provided in this
Agreement, to amend any Project Document, or to permit any
party thereunder to waive any provision thereof, to the
extent that the effect of such amendment or waiver would
be to eliminate, diminish or defer any obligation or
undertaking of the Partnership, the General Partner or its
Affiliates which accrues, directly or indirectly, to the
benefit of, or provides additional security or protection
to, the Investment Limited Partner (notwithstanding that
the Investment Limited Partner is neither a party to nor
express beneficiary of such provision or was not a partner
when such provision became effective);
(xiv) to approve any changes to the plans and
specifications for the Apartment Complex which would
result, either individually or in the aggregate, in an
overall development cost increase or decrease in excess of
$50,000;
(xv) to permit the merger, termination or
dissolution of the Partnership; or
(xvi) to do any act required to be approved or ratified by
all limited partners under the Act.
(b) In the event that any General Partner violates any
provision of Section 6.2(a) and such violation continues for ten (10)
days after receipt of written notice from the Special Limited Partner
by the General Partner, the Special Limited Partner in its sole
discretion and without prejudice to its rights under Sections 4.5(b)
and 7.6(a), may cause itself or its designee to be admitted as an
additional General Partner without any further action by any other
Partner. Upon any such admission of an additional General Partner,
each existing General Partner shall be deemed to have assigned
proportionally to the additional General Partner, automatically and
without further action, such portion of its General Partnership
Interest so that the additional General Partner shall receive a one
percent (1%) interest in the Profits, Losses, Tax Credits and
distributions of the Partnership in consideration of one dollar
($1.00) and any other consideration which may be agreed upon. An
additional General Partner so admitted shall automatically become the
Managing General Partner and shall be irrevocably delegated all of the
power and authority of all of the General Partner pursuant to Section
6.13. Each Partner hereby grants to the Special Limited Partner a
special power of attorney, irrevocable to the extent permitted by law
and coupled with an interest, to amend this Agreement and to do
anything else which, in view of the Special Limited Partner, may be
necessary or appropriate to accomplish the purposes of this Section
6.2(b) or to enable any additional General Partner admitted pursuant
to this Section 6.2(b) to manage the business of the Partnership. The
admission of the Special Limited Partner as an additional General
Partner shall not relieve any other General Partner of any of its
economic obligations hereunder in existence at the time of such
admission, and such additional General Partner shall fully indemnify
and hold harmless each other General Partner from and against any and
all Adverse Consequences sustained by any such other General Partner
as a result of the action of the additional General Partner in
connection with its status as a General Partner (other than Adverse
Consequences arising solely from the gross negligence or wilful
misconduct of such other General Partner).
(c) Neither the Investment General Partner nor any Affiliate
thereof shall be given an exclusive right to sell, or exclusive
employment to sell, the Apartment Complex.
6.3 Personal Services; Other Business Ventures
No General Partner or Affiliate thereof shall receive any salary
or other direct or indirect compensation for any services or goods
provided in connection with the Partnership or the Apartment Complex,
except as may be specifically provided in Section 6.12, Section 6.15
and Article XI or as to which the reasonable Consent of the Special
Limited Partner shall have been obtained to the precise terms thereof
prior to the commencement of such services or the provision of such
goods. Any Partner may engage independently or with others in other
business ventures of every nature and description, including the
ownership, operation, management, syndication and development of real
estate; neither the Partnership nor any other Partner shall have any
rights in and to such independent ventures or the income or profits
derived therefrom.
6.4 Business Management and Control
(a) Subject to the provisions of this Agreement, the General
Partner shall have the exclusive right to control the business of the
Partnership. If at any time there is more than one General Partner,
the powers and duties of the General Partners hereunder shall be
exercised in the first instance by a Managing General Partner who,
subject to the terms and provisions of this Agreement, shall manage
the business and affairs of the Partnership. The Managing General
Partner may bind the Partnership by executing and delivering, in the
name and on behalf of the Partnership, any documents which this
Agreement authorizes the General Partners to execute hereunder without
the requirement that any other General Partner execute such documents.
The initial Managing General Partner shall be HALLC; if it is
unwilling or unable to serve in such capacity or shall cease to be a
General Partner, the remaining General Partners may from time to time
designate a new Managing General Partner. If for any reason no
designation is in effect, the powers of the Managing General Partner
shall be exercised by a majority in interest of the General Partners.
Any action required or permitted to be taken by a corporate General
Partner hereunder may be taken by such of its proper officers or
agents as it shall validly designate for such purpose.
(b) The Managing General Partner shall have control over the
business of the Partnership and shall have all rights, powers and
authority conferred by law as necessary, advisable or consistent in
connection therewith. Without limiting the generality of the
foregoing, the Managing General Partner shall have the right, power
and authority to execute any documents relating to the acquisition,
financing, rehabilitation, operation and sale of all or any portion of
the Apartment Complex with the prior approval of the other General
Partners, if any. The Managing General Partner shall be responsible
for administering any construction loan draw requests for the
development of the Apartment Complex.
(c) Neither the Investment Limited Partner nor the Special
Limited Partner shall have any right to take part in the management or
control of the business of the Partnership or to transact any business
in the name of the partnership. No provision of this Agreement which
makes the Consent of the Investment Limited Partner or the Consent of
the Special Limited Partner a condition for the effectiveness of an
action taken by the General Partner is intended, and no such
provisions shall be construed, to give the Investment Limited Partner
or the Special Limited Partner, as the case may be, any participation
in the control of the Partnership business. Each of the Special
Limited Partner and the Investment Limited Partner hereby consents to
the exercise by the General Partner of the powers conferred on it by
law and this Agreement, and the General Partner agrees to exercise
control of the business of the Partnership only in accordance with the
provisions of this Agreement. Notwithstanding the foregoing, in no
event may the provisions of this Section 6.4 be invoked by any General
Partner or by any other Person as a defense against or as an
impediment to the ability of either the Investment Limited Partner or
the Special Limited Partner to take any action hereunder.
6.5 Duties and Obligations
(a) The General Partner shall manage the affairs of the
Partnership to the best of its ability, shall use its diligent and
good faith efforts to carry out the purpose of the Partnership, and
shall devote to the Partnership such time as may be necessary for the
proper performance of its duties and the business of the Partnership.
The General Partner shall promptly take all action which may be
necessary or appropriate for the proper development, construction,
maintenance and operation of the Apartment Complex in accordance with
the provisions of this Agreement, the Project Documents and any
applicable laws and Regulations, including the Act. The General
Partner is responsible for the management and operation of the
Partnership, including the oversight of the rent-up and operational
stages of the Apartment Complex. At a minimum, the General Partner
shall be responsible for and shall cause the Apartment Complex to be
operated in accordance with the HAP Contract and the standards for HUD
projects as set forth in 24 CFR, Part 290.10 and any rules and orders
issued thereunder.
(b) Subject to the provisions of Section 6.5(g), the General
Partner shall use its diligent good faith efforts to cause the
Partnership to generate Cash Flow for distribution to the Partners at
the maximum realizable level in view of (i) any applicable
Regulations, (ii) the Minimum Set-Aside Test, (iii) the Rent
Restriction Test, (iv) the Projected Rents, (v) the HAP Contract and
(vi) reasonably necessary capital needs of the Apartment Complex, and,
if necessary, the General Partner also shall use its diligent good
faith efforts to obtain approvals and implementation of appropriate
adjustments in the rental schedule of the Apartment Complex.
(c) The General Partner shall cause the Partnership to obtain
and keep in force, during the term of the Partnership, insurance
policies in accordance with the Insurance Requirements set forth on
Exhibit C hereto. Throughout the term of the Partnership, the General
Partner shall provide copies of all such policies (or binders) to the
Investment Limited Partner within thirty (30) days after their receipt
thereof. The General Partner shall cause the applicable insurer to
name the Investment Limited Partner as an "additional insured" on each
Partnership insurance policy. Each Partnership insurance policy shall
include a provision requiring the insurance company to notify the
Investment Limited Partner in writing no less than thirty (30) days
prior to any cancellation, non-renewal or material change in the terms
and conditions of coverage. The General Partner shall review
regularly all of the Partnership and Apartment Complex insurance
coverage to insure that it is adequate and continuing. In particular,
the General Partner shall review at least annually the insurance
coverage required by this Section 6.5(c) to insure that it is in an
amount at least equal to the then current full replacement value of
the Apartment Complex.
Without limitation of the foregoing, the General Partner shall
deliver to the Investment Limited Partner on or before the Admission
Date one or more certificates or memoranda of insurance, in form
reasonably acceptable to the Investment Limited Partner, evidencing,
(i) the existence of the insurance policies and coverages specified on
Exhibit C, (ii) that the Partnership and its Partners (including the
Investment Limited Partner) are named insured on such policies, and
(iii) that such insurance policies will not be cancelled by the
insurers except within thirty (30) days' written notice to the
Investment Limited Partner. From time to time following the Admission
Date, the General Partner shall deliver to the Investment Limited
Partner such further certificates or memoranda of insurance as the
Investment Limited Partner may reasonably require to confirm that such
insurance and notice provisions with respect to insurance under this
Agreement have been complied with.
(d) If at any time there is more than one General Partner, the
obligations of the General Partners hereunder shall be the joint and
several obligations of each General Partner. Except as otherwise
provided in Sections 4.5(b) and 7.1, such obligations shall survive
any Withdrawal of a General Partner from the Partnership.
(e) (i) The General Partner shall establish and maintain
reasonable reserves (the "Replacement Reserve") to provide for working
capital needs, improvements, replacements and any other contingencies
of the Partnership. At a minimum, on the Admission Date, the General
Partner shall cause the Partnership to deposit $104,400 into the
Replacement Reserve and further fund such Replacement Reserve with
monthly deposits from Cash Flow in the amount of $8,700; provided
that, to the extent that Cash Flow (as determined before deduction of
such reserve deposit and prior to any distributions of Cash Flow are
made to the Partners) for any Fiscal Year shall be insufficient to
make such deposit in full, the General Partner shall fund such
shortfall from its own funds as a Subordinated Loan.
(ii) In addition to the requirements of Section
6.5(e)(i), the General Partner shall cause to be deposited on the
Admission Date in a separate reserve account (the "Rehabilitation
Reserve") the amount of $639,000 out of Specified Proceeds. Funds
shall be released from the Rehabilitation Reserve to pay expenditures
incurred to complete the Additional Rehabilitation Work in accordance
with the procedures therefor set forth in the Bond Documents and with
the prior reasonable approval of the Special Limited Partner,
provided, however, such approval shall be deemed to have been granted
if the Special Limited Partner shall not have disapproved such release
of funds within 5 days after the General Partner provides the Special
Limited Partner with copies of the documents required by this
subsection (ii). The General Partner shall cause to be delivered to
the Special Limited Partner a copy of all documentation and
information delivered to the Trustee pursuant to the Bond Documents in
connection with the Additional Rehabilitation Work. Until such
materials are so received, the Special Limited Partner shall have no
obligation to deliver its approval under this subsection (ii).
(f) Each General Partner shall be bound by the provisions of
the Project Documents, and no additional General Partner (including,
without limitation, the Special Limited Partner if it becomes an
additional General Partner) shall be admitted if he, she or it has not
first agreed to be bound by this Agreement (and assume the obligations
of a General Partner hereunder) and by the Project Documents to the
same extent and under the same terms as each of the other General
Partners.
(g) The General Partner shall take all actions reasonably
appropriate to ensure that the Investment Limited Partner receives the
full amount of the Projected Credit, including, without limitation,
the rental of apartments to appropriate tenants and the filing of
annual certifications as may be required. In this regard, the General
Partner shall, inter alia, cause (i) the Partnership to satisfy the
Minimum Set-Aside Test, the Rent Restriction Test and all other
requirements imposed from time to time under the Code with respect to
rental levels and occupancy by qualified tenants by the close of the
first year of the Credit Period and throughout the Compliance Period
so as to permit the Partnership to be entitled to the maximum
available Tax Credit (ii) the Partnership to comply with all State Tax
Credit monitoring procedures, (iii) all dwelling units in the
Apartment Complex to be leased for initial periods of not less than
six months to individuals satisfying the Rent Restriction Test, (iv)
the Partnership to make all appropriate Tax Credit elections in a
timely fashion, and (v) all rental units in the Apartment Complex to
be of equal quality with comparable amenities available to low-income
tenants on a comparable basis without separate fees in accordance with
Section 42 of the Code.
(h) [Intentionally omitted]
(i) The General Partner shall (i) not store or dispose of
(except in compliance with all laws, ordinances, and regulations
pertaining thereto) any Hazardous Material at the Apartment Complex,
or at or on any other Site or Vessel owned, occupied, or operated
either by any General Partner, any Affiliate of a General Partner, or
any Person for whose conduct any General Partner is or was
responsible; (ii) neither directly nor indirectly transport or arrange
for the transport of any Hazardous Material (except in compliance with
all laws, ordinances, and regulations pertaining thereto); (iii)
provide the Investment Limited Partner with written notice (x) upon
any General Partner's obtaining knowledge of any potential or known
release, or threat of release, of any Hazardous Material at or from
the Apartment Complex or any other Site or Vessel owned, occupied, or
operated by any General Partner, any Affiliate of a General Partner or
any Person for whose conduct any General Partner is or was responsible
or whose liability may result in a lien on the Apartment Complex; (y)
upon any General Partner's receipt of any notice to such effect from
any federal, state, or other Governmental Authority; and (z) upon any
General Partner's obtaining knowledge of any incurrence of any expense
or loss by any such government authority in connection with the
assessment, containment, or removal of any Hazardous Material for
which expense or loss any General Partner may be liable or for which
expense or loss a lien may be imposed on the Apartment Complex.
(j) The General Partner shall promptly request in writing of
the Permanent Lender that the Permanent Lender cause the Special
Limited Partner to be named as an "interested party" in the Permanent
Mortgage Loan Documents, so that the Permanent Lender will notify the
Special Limited Partner of any default under the Permanent Mortgage or
the General Partner shall itself notify the Special Limited Partner of
any such default.
(k) The General Partner shall provide the Special Limited
Partner with a true and accurate copy of each project requisition and
any supporting documents and information which has been submitted in
connection with the Additional Rehabilitation Work (whether submitted
before or after the Admission Date).
(l) The General Partner shall have a fiduciary responsibility
for the safekeeping and use of all funds and assets of the
Partnership, whether or not in its immediate possession or control.
The General Partner shall not employ, or permit another to employ,
such funds or assets in any manner except for the exclusive benefit of
the Partnership. No General Partner shall contract away the fiduciary
duty owed at common law to the Limited Partners.
(m) The General Partner shall at all times cause the
Partnership to complete and satisfy the Capital Needs Requirements in
a timely manner as set forth in Exhibit C.
6.6 Representations and Warranties
The General Partner represents and warrants to the Investment
Limited Partner and the Special Limited Partner as follows:
(a) The Partnership is a duly organized limited partnership
validly existing and in good standing under the laws of the State and
has complied with all filing requirements necessary for its existence
and to preserve the limited liability of the Investment Limited
Partner.
(b) No event or proceeding has occurred or is pending or, is
to the Best Knowledge of the General Partner, threatened which would
(i) materially adversely affect the Partnership or its properties, or
(ii) materially adversely affect the ability of the General Partner or
any of its Affiliates to perform their respective obligations
hereunder or under any other agreement with respect to the Apartment
Complex, other than legal proceedings which have been bonded against
without recourse to Partnership assets in such manner as to stay the
effect of the proceedings or otherwise have been adequately provided
for. This subparagraph shall be deemed to include, without
limitation, the following: (x) legal actions or proceedings before
any court, commission, administrative body or other Governmental
Authority having jurisdiction over the zoning applicable to the
Apartment Complex; (y) labor disputes; and (z) acts of any
Governmental Authority.
(c) No default (or event which, with the giving of notice or
the passage of time or both, would constitute a default), except as
disclosed in writing to the Special Limited Partner, has occurred and
is continuing under this Agreement or under any material provision of
the Project Documents, and the Project Documents are in full force and
effect.
(d) Except as specifically permitted under Section 3.1, no
Partner or Related Person bears (or will bear) the Economic Risk of
Loss with respect to the Permanent Mortgage Loan. No General Partner
has, either on its own behalf or on behalf of the Partnership,
incurred any financial obligation with respect to the Partnership
prior to the Admission Date, other than as disclosed in writing to the
Special Limited Partner prior to the Admission Date.
(e) The Apartment Complex will be, is being or has been
constructed in a timely manner in conformity with the Project
Documents. There is no violation by the Partnership or the General
Partner of any zoning, environmental or similar regulation applicable
to the Apartment Complex which could have a material adverse effect
thereon, and the Partnership has to the General Partner's Best
Knowledge complied and will comply with all applicable municipal and
other laws, ordinances and regulations relating to such construction
and use of the Apartment Complex. All appropriate public utilities,
including, but not limited to, water, electricity, gas (if
applicable), and sanitary and storm sewers, are or will be available
and operating properly for each unit in the Apartment Complex at the
time of the initial occupancy of such unit.
(f) The Partnership owns good and marketable fee simple title
to the Apartment Complex, subject to no material liens, charges or
encumbrances other than those which (i) are both permitted by the
Project Documents and are noted or excepted in the Title Policy, (ii)
do not materially interfere with use of the Apartment Complex (or any
part thereof) for its intended purpose or, other than the permitted
Mortgages, have a material adverse effect on the value of the
Apartment Complex, or (iii) have been bonded or insured against in
such a manner as to preclude the holder of such lien or such surety or
insurer from having any recourse to the Apartment Complex or the
Partnership for payment of any debt secured thereby, which bond(s) or
insurance have been approved by the Lenders.
(g) The execution and delivery of all instruments and the
performance of all acts heretofore or hereafter made or taken
pertaining to the Partnership or the Apartment Complex by each
Affiliate of a General Partner which is a corporation or limited
liability company have been or will be duly authorized by all
necessary corporate or other actions, and the consummation of any such
transactions with or on behalf of the Partnership will not constitute
a breach or violation of, or a default under, the charter or by-laws
of such Affiliate or any agreement by which such Affiliate or any of
its properties is bound, nor constitute a violation of any law,
administrative regulation or court decree.
(h) Any General Partner (or partner or member of a General
Partner) which is a corporation or limited liability company (a
"Corporation/LLC") has been duly organized, is validly existing and in
good standing under the laws of its state of organization and has all
requisite corporate and other power to be a General Partner and to
perform its duties and obligations as contemplated by this Agreement
and the Project Documents. Neither the execution and delivery by any
Corporation/LLC of this Agreement nor the performance of any of the
actions of any Corporation/LLC contemplated hereby has constituted or
will constitute a violation of (a) the articles of incorporation,
operating agreement, by-laws and any other organizational documents of
such Corporation/LLC, (b) any agreement by which such Corporation/LLC
is bound or to which any of its property or assets is subject, or (c)
any law, administrative regulation or court decree.
(i) No Event of Bankruptcy has occurred with respect to the
Partnership, any General Partner or the Developer.
(j) All accounts of the Partnership required to be maintained
under the terms of the Project Documents, including, but not
necessarily limited to, any account for replacement reserves, are
currently funded to the levels required by any Agency or Lender.
(k) The General Partner has and will continue to have a net
worth of not less than the maximum amount of Subordinated Loans
required to be made by the General Partner pursuant to Section 6.10;
provided, however, that after the end of the Subordinated Loan Period,
the General Partner shall maintain a net worth of not less than
$250,000 at all times. For the purposes of computing the General
Partner's net worth under this subsection only, any amounts advanced
to the General Partner under a demand promissory note from the
Guarantors and subsequently expended by the General Partner to satisfy
its obligations hereunder shall be deemed not to reduce the net worth
of the General Partner.
(l) All anticipated payments and expenses required to be made
or incurred in order to complete the rehabilitation of the Apartment
Complex in conformity with the Project Documents, to fund any reserves
hereunder or under any other Project Document required to be funded at
or prior to the later of the Admission Date or Permanent Mortgage
Commencement, to satisfy all requirements under the Project Documents
and to pay the Development Fee and all other fees, have been or will
be paid or provided for utilizing only (i) the Capital Contributions
of the Investment Limited Partner, (ii) the Capital Contributions of
the General Partner in the amounts set forth on Schedule A as of the
Admission Date, (iii) 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 any Agency
or Lender), (iv) any Cash Flow generated subsequent to Permanent
Mortgage Commencement (to the extent provided in Section 10.2(a)),
(v) any insurance proceeds, (vi) any funds furnished by the General
Partner pursuant to Sections 6.5(e) and 6.11(a) and (vii) available
proceeds of the Permanent Loan.
(m) The aggregate amount of Tax Credit which is expected to be
allocated by the Partnership to the Investment Limited Partner is
$147,869 per annum for each of the years 1997 through 2006
(inclusive), provided, however, that the General Partner shall have no
liability to the Investment Limited Partner or the Special Limited
Partner for any breach of the representation contained in this
paragraph (m) if (but only to the extent that) the adjuster provisions
set forth in Sections 5.1(e), (f) and (g) have become operative and
all required payments or adjustments have been made thereunder in
accordance with the terms thereof.
(n) The Apartment Complex will be, is being or has been
rehabilitated and operated in a manner which satisfies Section 42 of
the Code and shall continue to satisfy all existing and anticipated
restrictions applicable to projects generating Tax Credits.
(o) To the Best Knowledge of the General Partner, no General
Partner, Affiliate of a General Partner or Person for whose conduct
any General Partner is or was responsible has ever: (i) owned,
occupied, or operated a Site or Vessel on which any Hazardous Material
was or is stored, transported, or disposed of, except if such storage,
transport or disposition was and is at all times in compliance with
all laws, ordinances, and regulations pertaining thereto; (ii)
directly or indirectly transported, or arranged for transport, of any
Hazardous Material (except if such transport was and is at all times
in compliance with all laws, ordinances and regulations pertaining
thereto); (iii) caused or was legally responsible for any release or
threat of release of any Hazardous Material; (iv) received
notification from any federal, state or other Governmental Authority
of (x) any potential, known, or threat of release of any Hazardous
Material from the Apartment Complex or any other Site or Vessel owned,
occupied, or operated by any General Partner, by any Affiliate of a
General Partner, or by any Person for whose conduct any General
Partner is or was responsible or whose liability may result in a lien
on the Apartment Complex; or (y) the incurrence of any expense or loss
by any such Governmental Authority or by any other Person in
connection with the assessment, containment, or removal of any release
or threat of release of any Hazardous Material from the Apartment
Complex or any such Site or Vessel.
(p) To the Best Knowledge of the General Partner, no Hazardous
Material was ever or is now stored on, transported, or disposed of on
the land comprising the Apartment Complex, except to the extent any
such storage, transport or disposition was at all times in compliance
with all laws, ordinances, and regulations pertaining thereto.
(q) The General Partner has fulfilled and will continue to
fulfill all of its duties and obligations under Section 6.5.
(r) Certifications have been obtained or will be obtained in a
timely fashion from the Credit Agency and the issuer of the Bonds, to
the extent required in accordance with Code Sections 42(m)(1)(D) and
42(m)(2)(D), which confirm their determinations that (i) the Apartment
Complex satisfied the requirements for allocation of Tax Credits under
the qualified allocation plan applicable to the area in which the
Apartment Complex is located, and (ii) the Tax Credits to be claimed
with respect to the Apartment Complex do not exceed the amount
necessary for the financial feasibility of the Apartment Complex and
its viability as a qualified low-income housing project throughout the
Compliance Period.
(s) At least 50% of the aggregate basis of the Apartment
Complex has been or will be financed by the proceeds of bonds (i) the
interest from which is exempt from federal income taxation under
Section 103 of the Code, (ii) which are taken into account under
Section 146 of the Code and (iii) which will be redeemed within a
reasonable period using principal payments on the loans provided from
the proceeds of the issuance of the bonds.
6.7 Liability on Mortgages
Neither any General Partner nor any Related Person shall at any
time bear the Economic Risk of Loss for the payment of any portion of
any Mortgage Loan, and the General Partner shall not permit any other
Partner or any Related Person to bear the Economic Risk of Loss for
the payment of any portion of any Mortgage Loan, except as may be
expressly permitted pursuant to the provisions of Article III with the
Consent of the Special Limited Partner.
6.8 Indemnification of the General Partner
(a) Except as provided by Sections 5.1(e), (f) and (g) and
5.2, no General Partner or any Affiliate thereof shall have liability
to the Partnership or to any Limited Partner for any loss suffered by
the Partnership which arises out of any action or inaction of any
General Partner or Affiliate thereof if such General Partner or
Affiliate thereof in good faith determined that such course of conduct
was in the best interest of the Partnership and such course of conduct
did not constitute gross negligence or willful misconduct of such
General Partner or Affiliate thereof.
(b) A General Partner or any Affiliate thereof shall be
indemnified by the Partnership from and against any Adverse
Consequences sustained in connection with the business and operations
of the Partnership, provided that all of the following conditions are
met: (i) such General Partner has determined, in good faith, that the
course of conduct which caused the loss, judgment, liability, expense
or amount paid in settlement was in the best interests of the
Partnership; and (ii) such Adverse Consequences were not the result of
gross negligence or willful misconduct on the part of such General
Partner or Affiliate thereof; and (iii) such indemnification or
agreement to hold harmless is recoverable only out of the assets of
the Partnership and distributions thereof, and not from the Limited
Partners.
(c) Notwithstanding the above, no Partner or any Affiliate
thereof performing services for the Partnership or any broker-dealer
shall be indemnified for any Adverse Consequences arising from or out
of an alleged violation of federal or state securities laws unless
there has been a successful adjudication on the merits of each count
involving securities laws violations as to the particular indemnitee
and the court finds that indemnification of the settlement and related
costs should be made. In any claim for indemnification for federal or
state securities law violations, the party seeking indemnification
shall, prior to seeking court approval for such indemnification, place
before the court the positions of the Securities and Exchange
Commission, the Massachusetts Securities Division and any other
applicable state securities administrator with respect to the issue of
indemnification for securities law violations.
(d) The Partnership shall not incur the cost of the portion of
any insurance, other than public liability insurance or course of
construction insurance, which insures any party against any liability
as to which such party is herein prohibited from being indemnified.
(e) The Partnership may indemnify Affiliates of a General
Partner under this Section 6.8 only if the loss involves an activity
in which such Affiliates acted in the capacity of a General Partner.
(f) For purposes of this Section 6.8 only, the term
"Affiliate" shall mean 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 percent (10%) or more of the outstanding voting
securities of a General Partner; (iii) is an officer, director,
partner, member, manager or trustee of a General Partner; or (iv) if a
General Partner is an officer, director, partner or trustee, in any
company for which such General Partner acts in any such capacity. For
purposes of this Section 6.8 only, the term "controls" and any form of
such term shall mean the power to direct the management and policies
of a Person, directly or indirectly, whether through ownership of
voting securities, by contract or otherwise.
6.9 Indemnification of the Partnership and the Limited
Partners
(a) The General Partner will indemnify and hold the
Partnership and the Limited Partners harmless from and against any and
all Adverse Consequences which the Partnership or any Limited Partner
may incur by reason of (i) the past, present or future actions or
omissions of the General Partner or any of its Affiliates constituting
gross negligence or willful misconduct, or (ii) any liabilities to
which either the Partnership or the Apartment Complex is subject other
than (x) any Mortgage Loan Documents or (y) any payables or necessary
contractual obligations incurred pursuant to the requirements of any
Agency or Lender in connection with the operation of the Apartment
Complex in the ordinary course of business.
(b) Notwithstanding the foregoing, no General Partner shall be
liable to a Limited Partner or the Partnership for any act or omission
for which the Partnership is required to indemnify such General
Partner under Section 6.8, except as provided by Sections 5.1(e), (f)
and (g) and 5.2.
(c) The General Partner shall indemnify, defend, and hold the
Limited Partners harmless from and against any Adverse Consequences
related to or arising out of the presence of any Hazardous Material at
the Apartment Complex (other than any Adverse Consequences resulting
from the acts or omissions of the Limited Partners or those arising
out of items expressly disclosed in the Phase I Environmental Reports
and not otherwise expressly required by this Agreement to be abated or
remediated). Any claim or loss described in the immediately preceding
sentence may be defended, compromised, settled, or pursued by the
Limited Partners with counsel of the Limited Partners' selection, but
at the expense of the General Partner. Notwithstanding anything else
set forth herein, this indemnification shall survive the withdrawal of
any General Partner and/or the termination of this Agreement.
6.10 Operating Deficits
Subject to any Requisite Approvals, the General Partner shall be
obligated during the Subordinated Loan Period, to promptly advance
funds to eliminate any Operating Deficit, provided however, that the
balance of such Subordinated Loans shall not be required to exceed
$550,000 at any time prior to the first anniversary of Rental
Achievement, $500,000 at any time between the first and second
anniversaries of Rental Achievement, $450,000 at any time between the
second and third anniversaries of Rental Achievement, $400,000 at any
time between the third and fourth anniversaries of Rental Achievement,
$350,000 at any time between the fourth anniversary of Rental
Achievement and the end of the Subordinated Loan Period and $150,000
at any time thereafter. In the event that the General Partner shall
fail to make any such advance as aforesaid, (a) the Partnership shall
utilize amounts (the "Applied Amounts") otherwise payable to the
General Partner or its Affiliates under Section 6.12 and/or Article X
to meet the obligations of the General Partner pursuant to this
Section 6.10, with such utilization of Applied Amounts constituting
payment and satisfaction of the corresponding amounts payable to the
General Partner or its Affiliates under Section 6.12 and/or Article X,
with the proceeds thereof being applied to such obligations, and with
the obligation of the Partnership to make such payments to the General
Partner or its Affiliates pursuant to Section 6.12 and/or Article X
being deemed to have been satisfied to the extent thereof and (b) the
Special Limited Partner shall have the option, exercisable in its sole
discretion, to cause it or one or more of its designees to be admitted
to the Partnership as additional General Partner(s). An additional
General Partner so admitted shall automatically, without the need for
any further action by any Partner, become the Managing General Partner
and shall be delegated all of the powers and authority of all of the
General Partners pursuant to Section 6.13, and each Partner hereby
grants to any such additional General Partner a power of attorney,
coupled with an interest and irrevocable to the extent permitted by
law, to execute and deliver any and all instruments and documents
which it believes to be necessary or appropriate in order to
accomplish the purposes of this Section 6.10 and to manage the
business of the Partnership. The admission of an additional General
Partner shall not relieve any other General Partner of any of its
economic obligations hereunder, and each other General Partner shall
indemnify and hold harmless the additional General Partner from and
against any and all Adverse Consequences sustained after such
additional General Partner's admission to the Partnership in
connection with the additional General Partner's status as a General
Partner (other than Adverse Consequences arising solely out of the
negligence or misconduct of such additional General Partner). For the
purpose of this Section 6.10, all expenses shall be paid on a sixty
(60)-day current basis. Moreover, the General Partner may in its sole
discretion at any time advance funds to the Partnership to pay
operating expenses and/or debt service of the Partnership in order to
facilitate the Partnership's compliance with the Rent Restriction
Test. All advances pursuant to Section 6.5(e)(i) and this Section
6.10 (including any Applied Amounts) shall constitute non-interest-
bearing Subordinated Loans. Subordinated Loans shall be repaid in
accordance with the provisions of Article X. The form and provisions
of all Subordinated Loans shall conform to any applicable Regulations.
6.11 Obligation to Complete the Rehabilitation of the Apartment
Complex
(a) The Developer shall be obligated to complete the
Additional Rehabilitation Work and achieve Permanent Mortgage
Commencement and Rental Achievement in the manner set forth in this
Agreement and the Development Agreement.
(b) The completion of the Additional Rehabilitation Work shall
be secured by the Guaranty.
6.12 Certain Payments to the General Partner and Others
(a) As reimbursement for certain advances and as compensation
for the Developer's services in connection with the development and
rehabilitation of the Apartment Complex, the Partnership shall pay to
the Developer a development fee (the "Development Fee") in the amount
and at the times set forth in the Development Agreement; provided,
however, subject to the terms of the Bond Documents, the Development
Fee shall be paid by the Partnership prior to the payment of all
financing, brokerage and other fees owed by the Partnership to the
General Partner, its members or any of such parties' Affiliates upon
Permanent Mortgage Commencement and any limited dividend accrual or
other soft costs payable to the General Partner, its members or any of
such parties' Affiliates in respect of any Partnership financing,
except as approved in advance by the Special Limited Partner, and
further provided that all expenses being included in basis shall be
paid prior to those not so included. If the Development Fee has not
been fully paid by the tenth (10th) anniversary of the Completion
Date, the General Partner shall make a Capital Contribution to the
Partnership in an amount sufficient to enable the Partnership to pay
any unpaid portion of the Development Fee.
(b) The Partnership shall pay to the Special Limited Partner
or an Affiliate thereof a fee (the "Asset Management Fee") commencing
in 1997 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 $10,000. The Asset
Management Fee shall be payable from Cash Flow in the manner and
priority set forth in Section 10.2(a); provided however, that if in
any Fiscal Year, Cash Flow is insufficient to pay the full amount of
the Asset Management Fee, the General Partner shall advance the amount
of such deficiency to the Partnership as a Subordinated Loan. If for
any reason the Asset Management Fee still is not fully paid in any
Fiscal Year, the unpaid portion thereof shall accrue and be payable on
a cumulative basis in the first Fiscal Year in which there is
sufficient Cash Flow or Capital Proceeds as provided in Article X.
(c) In consideration of the services of the General Partner in
managing the day-to-day business and affairs of the Partnership, the
Partnership shall pay to the General Partner an annual fee (the
"Partnership Management Fee") commencing in 1997 in the amount of
$75,000, payable from Cash Flow in the manner and priority set forth
in Section 10.2(a). The Partnership Management Fee shall be
noncumulative so that if there is not sufficient Cash Flow in any
Fiscal Year to pay the amount of the Partnership Management Fee
specified in Section 10.2(a), the Partnership shall have no obligation
to pay such shortfall in any future Fiscal Year.
6.13 Delegation of General Partner Authority
(a) If there shall be more than one General Partner serving
hereunder, each General Partner may from time to time, by an
instrument in writing, delegate all or any of his powers or duties
hereunder to another General Partner or General Partners.
(b) Each contract, deed, mortgage, lease and other instrument
executed by any General Partner shall be conclusive evidence in favor
of every Person relying thereon or claiming thereunder that at the
time of the delivery thereof (i) the Partnership was in existence,
(ii) this Agreement had not been amended in any manner so as to
restrict the delegation of authority among General Partners (except as
shown in certificates or other instruments duly filed in the Filing
Office) and (iii) the execution and delivery of such instrument was
duly authorized by the General Partners. Any Person may always rely
on a certificate addressed to him and signed by any General Partner
hereunder:
(1) as to who are the General Partners or Limited
Partners hereunder;
(2) as to the existence or nonexistence of any fact
which constitutes a condition precedent to acts by the General
Partners or in any other manner germane to the affairs of the
Partnership;
(3) as to who is authorized to execute and deliver any
instrument or document of the Partnership;
(4) as to the authenticity of any copy of this Agreement
and any amendments thereto; or
(5) as to any act or failure to act by the Partnership
or as to any other matter whatsoever involving the Partnership
or any Partner.
6.14 Assignment to Partnership
The Developer and the General Partner hereby transfer and assign
to the Partnership all of their right, title and interest in and to
the Apartment Complex and in and to all of the Project Documents,
including, but not limited to, the following: (i) all contracts with
architects, supervising architects, engineers and contractors with
respect to the development of the Apartment Complex; (ii) all plans,
specifications and working drawings heretofore prepared or obtained in
connection with the Apartment Complex; (iii) all governmental
commitments and approvals obtained, and applications therefore,
including, but not limited to those relating to planning, zoning,
building permits and Tax Credits; (iv) any and all commitments with
respect to any Mortgage(s); and (v) any and all contracts or rights
with respect to any agreements with any Agency or Lender.
6.15 Contracts with Affiliates
(a) The General Partner or any Affiliate thereof may act as
Management Agent upon the terms and conditions set forth in Article
XI.
(b) The General Partner or any Affiliates thereof shall have
the right to contract or otherwise deal with the Partnership for the
sale of goods or services to the Partnership in addition to those set
forth herein, if (i) compensation paid or promised for such goods or
services is reasonable (i.e., at fair market value) and is paid only
for goods or services actually furnished to the Partnership, (ii) the
goods or services to be furnished shall be reasonable for and
necessary to the Partnership, (iii) the fees, terms and conditions of
such transaction are at least as favorable to the Partnership as would
be obtainable in an arm's-length transaction, and (iv) no agent,
attorney, accountant or other independent consultant or contractor who
also is employed on a full-time basis by the General Partner or any
Affiliate shall be compensated by the Partnership for his services.
Any contract except the Management Agreement covering such
transactions shall be in writing and shall be terminable without
penalty on sixty (60) days written notice. Any payment made to the
General Partner or any Affiliate for such goods or services shall be
fully disclosed to all Limited Partners in the reports required under
Article XII. Neither the General Partner nor any Affiliate shall, by
the making of lump-sum payments to any other Person for disbursement
by such other Person, circumvent the provisions of this Section
6.15(b).
6.16 Tax Matters Partner
(a) The General Partner hereby is designated as Tax Matters
Partner of the Partnership, and shall engage in such undertakings as
are required of the Tax Matters Partner of the Partnership as provided
in treasury regulations pursuant to Section 6231 of the Code. Each
Partner, by the execution of this Agreement, consents to such
designation of the Tax Matters Partner and agrees to execute, certify,
acknowledge, deliver, swear to, file and record at the appropriate
public offices such documents as may be necessary or appropriate to
evidence such consent.
(b) The Tax Matters Partner hereby is authorized, but not
required:
(i) to enter into any settlement agreement with the
Service with respect to any tax audit or judicial review, in
which agreement the Tax Matters Partner may expressly state that
such agreement shall bind the other Partners, except that such
settlement agreement shall not bind any Partner who (within the
time prescribed pursuant to the Code and treasury regulations
thereunder) files a statement with the Service providing that
the Tax Matters Partner shall not have the authority to enter
into a settlement agreement on the behalf of such Partner;
(ii) in the event that a notice of final administrative
adjustment at the Partnership level of any item required to be
taken into account by a Partner for tax purposes (a "Final
Adjustment") is mailed to the Tax Matters Partner, to seek
judicial review of such Final Adjustment, including the filing
of a petition for readjustment with the Tax Court, the District
Court of the United States for the district in which the
Partnership's principal place of business is located, or the
United States Claims Court;
(iii) to intervene in any action brought by any other
Partner for judicial review of a Final Adjustment;
(iv) to file a request for an administrative adjustment
with the Service at any time and, if any part of such request is
not allowed by the Service, to file an appropriate pleading
(petition or complaint) for judicial review with respect to such
request;
(v) to enter into an agreement with the Service to
extend the period for assessing any tax which is attributable to
any item required to be taken into account by a Partner for tax
purposes, or an item effected by such item; and
(vi) to take any other action on behalf of the Partners
or the Partnership in connection with any administrative or
judicial tax proceeding to the extent permitted by applicable
law or Regulations.
(c) The Partnership shall indemnify and reimburse the Tax
Matters Partner for all expenses, including legal and accounting fees,
claims, liabilities, losses and damages incurred in connection with
any administrative or judicial proceeding with respect to the tax
liability of the Partners. The payment of all such expenses shall be
made before any distributions are made from Cash Flow or any
discretionary reserves are set aside by the General Partner. The
General Partner shall have the obligation to provide Partnership funds
for such purpose, but only to the extent of available Partnership
resources. The taking of any action and the incurring of any expense
by the Tax Matters Partner in connection with any such proceeding,
except to the extent required by law, is a matter in the sole
discretion of the Tax Matters Partner and the provisions on
limitations of liability of the General Partner and indemnification
set forth in Section 6.8 of this Agreement shall be fully applicable
to the Tax Matters Partner in its capacity as such.
6.17 Final Closing of the Bonds
The General Partner, acting singly, in the name of and on behalf
of the Partnership, is hereby authorized, empowered and instructed, in
furtherance of the purposes of the Partnership, to undertake the
following actions:
(i) The General Partner is hereby authorized and
instructed to take all actions necessary and appropriate
to enable the Partnership to consummate a final closing in
connection with the issuance, remarketing and/or
reissuance of the Bonds;
(ii) The General Partner is specifically
authorized, empowered and instructed on behalf of the
Partnership to enter into, execute, acknowledge, amend
and/or deliver, without limitation, the following
documents in connection with the issuance, remarketing
and/or reissuance of the Bonds: (a) the Permanent Loan
Agreement; (b) the Indenture; (c) Tax Representation
Certificates of Borrower; (d) General Certificate of
Borrower; (e) Land Use Restriction Agreement, and any
amendments thereto; (f) Assignment of Management
Agreement; (g) Assignment of Housing Assistance Payments
Contract; (h) Bond Purchase Agreement and Amended Bond
Purchase Agreement; (i) Investment Agreement;
(j) Certificate of Issuer re: Arbitrage; (j) Continuing
Disclosure Agreement; (i) Affidavit of Title;
(l) Disbursement Statement; (m) Development Services
Agreement; (n) Project Development Services Agreement;
(o) Remarketing Memorandum; (p) Memorandum of
Understanding re: Capital Source and Uses of Funds);
(q) Operations and Maintenance Agreement; (r) Disbursement
Statement; (s) Requisition Certificates; (t) Mortgage,
Assignment of Rents and Security Agreement; (u) the
Permanent Note in the principal amount of $6,300,00;
(v) Financing Statements; (w) Assignment of Leases, Rents,
Contracts and other instruments; (x) subject to the terms
of this Agreement, such other documents which the General
Partner deems to be necessary to and appropriate in order
to consummate a closing with respect to the issuance,
remarketing and/or reissuance of the Bonds.
(iii) Any and all documents previously executed,
acknowledged, amended and/or delivered by the General
Partner on behalf of the Partnership, in pursuance of the
authority set forth in paragraph (ii) above, in connection
with and relative to the reissuance, remarketing and/or
reissuance of the Bonds, are hereby ratified, confirmed
and approved by the Partners.
ARTICLE VII
Withdrawal of a General Partner; New General Partners
7.1 Voluntary Withdrawal
No General Partner shall have the right to Withdraw voluntarily
from the Partnership or to sell, assign or encumber its Interest
without the Consent of the Investment Limited Partner and each of the
other General Partners (if any) and, if required, any Requisite
Approvals.
7.2 Reconstitution
In the event of the Withdrawal of a General Partner, the
Partnership shall not be dissolved or required to be wound up if (i)
at the time of such Withdrawal there is at least one remaining General
Partner and that General Partner carries on the business of the
Partnership (any such remaining General Partner being hereby
authorized to carry on the business of the Partnership), or (ii)
within ninety (90) days after such Withdrawal all remaining Partners
agree in writing to continue the business of the Partnership and to
the appointment, effective as of the date of such Withdrawal, of one
or more additional General Partners. Within ten (10) days after the
occurrence of such Withdrawal, the remaining General Partners, if any,
shall notify the Investment Limited Partner thereof:
(i) The reconstituted limited partnership shall
continue until the occurrence of a Liquidating Event as
provided in Section 2.4;
(ii) If the successor General Partner is not a
former General Partner, then the provisions of Section
7.4(d) shall apply; and
(iii) All necessary steps shall be taken to cancel
this Agreement and the Certificate and to enter into a new
partnership agreement and certificate of limited
partnership, and the successor General Partner shall be
obligated to take such steps.
7.3 Successor General Partner
(a) Upon the occurrence of any Withdrawal, the remaining
General Partners may designate a Person to become a successor General
Partner to the Withdrawing General Partner. Any Person so designated,
subject to any Requisite Approvals, the Consent of the Investment
Limited Partner and, if required by the Act or any other applicable
law, the consent of any other Partner so required, shall become a
successor General Partner upon his written agreement to be bound by
the Project Documents and by the provisions of this Agreement.
(b) If any Withdrawal shall occur at a time when there is no
remaining General Partner and the Partners do not unanimously elect to
continue the business of the Partnership in accordance with the
provisions of clause (ii) of Section 7.2(a) above, then the Investment
Limited Partner shall have the right, subject to any Requisite
Approvals, to designate a Person to become a successor General Partner
upon his written agreement to be bound by the Project Documents and by
the provisions of this Agreement.
(c) If the Investment Limited Partner elects to reconstitute
the Partnership and admit a successor General Partner pursuant to this
Section 7.3, the relationship of the Partners in the reconstituted
Partnership shall be governed by this Agreement.
7.4 Interest of Predecessor General Partner
(a) No assignee or transferee of all or any part of the
Interest as a General Partner of a General Partner shall have any
automatic right to become a General Partner. Until the acquisition of
the Interest of a Withdrawing General Partner pursuant to
Section 7.4(d) or 7.6, such Interest shall be deemed to be that of an
assignee and the holder thereof shall be entitled only to such rights
as an assignee may have as such under the laws of the State.
(b) Anything herein contained to the contrary notwithstanding,
any General Partner who Withdraws voluntarily in violation of
Section 7.1 shall remain liable for all of its obligations under this
Agreement, for all its other obligations and liabilities hereunder
incurred or accrued prior to the date of its Withdrawal and for any
loss or damage which the Partnership or any of its Partners may incur
as a result of such Withdrawal (except as provided in Section 6.8(a)),
except for any loss or damage attributable to the default, negligence
or misconduct of a successor General Partner admitted in its place
under this Agreement.
(c) The estate (which term, for purposes of this
Section 7.4(c), shall include the heirs, distributees, estate,
executors, administrators, guardian, committee, trustee or other
personal representative) of a Withdrawn General Partner shall be
liable for all his liabilities and obligations hereunder, except as
provided in this Section 7.4(c). In the event of the death, insanity
or incompetency of a General Partner, his estate shall remain liable
for all of his obligations and liabilities hereunder incurred or
accrued prior to the date of such event, and for any damages arising
out of any breach of this Agreement by him, but his estate shall not
have any obligation or liability on account of the business of the
Partnership or the activities of the other General Partners after his
death, insanity or incompetency unless it becomes a General Partner
pursuant to Section 7.3(a).
(d) The Disposition of the General Partner Interest of a
General Partner who or which Withdraws voluntarily in compliance with
this Agreement shall be accomplished in such manner as shall be
acceptable to the remaining General Partners and shall reasonably be
approved by Consent of the Investment Limited Partner. Except as
provided in the preceding sentence, upon the Withdrawal of a General
Partner (other than a General Partner who or which is removed as such
pursuant to Section 4.5), such Withdrawn General Partner shall be
deemed to have automatically transferred to the remaining General
Partners, in proportion to their respective General Partner Interests,
or, if there shall be no remaining General Partner, then to the
Partnership for the benefit of the remaining Partners, all or such
portion of the General Partner Interest of such Withdrawn General
Partner which, when aggregated with the existing General Partner
Interests of all such remaining General Partners, will be sufficient
to assure such remaining General Partners a 1% interest in all
Profits, Losses, Tax Credits and distributions of the Partnership
under Article X. No documentation shall be necessary to effectuate
such transfer, which shall be automatic, and no consideration shall be
payable therefor. For the purposes of Article X, the effective date
of the transfer pursuant to the provisions of this Section 7.4(d) of
the General Partner Interest of a Withdrawn General Partner shall be
deemed to be the date on which such Withdrawal occurs. That portion
of the General Partner Interest (the "Remaining Interest") of the
Withdrawing General Partner which shall not have been transferred
pursuant to this Section 7.4(d) shall be (i) purchased by the
Partnership in accordance with the provisions of Section 7.6 in the
case of a General Partner who or which Withdraws in violation of
Section 7.1 hereof and (ii) in all other cases (except in respect of a
removed General Partner), shall be retained by such Withdrawing
General Partner (or pass to legal representatives thereof) who or
which shall have the status of a special Limited Partner, but with the
right to receive only that share of the Profits, Losses, Tax Credits
and distributions of the Partnership to which the Withdrawing General
Partner, as such, would have been entitled had he or it remained,
reduced to the extent of the General Partner Interest transferred
hereunder, but such Withdrawing Partner (or his or its legal
representatives, as the case may be) shall not be considered to be a
Special Limited Partner for the purpose of exercising any rights
reserved to the Special Limited Partner under this Agreement or
sharing the benefits allocated to the Special Limited Partner under
Article X hereof and shall not participate in the votes or consents of
the Limited Partners hereunder; provided, however, that in the case of
a General Partner who or which Withdraws involuntarily without
violation of this Agreement, the Partnership shall have the option
(but not the obligation), exercisable by notice to the holder of such
Interest within six (6) months following the date of such Withdrawal,
to acquire the Remaining Interest of such Withdrawing General Partner
(or the Special Limited Partner Interest deriving therefrom) in
accordance with the valuation and payment provisions of Section 7.8.
7.5 Amendment of Certificate; Approval of Certain Events
(a) Upon the admission of a new General Partner pursuant to
the preceding provisions of this Article VII, Schedule A shall be
amended to reflect such admission and an amendment to the Certificate,
also reflecting such admission, shall be filed as required by the Act.
(b) Each Partner hereby consents to and authorizes any
admission or substitution of a General Partner or any other
transaction, including, without limitation, the continuation of the
Partnership business, which has been authorized under the provisions
of this Agreement, and hereby ratifies and confirms each amendment of
this Agreement necessary or appropriate to give effect to any such
transaction.
7.6 Valuation and Sale of Interest of Former General Partner
(a) Subject to the provisions of Section 7.4(d), if the
business of the Partnership is continued after the Withdrawal of a
General Partner, or if, following such event, the Partnership is
reconstituted and continued, in each case as contemplated by this
Agreement, the Partnership shall purchase such General Partner's
Interest (which term, and words of like import, as used in this
Section 7.6 shall refer only to the "Remaining Interest" of such
Withdrawing General Partner as defined in Section 7.4(d) in all cases
where applicable) for a price equal to the fair market value thereof.
Such fair market value shall be based upon 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 qualified, MAI-designated
state-licensed real estate appraiser selected by the Withdrawing
General Partner. If the Partnership does not accept such value, it
may select a second similarly-qualified appraiser. If the values
determined by both such appraisers are within 10%, then the purchase
price shall be the arithmetic mean of the two. If the values differ
by more than 10%, then the two appraisers shall appoint a third
similarly-qualified appraiser, who shall also determine a value. The
final purchase price shall be the arithmetic mean of the two values
closest in absolute dollars. Notwithstanding the foregoing, if a
General Partner is removed for cause, or if a General Partner has
voluntarily Withdrawn from the Partnership in contravention of the
terms of this Agreement, the purchase price paid to such General
Partner for its Interest shall be reduced by an amount determined by
an arbitrator mutually agreeable to the Partnership and the General
Partner to adequately compensate the Partnership for any monetary
damages arising from the action of such General Partner leading to its
removal, or for the fact of its violation of the terms of this
Agreement.
(b) Promptly after the determination of the purchase price of
a former General Partner's Interest pursuant to Section 7.6(a), the
Partnership shall deliver to such former General Partner a promissory
note of the Partnership for such purchase price, payable in five equal
consecutive annual installments commencing on the first anniversary of
the date of such note. Such promissory note shall bear simple
interest at the rate per annum which is at all times equal to the
Prime Rate then in effect for obligations of like term, payable on the
last day of each calendar quarter during which such note is
outstanding; provided, however, that if such note is delivered
following a Withdrawal of a General Partner which is voluntary on its
part in violation of this Agreement or a removal for cause, then
(i) such note shall neither be secured nor bear interest, and (ii) the
principal payable to the withdrawing General Partner shall be limited
in amount and date of payment to distributions available from the
proceeds of a Capital Transaction as set forth in Section 10.2(b).
Within one hundred twenty (120) days after the determination of the
purchase price of the former General Partner's Interest, the
Partnership may, with the consent of all remaining General Partners
and the Consent of the Investment Limited Partner, sell such Interest
to one or more Persons, who may be Affiliates of the remaining General
Partner or General Partners, and admit such Person or Persons to the
Partnership as substitute General Partners; provided, however, that
the purchase price to be paid to the Partnership for the Interest of
the former General Partner or Partners shall not be less than its
purchase price as determined by the appraisal and, if applicable,
arbitration described above. Such substitute General Partners may pay
said purchase price in installments in the manner set forth above in
this Section 7.6(b).
7.7 Designation of New General Partners
The General Partner may, with the written consent of all
Partners, at any time designate new General Partners, each with such
Interest as a General Partner in the Partnership as the General
Partner may specify, subject to any Requisite Approvals.
Any new General Partner shall, as a condition of receiving any
interest in the Partnership property, agree to be bound by the Project
Documents and any other documents required in connection therewith and
by the provisions of this Agreement, to the same extent and on the
same terms as any other General Partner.
ARTICLE VIII
Transferability of Limited Partner Interests
8.1 Assignments
(a) Except by operation of law (including the laws of descent
and distribution) or pursuant to the provisions of Section 8.1(b), no
Limited Partner may assign all or any part of its Interest without the
written consent of the General Partner, the giving or withholding of
which is exclusively within its discretion.
(b) A Limited Partner, without the consent of the General
Partner (except that prior to the payment of the final Installment of
the Investment Limited Partners' Capital Contribution, the General
Partner shall have reasonable consent rights to the assignment of any
Investment Limited Partner's Interest, but only in the event that the
proposed assignee does not have the financial condition reasonably
sufficient make any Installments outstanding at the time of such
assignment), may assign to any Person all or any portion of the
economic benefits of the ownership of such Limited Partner's Interest;
provided, however, that such assignment shall not be binding on the
Partnership until there shall have been filed with the Partnership by
registered mail certified copies of an executed and acknowledged
assignment and the written acceptance by the assignee of all the terms
and provisions of this Agreement; if such assignment and acceptance
are not so filed, the Partnership need not recognize such assignment
for any purpose. An assignee of a Limited Partner who does not become
a Substituted Limited Partner shall have the right to receive the
allocable share of any Profits, Losses, Tax Credits or distributions
of the Partnership to which the assigning Limited Partner would have
been entitled with respect to the Interest (or portion thereof) so
assigned if no such assignment had been made by such Limited Partner,
but such assignee shall not have any of the voting or consent rights
of the assignor Limited Partner. Any assigning Limited Partner whose
permitted assignee becomes a Substituted Limited Partner shall
thereupon cease to be a Limited Partner and shall no longer have any
of the rights or privileges of a Limited Partner. Where the assignee
does not become a Substituted Limited Partner, the Partnership shall
recognize such assignment not later than the last day of the calendar
month following receipt of notice of assignment and all documentation
required in connection therewith.
(c) Each assignee of a Limited Partner Interest (or any
portion thereof) who desires to make a further assignment of its
Interest shall be subject to all the provisions of this Article VIII.
8.2 Substituted Limited Partner
(a) No Limited Partner shall have the right to substitute an
assignee as Limited Partner in its place. Subject to the provisions
of Section 8.3, the General Partner may, in its sole discretion,
permit an assignee to become a Substituted Limited Partner. The
consent of the General Partner to an assignment of a Limited Partner's
Interest under Section 8.1 shall not, in and of itself, constitute its
consent to the admission of the assignee as a Substituted Limited
Partner under this Section 8.2.
(b) Any Substituted Limited Partner shall execute such
instrument or instruments as shall be required by the General Partner
to signify the agreement of such Substituted Limited Partner to be
bound by all the provisions of this Agreement and shall pay the
Partnership's reasonable legal fees and filing costs in connection
with its substitution as a Limited Partner.
8.3 Restrictions
(a) No Disposition of a Limited Partner Interest may be made
if such Disposition would violate the provisions of Sections 8.1, 8.2
or 13.1.
(b) In no event shall all or any part of a Limited Partner
Interest be Disposed of to a minor (other than to a descendant by
reason of death) or to an incompetent.
(c) The General Partner may, in addition to any other
requirement it may impose, require as a condition of any Disposition
of a Limited Partner Interest that the transferor (i) assume all costs
incurred by the Partnership in connection therewith and (ii) furnish
the Partnership and the other Partners with an opinion of counsel
satisfactory to counsel to the Partnership that such Disposition
complies with applicable federal and state securities laws.
(d) Any sale, exchange, transfer or other Disposition of a
Limited Partner Interest in contravention of any of the provisions of
this Section 8.3 shall be void and ineffectual and shall not bind or
be recognized by the Partnership.
(e) Notwithstanding any other provision contained in this
Article VIII, if at any time there is more than one Investment Limited
Partner, each Investment Limited Partner shall have a right of first
refusal to purchase the Interest of any other Investment Limited
Partner who wishes to sell or otherwise transfer its Interest at a
price equal to and on terms identical to those of the prospective
purchaser thereof, to the extent reasonably practical, and shall have
at least fifteen (15) business days in which to exercise such right
after receiving notice thereof. If there shall be more than two non-
selling or transferring Investment Limited Partners, each of which
desires to exercise such a right of first refusal, they may do so pro
rata or, to the extent one does not so desire to exercise such right,
to the extent of the entire Interest being so sold or transferred.
(f) No transfer or assignment under this Article VIII shall be
permitted if in the opinion of the Special Tax Counsel, such transfer
or assignment shall cause a tax termination of the Partnership or
shall cause the Partnership to be taxed as other than a partnership.
ARTICLE IX
Borrowings
All Partnership borrowings shall be subject to the terms of this
Agreement and the Project Documents and may be made from any source,
including Partners and their Affiliates. Any Partnership borrowings
from any Partner shall be subject to any Requisite Approvals. If any
Partner shall lend any monies to the Partnership, the amount of any
such loan shall not increase such Partner's Capital Contribution. If
any Partner shall so lend monies, each such loan (a "Voluntary Loan")
shall be an obligation of the Partnership and (except for Subordinated
Loans) shall be repayable to such Partner on the same basis and with
the same rate of interest as would be applicable to a comparable loan
to the Partnership from a third party. Funds advanced by the General
Partner to the Partnership pursuant to the provisions of Section 6.11
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 Profits, Losses and Tax Credits
(a) Subject to the provisions of Section 10.1(b) and Section
10.4, for each Partnership Fiscal Year or portion thereof, all
Operating Profits and Losses, tax-exempt income, losses, non-
deductible non-capitalizable expenditures and Tax Credits incurred or
accrued on or after the Commencement Date shall be allocated ninety-
nine percent (99%) to the Investment Limited Partner and one percent
(1%) to the General Partner.
(b) Except as otherwise specifically provided in this Article,
all Profits and Losses arising from a Capital Transaction shall be
allocated to the Partners as follows:
As to Profits:
First, that portion of Profits
(including any Profits treated as ordinary income for
federal income tax purposes) shall be allocated to the
Partners who have negative Capital Account balances in
proportion to the amounts of such balances, provided that
no Profits shall be allocated to a Partner under this
Clause First to increase any such Partner's Capital
Account above zero; and
Second, Profits in excess of the amounts
allocated under Clause First above shall be allocated to
and among the Partners in the same percentages as cash is
distributed under Clauses Seventh through Ninth and
Eleventh of Section 10.2(b);
As to Losses:
First, an amount of Losses shall be
allocated to the Partners to the extent and in such
proportions as shall be necessary such that, after giving
effect thereto, the respective balances in all Partners'
Capital Accounts shall be in the ratio of 99% for the
Investment Limited Partner and 1% for the General Partner;
Second, an amount of Losses shall be
allocated to the Partners until the balance in each
Partner Capital Account equals the amount of such
Partner's Capital Contribution (after the allocation under
Clause First above);
Third, an amount of Losses shall be
allocated to the Partners to the extent of and in
proportion to such Partners' Capital Account balances
(after the allocations under Clauses First and Second
above); and
Fourth, any remaining amount of Losses
after the allocation under Clauses First, Second and Third
above shall be allocated to the Partners in accordance
with the manner in which they bear the Economic Risk of
Loss associated with such Loss; provided, however, that in
the event that no Partner bears an Economic Risk of Loss
then any remaining Losses shall be allocated 99% to the
Investment Limited Partner and 1% to the General Partner.
10.2 Cash Distributions Prior to Dissolution
(a) Cash Flow
Subject to any Requisite Approvals and the terms of the
Bond Documents, Cash Flow for each Fiscal Year or portion thereof
shall be applied as follows:
First, to the payment of the Asset
Management Fee for such Fiscal Year and for any previous
Fiscal Year(s) as to which the Asset Management Fee shall
not yet have been paid in full;
Second, to the payment of any unpaid
portion of the Development Fee;
Third, to the repayment of any
Subordinated Loans;
Fourth, to the payment of the
Partnership Management Fee; and
Fifth, the balance thereof, if any,
shall be distributed annually, seventy-five (75) days
after the end of the Fiscal Year, 20% to the Investment
Limited Partner and 80% to the General Partner.
(b) Distributions of Capital Proceeds
Prior to dissolution, if Capital Proceeds are available
for distribution from a Capital Transaction, such Capital Proceeds
shall be applied or distributed as follows:
First, to the payment of all matured
debts and liabilities of the Partnership (including, but
not limited to, all expenses of the Partnership incident
to such Capital Transaction, any amounts due to a General
Partner who voluntarily withdraws from the Partnership in
accordance with this Agreement, and any unpaid portion of
the Development Fee), excluding (i) debts and liabilities
of the Partnership to Partners or their Affiliates (other
than the Development Fee, any amounts due to a General
Partner who voluntarily withdraws from the Partnership in
accordance with this Agreement, but including those
promissory notes provided for in clause Tenth of this
Section 10.2(b)); and (ii) all unpaid fees owing to the
General Partner or its Affiliates and to the establishment
of any reserves which the General Partner and the Auditors
shall deem reasonably necessary for contingent, unmatured
or unforeseen liabilities or obligations of the
Partnership;
Second, to the payment of any accrued
and unpaid Asset Management Fee;
Third, to the payment to the Investment
Limited Partner of the full amount (including interest) of
any Credit Recovery Loans;
Fourth, to the General Partner as payment of the
Disposition Fee in accordance with the Capital Disposition
Agreement;
Fifth, to the repayment of any
Subordinated Loans;
Sixth, to the repayment of any remaining
unpaid debts and liabilities owed to Partners or
Affiliates thereof by the Partnership for Partnership
obligations (exclusive of Credit Recovery Loans and
Subordinated Loans) to any of them, including, but not
limited to, accrued and unpaid amounts due in respect of
any and all fees (except the Development Fee) due and
payable to the General Partner or its Affiliates as set
forth in Section 6.12; provided, however, that any debts
or obligations to be repaid to any Limited Partner or
Affiliate thereof pursuant to this Clause Sixth shall be
repaid prior to the repayment of any such debts or
obligations to any General Partner or Affiliate thereof;
Seventh, to the payment to each Limited
Partner of an amount equal to its paid-in Capital
Contributions in each case minus any prior distributions
made to such Partner under this Clause Seventh, but never
an amount less than zero;
Eighth, to the payment to each General
Partner of an amount equal to its paid-in Capital
Contributions in each case minus any prior distributions
made to such Partner under this Clause Eighth, but never
an amount less than zero;
Ninth, pro rata 25% to the Investment Limited
Partner and 75% to the General Partner until the General
Partner, when added to any amounts received pursuant to
clauses Fourth and Eighth of this Section 10.2(b), has
received under this clause Ninth an amount equal to
$1,000,000;
Tenth, to the payment of any outstanding principal
and interest in respect of any promissory notes executed
by the Partnership pursuant to Sections 4.5(b)(iii) or
7.6(b) and not already provided for in Clause First of
this Section 10.2(b);
Eleventh, subject to the provisions of
Section 10.3(a), any balance 19.999% to the Investment
Limited Partner, .001% to the Special Limited Partner and
80% to the General Partner.
(c) Excess Financing Proceeds
Notwithstanding the provisions of Section 10.2(b), but
subject to the terms of the Bond Documents and any Requisite
Approvals, any Excess Financing Proceeds shall be distributed to the
General Partner after review of the project sources and uses by the
Special Limited Partner and its acknowledgement that the calculation
of Excess Financing Proceeds complies with the terms of this
Agreement.
10.3 Distributions Upon Dissolution
(a) Upon dissolution and termination, after payment of, or
adequate provision for, the debts and obligations of the Partnership,
the remaining assets of the Partnership shall be distributed to the
Partners in accordance with the positive balances in their Capital
Accounts after taking into account all Capital Account adjustments for
the Partnership Fiscal Year, including adjustments to Capital Accounts
pursuant to Sections 10.1(b) and 10.3(b). In the event that a General
Partner or Additional Limited Partner has a negative balance in its
Capital Account following the liquidation of the Partnership or such
Partner's Interest, after taking into account all Capital Account
adjustments for the Partnership Fiscal Year in which such liquidation
occurs, such Partner shall pay to the Partnership in cash an amount
equal to the negative balance in such Partner's Capital Account. Such
payment shall be made by the end of such Fiscal Year (or, if later,
within ninety (90) days after the date of such liquidation) and shall,
upon liquidation of the Partnership, be paid to recourse creditors of
the Partnership or distributed to other Partners in accordance with
the positive balances in their Capital Accounts.
(b) With respect to assets distributed in kind to the Partners
in liquidation or otherwise, (i) any unrealized appreciation or
unrealized depreciation in the values of such assets shall be deemed
to be Profits and Losses realized by the Partnership immediately prior
to the liquidation or other distribution event; and (ii) such Profits
and Losses shall be allocated to the Partners in accordance with the
provisions of Section 10.1(b), and any property so distributed shall
be treated as a distribution of an amount in cash equal to the excess
of such fair market value over the outstanding principal balance of
and accrued interest on any debt by which the property is encumbered.
For the purposes of this Section 10.3(b), the terms "unrealized
appreciation" or "unrealized depreciation" shall mean the difference
between the fair market value of such assets, taking into account the
fair market value of the associated financing (but subject to the
provisions of Section 7701(g) of the Code), and the Partnership's
adjusted basis for such assets as determined under the applicable
provisions of the Allocation Regulations. This Section 10.3(b) is
merely intended to provide a rule for allocating unrealized gains and
losses upon liquidation or other distribution event, and nothing
contained in this Section 10.3(b) or elsewhere herein is intended to
treat or cause such distributions to be treated as sales for value.
The fair market value of such assets shall be determined by an
appraiser to be selected by the General Partner with the reasonable
Consent of the Special Limited Partner.
10.4 Special Provisions
(a) Except as otherwise provided in this Agreement, all
Profits, tax-exempt income, Losses, non-deductible non-capitalizable
expenditures, Tax Credits and cash distributions shared by a class of
Partners shall be shared by each Partner in such class in the ratio of
such Partner's paid-in Capital Contribution to the paid-in Class
Contribution of the class of Partners of which such Partner is a
member.
(b) Notwithstanding the foregoing provisions of this
Article X:
(i) If (a) the Partnership incurs recourse obligations
or Partner Nonrecourse Debt (including, without limitation,
Voluntary Loans or Subordinated Loans) or (b) the Partnership
incurs Losses from extraordinary events which are not recovered
from insurance or otherwise (collectively "Recourse
Obligations") in respect of any Partnership Fiscal Year, then
the calculation and allocation of Profits and Losses shall be
adjusted as follows: first, an amount of deductions
attributable to the Recourse Obligations shall be allocated to
the General Partner; and second, the balance of such deductions
shall be allocated as provided in Section 10.1(a).
(ii) If any Profits arise from the sale or other
disposition of any Partnership asset which shall be treated as
ordinary income under the depreciation recapture provisions of
the Code, then the full amount of such ordinary income shall be
allocated among the Partners in the proportions that the
Partnership deductions from the depreciation giving rise to such
recapture were actually allocated. In the event that
subsequently-enacted provisions of the Code result in other
recapture income, no allocation of such recapture income shall
be made to any Partner who has not received the benefit of those
items giving rise to such other recapture income.
(iii) If the Partnership shall receive any purchase money
indebtedness in partial payment of the purchase price of the
Apartment Complex and such indebtedness is distributed to the
Partners pursuant to the provisions of Section 10.2(b) or
Section 10.3, the distributions of the cash portion of such
purchase price and the principal amount of such purchase money
indebtedness hereunder shall be allocated among the Partners in
the following manner: On the basis of the sum of the principal
amount of the purchase money indebtedness and cash payments
received on the sale (net of amounts required to pay Partnership
obligations and fund reasonable reserves), there shall be
calculated the percentage of the total net proceeds
distributable to each class of Partners based on Section 10.2(b)
or Section 10.3, as applicable, treating cash payments and
purchase money indebtedness principal interchangeably for this
purpose, and the respective classes shall receive such
respective percentages of the net cash purchase price and
purchase money principal. Payments on such purchase money
indebtedness retained by the Partnership shall be distributed in
accordance with the respective portions of principal allocated
to the respective classes of Partners in accordance with the
preceding sentence, and if any such purchase money indebtedness
shall be sold, the sale proceeds shall be allocated in the same
proportion.
(iv) Income, gain, loss and deduction with respect to any
asset which has a variation between its basis computed in
accordance with the applicable provisions of the Allocation
Regulations and its basis computed for federal income tax
purposes shall be shared among the Partners so as to take
account of such variation in a manner consistent with the
principles of Section 704(c) of the Code and Section 1.704-
1(b)(2)(iv)(g) of the Allocation Regulations.
(v) The terms "Profits" and "Losses" used in this
Agreement shall mean income and losses, and each item of income,
gain, loss, deduction or credit entering into the computation
thereof, as determined in accordance with the accounting methods
followed by the Partnership and computed in accordance with
Treasury Regulation Section 1.704-1(b)(2)(iv). Profits and
Losses for federal income tax purposes shall be allocated in the
same manner as set forth in this Article X, except as provided
in Section 10.4(b)(iv).
(vi) Nonrecourse Deductions shall be allocated 1% to the
General Partner and 99% to the Investment Limited Partner.
(vii) Partner Nonrecourse Deductions shall be allocated to
and among the Partners in the manner provided in the Allocation
Regulations.
(viii) Subject to the provisions of Section
10.4(b)(xix), if there is a net decrease in Partnership Minimum
Gain for a Partnership Fiscal Year, the Partners shall be
allocated items of Partnership income and gain in accordance
with the provisions of Section 1.704-(2)(f) of the Allocation
Regulations.
(ix) Subject to the provisions of Section 10.4(b)(xix),
if there is a net decrease in Partner Nonrecourse Debt Minimum
Gain for a Partnership Fiscal Year then any Partner with a Share
of such Partner Nonrecourse Debt Minimum Gain shall be allocated
items of Partnership income and gain in accordance with the
provisions of Section 1.704-2(i)(4) of the Allocation
Regulations.
(x) Subject to the provisions of 10.4(b)(vi) through
10.4(b)(ix) above, in the event that any Limited Partner
unexpectedly receives any adjustments, allocations or
distributions described in Section 1.704-1(b)(2)(ii)(d)(4), (5)
or (6) of the Allocation Regulations, items of Partnership
income and gain shall be specially allocated to each such
Partner in an amount and manner sufficient to eliminate, to the
extent required by the Allocation Regulations, the Adjusted
Capital Account Deficit of such Limited Partner as quickly as
possible. This Section 10.4(b)(x) is intended to constitute a
"qualified income offset" provision within the meaning of the
Allocation Regulations and shall be interpreted consistently
therewith.
(xi) Subject to the provisions of Sections 10.4(b)(vi)
through 10.4(b)(x) above, in no event shall any Limited Partner
be allocated Losses which would cause it to have an Adjusted
Capital Account Deficit as of the end of any Partnership Fiscal
Year. Any Losses which are not allocated to a Limited Partner
by reason of the application of the provisions of this Section
10.4(b)(xi) shall be allocated to the General Partner.
(xii) Subject to the provisions of Sections 10.4(b)(vi)
through 10.4(b)(xi) above, in the event that any Limited Partner
has an Adjusted Capital Account Deficit at the end of any
Partnership Fiscal Year, items of Partnership income and gain
shall be specially allocated to each such Limited Partner in the
amount of such Adjusted Capital Account Deficit as quickly as
possible.
(xiii) Syndication Expenses for any Fiscal Year or
other period shall be specially allocated to the Investment
Limited Partner.
(xiv) For purposes of determining the Profits, Losses, Tax
Credits or any other items allocable to any period, Profits,
Losses, Tax Credits and any such other items shall be determined
on a daily, monthly, or other basis, as determined by the
General Partner using any permissible method under Code Section
706 and the Treasury Regulations thereunder.
(xv) To the extent that interest on loans (or other
advances which are deemed to be loans) made by a General Partner
to the Partnership is determined to be deductible by the
Partnership in excess of the amount of interest actually paid by
the Partnership, such additional interest deduction(s) shall be
allocated solely to such General Partner.
(xvi) Notwithstanding anything to the contrary contained
herein, the General Partner (or, if there is more than one
General Partner, all of the General Partners as a group) shall
be allocated not less than 1% of each material item of
Partnership income, gain, loss, deduction and credit
("Partnership Items") at all times during the existence of the
Partnership, provided, however, that temporary nonconformance
with the provisions of this Section 10.4(b)(xvi) shall be
permitted to the extent permitted by Revenue Procedure 89-12 or
any successor provisions. Subject to the foregoing, in the
event that there is no allocation of a material Partnership Item
to the General Partner(s) hereunder or if the amount of any
material Partnership Item allocable to the General Partner(s)
hereunder shall not equal 1% of the aggregate amount allocable
to all the Partners without giving effect to this provision,
then the amount of such Partnership Item(s) otherwise allocable
to the Limited Partners hereunder shall be correspondingly
reduced in order to assure the General Partner(s) of its or
their 1% share. Any such reduction shall be applied to reduce
the share of all classes of Limited Partners in proportion to
their respective Interests.
(xvii) For purposes of determining each Partner's
proportionate share of the excess Nonrecourse Liabilities of the
Partnership pursuant to Section 1.752-3(a)(3) of the Allocation
Regulations, the Investment Limited Partner shall be deemed to
have a 99% interest in Profits and the General Partner shall be
deemed to have a 1% interest in Profits.
(xviii) Any recapture of any Tax Credit shall be
allocated to and among the Partners in the same manner in which
the Partners share the expenditures giving rise to such Tax
Credit.
(xix) If for any Fiscal Year the application of the
minimum gain chargeback provisions of Section 10.4(b)(viii) or
Section 10.4(b)(ix) of this Agreement would cause distortion in
the economic arrangement among the Partners and it is not
expected that the Partnership will have sufficient other income
to correct that distortion, the General Partner may request a
waiver from the Commissioner of the Service of the application
in whole or in part of Section 10.4(b)(viii) or Section
10.4(b)(ix) in accordance with Section 1.704-2(f)(4) of the
Allocation Regulations. Furthermore, if additional exceptions
to the minimum gain chargeback requirements of the Allocation
Regulations have been provided through revenue rulings or other
Service pronouncements, the General Partner is authorized to
cause the Partnership to take advantage of such exceptions if to
do so would be in the best interest of a majority in interest of
the Partners.
(xx) In the event that any fee payable to any General
Partner or any Affiliate thereof shall instead be determined to
be a non-deductible, non-capitalizable distribution from the
Partnership to a Partner for federal income tax purposes, then
there shall be allocated to such General Partner an amount of
gross income equal to the amount of such distribution.
(xxi) In applying the provisions of Article X with respect
to distributions and allocations, the following ordering of
priorities shall apply:
(1) Capital Accounts shall be deemed
to be reduced by Qualified Income Offset
Items.
(2) Capital Accounts shall be reduced by
distributions of Cash Flow under Clause Fifth
of Section 10.2(a).
(3) Capital Accounts shall be reduced by
distributions of Capital Proceeds under
Clauses Seventh through Ninth and Eleventh of
Section 10.2(b).
(4) Capital Accounts shall be increased by any
minimum gain chargeback under Section
10.4(b)(viii) or Section 10.4(b)(ix).
(5) Capital Accounts shall be increased by any
qualified income offset required under Section
10.4(b)(x).
(6) Capital Accounts shall be increased by
allocations of Operating Profits under Section
10.1(a).
(7) Capital Accounts shall be reduced by
allocations of Operating Losses under Section
10.1(a).
(8) Capital Accounts shall be reduced by
allocations of Losses under Section 10.1(b).
(9) Capital Accounts shall be increased by
allocations of Profits under Section 10.1(b).
(xxii) To the maximum extent permitted under the
Code, allocations of Profits and Losses shall be modified so
that the Partners' Capital Accounts reflect the amount they
would have reflected if adjustments required by Sections
10.4(b)(x), 10.4(b)(xi) and 10.4(b)(xii) had not occurred.
10.5 Authority of the General Partner to Vary Allocations to
Preserve and Protect the Partners' Intent
(a) It is the intent of the Partners that each Partner's
distributive share of Profits, tax-exempt income, Losses, non-
deductible non-capitalizable expenditures and Tax Credits (and items
thereof) shall be determined and allocated in accordance with this
Agreement to the fullest extent permitted by Section 704(b) of the
Code and the Allocation Regulations. In order to preserve and protect
the determinations and allocations provided for in this Agreement, the
General Partner is hereby authorized and directed to allocate Profits,
tax-exempt income, Losses, non-deductible non-capitalizable
expenditures and credits (and items thereof) arising in any Fiscal
Year differently than otherwise provided for in this Agreement to the
extent that allocating Profits, tax-exempt income, Losses, non-
deductible non-capitalizable expenditures or credits (or any item
thereof) in the manner provided for herein would cause the
determinations and allocations of each Partner's distributive share of
Profits, tax-exempt income, Losses, non-deductible non-capitalizable
expenditures or credits (or any item thereof) not to be permitted by
Section 704(b) of the Code. Any allocation made pursuant to this
Section 10.5 shall be deemed to be a complete substitute for any
allocation otherwise provided for in this Agreement, and no amendment
of this Agreement or approval of any Partner shall be required.
(b) In making any allocation (the "New Allocation") under
Section 10.5(a), the General Partner is authorized to act only after
having been advised in writing by the Tax Accountants that, under
Section 704(b) of the Code and/or the Allocation Regulations, (i) the
New Allocation is necessary, and (ii) the New Allocation is the
minimum modification of the allocations otherwise provided for in this
Agreement necessary in order to assure that, either in the then-
current Fiscal Year or in any preceding Fiscal Year, each Partner's
distributive share of Profits, tax-exempt income, Losses, non-
deductible non-capitalizable expenditures and Tax Credits (or any item
thereof) is determined and allocated in accordance with this Agreement
to the fullest extent permitted by Section 704(b) of the Code and the
Allocation Regulations.
(c) If the General Partner is required by Section 10.5(a) to
make any New Allocation in a manner less favorable to the Limited
Partners than is otherwise provided for herein, then the General
Partner is authorized and directed, only after having been advised in
writing by the Tax Accountants that such an allocation is permitted by
Section 704(b) of the Code and the Allocation Regulations, to allocate
Profits, tax-exempt income, Losses, non-deductible non-capitalizable
expenditures and credits (and any item thereof) arising in later years
in such manner so as to bring the allocations of Profits, tax-exempt
income, Losses, non-deductible non-capitalizable expenditures and
credits (and each item thereof) to the Limited Partners as nearly as
possible to the allocations thereof otherwise contemplated by this
Agreement.
(d) New Allocations made by the General Partner under Section
10.5(a) and Section 10.5(c) in reliance upon the advice of the Tax
Accountants shall be deemed to be made pursuant to the fiduciary
obligation of the General Partner to the Partnership and the Limited
Partners, and no such allocation shall give rise to any claim or cause
of action by any Limited Partner.
10.6 Recapture Amount
(a) If at any time during the "compliance period" (as defined
in Section 42(i)(1) of the Code), the Apartment Complex ceases to be a
"qualified low income housing project" (as defined in Section 42(g)(1)
of the Code) or any Low-Income Unit in the Apartment Complex ceases to
be a "low income unit" (as defined in Section 42(i)(3) of the Code),
and as a result thereof all or any portion of credits allowed to the
Partnership and its Partners under Section 42 of the Code are subject
to recapture pursuant to Section 42(j) of the Code (such an occurrence
being referred to herein as a "Recapture Event"), the Investment
Limited Partner shall become entitled to additional cash distributions
equal to the "Recapture Amount".
(b) The Recapture Amount is an amount that, after deduction of
all federal income taxes payable by the Investment Limited Partner (or
its partners) as computed under Section 10.6(d) below, is equal the
sum of (i) the "credit recapture amount" allocable to the Investment
Limited Partner as defined in Section 42(j) of the Code plus (ii) the
amount of credits allocable to the Investment Limited Partner which
are disallowed in the year of the Recapture Event and in each
subsequent year.
(c) Any Recapture Amount distributable to the Investment
Limited Partner pursuant to the foregoing provisions shall be
distributed as funds become available for such distributions, but such
distributions shall not be made prior to (i) in the case of the
"credit recapture amount", the year of the Recapture Event and (ii) in
the case of any credits disallowed with respect to any year subsequent
to the Recapture Event, in each such subsequent year.
(d) Determination of the Recapture Amount shall be made on the
assumption that receipt or accrual by each partner of the Investment
Limited Partner of any amounts distributable to such partner under
Subsection (c) above will currently be subject to United States
federal income tax at the highest marginal rate applicable to
corporations for the year(s) in question (and assuming the non-
applicability of the alternative minimum tax).
(e) All computations required under this Section 10.6 shall be
made reasonably by the Investment Limited Partner, and the results of
such computations, together with a statement describing in reasonable
detail the manner in which such computations were made, shall be
delivered to the Managing General Partner in writing. Within fifteen
(15) days following receipt of such computation, the Managing General
Partner may request that the Accountants determine whether such
computations are reasonable and are not erroneous. If the Accountants
determine that such computations are unreasonable or contain errors,
then the Accountants shall determine what they believe to be the
appropriate computations. If the Investment Limited Partner does not
agree with the determination of the Auditors, then another accounting
firm other than the Auditors to be selected jointly by the Investment
Limited Partner and the Managing General Partner or, if they cannot
agree, by the American Arbitration Association, from among the ten
largest national accounting firms, shall make such computations. The
computations of the Investment Limited Partner, the Auditors, or the
other accounting firm so selected, whichever is applicable, shall be
final, binding and conclusive upon the parties. All fees and expenses
payable to an accounting firm other than the Auditors under this
paragraph shall be borne solely by the Managing General Partner. All
fees and expenses payable to the American Arbitration Association
shall be borne equally by the General Partner and the Investment
Limited Partner.
ARTICLE XI
Management Agent
11.1 General
The General Partner shall engage the Management Agent to manage
the Apartment Complex pursuant to the Management Agreement. The
Management Agent shall receive a Management Fee of those amounts
payable from time to time by the Partnership to the Management Agent
for management services in accordance with a management contract
approved by any Agency or Lender with the right to approve the same,
or, when any such management contract is not subject to the approval
of any Agency or Lender, in accordance with a reasonable and
competitive fee arrangement. The initial Management Agent shall be
Hendy Management Company, Inc. 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 Partner shall
have obtained the prior Consent of the Special Limited Partner to the
identity of the Management Agent and the terms of the Management
Agreement or the modification or extension thereof and (ii) such new
Management Agreement or modified or extended Management Agreement
provides that it is terminable by the Partnership on thirty (30) days'
notice by the Partnership in the event of any change in the identity
of the General Partner. The Management Agent shall maintain insurance
in accordance with the applicable Insurance Requirements set forth in
Exhibit C. Copies of such policies (or binders) shall be provided to
the Partnership and the Investment Limited Partner within thirty (30)
days after the effective date of the Management Agreement and annually
thereafter.
11.2 Fees
Notwithstanding the provisions of Section 11.1, however, should
the Investment General Partner or an Affiliate thereof perform
property management services for the Partnership, property management,
rent-up or leasing fees shall be paid to the Investment General
Partner or such Affiliate only for services actually rendered and
shall be in an amount equal to the lesser of (i) fees competitive in
price and terms with those of non-affiliated Persons rendering
comparable services in the locality where the Apartment Complex is
located and which could reasonably be available to the Partnership, or
(ii) five percent (5%) of the gross revenues of the Apartment Complex.
No duplicate property manager fees shall be paid to any Person.
11.3 Removal and Replacement
If (i) the Apartment Complex shall be subject to a substantial
building code violation which shall not have been cured within six (6)
months after notice from a Governmental Authority or (ii) the
Partnership shall not have achieved a 1.15 to 1.00 Debt Service
Coverage Ratio during any Fiscal Year commencing on January 1, 1998,
or (iii) an Event of Bankruptcy shall occur with respect to the
Management Agent, or (iv) the Management Agent shall commit willful
misconduct or gross negligence in its conduct of its duties and
obligations under the Management Agreement or (v) there is any change
in the Persons acting as General Partners (to which the Special
Limited Partner has not consented), or (vi) the Management Agent is
cited by the Credit Agency or any other Tax Credit monitoring or
compliance agency of the State or any other Governmental Authority for
a violation of any applicable rules, regulations or requirements,
including, without limitation, non-compliance with the Minimum Set-
Aside Test, the Rent Restriction Test or any other Tax Credit-related
provision, then, upon request by the Special Limited Partner and
subject to any Requisite Approval, the General Partner shall cause the
Partnership to promptly terminate the Management Agreement with the
Management Agent and appoint a new Management Agent selected by the
Special Limited Partner, which new Management Agent shall not be an
Affiliate of a General Partner. Each General Partner hereby grants to
the Special Limited Partner an irrevocable (to the extent permitted by
applicable law) power of attorney coupled with an interest to take any
action and to execute and deliver any and all documents and
instruments on behalf of such General Partner and the Partnership as
the Special Limited Partner may deem to be necessary or appropriate in
order to effectuate the provisions of this Article XI. Subject to any
Requisite Approvals, the Partnership shall not enter into any future
management arrangement or renew or extend any existing management
arrangement unless such arrangement is terminable without penalty upon
the occurrence of the events described in this Article XI.
11.4 Lack of Management Agent
The General Partner shall have the duty to manage the Apartment
Complex during any period when there is no Management Agent.
ARTICLE XII
Books and Records, Accounting, Tax Elections, Etc.
12.1 Books and Records
The Partnership shall maintain all books and records which are
required under the Act or by any Governmental Authority and may
maintain such other books and records as the General Partner in its
discretion deems advisable. Each Limited Partner, or its duly
authorized representatives, shall have access to the records of the
Partnership at the principal office of the Partnership at any and all
reasonable times, and may inspect and copy any of such records. A
list of the name and addresses of all of the Limited Partners shall be
maintained as part of the books and records of the Partnership and
shall be mailed to any Limited Partner upon request. The Partnership
may require reimbursement for any out of pocket expenses which it
incurs as a result of the exercise by any Limited Partner of its
rights under this Section 12.1, including, without limitation,
photocopying expenses.
12.2 Bank Accounts
The bank accounts of the Partnership shall be maintained in the
Partnership's name with such financial institutions as the General
Partner shall determine. Withdrawals shall be made only in the
regular course of Partnership business on such signature or signatures
as the General Partner may determine. All deposits (including
security deposits and other funds required to be escrowed by any
Lender or Agency) and other funds not needed in the operation of the
business shall be deposited, if required by applicable law and to the
extent permitted by applicable Agency or Lender requirements, in
interest bearing accounts or invested in United States Government
obligations maturing within one year.
12.3 Auditors
(a) The Auditors shall prepare, for execution by the General
Partner, all tax returns of the Partnership. Prior to the filing of
the Partnership tax returns, and in no event later than February 1 of
each Fiscal Year, the Auditors shall deliver the tax returns for the
prior Fiscal Year to the Tax Accountants for their review and comment.
If a dispute arises between the Auditors and the Tax Accountants over
the proper preparation of the tax returns and such dispute cannot be
resolved by the Auditors and the Tax Accountants by March 1 of such
Fiscal Year, then the Tax Accountants shall make the final decision
with respect to whether any changes are necessary. The Partnership
shall reimburse the Investment Limited Partner and its Affiliates for
all costs and expenses paid to the Tax Accountants for the
aforementioned services.
(b) The Auditors shall certify all annual financial reports to
the Partners in accordance with generally accepted auditing standards.
(c) If the Partnership fails to fulfill any of its obligations
under Section 12.7(a)(i) and/or Section 12.7(a)(ii) within the time
periods set forth therein, at any time thereafter upon written notice
from the Special Limited Partner, the General Partner shall appoint
replacement Auditors. If no such notice from the Special Limited
Partner is delivered, the Consent of the Special Limited Partner must
be received to the appointment of replacement Auditors. If the
General Partner fails to appoint replacement Auditors within thirty
(30) days of the notice from the Special Limited Partner to replace
the Auditors, then the Special Limited Partner shall appoint
replacement Auditors of its own choosing, the cost of which shall be
borne by the Partnership as a Partnership expense. All of the
Partners hereby grant to the Special Limited Partner a special power
of attorney, irrevocable to the extent permitted by law, coupled with
an interest, to so appoint replacement Auditors and to anything else
which in the judgment of the Special Limited Partner may be necessary
or appropriate to accomplish the purposes of this Section 12.3(c).
(d) On or prior to the date which is thirty (30) days after
the Admission Date, the General Partner shall cause the Partnership
(i) in writing, to engage the Auditors to perform the services
required herein and (ii) to deliver to the Investment Limited Partner
copies of all such engagement letters and agreements.
12.4 Cost Recovery and Elections
(a) With respect to all depreciable assets for which cost
recovery deductions are permitted, the Partnership shall elect to use,
so far as permitted by the provisions of the Code, accelerated cost
recovery methods. However, the Partnership may change to another
method of cost recovery if such other method is, in the opinion of the
Auditors, more advantageous to the Investment Limited Partner (and the
limited partners and/or holders of beneficial assignee certificates
thereof).
(b) Subject to the provisions of Section 12.5, all other
elections required or permitted to be made by the Partnership under
the Code shall be made by the General Partner in such manner as will,
in the opinion of the Auditors, be most advantageous to the Investment
Limited Partner and the limited partners and/or holders of beneficial
assignee certificates thereof.
12.5 Special Basis Adjustments
In the event of a transfer of all or any part of the Interest of
the Investment Limited Partner or a transfer of all or any part of an
interest of a partner and/or a holder of a beneficial assignee
certificate of the Investment Limited Partner, the Partnership shall
elect, upon the request of the Investment Limited Partner, pursuant to
Section 754 of the Code, to adjust the basis of the Partnership
property. Any adjustments made pursuant to said Section 754 shall
affect only the successor in interest to the transferring Partner or
partner or holder of a beneficial assignee certificate thereof. Each
Partner will furnish the Partnership all information necessary to give
effect to any such election.
12.6 Fiscal Year
Unless otherwise required by law, the Fiscal Year and tax year
of the Partnership shall be the calendar year. The books of the
Partnership shall be maintained on an accrual basis.
12.7 Information to Partners
(a) The General Partner shall cause to be prepared and
distributed to all Persons who were Partners at any time during a
Fiscal Year of the Partnership:
(i) Within forty-five (45) days after the end of each
Fiscal Year of the Partnership, (A) a balance sheet as of the
end of such Fiscal Year, a statement of income, a statement of
partners' equity, and a statement of cash flows, each for the
Fiscal Year then ended, all of which, except the statement of
cash flows, shall be prepared in accordance with generally
accepted accounting principles and accompanied by a report of
the Auditors containing an opinion of the Auditors, and (B) a
report of the activities of the Partnership during the period
covered by the report. With respect to any distribution to the
Investment Limited Partner, the report called for shall
separately identify distributions from (1) Cash Flow from
operations during the period, (2) Cash Flow from operations
during a prior period which had been held as reserves, (3)
proceeds from disposition of property and investments, (4) lease
payments on net leases with builders and sellers, if any, (5)
reserves from the gross proceeds of the Capital Contributions of
the Investment Limited Partner, if any, (6) borrowed monies, and
(7) transactions outside of the ordinary course of business with
a description thereof.
(ii) Within thirty (30) days after the end of each Fiscal
Year of the Partnership, all information relating to the
Partnership and/or the Apartment Complex which is necessary, in
the view of the Tax Accountants, for the preparation of the
Limited Partners' federal income tax returns for the prior
Fiscal Year.
(iii) Within thirty (30) days after the end of each
quarter of a Fiscal Year of the Partnership, a report
containing:
(A) a balance sheet, which may be
unaudited;
(B) a statement of income for the
quarter then ended, which may be unaudited;
(C) a statement of cash flows for the
quarter then ended, which may be unaudited;
(D) a certification of the General
Partner that the Apartment Complex and its tenants are in
compliance with all applicable federal, state and local
requirements and regulations;
(E) a Tax Credit monitoring form, a
copy of the rent roll for the Apartment Complex for each
month during such quarter, a statement of income and
expenses, an operating statement and an Occupancy/Rental
Report, all in a form specified by the Special Limited
Partner;
(F) all other information which would
be pertinent to a reasonable investor regarding the
Partnership and its activities during the quarter covered
by the report; and
(b) Within sixty (60) days after the end of each Fiscal Year
of the Partnership a copy of the annual report to be filed with the
United States Treasury concerning the status of the Apartment Complex
as low-income housing and, if required, a certificate to the
appropriate state agency concerning the same.
(c) upon the reasonable written request of the Investment
Limited Partner for further information with respect to any matter
covered in item (a) or item (b) above, the General Partner shall
furnish such information within thirty (30) days of receipt of such
request.
(d) Prior to October 15 of each Fiscal Year, the Partnership
shall send to the Investment Limited Partner an estimate of the
Investment Limited Partner's share of the Tax Credits, Profits and
Losses of the Partnership for federal income tax purposes for the
current Fiscal Year. Such estimate shall be prepared by the General
Partner and the Auditors and shall be in the form specified by the
Special Limited Partner.
(e) Within fifteen (15) days after the end of any calendar
quarter during which:
(i) there is a material default by the Partnership under
any Project Document or in the payment of any mortgage, taxes,
interest or other obligation on secured or unsecured debt,
(ii) any reserve has been reduced or terminated by
application of funds therein for purposes materially different
from those for which such reserve was established,
(iii) any General Partner has received any notice of a
material fact which may substantially affect further
distributions or Tax Credit allocations to any Limited Partner,
or
(iv) any Partner has pledged or collateralized its
Interest in the Partnership, the General Partner shall send the
Investment Limited Partner a detailed report of such event.
(f) After the Admission Date, the Partnership shall send to
the Investment Limited Partner copies of all applicable periodic
reports covering the status of project operations and any matters
relating to the Tax Credit as are required by any Lender or Agency.
(g) On or before May 1 of each Fiscal Year, the Partnership
shall send to the Investment Limited Partner a report on operations,
in the form supplied by the Special Limited Partner.
(h) The General Partner hereby consents to each Lender or
Agency providing the Special Limited Partner with copies of all
material communications between any such Lender or Agency and the
General Partner and/or the Partnership, including, but not limited to,
any notices of default.
(i) The General Partner shall cause to be prepared and
delivered to the Investment Limited Partner within sixty (60) days of
the Admission Date an audited statement of income (or if none has been
prepared, an unaudited statement of income) of the Partnership for
fiscal year 1995.
(j) Within thirty (30) days following the Completion Date, the
General Partner shall prepare, or cause the Auditors to prepare, and
deliver to each Limited Partner a Tax Credit basis worksheet for each
building in the Apartment Complex, all in a form specified by the
Special Limited Partner.
(k) Promptly after Permanent Mortgage Commencement, the
General Partner shall send to the Special Limited Partner a closing
binder containing photocopies of the fully executed versions of all
documents signed in connection with the Permanent Mortgage. From and
after any date upon which the General Partner receives notice from the
Special Limited Partner that the Special Limited Partner would like
copies of the monthly rent rolls for the Apartment Complex to be sent
to the Special Limited Partner, the General Partner shall send copies
of the rent rolls to the Special Limited Partner no later than ten
(10) days after the expiration of each month.
(l) If the General Partner does not cause the Partnership to
fulfill its obligations under Section 12.7(a)(i) and/or Section
12.7(a)(ii) within the time periods set forth therein, the General
Partner shall pay as damages the sum of $150 per day to the Investment
Limited Partner until such obligations shall have been fulfilled.
Such damages shall be paid forthwith by the General Partner, and the
failure to pay any such damages shall constitute a material default by
the General Partner hereunder. In addition, if the General Partner
shall fail to pay any such damages, the General Partner and its
Affiliates shall forthwith cease to be entitled to the distribution of
any Cash Flow or Capital Proceeds to which they may otherwise be
entitled hereunder. Such distributions of Cash Flow and Capital
Proceeds shall be restored only upon the payment of such damages in
full, and any amount of such damages not so paid shall be deducted
against distributions of Cash Flow and Capital Proceeds otherwise due
to the General Partner or its Affiliates.
12.8 Expenses of the Partnership
(a) All expenses of the Partnership shall be billed directly
to and paid by the Partnership.
(b) Except in extraordinary circumstances, neither the
Investment General Partner nor any Affiliate thereof shall be
permitted to contract or otherwise deal with the Partnership for the
sale of goods or services or the lending of money to the Partnership
or the General Partners, except for (i) management services, subject
to the restrictions set forth in Article XI, (ii) loans made by, or
guaranteed by, the Investment General Partner or any of its Affiliates
and (iii) those dealings, contracts or provision of services described
in the Investment Partnership Agreement. Extraordinary circumstances
shall only be presumed to exist where there is an emergency situation
requiring immediate action and the services required are not
immediately available from unaffiliated parties. All services
rendered under such circumstances must be rendered pursuant to a
written contract which must contain a clause allowing termination
without penalty on sixty (60) days' notice. Goods and services
provided under such circumstances must be provided at the lesser of
actual cost or the price charged for such goods or services by
independent parties.
(c) In the event that extraordinary circumstances arise, the
Investment General Partner and its Affiliates may provide construction
services in connection with the Apartment Complex. Neither the
Investment General Partner nor any of its Affiliates shall provide
such services unless it believes it has an adequate staff to do so and
unless such provision of goods and construction services is part of
its ordinary and ongoing business in which it has previously engaged,
independent of the activities of the Investment Limited Partner. Any
such services must be reasonable for and necessary to the Partnership,
actually furnished to the Partnership, and provided at the lower of
one hundred percent (100%) of the construction contract rate with
respect to the Apartment Complex or ninety percent (90%) of the
competitive price charged for such services by independent parties for
comparable goods and services in the same geographic location (except
that in the case of transfer agent, custodial and similar banking-type
fees, and insurance fees, the compensation, price or fee shall be at
the lesser of costs or the compensation, price or fee of any other
Person rendering comparable services as aforesaid). Cost of services
as used herein means the pro rata cost of personnel, including an
allocation of overhead directly attributable to such personnel, based
on the amount of time such personnel spend on such services or other
method of allocation acceptable to the accountants for the Investment
Limited Partner.
(d) All services provided by the Investment General Partner or
any Affiliate thereof pursuant to Section 12.8(c) must be rendered
pursuant to the Investment Partnership Agreement or a written contract
which precisely describes the services to be rendered and all
compensation to be paid and shall contain a clause allowing
termination without penalty upon sixty (60) days' notice to the
Investment General Partner by a vote of a majority in interest of the
limited partners and assignees of beneficial interests in the
Investment Limited Partner.
(e) No compensation or fees may be paid by the Partnership to
the Investment General Partner or its Affiliates except as described
in the Investment Partnership Agreement.
ARTICLE XIII
General Provisions
13.1 Restrictions by Reason of Section 708 of the Code
No Disposition of an Interest may be made if the Interest sought
to be Disposed of, when added to the total of all other Interests
Disposed of within the period of twelve (12) consecutive months prior
to the proposed date of the Disposition, would, in the opinion of the
Tax Accountants or tax counsel to the Partnership, result in the
termination of the Partnership under Section 708 of the Code. This
Section 13.1 shall have no application to any required repurchase of
the Investment Limited Partner's Interest. Any Disposition in
contravention of any of the provisions of this Section 13.1 shall be
void ab initio and ineffectual and shall not bind or be recognized by
the Partnership. Notwithstanding the foregoing provisions of this
Section 13.1, however, the Investment Limited Partner may waive the
provisions of this Section 13.1 at any time as to a Disposition or
series of Dispositions, and in the event of such a waiver, this
Section 13.1 shall have no force or effect upon such Disposition or
series of Dispositions.
13.2 Amendments to Certificates
To the extent required by the Act, within one hundred twenty
(120) days after the end of the Partnership Fiscal Year in which the
Investment Limited Partner shall have received any distributions under
Article X, the General Partner shall file an amendment to the
Certificate reducing the amount of its allocable share of such
distribution the amount of Capital Contribution of the Investment
Limited Partner as stated in the last previous amendment to the
Certificate. However, Schedule A shall not be amended on account of
any such distribution.
The Partnership shall amend the Certificate at least once each
calendar quarter to effect the substitution of Substitute Limited
Partners, although the General Partner may elect to do so more
frequently. In the case of assignments, where the assignee does not
become a Substitute Limited Partner, the Partnership shall recognize
the assignment not later than the last day of the calendar month
following receipt of notice of assignment and all documentation
required in connection therewith hereunder.
Notwithstanding the foregoing provisions of this Section 13.2,
no such amendments to the Certificate need be filed by the General
Partner if the Certificate is not required to and does not identify
the Limited Partners or their Capital Contributions in such capacity.
13.3 Notices
Except as otherwise specifically provided herein, all notices,
demands or other communications hereunder shall be in writing and
shall be deemed to have been given when the same are (i) deposited in
the United States mail and sent by certified or registered mail,
postage prepaid, return receipt requested, (ii) delivered to a
nationally recognized overnight delivery service, (iii) sent by
telecopier or other facsimile transmission, answerback requested, or
(iv) delivered personally, in each case, to the parties at the
addresses set forth below or at such other addresses as such parties
may designate by notice to the Partnership:
(a) If to the Partnership, at the office of the Partnership
set forth in Section 2.2.
(b) If to a Partner, at its address set forth in the Schedule,
with copies to Xxxxxxx X. Xxxxxx, Esq., Xxxxxxxxx, Powers & Xxxxxxx,
P.C., Xxx Xxxxxx Xxxxxx, 00xx Xxxxx, Xxxxxx, XX 00000 and Xxxxxx X.
Xxxxx, Esq., Xxxxxxx & Xxxx, 2100 PNC Center, 000 Xxxx Xxxxx Xxxxxx,
Xxxxxxxxxx, XX 00000-0000.
13.4 Word Meanings
The words such as "herein," "hereinafter," "hereof" and
"hereunder" refer to this Agreement as a whole and not merely to a
subdivision in which such words appear unless the context otherwise
requires. The singular shall include the plural, and vice versa, and
each gender (masculine, feminine and neuter) shall include the other
genders, unless the context requires otherwise. Each reference to a
"Section" or an "Article" refers to the corresponding Section or
Article of this Agreement, unless specified otherwise. References to
Treasury Regulations (permanent or temporary) or Revenue Procedures
shall include any successor provisions.
13.5 Binding Effect
The covenants and agreements contained herein shall be binding
upon and inure to the benefit of the heirs, executors, administrators,
successors and assigns of the respective parties hereto.
13.6 Applicable Law
This Agreement shall be construed and enforced in accordance
with the laws of the State.
13.7 Counterparts
This Agreement may be executed in several counterparts and all
so executed shall constitute one agreement binding on all parties
hereto, notwithstanding that all the parties have not signed the
original or the same counterpart.
13.8 Financing Regulations
(a) So long as any of the Project Documents are in effect, (i)
each of the provisions of this Agreement shall be subject to, and the
General Partner covenants to act in accordance with, the Project
Documents; (ii) the Project Documents shall govern the rights and
obligations of the Partners, their heirs, executors, administrators,
successors and assigns to the extent expressly provided therein; (iii)
upon any dissolution of the Partnership or any transfer of the
Apartment Complex, no title or right to the possession and control of
the Apartment Complex and no right to collect the rent therefrom shall
pass to any Person who is not, or does not become, bound by the
Project Documents in a manner satisfactory to the Lenders and any
Agency (to the extent that its approval is required); (iv) no
amendment to any provision of the Project Documents shall become
effective without the prior written consent of any Lender and/or
Agency (to the extent that its approval is required); and (v) the
affairs of the Partnership shall be subject to the Regulations, and no
action shall be taken which would require the consent or approval of
any Lender and/or Agency unless the prior consent or approval of such
Lender and/or Agency, as the case may be, shall have been obtained.
No new Partner shall be admitted to the Partnership, and no Partner
shall withdraw from the Partnership or be substituted for without the
consent of any Lender and/or Agency (if such consent is then
required). No amendment to this Agreement relating to matters
governed by the Regulations or requirements shall become effective
until any Requisite Approvals to such amendment shall have been
obtained.
(b) Any conveyance or transfer of title to all or any portion
of the Apartment Complex required or permitted under this Agreement
shall in all respects be subject to all conditions, approvals and
other requirements of any Regulations applicable thereto.
13.9 Separability of Provisions
Each provision of this Agreement shall be considered separable
and (a) if for any reason any provision is determined to be invalid,
such invalidity shall not impair the operation of or affect those
portions of this Agreement which are valid, and (b) if for any reason
any provision would cause the Investment Limited Partner or the
Special Limited Partner (in its capacity as a Limited Partner) to be
bound by the obligations of the Partnership (other than the
Regulations and the other requirements of any Agency or Lender), such
provision or provisions shall be deemed void and of no effect.
13.10 Paragraph Titles
All article and section headings in this Agreement are for
convenience of reference only and are not intended to qualify the
meaning of any article or section.
13.11 Amendment Procedure
This Agreement may be amended by the General Partner only with
the Consent of the Investment Limited Partner and the Consent of the
Special Limited Partner.
13.12 Extraordinary Partner Expenses
(a) Any and all costs and expenses incurred by any Partner in
connection with exercising rights and remedies against any other
Partner with respect to this Agreement, including, without limitation,
reasonable attorneys' fees, shall be paid by nonprevailing General
Partner on demand. All amounts due to such prevailing Partner
pursuant to this provision shall bear interest from demand at the
Prime Rate.
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 treasury regulations are issued under the Code or an amendment
to the Code is adopted which would require, in the opinion of the
Auditors, that the Investment Limited Partner be deemed admitted on a
date other than as of the Commencement Date, then the General Partner
shall select a permitted admission date which is most favorable to the
Investment Limited Partner.
13.14 Bond Requirements
Notwithstanding anything to the contrary set forth in this
Agreement, no distributions of Cash Flow or Capital Proceeds shall be
made or required pursuant to the terms of this Agreement which are not
permitted by the Bond Documents.
WITNESS the execution hereof under seal as of the _____ day of
November, 1996.
ORIGINAL (WITHDRAWING)
LIMITED PARTNER:
/s/Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
/s/Xxxxxxx X. Xxx
Xxxxxxx X. Xxx
CITY SECURITIES, LTD., a Swiss
corporaiton
By:
GENERAL PARTNER:
HENDY ASSOCIATES LIMITED LIABILITY
COMPANY, an Ohio limited liability company
By:
SPECIAL LIMITED PARTNER:
BCTC 94, INC., a Delaware corporation
By: /s/Xxxxxx Xxxx Xxx, as Attorney-in-Fact
for Xxxx X. Xxxxxxx, President
INVESTMENT LIMITED PARTNER:
BOSTON CAPITAL TAX CREDIT FUND IV L.P.,
a Delaware limited partnership, by its general
partner, Boston Capital Associates IV L.P., a Delaware
limited partnership, by its general partner, C&M
Associates d/b/a/ Boston Capital Associates, a
Massachusetts general partnership
By: /s/Xxxxxx Xxxx Xxx, as Attorney-in-Fact
for Xxxx X. Xxxxxxx, a Partner
CONSENTS AND AGREEMENTS
The undersigned hereby executes this Agreement for the sole purpose
of agreeing to the provisions of Article XI of the foregoing First
Amended and Restated Agreement of Limited Partnership notwithstanding
any provision of the Management Agreement to the contrary.
HENDY MANAGEMENT COMPANY, INC., an Ohio
corporation
By: /s/Xxxxx X. Xxxxx
Xxxxx X. Xxxxx, President
The undersigned hereby executes this Agreement for the sole purpose
of agreeing to the provisions of Sections 6.11 and 6.12(a) of the
foregoing First Amended and Restated Agreement of Limited Partnership.
HENDY ASSOCIATES LIMITED LIABILITY COMPANY,
an Ohio limited liability company
By: /s/Xxxxx X. Xxxxx
Xxxxx X. Xxxxx, Manager
XXXXXX PLACE APARTMENTS, L.P.
SCHEDULE A
As of November 20, 1996
General Partner Capital Contribution Percentage Interests
of Operating Profits
and Losses and Tax
Credits
Hendy Associates Limited $100 1%
Liability Company
00 Xxxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxxx, XX 00000
Special Limited Partner Capital Contribution Percentage Interests
of Operating Profits
and Losses and Tax
Credits
BCTC 94, Inc. $10 0%
c/o Boston Capital Partners,
Inc.
Xxx Xxxxxx Xxxxx, 00xx Xxxxx
Xxxxxx, XX 00000
Investment Total Agreed-to Paid-In Capital Percentage
Limited Partner Capital Contribution Contribution* Interests of
Operating
Profits and
Losses and Tax
Credits
Boston Capital Tax Credit $887,216 $532,330 99%
Fund IV L.P.
Xxx Xxxxxx Xxxxx, 00xx
Xxxxx
Xxxxxx, XX 00000
*Paid-in Capital Contribution as of the date of this Schedule A.
Future Installments of Capital Contribution are subject to adjustment
and are due at the times and subject to the conditions set forth in
the Agreement to which this Schedule is attached.
EXHIBIT A
LEGAL DESCRIPTION
EXHIBIT B
PROJECTED RENTS
EXHIBIT C
CAPITAL NEEDS REQUIREMENTS
EXHIBIT D
INSURANCE REQUIREMENTS
The General Partner shall cause the Partnership to maintain
insurance for the term of the Partnership in accordance with the
following:
I. Comprehensive Casualty.
The General Partner shall cause to be maintained
comprehensive casualty insurance including, but not limited to, fire,
earthquakes and other risks generally included under "extended
coverage" policies in favor of the Partnership in an amount not less
than the replacement value of the Apartment Complex and shall include
loss of rents coverage in an amount not less than the Apartment
Complex's projected annual gross rent, an agreed amount endorsement
covering all property and rental values, and a standard building laws
endorsement which includes coverage for building ordinance compliance,
demolition and any increased cost of construction of the Apartment
Complex.
II. Comprehensive General Liability.
The General Partner shall cause to be maintained commercial
general liability insurance in favor of the Partnership in an amount
not less than $1,000,000 per occurrence (combined single limit) and
$2,000,000 in the aggregate.
III. Worker's Compensation and Employer's Liability.
The General Partner shall cause to be maintained worker's
compensation and employer's liability insurance in favor of the
Partnership in an amount equal to the greater of (i) the amount
required by the State's laws governing such insurance or (ii)
$1,000,000.
IV. Comprehensive Automobile.
The General Partner shall cause to be maintained
comprehensive automobile, including non-owned automobile liability,
insurance in favor of the Partnership in an amount not less than
$1,000,000 (combined single limit).
V. Excess or Umbrella Liability.
The General Partner shall cause to be maintained excess or
umbrella liability insurance in favor of the Partnership in an amount
not less than $5,000,000 (combined single limit).
VI. Builder's Risk.
Through the Completion Date, or such later date as may be
required by any Agency or any Lender, the General Partner shall cause
the Partnership to maintain builder's risk insurance in favor of the
Partnership in an amount not less than the greater of (i) the full
replacement value of the Apartment Complex (excluding the value of the
underlying land, the site utilities and the foundations) or (ii) such
other amount as shall be required by any Agency or Lender.
VII. Management Agent.
The Management Agent shall maintain for the term of the
Management Agreement liability insurance in the amount of $1,000,000
per incident and $2,000,000 in the aggregate, worker's compensation
insurance in accordance with the State's laws governing such
insurance, a fidelity bond in the amount of not less than six (6)
months of the Apartment Complex's projected gross rent, auto liability
insurance in the amount of $1,000,000 per incident and error and
omissions insurance in the amount of $1,000,000 per incident.
VIII. General Requirements.
All of the policies required above, including those to be
maintained by the Management Agent, shall be issued by insurance
carriers which are currently rated by Standard & Poors as A or better.
No deductibles on such policies shall exceed $2,500.
EXHIBIT E
