NORTHFIELD HOUSING, L.P.
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
Dated as of December 1, 1996
NORTHFIELD HOUSING, L.P.
TABLE OF CONTENTS
Page
Preliminary Statement ................................... 5
ARTICLE I Defined Terms ............................ 5
ARTICLE II Name and Business ........................ 17
2.1 Name; Continuation ....................... 17
2.2 Office and Resident Agent ................ 17
2.3 Purpose .................................. 18
2.4 Term and Dissolution ..................... 18
ARTICLE III Mortgage, Refinancing and Disposition
of Property ............................ 19
ARTICLE IV Partners; Capital ........................ 19
4.1 Capital and Capital Accounts ............. 19
4.2 General Partners ......................... 20
4.3 Investment Limited Partner, Special Limited
Partner, and Original Limited Partner... 21
4.4 Liability of the Limited Partners......... 21
4.5 Special Rights of the Investment
Limited Partner ........................ 21
4.6 Meetings ................................. 23
ARTICLE V Capital Contributions of the Investment
Limited Partner and the Special Limited
Partner................................. 24
5.1 Payments ................................. 24
5.2 Return of Capital Contributions .......... 28
ARTICLE VI Rights, Powers and Duties of General
Partners ............................... 30
6.1 Authorized Acts .......................... 30
6.2 Restrictions on Authority ................ 31
6.3 Personal Services ........................ 33
6.4 Business Management and Control; Tax
Matters Partner ........................ 33
6.5 Duties and Obligations ................... 34
6.6 Representations and Warranties ........... 36
6.7 Liability on the Permanent Mortgage ...... 40
6.8 Indemnification of the General Partners .. 40
Page
6.9 Indemnification of the Partnership and the
Limited Partners ....................... 42
6.10 Operating Deficits ....................... 42
6.11 Obligation to Complete the Construction
of the Partnership Property ............ 43
6.12 Certain Payments to the General Partner
and Others ............................. 44
6.13 Delegation of General Partner Authority .. 46
6.14 Assignment to Partnership ................ 46
ARTICLE VII Withdrawal of a General Partner; New
General Partner ........................ 47
7.1 Withdrawal ............................... 47
7.2 Obligation to Continue ................... 48
7.3 Withdrawal of All General Partners ....... 48
7.4 Interest of General Partner After
Permitted Withdrawal ................... 48
7.5 Admission of Additional General Partner(s)
under Certain Circumstances.............. 49
ARTICLE VIII Transferability of Limited Partner
Interests .............................. 50
8.1 Assignments .............................. 50
8.2 Substituted Limited Partner .............. 51
8.3 Restrictions ............................. 51
ARTICLE IX Borrowings................................ 51
9.1 Borrowings ............................... 51
9.2 Operating Reserve ........................ 52
ARTICLE X Profits, Losses, Tax Credits, Distributions
and Capital Accounts ................... 52
10.1 Profits, Losses and Tax Credits .......... 52
10.2 Cash Distributions Prior to Dissolution .. 55
10.3 Distributions Upon Dissolution ........... 56
10.4 Special Provisions ....................... 57
10.5 Authority of the General Partners to Vary
Allocations to Preserve and Protect the
Partners' Intent ....................... 61
ARTICLE XI Management Agent ......................... 62
Page
ARTICLE XII Books and Records, Accounting, Tax
Elections, Etc. ........................ 64
12.1 Books and Records ........................ 64
12.2 Bank Accounts ............................ 64
12.3 Auditors ................................. 64
12.4 Cost Recovery and Elections .............. 65
12.5 Special Basis Adjustments ................ 65
12.6 Fiscal Year .............................. 65
12.7 Information to Partners .................. 65
12.8 Expenses of the Partnership .............. 68
ARTICLE XIII General Provisions ....................... 70
13.1 Restrictions by Reason of Section 708 of
the Code ............................... 70
13.2 Amendments to Certificate ................ 70
13.3 Notices .................................. 71
13.4 Word Meanings ............................ 71
13.5 Binding Effect ........................... 71
13.6 Applicable Law ........................... 71
13.7 Counterparts ............................. 71
13.8 Financing Regulations .................... 71
13.9 Separability of Provisions ............... 71
13.10 Paragraph Titles ......................... 72
13.11 Amendment Procedure....................... 72
13.12 Time of Admission ........................ 72
NORTHFIELD HOUSING, L.P.
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
Preliminary Statement
Northfield Housing, L.P. (the "Partnership") was formed as a
Mississippi limited partnership pursuant to an Agreement of Limited
Partnership (the "Original Agreement") dated August 10, 1994 by X.X.
Xxxxxx, Xx. as General Partner and Xxxxx X. Xxxxxx as the Limited
Partner (the "Original Limited Partner"). A Certificate of Mississippi
Limited Partnership relating thereto (the "Original Certificate of
Limited Partnership") was filed with Mississippi Secretary of State's
office on August 11, 1994.
In consideration of 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 this Agreement shall have the meanings
specified below:
Actual Credit means, with respect to a particular year, the total
amount of Tax Credit properly allocable by the Partnership to the
Investment Limited Partner for such year. The Actual Credit shall be
retroactively revised if the amount of Tax Credit properly allocable to
the Investment Limited Partner is revised after audit.
Additional Limited Partner means any holder of an Interest
designated as an Additional Limited Partner pursuant to Section 4.5(b)
or Section 7.4.
Admission Date means the first date on which all parties hereto
shall have executed this Agreement, or, if, pursuant to the
Uniform Act, the Investment Limited Partner shall not be deemed admitted
to the Partnership on such date, then the next date thereafter on which
the Investment Limited Partner shall be deemed to be admitted to the
Partnership under the Uniform Act.
Affiliate means (A) as to the Investment Limited Partner, the
Investment General Partner or Boston Capital, (i) such Person; (ii) each
member of the Immediate Family of such Person; (iii) each legal
representative, successor or assignee of any Person referred to in the
preceding clauses (i) or (ii); (iv) each trustee of a trust for the
benefit of any Person referred to in the preceding clauses (i) or (ii);
or (v) any other Person (a) who directly or indirectly controls, is
controlled by, or is under common control with such Person, (b) who is
an officer of, director of, partner in or trustee of, or serves in a
similar capacity 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)(a), (v)(b) or (v)(c) or (e) who, whatever his title, performs
functions for such Person or any Affiliate of such Person similar to a
Chairman or member of the Board of Directors, or executive officer such
as the President, Executive Vice President or Senior Vice President,
Corporate Secretary, or Treasurer, or any Person holding a five percent
(5%) or more equity interest in such Person, or any Person having the
power to direct or cause the direction of such Person, whether through
the ownership of voting securities, by contract or otherwise; and (B) as
to any other named Person or Persons (i) such Person; (ii) each member
of the Immediate Family of such Person; (iii) each legal representative,
successor or assignee of any Person referred to in the preceding clauses
(i) or (ii); (iv) each trustee of a trust for the benefit of any Person
referred to in the preceding clauses (i) or (ii); or (v) any other
Person (a) who directly or indirectly controls, is controlled by, or is
under common control with such Person, (b) who owns or controls ten
percent (10%) or more of the outstanding voting securities of such
Person, (c) of which ten percent (10%) or more of the outstanding voting
securities is owned by such Person or any of the Persons referred to in
the foregoing clauses (i) through (iii), (d) who is an officer,
director, partner or trustee of such Person, or (e) for which such
Person acts in the capacity of officer, director, partner or trustee.
An Affiliate of the Investment Limited Partner or of the Investment
General Partner does not include a Person who is a partner in a
partnership or joint venture with the Investment Limited Partner or any
other Affiliate of the Investment Limited Partner if such Person is not
otherwise an Affiliate of the Investment Limited Partner or the
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 the Investment Limited
Partner, the Investment General Partner or any Affiliate of either of
them.
Agency means, as applicable, HUD, the Authority, and/or any other
government agency having jurisdiction over the particular matter to
which reference is being made.
Aggregate Cost means the sum of (i) the total Capital
Contributions made or anticipated to be made by the Investment Limited
Partner plus (ii) the proportionate amount of the mortgage loans on, and
other debts related to, the Partnership Property, which proportionate
amount is equal to the Investment Limited Partner's initial pro rata
interest in the profits, losses, and tax credits of the Partnership. The
amount of the Aggregate Cost determined upon payment of the last of the
four Installments of the Capital Contribution of the Investment Limited
Partner shall not thereafter be reduced.
Agreement means this Amended and Restated Agreement of Limited
Partnership, including Schedule A, as amended from time to time.
Annual Partnership Management Fee means the fee payable to the
General Partners pursuant to the provisions of Section 6.12(a).
Applicable Federal Rate means the "applicable federal rate" as
defined in Section 1274(d) of the Code.
Applicable Percentage has the meaning given to it in Section 42(b)
of the Code.
Asset Management Fee means the fee payable to Boston Capital or an
Affiliate thereof pursuant to Section 6.12(c).
Auditors means Xxx Xxxxxxxx, CPA, of Jackson, Mississippi, or such
other firm of independent certified public accountants as may be engaged
by the General Partners with the consent of Boston Capital for the
purposes of preparing the Partnership income tax returns, auditing the
books and records of the Partnership and certifying financial reports of
the Partnership.
Authority means the Mississippi Home Corporation.
BCCLP means Boston Capital Communications Limited Partnership, a
Massachusetts limited partnership, and its successors and assigns.
Boston Capital means Boston Capital Partners, Inc., a
Massachusetts corporation, its successors and assigns.
Capital Account has the meaning specified in Section 4.1(b).
Capital Contribution means the total value of cash or property
contributed and agreed to be contributed to the Partnership by each
Partner, as shown in Schedule A. Any reference in this Agreement to the
Capital Contribution of a then Partner shall include a Capital
Contribution previously made by any prior Partner for the Interest of
such then Partner.
Capital Transaction means any transaction the proceeds of which
are not includable in determining Cash Flow including, without
limitation, the sale or other disposition of all or substantially all of
the assets of the Partnership, but excluding the payment of Capital
Contributions.
Carryover Certification means the date upon which the Investment
Limited Partner shall have received, in a form and in substance
satisfactory to the Investment Limited Partner, the certification of the
Auditors that as of a date no later than December 31, 1994, the
Partnership had owned land or depreciable property constituting part of
the Partnership Property and had incurred capitalizable costs with
respect to the Partnership Property of at least ten percent (10%) of the
Partnership's reasonably expected basis in the Partnership Property as
of December 31, 1996, so that each building in the Partnership Property
constitutes a "qualified building" for the purposes of Section
42(h)(1)(E)(ii) of the Code.
Cash Available for Debt Service Requirements for any period means
the excess of (i) all cash received by the Partnership on a cash basis
from normal operations during such period, 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) 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 operations, 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 all Partnership
reserves, normal repairs, real estate taxes at fully assessed levels
assuming a fully improved property, and necessary capital improvements.
Cash Flow means the profits or losses of the Partnership from and
after the Commencement Date subject to any applicable Agency or Lender
requirements and to the following adjustments:
(a) Cost recovery deductions of buildings, improvements
and personal property and amortization of any financing fees shall
not be deducted;
(b) Mortgage amortization shall be deducted;
(c) Mortgage interest which is included in determining
profits and losses but which is not currently payable in cash
shall be deducted when actually paid;
(d) Payments to reserves under Section 6.5(e) shall be
deducted;
(e) Any amounts paid for capital expenditures shall be
deducted, unless paid from any replacement reserve or funded
through insurance;
(f) The proceeds of any Construction Mortgage or Permanent
Mortgage refinancing, any sale, exchange, eminent domain taking,
damage or destruction (whether insured or uninsured), or other
disposition, of all or any part of the Partnership Property (other
than the proceeds of any business or rental interruption
insurance) shall not be included;
(g) Any rent or interest subsidy payments shall be
included;
(h) The fees set forth in Sections 6.12, any interest on
the Construction and Development Fee, and any fee payable in
connection with any transaction referred to in clause (f) above
shall not be deducted; and
(i) Prior to Permanent Mortgage Commencement, an amount
equal to the amount, if any, of net rental income applied to
complete the construction of the Partnership Property pursuant to
Section 6.11 shall be deducted.
Certificate means the Original Certificate as amended from time to
time.
Class Contribution means the aggregate Capital Contributions of
all members of a particular class of Partners (i.e., the General
Partners, the Investment Limited Partner, the Special Limited Partner or
any Additional Limited Partner.)
Code means the Internal Revenue Code of 1986, as amended from time
to time, and the regulations (permanent or temporary) issued thereunder.
References herein to any Code section shall include any successor
provisions.
Commencement Date means the first day of the month in which the
Admission Date occurs.
Competitive Real Estate Commission means that real estate or
brokerage commission paid for the purchase or sale of the Partnership
Property or other Partnership property which is reasonable, customary
and competitive in light of the size, type and location of the
Partnership Property or other property.
Completion Date means the date upon which the Partnership Property
has been completed as evidenced by the issuance by the inspecting
architect and by each governmental agency having jurisdiction of
certificates of substantial completion or occupancy (or local
equivalents) with respect to all of the 5 single family home units in
the Partnership Property.
Consent of the Investment Limited Partner means the prior written
consent or approval of the Investment Limited Partner.
Construction and Development Fee means the fee described in
Section 6.12(b).
Construction Lender means the Trustmark National Bank of Jackson,
Mississippi in its capacity as holder of the Construction Mortgage, or
its successors or assigns in such capacity.
Construction Mortgage means the financing for the construction of
the Partnership Property provided by the Construction Lender in a
principal amount of up to $328,000.
Controlling Person has the meaning given to it in the context of
Section 15 of the Securities Act of 1933, as amended.
Cost Certification means the date upon which each Limited Partner
shall have received the written certification of the Auditors, in a form
and substance satisfactory to Boston Capital, as to the itemized amounts
of the construction and development costs of the Partnership Property
and the Eligible Basis and Applicable Percentage pertaining to each
building in the Partnership Property.
Credit Period has the meaning given to it in Section 42(f)(1) of
the Code.
Credit Recovery Loan means a constructive interest-bearing advance
of the Investment Limited Partner as more fully described in Section
5.1(f). Credit Recovery Loans and interest thereon shall not be treated
as loans or interest, respectively, for accounting, tax or liability
purposes or for the purposes of Section 6.2(a)(1). For the purposes of
Article X, the term Credit Recovery Loan shall not include any portion
of such an advance which shall have there tofore been paid to the
Investment Limited Partner.
Credit Shortfall has the meaning given to it in Section 5.1(f).
Disposition (including the forms Dispose and Disposing) means, as
to a Limited Partner, the assignment, sale, transfer, exchange or other
disposition of all or any part of its Interest.
Economic Risk of Loss has the meaning set forth in Treasury
Regulation 1.752-2.
89-12 Requirements means the requirements set forth in Internal
Revenue Procedure 89-12 which are prerequisites to the issuance,
assuming that each General Partner is a corporation, by the Service of
an advance ruling that the Partnership will be taxed as a partnership
and not as an association taxable as a corporation for Federal income
tax purposes.
Escrow Agent means the Trustmark National Bank of Jackson,
Mississippi.
Entity means any general partnership, limited partnership,
corporation, joint venture, trust, business trust, cooperative or
association.
Event of Bankruptcy means with respect to any Person,
(i) the entry of a decree or order for relief by a court
having jurisdiction in respect of such Person or in respect of any
Controlling Person of such Person in a case under the federal
bankruptcy laws, as now or hereafter constituted, or any other
applicable federal or state bankruptcy, insolvency or other
similar law, or the appointment of a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or similar official)
of such Person or of any Controlling Person of such Person for any
substantial part of such Person's property or of the property of
any Controlling Person of such Person, or the issuance of an order
for the winding-up or liquidation of such Person's affairs and the
continuance of any such decree or order unstayed and in effect for
a period of sixty (60) consecutive days, or
(ii) the commencement by such Person or by any Controlling
Person of such Person of a proceeding seeking any decree, order or
appointment referred to in clause (i), the consent by such Person
to any such decree, order or the appointment, or taking of any
action by such Person in furtherance of any of the foregoing.
Filing Office means the Office of the Secretary of State of the
State.
General Partner Admission Loan means the advances made by the
General Partner to the Partnership in the principal amount of $72,389 as
specified in Section 9.2.
General Partners means the Persons designated as the General
Partners in Schedule A and any Persons who become General Partners as
provided herein, in their capacities as general partners of the
Partnership. At any and all times where there is only one General
Partner, the term General Partners shall mean such sole General Partner.
Hazardous Material shall have the collective meanings given to the
terms "hazardous material", "hazardous substances" and "hazardous
wastes" in the Federal Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. Sec. 9601 et seq., as
amended, and to the term "radioactive materials" in the context of the
Atomic Energy Act, 28 U.S.C. Sec. 2344, and also includes any meanings
given to such terms in any similar state or local statutes, ordinances,
regulations or by-laws. In addition, the term Hazardous Material also
includes oil and any other substance known to be hazardous.
HUD means the United States Department of Housing and Urban
Development.
Immediate Family means with respect to any Person, such Person's
spouse, parents, parents-in-law, descendants, nephews, nieces, brothers,
sisters, brothers-in-law, sisters-in-law, children-in-law and
grandchildren-in-law.
Initial 100% Occupancy Date means the first date upon which not
less than one hundred percent (100%) of the single family home units in
the Partnership Property shall have been leased to and physically
occupied by Qualified Tenants.
Installment means an installment of the Investment Limited
Partner's Capital Contribution paid or payable to the Partnership
pursuant to Section 5.1.
Interest means the entire interest of a Partner in the Partnership
at any particular time, including the right of such Partner to any and
all benefits to which a Partner may be entitled hereunder and the
obligation of such Partner to comply with the terms of this Agreement.
Invested Amount means (i) as to the Investment Limited Partner, an
amount equal to the Capital Contribution of the Investment Limited
Partner divided by 73% and (ii) as to any other Partner, an amount equal
to its Capital Contribution.
Investment General Partners means Boston Capital Associates IV,
L.P., a Delaware limited partnership, in its capacity as the general
partner of the Investment Limited Partner, and any other Person who may
become a successor or additional general partner of the Investment
Limited Partner.
Investment Limited Partner means Boston Capital Tax Credit Fund
IV, L.P., a Delaware limited partnership, and any Person or Persons who
replace them as Substituted Limited Partner, but shall not include any
Special Limited Partner or Additional Limited Partner.
Investment Partnership Agreement means the Agreement of Limited
Partnership of the Investment Limited Partner, as amended from time to
time.
Lender means the Construction Lender or Permanent Lender , each in
its capacity as maker of a Mortgage loan, or its successors and assigns
in such capacity.
Limited Partners means the Investment Limited Partner, the Special
Limited Partner and any Additional Limited Partner.
Management Agent means the management and rental agent for the
Partnership Property.
Management Agreement means the agreement between the Partnership
and the Management Agent providing for the management of the Partnership
Property.
Management Fee means the Management Fee to which reference is made
in Article XI.A.
Minimum Set-Aside Test means the set aside test selected by the
Partnership pursuant to Section 42(g) of the Code whereby at least 40%
of the units in the Partnership Property must be occupied by individuals
with incomes equal to 60% or less of area median income, as adjusted for
family size.
Mortgage means the mortgage indebtedness of the Partnership to the
Construction Lender and/or the Permanent Lender; and where the context
admits Mortgage shall mean and include the mortgage note evidencing such
indebtedness, the mortgage or deed of trust and security agreement
securing such indebtedness, the loan agreement and all other
documentation related thereto which evidence and secure such
indebtedness, including any Agency documentation related thereto.
Offering Memorandum means the confidential memorandum dated
November 1, 1995 by which the Investment Limited Partner offers limited
partnership interests for purchase by investors.
Original Agreement has the meaning specified in the Preliminary
Statement.
Original Certificate of Limited Partnership has the meaning
specified in the Preliminary Statement.
Original Limited Partner has the meaning specified in the
Preliminary Statement.
Partner means any General Partner or Limited Partner.
Partnership means the limited partnership continued pursuant to
this Agreement.
Partnership Minimum Gain means the amount determined by computing,
with respect to each Partnership Non-recourse Liability, the amount of
gain, if any, that would be realized by the Partnership if it disposed
of (in a taxable transaction) the property subject to such liability in
full satisfaction of such liability, and by then aggregating the amounts
so computed. Such computations shall be made in a manner consistent
with Treasury Regulation Section 1.704-2(d).
Partnership Non-Recourse Liability means any Partnership liability
(or portion thereof) for which no Partner or Related Person bears the
Economic Risk of Loss.
Partnership Property means the real property located in Jackson,
Xxxxx County, Mississippi as more fully described in the Mortgage,
together with (i) all buildings and other improvements constructed or to
be constructed thereon and (ii) all furnishings, equipment and personal
property covered by the Mortgage.
Permanent Mortgage means the permanent financing provided, or to
be provided, by Trustmark National Bank of Jackson, Mississippi for the
Partnership Property following the completion thereof in the initial
principal amount of $200,000.
Permanent Mortgage Commencement means the first date on which all
of the following shall have occurred: (a) the Completion Date; (b) the
principal amount and maturity date of the Permanent Mortgage shall have
been finally determined; and (c) amortization of the Permanent Mortgage
shall have commenced.
Permanent Mortgage Commitment means the first date on which the
Partnership receives the written commitment of the Permanent Lender to
make the Permanent Mortgage.
Person means any individual or Entity.
Project Documents means and includes the Construction Mortgage and
the Permanent Mortgage, the Management Agreement, all other instruments
delivered to (or required by) the Construction Lender and/or the
Permanent Lender and all other documents relating to the Partnership
Property or the Tax Credit and by which the Partnership is bound, as
amended or supplemented from time to time.
Projected Credit to the Investment Limited Partner means $36,608
per annum for the years 1997 through 2007 (inclusive); provided, how-
ever, that upon the occurrence of any of the events described in clauses
(i), (ii) and (iii) of Section 5.1(g), the Projected Credit shall
thereafter be the Revised Projected Credit.
Qualified Basis has the meaning given to it in Section 42(c) of
the Code.
Qualified Income Offset Item means (1) an allocation of loss or
deduction that, as of the end of each year, reasonably is expected to be
made (a) pursuant to Section 704(e)(2) of the Code to a donee of an
interest in the Partnership, (b) pursuant to Section 706(d) of the Code
as the result of a change in any Partner's Interest, or (c) pursuant to
Regulation Section 1.751-1(b)(2)(ii) as the result of a distribution by
the Partnership of unrealized receivables or inventory items and (2) a
distribution that, as of the end of such year, reasonably is expected to
be made to a Partner to the extent it exceeds offsetting increases to
such Partner's Capital Account which reasonably are expected to occur
during or prior to the Partnership taxable year in which such
distribution reasonably is expected to occur.
Qualified Tenant means a tenant (i) with income not exceeding that
permitted by the Minimum Set-Aside Test who leases a Low-Income
Apartment Unit in the Project under a lease having an original term of
not less than 6 months at a rent which satisfies the Rent Restriction
Test and (ii) complying with any other requirements imposed by the
Project Documents.
Related Person means a person related to a Partner within the
meaning of Treasury Regulation Section 1.752-4(b).
Rent Restriction Test means the test pursuant to Section 42 of the
Code whereby the gross rent charged to tenants of the low-income units
in the Partnership Property may not exceed thirty percent (30%) of the
qualifying income levels.
Rental Achievement means the first time, based upon four
consecutive full calendar months of operation, two months prior to
Permanent Mortgage Commencement, using full debt service payments, with
each month taken individually, that Cash Available for Debt Service
Requirements equals or exceeds 1.15 times debt service requirements.
For the purpose of calculating the debt service coverage ratio, expenses
shall include all accrued operating expenses and a ratable portion of
the amount of those expenses which might reasonably be expected to be
incurred during a full stabilized annual period of operation and
reserves required pursuant to Section 5.6.
Revised Projected Credit has the meaning given to it in
Section 5.1(g).
Schedule A means Schedule A to this Agreement as amended from time
to time.
Service means the Internal Revenue Service.
Site has the meaning given to it in the Federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42
U.S.C. Sec. 9601 et seq., as amended, and shall also include any meaning
given to it in any similar state or local statutes, ordinances,
regulations or by-laws.
Special Limited Partner means BCTC 94, Inc., a Delaware
corporation, and any Person who becomes a Special Limited Partner as
provided herein, in its capacity as a special limited partner of the
Partnership.
State means the State of Mississippi.
State Designation means the date upon which the Partnership
receives the allocation by the authorized agency of the State of Tax
Credit for the building(s) constituting the Partnership Property in an
annual dollar amount of not less than $36,978 as evidenced by the
execution by or on behalf of such agency of Form(s) 8609. For the
purposes of determining State Designation, each building in the
Partnership Property shall be treated as having received an allocation
of Tax Credit in an amount equal to the lesser of (i) the amount of Tax
Credit carryover allocation received from the authorized agency of the
State as to such building or (ii) the amount of Tax Credit set forth on
the Form 8609 as to such building.
Subordinated Loan means any loan made by the General Partners to
the Partnership pursuant to Section 6.10.
Substituted Limited Partner means any Person who is admitted to
the Partnership as Limited Partner under Section 8.2 or acquires the
Interest of a Limited Partner pursuant to Section 5.2.
Tax Accountants means Xxxxxxx, Xxxxxx & Xxxxxxxxx of Bethesda,
Maryland or such other firms of independent certified public accountants
as may be engaged by Boston Capital to review the Partnership income tax
returns.
Tax Credit means the low-income housing tax credit issued pursuant
to Section 42 of the Code.
Tax Credit Set-Aside means the date upon which the Partnership
receives a preliminary reservation, effective for the year 1996, the
year the Partnership Property is expected to receive an allocation of
Tax Credit, by the authorized agency of the State of Tax Credit for the
building(s) constituting the Partnership Property in an annual dollar
amount of not less than $36,978, which reservation shall not have
expired or been revoked prior to the date on which the First Installment
is paid.
Uniform Act means the Uniform Limited Partnership Act and/or the
Revised Limited Partnership Act as adopted by the State and amended from
time to time.
Vessel has the meaning given to it in the Federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42
U.S.C. Sec. 9601 et seq., as amended, and shall also include any meaning
given to it in any similar state or local statutes, ordinances,
regulations or by-laws.
Withdrawal (including the forms Withdraw, Withdrawing and
Withdrawn) means, as to a General Partner, the occurrence of death,
adjudication of insanity or incompetence, Event of Bankruptcy,
dissolution, liquidation, or voluntary or involuntary withdrawal or
retirement from the Partnership for any reason, including whenever a
General Partner may no longer continue as a General Partner by law or
pursuant to any terms of this Agreement. Withdrawal shall also mean the
sale, assignment, transfer or encumbrance by a General Partner of its
interest as a General Partner. A General Partner which is a corporation
or partnership shall be deemed to have sold, assigned, transferred or
encumbered its interest as a General Partner in the event (as a result
of one or more transactions) of any sale, assignment or other transfer
(but specifically excluding any transfer occurring pursuant to the laws
of descent and distribu tion) of a controlling interest in a corporate
General Partner or of a general partner interest in a General Partner
which is a partnership. For purposes of this definition of Withdrawal,
"controlling interest" shall mean the power to direct the management and
policies of such person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise.
ARTICLE II
Name and Business
2.1 Name; Continuation
The name of the Partnership is Northfield Housing, L.P. The
Partners agree to continue the Partnership which was formed pursuant to
the provisions of the Uniform Act.
2.2 Office and Resident Agent
(a) The principal office of the Partnership is 0000 Xxxxxxx Xxxx,
Xxxxx 000, Xxxxxxx, Xxxxxxxxxxx 00000 at which office there shall be
maintained those records required by the Uniform Act to be kept by the
Partnership. The Partnership may have such other or additional offices
as the General Partners shall deem desirable. The General Partners may
at any time change the location of the principal office and shall give
due notice thereof to the Limited Partners.
(b) The resident agent in the State for the Partnership for
service of process is as follows:
For Mississippi: X. X. Xxxxxx, Xx.
0000 Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, XX 00000
2.3 Purpose
The purpose of the Partnership is to acquire, hold, invest in,
construct, rehabilitate, develop, improve, maintain, operate, lease and
otherwise deal with the Partnership Property. The Partnership shall
operate the Partnership Property in accordance with any applicable
Agency regulations and requirements. The Partnership shall not engage
in any other business or activity.
2.4 Term and Dissolution
The Partnership shall continue in full force and effect until
December 31, 2044, except that the Partnership shall be dissolved and
its assets liquidated prior to such date upon:
(a) The sale or other disposition of all or substantially all of
the assets of the Partnership;
(b) A General Partner dying, being adjudicated bankrupt, insane
or incompetent, (if a corporation or partnership) being dissolved or
liquidated, or voluntarily or involuntarily withdrawing from the
Partnership for any reason, including an inability to continue serving
as a General Partner by law or pursuant to the terms of this Agreement,
if (i) the remaining General Partner(s), if any, shall fail to continue
the business of the Partnership and reconstitute the Partnership as a
successor limited partnership as provided in Section 7.2 and (ii) the
Investment Limited Partner shall fail to exercise the right provided in
Section 7.3;
(c) The election to dissolve the Partnership made in writing by
the General Partners with the Consent of the Investment Limited Partner
and the approval (if required) of any Agency ;
(d) The entry of a final decree of dissolution of the
Partnership by a court of competent jurisdiction; or
(e) Any other event which causes the dissolution of the
Partnership under the Uniform Act if the Partnership is not
reconstituted pursuant to Section 7.2 or Section 7.3.
Upon dissolution of the Partnership, the General Partners (or for
purposes of this paragraph, their trustees, receivers or successors)
shall cause the cancellation of the Certificate, liquidate the
Partnership assets and apply and distribute the proceeds thereof in
accordance with Section 10.3. Notwithstanding the foregoing, if, during
liquidation, the General Partners shall determine that an immediate sale
of part or all of the Partnership's assets would be impermissible,
impractical or cause undue loss to the Partners, the General Partners
may defer liquidation of, and withhold from distribution for a
reasonable time, any assets of the Partnership except those necessary to
satisfy Partnership debts and obligations (except Subordinated Loans).
ARTICLE III
Mortgage, Refinancing and Disposition of Property
A. The Partnership may decrease, increase or refinance the
Permanent Mortgage and may make any required transfer or conveyance of
Partnership assets for security or mortgage purposes, provided, however,
any such decrease (except through the thirty-year amortization schedule
anticipated at Permanent Mortgage Commencement), increase or refinancing
of the Permanent Mortgage may be made by the General Partners only with
the Consent of the Investment Limited Partner, which Consent shall not
be unreasonably withheld.
B. The Partnership may sell, lease, exchange or otherwise
transfer or convey all or substantially all the assets of the
Partnership only with the Consent of the Investment Limited Partner.
Notwithstanding the foregoing and except as set forth in
Section 6.2(a)(6), no Consent of the Investment Limited Partner shall be
required for the leasing of apartments to tenants in the normal course
of operations or the leasing of all or substantially all the apartments
to a public housing authority at rents satisfactory to each Agency as
expressed in writing.
C. The total compensation to all Persons for the sale of the
Partnership Property shall be limited to a Competitive Real Estate
Commission, not to exceed six percent (6%) of the contract price for the
sale of the Partnership Property, unless approved by the Investment
Limited Partner.
ARTICLE IV
Partners; Capital
4.1 Capital and Capital Accounts
(a) The Capital Contribution of each Partner shall be as set
forth on Schedule A. No interest shall be paid on any Capital
Contribution. No Partner shall have the right to withdraw its Capital
Contribution or to demand and receive property of the Partnership in
return for its Capital Contribution, except as may be specifically
provided in this Agreement or required by law.
(b) An individual Capital Account shall be established and
maintained on behalf of each Partner, including any additional or
substituted Partner who shall hereafter receive an interest in the
Partnership. In accordance with Treasury Regulation Section 1.704-1(b),
the Capital Account of each Partner shall consist of (i) the amount of
cash such Partner has contributed to the Partnership plus (ii) the fair
market value of any property such Partner has contributed to the
Partnership net of any liabilities assumed by the Partnership or to
which such property is subject plus (iii) the amount of profits or
income (including tax-exempt income) allocated to such Partner less (iv)
the amount of losses and deductions allocated to such Partner less (v)
the amount of all cash distributed to such Partner less (vi) the fair
market value of any property distributed to such Partner net of any
liabilities assumed by such Partner or to which such property is subject
less (vii) such Partner's share of any other expenditures which are not
deductible by the Partnership for Federal income tax purposes or which
are not allowable as additions to the basis of Partnership property and
shall be (viii) subject to such other adjustments as may be required
under the Code. The Capital Account of a Partner shall not be affected
by any adjustments to basis made pursuant to Section 743 of the Code but
shall be adjusted with respect to adjustments to basis made pursuant to
Section 734 of the Code.
The original Capital Account established for any Substituted
Partner (as hereinafter defined) shall be in the same amount as, and
shall replace, the Capital Account of the Partner which such Substituted
Partner succeeds, and, for the purposes of this Agreement, such
Substituted Partner shall be deemed to have made the Capital
Contribution, to the extent actually paid in, of the Partner which such
Substituted Partner succeeds. The term "Substituted Partner" as used in
this paragraph, shall mean a Person who shall become entitled to receive
a share of the allocations and distributions of the Partnership by
reason of such Person succeeding to all or any part of the Interest of a
Partner by assignment of all or any part of a Partner's Interest. To
the extent a Substituted Partner receives less than 100% of the Interest
of a Partner he succeeds, the original Capital Account of such
transferee Substituted Partner and his Capital Contribution shall be in
proportion to the portion of the transferor Partner's Interest prior to
the transfer which the transferee receives, and the Capital Account of
the transferor Partner who retains a portion of his former Interest and
his Capital Contribution shall continue, and not be replaced, in
proportion to the portion of the transferor Partner's Interest prior to
the transfer which the transferor Partner retains. Nothing in this
Section 4.1(b) shall affect the limitations on transferability of
Interests set forth in Article VII or Article VIII.
4.2 General Partners
The name, address and Capital Contribution of each General Partner
are as set forth on Schedule A.
4.3 Investment Limited Partner, Special Limited Partner and
Original Limited Partner
The Original Limited Partner hereby withdraws as a limited partner
of the Partnership and acknowledges that she no longer has any Interest
in, or rights or claims against, the Partnership as a Limited Partner as
of the Admission Date. The Investment Limited Partner and the Special
Limited Partner are hereby admitted as the sole Limited Partners in
substitution for the Original Limited Partner as of the Admission Date
and agree to be bound by the terms and provisions of the Project
Documents and this Agreement. The names and addresses of the Investment
Limited Partner and the Special Limited Partner are as set forth on
Schedule A. The General Partners shall have no authority to admit
additional Limited Partners without the Consent of the Investment
Limited Partner.
4.4 Liability of the Limited Partners
None of the Investment Limited Partner, the Special Limited
Partner and any Person who becomes an Additional Limited Partner shall
be liable for any debts, liabilities, contracts or obligations of the
Partnership, except as provided by the Uniform Act or the Escrow
Agreement, and shall only be liable to pay their respective Capital
Contributions as and when the same are due hereunder and under the
Uniform Act.
4.5 Special Rights of the Investment Limited Partner, and the
Special Limited Partner
(a) Notwithstanding any other provision herein, to the extent
the law of the State is not inconsistent, each of the Investment Limited
Partner and the Special Limited Partner shall have the right, subject to
the prior written consent of any Agency (if such consent is required)
to:
(i) amend this Agreement in any particular;
(ii) dissolve the Partnership;
(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,
negligence, misconduct or breach of fiduciary duty, or (B) upon
the occurrence of any of the following: (1) such General Partner
shall have violated any provisions of any Project Document or
other document required in connection with any Mortgage, or any
provisions of any Agency regulations applicable to the
Partnership Property; (2) such General Partner shall have violated
any provision of this Agreement, including, but not limited to,
any obligation to fund any Partnership expense under Section 6.10,
or such General Partner shall have violated any provision of
applicable law; (3) any Mortgage shall have gone into default; or
(4) such General Partner shall have conducted its own affairs or
the affairs of the Partnership in such a manner as would (a) cause
the termination of the Partnership for Federal income tax
purposes; or (b) cause the Partnership to be treated for Federal
income tax purposes as an association taxable as a corporation;
(iv) continue the business of the Partnership with a
substitute General Partner; 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
automatically become a General Partner and acquire in consideration of a
cash payment of $100 such portion of the Interest of the removed General
Partner as counsel to the Investment Limited 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 Uniform
Act, (ii) such portion of the economic Interest as an Additional Limited
Partner, (iii) the economic Interest of the Special Limited Partner as
the Special Limited Partner shall continue unaffected by the new status
of the Special Limited Partner as a General Partner, and (iv) the new
General Partner (which shall also continue to be the Special Limited
Partner) shall automatically be delegated all of the powers and duties
of the General Partners pursuant to Section 6.13. The former Special
Limited Partner of any successor General Partner proposed by the former
Special Limited Partner shall have the option, exercisable in its sole
discretion, to acquire the remainder of the Additional Limited Partner
Interest, or any portion thereof, of any removed General Partner upon
payment of the agreed or then present fair market value of such interest
or portion thereof. Any dispute as to the value of the Interest or
portion thereof to be acquired pursuant to the immediately preceding
sentence shall be submitted to a committee composed of three qualified
real estate appraisers, one chosen by the removed General Partner, one
chosen by the successor General Partner or the Investment Limited
Partner, as the case may be, and the third chosen by the two so chosen.
The proceedings of such committee shall conform to the rules of the
American Arbitration Association, as far as appropriate, and its
decision shall be final and binding. The expense of arbitration shall
be born equally by the removed General Partner and the Partnership. The
method of payment to the removed General Partner shall be fair and must
protect the solvency and liquidity of the Partnership. The method of
payment will be deemed presumptively fair where it provides for an
interest-bearing promissory note coming due in no less than five (5)
years with equal installments each year. In addition, upon removal, the
Partnership must promptly pay to the removed General Partner all amounts
then accrued and owing to the removed General Partner; provided,
however, that notwithstanding the language of Section 6.12, Article X,
Article XI and any other provision hereof, no removed General Partner or
any Affiliate thereof shall be entitled to receive any fee, compensation
or other remuneration from the Partnership, other than (i) the above-
described payment for the Interest, or portion thereof, of the removed
General Partner, and (ii) any such fee, compensation or other
remuneration which had already been earned in full prior 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 agreement. The Partnership may
offset against any payments to a General Partner removed under this
Section 4.5 any damages suffered by the Partnership as a result of any
breach of the obligations of such General Partner hereunder. A General
Partner so removed will not be liable as a General Partner for any
obligations of the Partnership after the effective date of its removal.
Each General Partner hereby grants to the Special Limited Partner an
irrevocable (to the extent permitted by applicable law) power of
attorney coupled with an interest to execute and deliver any and all
documents and instruments on behalf of such General Partner 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.
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 Partners shall
provide all Limited Partners within ten (10) days after receipt of said
request, written notice (either in person or by certified mail) of a
meeting and the purpose of such meeting to be held on a date not less
then fifteen (15) nor more than sixty (60) days after receipt of said
request, at a time convenient to the Limited Partners. All meetings
shall be held at the principal office of the Partnership.
ARTICLE V
Capital Contributions of the Investment Limited Partner
and the Special Limited Partner
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 shall be paid in cash
installments (the "Installments"), as follows:
(1) $130,360 (the "First Installment") on the latest of
(i) the Admission Date, (ii) Tax Credit Set-Aside, (iii) closing
of the Construction Mortgage or (iv) receipt of a commitment
acceptable to the Investment Limited Partner for the Permanent
Mortgage;
(2) $43,453 (the "Second Installment") upon 50% completion
based on total projected costs; and,
(3) $43,453 (the "Third Installment") upon the latest to
occur of (i) the Completion Date, (ii) Cost Certification, (iii)
receipt of an updated title insurance policy satisfactory to the
Investment Limited Partner, (iv) Compliance with Due Diligence
recommendations, or (v) receipt by the Investment Limited Partner
of estoppel letters from each Lender.
provided, however, that the First Installment shall be paid in
accordance with and subject to the Escrow Agreement executed
herewith and provided further, that the General Partners shall
give the Investment Limited Partner not less than ten (10) days'
written notice prior to the due date of each Installment
subsequent to the First Installment.
(b) The obligation of the Investment Limited Partner to pay each
Installment is conditioned upon delivery by the General Partners to the
Investment Limited Partner of a written certificate (the "Payment
Certificate") stating that as of the date of such certificate (i) all
the conditions to the payment of such Installment have been satisfied
and (ii) all representations and warranties of the General Partners
contained in this Agreement are true and correct. Except as provided in
the final sentence of this Section 5.1(b), acceptance by the Partnership
of any Installment shall constitute a confirmation that, as of the date
of payment, all such conditions are satisfied and all such
representations and warranties are true and correct. The obligation of
the Investment Limited Partner to pay the First Installment is also con-
ditioned upon delivery by the General Partners to the Investment Limited
Partner of (i) a legal opinion of independent counsel to the
Partnership, which opinion must be satisfactory to the Investment
Limited Partner as to form, content and identity of counsel and (ii) a
photocopy of an owner's title insurance policy, or an endorsement
thereto, issued to the Partnership with respect to the Partnership
Property with an effective date on or after the Admission Date, in an
insured amount of not less than $570,114 from a title insurance company
reasonably satisfactory to the Investment Limited Partner and evidencing
the Partnership's ownership of the Partnership Property, subject only to
such exclusions, exceptions, conditions and stipulations as shall be
acceptable to the Investment Limited Partner, in its sole discretion.
In no event shall any Installment become due until all of the conditions
for all of the Installments listed prior to the Installment in question
in Section 5.1(a) shall have been satisfied and all of such prior
Installments shall have become due. Notwithstanding the foregoing,
however, if at any time prior to the date when an Installment becomes
due and payable, the Partnership has an "Operating Deficit" (expenses in
excess of revenues which the General Partners would be required to fund
pursuant to Section 6.10), then the Investment Limited Partner may, at
its option, waive the requirement of the delivery of the Payment
Certificate or any other condition with respect to part or all of such
Installment and pay such part or all of such Installment, provided that
the proceeds of the amount so paid are used by the Partnership to fully
fund such Operating Deficit; provided, however, that if the proceeds of
such amount so paid are designated in Section 6.12 or Section 10.2(c) to
be used to pay fees or special distributions, then such proceeds shall
be utilized to pay such fees or special distributions and the recipients
thereof shall be required to, and hereby agree to, utilize the proceeds
of such fees or special distributions 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 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 Partners shall
notify the Investment Limited Partner of the reason why such statement
would be untrue if made, and the Investment Limited Partner shall not be
required to pay such Installment; provided, however, that if (i) any
such statement can subsequently be truthfully made and (ii) the
Investment Limited Partner shall not have irrevocably lost, in the good
faith judgment of the Investment General Partner, any material tax or
other benefits hereunder, then the Investment Limited Partner shall pay
such Installment to the Partnership thirty (30) days after delivery by
the General Partners to the Investment Limited Partner of the Payment
Certificate together with an explanation of the manner in which each
such statement had become true.
(e) If with respect to any year all or a portion of which occurs
during the 60-month period commencing on the later of (i) the Admission
Date or (ii) the date on which the first building in the Partnership
Property is placed in service for the purposes of Section 42 of the Code
(a "Reduction Year") the Actual Credit is or was less than the Projected
Credit, then the General Partners shall pay to the Investment Limited
Partner the Reduction Amount. The Reduction Amount shall be equal to the
sum of (A) the excess of the Projected Credit for such year over the
Actual Credit for such year multiplied by .814 plus (B) the amount of
any recapture, interest or penalty payable by the limited partners
and/or the holders of beneficial assignee certificates of the Investment
Limited Partner as a result of such shortfall, assuming that each
limited partner and/or each holder of a beneficial assignee certificate
in the Investment Limited Partner used all of the Tax Credits allocated
to him in the year of allocation. The Auditors shall make their
determination of the amount of the Actual Credit with respect to each
Reduction Year within thirty (30) days following the end of such year.
The Capital Contribution of the Investment Limited Partner shall be
subject to reduction as hereinabove described with respect to each
Reduction Year. Any reduction in the Capital Contribution of the
Investment Limited Partner shall, at the option of the Investment
Limited Partner, either (i) first be applied to reduce 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 reduce succeeding Installments, provided, that if
no further Installments remain to be paid or if the Reduction Amount
shall exceed the sum of the amounts of the remaining Installments, then
the entire Reduction Amount or the balance of the Reduction Amount, as
the case may be, shall be paid by the General Partners to the Investment
Limited Partner promptly after demand is made therefor, as a payment of
damages for breach of warranty or (ii) be paid in its entirety by the
General Partners to the Investment Limited Partner promptly after demand
is made therefor, as a payment of damages for breach of warranty.
(f) In the event that, for any reason, at any time after the
sixty (60)-month anniversary of the completion of construction, the
amount of the Actual Credit shall be less than the Projected Credit with
respect to any fiscal year of the Partnership (such difference being
hereinafter referred to as a "Credit Shortfall"), the Investment Limited
Partner shall be treated as having made a constructive advance to the
Partnership with respect to such year (a "Credit Recovery Loan"), which
shall be deemed to have been made on January 1 of such year in an amount
equal to the sum of (i) the Credit Shortfall for such year plus (ii) the
amount of any recapture, interest or penalty payable by the limited
partners and/or the holders of beneficial assignee certificates of the
Investment Limited Partner as a result of the Credit Shortfall for such
year, assuming that each limited partner and/or holder of a beneficial
assignee certificate in the Investment Limited Partner used all of the
Tax Credits allocated to him in the year of allocation. Credit Recovery
Loans shall be deemed to bear simple (not compounded) interest from the
respective dates on which such principal advances shall have been deemed
to have been made under this Section 5.1(f) at 9% per annum. Credit
Recovery Loans shall be payable by the Partnership as provided in
Section 10.2(b), Clause Third.
(g) In the event that (i) State Designation does not occur by
December 31, 1996, or (ii) by December 31, 1996, the Limited Partners
shall not have received a written certification of the Auditors in a
form and in substance satisfactory for the purpose of achieving Cost
Certification and indicating that the product of the Partnership
Property's Eligible Basis and its Applicable Percentage is such that the
Partnership Property will be eligible to receive Tax Credit in an annual
amount of at least $36,978, or (iii) at any time after the Completion
Date the product of the Partnership Property's Eligible Basis and its
Applicable Percentage is determined by the Auditors, the Tax Accountants
or the Service to be such that the Partnership Property will not be
eligible to receive Tax Credit in an annual dollar amount of at least
$36,978, then (a) the General Partners shall pay to the Investment
Limited Partner an amount equal to 99% of the product of (A) difference
between (i) $36,978 and (ii) the total annual amount of Tax Credit
allocated and available to the Partnership and (B) 8.14 and (b) the
Projected Credit for each year shall thereafter be redefined to mean 99%
of the total amount of Tax Credit actually so allocated and available to
the Partnership for such year (the "Revised Projected Credit").
5.2 Return of Capital Contributions
(a) Failure to Achieve Development and/or Tax Credit Benchmarks
and Standards. If (i) all of the single family home units in the
Partnership Property shall not have been placed in service prior to
December 31 in the year in which the Tax Credits were allocated and the
Partnership does not receive a Carryover Allocation (or any later date
fixed by the General Partners with the Consent of the Investment Limited
Partner) or (ii) by December 31, 1996 (or any later date fixed by the
General Partners with the Consent of the Investment Limited Partner)
less than 100% single family home units in the Partnership Property
shall have been occupied by tenants meeting the terms of the Minimum
Set-Aside Test under executed leases which shall have received any
necessary Agency or Lender approvals at rental levels meeting the
requirements of the Rent Restriction Test, or (iii) Permanent Mortgage
Commencement shall not have occurred prior to December 31, 1996 (or any
later date fixed by the General Partners with the Consent of the
Investment Limited Partner), or (iv) State Designation shall not have
occurred by December 31, 1996 (or any later date fixed by the General
Partner with the Consent of the Investment Limited Partner), or (v) the
Partnership shall fail to meet the Minimum Set-Aside Test or the Rent
Restriction Test by the close of the first year of the Credit Period
and/or fails to continue to meet either of those Tests at any time
during the sixty (60)-month period commencing on such date or (vi) prior
to Permanent Mortgage Commencement, (a) foreclosure proceedings shall
have commenced under the Construction Mortgage and such proceedings
shall not have been dismissed within sixty (60) days, (b) any of the
commitments of any Lender or Agency to provide the Permanent Mortgage
and/or any subsidy financing shall be terminated or withdrawn and not
reinstated or replaced within ninety (90) days with terms equally or
more favorable to the Investment Limited Partner or terms for which the
Consent of the Investment Limited Partner and (if required) the approval
of any Lender or Agency shall have been obtained, or (c) the
Construction Lender shall have irrevocably refused to make any further
advances under the Construction Mortgage and such decision shall not
have been reversed or the Construction Lender replaced within sixty (60)
days, or (vii) if by December 31, 1996 (or any later date fixed by the
General Partners with the Consent of the Investment Limited Partner),
the Investment Limited Partner shall not have received a written
certification of the Auditors, in a form and in substance satisfactory
to Boston Capital, as to the respective amounts of the Qualified Basis
and the Applicable Percentage pertaining to each building in the
Partnership Property, or (viii) if at any time it shall be determined by
the Auditors, the Tax Accountants, or the Service that as of December
31, 1996, the Partnership did not own land or depreciable property
constituting part of the Partnership Property and had incurred
capitalizable costs with respect to the Partnership Property of at least
ten percent (10%) of the Partnership's reasonably expected basis in the
Partnership Property as of December 31, 1996 so that each building in
the Partnership Property constitutes a "qualified building" for the
purposes of Section 42(h)(1)(E)(ii) of the Code, or (ix)if within 12
months of the Completion Date Rental Achievement has not been achieved,
or (x) the Completion Date has not occurred by December 31, 1996, or
(xi) the general Partners fail to make the subordinated loans as
required by Section 6.10, then the General Partners shall, within
fifteen (15) days of the occurrence thereof, send to the Investment
Limited Partner and the Special Limited Partner notice of such event and
of the General Partners' obligation to repurchase the Interests of the
Investment Limited Partner and the Special Limited Partner by paying to
the Investment Limited Partner and the Special Limited Partner an amount
equal to each such Partner's Invested Amount in the event the Investment
Limited Partner and/or the Special Limited Partner so require. If
either the Special Limited Partner or the Investment Limited Partner
elects to require a repurchase of its Interest and the payment to it of
an amount equal to its Invested Amount, it shall send notice thereof to
the Partnership within sixty (60) days after the mailing date of the
General Partners' notice (or at any time after the occurrence of any of
the foregoing if the General Partners shall not have sent such a notice
thereof) and the General Partners shall within thirty (30) days
thereafter repurchase the Interest of such Partner by paying to each
such Partner an amount equal to its Invested Amount plus the amount of
any third party costs incurred by or on behalf of such Partner in
implementing this Section 5.2(a).
(b) Lender Disapproval. If the Construction Lender and/or the
Permanent 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
selected by the Partner being disapproved or not approved shall, (or
such other time as may be specified by the Construction Lender and/or
the Permanent Lender in its disapproval),at the option of the Partner
being disapproved or not approved (if not directed by the Construction
Lender and/or the Permanent Lender not to withdraw), cease to be a
Limited Partner. The General Partners shall, within ten (10) days of the
effective date of such cessation, pay to the Partner being disapproved
or not approved an amount equal to its Invested Amount plus the amount
of any third party costs, incurred by or on behalf of such Partner in
implementing this Section 5.2(b).
(c) Substitution and Indemnification. Upon receipt by the
Investment Limited Partner and/or the Special Limited Partner of the
amount due to it pursuant to either Section 5.2(a) or Section 5.2(b) of
an amount equal to the sum of its Investment Amount plus the amount of
any third party costs, the Interest of such Partner shall terminate, and
the General Partners shall indemnify and hold harmless such Partner from
any losses, damages, and liabilities to which such Partner (as a result
of its participation hereunder) may be subject, except for negligence,
fraud, misconduct or breach by such Partner.
(d) Waiver of Repurchase Right. The Investment Limited Partner
shall have the right to irrevocably waive its right to have its Interest
repurchased pursuant to any clause or clauses of Section 5.2(a), or any
portion thereof, at any time during which any of such rights shall be in
effect. Such a waiver shall be exercised by delivery to the General
Partners of a written notice stating that the rights being waived
pursuant to any specified clause or clauses of Section 5.2(a), or any
specified portion thereof, are thereby waived from that date forward.
(e) Additional General Partner. If the General Partners shall
fail to make on the due date therefor any payment required under Section
5.2(a) or Section 5.2(b), time being of the essence, at any time
thereafter the Special Limited Partner shall have the option,
exercisable in its sole discretion, to be admitted as an additional
General Partner, with the same collective economic interest in the
Partnership as a General Partner and a Special Limited Partner as the
economic interest in the Partnership which it formerly held as a Special
Limited Partner. Upon any such admission of the Special Limited Partner
as an additional General Partner, each of the other General Partners
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, except as required by the Uniform Act.
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); provided, however, this power of attorney shall be limited to
the execution, delivery, filing and recording of documents and
instruments pertaining to the Partnership and Partnership property, and
shall not extend to unrelated business affairs or property of the
General Partner. 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, and each other General
Partner shall fully indemnify and hold harmless the additional General
Partner against any and all losses, judgments, liabilities, expenses and
amounts paid in settlement of any claims sustained in connection with
its capacity as a General Partner.
ARTICLE VI
Rights, Powers and Duties of General Partners
6.1 Authorized Acts
Subject to Section 6.2, Section 6.3, and all other provisions of
this Agreement, the General Partners for, in the name and on behalf of
the Partnership, are hereby authorized to do the following in
furtherance of the purposes of the Partnership:
(1) To acquire by purchase, lease, exchange or otherwise any
real or personal property;
(2) To construct, rehabilitate, operate, maintain, finance
and improve, and to own, sell, convey, assign, mortgage or lease
any real estate and any personal property;
(3) To borrow money and issue evidences of indebtedness and
to secure the same by mortgage, pledge or other lien on the
Partnership Property or any other assets of the Partnership;
(4) To execute the Construction and Permanent Mortgages, the
other Project Documents and all such other documents as the
General Partners deem necessary or appropriate in connection with
the acquisition, development and financing of the Partnership
Property;
(5) To prepay in whole or in part, refinance or modify the
Construction and Permanent Mortgages or any other financing
affecting the Partnership Property;
(6) To employ the Management Agent (which may be an
Affiliate of the General Partners) and to pay reasonable
compensation for its services;
(7) To employ their respective Affiliates to perform
services for, or sell goods to, the Partnership;
(8) To execute contracts with the State or any
subdivision or agency thereof or any other government agency to
make apartments or tenants in the Partnership Property eligible
for any public-subsidy program;
(9) To execute leases of some or all of the single family
home units of the Partnership Property to a public housing
authority and/or to a non-profit corporation, cooperative or other
non-profit Entity; and
(10) To enter into any kind of activity and to perform and
carry out contracts of any kind which may be lawfully carried on
or performed by a partnership and to file all certificates and
documents which may be required under the laws of the State.
6.2 Restrictions on Authority
(a) Notwithstanding any other Section of this Agreement, the
General Partners shall have no authority to perform any act in violation
of applicable law, Agency or other government regulations, requirements
of any Lender, or the Project Documents. In the event of any conflict
between the terms of this Agreement and any applicable Agency or other
government regulations or re quirements of any Lender, the terms of such
regulations or requirements shall govern. Neither shall the General
Partners have any authority to do any of the following acts without the
Consent of the Investment Limited Partner:
(1) To borrow in excess of $10,000 in the aggregate at any
one time outstanding on the general credit of the Partnership,
except borrowings constituting Subordinated Loans ;
(2) To borrow from the Partnership or commingle Partnership
funds with funds of any other Person;
(3) Following the Completion Date, to construct any new or
replacement capital improvements on the Partnership Property which
substantially alter the Partnership Property or its use or which
are at a cost in excess of $10,000 in a single Partnership fiscal
year, except (a) replacements and remodeling in the ordinary
course of business or under emergency con ditions or (b)
construction paid for from insurance proceeds;
(4) To acquire any real property in addition to the
Partnership Property;
(5) Following Permanent Mortgage Commencement, to increase,
decrease (except through the Thirty-year amortization provided for
in the Permanent Mortgage Commencement), modify the terms of or
refinance the Permanent Mortgage;
(6) To rent the Partnership Property such that the
Partnership Property would not meet the requirements of the
Minimum Set-Aside Test or the Rent Restriction Test;
(7) To sell, exchange or otherwise convey or transfer
the Partnership Property or substantially all the assets of
the Partnership;
(8) To terminate any agreement with any Agency ;
(9) To execute contracts with any Agency, the State or any
subdivision or agency thereof or any other government agency to
make apartments or tenants in the Partnership Property eligible
for any public-subsidy program;
(10) To execute leases of some or all of the single family
home units of the Partnership Property to a public housing
authority and/or to a non-profit corporation, cooperative or other
non-profit Entity;
(11) To amend the Construction Contract, except for change
orders approved by the Lender;
(12) To pledge or assign any of the Capital Contribution of
the Investment Limited Partner or the proceeds thereof; or
(13) To do any act required to be approved or ratified by
all limited partners under the Uniform Act.
(b) Neither the Investment General Partner nor any Affiliate
thereof shall be given an exclusive right to sell, or exclusive
employment to sell, the Partnership Property.
6.3 Personal Services
No General Partner or Affiliate thereof shall receive any salary
or other direct or indirect compensation for any services or goods
provided in connection with the Partnership or the Partnership Property,
except as may be specifically provided in Section 6.12 and Article XI or
as to which the prior written consent of the Special Limited Partner
shall have been obtained to the precise terms thereof prior to the
commencement of such services or the provision of such goods. Any
Partner may engage independently or with others in other business
ventures of every nature and description including the ownership,
operation, management, syndication and development of competing real
estate; neither the Partnership nor any other Partner shall have any
rights in and to such independent ventures or the income or profits
derived therefrom.
6.4 Business Management and Control; Tax Matters Partner
Subject to the provisions of this Agreement, the General Partners
shall have the exclusive right to control the business of the
Partnership. The Investment Limited Partner shall have no right to take
part in the management or control of the business of the Partnership or
to transact any business in the name of the Partnership. No provision
of this Agreement which makes the Consent of the Investment Limited
Partner a condition for the effectiveness of an action taken by the
General Partners is intended, and no such provision shall be construed,
to give the Investment Limited Partner any participation in the control
of the Partnership business. Each of the Special Limited Partner and
the Investment Limited Partner hereby consents to the exercise by the
General Partners of the powers conferred on them by law and this
Agreement, and the General Partners agree to exercise control of the
business of the Partnership only in accordance with the provisions of
this Agreement. All Partners hereby agree that X.X. Xxxxxx, Xx. shall
serve as the "Tax Matters Partner." In the case of litigation, the Tax
Matters Partner is required to file suit in the United States Tax Court
unless the Consent of the Investment Limited Partner is obtained to file
suit in the United States Claims Court or the United States District
Court. Nothing herein shall be construed to restrict the Partnership
from engaging the Auditors to assist the Tax Matters Partner in
discharging its duties hereunder.
6.5 Duties and Obligations
(a) The General Partners shall manage the affairs of the
Partnership to the best of their ability, shall use their best efforts
to carry out the purpose of the Partnership, and shall devote to the
Partnership such time as may be necessary for the proper performance of
their duties and the business of the Partnership. The General Partners
shall promptly take all action which may be necessary or appropriate for
the proper development, maintenance and operation of the Partnership
Property in accordance with the provisions of this Agreement, the
Project Documents and applicable laws and regulations including, without
limitation, funding the Construction and Development Fee to the extent
Capital Contributions are insufficient. The General Partners are
responsible for the management and operation of the Partnership,
including the oversight of the rent-up and operational stages of the
Partnership Property.
(b) The General Partners shall use their best efforts to cause the
Partnership to generate Cash Flow for distribution to the Partners at
the maximum realizable level in view of (i) any applicable Agency and
other regulations, (ii) the Minimum Set-Aside Test and (iii) the Rent
Restriction Test, and, if necessary, the General Partners shall also use
their best efforts to obtain approvals and implementation of appropriate
adjustments in the rental schedule of the Partnership Property.
(c) The General Partners shall cause the Partnership to obtain and
keep in force, during the term of the Partnership, comprehensive
casualty insurance, including, but not limited to, fire and other risks
generally included under "extended coverage" policies, workmen's
compensation and public liability insurance in favor of the Partnership
(i) with such companies and in such amounts as shall be satisfactory to
the Lenders and any Agency , or, if the Partnership Property is no
longer subject to Lender or Agency regulation or requirements, as shall
be customary for property similar to the Partnership Property and (ii)
in amounts, including deductibles, which shall be (A) no less than those
amounts which are customary in the area for property similar to the
Partnership Property, (B) no less than such amounts as may be reasonably
requested by the Investment Limited Partner and/or the Special Limited
Partner from time to time, and (C) in any event, sufficient to prevent
the Partnership from becoming a co-insurer under any such policies. No
deductibles on such policies may exceed $5,000, without the prior
written consent of the Investment Limited Partner. The public liability
insurance in favor of the Partnership shall be in an amount not less
than $5,000,000 and the Investment Limited Partner shall be named as an
additional insured and/or loss payee. Through the Completion Date, or
such later date as may be required by the Construction Lender or any
Agency , the General Partners shall also cause the Partnership to obtain
and keep in force a builder's risk policy in favor of the Partnership in
an amount not less than the greater of (i) the full replacement value of
the Partnership Property(excluding the value of the underlying land, the
site utilities and the foundations) or (ii) such other amount as shall
be required by any Agency or the Construction Lender. Throughout the
term of the Partnership, the General Partners shall provide copies of
all such policies (or binders) to the Investment Limited Partner
promptly after their receipt thereof. Upon the request of the
Investment Limited Partner to the General Partners, the General Partners
shall cause the applicable insurer to name the Investment Limited
Partner as an "additional insured" on each Partnership insurance policy.
(d) The obligations of the General Partners hereunder shall be the
joint and several obligations of each General Partner. Except as
otherwise provided in Sections 4.5(b) and 7.1, such obligations shall
survive any Withdrawal of a General Partner from the Partnership.
(e) The General Partners shall establish and maintain reasonable
reserves to provide for working capital needs, improvements,
replacements and any other contingencies of the Partnership. At a
minimum, the General Partners shall cause the Partnership to annually
deposit $1,000 from its Cash Flow into replacement reserves until the
reserve account has a balance of not less than $10,000 to the extent
that Cash Flow (as determined before deduction of this reserve deposit)
for any year shall be insufficient to make such deposit in full, the
General Partners shall fund such shortfall from their own funds as a
Subordinated Loan. Funding of replacement reserves may be suspended
during any period when this account has a balance of at least $10,000,
but must resume should said balance at any time drop below $10,000.
(f) Each General Partner shall be bound by the Project Documents,
and no additional General Partner shall be admitted if he, she or it has
not first agreed to be bound by this Agreement (and assume the
obligations of a General Partner hereunder) and by the Project Documents
to the same extent and under the same terms as the other General
Partners.
(g) The General Partners shall take all actions necessary to
ensure that the Investment Limited Partner receives the full amount of
the Projected Credit, including, without limitation, the rental of
apartments to appropriate tenants and the filing of annual
certifications as may be required. In this regard, the General Partners
shall, inter alia, cause (i) the Partnership to satisfy all requirements
imposed from time to time under the Code with respect to rental levels
and occupancy by qualified tenants by the close of the first year of the
Credit Period so as to permit the Partnership to be entitled to the Tax
Credit throughout the compliance periodspecified in the Code, (ii) all
dwelling units in the Partnership Property to be leased for periods of
not less than six months to persons satisfying the Rent Restriction
Test, (iii) the Partnership to make all appropriate Tax Credit elections
in a timely fashion, and (iv) all rental units in the Partnership
Property to be of equal quality with comparable amenities available to
low-income tenants on a comparable basis without separate fees.
(h) On or before the Admission Date, the General Partners shall
provide to the Investment Limited Partner either (i) an appraisal of the
Partnership Property prepared by a competent independent appraiser or
(ii) completed FmHA 1924-13 (estimate and certificate of actual cost)
and 1930-7 (statement of budget, income and expense) or HUD project cost
and budget analysis on Form 2264, or any successor FmHA or HUD form, any
comparable form of a state or other governmental agency, including any
applicable Tax Credit allocation agency, setting forth estimates with
respect to construction and mortgage financing costs and initial rental
income and operating expense figures for the Partnership Property.
(i) The General Partners shall (i) not store (except in compliance
with all laws, ordinances, and regulations pertaining thereto) or
dispose of any Hazardous Material at the Partnership Property, 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 Partnership Property 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 Partnership Property; (y) upon any General Partner's receipt
of any notice to such effect from any Federal, state, or other
governmental authority; and (z) upon any General Partner's obtaining
knowledge of any incurrence of any expense or loss by any such
governmental authority in connection with the assessment, containment,
or removal of any Hazardous Material for which expense or loss any
General Partner may be liable or for which expense or loss a lien may be
imposed on the Partnership Property.
6.6 Representations and Warranties
The General Partners represent and warrant to the Investment
Limited Partner and the Special Limited Partner as follows:
(1) The Partnership is a duly organized limited partnership
validly existing and in good standing under the laws of the State,
is duly qualified to transact business in the State of
Mississippi, and has complied with all filing requirements
necessary for its existence and to preserve the limited liability
of the Investment Limited Partner and the Special Limited Partner.
(2) No event or proceeding has occurred or is pending or
threatened which would (a) materially adversely affect the
Partnership or its properties, or (b) materially adversely affect
the ability of the General Partners or any of their Affiliates to
perform their respective obligations hereunder or under any other
agreement with respect to the Partnership Property, 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 Partnership
Property; (y) labor disputes; and (z) acts of any governmental
authority.
(3) No default by the General Partner of the Partnership (or
event which, with the giving of notice or the passage of time or
both, would constitute a default) has occurred and is continuing
under this Agreement or under any material provision of the
Project Documents, and the same are in full force and effect.
(4) No Partner or Related Person bears the Economic Risk of
Loss with respect to the Permanent Mortgage. No General Partner
has, either on its own behalf or on behalf of the Partnership,
incurred any financial responsibility with respect to the
Partnership prior to the Admission Date, other than as disclosed
in writing to the Investment Limited Partner prior to the
Admission Date, and excepting the General Partners' Guarantee of
the Construction Loan.
(5) The Partnership Property will be completed in a timely
manner in conformity with the Project Documents. There is no
violation by the Partnership or the General Partners of any
zoning, environmental or similar regulation applicable to the
Partnership Property which could have a material adverse effect
thereon, and the Partnership has complied with all applicable
municipal and other laws, ordinances and regulations relating to
such construction and use of the Partnership Property. All
appropriate public utilities, including, but not limited to,
water, electricity, gas (if called for in the plans and
specifications), and sanitary and storm sewers, are or will be
available and operating properly for each unit in the Partnership
Property at the time of the first occupancy of such unit, except
for Acts of God or acts beyond the control of the General Partner.
(6) The Partnership owns good and marketable fee simple
title to the Partnership Property, subject to no material liens,
charges or encumbrances other than those which (a) are both
permitted by the Project Documents and are noted or excepted in
the title insurance policy delivered to the Investment Limited
Partner in satisfaction of the requirements of Section 5.1(b) and
(b) do not materially interfere with use of the Partnership
Property (or any part thereof) for its intended purpose or have a
material adverse effect on the value of the Partnership Property.
(7) The execution and delivery of all instruments and the
performance of all acts heretofore or hereafter made or taken
pertaining to the Partnership or the Partnership Property by each
Affiliate of a General Partner which is a corporation have been or
will be duly authorized by all necessary corporate or other
action, and the consummation of any such transactions with or on
behalf of the Partnership will not constitute a breach or
violation of, or a default under, the charter or by-laws of such
Affiliate or any agreement by which such Affiliate or any of its
properties is bound, nor constitute a violation of any law,
administrative regulation or court decree.
(8) Any General Partner which is a corporation (a
"Corporation") has been duly organized, is validly existing and in
good standing under the laws of its state of incorporation and has
all requisite corporate power to be a General Partner and to
perform its duties and obligations as contemplated by this
Agreement and the Project Documents. Neither the execution and
delivery by any Corporation of this Agreement nor the per formance
of any of the actions of any Corporation contemplated hereby has
constituted or will constitute a violation of (a) the articles of
organization or by-laws of such Corporation, (b) any agreement by
which such Corporation is bound or to which any of its property or
assets is subject, or (c) any law, administrative regulation or
court decree.
(9) No Event of Bankruptcy has occurred with respect to any
General Partner.
(10) All accounts of the Partnership required to be
maintained under the terms of the Project Documents, including,
but not necessarily limited to, any account for replacement
reserves, are currently funded to the levels required by the
Lenders and/or any Agency .
(11) If the only General Partner(s) are one or more
corporations, then the General Partner(s) have a net worth which
satisfies the 89-12 Requirements.
(12) All payments and expenses required to be made or
incurred in order to complete rehabilitation of the Partnership
Property in conformity with the Project Documents, to fund any
reserves hereunder or under any other Project Document required to
be funded at or prior to the later of the Admission Date or
Permanent Mortgage Commencement, to satisfy all requirements under
the Project Documents and/or which form the basis for determining
the principal sum of the Permanent Mortgage and to pay the
Construction and Development Fee have been or will be paid or
provided for utilizing only (a) the funds available from the
Construction Mortgage, (b) the Capital Contribution of the
Investment Limited Partner, (c) the Capital Contributions of the
General Partners in the amounts set forth on Schedule A as of the
Admission Date, (d) the available net rental income, if any,
earned by the Partnership prior to Permanent Mortgage Commencement
(to the extent that it is permitted to be used for such purposes
by the Lenders and/or any Agency ), (e) any insurance proceeds and
(f) the funds furnished by the General Partners pursuant to
Sections 6.5(a) and 6.11(a).
(13) The amount of Tax Credit which is expected to be
allocated by the Partnership to the Investment Limited Partner is
$36,608 per annum for the years 1997 through 2007 (inclusive).
(14) The Partnership Property is being developed in a manner
which satisfies and shall continue to satisfy, all restrictions,
including tenant income and rent restrictions, applicable to
projects generating Tax Credits.
(15) The General Partners have provided the Investment
Limited Partner with a complete copy of "Phase I" hazardous waste
site assessment report for the Partnership Property. 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 or is at all times in compliance with all laws,
ordinances and regulations pertaining thereto); (iii) caused or
was legally responsible for any release or threat of release of
any Hazardous Material; (iv) received notification from any
Federal, state or other governmental authority of (x) any
potential, known, or threat of release of any Hazardous Material
from the Partnership Property or any other Site or Vessel owned,
occupied, or operated by any General Partner, by 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 Partnership Property; 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 Partnership Property or any such Site or Vessel.
(16) To the best of the General Partners' knowledge, no
Hazardous Material was ever or is now stored on, transported, or
disposed of on the land comprising the Partnership Property,
except to the extent any such storage, transport or disposition
was at all times in compliance with all laws, ordinances, and
regulations pertaining thereto.
(17) The General Partners have fulfilled and will continue
to fulfill all of their duties and obligations under Section 6.5.
(18) As of the due date of the First Installment and at all
times thereafter, the Construction Mortgage Closing has occurred,
and construction of the Partnership Property is being completed
(and as of the Completion Date will have been completed) in
conformity with the requirements hereof and of the Project
Documents.
(19) The General Partners have made a General Partner
Admission Loan to the Partnership in the amount of $72,389 and
Capital Contributions in the amount of $100.
(20) All major subcontractors (all subcontractors with
contracts in excess of $250,000 being expressly deemed "major")
shall be bonded.
6.7 Liability on the Permanent Mortgage
Except for the Construction Mortgage and the Permanent
Mortgage, or as otherwise provided herein, neither any General Partner
nor any Related Person shall at any time bear the Economic Risk of Loss
for the payment of the Principal of or payment of interests on any
Mortgage, and the General Partners shall not permit any other Partner or
any Related Person to bear the Economic Risk of Loss for the payment of
any Mortgage.
6.8 Indemnification of the General Partners
(a) No General Partner nor any Affiliate thereof shall have
liability to the Partnership or to any Limited Partner for any loss
suffered by the Partnership which arises out of any action or inaction
of any General Partner or Affiliate thereof if such General Partner or
Affiliate thereof in good faith determined that such course of conduct
was in the best interest of the Partnership and such course of conduct
did not constitute negligence or misconduct of such General Partner or
Affiliate thereof.
(b) A General Partner or any Affiliate thereof shall be
indemnified by the Partnership against losses, judgments, liabilities,
expenses and amounts paid in settlement of any claims sustained in
connection with the Partnership, provided that all of the following
conditions are met: (i) such General Partner has determined, in good
faith, that the course of conduct which caused the loss, judgment,
liability, expense or amount paid in settlement was in the best
interests of the Partnership; and (ii) such loss, judgment, liability,
expense or amount paid in settlement was not the result of negligence or
misconduct on the part of the General Partner or Affiliate thereof; and
(iii) such indemnification or agreement to hold harmless is recoverable
only out of the assets of the Partnership, and not from the Limited
Partners.
(c) Notwithstanding the above, no General Partner or any Affiliate
thereof performing services for the Partnership or any broker-dealer
shall be indemnified for any losses, liabilities or expenses arising
from or out of an alleged violation of Federal or state securities laws
unless (i) there has been a successful adjudication on the merits of
each count involving securities laws violations as to the particular
indemnitee and, the court approves the indemnification of such
litigation costs, (ii) such claims have been dismissed with prejudice on
the merits by a court of competent jurisdiction as to the particular
indemnitee and, the court approves the indemnification of such
litigation costs or (iii) a court of competent jurisdiction approves a
settlement of the claims against a particular indemnitee and the court
finds that indemnification of the settlement and related costs should be
made. In any claim for indemnification for Federal or state securities
law violations, the party seeking indemnification shall, prior to
seeking court approval for such indemnification, place before the court
the positions of the Securities and Exchange Commission, the
Massachusetts Securities Division, and any other applicable state
securities administrator with respect to the issue of indemnification
for securities law violations.
(d) The Partnership shall not incur the cost of the portion of any
insurance, other than public liability insurance, which insures any
party against any liability as to which such party is herein prohibited
from being indemnified.
(e) The Partnership may indemnify Affiliates of the General
Partner under this Section 6.8 only if the loss involves activity in
which such Affiliates acted in the capacity of a General Partner.
(f) For purposes of this Section 6.8 only, the term "Affiliate"
shall mean any Person performing services on behalf of the Partnership
who (i) directly or indirectly controls, is controlled by or is under
common control with a General Partner; (ii) owns or controls ten percent
(10%) or more of the outstanding voting securities of a General Partner;
(iii) is an officer, director, partner or trustee of a General Partner;
or (iv) if a General Partner is an officer, director, partner or
trustee, is any company for which such General Partner acts in any such
capacity.
6.9 Indemnification of the Partnership and the Limited Partners
(a) The General Partners will indemnify and hold the Partnership
and the Limited Partners harmless from and against any and all losses,
damages and liabilities which the Partnership or any Limited Partner may
incur by reason of the (a) past, present or future actions or omissions
of the General Partner or any of their Affiliates, except acts
undertaken in their capacity as General Partner of the Partnership or
(b) any liabilities to which either the Partnership or the Partnership
Property is subject; provided, however, that the foregoing
indemnification shall not apply to (i) any Mortgage or (ii) necessary
contractual obligations incurred pursuant to Agency or Lender
requirements in connection with the operation of the Partnership
Property in the ordinary course of business.
(b) Notwithstanding the foregoing, no General Partner shall be
liable to a Limited Partner or the Partnership for any act or omission
for which the Partnership is required to indemnify such General Partner
under Section 6.8.
(c) The General Partners shall indemnify, defend, and hold the
Investment Limited Partner harmless from and against any claim brought
or threatened against the Investment Limited Partner or loss (as well as
from any and all attorneys' fees and expenses incurred in connection
with any such claim or loss) on account of the presence of any Hazardous
Material at the Partnership Property. Any claim or loss described in the
immediately preceding sentence may be defended, compromised, settled, or
pursued by the Investment Limited Partner with counsel of the Investment
Limited Partners' selection, but at the expense of the General Partners.
Notwithstanding anything else set forth herein, this indemnification
shall survive the withdrawal of any General Partner and/or the
termination of this Agreement.
6.10 Operating Deficits
Subject to the prior written consent of any Agency (if such
consent shall be required under applicable Agency regulations), the
General Partners shall be obligated throughout construction and
stabilization and for a period continuing three years from Rental
Achievement, to advance funds to meet operating expenses, debt service
and the Replacement Reserve Fund of the Partnership which exceed
operating income available for the payment thereof, operating expenses
to expressly include the Asset Management Fee guaranteed in the amount
of $500 per annum. In the event that the General Part ners shall fail
to make any such advance as aforesaid, the Partnership shall utilize
amounts (the "Applied Fees") otherwise payable to the General Partners
or Affiliates thereof under Section 6.12 and/or Article X to meet the
obligations of the General Partners pursuant to this Section 6.10. Such
utilization of Applied Fees shall also constitute payment and
satisfaction of the corresponding amounts payable to the General
Partners or Affiliates thereof under Section 6.12 and/or Article X, with
the proceeds thereof being applied to such obligations, and the
obligation of the Partnership to make such payments to the General
Partners or the Affiliates thereof pursuant to Section 6.12 and/or
Article X being deemed satisfied to the extent thereof. For the purpose
of this Section 6.10, all expenses shall be paid on a sixty (60)-day
current basis. Moreover, the General Partners may in their sole
discretion at any time advance funds to the Partnership to pay operating
expenses and/or debt service of the Partnership in order to facilitate
the Partnership's compliance with the Rent Restriction Test. All
advances pursuant to this Section 6.10 (including any Applied Fees)
shall be Subordinated Loans repayable without interest in accordance
with the provisions of Article X. The form and provisions of all Subor-
dinated Loans shall conform to applicable rules and regulations.
6.11 Obligation to Complete the Construction of the Partnership Property
(a) The General Partners shall complete the construction of the
Partnership Property substantially in accordance with the plans and
specifications approved by the Lenders and/or any Agency and all
requirements necessary to obtain the required certificates of occupancy
for dwelling units, or cause the same to be completed, in a good and
workmanlike manner, free and clear of all mechanics', materialmen's or
similar liens, and shall equip the Partnership Property or cause the
same to be equipped with all necessary and appropriate fixtures,
equipment and articles of personal property, including refrigerators and
ranges, and shall cause all necessary certificates of occupancy for all
single family home units in the Partnership Property to be obtained, all
in accordance with the Project Documents. If the proceeds of the
Construction and Permanent Mortgages, the net rental income, if any, of
the Partnership Property generated prior to the later of Permanent
Mortgage Commencement or the Admission Date and which is permitted by
the Lenders and/or any Agency to be utilized for any of the purposes
hereinafter set forth, the Capital Contribution of the Investment
Limited Partner, the Capital Contributions of the General Partners in
the amounts set forth on Schedule A as of the Admission Date, and any
insurance proceeds arising out of casualties prior to the later of
Permanent Mortgage Commencement or the Admission Date as available from
time to time are insufficient to (i) acquire and complete the
construction of the Partnership Property and satisfy all other
obligations, all as provided in the first sentence of this Section
6.11(a), (ii) make the special distributions to the General Partners
described in Section 10.2(c), (iii) pay the Construction and Development
Fee, (iv) arrive at Permanent Mortgage Commencement in conformity with
the Project Documents, (v) discharge all Partnership liabilities and
obligations arising out of any casualty giving rise to any such
insurance proceeds, and (vi) provide for all other payments and expenses
required to be made or incurred through the later of Permanent Mortgage
Commencement or the Admission Date, including the funding of any
reserves required hereunder or under any other Project Document and the
repayment in full of all obligations under the Construction Mortgage,
the General Partners shall be responsible for and obligated to pay such
deficiencies and shall, to the extent permitted under the Project
Documents and any applicable regulations or requirements of the Lenders
and/or any Agency, be reimbursed at or prior to the later of Permanent
Mortgage Commencement or the Admission Date only out of the proceeds
designated in this sentence available from time to time after payment of
all costs described in this sentence. Any amounts not reimbursed
through the later of Permanent Mortgage Commencement or Admission Date
only out of the proceeds of the Capital Contribution of the Investment
Limited Partner as provided in Section 5.1 shall not be reimbursable or
otherwise change the Interest of any Person in the Partnership but shall
be borne by the General Partners; provided, however, that,
notwithstanding the foregoing, to the extent any such amounts represent
items which are properly included in the Partnership's Qualified Basis
for purposes of Section 42 of the Code and result in an increase in the
amount of Tax Credit allocated and available to the Partnership over and
above the amount of Tax Credit required in order to achieve State
Designation ("Includable Items"), the General Partners shall make an
additional Capital Contribution in the amount of the Includable Items
and the Partnership shall utilize the proceeds of such additional
Capital Contribution to pay the Includable Items. In the event that the
General Partners shall fail to fund any such deficiency as required by
this Section 6.11, an amount not in excess of the next installment of
the Construction and Development Fee due to the General Partners or any
of their Affiliates under Section 6.12 or any other provision hereof
shall be applied by the Partnership to meet such obligation of the
General Partners, and, to the extent there may still be a deficiency,
any amounts otherwise payable as the Annual Partnership Management Fee
or distributable to the General Partners pursuant to Article X shall be
so applied. Any such application of funds as described in the
immediately preceding sentence shall constitute a payment of the amount
of the Fee or such other item which such funds had been earmarked to
pay, and the obligation of the General Partners to advance such amount
under this Section 6.11 shall be satisfied to the extent of such
application.
6.12 Certain Payments to the General Partners and Others
(a) The Partnership shall pay to the General Partners, or their
designee, a fee (the "Annual Partnership Management Fee") commencing in
1998 for services in connection with the administration of the day to
day business of the Partnership in an annual amount equal to $500 per
annum . The Annual Partnership Management Fee for each fiscal year of
the Partnership shall be payable from Cash Flow in the manner and
priority set forth in Section 10.2(a).
(b) In consideration of their consultation, advice and other
services in connection with the construction and development of the
Partnership Property and as consideration for the assignment described
in Section 6.14, the Partnership shall pay to the General Partners (or
their designee) a construction and development fee (the "Development
Fee") in the principal amount of $29,891 which fee shall be earned in
full as to each building in the Partnership Property as of the date such
building is completed. The Development Fee shall be payable $29,891
from the proceeds of the Third Installment. Any portion of the
Construction and Development Fee which shall not have been paid after
payment of the Installments shall be payable from cash flow as set forth
in Section 10.2, with the deferred developer's fee being paid in full by
the tenth year of operations. Any amount remaining to be paid at that
time will be paid in full by the General Partner, and will be considered
a capital contribution to the Partnership as of the date which is six
months after it shall have been earned shall accrue interest at the
Applicable Federal Rate in effect at the time earned from the date
earned through the date of payment; any such interest shall be payable
in accordance with the provisions of Article X.
(c) The Partnership shall pay to BCCLP or an Affiliate thereof a
fee (the "Asset Management Fee ") commencing in 1998 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
$500. 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 commencing with 1998, Cash Flow is
insufficient to pay the full amount of the Asset Management Fee, the
General Partner shall be obligated to make Subordinated Loans to the
Partnership to cover the Asset Management Fee.
6.13 Delegation of General Partner Authority
If there shall be more than one General Partner serving hereunder,
each General Partner may from time to time, by an instrument in writing,
delegate all or any of his powers or duties hereunder to another General
Partner or General Partners.
Every contract, deed, mortgage, lease and other instrument
executed by any General Partner shall be conclusive evidence in favor of
every Person relying thereon or claiming thereunder that at the time of
the delivery thereof (a) the Partnership was in existence, (b) this
Agreement had not been amended in any manner so as to restrict the
delegation of authority among General Partners (except as shown in
certificates or other instruments duly filed in the Filing Office) and
(c) the execution and delivery of such instrument was duly authorized by
the General Partners. Any Person may always rely on a certificate
addressed to him and signed by any General Partner hereunder:
(1) As to who are the General Partners or Limited Partners
hereunder;
(2) As to the existence or nonexistence of any fact which
constitutes a condition precedent to acts by the General Partners
or in any other manner germane to the affairs of the Partnership;
(3) As to who is authorized to execute and deliver any
instrument or document of the Partnership;
(4) As to the authenticity of any copy of this Agreement,
the Certificate, and 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 General Partners hereby transfer and assign to the Partnership
all of their right, title, and interest in and to the Partnership
Property 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 Partnership Property; (ii) all plans, specifications
and working drawings heretofore prepared or obtained in connection with
the Partnership Property; (iii) all governmental commitments and
approvals obtained, and applications therefor, including, but not
limited to, those relating to planning, zoning, building permits and Tax
Credit; (iv) any and all commitments with respect to any Mortgage(s);
(v) any and all contracts or rights with respect to any agreements with
any Lender; and (vi) any other work product related to the Partnership
Property and/or the Partnership.
ARTICLE VII
Withdrawal of a General Partner; New General Partners
7.1 Withdrawal
(a) No General Partner shall Withdraw from the Partnership (other
than by reason of death or adjudication of incompetence or insanity) or
sell, assign or encumber its Interest without the Consent of the
Investment Limited Partner and all the other General Partners, except
that if the Special Limited Partner becomes a General Partner pursuant
to Section 4.5(b), it shall not require the consent of any other General
Partner to transfer all or any portion of its interest as a General
Partner, other than as may be required under the Uniform Act. In the
event of any Withdrawal by a General Partner in violation of this
Section 7.1, such General Partner, in addition to being subject to any
and all other legal remedies which may be pursued by the Partners, shall
forfeit to the Special Limited Partner, such General Partner's Interest
and all unpaid fees from the Partnership and shall remain liable for all
of the Withdrawing General Partner's obligations under this Agreement;
provided, however, that the Withdrawing General Partner's liability
hereunder shall be limited to obligations arising prior to his
Withdrawal, and shall include no obligations arising after such
Withdrawal. In addition, upon such Withdrawal and transfer, the Special
Limited Partner or its designee shall automatically become a General
Partner without further action by the Withdrawing General Partner or any
other Partner, and the Investment Limited Partner hereby consents to
such transfer and to the admission of the Special Limited Partner or its
designee as a General Partner in such a situation. Such transfer shall
occur automatically upon such Withdrawal without further action by such
Withdrawing General Partner.
(b) If at any time the only General Partners shall be one or more
corporations (or partnerships with corporations as sole general
partners), they shall be obligated to have a net worth which satisfies
the 89-12 Requirements. If the General Partners shall at any time fail
to meet the requirements of this Section 7.1(b), then they shall be
deemed to have withdrawn from the Partnership in violation of the
provisions of this Section 7.1 and shall be subject to the provisions of
Section 7.1(a). Notwithstanding the foregoing, the provisions of this
Section 7.1(b) shall not apply to the Special Limited Partner in the
event it becomes the sole General Partner.
7.2 Obligation to Continue
Upon the Withdrawal of a General Partner, the remaining General
Partners shall have the right and obligation to continue the business of
the Partnership employing its assets and name, all as contemplated by
the Uniform Act. Within thirty (30) days after they obtain knowledge of
the Withdrawal of a General Partner, the remaining General Partners
shall notify the Investment Limited Partner or its designee of such
Withdrawal.
7.3 Withdrawal of All General Partners
If, following the Withdrawal of a General Partner, there is no
remaining General Partner, the Investment Limited Partner and the
Special Limited Partner may elect to reconstitute the Partnership and
continue the business of the Partnership for the balance of the term
specified in Section 2.4 by selecting a successor General Partner. If
the Investment Limited Partner and the Special Limited Partner elect to
reconstitute the Partnership pursuant to this Section 7.3 and admit the
designated successor General Partner, the relationship among the then
Partners shall be governed by this Agreement.
7.4 Interest of General Partner After Permitted Withdrawal
In the event of the Withdrawal of a General Partner not in
violation of Section 7.1 and except as otherwise provided in Section
4.5(b), the Withdrawing General Partner hereby covenants and agrees to
transfer to the remaining General Partners or to a successor General
Partner selected in accordance with Section 7.3, as the case may be,
such portion of the Withdrawing General Partner's Interest as such
remaining or successor General Partners may designate, such transfer to
be made in consideration of the payment by the transferee of either the
agreed value of such Interest or, if such value is not agreed to, the
fair market value of such Interest as determined by a committee of three
qualified real estate appraisers, one selected by the Withdrawing
General Partner, one selected by the transferee and a third selected by
the other two. The portion of the Withdrawing General Partner's
Interest designated to be transferred in accordance with the provisions
of this Section 7.4 shall be sufficient to ensure the continued treat-
ment of the Partnership as a partnership under the Code and as a limited
part nership under the Uniform Act, and, for the purposes of Article X,
shall be deemed to be effective as of the date of Withdrawal, but the
Partnership shall not make any distributions to the designated
transferee until the transfer shall have been made. Any holder of any
portion of the Interest of a Withdrawing General Partner which is not
designated to be transferred to the remaining or successor General
Partners pursuant to the provisions of this Section 7.4 shall become an
Additional Limited Partner but (i) with the same share of the profits,
losses, tax credits, Cash Flow and other distributions to which the
holder of such Interest was entitled when held as a General Partner
Interest, and (ii) shall not participate in the votes or Consents of the
Investment Limited Partner hereunder. The admission of any successor or
additional General Partner shall be subject to the consent of the
Lenders and any Agency (if required) and the Consent of the Investment
Limited Partner.
7.5 Admission of Additional General Partner(s) under Certain
Circumstances
In the event each of the General Partners is a corporation and the
General Partners at any time, or from time to time, fail to have a net
worth which satisfies the 89-12 Requirements, the Special Limited
Partner or its designee(s) shall be admitted (and each hereby agrees to
be admitted), automatically and without further action by them or any
Partner, as additional General Partner(s), notwithstanding any other
provision of this Agreement. The General Partners hereby agree to take
all action necessary to implement this Section 7.5. Further, the
General Partners agree in such event to give prompt written notice
thereof to each Lender and Agency. If any Lender or Agency rejects the
admission of any additional General Partner so admitted as a General
Partner, then such additional General Partner shall withdraw as a
General Partner promptly after an additional General Partner acceptable
to each Lender and Agency is admitted to the Partnership.
Simultaneously with such admission, each of the previously admitted
General Partners shall be deemed to have assigned proportionally to the
additional General Partner(s), automatically and without further action,
such portion of its General Partner Interest so that the additional
General Partner shall receive not less than a one percent (1%) interest
(or such greater percentage as may be required either (i) in the opinion
of the Tax Accountants, to assure the partnership status of the
Partnership for Federal income tax purposes or (ii) by any Agency in the
profits, losses, tax credits and distributions of the Partnership in
consideration of $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 be irrevocably delegated all of
the power and authority of all of the General Partners pursuant to
Section 6.13. Each such additional General Partner shall remain a
General Partner until a Lender or Agency shall object thereto in writing
or until such time as, in the opinion of the Tax Accountants, the
Partnership would continue to be treated as a partnership for Federal
income tax purposes notwithstanding their Withdrawal. At such time,
each such additional General Partner may, at its option, then Withdraw
without the approval of the Limited Partners upon reassignment of its
entire Interest to the remaining General Partners. Each partner hereby
grants to the Special Limited Partner a special power of attorney,
irrevocable to the extent permitted by law and coupled with an interest,
to amend the Certificate and this Agreement and to do anything else
which, in the view of the Special Limited Partner, may be necessary or
appropriate to accomplish the purposes of this Section 7.5 or to manage
the business of the Partnership. The admission of an additional General
Partner shall not relieve any other General Partner of any of its
obligations hereunder, and each other General Partner shall fully
indemnify and hold harmless the additional General Partner from and
against any and all losses, judgments liabilities, expenses and amounts
paid in settlement of any claims sustained in connection with its
capacity as a General Partner.
ARTICLE VIII
Transferability of Limited Partner Interests
8.1 Assignments
(a) Except by operation of law (including the laws of descent and
distribution) or Section 8.1(b), no Limited Partner may assign all or
any part of its Interest without the written consent of the General
Partners, the giving or withholding of which is exclusively within their
discretion.
(b) A Limited Partner, without the consent of the General
Partners, may assign to any Person all or any portion of the economic
benefits of the ownership of its Interest; provided, however, that such
assignment shall not be binding on the Partnership until there shall
have been filed with the Partnership by registered mail certified copies
of an executed and acknowledged assignment and the written acceptance by
the assignee of all the terms and provisions of this Agreement; if such
assignment and acceptance are not so filed, the Partnership need not
recognize such assignment for any purpose. An assignee of a Limited
Partner who does not become a Substituted Limited Partner shall have,
and shall only have, the right to receive the share of allocations and
distributions of the Partnership to which the assigning Limited Partner
would have been entitled with respect to the Interest (or portion
thereof) so assigned if no such assignment had been made by such Limited
Partner. Any assigning Limited Partner whose permitted assignee becomes
a Substituted Limited Partner shall thereupon cease to be a Limited
Partner and shall no longer have any of the rights or privileges of a
Limited Partner. Where the assignee does not become a Substituted
Limited Partner, the Partnership shall recognize such assignment not
later than the last day of the calendar month following receipt of
notice of assignment and all documentation required in connection
therewith.
(c) Every assignee of a Limited Partner Interest (or any portion
thereof) who desires to make a further assignment of its Interest shall
be subject to all the provisions of this Article VIII.
8.2 Substituted Limited Partner
No Limited Partner shall have the right to substitute an assignee
as Limited Partner in its place. Subject to Section 8.3, the General
Partners may, however, in their sole discretion, permit an assignee to
become a Substituted Limited Partner. The consent of the General
Partners to an assignment of a Limited Partner Interest under Section
8.1 shall not, in and of itself, constitute permission under this
Section 8.2.
Any Substituted Limited Partner shall execute such instrument or
instruments as shall be required by the General Partners to signify the
agreement of such Substituted Limited Partner to be bound by all the
provisions of this Agreement and shall pay the Partnership's reasonable
legal fees and filing costs in connection with its substitution as a
Limited Partner.
8.3 Restrictions
(a) No Disposition may be made if such Disposition would violate
Section 13.1.
(b) In no event shall all or any part of a Limited Partner
Interest be Disposed of to a minor (other than to a descendant by reason
of death) or to an incompetent.
(c) The General Partners may, in addition to any other requirement
they may impose, require as a condition of any Disposition that the
transferor (i) assume all costs incurred by the Partnership in
connection therewith and (ii) furnish the Partnership and the other
Partners with an opinion of counsel satisfactory to counsel to the
Partnership that such Disposition complies with applicable Federal and
state securities laws.
(d) Any sale, exchange, transfer or other Disposition in
contravention of any of the provisions of this Section 8.3 shall be void
and ineffectual and shall not bind or be recognized by the Partnership.
ARTICLE IX
Borrowings
9.1 Borrowings
All Partnership borrowings shall be subject to the terms of this
Agreement, including, but not limited to, the restrictions of Section
6.2, and may be made from any source, including Partners and their
Affiliates. If any Partner shall lend any monies to the Partnership,
the amount of any such loan shall not be an increase of such Partner's
Capital Contribution. If any Partner shall so lend monies, such loans
shall be an obligation of the Partnership and (except for 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.
9.2 General Partner Admission Loan
The General Partner has agreed to make the General Partner
Admission Loan to the Partnership in the initial amoun of $72,389. The
General Partner Admission Loan shall bear interest and be repayable in
accordance with the terms of the General Partner Admission Note. The
proceeds of the General Partner Admission Loan shall be advanced to the
Partnership upon the occurrence of all of the conditions to the payment
of the First Installment.
ARTICLE X
Profits, Losses, Tax Credits, Distributions
and Capital Accounts
10.1 Profits, Losses and Tax Credits
(a) Subject to Section 10.1(c) and Section 10.4, for each Part
nership fiscal year or portion thereof, all profits, tax-exempt income,
losses, non-deductible non-capitalizable expenditures, and tax credits
incurred or accrued on or after the Commencement Date, other than those
arising from a Capital Transaction, shall be allocated 99% to the
Investment Limited Partner and 1% to the General Partners.
(b) Except as otherwise specifically provided in this Article, all
profits and losses arising from a Capital Transaction shall be allocated
to the Partners as follows:
As to profits:
First, that portion of profits (including any profits
treated as ordinary income for Federal income tax purposes)
shall be allocated to the Partners who have negative Capital
Account balances in proportion to the amounts of such
balances, provided that no profits shall be allocated to a
Partner under this Clause First to increase any such
Partner's Capital Account above zero;
Second, profits in excess of the amounts allocated
under Clause First above shall be allocated to the General
Partners in an amount equal to the amount of cash
distributed or available to be distributed to them pursuant
to Clause Second of Section 10.2(b) as to the particular
Capital Transaction;
Third, profits in excess of the amounts allocated
under Clauses First and Second above shall be allocated to
the Investment Limited Partner in an amount equal to the
amount of cash required to pay to the Investment Limited
Partner the full amount (including interest) of the Credit
Recovery Loans;
Fourth, profits in excess of the amounts allocated
under Clauses First, Second and Third above shall be
allocated (i) to the Investment Limited Partner in an amount
equal to the sum of (a) its Invested Amount plus (b) the
full amount (including interest) of any Credit Recovery
Loans and (ii) to each other Limited Partner in an amount
equal to the amount of its respective Invested Amount,
reduced (but not below zero) in the case of each Limited
Partner (whether under clause (i) or clause (ii)) by the sum
of (A) the total amount of all prior cash made to such
Limited Partner pursuant to Section 10.2(b), Clause Sixth
plus (B) the positive balance in the Capital Account of such
Limited Partner prior to the allocation made pursuant to
this Clause Fourth;
Fifth, profits in excess of the amounts allocated
under Clauses First, Second, Third and Fourth above shall be
allocated to each General Partner in the amount of its
respective paid-in Capital Contribution, reduced (but not
below zero) by the sum of (i) the total amount of
distributions previously made to it pursuant to Section
10.2(b), Clause Seventh to credit amounts distributed under
Clause Second of Section 10.2(b) against amounts
distributable under Clause Seventh of Section 10.2(b) (and
not including the amounts so credited) plus (ii) the
positive balance in such General Partner's respective
Capital Accounts prior to the allocations made pursuant to
this Clause Fifth; and
Sixth, profits in excess of the amounts allocated
under Clauses First, Second, Third, Fourth, and Fifth above
shall be allocated to the Partners in the same percentages
as cash is distributed under Clause Ninth of Section 10.2(b)
to credit amounts distributed under Clause Second of Section
10.2(b) against amounts distributable under said Clause
Ninth (and not including the amounts so credited.)
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 Partners;
Second, an amount of losses shall be allocated to the
Partners until the balance in each Partner's Capital Account
equals the amount of such Partner's Capital Contribution
(after the allocation under Clause First above);
Third, an amount of losses shall be allocated to the
Partners to the extent of and in proportion to such
Partners' Capital Account balances (after the allocations
under Clauses First and Second above); and
Fourth, any remaining amount of losses after the
allocations under Clauses First, Second and Third above
shall be allocated to the Partners in accordance with the
manner in which they bear the Economic Risk of Loss;
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 Partners.
(c) Notwithstanding the foregoing provisions of Sections 10.1(a)
and 10.1(b), in no event shall any losses be allocated to the Investment
Limited Partner or the Special Limited Partner if an to the extent that
such allocation would cause, as of the end of the Partnership taxable
year, the negative balance in the Investment Limited Partner's Capital
Account to exceed such Partner's share of Partnership Minimum Gain plus
such Partner's share, if any of Partner Non-Recourse Debt Minimum Gain.
Any losses which are not allocated to a Partner by virtue of the
application of this Section 10.1(c) shall be allocated to the General
Partners. For the purposes of this Section 10.1(c), a Partner's Capital
Account shall be treated as reduced by Qualified Income Offset Items.
10.2 Cash Distributions Prior to Dissolution
(a) Cash Flow
Subject to Agency and Lender approval (if required), Cash Flow
for each fiscal year or portion thereof of the Partnership shall be
applied as follows:
First, to the payment of the Asset Management Fee for such year
and for any previous year(s) as to which the Asset Management Fee shall
not yet have been paid in full;
Second, to the repayment of any Subordinated Loans;
Third, to the payment of the Annual Partnership Management Fee
attributable to such year; and
Fourth, the balance thereof, if any, shall be distributed
annually, within seventy-five (75) days after the end of the fiscal
year, 20% to the Investment Limited Partner and 80% to the General
Partners; provided, however, that during such time as Agency regulations
are applicable to the Partnership Property, the total amount of Cash
Flow which may be so distributed to the Partners in respect to any
fiscal year shall not exceed such amounts as Agency regulations permit
to be distributed.
(b) Distributions of other than Cash Flow
Prior to dissolution, if the General Partners shall determine from
time to time that cash is available for distribution from a Capital
Transaction, such cash shall be applied or distributed as follows:
First, to the payment of all matured debts and liabilities of the
Partnership (including, but not limited to, all expenses of the
Partnership incident to the Capital Transaction), excluding (i) debts
and liabilities of the Partnership to Partners or their Affiliates and
(ii) all unpaid fees owing to the General Partners or their Affiliates;
and to the establishment of any reserves which the General Partners and
the Auditors shall deem reasonably necessary for contingent, unmatured
or unforeseen liabilities or obligations of the Partnership;
Second, to the payment of the Asset Management Fee for such year
and for any previous year as to which the Asset Management Fee has not
been paid in full ;
Third, to the payment to the Investment Limited Partner of the
full amount (including interest) of any Credit Recovery Loans;
Fourth, to the repayment of any Subordinated Loans;
Fifth, to the repayment of any then-unpaid debts and liabilities
owed to Partners or Affiliates thereof by the Partnership for
Partnership obligations (exclusive of Credit Recovery Loans,
Subordinated Loans and General Partner Admission Loan) to any of them,
including, but not limited to, accrued and unpaid Annual Partnership
Management Fee for the fiscal year of the Capital Transaction; provided,
however, that any debts or obligations to be repaid to any Limited
Partner or Affiliate thereof pursuant to this Clause Fifth shall be
repaid prior to the repayment of any such debts or obligations to any
General Partner or Affiliate thereof;
Sixth, to the payment to each Limited Partner of an amount equal
to its Invested Amount, in each case minus any prior distributions made
to such Partner under this Clause Sixth, but never an amount less than
zero;
Seventh, to the repayment to the General Partners of their paid-in
Capital Contributions minus any prior distributions made to them under
this Clause Seventh and the General Partner Admisson Loan , but never an
amount less than zero;
Eighth, except in the case of a refinancing, to each Partner in an
amount equal to the positive balance in his/her/its capital account,
after distributions to each Partner under Clauses First through Seventh,
above ; and
Ninth, any balance 34.999% to the Investment Limited Partner and
.001% to the Special Limited Partner, and 65% to the General Partners.
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 taxable year, including adjustments to Capital Accounts
pursuant to Sections 10.1(b) and 10.3(b). In the event that a General
Partner or Additional Limited Partner has a negative balance in its
Capital Account following the liquidation of the Partnership or such
Partner's Interest, after taking into account all Capital Account
adjustments for the Partnership taxable year in which such liquidation
occurs, such Partner shall pay to the Partnership in cash an amount
equal to the negative balance in such Partner's Capital Account. Such
payment shall be made by the end of such taxable year (or, if later,
within 90 days after the date of such liquidation) and shall, upon
liquidation of the Partnership, be paid to recourse creditors of the
Partnership or distributed to other Partners in accordance with the
positive balances in their Capital Accounts.
(b) With respect to assets distributed in kind to the Partners in
liquidation or otherwise, (i) any unrealized appreciation or unrealized
depreciation in the values of such assets shall be deemed to be profits
and losses realized by the Partnership immediately prior to the
liquidation or other distribution event; and (ii) such profits and
losses shall be allocated to the Partners in accordance with Section
10.1(b), and any property so distributed shall be treated as a
distribution of an amount in cash equal to the excess of such fair
market value over the outstanding principal balance of and accrued
interest on any debt by which the property is encumbered. For the
purposes of this Section 10.3(b), "unrealized appreciation" or
"unrealized depreciation" shall mean the difference between the fair
market value of such assets, taking into account the fair market value
of the associated financing (but subject to Section 7701(g) of the
Code), and the Partnership's adjusted basis for such assets as
determined under Regulation Section 1.704-1(b). This Section 10.3(b) is
merely intended to provide a rule for allocating unrealized gains and
losses upon liquidation or other distribution event, and nothing
contained in this Section 10.3(b) or elsewhere herein is intended to
treat or cause such distributions to be treated as sales for value. The
fair market value of such assets shall be determined by an appraiser to
be selected by the General Partner with the Consent of the Investment
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 Non-Recourse Debt (including, without limitation,
Subordinated Loans) or (b) the Partnership incurs losses from
extraordinary events which are not recovered from insurance or
otherwise (collectively "Recourse Obligations") in respect of any
Partnership taxable year, then the calculation and allocation of
profits and losses shall be adjusted as follows: first, an amount
of deductions attributable to the Recourse Obligations shall be
allocated to the General Partners in the case of extraordinary
events); and second, the balance of such deductions shall be
allocated as provided in Section 10.1(a).
(ii) If any profit arises 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
Partnership Property and such indebtedness is distributed to the
Partners pursuant to the provisions of Section 10.2(b) or Section
10.3, the distributions of the cash portion of such purchase price
and the principal amount of such purchase money indebtedness
hereunder shall be allocated among the Partners in the following
manner: On the basis of the sum of the principal amount of the
purchase money indebtedness and cash payments received on the sale
(net of amounts required to pay Partnership obligations and fund
reasonable reserves), there shall be calculated the percentage of
the total net proceeds distributable to each class of Partners
based on Section 10.2(b) or Section 10.3, as applicable, treating
cash payments and purchase money indebtedness principal
interchangeably for this purpose, and the respective classes shall
receive such respective percentages of the net cash purchase price
and purchase money principal. Payments on such purchase money
indebtedness retained by the Partnership shall be distributed in
accordance with the respective portions of principal allocated to
the respective classes of Partners in accordance with the
preceding sentence, and if any such purchase money indebtedness
shall be sold, the sale proceeds shall be allocated in the same
proportion.
(iv) Income, gain, loss and deduction with respect to any
asset which has a variation between its basis computed in
accordance with Treasury Regulation Section 1.704-1(b) and its
basis computed for Federal income tax purposes shall be shared
among the Partners so as to take account of such variation in a
manner consistent with the principles of Section 704(c) of the
Code and Treasury Regulation Section 1.704-l(b)(2)(iv)(g).
(v) The terms "profits" and "losses" used in this Agreement
shall mean income and losses, and each item of income, gain, loss,
deduction or credit entering into the computation thereof, as
determined in accordance with the accounting methods followed by
the Partnership and computed in accordance with Treasury
Regulation Section 1.704-1(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) If there is a net decrease in Partnership Minimum Gain
during a Partnership taxable year, each Partner will be allocated
items of income and gain for such year (and, if
necessary, subsequent years) in proportion to, and to the extent
of, an amount equal to such Partner's share of the net decrease
in Partnership Minimum Gain during the year, before any other
allocation of Partnership items for such taxable year. A Partner
shall not be subject to this mandatory allocation of income or
gain to the extent that any of the exceptions provided in treasury
Regulation Section 1.704-2(f)(2)-(5) applies. All allocations
pursuant to this Section 10.4(b)(iv) shall be in accordance with
Treasury Regulation Section 1.704-2(f). This provision is a
"minimum chargeback" within the meaning of Treasury Regulation
Section 1.704-2(f) and shall be construed as such.
(vii) If there is a net decrease in Partner Non-Recourse
Debt Minimum Gain during a Partnership taxable year, then each
Partner with a share of the minimum gain attributable to such debt
at the beginning of such year will be allocated items of income
and gain for such year (and, if necessary, subsequent years) in an
amount equal to the greater of (a) the portion of such Partner's
share of the net decrease in Partner Non-Recourse Debt Minimum
Gain. A Partner is not subject to this Partner Non-Recourse Debt
Minimum Gain chargeback to the extent that any of the exceptions
provided in Treasury Regulation Section 1.704-2(i)(4) applied
consistently with Treasury Regulation Section 1.704-2(f)(2)-(5)
applies. Such allocations shall be made in a manner consistent
with the requirements of Treasury Regulation Section 1.704-
(2)(i)(4) under Section 704 of the Code.
(viii) If a Limited Partner unexpectedly receives (a) an
allocation of loss or deduction or expenditures described in
Section 705(a)(2)(B) of the Code made (1) pursuant to Section
704(e)(2) of the Code to a donee of an Interest, (2) pursuant to
Section 706(d) of the Code as the result of a change in any
Partner's Interest, or (3) pursuant to Regulation Section
1.751-1(b)(2)(ii) as a result of a distribution by the Partner
ship of unrealized receivables or inventory items or (b) a
distribution, and such allocation and/or distribution would cause
the negative balance in such Partner's Capital Account to exceed
(i) such Partner's share of Partnership Minimum Gain plus (ii) the
amount of such Partner's obligation, if any, to restore a negative
balance in such Partner's Capital Account, then such Partner shall
be allocated items of income and gain in an amount and manner
sufficient to eliminate such negative balance as quickly as
possible. For purposes of this Section 10.4(b)(viii), a Partner's
Capital Account shall be treated as reduced by Qualified Income
Offset Items.
(ix) In the event that any fee payable to the General
Partner or any Affiliate thereof shall instead be determined to be
a non-deductible, non-capitalizable distribution from the
Partnership to a Partner for Federal income tax purposes, then
there shall be allocated to such General Partner an amount of
gross income equal to the amount of such distribution.
(x) In applying the provisions of Article X with respect to
distributions and allocations, the following ordering of
priorities shall apply:
(1) Capital Accounts shall be deemed to be reduced
by Qualified Income Offset Items.
(2) Capital Accounts shall be reduced by
distributions of Cash Flow under Section 10.2(a).
(3) Capital Accounts shall be reduced by
distributions from Capital Transactions under Section
10.2(b).
(4) Capital Accounts shall be increased by any
minimum gain chargeback under Section 10.4(b)(vi) or Section
10.4(b)(vii).
(5) Capital Accounts shall be increased by any
qualified income offset under Section 10.4(b)(viii).
(6) Capital Accounts shall be increased by
allocations of profits under Section 10.1(a).
(7) Capital Accounts shall be reduced by allocations
of losses under Section 10.1(a).
(8) Capital Accounts shall be reduced by allocations
of losses under Section 10.1(b).
(9) Capital Accounts shall be increased by
allocations of profits under Section 10.1(b).
(xi) To the maximum extent permitted under the Code,
allocations of profits and losses shall be modified so that the
Partners' Capital Accounts reflect the amounts they would have
reflected if adjustments required by Sections 10.4(b)(vi),
10.4(b)(vii) and 10.4(b)(viii) had not occurred.
10.5 Authority of the General Partners to Vary Allocations to
Preserve and Protect the Partners' Intent
(a) It is the intent of the Partners that each Partner's
distributive share of profits, tax-exempt income, losses, non-deductible
non-capitalizable expenditures and credits (and items thereof) shall be
determined and allocated in accordance with this Agreement to the
fullest extent permitted by Section 704(b) of the Code. In order to
preserve and protect the determinations and allocations provided for in
this Agreement, the General Partners are hereby authorized and directed
to allocate profits, tax-exempt income, losses, nondeductible
non-capitalizable expenditures and credits (and items thereof) arising
in any year differently than otherwise provided for in this Agreement to
the extent that allocating profits, tax-exempt income, losses, non-
deductible non-capitalizable expenditures or credits (or any item
thereof) in the manner provided for herein would cause the
determinations and allocations of each Partner's distributive share of
profits, tax-exempt income, losses, non-deductible non-capitalizable
expenditures, or credits (or any item thereof) not to be permitted by
Section 704(b) of the Code and the Treasury Regulations promulgated
thereunder. Any allocation made pursuant to this Section 10.5 shall be
deemed to be a complete substitute for any allocation otherwise provided
for in this Agreement, and no amendment of this Agreement or approval of
any Partner shall be required.
(b) In making any allocation (the "New Allocation") under Sec tion
10.5(a), the General Partners are authorized to act only after having
been advised in writing by the Tax Accountants that, under Section
704(b) of the Code, (i) the New Allocation is necessary, and (ii) the
New Allocation is the minimum modification of the allocations otherwise
provided for in this Agreement necessary in order to assure that, either
in the then-current year or in any preceding year, each Partner's
distributive share of profits, tax-exempt income, losses, non-deductible
non-capitalizable expenditures, and credits (or any item thereof) is
determined and allocated in accordance with this Agreement to the
fullest extent permitted by Section 704(b) of the Code.
(c) If the General Partners are required by Section 10.5(a) to
make any New Allocation in a manner less favorable to the Limited
Partners than is otherwise provided for herein, then the General
Partners are authorized and directed, only after having been advised in
writing by the Tax Accountants that such an allocation is permitted by
Section 704(b) of the Code, to allocate profits, tax-exempt income,
losses, non-deductible non-capitalizable expenditures, and credits (and
any item thereof) arising in later years in such manner so as to bring
the allocations of profits, tax-exempt income, losses, non-deductible
non-capitalizable expenditures, and credits (and each item thereof) to
the Limited
Partners as nearly as possible to the allocations thereof otherwise
contemplated by this Agreement.
(d) New Allocations made by the General Partners under Section
10.5(a) and Section 10.5(c) in reliance upon the advice of the Tax
Accountants shall be deemed to be made pursuant to the fiduciary
obligation of the General Partners to the Partnership and the Limited
Partners, and no such allocation shall give rise to any claim or cause
of action by any Limited Partner.
ARTICLE XI
Management Agent
A. The General Partner shall engage the Management Agent to manage
the Partnership Property 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
the Agency (if such approval is required) or, when the Partnership
Property is not subject to Agency regulation, in accordance with a
reasonable and competitive fee arrangement. From and after the
Admission Date, the Partnership shall not enter into any Management
Agreement or modify or extend any Management Agreement unless the
General Partners shall have obtained the prior written consent of the
Special Limited Partner to the identity of the Management Agent and the
terms of the Management Agreement or the modification or extension
thereof.
B. Notwithstanding the foregoing, however, should the Investment
General Partner or an Affiliate thereof perform property management
services for the Partnership, property management, rent-up or leasing
fees shall be paid to the Investment General Partner or such Affiliate
only for services actually rendered and shall be in an amount equal to
the lesser of (i) fees competitive in price and terms with those of
non-affiliated Persons rendering comparable services in the locality
where the Partnership Property is located and which could reasonably be
available to the Partnership, or (ii) five percent (5%) of the gross
revenues of the Partnership Property. No duplicate property management
fees shall be paid to any Person.
C. If (i) the Management Agent is the General Partner or an
Affiliate of the General Partner, and (a) the Partnership Property shall
be subject to a substantial building code violation which shall not have
been cured within six months after notice from the applicable
governmental agency or department or (b) the Partnership shall not have
Cash Flow of at least $10,000 each during year after 1998, or (ii) an
Event of Bankruptcy shall occur with respect to the Management Agent, or
(iii) the Management Agent shall commit willful misconduct or gross
negligence in its conduct of its duties and obligations under the
Management Agreement, then upon request by the Special Limited Partner
and subject to Agency approval, if required, the General Partners must
cause the Partnership to promptly terminate the Management Agreement
with the Management Agent and appoint a new Management Agent selected by
the Special Limited Partner, which new Management Agent shall not be an
Affiliate of a General Partner. Each General Partner hereby grants to
the Special Limited Partner an irrevocable (to the extent permitted by
applicable law) power of attorney coupled with an interest to take any
action and to execute and deliver any and all documents and instruments
on behalf of such General Partner and the Partnership as the Special
Limited Partner may deem to be necessary or appropriate in order to
effectuate the provisions of this Article XI.C. Subject to Agency
approval, if required, the Partnership shall not enter into any future
management arrangement or renew or extend any existing management
arrangement unless such arrangement is terminable without penalty upon
the occurrence of the events described in this Article XI.
D. The General Partners shall have the duty to manage the
Partnership Property 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 Uniform Act under the Code for the Tax Credit, or by
any governmental agency having jurisdiction and may maintain such other
books and records as the General Partners in their discretion deem
advisable. Every Limited Partner, or its duly authorized repre-
sentatives, shall at all times have access to the records of the
Partnership at the principal office of the Partnership at any reasonable
times, and may inspect and copy any of such records. A list of the
names and addresses of all of the Limited Partners shall be maintained
as part of the books and records of the Partnership and shall be mailed
to any Limited Partner upon request. A reasonable charge for copy work
may be charged by the Partnership.
12.2 Bank Accounts
The bank accounts of the Partnership shall be maintained in the
Partnership's name with such financial institutions as the General
Partners shall determine. Withdrawals shall be made only in the regular
course of Partnership business on such signature or signatures as the
General Partners may determine. All deposits (including security
deposits and other funds required to be escrowed by any Lender ) and
other funds not needed in the operation of the business shall be
deposited, if required by applicable law and to the extent permitted by
applicable Agency or Mortgage requirements, in interest-bearing
accounts or invested in United States Government obligations maturing
within one year.
12.3 Auditors
(a) The Auditors shall prepare, for execution by the General
Partners, all tax returns of the Partnership. Prior to the filing of
the Partnership tax returns, and in no event later than February 7 of
each year, the Auditors shall deliver the tax returns for such year to
the Tax Accountants for their review and comment. If a dispute arises
between the Auditors and the Tax Accountants over the proper preparation
of the tax returns and such dispute cannot be resolved by the Auditors
and the Tax Accountants by March 1 of such year, then the Tax
Accountants shall make the final decision on whether any changes are
necessary. The Partnership shall reimburse BCCLP for all reasonable
costs and expenses paid to the Tax Accountants for the aforementioned
services.
(b) The Auditors shall audit and certify all annual financial
reports to the Partners in accordance with generally accepted auditing
standards.
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 Partners in such manner as will, in the opinion
of the Auditors, be most advantageous to the Investment Limited Partner
and the limited partners and/or holders of beneficial assignee
certificates thereof.
12.5 Special Basis Adjustments
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 holders of beneficial assignee certificates
of the Investment Limited Partner, the Partnership shall elect, upon the
request of the Investment Limited Partner, pursuant to Section 754 of
the Code, to adjust the basis of the Partnership property. Any
adjustments made pursuant to said Section 754 shall affect only the
successor in interest to the transferring Partner or partner or holder
of beneficial assignee certificate thereof. Each Partner will furnish
the Partnership all information necessary to give effect to such
election.
12.6 Fiscal Year
The fiscal and tax year of the Partnership shall be the calendar
year. The books of the Partnership shall be kept on an accrual basis.
12.7 Information to Partners
(a) The General Partners shall cause to be prepared and
distributed to all Persons who were Partners at any time during a fiscal
year of the Partnership:
(i) Within sixty (60) days after the end of each fiscal year
of the Partnership, (A) a balance sheet as of the end of such
fiscal year, a statement of income, a statement of partners'
equity, and a statement of cash flows, each for the year then
ended, all of which, except the statement of cash flows, shall be
prepared in accordance with generally accepted accounting
principles and accompanied by a report of the Auditors containing
an opinion of the Auditors, and (B) a report of the activities of
the Partnership during the period covered by the report. With
respect to any distribution to the Investment Limited Partner, the
report called for shall separately identify distributions from (1)
Cash Flow from operations during the period, (2) Cash Flow from
operations during a prior period which had been held as reserves,
(3) proceeds from disposition of property and investments, (4)
lease payments on net leases with builders and sellers, (5)
reserves from the gross proceeds of the Capital Contribution of
the Investment Limited Partner, (6) borrowed monies, and (7)
transactions outside of the ordinary course of business with a
description thereof.
(ii) Within thirty (30) days after the end of each fiscal
year of the Partnership, all information relating to the
Partnership and/or the Partnership Property which is necessary, in
the view of the Tax Accountants, for the preparation of the
Limited Partners' Federal income tax returns.
(iii) Within forty-five (45) 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) all other information which would be pertinent to
a reasonable investor regarding the Partnership and its activities
during the quarter covered by the report.
(b) Within sixty (60) days after the end of each fiscal year of
the Partnership a copy of the annual report to be filed with the United
States Treasury concerning the status of the Partnership Property as
low-income housing and, if required, a certificate to the appropriate
state agency concerning the same.
(c) Upon the 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 Partners shall furnish such information
within thirty (30) days of receipt of such request.
(d) Prior to October 15 of each year, the Partnership shall send
to the Investment Limited Partner an estimate of the Investment Limited
Partner's share of the tax credits, profits and losses of the
Partnership for Federal income tax purposes for the current fiscal year.
Such estimate shall be prepared by the General Partners and the
Auditors.
(e) Within fifteen (15) days after the end of any calendar quarter
during which:
(i) there is a material default by the Partnership under the
Project Documents or in payment of any mortgage, taxes, interest
or other obligation on secured or unsecured debt,
(ii) any reserve has been reduced or terminated by
application of funds therein for purposes materially different
from those for which such reserve was established,
(iii) any General Partner has received any notice of a
material fact which may substantially affect further distributions
or Tax Credit allocations to any Limited Partner, or
(iv) any Partner has pledged or collateralized its Interest
in the Partnership,
the General Partners shall send the Investment Limited Partner a
detailed report of such event.
(f) After the Admission Date, the Partnership shall send to the
Investment Limited Partner, on or before the tenth day of each month,
the monthly housing credit monitoring form, and copies of all applicable
periodic reports covering the status of project operations from the
previous period, as may be required by any Agency or the Authority.
(g) Within thirty (30) days after the end of each quarter of the
Partnership's fiscal year, the Partnership shall send to the Investment
Limited Partner a report on operations, in the form supplied by the
Investment Limited Partner.
(h) The General Partners shall cause the Partnership to send to
the Investment Limited Partner a copy of each Construction Mortgage draw
requisition and any notification or correspondence from the Construction
Lender indicating that any such draw will not be paid as requisitioned.
Upon receipt, the Partnership shall send to the Investment Limited
Partner copies of the Form(s) 8609 evidencing the Tax Credit allocation.
(i) If the earlier of (A) the Completion Date or (B) the date upon
which tenants first occupied single family home units in the Partnership
Property shall have occurred six months or more prior to the date upon
which the Investment Limited Partner acquired its Interest in the
Partnership, then the General Partners shall cause to be prepared and
delivered to the Investment Limited Partner within sixty (60) days of
the Admission Date the following items:
(i) An unaudited statement of income of the Partnership for
the year (or such shorter period as there may be from the date of
the most recent audited statement of income of the Partnership)
ended on the date upon which the Investment Limited Partner
acquired its Interest in the Partnership; and
(ii) An audited statement of income of the Partnership for
any fiscal year of the Partnership ending between (A) the earlier
of (1) the Completion Date or (2) the date upon which tenants
first occupied single family home units in the Partnership
Property and (B) the date upon which the Investment Limited
Partner acquired its Interest in the Partnership.
(j) Within thirty (30) days of the Completion Date, the General
partners shall furnish the Investment Limited Partner with a Credit
Basis Worksheet for each building, in the form specified by the
Investment Limited Partner.
(k) If the General Partners do not cause the Partnership to
fulfill its obligations under Section 12.7(a)(i) and/or
Section 12.7(a)(ii) within the time periods set forth therein, the
General Partners may be required by the Investment Limited Partner to
pay as damages the sum of $250 per day (plus interest at a rate equal to
the general base rate of interest established by The First National Bank
of Boston or its successors and assigns and announced by it as the rate
charged by it to its prime commercial customers on short-term unsecured
borrowings as its "base rate" from time to time in effect plus 3%) to
the Investment Limited Partner until such obligations shall have been
fulfilled; provided, however, that said penalty shall not be applied
should the failure to provide such reports and information be beyond the
control of the General Partner. Such damages shall be paid forthwith by
the General Partners, and failure to so pay shall constitute a material
default of the General Partners hereunder. In addition, if the General
Partners shall so fail to pay, the General Partners and their Affiliates
shall forthwith cease to be entitled to the Annual Partnership
Management Fee, and to the payment of any Cash Flow or Capital
Transaction proceeds to which they may otherwise be entitled hereunder.
Such payments of the Annual Partnership Management Fee, Cash Flow and
Capital Transaction proceeds shall be restored only upon the payment of
such damages in full, and any amount of such damages not so paid shall
be deducted against payments of the Annual Partnership Management Fee,
Cash Flow and Capital Transaction proceeds otherwise due to the General
Partners or their 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.B., (ii) loans made by, or guaranteed by, the
Investment General Partner or any of its Affiliates, and (iii) those
dealings, contracts or provision of services described in the Investment
Partnership Agreement or in the Prospectus. Extraordinary circumstances
shall only be presumed to exist where there is an emergency situation
requiring immediate action and the services required are not immediately
available from unaffiliated parties. All services rendered under such
circumstances must be rendered pursuant to a written contract which must
contain a clause allowing termination without penalty on sixty (60)
days' notice. Goods and services provided under such circumstances must
be provided at the lesser of actual cost or the price charged for such
goods or services by independent parties.
(c) In the event extraordinary circumstances arise, the Investment
General Partner and its Affiliates may provide construction services in
connection with the Partnership Property. Neither the Investment General
Partner nor any of its Affiliates shall provide such services unless it
believes it has an adequate staff to do so and unless such provision of
goods and construction services is part of its ordinary and ongoing
business in which it has previously engaged, independent of the
activities of the Investment Limited Partner. Any such services must be
reasonable for and necessary to the Investment Limited Partner, actually
furnished to the Investment Limited Partner, and provided at the lower
of ten percent (10%) of the construction contract rate with respect to
the Partnership Property or ninety percent (90%) of the competitive
price charged for such services by independent parties for comparable
goods and services in the same geographic location (except that in the
case of transfer agent, custodial and similar banking-type fees, and
insurance fees, the compensation, price or fee shall be at the lesser of
costs or the compensation, price or fee of any other Person rendering
comparable services as aforesaid). Cost of services as used herein means
the pro rata cost of personnel, including an allocation of overhead
directly attributable to such personnel, based on the amount of time
such personnel spent on such services or other method of allocation
acceptable to the accountants for the Investment Limited Partner.
(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 or in the Prospectus.
ARTICLE XIII
General Provisions
13.1 Restrictions by Reason of Section 708 of the Code
No Disposition may be made if the Interest sought to be Disposed
of, when added to the total of all other Interests Disposed of within
the period of twelve consecutive months prior to the proposed date of
the Disposition, could, in the opinion of tax counsel to the
Partnership, result in the termination of the Partnership under Section
708 of the Code. This Section 13.1 shall have no application to any
required repurchase of the Investment Limited Partner's Interest. Any
Disposition in contravention of any of the provisions of this Section
13.1 shall be void ab initio and ineffectual and shall not bind or be
recognized by the Partnership. Notwithstanding the foregoing provisions
of this Section 13.1, however, the Investment Limited Partner may waive
the provisions of this Section 13.1 at any time as to a Disposition or
series of Dispositions, and in the event of such a waiver, this Section
13.1 shall have no force or effect upon such Disposition or series of
Dispositions.
13.2 Amendments to Certificate
Within one hundred twenty (120) days after the end of any
Partnership fiscal year in which the Investment Limited Partner shall
have received any distributions under Article X, the General Partners
shall file an amendment to the Certificate reducing by the amount of its
allocable share of such distribution the amount of Capital Contribution
of the Investment Limited Partner as stated in the last previous
amendment to the Certificate if such Amendment is required under the
Uniform Act to reduce any liability of the Investment Limited Partner to
partnership creditors. However, Schedule A shall not be amended on
account of any such distribution.
The Partnership shall amend the Certificate at least once each
calendar quarter to effect the substitution of Substituted Limited
Partners, although the General Partners may elect to do so more
frequently. In the case of assignments, where the assignee does not
become a Substituted Limited Partner, the Partnership shall recognize
the assignment not later than the last day of the calendar month
following receipt of notice of assignment and all docu mentation
required in connection therewith hereunder.
Notwithstanding the foregoing provisions of this Section 13.2, no
such amendments to the Certificate need be filed by the General Partners
if the Certificate is not required to and does not identify the Limited
Partners or their Capital Contributions in such capacity.
13.3 Notices
Any notice called for under this Agreement shall be in writing and
shall be deemed adequately given if actually delivered or if sent by
registered or certified mail, postage prepaid, to the party for whom
such notice is intended at such party's last address of record on the
Partnership books.
13.4 Word Meanings
The words such as "herein," "hereinafter," "hereof" and
"hereunder" refer to this Agreement as a whole and not merely to a
subdivision in which such words appear unless the context otherwise
requires. The singular shall include the plural, and vice versa, and
each gender (masculine, feminine and neuter) shall include the other
genders, unless the context requires otherwise. Each reference to a
"Section" or an "Article" refers to the corresponding Section or Article
of this Agreement, unless specified otherwise. References to Treasury
Regulations (permanent or temporary) or Revenue Procedures shall include
any successor provisions.
13.5 Binding Effect
The covenants and agreements contained herein shall be binding
upon and inure to the benefit of the heirs, executors, administrators,
successors and assigns of the respective parties hereto.
13.6 Applicable Law
This Agreement shall be construed and enforced in accordance with
the laws of the State.
13.7 Counterparts
This Agreement may be executed in several counterparts and all so
executed shall constitute one agreement binding on all parties hereto,
notwithstanding that all the parties have not signed the original or the
same counterpart.
13.8 Financing Regulations
So long as any of the Project Documents are in effect, (a) each of
the provisions of this Agreement shall be subject to, and the General
Partners covenant to act in accordance with, the Project Documents; (b)
the Project Documents shall govern the rights and obligations of the
Partners, their heirs, executors, administrators, successors and assigns
to the extent expressly provided therein; (c) upon any dissolution of
the Partnership or any transfer of the Partnership Property, no title or
right to the possession and control of the Partnership Property and no
right to collect the rent therefrom shall pass to any Person who is not,
or does not become, bound by the Project Documents and other Project
Documents in a manner satisfactory to the Lender or any Agency ; (d) no
amendment to any provision of the Project Documents shall become
effective without the prior written consent of the Lender or any Agency
(if required); and (e) the affairs of the Partnership shall be subject
to Agency regulation and no action shall be taken which would require
the consent or approval of any Agency unless the same is first
obtained. No new Partner shall be admitted to the Partnership, and no
Partner shall withdraw from the Partnership or be substituted for
without the consent of the Lender or any Agency (if such consent is then
required). No amendment to this Agreement relating to matters governed
by Agency regulations or requirements shall become effective until the
prior written consent of the Agency (if required) to such amendment
shall have been obtained.
Any conveyance or transfer of title to all or any portion of the
Partnership Property required or permitted under this Agreement shall in
all respects be subject to all conditions, approvals and other
requirements of FmHA rules and regulations applicable thereto.
13.9 Separability of Provisions
Each provision of this Agreement shall be considered separable and
(a) if for any reason any provision is determined to be invalid, such
invalidity shall not impair the operation of or affect those portions of
this Agreement which are valid, and (b) if for any reason any provision
would cause the Investment Limited Partner to be bound by the
obligations of the Partnership (other than the rules and regulations of
any Lender and the requirements of any other Lender), such provision or
provisions shall be deemed void and of no effect.
13.10 Paragraph Titles
All article and section headings in this Agreement are for
convenience of reference only and are not intended to qualify the
meaning of any article or section.
13.11 Amendment Procedure
This Agreement may be amended by the General Partners only with
the Consent of the Investment Limited Partner and the prior written
consent of the Special Limited Partner.
13.12 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 hereof; provided, however, that
if regulations are issued under the Code or an amendment to the Code is
adopted which would require, in the opinion of the Auditors, that the
Investment Limited Partner be deemed admitted on a date other than as of
the Commencement Date, then the General Partners shall select a
permitted admission date which is most favorable to the Investment
Limited Partner.
Intentionally left blank
WITNESS the execution hereof under seal as of the 1st day of
October, 1996.
ORIGINAL (WITHDRAWING)
LIMITED PARTNER(S): GENERAL PARTNER(S):
/s/ Xxxxx Xxxxx Thames /s/ X.X. Xxxxxx, Xx.
Xxxxx Xxxxx Thames X.X. Xxxxxx, Xx.
INVESTMENT LIMITED PARTNER: SPECIAL LIMITED PARTNER:
BOSTON CAPITAL TAX BCTC 94, Inc.
CREDIT FUND IV, L.P.,
a Delaware
limited partnership
By: Boston Capital Associates
IV, L.P., a Delaware
limited partnership, By: /s/ Xxxxxx Xxxx Xxx
its general partner Xxxxxx Xxxx Xxx,
Attorney in-Fact
for
Xxxx X. Xxxxxxx, its
duly authorized President
By: C&M Associates d/b/a
Boston Capital Associates,
a general partner
By:/s/ Xxxxxx Xxxx Xxx,
Xxxxxx Xxxx Xxx,
Attorney-In-Fact for
Xxxx X. Xxxxxxx, its
duly authorized
President
STATE OF Mississippi
COUNTY OF Xxxxxx
Personally appeared before me the under-signed authority in and
for the said county and state, on this _____ day of _____________, 1996,
within my jurisdiction, the within named X.X. Xxxxxx, Xx., who
acknowledged that he executed the above and foregoing instrument.
________________________________
(Notary Public)
My Commission Expires:
___________________________
STATE OF Mississippi
COUNTY OF Xxxxxx
Personally appeared before me the under-signed authority in and
for the said county and state, on this _____ day of _____________, 1996,
within my jurisdiction, the within named Xxxxx Xxxxx Thames, who
acknowledged that she executed the above and foregoing instrument.
________________________________
(Notary Public)
My Commission Expires:
___________________________
STATE OF MASSACHUSETTS
COUNTY OF SUFFOLK
Personally appeared before me, the undersigned authority in and
for said County and State, on this _______ day of ____________, 1996,
within my jurisdiction, the within named Xxxxxx Xxxx Xxx, Attorney in
Fact for Xxxx X. Xxxxxxx, who acknowledged that he is President of
Boston Capital Associates, Inc., which is the general partner of Boston
Capital Associates IV, L.P., which is the general partner of Boston
Capital Tax Credit Fund IV, L.P. and that in said representative
capacity she executed the above and foregoing instrument, after first
having been duly authorized to do so.
(Notary Public)
My Commission Expires:
___________________________
STATE OF MASSACHUSETTS
COUNTY OF SUFFOLK
Personally appeared before me, the undersigned authority in and
for said County and State, on this _______ day of ____________, 1996,
within my jurisdiction, the within named Xxxxxx Xxxx Xxx, Attorney in
Fact for Xxxx X. Xxxxxxx, who acknowledged that he is the President of
BCTC 94, Inc., a Delaware corporation, and that for and on behalf of the
said corporation, and as its act and deed she executed the above and
foregoing instrument, after first having been duly authorized by said
corporation to do so.
(Notary Public)
My Commission Expires:
__________________________
GUARANTY
The undersigned unconditionally guarantee the performance by the
General Partners of all of its obligations under Sections 5.1, 5.2, 6.5,
6.10, 6.11(a) and 12.7(k) of the Amended and Restated Agreement and
Certificate of Limited Partnership and
____________________
X.X. Xxxxxx, Xx.
Northfield Housing, L.P.
Schedule A
As of
December 1, 1996
General Partners Capital Contribution
X.X. Xxxxxx, Xx. $100
0000 Xxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxxxxx 00000
Special Limited Partner Capital Contribution
BCTC 94, Inc. $10
c/o Boston Capital
Partners, Inc.
Xxx Xxxxxx Xxxxx
Xxxxxx, XX 00000-0000
Investment Total Agreed-to Paid-In
Limited Partner Capital Contribution Capital Contribution
Boston Capital $217,266 $130,360
Tax Credit Fund IV, L.P.
c/o Boston Capital
Partners, Inc.
Xxx Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
____________________________
*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.
16650_2
