PAHRUMP VALLEY INVESTORS,
A WYOMING LIMITED PARTNERSHIP
AMENDED AND RESTATED
AGREEMENT AND CERTIFICATE OF LIMITED PARTNERSHIP
Dated as of May 1, 1991____________, 199_
PAHRUMP VALLEY INVESTORS
A WYOMING LIMITED PARTNERSHIP
TABLE OF CONTENTS
Page
Preliminary Statement 1
ARTICLE I -- Defined Terms 1
ARTICLE II -- Name and Business 12
2.1 -- Name; Continuation 12
2.2 -- Office and Resident Agent 12
2.3 -- Purpose 12
2.4 -- Term and Dissolution 12
ARTICLE III -- Mortgage, Refinancing and Disposition
of Property 13
ARTICLE IV -- Partners; Capital 14
4.1 -- Capital and Capital Accounts 14
4.2 -- General Partners 15
4.3 -- Investment Limited Partner, Special
Limited Partner, and Original Limited
Partner 15
4.4 -- Liability of the Limited Partners 16
4.5 -- Special Rights of the Investment
Limited Partner and Special Limited
Partner 16
4.6 -- Meetings 17
ARTICLE V -- Capital Contributions of the Investment
Limited Partner and the Special Limited
Partner 18
5.1 -- Payments 18
5.2 -- Return of Capital Contributions 21
ARTICLE VI -- Rights, Powers and Duties of General
Partners 23
6.1 -- Authorized Acts 23
6.2 -- Restrictions on Authority 24
6.3 -- Personal Services 25
6.4 -- Business Management and Control;
Tax Matters Partner 25
6.5 -- Duties and Obligations 26
6.6 -- Representations and Warranties 28
6.7 -- Liability on the Permanent Mortgage 31
6.8 -- Indemnification of the General Partners 31
6.9 -- Indemnification of the Partnership and
the Limited Partners 32
6.10 -- Operating Deficits 33
6.11 -- Obligation to Complete the Construction
of the Apartment Complex 33
6.12 -- Certain Payments to the General Partners
and Others 35
6.13 -- Delegation of General Partner Authority 36
6.14 -- Assignment to the Partnership 37
ARTICLE VII -- Withdrawal of a General Partner; New
General Partners 37
7.1 -- Withdrawal 37
7.2 -- Obligation to Continue 37
7.3 -- Withdrawal of All General Partners 38
7.4 -- Interest of General Partner After
Permitted Withdrawal 38
7.5 -- Admission of Additional General Partner(s)
Under Certain Circumstances
ARTICLE VIII -- Transferability of Limited Partner
Interests 39
8.1 -- Assignments 39
8.2 -- Substituted Limited Partner 39
8.3 -- Restrictions 40
ARTICLE IX -- Working Capital Loan; Borrowings 40
9.1 -- Working Capital Loan 40
9.2 -- Borrowings 40
ARTICLE X -- Profits, Losses, Tax Credits,
Distributions and Capital Accounts 41
Allocation of Taxable Income, Tax Losses,
Tax Credits and Cash Distributions
10.1 -- Profits, LossesAllocation of Taxable Income,
Tax Losses and Tax Credits 41
10.2 Allocation of Taxable Income and Tax
Losses from Capital Transactions
10.2.1 -- Allocations Among the General Partners
10.23 -- Cash Distributions Prior to Dissolution 43
10.34 -- Distributions Upon Dissolution 45
10.45 -- Special ProvisionsAllocations Among
Partners 46
10.6 Qualified Income Offset
10.7 Minimum Gain Allocations
10.8 Regulatory Allocations
10.9 Partners' Partnership Non-Recourse
Liabilities
10.10 Tax Allocations: Code Section 704(c)
10.11 Tax Matters Partner
10.12 Capital Accounts
10.513 -- Authority of the General Partners to Vary
Allocations to Preserve and Protect the
Partners' Intent 49
ARTICLE XI -- Management Agent 50
ARTICLE XII -- Books and Records, Accounting, Tax
Elections, Etc 51
12.1 -- Books and Records 51
12.2 -- Bank Accounts 52
12.3 -- Auditors 52
12.4 -- Cost Recovery and Elections 52
12.5 -- Special Basis Adjustments 53
12.6 -- Fiscal Year 53
12.7 -- Information to Partners 53
12.8 -- Expenses of the Partnership 56
ARTICLE XIII -- General Provisions 57
13.1 -- Restrictions by Reason of Section 708
of the Code 57
13.2 -- Amendments to Certificate 57
13.3 -- Notices 58
13.4 -- Word Meanings 58
13.5 -- Binding Effect 58
13.6 -- Applicable Law 58
13.7 -- Counterparts 58
13.8 -- Financing Regulations 58
13.9 -- Separability of Provisions 59
13.10 -- Paragraph Titles 59
13.11 -- Amendment Procedure 59
13.12 -- Time of Admission 59
Schedule A 64
PAHRUMP VALLEY INVESTORS, A
WYOMING LIMITED PARTNERSHIP
AMENDED AND RESTATED
AGREEMENT AND CERTIFICATE OF LIMITED PARTNERSHIP
Preliminary Statement
Pahrump Valley Investors, aA Wyoming Limited Partnership (the
"Partnership") was formed as a Wyoming Limited Partnership pursuant to a
Certificate of Limited Partnership dated March 31, 1994, by and among Xxxx
X. Xxxxxxxxx, Xxxxx X. Xxxx and Xxxx Xxxxxxx as General Partners and as the
Limited Partners (in such capacity, the "Original Limited Partners") . The
Certificate of Limited Partnership (the "Original Certificate") was filed in
the Filing Office on April 7, 1994. The Partnership filed an application
for registration and transaction of business in the State of Nevada and so
qualified as of March 27, 1995. Certain capitalized terms used herein
shall have the respective meanings specified in Article I.
In consideration of mutual agreements set forth herein, it is agreed
and certified, and the Original Agreement and the Original Certificate are
hereby amended and restated in their entireties, as follows:
ARTICLE I
Defined Terms
The 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 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) i (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 per cent
(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 per cent (10%) or
more of any class of equity securities, (d) who is an officer, director,
general partner, trustee or holder of ten per cent (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
per cent (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) i 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 per cent (10%) or more of the
outstanding voting securities of such Person, (c) of which ten per cent
(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.
Agreement means this Amended and Restated Agreement and Certificate 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).
Apartment Complex means the real property located in Pahrump, Pahrump
County, Nevada, 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.
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.
Auditors means Xxxxx & Rea of Stockton, California, 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, as applicable, the State of Nevada, Department of
Business and Industry, Housing Division, in its capacity as the designated
agency of the State of Nevada to allocate the Tax Credits, acting through
any authorized representative and/or any other governmental authority having
jurisdiction over the particular matter to which reference is being made.
"Book Depreciation" has the meaning set forth in Section 10.12C.
"Book Profits and Losses" means the Taxable Income or Tax Losses of
the Partnership, adjusted for purposes of determining and maintaining the
Partners' Capital Accounts as provided in Section 10.12.
Boston Capital means Boston Capital Partners, Inc., a Massachusetts
corporation, and its successors and assigns.
Boston Capital Loan means that certain loan in the amount of $103,600
made by the Investment Limited Partner to the Partnership as evidenced by a
Demand Promissory Note dated January 30, 1996 and the Loan and Security
Agreement dated as of January __, 1996, between the Partnership and the
Investment Limited Partner and secured by that certain Guaranty dated as of
December __, 1995, from Xxxx X. Xxxxxxxxx, Xxxx X. Xxxxxxx and Xxxxx X. Xxxx
in favor of the Investment Limited Partner and that certain Collateral
Assignment and Pledge of Partnership Interest dated as of January __, 1996,
by Xxxx X. Xxxxxxxxx, Xxxx X. Xxxxxxx and Xxxxx X. Xxxx to the Investment
Limited Partner.
Breakeven Point means thirty (30) days after the first time at which,
as certified by the General Partners, based upon six (6) consecutive full
calendar months of operation occurring after the later to occur of (i) the
Admission Date or (ii) Permanent Mortgage Closing, with each month taken
individually, the rental income (including government subsidies) of the
Partnership actually received on a cash basis (excluding prepaid rent) shall
have exceeded all the Partnership's expenses on an accrual basis (including
the funding of any reserves required pursuant to the terms of this
Agreement), except for depreciation, distributions of Cash Flow and Capital
Transaction proceeds to the Partners and the fees payable pursuant to this
Agreement. For purposes of the foregoing, expenses shall (i) include
monthly payments of principal and interest in the amount specified in the
Mortgage regardless of any forbearance thereof, (ii) include a ratable
portion of the annual amount (as estimated by the General Partners) of those
seasonal expenses (such as utilities and maintenance expenses) which might
reasonably be expected to be incurred on an unequal basis during a full
annual period of operation, and (iii) be adjusted, if necessary, so that the
expenses of real estate taxes and insurance are based on the General
Partners' estimate of the full value of the Apartment Complex after
completion of construction.
Capital Account has the meaning specified in Section 10.12.
Capital Contribution with respect to any Partner, means the total
amount of money and the initial Gross Asset Value of any property (other
than money) contributed or agreed to be contributed, as the context
requires, to the Partnership by each Partner pursuant to the terms of this
Agreement. Any reference to the Capital Contribution of a Partner shall
include the Capital Contribution made by a predecessor holder of the
Interest of such 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, 1995, the Partnership had owned land or
depreciable property constituting part of the Apartment Complex and had
incurred capitalizable costs with respect to the Apartment Complex of at
least ten per cent (10%) of the Partnership's reasonably expected basis in
the Apartment Complex as of December 31, 1997, so that each building in the
Apartment Complex constitutes a "qualified building" for the purposes of
Section 42(h) (1) (E) (ii) of the Code.
Cash Flow means, with respect to any year or other applicable period,
(a) all Revenues received by the Partnership during such period, plus (b)
any amounts which the General Partners, with the Consent of the Investment
Limited Partner, and subject to the approval of FmHA, if required, releases
from the replacement reserves account and operating reserves account
established pursuant to Section 6.5(e) herein as being no longer necessary
to hold as part of such accounts, less (i) all operating expenses and
obligations of the Partnership paid or payable (on a thirty-day current
basis) during the applicable period, including without limitation escrow
deposits for taxes and insurance, maintenance and repairs, (ii) all sums due
or currently required to be paid under the terms of any Mortgage or any
other third-party indebtedness of the Partnership, and (iii) all amounts
from Revenues, if any, added or required to be added to the replacement
reserves account and/or the operating reserves account during such period.
In no event will deductions in determining Cash Flow pursuant to clauses (i)
and (ii) above include payments made on account of: the Reporting Fee,
amounts due on any Subordinated Loans, the Annual Partnership Management
Fee, and/or any portion of the Construction and Development Fee which is not
paid from the Installments.
Cash Flow shall be determined separately for each fiscal year
and shall not be cumulative.
Certificate means the Original Certificate as amended from time to
time (including any amendment thereto effected by this Agreement).
Class Contribution means the aggregate Capital Contributions of all
members of a particular class of Partners (i.e., the General Partners or the
Limited Partners (including, the Investment Limited Partner, the Special
Limited Partner or any Additional Limited Partner).
Code means the Internal Revenue Code of 1986, as amended from time to
time, and the regulations (permanent and temporary) issued thereunder.
References herein to any Code section shall include any successor
provisions.
Commencement Date means the first day of the month in which the
Admission Date occurs.
Competitive Real Estate Commission means that real estate or brokerage
commission paid for the purchase or sale of the Apartment Complex or other
Partnership property which is reasonable, customary and competitive in light
of the size, type and location of the Apartment Complex or other property.
Completion Date means the date upon which the Apartment Complex has
been completed as evidenced by the issuance by the inspecting architect and
by each governmental agency having jurisdiction of certificates of
substantial completion or occupancy (or local equivalents) with respect to
all 32 apartment units in the Apartment Complex.
Compliance Period means the fifteen (15) year period commencing with
the first year of the Credit Period.
Consent of the Investment Limited Partner means the prior written
consent or approval of the Investment Limited Partner.
Construction Contract means that certain construction contract dated
December 29, 1995 (including exhibits and attachments thereto) entered into
between the Partnership and the Contractor pursuant to which the Apartment
Complex is being constructed.
Construction and Development Fee means the fee described in Section
6.12(b).
Construction Lender means Mortgage Investors Group, Ltd., a Florida
limited partnership, in its capacity as holder of the Construction Mortgage,
or its successors or assigns in such capacity.
Construction Mortgage means the financing for the construction of the
Apartment Complex provided by the Construction Lender in a principal amount
of up to $1,406,000.
Construction Mortgage Closing means the first date upon which the
Construction Mortgage shall have closed and all preconditions to
disbursement of funds thereunder have been met.
Contractor means Sequoia Pacific Builders, Inc., a California
corporation, in its capacity as a general construction contractor for the
Apartment Complex.
Controlling Person has the meaning given to it in the context of
Section 15 of the Securities Act of 1933, as amended.
Cost Certification means the date upon which each Limited Partner
shall have received the written certification of the Auditors, in a form and
in substance satisfactory to Boston Capital, as to the itemized amounts of
the construction and development costs of the Apartment Complex and the
Eligible Basis and Applicable Percentage pertaining to each building in the
Apartment Complex.
Credit Period has the meaning given to it in Section 42(f)(1) of the
Code.
Credit Recovery Loan means a constructive interest-bearing advance of
the Investment Limited Partner, as more fully described in Section 5.1(f).
Credit Recovery Loans and interest thereon shall not be treated as loans or
interest, respectively, for accounting, tax or liability purposes or for the
purposes of Section 6.2(a) (1). For the purposes of Article X, the term
Credit Recovery Loan shall not include any portion of such an advance which
shall have theretofore been paid to 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.
89-12 Requirements means the requirements set forth in Internal
Revenue Procedure 89-12 which are prerequisites to the issuance, assuming
that each General pPartner 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.
Eligible Basis has the meaning given to it in Section 42(d) of the
Code.
Entity means any general partnership, limited partnership,
corporation, joint venture, trust, business trust, cooperative or
association.
Event of Bankruptcy means with respect to any Person,
(i) the entry of a decree or order for relief by a court
having jurisdiction in respect of such Person or in respect of any
Controlling Person of such Person in a case under the federal bankruptcy
laws, as now or hereafter constituted, or any other applicable federal or
state bankruptcy, insolvency or other similar law, or the appointment of a
receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar
official) of such Person or of any Controlling Person of such Person or for
any substantial part of such Person's property or of the property of any
Controlling Person of such Person, or the issuance of an order for the
winding-up or liquidation of such Person's affairs or the affairs of any
Controlling Person of such Person and the continuance of any such decree or
order unstayed and in effect for a period of sixty (60) consecutive days, or
(ii) the commencement by such Person or by a Controlling Person
of such Person of a proceeding seeking any decree, order or appointment
referred to in clause (i), the consent by such Person or by any Controlling
Person of such Person to any such decree, order or the appointment, or
taking of any action by such Person or by any Controlling Person of such
Person in furtherance of any of the foregoing.
Economic Risk of Loss has the meaning set forth in Treasury Regulation
1.752-2.
Extended Use Agreement means the Declaration of Land Use Restrictive
Covenants, which is intended to meet the definition of a "long term
commitment to low-income housing" as required by Section 42(h)(b) of the
Code and the requirements of the Authority's Tax Credit program.
Filing Office means the Secretary of State of the State.
FmHA means the Farmers Home Administration of the United States
Department of Agriculture, now known as Rural Economic and Community
Development acting on behalf of the Rural Housing Services.
FmHA Loan Agreement means the FmHA Loan Agreement dated August 17,
1995 by and between the Partnership and FmHA, as amended from time to time.
General Partners means the Persons designated as General Partners in
Schedule A and any Persons who become General Partners as provided herein,
in their capacities as general partners of the Partnership. At any and all
times where there is only one General Partner, the term General Partners
shall mean such sole General Partner.
Gross Asset Value means, with respect to any asset, the asset's
adjusted basis for federal income tax purposes, except as adjusted pursuant
to Section 10.12B.
Hazardous Material has the collective meanings given to the terms
"hazardous material", "hazardous substances" and "hazardous wastes" in the
Federal Comprehensive Environmental Response, Compensation and Liability Act
of 1980, 42 U.S.C. Sec. 9601 et seq., as amended, and to the term
"radioactive materials" in the context of the Atomic Energy Act, 28 U.S.C.
Sec. 2344, and also includes any meanings given to such terms in any similar
state or local statutes, ordinances, regulations or by-laws. In addition,
the term Hazardous Material also includes oil and any other substance known
to be hazardous.
Hazardous Waste Laws means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, and any other federal, state or
local law governing Hazardous Material, as such laws may be amended from
time to time.
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 90% Occupancy Date means the first date upon which not less
than 90% of the Low-Income Apartment Units in the Apartment Complex shall
have been leased to and physically occupied by Qualified Tenants.
Installment means an installment of the Investment Limited Partner's
Capital Contribution paid or payable to the Partnership pursuant to Section
5.1.
Interest means the entire interest of a Partner in the Partnership at
any particular time, including the right of such Partner to any and all
benefits to which a Partner may be entitled hereunder and the obligation of
such Partner to comply with the terms of this Agreement.
Invested Amount means (i) as to the Investment Limited Partner, an
amount equal to the paid-in Capital Contribution of the Investment Limited
Partner divided by 73% and (ii) as to any other Partner, an amount equal to
its paid in Capital Contribution.
Investment General Partner means Boston Capital Associates IV L.P., a
Delaware limited partnership, in its capacity as the general partner of the
Investment Limited Partner, and any other Person who may become a successor
or additional general partner of the Investment Limited Partner.
Investment Limited Partner means Boston Capital Tax Credit Fund IV
Limited Partnership, a Delaware limited partnership, specifically Series 24
thereof, and any Person or Persons who replace it as Substituted Limited
Partner, but shall not include any Special Limited Partner or Additional
Limited Partner.
Investment Partnership Agreement means the Agreement of Limited
Partnership of the Investment Limited Partner, as amended from time to time.
Lender means the Construction Lender and FmHA, 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.
Low-Income Apartment Units means the 32 units in the Apartment Complex
with respect to which the Partnership has agreed to comply with the
requirements.
Notice has the meaning specified in Section 13.3 of this Agreement.
Management Agent means the management and rental agent for the
Apartment Complex.
Management Agreement means the agreement between the Partnership and
the Management Agent providing for the management of the Apartment Complex.
Management Fee means the Management Fee to which reference is made in
Article XI.A.
"Minimum Gain" means the amount determined by computing, with respect
to each non-recourse liability of the Partnership, the amount of Taxable
Income, 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 thereof, and by then aggregating the amounts so computed, in
accordance with Treasury Regulation 1.704-2(d). For purposes of determining
the amount of such Taxable Income with respect to a liability, the adjusted
basis, for federal income tax purposes, of the asset subject to the
liability shall be allocated among all the liabilities that the asset
secures in the manner set forth in Treasury Regulation 1.704-2(d)(2) (or
successor provisions). If Partnership property subject to one or more non-
recourse liabilities of the Partnership is, under Treasury Regulation 1.704-
1(b)(2)(iv)(d),(f), or (r), properly reflected on the books of the
Partnership at a book value that differs from the adjusted tax basis of such
property, then the determination of Minimum Gain shall be made with
reference to such book value.
Minimum Set-Aside Test means the set aside test selected by the
Partnership pursuant to Section 42(g) of the Code whereby at least 40% of
the units in the Apartment Complex must be occupied by individuals with
incomes equal to 60% or less of area median income, as adjusted for family
size.
Mortgage means the mortgage indebtedness of the Partnership to the
Construction Lender and/or FmHA; 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 FmHA documentation
related thereto.
"Nonrecourse Deductions" has the meaning set forth in Section 1.704-
2(c) of the Treasury Regulations. The amount of Nonrecourse Deductions for
a Fiscal Year of the Partnership equals the net increase, if any, in the
amount of Minimum Gain during that Fiscal Year, determined according to the
provisions of Treasury Regulation Section 1.704-2(c).
[Original Agreement has the meaning specified in the Preliminary
Statement.]
Original Certificate has the meaning specified in the Preliminary
Statement.
Original Limited Partners has the meaning specified in the Preliminary
Statement.
Partner means any General Partner or Limited Partner.
Partner Non-Recourse Debt Minimum Gain means, with respect to any
Partner, the sum of (a) the deductions attributable to Partner Non-Recourse
Debt that have been allocated to such Partner and (b) the aggregate amount
of distributions made to such Partner of proceeds of such debt that are
allocable to an increase in minimum gain attributable to such debt (but only
if such Partner or a Related Person bears the economic risk of loss for such
debt) in excess of the sum of (c) such Partner's aggregate share of the net
decreases in minimum gain attributable to such debt and (d) such Partner's
share of the decreases in the minimum gain attributable to such debt
resulting from revaluations of Partnership property subject to such debt.
The net increase (or decrease) in the minimum gain that is attributable to
Partner Non-Recourse Debt equals the sum of (i) any increase (or decrease)
in the net increase in Partnership Minimum Gain during a year that would
result if such Partner NonRecourse Debt were treated as a Partnership Non-
Recourse Liability and (ii) any decrease (or increase) in the net decrease
in Partnership Minimum Gain during a year that would result if such Partner
Non-Recourse Debt were treated as a Partnership Non-Recourse Liability.
"Partner Nonrecourse Debt Minimum Gain" has the meaning attributed to
"partner nonrecourse debt minimum gain" in Treasury Regulation 1.704-
2(i)(3).
"Partner Nonrecourse Deductions" means any deductions of the
Partnership that are attributable to a nonrecourse liability for which a
Partner or a Related Person bears the Economic Risk of Loss.
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 1.704-1T(b) (4) (iv) (c)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 as defined in Treasury Regulation Section 1.704-1T(b) (4) (iv)
(k) (1).
Permanent Mortgage means the permanent financing provided, or to be
provided by FmHA for the Apartment Complex following the completion thereof
in the initial principal amount of $1,406,000.
Permanent Mortgage Closing means the date upon which the following
shall have occurred (a) the Completion Date and (b) the funding and the
closing of the Permanent Mortgage upon terms and conditions satisfactory to
the Investment Limited Partner and the Special Limited Partner.
Person means any individual or Entity.
Project Documents means and includes all documents evidencing or
relating to the Construction Mortgage and the Permanent Mortgage, the FmHA
Loan Agreement, the Rental Assistance Agreement, the Management Agreement,
the Regulatory Agreement, the Extended Use Agreement, all other instruments
delivered to (or required by) the Construction Lender and/or FmHA and all
other documents relating to the Apartment Complex and by which the
Partnership is bound, as amended or supplemented from time to time.
Projected Credit means the amount of Tax Credit projected to be
allocated to the Investment Limited Partner in each year of the Credit
Period, i.e.: $31,144 for 1996 $61,189 per annum for each of the years 1997
through 2005 (inclusive) and $28,045 for 2006; provided, however, that the
Projected Credit for 2006 shall be reduced by the amount, if any, by which
the Actual Credit for 1996 exceeds $31,144.
Prospectus means the prospectus contained in the registration
statement [(File No. 33-30145)] filed with the Securities and Exchange
Commission on behalf of the Investment Limited Partner for the registration
of beneficial assignee certificates and/or limited partnership interests
under the Securities Act of 1933, in the final form in which said prospectus
is filed with said Commission and as thereafter amended and/or supplemented
from time to time pursuant to Rule 424 under said Act, or otherwise.
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
12 months at a rent which satisfies the Rent Restriction Test and (ii)
complying with any other requirements imposed by the Project Documents.
Regulatory Agreement means the Regulatory Agreement, if any, to be
entered into between the Partnership and the Authority setting forth certain
terms and conditions under which the Apartment Complex is to be operated.
Related Person means a Person related to a Partner within the meaning
of Treasury Regulation Section 1.752-4(b)1T(h) (1) -(5).
Rent Restriction Test means the test pursuant to Section 42 of the
Code whereby the gross rent charged to tenants of the low-income units in
the Apartment Complex may not exceed thirty per cent (30%) of the qualifying
income levels.
Rental Assistance Agreement means the Rental Assistance Agreement by
and between the Partnership and FmHA, as said agreement may be amended from
time to time, and any successor agreement.
Reporting Fee means the fee payable to Boston Capital or an Affiliate
thereof pursuant to Section 6.12(c).
Revenues mean all cash receipts of the Partnership during any period
except for Capital Contributions, proceeds from the liquidation, sale or
refinancing of Partnership property or of a Capital Transaction, or the
proceeds of any loan to the Partnership.
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.
"Share of Minimum Gain" means for each Partner, the excess of (1) the
sum of (a) the aggregate Non-Recourse Deductions allocated to such Partner
(and such Partner's predecessors in interest) up to that time and (b) the
aggregate distributions to such Partner (and such Partner's predecessors in
interest) up to that time of proceeds of a non-recourse liability that are
allocable to an increase in Partnership Minimum Gain over (2) the sum of (a)
such Partner's (and such Partner's predecessors' in interest) aggregate
share of the net decrease in Partnership Minimum Gain up to that time and
(b) such Partner's (and such Partner's predecessors' in interest) aggregate
share of the decreases up to that time in Partnership Minimum Gain resulting
from revaluations of Partnership Property subject to one or more non-
recourse liabilities of the Partnership, as more fully set forth in Treasury
Regulation 1.704-2(g).
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 Wyoming.
State Designation means the date upon which the Partnership receives
the allocation by the authorized agency of the State of a Tax Credit for the
building(s) constituting the Apartment Complex in an annual dollar amount of
not less than $61,807 as evidenced by the execution by or on behalf of said
agency of Form(s) 8609. For the purposes of determining State Designation,
each building in the Apartment Complex shall be treated as having received
an allocation of Tax Credit in an amount equal to the lesser of (i) the
amount of Tax Credit carryover allocation received from the authorized
agency of the State of Nevada 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 pursuant to Section
42 of the Code.
Tax Credit Set-Aside means the date upon which the Partnership
received a carryover allocation of Tax Credits for a year no earlier than
1995, meeting the requirements of Section 42(b)(1)(E) of the Code and
Treasury Regulations for an allocation of Tax Credit for the building(s)
constituting the Apartment Complex in an annual dollar amount of not less
than $61,807, which carryover allocation shall not have been revoked prior
to the date on which the First Installment is paid. The Tax Credit Set
Aside for the Partnership was issued by the Authority through a Carryover
Allocation Agreement between the Authority and the Partnership dated
December 8, 1995.
"Taxable Income" and "Tax Losses" means the Partnership's taxable
income or tax losses, respectively, for each fiscal year (or part thereof)
as determined for federal income tax purposes, including, where the context
requires, all items of income, gain, loss, deduction and credit which enter
into the computation thereof.
Uniform Act means the Uniform Limited Partnership Act as adopted by
the State.
Vessel has the meaning given to it in the Federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C.
Sec. 9601 et seq., as amended, and shall also include any meaning given to
it in any similar state or local statutes, ordinances, regulations or by-
laws.
Withdrawal (including the forms Withdraw, Withdrawing and Withdrawn)
means, as to a General Partner, the occurrence of death, adjudication of
insanity or incompetence, Event of Bankruptcy, dissolution, liquidations, or
voluntary or involuntary withdrawal or retirement from the Partnership for
any reason, including whenever a General Partner may no longer continue as a
General Partner by law or pursuant to any terms of this Agreement.
Withdrawal shall also mean the sale, assignment, transfer or encumbrance by
a General Partner of its interest as a General Partner. A General Partner
which is a corporation or partnership shall be deemed to have sold,
assigned, transferred or encumbered its interest as a General Partner in the
event (as a result of one or more transactions) of any sale, assignment or
other transfer (but specifically excluding any transfer occurring pursuant
to the laws of descent and distribution) 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.
Working Capital Loan means a loan made or to be made by the General
Partners to the Partnership, as described in Section 9.1.
ARTICLE II
Name and Business
2.1 Name; Continuation
The name of the Partnership is Pahrump Valley Investors, a Wyoming
Limited Partnership. The name of the Partnership for the transaction of
business in the State of Nevada is Pahrump Valley Investors, a Wyoming
Limited Partnership. 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 Xxxxxxxx Xxxxxx,
Xxxxxxxx, Xxxxxxx 00000 at which office there shall be maintained those
records required by the Uniform Act to be kept by the Partnership. The
office of the Partnership in the State of Nevada is 0000 X. Xxxxxxx
Xxxxxxxxx, #00, Xxxxxxx, Xxxxxx 00000. 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:
Xxxx X. Xxxxxxxxx
000 Xxxx Xxxx Xxxxxx, Xxxxx 0,
Xxxxxxxx, Xxxxxxxxxx 00000
0000 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxx 00000
(c) The resident agent in the State of Nevada for the Partnership
for service of process is as follows:
Xxxxxxx Xxxxxx
0000 X. Xxxxxxx Xxxxxxxxx
Xxxxxxx, Xxxxxx 00000
2.3 Purpose
The purpose of the Partnership is to acquire, hold, invest in,
construct, develop, improve, maintain, operate, lease and otherwise deal
with the Apartment Complex. The Partnership shall operate the Apartment
Complex in accordance with any applicable FmHA and/or Authority 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, 2049, 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) The Withdrawal of a General Partner, if (i) the remaining
General Partner(s), if any, shall fail to continue the business of the
Partnership and reconstitute the Partnership as a successor limited
partnership as provided in Section 7.2 and (ii) the Investment Limited
Partner and the Special Limited Partner shall fail to exercise the right
provided in Section 7.3;
(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 FmHA and/or any Authority;
(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
the Working Capital Loan and Subordinated Loans).
ARTICLE III
Mortgage, Refinancing and Disposition of Property
A. The General Partners and their Affiliates, jointly and
severally, are hereby authorized to incur personal liability for the
repayment of funds advanced by the Construction Lender (and interest
thereon) pursuant to the Construction Mortgage. However, from and after
Permanent Mortgage Closing, neither any General Partner nor any Related
Person shall at any time bear, nor shall the General Partners permit any
other Partner or any Related Person to bear, the Economic Risk of Loss for
the payment of any portion of any Mortgage. The General Partners promptly
shall cause the Partnership to elect, to the extent permitted and in the
manner prescribed by FmHA, that all debt service payments made by the
Partnership to FmHA shall be applied first to interest determined at the
stated rate set forth in the promissory note to FmHA, all as provided under
FmHA regulations, and then to principal due under the Permanent Mortgage.
B. 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 fifty-year amortization schedule
anticipated at Permanent Mortgage Closing), increase or refinancing of the
Permanent Mortgage may be made by the General Partners only with the Consent
of the Investment Limited Partner.
C. The Partnership may sell, lease, exchange or otherwise transfer
or convey all or substantially all the assets of the Partnership only with
the Consent of the Investment Limited Partner. Notwithstanding the
foregoing and except as set forth in Section 6.2(a) (6), no Consent of the
Investment Limited Partner shall be required for the leasing of apartments
to tenants in the normal course of operations or the leasing of all or
substantially all the apartments to a public housing authority at rents
satisfactory to FmHA as expressed in writing.
D. The total compensation to all Persons for the sale of the
Apartment Complex shall be limited to a Competitive Real Estate Commission,
not to exceed six per cent (6%) of the contract price for the sale of the
Apartment Complex.
ARTICLE IV
Partners; Capital
4.1 Partnership Capital
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.
4.2 General Partners
The name, address and Capital Contribution of ach General Partner is
as set forth on Schedule A.
In the event that the Partnership has not paid all or part of the
Deferred Development Fee when the final payment is due pursuant to the
Construction and Development Agreement and Section 6.12(b) hereof, or, in
accordance with Sections 10.3(a) or 10.3(b) herein, or, if not sooner paid,
on December 31, 2006, the General Partners shall at such time contribute to
the Partnership an amount equal to any such remaining principal balance (not
including accrued but unpaid interest) (the "General Partners' Special
Capital Contribution"), and the Partnership shall thereupon make a payment
in an equal amount to pay off the principal balance due under the
Construction and Development agreement.
4.3 Investment Limited Partner, Special Limited Partner
and Original Limited Partners
The Original Limited Partners hereby withdraw as limited partners of
the Partnership and acknowledges that they no longer have any Interest in,
or rights or claims against, the Partnership as Limited Partners 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 Partners as of the Admission Date and agree to be bound
by the terms and provisions of the Project Documents and this Agreement.
The name and address of the Investment Limited Partner and the Special
Limited Partner are as set forth on Schedule A. 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 Partner
Neither the Investment Limited Partner, the Special Limited Partner,
nor any Person who becomes an Additional Limited Partner shall be liable for
any debts, liabilities, contracts or obligations of the Partnership and
shall only be liable to pay its Capital Contribution as and when the same is
due hereunder and under the Uniform Act.
4.5 Special Rights of the Investment Limited Partner and
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 FmHA and/or any Authority (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 the FmHA and/or Authority regulations applicable to the
Apartment Complex; (2) such General Partner shall have violated any
provision of this Agreement or 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 purpose 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.
The Investment Limited Partner or any successor General Partner
proposed by the Investment Limited Partner shall have the option,
exercisable in its sole discretion, to acquire the 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 such value shall be submitted to a committee composed of three
qualified real estate appraisers, one chosen by the removed General Partner,
one chosen by the successor General Partner and the third chosen by the two
so chosen. The proceedings of such committee shall conform to the rules of
the American Arbitration Association, as far as appropriate, and its
decision shall be final and binding. The expense of arbitration shall be
borne equally by the removed General Partner and the Partnership. The
method of payment to the removed General Partner shall be fair; and must
protect the solvency and liquidity of the Partnership. The method of
payment will be deemed presumptively fair where it provides for an interest-
bearing promissory note coming due in no less than five (5) years with equal
installments each year. In addition, upon removal, the Partnership must
promptly pay to the removed General Partner all amounts then accrued and
owing to the removed General Partner; provided, however, that
notwithstanding the language of Section 6.12, Article X, Article XI and any
other provision hereof, no removed General Partner or any Affiliate thereof
shall be entitled to receive any fee, compensation or other remuneration
from the Partnership, other than (i) the above-described payment for the
Interest, or portion thereof, of the removed General Partner, and (ii) any
such fee, compensation or other remuneration which had already been earned
in full prior to the date of such removal. The Partnership is not
authorized to enter into any arrangement whereby any fee, compensation or
other remuneration could be payable directly or indirectly to any General
Partner or Affiliate thereof in a manner inconsistent with the immediately
preceding sentence unless the Consent of the Investment Limited Partner
shall have been obtained to such particular arrangement. The Partnership
may offset against any payments to a General Partner removed under this
Section 4.5 any 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.
Upon the removal of a General Partner, (i) without any further action by any
Partner, the Special Limited Partner or its designee shall automatically
become a General Partner and acquire in consideration of a cash payment of
$100 such portion of the Interest of the removed General Partner as counsel
to the Investment Limited Partnership shall determine is the minimum
appropriate interest in order to assure the continued status of the
Partnership as a partnership under the Code and under the Uniform Act, (ii)
the remaining portion of the Interest of the removed General Partner shall
automatically be converted to an equal Interest as an Additional Limited
Partner, (iii) the Interest of the Special Limited Partner as the Special
Limited Partner shall continue unaffected by the new status of the Special
Limited Partner or its designee as a General Partner, and (iv) the new
General Partner shall automatically be irrevocably delegated all of the
powers and duties of the General Partners pursuant to Section 6.13. The
Special Limited Partner or any successor General Partner proposed by the
Special Limited Partner shall have the option, exercisable in its sole
discretion, to acquire the Additional Limited Partner Interest, or any
portion thereof, of any removed General Partner upon payment of the agreed
or then present fair market value of such Interest or portion thereof. Any
dispute as to the value of the Interest or portion thereof to be acquired
pursuant to the immediately preceding sentence shall be submitted to a
committee composed of three qualified real estate appraisers, one chosen by
the removed General Partner, one chosen by the successor General Partner,
and the third chosen by the two so chosen. The 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 borne equally by the removed
General Partner and the Partnership. The method of payment to the removed
General Partner shall be fair; and must protect the solvency and liquidity
of the Partnership. The method of payment will be deemed presumptively fair
where it provides for an interest-bearing promissory note coming due in no
less than five (5) years with equal installments each year. In addition,
upon removal, the Partnership must promptly pay to the removed General
Partner all amounts then accrued and owing to the removed General Partner;
provided, however, that notwithstanding the language of Section 6.12,
Article X, Article XI and any other provision hereof, no removed General
Partner or any Affiliate thereof shall be entitled to receive any fee,
compensation or other remuneration from the Partnership, other than (i) the
above-described payment for the Interest, or portion thereof, of the removed
General Partner, and (ii) any such fee, compensation or other remuneration
which had already been earned in full prior to the date of such removal.
The Partnership is not authorized to enter into any arrangement whereby any
fee, compensation or other remuneration could be payable directly or
indirectly to any General Partner or Affiliate thereof in a manner
inconsistent with the immediately preceding sentence unless the prior
written consent of the Special Limited Partner shall have been obtained to
such particular arrangement. The Partnership may offset against any
payments to a General Partner removed under this Section 4.5 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 incurred
after the effective date of its removal. Each General Partner hereby grants
to the Special Limited Partner an irrevocable (to the extent permitted by
applicable law) power of attorney coupled with an interest to execute and
deliver any and all documents and instruments on behalf of such General
Partner and the Partnership as the Special Limited Partner may deem to be
necessary or appropriate in order to effect the provisions of this Section
4.5 and to enable the new General Partner to manage the business of the
Partnership.
(c) From and after the Compliance Period, in order to implement
Section 4.5(a) (v), the General Partners are hereby required, within five
(5) days after their receipt of any offer to purchase the Apartment Complex
or all of the Interests in the Partnership, to send a copy of such offer (or
a written description of any such oral offer) to each of the Limited
Partners. If, within thirty (30) days of its receipt of any such copy of
such an offer, the Special Limited Partner shall send notice to the General
Partners that the Special Limited Partner desires that the Partnership
accept such offer, then the General Partners shall be required to accept
such offer on behalf of the Partnership and proceed promptly to close such
transaction unless otherwise instructed by the Special Limited Partner at
any point prior to the closing of such transaction. To the extent, if any,
that the Special Limited Partner shall determine, in its discretion, that
the General Partners are not proceeding in a manner satisfactory to it with
respect to any such offer or closing, each Partner hereby grants to the
Special Limited Partner an irrevocable (to the extent permitted by law)
power of attorney coupled with an interest to execute and deliver any and
all documents and instruments on behalf of the Partnership and any Partner
as the Special Limited Partner may deem to be necessary or appropriate in
order to effect the acceptance of and/or closing pursuant to any such offer
in such a manner as the Special Limited Partner shall, in its discretion,
determine to be satisfactory. If the Special Limited Partnership does not
send a notice to the General Partners within the thirty (30) day period set
forth above, the Special Limited Partners will be deemed to have rejected
such offer, and the Partnership shall be required to reject such offer on
behalf of the Partnership. Notwithstanding the foregoing, prior to the end
of the Compliance Period, the General Partners shall not sell the Apartment
Complex.
4.6 Meetings
The General Partners 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 than fifteen (15) nor more than sixty (60) days after receipt
of said request, at a time convenient to the Limited Partners. All meetings
shall be held at the principal office of the Partnership.
ARTICLE V
Capital Contributions of the Investment Limited Partner
and the Special Limited Partner
5.1 Payments
(a) The Special Limited Partner's Contribution shall be $10, payable
in full in cash on the Admission Date. Subject to the provisions of this
Agreement, including without limitation, the provisions of Sections 5.2 and
5.3, the Investment Limited Partner shall be obligated to make Capital
Contributions to the Partnership in the aggregate amount of $339,559 in four
(4) installments (the "Installments"), which Installments shall be due and
payable in cash by the Investment Limited Partner, solely from capital
contributions of its investor limited partners to the Investment Limited
Partner, within twenty-one (21) days after the Investment Limited Partner
shall have received evidence reasonably satisfactory to it, of the
occurrence of each of the conditions set forth below as the applicable
Installment, as follows:
(1) $162,830 (the "First Installment") on the later of (i) the
Admission Date, (ii) Tax Credit Set-Aside, (iii) Construction Mortgage
Closing, (iv) receipt of a commitment for the Permanent Mortgage acceptable
to the Investment Partnership, or (v) Carryover Certification;
(2) $79,885 (the "Second Installment") on the later of (i) the
Completion Date, (ii) Cost Certification, (iii) State Designation, (iv)
receipt of an updated title insurance policy satisfactory to the Investment
Limited Partner, (v) compliance with due diligence recommendations, (vi)
receipt of release of liens, in form acceptable to the Investment Limited
Partner, from the Contractor stating that all amounts payable to the
Contractor have been paid in full and that the Partnership is not in default
under the Construction Contract, (vii) receipt of an estoppel letter and
consent to syndication from the Lender, or (viii) satisfaction of all of the
conditions to the payment of the First and Second Installments; and
(3) $79,894 (the "Third Installment") on the latest of (i) the
Initial 90% Occupancy Date, (ii) Permanent Mortgage Closing, together
presentation of evidence satisfactory to Investment Limited Partner in its
sole discretion, which may include a satisfactory opinion of counsel that
the Permanent Mortgage is non-recourse, i.e., none of the Partners of the
Partnership have any liability for repayment of principal and interest of
the Permanent Mortgage, (iii) the Breakeven Point, or (iv) satisfaction of
the conditions to payment of the First, Second and Third Installments; and
(4) $17,000 on the later to occur of (i) receipt by the
Investment Limited Partner of an executed copy of the federal tax return and
audited financial statement for the fiscal year in which the Breakeven Point
occurs or (ii) satisfaction of all of the conditions to payment of the
First, Second and Third Installments; provided, however, that the General
Partners shall give the Investment Limited Partner not less than 21 days'
written notice prior to the due date of each Installment subsequent to the
First Installment.
The proceeds from the First and Second Installments shall be used by
the Partnership to repay the outstanding balance on the Boston Capital Loan.
(b) The obligation of the Investment Limited Partner to pay each
Installment is conditioned upon delivery by the General Partners to the
Investment Limited Partner of a written certificate (the "Payment
Certificate") stating that as of the date of such certificate (i) all the
conditions to the payment of such Installment have been satisfied and (ii)
all representations and warranties of the General Partners contained in this
Agreement are true and correct. Except as provided in the final sentence of
this Section 5.1(b), acceptance by the Partnership of any Installment shall
constitute a confirmation that, as of the date of payment, all such
conditions are satisfied and all such representations and warranties are
true and correct. The obligation of the Investment Limited Partner to pay
the First Installment is also conditioned upon delivery by the General
Partners to the Investment Limited Partner of 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. 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 10.3(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 Apartment Complex is
placed in service for the purposes of Section 42 of the Code (a "Reduction
Year"), the Actual Credit is or was less than the Projected Credit, then the
Capital Contribution of the Investment Limited Partner shall be reduced by
the Reduction Amount. The Reduction Amount shall be equal to the sum of (A)
the excess of the Projected Credit for such year over the Actual Credit for
such year multiplied by .753 plus (B) the amount of any recapture, interest
or penalty payable by the limited partners and/or holders of beneficial
assignee certificates of the Investment Limited Partner as a result of such
shortfall, assuming that each limited partner and/or holder of a beneficial
assignee certificate in the Investment Partnership used all of the Tax
Credits allocated to it in the year of allocation and that each such Person
was subject to interest at the rate set forth in Section 6621 (a) (2) of the
Code and to the penalty for understatement of tax set forth in Section
6662(d) of the Code. The Auditors shall make their determination of the
amount of the Actual Credit with respect to each Reduction Year within
thirty (30) days following the end of such year but such amount shall be
subject to later adjustment by the Auditors or by the Service in connection
with an audit. Any reduction in the Capital Contribution shall first be
applied to reduce the Installment next due to be paid by the Investment
Limited Partner, and any portion of such reduction in excess of such
Installment shall be applied to reduce succeeding Installments. If no
further Installments are due to be paid, then the entire Reduction Amount
shall be repaid by the Partnership to the Investment Limited Partner
promptly after demand is made therefor. The Investment Limited Partner
shall be eligible to be paid a Reduction Amount as hereinabove described
with respect to each Reduction Year and may receive multiple payments of
Reduction Amounts in the event of multiple changes in the Actual Credit. The
General Partners are obligated to provide such Funds as shall be necessary
to cause the aforesaid payments of any Reduction Amount(s) to be made by the
Partnership to the Investment Limited Partner.
(f) In the event that, for any reason, at any time after the end of
the year during which there occurs the 60-month anniversary of the later of
(i) the Admission Date or (ii) the date on which the first building in the
Apartment Complex is placed in service for the purposes of Section 42 of the
Code, the amount of the Actual Credit shall be less than the Projected
Credit with respect to any fiscal year of the Partnership (such difference
being hereinafter referred to as a "Credit Shortfall"), the Investment
Limited Partner shall be treated as having made a constructive advance to
the Partnership with respect to such year (a "Credit Recovery Loan"), which
shall be deemed to have been made on January 1 of such year in an amount
equal to the sum of (i) the Credit Shortfall for such year plus (ii) the
amount of any recapture, interest or penalty payable by the limited partners
and/or 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 Partnership used all of the Tax Credits allocated to him
in the year of allocation and that each such Person was subject to interest
at the rate set forth in Section 6621(a)(2) of the Code and to the penalty
for under statement of tax set forth in Section 6662(d) of the Code. Credit
Recovery Loans shall be deemed to bear simple (not compounded) interest from
the respective dates on which such 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
10.23(b), Clause Third.
(g) In the event that (i) State Designation is less than the full
amount, 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 to the Limited Partners for the purposes of achieving Cost
Certification and indicating that the product of the Apartment Complex's
Qualified Basis and its Applicable Percentage is such that the Apartment
Complex will be eligible to receive Tax Credit in an annual amount of at
least $61,807 or (iii) at any time after the Completion Date the product of
the Apartment Complex's Qualified Basis and its Applicable Percentage is
determined by the Auditors, the Tax Accountants or the Service to be such
that the Apartment Complex will not be eligible to receive Tax Credit in an
annual dollar amount of at least $61,807 (the "Allocation Differential"),
then the Capital Contribution of the Investment Limited Partner shall be
reduced by the "Adjustment Amount". The Adjustment Amount shall be equal to
the Allocation Differential multiplied by .753. Any such reduction in
Capital Contribution shall be applied to reduce the Second Installment and
if, and to the extent necessary, the Third and Fourth Installments. If no
further Installments are due to be paid, then the entire amount of such
reduction shall be repaid by the Partnership to the Investment Limited
Partner promptly after demand is made therefor. The General Partners are
obligated to provide such funds to the Partnership as shall be necessary to
cause the aforesaid payment to be made by the Partnership to the Investment
Partnership. In the event that there is a reduction in Capital
Contributions equal to the Adjustment Amount, then the amount of the
Projected Credit shall be reduced to reflect the Allocation Differential,
and thereafter shall be referred to as the "Revised Projected Credit".
5.2 Return of Capital Contributions
(a) Failure to Achieve Developmental and/or Tax Credit
Benchmarks and Standards. If (i) all 32 of the Low-Income Apartment Units
in the Apartment Complex shall not have been placed in service by May 31,
1996 (or any later date fixed by the General Partners with the Consent of
Investment Limited Partner), or (ii) by May 31, 1996, (or any later date
fixed by the General Partners with the Consent of the Investment Limited
Partner) less than 32 of the Low-Income Apartment Units in the Apartment
Complex shall have been occupied by Qualified Tenants, or (iii) Permanent
Mortgage Closing, with a Permanent Mortgage that is nonrecourse to the
Partnership and all of the Partners, shall not have occurred prior to May
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, 1997 (or any later date fixed by the General
Partners with the Consent of the Investment Limited Partner) and by said
date the General Partners shall not have made any payment as described in
the last sentence of Section 5.1(g) or, if the Investment Limited Partner
shall have elected to have all or a portion of any payment under Section
5.1(g) applied toward future Installment obligations of the Investment
Limited Partner, amendments to this Agreement and, if applicable, to the
Certificate shall not have been adopted and, in the case of the Certificate,
if applicable, filed in the Filing Office, reflecting such event, 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 such Test at any time during the sixty (60)
month period commencing on such date, or (vi) prior to Permanent Mortgage
Closing, (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 FmHA 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 FmHA 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, 1995 (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, in form and substance satisfactory to the Investment Limited
Partner, the Carryover Certification or (viii) if at any time it shall be
determined by the Service or by the Tax Accountants that as of December 31,
1995, the Partnership had not incurred capitalizable costs with respect to
the Apartment Complex of at least ten per cent (10%) of the Partnership's
reasonably expected basis in the Apartment Complex as of December 31, 1997,
or (ix) if by December 31, 1996 (or any later date fixed by the General
Partners with the Consent of the Investment Limited Partner) Cost
Certification shall not have occurred, (x) the General Partners fail to make
Subordinated Loans as required by this Agreement or (xi) the Breakeven Point
has not been achieved within twelve months from and after the occurrence of
the Completion Date, 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 their obligation to
repurchase the Interest of the Investment Limited Partner and the Special
Limited Partner by paying to the Investment Limited Partner an amount equal
to its Invested Amount in the event the Investment Limited Partner and the
Special Limited Partner so requires. If either the Investment Limited
Partner or the Special 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 thirty (30) days after
the mailing date of the General Partners' notice (or at any time after the
occurrence of any of the foregoing if the General Partners shall not have
sent such a notice thereof) and the General Partners shall within thirty
(30) days thereafter repurchase the Interest of such Partner by paying to
such Partner an amount equal to its Invested Amount plus the amount of any
third party costs incurred by the Investment Limited Partner in implementing
this Section 5.2(a).
(b) Lender Disapproval. If the Construction Lender and/or
FmHA 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 its admission to
the partnership, then the Investment Limited Partner shall, effective as of
such time or such later time as may be selected by the Investment Limited
Partner (or such other time as may be specified by the Construction Lender
and/or FmHA in its disapproval), at the option of the Investment Limited
Partner (if not directed by the Construction Lender and/or FmHA 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
Investment Limited Partner an amount equal to its Invested Amount plus the
amount of any third party costs incurred by the Investment Limited Partner
in implementing this Section 5.2(a).
(c) Substitution and Indemnification. Upon the receipt by the
Investment Limited Partner and/or the Special Limited Partner pursuant to
either Section 5.2(a) or Section 5.2(b) of an amount equal to the sum of its
Invested 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.
(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 cause itself or its designee to be admitted as an additional
General Partner, whereupon such additional General Partner shall
automatically be transferred from the pre-existing General Partners,
proportionally from their Interests, in consideration of $10, a one per cent
(1%) interest in all profits, losses, tax credits and distributions of the
Partnership; such transfer notwithstanding, the Special Limited Partner
shall also retain its status as such and its interest in the Partnership as
the Special Limited Partner shall not be affected. Upon any such admission
of the Special Limited Partner or its designee 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. Each
Partner hereby grants to the Special Limited Partner an irrevocable (to the
extent permitted by applicable law) power of attorney coupled with an
interest to take any action and to execute, deliver and file or record any
and all documents and instruments on behalf of such Partner and the
Partnership as the Special Limited Partner may deem necessary or appropriate
in order to effectuate the provisions of this Section 5.2(e) and to allow
the additional General Partner to manage the business of the Partnership.
The admission of the Special Limited Partner or its designee as an
additional General Partner shall not relieve any other General Partner of
any of its 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.
5.3 Withholding of Capital Contribution Upon Default. In the event
that: (a) the General Partners, or any successor General Partners shall not
have substantially complied with any material provisions under this
Agreement, after Notice from the Investment Limited Partner of such
noncompliance and failure to cure such noncompliance within a period of
thirty (30) days from and after the date of such Notice, or (b) the Lender
shall have declared the Partnership to be in default under the Construction
Mortgage or the Permanent Mortgage, or (c) foreclosure proceedings shall
have been commenced against the Apartment Complex, then the Partnership and
the Investment Limited Partner, at its sole election, may cause the
withholding of payment of any Installment otherwise payable to the
Partnership.
All amounts so withheld by the Investment Limited Partner under this
Section 5.3 shall be promptly released to the Partnership only after the
General Partners or the Partnership has cured the default justifying the
withholding, as demonstrated by evidence reasonably acceptable to the
Investment Limited 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, operate, maintain, finance and improve, and
to own, sell, convey, assign, mortgage or lease any real estate and
any personal property;
(3) To borrow money and issue evidences of indebtedness and to
secure the same by mortgage, pledge or other lien on the Apartment
Complex or any other assets of the Partnership;
(4) To execute the Construction and Permanent Mortgages, the
other Project Documents and all such other documents as the General
Partners deem necessary or appropriate in connection with the
acquisition, development and financing of the Apartment Complex;
(5) To prepay in whole or in part, refinance or modify the
Construction and Permanent Mortgages or any other financing affecting
the Apartment Complex;
(6) To employ the Management Agent (which may be an Affiliate
of the General Partners) and to pay reasonable compensation for its
services;
(7) To employ their respective Affiliates to perform services
for, or sell goods to, the Partnership;
(8) To execute contracts with FmHA, the State of Nevada, or
the Authority, or any subdivision or agency thereof or any other
government agency to make apartments or tenants in the Apartment
Complex eligible for any public-subsidy program;
(9) To execute leases of some or all of the apartment units of
the Apartment Complex to a public housing authority and/or to a non-
profit corporation, cooperative or other non-profit Entity; and
(10) To enter into any kind of activity and to perform and
carry out contracts of any kind which may be lawfully carried on or
performed by a partnership and to file all certificates and documents
which may be required under the laws of the State.
6.2 Restrictions on Authority
(a) Notwithstanding any other Section of this Agreement, the General
Partners shall have no authority to perform any act in violation of
applicable law, FmHA, Authority, 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 FmHA,
Authority, or other government regulations or requirements of the Lender,
the terms of such regulations or requirements shall govern. Neither shall
the General Partners have any authority to do any of the following acts
without the Consent of the Investment Limited Partner and the prior written
consent of the Special Limited Partner:
(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 or the Working Capital
Loan;
(2) To borrow from the Partnership or commingle Partnership
funds with funds of any other Person;
(3) Following the Completion Date, to construct any new or
replacement capital improvements on the Apartment Complex which
substantially alter the Apartment Complex or its use or which are at a
cost in excess of $10,000 in a single Partnership fiscal year, except
(a) replacements and remodeling in the ordinary course of business or
under emergency conditions or (b) construction paid for from insurance
proceeds;
(4) To acquire any real property in addition to the Apartment
Complex;
(5) Following Permanent Mortgage Closing, to increase,
decrease (except through the fifty year amortization schedule provided
for in the Permanent Mortgage) or refinance the Permanent Mortgage;
(6) To rent apartments in the Apartment Complex such that the
Apartment Complex would not meet the requirements of the Minimum Set
Aside Test, the Rent Restriction Test, the Extended Use Agreement, or
the Regulatory Agreement;
(7) To sell, exchange or otherwise convey or transfer the
Apartment Complex or substantially all the assets of the Partnership;
(8) To terminate any agreement with FmHA and/or any Authority;
(9) To execute contracts with any agency, the State of Nevada
or any subdivision or agency thereof or any other government agency to
make apartments or tenants in the Apartment Complex eligible for any
public subsidy program;
(10) To cause the Partnership to commence a proceeding seeking
any decree, relief, order or appointment in respect to the Partnership
under the federal bankruptcy laws, as now or hereafter constituted, or
under any other federal or state bankruptcy, insolvency or similar
law, or the appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) for the
Partnership or for any substantial part of the Partnership's business
or property, or to cause the Partnership to consent to any such
decree, relief, order or appointment initiated by any Person other
than the Partnership;
(11) To execute leases of some or all of the apartment units of
the Apartment Complex to a public housing authority and/or to a non-
profit corporation, cooperative or other non-profit Entity;
(12) To amend the Construction Contract, except for change
orders approved by the Lender;
(123) To pledge or assign any of the Capital Contribution of the
Investment Limited Partner or the proceeds thereof; or
(14) 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 Apartment Complex.
(c) In the event that any General Partner violates any provision of
Section 6.2(a), the Special Limited Partner shall give notice to the General
Partners of such violation. If such violation has not been cured within
five (5) business days of receipt of such notice, then the Special Limited
Partner, in its sole discretion, may cause itself or its designee to be
admitted as an additional General Partner without any further action by any
other Partner. Upon any such admission of an additional General Partner,
each pre-existing General Partner shall be deemed to have transferred
(ratably in accordance with his respective Interest) to the additional
General Partner, automatically and without further action, such portion of
its General Partner interest so that the additional General Partner shall
receive not less than a one per cent (1%) interest in the profits, losses,
tax credits and distributions of the Partnership in consideration of the
payment of $10. An additional General Partner so admitted shall
automatically become the Managing General Partner and be irrevocably
delegated all of the power and authority of all of the General Partners
pursuant to Section 6.13. Any such additional General Partner shall have
the right to withdraw as a General Partner at any time, leaving the pre-
existing General Partners once again as the only General Partners, the
provisions of Article VII notwithstanding. Each Partner hereby grants to
the Special Limited Partner a special power of attorney, irrevocable to the
extent permitted by law and coupled with an interest, to amend the
Certificate and this Agreement' and to do anything else which, in the view
of the Special Limited Partner, may be necessary or appropriate to
accomplish the purposes of this Section 6.2(b) or to enable any additional
General Partner admitted pursuant to this Section 6.2(b) to manage the
business of the Partnership. The admission of 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.
6.3 Personal Services
No General Partner or Affiliate thereof shall receive any salary or
other direct or indirect compensation for any services or goods provided in
connection with the Partnership or the Apartment Complex, except as may be
specifically provided in Section 6.12 and Article XI or as to which the
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
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. Both
the Special Limited Partner and the Investment Limited Partner hereby
consent to the exercise by the General Partners of the powers conferred on
them by law and this Agreement, and the General Partners agree to exercise
control of the business of the Partnership only in accordance with the
provisions of this Agreement.
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 Apartment Complex in accordance with the
provisions of this Agreement, the Project Documents and applicable laws and
regulations including, without limitation, funding the Construction and
Development Fee to the extent Capital Contributions are insufficient. The
General Partners are responsible for the management and operation of the
Partnership, including the oversight of the rent-up and operational stages
of the Apartment Complex.
(b) The General Partners shall use their best efforts to cause the
Partnership to generate Cash Flow for distribution to the Partners at the
maximum realizable level in view of (i) any applicable Lender, Authority,
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 Apartment Complex.
(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 FmHA and/or any
Authority, or, if the Apartment Complex is no longer subject to FmHA or
Authority regulation or requirements, as shall be customary for apartment
complexes similar to the Apartment Complex, and (ii) in amounts which shall
be (A) no less than those amounts which are customary in the area for
apartment complexes such as the Apartment Complex, (B) in the case of the
"extended coverage" portion, no less than the full replacement value of the
Apartment Complex, (C) no less than such amounts as may be reasonably
requested by the Investment Limited Partner and/or the Special Limited
Partner from time to time, and (D) in any event, sufficient to prevent the
Partnership from becoming a co-insurer under any such policies. No
deductibles on such policies may exceed $1,000. The public liability
insurance in favor of the Partnership shall be in an amount not less than
$6,000,000 (of which up to $5,000,000 may be provided under an umbrella
policy). Through the Completion Date, or such later date as may be required
by the Construction Lender or FmHA, the General Partners shall also cause
the Partnership to obtain and keep in force a builder's risk policy in favor
of the Partnership in an amount not less than the greater of (i) the full
replacement value of the Apartment Complex (excluding the value of the
underlying land, the site utilities and the foundations) or (ii) such other
amount as shall be required by FmHA 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 $14,060 from its
Cash Flow into replacement reserves; to the extent that Cash Flow (as
determined before deduction of this reserve deposit) for any year shall be
insufficient to make such deposit in full, the General Partners shall fund
such shortfall from their own funds as a Subordinated Loan.
(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
Qualified 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 and throughout the
Compliance Period so as to permit the Partnership to be entitled to the
maximum available Tax Credit, (ii) the Partnership to comply with all State
Tax Credit monitoring procedures, (iii) all Low-Income Apartment Units to be
leased to Qualified Tenants, (iv) the Partnership to make all appropriate
Tax Credit elections in a timely fashion, and (iv) all rental units in the
Apartment Complex to be available to the general public and to be of equal
quality with comparable amenities available to low-income tenants on a
comparable basis without separate fees.
(h) On or before the Admission Date, the General Partners shall
provide to the Investment Limited Partner either (i) an appraisal of the
Apartment Complex prepared by a competent independent appraiser or (ii)
completed FmHA Forms 1924-13 (estimate and certificate of actual cost) and
1930-7 (statement of budget, income and expense) or HUD project cost and
budget analysis on Form 2264, or any successor 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 Apartment Complex.
(i) The General Partners shall (i) not store (except in compliance
with all laws, ordinances, and regulations pertaining thereto) or dispose of
any Hazardous Material at the Apartment Complex, or at or on any other Site
or Vessel owned, occupied, or operated either by any General Partner, any
Affiliate of a General Partner, or any Person for whose conduct any General
Partner is or was responsible; (ii) neither directly nor indirectly
transport or arrange for the transport of any Hazardous Material (except in
compliance with all laws, ordinances, and regulations pertaining thereto);
(iii) provide the Investment Limited Partner with written notice (x) upon
any General Partner's obtaining knowledge of any potential or known release,
or threat of release, of any Hazardous Material at or from the Apartment
Complex or any other Site or Vessel owned, occupied, or operated by any
General Partner, any Affiliate of a General Partner or any Person for whose
conduct any General Partner is or was responsible or whose liability may
result in a lien on the Apartment Complex; (y) upon any General Partner's
receipt of any notice to such effect from any Federal, state, or other
governmental authority; and (z) upon any General Partner's obtaining
knowledge of any incurrence of any expense or loss by any such governmental
authority in connection with the assessment, containment, or removal of any
Hazardous Material for which expense or loss any General Partner may be
liable or for which expense or loss a lien may be imposed on the Apartment
Complex.
(j) The General Partners shall request in writing of FmHA that FmHA
cause the Investment Limited Partner to be named as an "interested party" in
the Permanent Mortgage documents, so that FmHA will notify the Investment
Limited Partner of any default or other problem under the Permanent
Mortgage.
(k) The General Partners shall provide to the Special Limited
Partner, for its approval and written consent, prior to execution, a copy of
the Extended Use Agreement to be entered into between the Partnership and
the Authority.
(l) Upon any reduction in the Capital Contribution of the Investment
Partner, the General Partner shall file with the State an amendment to the
Certificate pursuant to the requirements of the Uniform Act.
(m) Within thirty (30) days following the Admission Date, the
General Partners shall submit to Boston Capital evidence of the
Partnership's engagement of Accountants, who have been approved by the
Investment Limited Partner, to be responsible for the Partnership's audit
and tax matter reporting obligations under Section 12.7 hereof.
(n) In accordance with the Reservation of Tax Credits between the
Authority and the Partnership dated July 21, 1995, the General Partners
shall cause the Partnership to satisfy the Authority's requirement that 100%
of the units in the Apartment Complex must be occupied by individuals with
incomes equal to 50% or less of area median income as adjusted for family
size.
(o) Prior to the Construction Mortgage Closing, the General
Partners, pursuant to Section 4 of the FmHA Loan Agreement, shall deposit
$74,000 with FmHA.
6.6 Representations and Warranties
The General Partners represent and warrant to the Investment Limited
Partner as follows:
(1) The Partnership is a duly organized limited partnership
and validly existing under the laws of the State and has complied with
all filing requirements necessary for its existence and to preserve
the limited liability of the Investment Limited Partner and the
Special Limited Partner. The Partnership is duly qualified as a
foreign limited partnership and in good standing under the laws of the
State of Nevada.
(2) No event or proceeding has occurred or is pending or
threatened which would (a) materially adversely affect the Partnership
or its properties, or (b) materially adversely affect the ability of
the General Partners or any of their Affiliates to perform their
respective obligations hereunder or under any other agreement with
respect to the Apartment Complex, other than legal proceedings which
have been bonded against without recourse to Partnership assets in
such manner as to stay the effect of the proceedings or otherwise have
been adequately provided for. This subparagraph shall be deemed to
include, without limitation, the following: (x) legal actions or
proceedings before any court, commission, administrative body or other
governmental authority having jurisdiction over the zoning applicable
to the Apartment Complex; (y) labor disputes; and (z) acts of any
governmental authority.
(3) No default (or event which, with the giving of notice or
the passage of time or both, would constitute a default) has occurred
and is continuing under this Agreement or under any material provision
of the Project Documents, and the same are in full force and effect.
(4) No Partner or Related Person bears the Economic Risk of
Loss with respect to the Permanent Mortgage. No General Partner has,
either on its own behalf or on behalf of the Partnership, incurred any
financial responsibility with respect to the Partnership prior to the
Admission Date, other than as disclosed in writing to the Investment
Limited Partner prior to the Admission Date.
(5) The Apartment Complex is being or has been completed in a
timely manner in conformity with the Project Documents. There is no
violation by the Partnership or the General Partners of any zoning,
environmental or similar regulation applicable to the Apartment
Complex which could have a material adverse effect thereon, and the
Partnership has complied with all applicable municipal and other laws,
ordinances and regulations relating to such construction and use of
the Apartment Complex. All appropriate public utilities, including,
but not limited to, water, electricity, gas (if called for in the
plans and specifications), and sanitary and storm sewers, are or will
be available and operating properly for each unit in the Apartment
Complex at the time of the first occupancy of such unit.
(6) The Partnership owns good and marketable fee simple tile
to the Apartment Complex, subject to no material liens, charges or
encumbrances other than those which (a) are both permitted by the
Project Documents and are noted or excepted in commitment for title
insurance, commitment number 9404296JS dated December 20,1995 in the
amount of $1,406,000.00 issued by Lawyers' Title Insurance of Nevada,
Inc. to the Partnership, and (b) do not materially interfere with use
of the Apartment Complex (or any part thereof) for its intended
purpose or have a material adverse effect on the value of the
Apartment Complex.
(7) The execution and delivery of all instruments and the
performance of all acts heretofore or hereafter made or taken
pertaining to the Partnership or the Apartment Complex by each
Affiliate of a General Partner which is a corporation have been or
will be duly authorized by all necessary corporate or other action,
and the consummation of any such transactions with or on behalf of the
Partnership will not constitute a breach or violation of, or a default
under, the charter or by-laws of such Affiliate or any agreement by
which such Affiliate or any of its properties is bound, nor constitute
a violation of any law, administrative regulation or court decree.
(8) Any General Partner which is a corporation (a
"Corporation") a has been duly organized, is validly existing and in
good standing under the laws of its state of incorporation and has all
requisite corporate power to be a General Partner and to perform its
duties and obligations as contemplated by this Agreement and the
Project Documents. Neither the execution and delivery by any
Corporation of this Agreement nor the performance of any of the
actions of any Corporation contemplated hereby has constituted or will
constitute a violation of (a) the articles of organization or by-laws
of such Corporation, (b) any agreement by which such Corporation is
bound or to which any of its property or assets is subject, or (c) any
law, administrative regulation or court decree.
(9) No Event of Bankruptcy has occurred with respect to any
General Partner.
(10) All accounts of the Partnership required to be maintained
under the terms of the FmHA Loan Agreement, including, but not
necessarily limited to, any account for replacement reserves, are
currently or will be funded to the levels required by FmHA.
(11) If the only General Partner(s) are one or more
corporation(s) 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 construction of the Apartment Complex in
conformity with the Project Documents, to fund any reserves hereunder
or under any other Project Document required to be funded at or prior
to the later of the Admission Date or Permanent Mortgage Closing, 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 Closing (to the extent that it is
permitted to be used for such purposes by FmHA or any authority), (e)
any insurance proceeds and (f) any 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 $33,144 for
1996, $61,189 per annum for each of the years 1997 through 2005
(inclusive) and $28,045 for 2006.
(14) The Apartment Complex is being developed in a manner which
satisfies and shall continue to satisfy all restrictions, including
tenant income and rent restrictions, applicable to projects generating
Tax Credits.
(15) 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 Apartment Complex or any
other Site or Vessel owned, occupied, or operated by any General
Partner, by any Affiliate of a General Partner, or by any Person for
whose conduct any General Partner is or was responsible or whose
liability may result in a lien on the Apartment Complex; or (y) the
incurrence of any expense or loss by any such governmental authority
or by any other Person in connection with the assessment, containment,
or removal of any release or threat of release of any Hazardous
Material from the Apartment Complex or any such Site or Vessel.
(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 Apartment Complex, except to the extent any
such storage, transport or disposition was at all times in compliance
with all laws, ordinances, and regulations pertaining thereto.
(17) The General Partners have fulfilled and will continue to
fulfill all of their duties and obligations under Section 6.5.
6.7 Liability on the Permanent Mortgage
Neither any General Partner nor any Related Person shall at any time
bear the Economic Risk of lLoss for the payment of any portion of any
Mortgage, and the General Partners shall not permit any other Partner or any
Related Person to bear the Economic Risk of Loss for the payment of any
portion of any Mortgage, except as may be expressly permitted with respect
to the Construction Mortgage pursuant to Article III.
6.8 Indemnification of the General Partners
(a) No General Partner nor any Affiliate thereof shall have
liability to the Partnership or to any Limited Partner for any loss suffered
by the Partnership which arises out of any action or inaction of any General
Partner or Affiliate thereof if such General Partner or Affiliate thereof in
good faith determined that such course of conduct was in the best interest
of the Partnership and such course of conduct did not constitute negligence
or misconduct of such General Partner or Affiliate thereof.
(b) A General Partner or any Affiliate thereof may be indemnified by
the Partnership against losses, judgments, liabilities, expenses and amounts
paid in settlement of any claims sustained in connection with the
Partnership, provided that all of the following conditions are met: (i) such
General Partner has determined, in good faith, that the course of conduct
which caused the loss, judgment, liability, expense or amount paid in
settlement was in the best interests of the Partnership; and (ii) such loss,
judgment, liability, expense or amount paid in settlement was not the result
of negligence or misconduct on the part of such General Partner or Affiliate
thereof; and (iii) such indemnification or agreement to hold harmless is
recoverable only out of the assets of the Partnership, and not from the
Limited Partners.
(c) Notwithstanding the above, no General Partner or any Affiliate
thereof performing services for the Partnership or any broker-dealer shall
be indemnified for any losses, liabilities or expenses arising from or out
of an alleged violation of Federal or state securities laws unless (i) there
has been a successful adjudication on the merits of each count involving
securities laws violations as to the particular indemnitee and the court
approves the indemnification of such litigation costs, (ii) such claims have
been dismissed with prejudice on the merits by a court of competent
jurisdiction as to the particular indemnitee and the court approves the
indemnification of such litigation costs or (iii) a court of competent
jurisdiction approves a settlement of the claims against a particular
indemnitee and the court finds that indemnification of the settlement and
related costs should be made. In any claim for indemnification for Federal
or state securities law violations, the party seeking indemnification shall,
prior to seeking court approval for such indemnification, place before the
court the positions of the Securities and Exchange Commission, the
Massachusetts Securities Division, the Tennessee Securities Division, and
any other applicable state securities administrator with respect to the
issue of indemnification for securities law violations.
(d) The Partnership shall not incur the cost of the portion of any
insurance, other than public liability insurance, which insures any party
against any liability as to which such party is herein prohibited from being
indemnified.
(e) The Partnership may indemnify Affiliates of a General Partner
under this Section 6.8 only if the loss involves activity in which such
Affiliates acted in the capacity of a General Partner.
(f) For purposes of this Section 6.8 only, the term "Affiliate"
shall mean any Person performing services on behalf of the Partnership who
(i) directly or indirectly controls, is controlled by or is under common
control with a General Partner; (ii) owns or controls ten per cent (10%) or
more of the outstanding voting securities of a General Partner; (iii) is an
officer, director, partner or trustee of a General Partner; or (iv) if a
General Partner is an officer, director, partner or trustee, is any company
for which such General Partner acts in any such capacity.
6.9 Indemnification of the Partnership and the Limited
Partners
(a) The General Partners will indemnify and hold the Partnership and
the Limited Partners harmless from and against any and all losses, damages
and liabilities which the Partnership or any Limited Partner may incur by
reason of the (a) past, present or future actions or omissions of the
General Partners or any of their Affiliates, or (b) any liabilities to which
either the Partnership or the Apartment Complex is subject; provided,
however, that the foregoing indemnification shall not apply to (i) any
Mortgage or (ii) necessary contractual obligations incurred pursuant to any
Authority or Lender requirements in connection with the operation of the
Apartment Complex in the ordinary course of business.
(b) Notwithstanding the foregoing, no General Partner shall be
liable to a Limited Partner or the Partnership for any act or omission for
which the Partnership is required to indemnify such General Partner under
Section 6.8.
(c) The General Partners shall indemnify, defend, and hold the
Limited Partners harmless from and against any claim brought or threatened
against any Limited Partner or any loss, damages, costs, obligations,
judgments and expenses, of any nature whatsoever (as well as from any and
all attorneys' fees and expenses incurred in connection with any such claim
or loss) suffered or incurred by the Limited Partners under or (i) on
account of the Hazardous Waste Laws or any similar laws or regulations,
including the assertion of any lien thereunder, relating to the Apartment
Complex, or (ii) on account of the presence of any Hazardous Material at the
Apartment Complex. Any claim or loss described in the immediately preceding
sentence may be defended, compromised, settled, or pursued by the Limited
Partners with counsel of the Limited Partners' selection, but at the expense
of General Partners. Notwithstanding anything else set forth herein, this
indemnification shall survive the withdrawal of any General Partner and/or
the termination of this Agreement.
6.10 Operating Deficits
Subject to the prior written consent of FmHA (if such consent shall be
required under applicable FmHA regulations), the General Partners shall be
obligated from the later to occur of (i) Permanent Mortgage Closing or (ii)
the Admission Date to advance funds to meet operating expenses (including
full payment of the Reporting Fee and reserve deposits required pursuant to
Section 6.5(e) or by a Lender) and debt service of the Partnership which
exceed operating income available for the payment thereof. In the event
that the General Partners shall fail to make any such advance as aforesaid,
the Partnership shall utilize amounts (the "Applied Amounts") otherwise
payable to the General Partners or Affiliates thereof under Section 6.12
and/or Article X to meet the obligations of the General Partners pursuant to
this Section 6.10. Such utilization of Applied Amounts shall 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 Affiliates
thereof pursuant to Section 6.12 and/or Article X and (b) the Special
Limited Partner shall have the option, exercisable in its sole discretion,
to cause it or one or more of its designees to be admitted to the
Partnership as additional General Partner(s). An additional General Partner
so admitted shall automatically, without the need for any further action by
any Partner, become the Managing General Partner and be delegated all of the
power and authority of all of the General Partners pursuant to Section 6.13,
and each Partner hereby grants to any such additional General Partner a
power of attorney, coupled with an interest and irrevocable to the extent
permitted by law, to execute and deliver any and all instruments and
documents which it believes to be necessary or appropriate in order to
accomplish the purposes of this Section 6.10 and to manage the business of
the Partnership. The admission of an additional General Partner shall not
relieve any other General Partner of any of its obligations hereunder, and
each other General Partner shall fully indemnify and hold harmless each
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.
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 Amounts) shall
be Subordinated Loans repayable without interest in accordance with the
provisions of Article X. The form and provisions of all Subordinated Loans
shall conform to applicable rules and regulations.
6.11 Obligation to Complete the Construction of the
Apartment Complex
(a) The General Partners shall complete the construction of the
Apartment Complex substantially in accordance with the plans and
specifications approved by any Authority and/or the Lender and all
requirements necessary to obtain the required certificates of occupancy for
dwelling units, or cause the same to be completed, in a good and workmanlike
manner, free and clear of all mechanics', materialmen's or similar liens,
and shall equip the Apartment Complex or cause the same to be equipped with
all necessary and appropriate fixtures, equipment and articles of personal
property, including refrigerators and ranges, and shall cause all necessary
certificates of occupancy for all apartment units in the Apartment Complex
to be obtained, all in accordance with the Project Documents. If the
proceeds of the Construction and Permanent Mortgages, the net rental income,
if any, of the Apartment Complex generated prior to the later of Permanent
Mortgage Closing or the Admission Date and which is permitted by any
Authority and/or the Lender 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 Closing
or the Admission Date as available from time to time are insufficient to (i)
acquire and complete the construction of the Apartment Complex and satisfy
all other obligations, all as provided in the first sentence of this Section
6.11(a), (ii) make the special distributions to the General Partners
described in Section 10.3(c), (iii) pay the Construction and Development
Fee, (iv) arrive at Permanent Mortgage Closing 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 Closing 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 any
Authority and/or the Lender, be reimbursed at or prior to the later of
Permanent Mortgage Closing 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 Closing or the Admission Date or from the
proceeds of the Capital Contribution of the Investment Limited Partner as
provided in Section 5.1 shall not be reimbursable or otherwise change the
Interest of any Person in the Partnership but shall be borne by the 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(a), an amount not in excess of the next installment of the
Construction and Development Fee due to the General Partners or any of their
Affiliates under Section 6.12 or any other provision hereof shall be applied
by the Partnership to meet such obligation of the General Partners, 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 also be so applied. Any such
application of funds as described in the immediately preceding sentence
shall constitute a payment of the amount of the Fee or such other item which
such funds had been earmarked to pay, and the obligation of the General
Partners to advance such amount under this Section 6.11(a) shall be
satisfied to the extent of such application.
(b) The completion of the Apartment Complex shall be secured by a
completion bond in an amount at least equal to the full amount of the
construction contract for the Apartment Complex or by other security
satisfactory to the Investment Limited Partner, which other security may
include, but shall not be limited to, the following:
(i) a written guaranty of completion by a Person, supported by
financial statements demonstrating sufficient net worth or adequately
collateralized by other real or personal properties or other Persons'
guarantees; and/or
(ii) a retention of a reasonable portion of the Capital
Contribution of the Investment Limited Partner and/or fees to the
General Partners as a potential offset in the event the General
Partners do not perform in accordance with this Agreement.
6.12 Certain Payments to the General Partners and Others
(a) The Partnership shall pay to the General Partners a non-
cumulative fee (the "Annual Partnership Management Fee") commencing in 1996
for their services in connection with the administration of the day to day
business of the Partnership in an annual amount equal to $1600 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 10.3(a) to the extent Cash Flow is available therefor for
such year.
(b) The Partnership has entered into a Development Agreement of even
date with the General Partners for their services in connection with the
development and construction of the Apartment Complex. In consideration of
such services and as consideration for the assignment described in Section
6.14, the Partnership shall pay to the General Partners (or their designee)
a construction and development fee (the "Construction and Development Fee")
in the total amount of $212,711, which fee shall be payable solely from the
Capital Contribution of the Investment Limited Partner The Construction
and Development Fee shall be payable $58,830 from the proceeds of the First
Installment, $79,885 from the proceeds of the Second Installment and $78,996
from the proceeds of the Third Installment. Any portion of the Construction
and Development Fee not paid from the Installments, shall be payable only in
accordance with the provisions of Sections 10.3(a) and 10.3(b), of, if not
sooner paid, on December 31, 2006 in accordance with the provisions of
Section 4.2.
(c) The Partnership shall pay to Boston Capital or an Affiliate
thereof a fee (the "Reporting Fee") commencing in 1996 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 equal to
$1,600. The Reporting Fee shall be payable from Cash Flow in the manner and
priority set forth in Section 10.3(a); provided, however, that if in any
fiscal year commencing with 1996, Cash Flow is insufficient to pay the full
amount of the Reporting Fee, the unpaid portion thereof shall accrue and be
payable on a cumulative basis in the first year in which there is sufficient
Cash Flow or from the proceeds of a Capital Transaction as provided in
Article X.
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 any amendments thereto; or
(5) As to any act or failure to act by the Partnership or as
to any other matter whatsoever involving the Partnership or any
Partner.
6.14 Assignment to Partnership
The General Partners hereby transfer and assign to the Partnership all
of their right, title and interest in and to the Apartment Complex and in
and to all of the Project Documents, including, but not limited to, the
following: (i) all contracts with architects, supervising architects,
engineers and contractors with respect to the development of the Apartment
Complex; (ii) all plans, specifications and working drawings heretofore
prepared or obtained in connection with the Apartment Complex; (iii) all
governmental commitments and approvals obtained, and applications therefor,
including, but not limited to, those relating to planning, zoning, building
permits and Tax Credit; (iv) any and all commitments with respect to any
Mortgage(s); (v) any and all contracts or rights with respect to any
agreements with the Lender and/or any Authority; and (vi) any other work
product related to the Apartment Complex and/or the Partnership.
6.15 Withholding of Fee Payments. In the event that (a) the General
Partners or any successor General Partner shall not have substantially
complied with any material provisions under this Agreement, or (b) any
financing commitment of any lender, or any agreement entered into by the
Partnership for financing related to the Apartment Complex shall have
terminated prior to their respective termination date(s), or (c) foreclosure
proceedings shall have been commenced against the Apartment Complex, then
(i) the General Partners shall be in default of this Agreement, and the
Partnership shall withhold payment of any fees payable pursuant to Sections
6.12(a) and (b), and (ii) the General Partners shall be liable for the
Partnership's payment of any and all installments of the Construction and
Development Fee payable pursuant to Section 6.12(b), to the extent that the
Investment Limited Partner has withheld any Installment(s) pursuant to
Section 5.3 as a result of the above-described default.
All amounts so withheld by the Partnership under this Section 6.15
shall be promptly released only after the General Partners have cured the
default justifying the withholding, as demonstrated by evidence reasonably
acceptable to the Investment Limited Partner.
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 or a designee thereof becomes a General Partner, it
shall not require the consent of any other General Partner to transfer all
or any portion of its interest as a General Partner, other than as may be
required under the Uniform Act. In the event of any Withdrawal by a General
Partner in violation of this Section 7.1, such General Partner, in addition
to being subject to any and all other legal remedies which may be pursued by
the Partners, shall forfeit to the remaining General Partners or, if there
are none, to the Special Limited Partner or its designee, such General
Partner's Interest and all unpaid fees from the Partnership and shall remain
liable for all of the Withdrawing General Partner's obligations under this
Agreement. In addition, upon such Withdrawal and transfer, the Special
Limited Partner or its designee shall automatically become a General Partner
without further action by the Withdrawing General Partner or any other
Partner and each Partner hereby consents to such transfer and to the
admission of the Special Limited Partner or its designee as a General
Partner in such a situation. Such transfer shall occur automatically upon
such Withdrawal without further action by such Withdrawing General Partner.
(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).
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 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, subject to the provisions of the Uniform Act, 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 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 treatment of the Partnership as a partnership under the Code and
as a limited partnership under the Uniform Act, and, for the purposes of
Article X, shall be deemed to be effective as of the date of Withdrawal, but
the Partnership shall not make any distributions to the designated
transferee until the transfer has been made. Any holder of any portion of
the Interest of a Withdrawing General Partner which is not designated to be
transferred to the remaining or successor General Partners pursuant to the
provisions of this Section 7.4 shall become an Additional Limited Partner
but (i) with the same share of the profits, losses, tax credits, Cash Flow
and other distributions to which the holder of such Interest was entitled
when held as a General Partner Interest, and (ii) shall not participate in
the votes or Consents of the Investment Limited Partner hereunder. The
admission of any successor or additional General Partner shall be subject to
the consent of the Lender and/or any Authority (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, then, at the election of the Special
Limited Partner, 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 Authority. If any Lender or Authority
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 Authority 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 per cent (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 Authority 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 economic obligations
hereunder, and each other General Partner shall fully indemnify and hold
harmless the additional General Partner from and against any and all losses,
judgments, liabilities, expenses and amounts paid in settlement of any
claims sustained in connection with its capacity as a General Partner.
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.
(ba) 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 (a "Disposition"); provided, however, that such
Disposition 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 Disposition 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.
(bc) Every assignee of a Limited Partner Interest (or any portion
thereof) who desires to make a further Disposition 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 Additional 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) 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
Working Capital Loan; Borrowings
9.1 Working Capital Loan
In order to comply with Paragraph 5(a) of the FmHA Loan Agreement, the
General Partners have advanced or will advance prior to the Permanent
Mortgage Closing to the Partnership $29,600, which amount has been deposited
by the Partnership in its general operating account (the "Working Capital
Loan"). The Working Capital Loan shall not bear interest and shall be
repaid (i) to the extent permitted by FmHA, out of the Partnership funds not
required for other Partnership purposes, (ii) out of any funds which FmHA
designates as a return to the Partnership of such deposit to the
Partnership's general operating account or (iii) as set forth in Article X.
9.2 Borrowings
All Partnership borrowings shall be subject to the terms of this
Agreement, including, but not limited to, the restrictions of Section 6.2,
any may be made from any source, including Partners and their Affiliates.
Any Partnership borrowings from any Partner shall be subject to the prior
written consent of FmHA (if required under applicable FmHA regulations or
requirements). If any Partner shall lend any monies to the Partnership, the
amount of any such loan shall not be an increase of such Partner's Capital
Contribution. If any Partner shall so lend monies, each such loan shall be
an obligation of the Partnership and (except for advances required by
Section 6.11(A), Section 9.1 and Subordinated Loans) shall be repayable to
such Partner on the same basis and with the same rate of interest as would
be applicable to a comparable loan to the Partnership from a third party.
ARTICLE X
Profits, Losses, Tax Credits, Distributions and Capital Accounts
10.1 Profits, Losses and Tax Credits
(a) Subject to Section 10.1(c) and Section 10.4, for each
Partnership fiscal year or portion thereof, all profits, tax-exempt income,
losses, non-deductible non-capitalizable expenditures and tax credits
incurred or accrued on or after the Commencement Date, other than those
arising from a Capital Transaction, shall be allocated 99% 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 any
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 paid-in Capital Contribution,
reduced (but not below zero) in the case of each Limited Partner
(whether under clause (i) or clause (ii)) by the sum of (A) the total
amount of all prior cash distributions made to such Limited Partner
pursuant to Section 10.2(b), Clause Sixth plus (B) the positive
balance in the Capital Account of such Limited Partner prior to the
allocation made pursuant to this Clause Fourth; Partner's Capital
Account to exceed such Limited Partner's share of Partnership Minimum
Gain plus such Limited Partner's share, if any, of Partner Non-
Recourse Debt Minimum Gain. Any losses which are not allocated to a
Limited 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.
ARTICLE X
ALLOCATION OF TAXABLE INCOME, TAX LOSSES, TAX CREDITS
AND CASH DISTRIBUTIONS
10.1. Allocation of Taxable Income, Tax Losses and Tax Credits.
A. General. Subject to the special allocations set forth in this
Article X, Taxable Income, Tax Credits and Tax Losses for each fiscal year
of the Partnership (or part thereof) other than those to be allocated
pursuant to Section 10.1B or Section 10.3 hereof, shall be allocated: (a)
first, Taxable Income shall be allocated among the Partners in amounts equal
to Cash Flow distributed or distributable to such Partners for such fiscal
year pursuant to Section 10.3(a), Clause Fifth; (b) any balance of Taxable
Income, and all Tax Credits and Tax Losses for such fiscal year shall be
allocated 99% to the Investment Limited Partner, and 1% to the General
Partners.
B. Nonrecourse Deductions. Nonrecourse Deductions for any fiscal
year or other period shall be specially allocated 99% to the Investment
Limited Partner and 1% to the General Partners.
C. Partner Nonrecourse Deductions. Any Partner Nonrecourse
Deductions for any Fiscal Year or other period shall be specially allocated
to the Partner who bears the Economic Risk of Loss with respect to the loan
to which such Partner Nonrecourse Deductions are attributable in accordance
with Treasury Regulations Section 1.704-2(i).
10.2. Allocation of Taxable Income and Tax Losses from Capital
Transactions. Subject to the special allocations set forth in this Article
X, Taxable Income and Tax Losses from Capital Transactions shall be
allocated to the Partners as follows:
(i) Taxable Income from Capital Transactions shall be allocated:
(a) first, to the Partners with negative Capital Accounts pro
rata in such amounts as will result in the elimination of the negative
Capital Accounts of such Partners; provided, however, that if Taxable Income
to be allocated pursuant to this Section 10.2(i)(a) is insufficient to
eliminate all negative Capital Accounts, such Taxable Income will be
allocated to Partners with negative Capital Accounts in the proportion that
each such Partner's negative Capital Account bears to the total of all such
Negative Capital Accounts;
(b) second, in the amount and to the extent necessary to
increase the Partners' respective Capital Accounts to equal the amounts
distributable under Sections 10.3(b), clause Second, then Seventh, then
Eighth;
(c) then, the balance, if any, of such Taxable Income shall be
allocated 50% to the General Partners and 50% to the Investment Limited
Partner.
(ii) Tax Losses from Capital Transactions shall be allocated:
(a) first, to the extent of the respective positive balances in
the Partners' Capital Accounts; and
(b) any balance, 99% to the Investment Limited Partner and 1%
to the General Partners.
(iii) Notwithstanding the foregoing provisions, if Taxable Income to
be allocated includes income treated as ordinary income for federal income
tax purposes because such Taxable Income is attributable to the recapture of
depreciation under Section 1245 or 1250 of the Code, such Taxable Income, to
the extent treated as ordinary income, shall be allocated to and reported by
the Partners in proportion to their accumulated depreciation allocations.
The Partnership shall keep records of such allocations of depreciation to
the Partners. In determining the accumulated depreciation allocations of
the Partners, depreciation deductions for each taxable year shall be deemed
allocated to the Partners in the same proportion as the Taxable Income or
Tax Losses in that particular taxable year were allocated to the Partners.
10.2.1. Allocations among the General Partners.
All allocations and distributions of cash, Taxable Income, Tax Losses,
and Tax Credits to the General Partners as a class shall be allocated among
the General Partners in proportion to their Percentage Interest.
10.3 Cash Distributions Prior to Dissolution
(a) Cash Flow
Subject to FmHA Authority 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 Reporting Fee for such year and for any
previous year(s) as to which the Reporting Fee shall not yet have been paid
in full;
Second, to the payment of any deferred Construction and Development
Fee;
Third, to the repayment of any Subordinated Loans;
Fourth, to the payment of the Asset Management Fee in an amount not to
exceed the difference between (i) $1,600 and (ii) the amount of Cash Flow
for such year applied under Clause Second above, to the repayment of the
Deferred Development Fee; and
Fifth, the balance thereof, if any, shall be distributed annually,
within seventy-five (75) days after the end of the fiscal year, 35% to the
Investment Limited Partner and 65% to the General Partners; provided,
however, that during such time as Authority and/or FmHA regulations are
applicable to the Apartment Complex, the total amount of Cash Flow which may
be so distributed to the Partners in respect to any fiscal year shall not
exceed such amounts as Authority and/or FmHA regulations permit to be
distributed.
(b) Distributions of other than Cash Flow
Prior to dissolution, if the General Partners shall determine from
time to time that cash is available for distribution from a Capital
Transaction, such cash shall be applied or distributed as follows:
First, to the payment of all matured debts and liabilities of the
Partnership (including, but not limited to, all expenses of the Partnership
incident to the Capital Transaction), excluding (i) debts and liabilities of
the Partnership to Partners or their Affiliates and (ii) all unpaid fees
owing to the General Partners or their Affiliates; and to the establishment
of any reserves which the General Partners and the Auditors shall deem
reasonably necessary for contingent, unmatured or unforeseen liabilities or
obligations of the Partnership;
Second, to the payment of any deferred Construction and Development
Fee;
Third, if the Permanent Mortgage is in place at the time of such
Capital Transaction or if such Capital Transaction constitutes a refinancing
of the Permanent Mortgage, to the General Partners in an aggregate amount
equal to 5% of the proceeds remaining after the payment of the items set
forth in Clause First of this Section 10.23(b);
Fourth, to the payment of the Reporting Fee for such year and for any
previous year as to which the Reporting Fee has not been paid in full;
Fifth, to the payment to the Investment Limited Partner of the full
amount (including interest) of any Credit Recovery Loans;
Sixth, to the repayment of any Subordinated Loans;
Seventh, to the repayment of any then-unpaid debts and liabilities
owed to Partners or Affiliates thereof by the Partnership for Partnership
obligations (exclusive of Credit Recovery Loans and Subordinated Loans) to
any of them, including, but not limited to, accrued and unpaid, the Annual
Partnership Management Fee for the fiscal year of the Capital Transaction,
and Reporting Fees, but excluding the Working Capital Loan; provided,
however, that any debts or obligations to be repaid to any Limited Partner
or Affiliate thereof pursuant to this Clause Sixth shall be repaid prior to
the repayment of any such debts or obligations to any General Partner or
Affiliate thereof;
Eighth, 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 SixthSeventh, but never an amount less than zero;
Ninth, to the repayment to the General Partners of their paid-in
Capital Contributions minus any prior distributions made to them under this
Clause SeventhEighth and under Section 10.23(c), but never an amount less
than zero;
Tenth, other than in the instance of a refinancing of the Permanent
Mortgage, to each Partner in an amount equal to the positive balance in its
Capital Account, after the above distributions in this Section 10.3(b); and
Eleventh, any balance 50% to the Investment Limited Partner and 50% to
the General Partners.
Notwithstanding the foregoing, however, for the purpose of determining
the amounts to be distributed under Clauses Ninth and Eleventh for a
particular Capital Transaction, any distribution to the General Partners
under Clause Second for such Capital Transaction shall be credited against
and reduce any distributions which would otherwise be made to the General
Partners under Clauses Ninth and Eleventh (with such credit operating first
against Clause Ninth distributions and then against Clause Eleventh
distributions), and the amount not distributed to the General Partners under
Clauses Ninth and Eleventh as a result thereof shall be distributed as if it
were additional proceeds of such Capital Transaction. Any proceeds of a
Capital Transaction distributed to the General Partners under Clause Second
which are not currently credited against a distribution to the General
Partners under either of Clause Ninth or Clause Eleventh from such Capital
Transaction shall be applied as additional credits against any distributions
to the General Partners under either of Clauses Ninth and Eleventh which may
be the result of any future Capital Transactions.
10.4 Distributions Upon Dissolution
(a) Upon dissolution and termination, after payment of, or adequate
provision for, the debts and obligations of the Partnership, the remaining
assets of the Partnership shall be distributed to the Partners in accordance
with the positive balances in their Capital Accounts after taking into
account all Capital Account adjustments for the Partnership taxable year,
including adjustments to Capital Accounts pursuant to Sections 10.1, 10.2,
and 10.4(b). If any General Partner has a negative Capital Account balance
following the liquidation of the Partnership or of the General Partner's
Interest in the Partnership within the meaning of Treasury Regulation
Section 1.704-1(b)(ii)(g), excluding from such General Partner's negative
Capital Account balance, (a) such General Partner's Share of Minimum Gain,
and (b) any other amount that such General Partner is deemed to be obligated
to restore to the Partnership under Treasury Regulation Section 1.704-
1(b)(2)(ii)(c) or otherwise under the Treasury Regulations promulgated under
Code Section 704(b), and after taking into account all Capital Account
adjustments (including adjustments arising from the liquidation) for the
Partnership taxable year during which such liquidation occurs, other than
those made pursuant to this Section, such General Partner shall be
unconditionally obligated to restore the amount of such negative Capital
Account balance to the Partnership by the end of such taxable year (or, if
later, within 90 days after the date of liquidation). Amounts contributed
to the Partnership in respect of such General Partner's obligation to
restore negative Capital Account balances shall be paid to creditors of the
Partnership or distributed to the other Partners in accordance with their
positive Capital Account balances, if any, as of the date of liquidation.
(b) With respect to assets distributed in kind to the Partners in
liquidation or otherwise, (i) any unrealized appreciation or unrealized
depreciation in the values of such assets shall be deemed to be profits and
losses realized by the Partnership immediately prior to the liquidation or
other distribution event; and (ii) such profits and losses shall be
allocated to the Partners in accordance with Section 10.1(b), and any
property so distributed shall be treated as a distribution of an amount in
cash equal to the excess of such fair market value over the outstanding
principal balance of and accrued interest on any debt by which the property
is encumbered. For the purposes of this Section 10.3(b), "unrealized
appreciation, or "unrealized depreciation" shall mean the difference between
the fair market value of such assets, taking into account the fair market
value of the associated financing (but subject to Section 7701(g) of the
Code), and the Partnership's adjusted basis for such assets as determined
under Regulation Section 1.704-1(b). This Section 10.3(b) is merely
intended to provide a rule for allocating unrealized gains and losses upon
liquidation or other distribution event, and nothing contained in this
Section 10.3(b) or elsewhere herein is intended to treat or cause such
distributions to be treated as sales for value. The fair market value of
such assets shall be determined by an appraiser to be selected by the
General Partners with the Consent of the Investment Limited Partner.
10.5 Allocations Among Partners.
A. For purposes of determining the Taxable Income (or Tax Losses)
or any other items allocable to any period, Taxable Income (or Tax Losses)
and any such other items shall be determined on a daily, monthly, or other
basis, as determined by the General Partners using any permissible method
under Code Section 706 and the Treasury Regulations thereunder.
B. Taxable Income, Tax Losses, and Tax Credits for all purposes of
this Agreement shall be determined in accordance with the accrual accounting
method. Except as otherwise provided in this Agreement, all items of
Partnership income, gain, loss, deduction, and any other allocations,
including allocation of Book Profits and Losses, shall be divided among the
Partners in the same proportions as they share Taxable Income, Tax Credits,
and Taxable Losses, as the case may be, for such fiscal year.
C. In any year in which a Partner sells, assigns or transfers all or
any portion of an Interest to any Person who during such year is admitted as
a substitute Partner, the share of all Taxable Income, Tax Losses, and Tax
Credits, allocated to and of all Cash Flow and all cash proceeds
distributable under Section 10.3 or 10.4 distributed to, all Partners which
is attributable to the Interest sold, assigned or transferred shall be
divided between the assignor and the assignee using any one of the following
methods as determined by agreement between the assignor and assignee: (i)
ratably on the basis of the number of days in such year before, and the
number of days on and after, the execution by the assignee of this
Agreement, or (ii) by dividing the Partnership fiscal year into two
segments, the first segment being the time period in such year before the
execution by the assignee of this Agreement and the second segment being the
time period in such year beginning on the date of execution of this
Agreement, and allocating Taxable Income, Tax Losses, Tax Credits, Cash
Flow, and all cash proceeds distributable in each such segment among the
persons who were Partners during that segment, or (iii) using such other
method as provided by the Code or regulations thereunder.
D. In the event that there is a determination that there is any
original issue discount or imputed interest attributable to the Capital
Contribution of any Partner, or any loan between a Partner and the
Partnership, any income or deduction of the Partnership attributable to such
imputed interest or original issue discount on such Capital Contribution or
loan (whether stated or unstated) shall be allocated solely to such Partner.
E. In the event that the deduction of all or a portion of any fee paid
or incurred by the Partnership to a Partner or an Affiliate of a Partner is
disallowed for federal income tax purposes by the Internal Revenue Service
with respect to a taxable year of the Partnership, the Partnership shall
then allocate to such Partner an amount of gross income of the Partnership
for such year equal to the amount of such fee as to which the deduction is
disallowed.
F. If any Partner's Interest in the Partnership is reduced but not
eliminated because of the admission of new Partners or otherwise, or if any
Partner is treated as receiving any items of property described in Section
751(a) of the Code, the Partner's Interest in such items of Section 751(a)
property that was property of the Partnership while such Person was a
Partner shall not be reduced, but shall be retained by the Partner so long
as the Partner has an Interest in the Partnership and so long as the
Partnership has an Interest in such property.
G. The Partners are aware of the income tax consequences of the
allocations made by this Article X and hereby agree to be bound by the
provisions of this Article X in reporting their shares of Partnership income
and loss for income tax purposes.
H. Except as otherwise provided in this Agreement, all Taxable
Income, Tax Losses, Tax Credits, Book Profits and Losses, and cash
distributions shall 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 Capital Contribution of the class of Partners of which such
Partner is a member.
10.6 Qualified Income Offset.
(i) Notwithstanding any other provision of this Article X, in
the event any Partner unexpectedly receives (a) an adjustment to the Capital
Account balance of such Partner as described in Section 1.704-
1(b)(2)(ii)(d)(4) of the Treasury Regulations, (b) an allocation to such
Partner of loss or deduction of the type described in Section 1.704-
1(b)(2)(ii)(d)(5) of the Treasury Regulations, or (c) a distribution to such
Partner in excess of any offsetting increase in the Partner's Capital
Account balance during or prior to the year of distribution, items of
Partnership Taxable Income and of income that constitute a credit to such
Partner's Capital Account shall be specially allocated to such Partner in an
amount and manner sufficient to eliminate, to the extent required by the
Treasury Regulations under Code Section 704(b), the Qualified Income Offset
Amount (defined in Section 10.6(ii)) created by such adjustments,
allocations, or distributions as quickly as possible, provided that an
allocation pursuant to this Section 10.6(i) shall be made only if and to the
extent that such Partner would have a Qualified Income Offset Amount after
all other allocations provided for in this Article have been tentatively
made as if this Section 10.6(i) were not in this Agreement.
(ii) Notwithstanding anything to the contrary contained in this
Agreement, in no event shall Tax Losses of the Partnership be allocated to a
Partner if such allocation would result in such Partner having a Qualified
Income Offset Amount" (as defined below). As used herein, the term
"Qualified Income Offset Amount" for a Partner means the deficit balance, if
any, in such Partner's Capital Account as of the end of the relevant fiscal
year after giving effect to the following adjustments: (i) credit to such
Capital Account an amount equal to (a) the Partner's Share of Minimum Gain
immediately prior to the allocation or distribution and (b) the sum of such
Partner's allocable share of any recourse indebtedness of the Partnership as
determined under Section 752 of the Code and any unconditional obligation of
such Partner to contribute additional amounts to the capital of the
Partnership in the future (to the extent not previously taken into account
in determining such Partner's share of recourse liabilities of the
Partnership) and (ii) debit to such Capital Account the allocations or
distributions described in Section 10.6(i) that, as of the end of the
taxable year, are reasonably expected to be made to such Partner. All Tax
Losses in excess of the limitation set forth in this Section 10.06(ii) shall
be allocated to the General Partners.
10.7. Minimum Gain Allocations. A.Notwithstanding any other
provisions of this Article X, if in any year there is a net decrease in the
amount of the Partnership's Minimum Gain, each Partner will be allocated
items of Taxable Income and gain for such year equal to that Partner's share
of the net decrease in Minimum Gain, within the meaning of Treasury
Regulation 1.704-2(g)(2), and subject to the exceptions set forth in
Treasury Regulation 1.704-2(f).
Allocations of Taxable Income and gain (hereinafter referred to as a
"Minimum Gain Chargeback") required pursuant to this Section 10.7 shall
consist first of gains recognized from the disposition of items of
Partnership property subject to one or more nonrecourse liabilities of the
Partnership to the extent of the decrease in Minimum Gain attributable to
the disposition of such items of property (or if such gains exceed the
amount of the Minimum Gain Chargeback required for such taxable year, the
Minimum Gain Chargeback shall consist of a proportionate share of each such
gain), and the remainder of such Minimum Gain Chargeback shall consist of a
pro-rata portion of the other items of Taxable Income and gain of the
Partnership for that year. If the amount of the Minimum Gain Chargeback
requirement exceeds the Partnership's Taxable Income and gains for the
taxable year, the excess shall carry over to subsequent years.
B. If in any year there is a net decrease (within the meaning of
Treasury Regulations Section 1.704-2(i)(3) in Partner Nonrecourse Debt
Minimum Gain, any Partner with a share of that Member Nonrecourse Debt
Minimum Gain (determined under Treasury Regulation 1.704-2(i)(5)) as of the
beginning of the year shall be allocated items of profits and gains for that
year (and if necessary, subsequent years) equal to that Partner's share of
the net decrease in Member Nonrecourse Debt Minimum Gain in accordance with
Treasury Regulation Section 1.704-2(i)(4).
10.8 Regulatory Allocations. The allocations set forth in Sections
10.1B, 10.1C, 10.6 and 10.7 (the "Regulatory Allocations") are intended to
comply with certain requirements of Treasury Regulation Section 1.704-1(b).
It is the intent of the Partners that, to the extent possible, all
Regulatory Allocations shall be offset either with other Regulatory
Allocations or with special allocations of other items of Taxable Income,
Tax Losses and items of income, gain, loss, or deduction pursuant to this
Section 10.8. Therefore, notwithstanding any other provision of this
Article (other than the Regulatory Allocations), the General Partners shall
make such offsetting special allocations of Taxable Income, Tax Losses, and
items of income, gain, loss, or deduction in whatever manner they determine
appropriate so that, after such offsetting allocations are made, each
Capital Account balance is, to the extent possible, equal to the Capital
Account balance such Partner would have had if the Regulatory Allocations
were not part of the Agreement and all items were allocated pursuant to
Sections 10.1A and 10.2. In exercising its discretion under this Section
10.8, the General Partners shall take into account future Regulatory
Allocations under Section 10.7 that, although not yet made, are likely to
offset other Regulatory Allocations previously made under Sections 10.1B and
10.1C.
10.9 Partners' Partnership Non-recourse Liabilities. For purposes of
Code Section 752, each Partner's share of Partnership non-recourse
liabilities shall be determined in accordance with Treasury Regulation
1.752-3(a) or successor regulation. In this connection, for purposes of
determining each Partner's proportionate share of the excess non-recourse
liabilities of the Partnership pursuant to Treasury Regulation 1.752-3(a),
the Investment Limited Partner shall have a 99% interest in Partnership
Taxable Income or profits and the General Partners shall have a 1% interest
in Partnership Taxable Income or profits.
10.10 Tax Allocations: Code Section 704(c). In accordance with Code
Section 704(c) and the Treasury Regulations thereunder, income, gain, loss,
and deduction with respect to any property contributed to the capital of the
Partnership shall be allocated among the Partners so as to take account of
any variation between the adjusted basis of such property to the Partnership
for federal income tax purposes and its initial Gross Asset Value (computed
in accordance with Section 10.12 hereof).
In the event the Gross Asset Value of any Partnership properties is
adjusted pursuant to Section 10.11 hereof, subsequent allocations of income,
gain, loss, and deduction with respect to such asset shall take into account
any variation between the adjusted basis of such asset for federal income
tax purposes and its Gross Asset Value in the same manner as under Code
Section 704(c) and the Treasury Regulations thereunder.
Any elections or other decisions relating to such allocations shall be
made by the General Partners with the Consent of the Limited Partners, in
any manner that reasonably reflects the purpose and intention of this
Agreement. Allocations pursuant to this Section are solely for purposes of
federal, state, and local taxes and shall not affect, or in any way be taken
into account in computing, any Partner's Capital Account or share of Book
Profits and Losses, other items, or distributions pursuant to any provision
of this Agreement.
10.11. Tax Matters Partner.
A. Xxxx X. Xxxxxxxxx hereby is designated as Tax Matters Partner of
the Partnership, and shall engage in such undertakings as are required of
the Tax Matters Partner of the Partnership, as provided in regulations
pursuant to Section 6231 of the Code. Each Partner, by its execution of this
Agreement, Consents to such designation of the Tax Matters Partner and
agrees to execute, certify, acknowledge, deliver, swear to, file and record
at the appropriate public offices such documents as may be necessary or
appropriate to evidence such Consent.
B. The Tax Matters Partner is hereby authorized, but not required:
(a) to enter into any settlement with the Internal Revenue
Service or the Secretary with respect to any tax audit or judicial review,
in which agreement the Tax Matters Partner may expressly state that such
agreement shall bind the other Partners, except that such settlement
agreement shall not bind any Partner who (within the time prescribed
pursuant to the Code and regulations thereunder) files a statement with the
Secretary providing that the Tax Matters Partner shall not have the
authority to enter into a settlement agreement on behalf of such Partner;
(b) in the event that a notice of a final administrative
adjustment at the Partnership level of any item required to be taken into
account by a Partner for tax purposes (a "final adjustment") is mailed to
the Tax Matters Partner, to seek judicial review of such final adjustment,
including the filing of a petition for readjustment with the Tax Court, the
District Court of the United States for the district in which the
Partnership's principal place of business is located, or the United States
Claims Court;
(c) to intervene in any action brought by any other Partner for
judicial review of a final adjustment;
(d) to file a request for an administrative adjustment with the
Internal Revenue Service at any time and, if any part of such request is not
allowed by the Internal Revenue Service, to file a petition for judicial
review with respect to such request;
(e) to enter into an agreement with the Internal Revenue
Service to extend the period for assessing any tax which is attributable to
any item required to be taken into account by a Partner for tax purposes, or
an item affected by such item; and
(f) to take any other action on behalf of the Partners or the
Partnership in connection with any administrative or judicial tax proceeding
to the extent permitted by applicable law or regulations.
C. The Partnership shall indemnify and reimburse the Tax Matters
Partner for all expenses, including legal and accounting fees, claims,
liabilities, losses and damages incurred in connection with any
administrative or judicial proceeding with respect to the tax liability of
the Partners. The payment of all such expenses (including any reimbursement
of the Tax Matters Partner for expenses that it may incur under the
following sentence) shall be made before any distributions are made from
Cash Flow or any discretionary reserves are set aside by the General
Partner. The General Partner shall have the obligation to provide funds for
such purpose. The taking of any action and the incurring of any expense by
the Tax Matters Partner in connection with any such proceeding, except to
the extent required by law, is a matter in the sole discretion of the Tax
Matters Partner and the provisions on limitations of liability of the
General Partner and indemnification set forth in Section 8.07 of this
Agreement shall be fully applicable to the Tax Matters Partner in its
capacity as such.
10.12 Capital Accounts
A. A Capital Account shall be maintained on the books of the
Partnership for each Partner, which shall be (i) credited with its Capital
Contributions and the amount of any Partnership liabilities that are assumed
by such Partner or that are secured by any Partnership property distributed
to such Partner; (ii) credited with its distributive share of Taxable Income
and any income of the Partnership that is exempt from federal income tax and
not otherwise taken into account in computing Taxable Income; (iii) charged
with its distributive share of Tax Losses and any nondeductible expenditures
of the Partnership (including Syndication Expenses) described in Code
Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures
pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(i) and not
otherwise taken into account under this Section 10.12; and (iv) charged with
any distributions to it and with the amount of any liabilities of such
Partner that are assumed by the Partnership or that are secured by any
property contributed by such Partner to the Partnership.
In the case of property other than cash contributed to the Partnership
or distributed to a Partner, each Partner's Capital Account will be credited
with the Gross Asset Value of property contributed to the Partnership (net
of liabilities assumed by the Partnership and liabilities to which such
contributed property is subject) and shall be debited with the cash and the
Gross Asset Value of property distributed to it (net of liabilities assumed
by such Partner and liabilities to which such distributed property is
subject). In the event the Gross Asset Values of Partnership assets are
adjusted pursuant to Section 10.12B hereof, the Capital Accounts of all
Partners shall be adjusted simultaneously to reflect the aggregate net
adjustment as if the Partnership recognized gain or loss equal to the amount
of such aggregate net adjustment.
Upon the sale, exchange or other transfer of an Interest, or the
assignment of such Interest to a new Partner, the Capital Account of the
transferor Partner shall carry over to the transferee Partner.
B. For purposes of determining and maintaining the Partners' Capital
Accounts, the Gross Asset Value of Partnership assets shall be adjusted as
follows:
(i) The initial Gross Asset Value of any asset contributed by a
Partner to the Partnership shall be the gross fair market value of such
asset, as determined by the contributing Partner and the Partnership;
(ii) The Gross Asset Values of all Partnership assets shall be
adjusted to equal their respective gross fair market values, as determined
by the General Partners, as of the following times: (a) the acquisition of
an additional Interest in the Partnership by any new or existing Partner in
exchange for more than a de minimis Capital Contribution; (b) upon
liquidation of the Partnership, or upon the distribution by the Partnership
to a Partner of more than a de minimis amount of money or other Partnership
property to a retiring or continuing Partner as consideration for an
Interest in the Partnership or (c) under generally accepted industry
accounting practices, provided substantially all of the Partnership's
property (excluding money) consists of stock, securities, commodities,
options, warrants, futures, or similar instruments that are readily
tradeable on an established securities market; and
(iii) If the Gross Asset Value of an asset has been determined
or adjusted pursuant to subsection (i) or (ii) of this Section 10.12, such
Gross Asset Value shall thereafter be adjusted by the Book Depreciation
taken into account with respect to such asset for purposes of computing Book
Profits and Losses, as set forth in Section 10.12B.
C. For purposes of determining and maintaining the Partners' Capital
Accounts and the computation of Book Profits and Losses only, the following
adjustments shall be made to the calculation of Taxable Income and Tax
Losses reflected in the Partners' Capital Accounts:
(i) Gain or loss resulting from any disposition of Partnership
property with respect to which gain or loss is recognized for federal income
tax purposes shall be computed by reference to the Gross Asset Value of the
property disposed of, notwithstanding that the adjusted tax basis of such
property differs from its Gross Asset Value; and
(ii) In lieu of the depreciation, amortization, and other cost
recovery deductions taken into account in computing such Taxable Income or
Tax Losses, there shall be taken into account Book Depreciation for such
fiscal year or other period, computed as hereinafter set forth.
(iii) For this purpose, "Book Depreciation" means, for each
fiscal year or other period, an amount equal to the depreciation,
amortization, or other cost recovery deduction allowable with respect to an
asset for such year or other period, except that if the Gross Asset Value of
an asset differs from its adjusted basis for federal income tax purposes at
the beginning of such year or other period, Book Depreciation shall be an
amount which bears the same ratio to such beginning Gross Asset Value as the
federal income tax depreciation, amortization, or other cost recovery
deductions for such year or other period bears to such beginning adjusted
tax basis.
(iv) Allocations of Book Profits and Losses among the Partners
shall be made in accordance with the provisions of this Article X respecting
allocations of Taxable Income and Tax Losses among the Partners.
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 Partner or Partners
that bear the economic risk of loss (within the meaning of Treasury
Regulation Section l.704-T(b) (4) (iv) (k) (1)) with respect to such
obligations in the ratio in which they bear the economic risk of loss
(or 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 Apartment
Complex and such indebtedness is distributed to the Partners pursuant
to the provisions of Section 10.2(b) or Section 10.3, the
distributions of the cash portion of such purchase price and the
principal amount of such purchase money indebtedness hereunder shall
be allocated among the Partners in the following manner: On the basis
of the sum of the principal amount of the purchase money indebtedness
and cash payments received on the sale (net of amounts required to pay
Partnership obligations and fund reasonable reserves), there shall be
calculated the percentage of the total net proceeds distributable to
each class of Partners based on Section 10.2(b) or Section 10.3, as
applicable, treating cash payments and purchase money indebtedness
principal interchangeably for this purpose, and the respective classes
shall receive such respective percentages of the net cash purchase
price and purchase money principal. Payments on such purchase money
indebtedness retained by the Partnership shall be distributed in
accordance with the respective portions of principal allocated to the
respective classes of Partners in accordance with the preceding
sentence, and if any such purchase money indebtedness shall be sold,
the sale proceeds shall be allocated in the same proportion.
(iv) Income, gain, loss and deduction with respect to any asset
which has a variation between its basis computed in accordance with
Treasury Regulation Section 1.704-1(b) and its basis computed for
Federal income tax purposes shall be shared among the Partners so as
to take account of such variation in a manner consistent with the
principles of Section 704(c) of the Code and Treasury Regulation
Section 1.704-1(b) (2) (iv) (g).
(v) The terms "profits" and "losses" used in this Agreement
shall mean income and losses, and each item of income, gain, loss,
deduction or credit entering into the computation thereof, as
determined in accordance with the accounting methods followed by the
Partnership and computed in accordance with Treasury Regulation
Section 1.704-1(b) (2) (iv). Profits and losses for 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 the
greater of (a) the portion of such Partner's share of the net decrease
in Partnership Minimum Gain during the year that is allocable to the
disposition of Partnership property subject to one or more Partnership
Non-Recourse Liabilities or (b) the deficit balance in such Partner's
Capital Account at the end of such year. For purposes of the
foregoing clause (b), a Partner's Capital Account shall be determined
(A) prior to taking into account any other allocations for the year,
(B) by excluding from such negative Capital Account balance the amount
of such Partner's obligation, if any, to restore a negative balance in
such Partner's Capital Account, (C) by treating each Partner's share
of Partnership Minimum Gain as an obligation to restore a negative
balance in such Partner's Capital Account and (D) by treating a
Partner's share of the minimum gain attributable to Partner Non-
Recourse Debt with respect to which such Partner or a Related Person
bears the economic risk of loss for such debt as an obligation to
restore a negative balance in such Partner's Capital Account. Such
allocations shall be made in a manner consistent with the requirements
of Treasury Regulation Section 1.704-lT(b) (4) (iv) (e) under Section
704 of the Code. For purposes of this Section 10.4(b) (vi), a
Partner's Capital Account shall be treated as reduced by Qualified
Income Offset Items.
(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 proportion to, and to the
extent of, 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 that is allocable to the disposition of Partnership
property subject to such debt or (b) the negative balance in such
Partner's Capital Account at the end of such year. For purposes of
the foregoing clause (b), a Partner's Capital Account shall be
determined (A) prior to taking into account any other allocations for
the year, (B) by excluding from such deficit Capital Account balance
the amount of such Partner's obligation, if any, to restore a negative
balance in such Partner's Capital Account, (C) by treating each
Partner's share of Partnership Minimum Gain as an obligation to
restore a negative balance in such Partner's Capital Account and (D)
by treating a Partner's share of the minimum gain attributable to
Partner Non-Recourse Debt with respect to which such Partner or a
Related Person bears the economic risk of loss as an obligation to
restore a negative balance in such Partner's Capital Account. Such
allocations shall be made in a manner consistent with the requirements
of Treasury Regulation Section 1.704-1T(b) (4) (iv) (A) under Section
704 of the Code. For purposes of this Section 10.4(b) (vii), a
Partner's Capital Account shall be treated as reduced by Qualified
Income Offset Items.
(viii) If a Limited Partner unexpectedly receives (a) an
allocation of loss or deduction or expenditures described in Section
705(a) (2) (B) of the Code made (1) pursuant to Section 704(e) (2) of
the Code to a donee of an Interest, (2) pursuant to Section 706(d) of
the Code as the result of a change in any Partner's Interest, or (3)
pursuant to Regulation Section 1.751-1(b) (2) (ii) as a result of a
distribution by the Partnership of unrealized receivables or inventory
items or (b) a distribution, and such allocation and/or distribution
would cause the negative balance in such Partner's Capital Account to
exceed (i) such Partner's share of Partnership Minimum Gain plus (ii)
the amount of such Partner's obligation, if any, to restore a negative
balance in such Partner's Capital Account, then such Partner shall be
allocated items of income and gain in an amount and manner sufficient
to eliminate such negative balance as quickly as possible. For
purposes of this Section 10.4(b) (viii), a Partner's Capital Account
shall be treated as reduced by Qualified Income Offset Items.
(ix) In the event that any fee payable to any General Partner
or any Affiliate thereof shall instead be determined to be a non-
deductible, non-capitalizable distribution from the Partnership to a
Partner for Federal income tax purposes, then there shall be allocated
to such General Partner an amount of gross income equal to the amount
of such distribution.
(x) In applying the provisions of Article X with respect to
distributions and allocations, the following ordering of priorities
shall apply:
(1) Capital Accounts shall be deemed to be reduced by
Qualified Income Offset Items.
(2) Capital Accounts shall be reduced by distributions of Cash
Flow under Section 10.2(a).
(3) Capital Accounts shall be reduced by distributions from
Capital Transactions under Section 10.2(b).
(4) Capital Accounts shall be increased by any minimum gain
chargeback under Section 10.4(b) (vi) or 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.
10.13 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, nondeductible non-capitalizable expenditures or
credits (or any item thereof) in the manner provided for herein would cause
the determinations and allocations of each Partner's distributive share of
profits, tax-exempt income, losses, non-deductible non-capitalizable
expenditures or credits (or any item thereof) not to be permitted by Section
704(b) of the Code. Any allocation made pursuant to this Section 10.13
shall be deemed to be a complete substitute for any allocation otherwise
provided for in this Agreement, and no amendment of this Agreement or
approval of any Partner shall be required.
(b) In making any allocation (the "New Allocation") under Section
10.13(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 10.13(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
10.13(a) and Section 10.13(c) in reliance upon the advice of the Tax
Accountants shall be deemed to be made pursuant to the fiduciary obligation
of the General Partners to the Partnership and the Limited Partners, and no
such allocation shall give rise to any claim or cause of action by any
Limited Partner.
ARTICLE XI
Management Agent
A. The General Partners shall engage the Management Agent to manage
the Apartment Complex pursuant to the Management Agreement. The 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 FmHA or, when the
Apartment Complex is not subject to FmHA 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 (i) the General Partners
shall have obtained the prior written consent of FmHA (if required) and the
Special Limited Partner to the identity of the Management Agent and the
terms of the Management Agreement or the modification or extension thereof
and (ii) such new Management Agreement or modified or extended Management
Agreement provides that it is terminable by the Partnership on thirty (30)
days' notice by the Partnership in the event of any change in the identity
of the General Partners.
B. Notwithstanding the foregoing, however, should the Investment
General Partner or an Affiliate thereof perform property management services
for the Partnership, property management, rent-up or leasing fees shall be
paid to the Investment General Partner or such Affiliate only for services
actually rendered and shall be in an amount equal to the lesser of (i) fees
competitive in price and terms with those of non-affiliated Persons
rendering comparable services in the locality where the Apartment Complex is
located and which could reasonably be available to the Partnership, or (ii)
five per cent (5%) of the gross revenues of the Apartment Complex. No
duplicate property management fees shall be paid to any Person.
C. If (i) the Management Agent is a General Partner or an Affiliate
of a General Partner, and (a) the Apartment Complex shall be subject to a
substantial building code violation which shall not have been cured within
six months after notice from the applicable governmental agency or
department or (b) the Partnership shall not have Cash Flow of at least
$3,394 during any year after 1996, or (ii) an Event of Bankruptcy shall
occur with respect to the Management Agent, or (iii) the Management Agent
shall commit willful misconduct or gross negligence in its conduct of its
duties and obligations under the Management Agreement or (iv) there is any
change in the identity of the General Partners, or (v) the Management Agent
is cited by FmHA or any Authority, including any Tax Credit monitoring or
compliance agency of the State of Nevada or any other governmental agency
for a violation or alleged violation of any applicable rules, regulations or
requirements, including, but not limited to, non-compliance with the Minimum
Set-Aside Test, the Rent Restriction Test or any other Tax Credit-related
provision, then, upon request by the Special Limited Partner and subject to
FmHA 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 FmHA approval, if required, the Partnership shall not enter into
any future management arrangement or renew or extend any existing 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 Apartment
Complex during any period when there is no Management Agent.
ARTICLE XII
Books and Records, Accounting, Tax Elections, Etc.
12.1 Books and Records
The Partnership shall maintain all books and records which are
required under the Uniform Act 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 representatives, shall at all times have access to the
records of the Partnership at the principal office of the Partnership at any
and all reasonable times, and may inspect and copy any of such records. A
list of the names and addresses of all of the Limited Partners shall be
maintained as part of the books and records of the Partnership and shall be
mailed to any Limited Partner upon request. A reasonable charge for copy
work may be charged by the Partnership.
12.2 Bank Accounts
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 FmHA) 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 Authority 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 l 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 Boston Capital Communications Limited Partnership for all costs
and expenses paid to the Tax Accountants for the aforementioned services.
(b) The Auditors shall audit and certify all annual financial
reports to the Partners in accordance with generally accepted auditing
standards.
(c) If the Partnership fails to fulfill any of its obligations under
Section 12.7(a) (i) and/or Section 12.7(a) (ii) within the time periods set
forth therein, at any time thereafter upon notice from the Special Limited
Partner that a change in the identity of the Auditors is desired, the
General Partners, on behalf of the Partnership, shall promptly terminate the
Partnership's engagement of the Auditors, and the prior written consent of
the Special Limited Partner must be received to the appointment of
replacement Auditors. If no such consent is received to the appointment of
replacement Auditors within thirty (30) days of the notice from the Special
Limited Partner to replace the Auditors, then the Special Limited Partner
shall appoint replacement Auditors of its own choosing, the cost of which
shall be borne by the Partnership as a Partnership expense. All Partners
hereby grant to the Special Limited Partner a special power of attorney,
irrevocable to the extent permitted by law, coupled with an interest, to so
appoint replacement Auditors and to do anything else which in the view of
the Special Limited Partner may be necessary or appropriate to accomplish
the purposes of this Section 12.3(c).
12.4 Cost Recovery and Elections
(a) With respect to all depreciable assets for which cost recovery
deductions are permitted, the Partnership shall elect to use, so far as
permitted by the provisions of the Code, accelerated cost recovery methods.
However, the Partnership may change to another method of cost recovery if
such other method is, in the opinion of the Auditors, more advantageous to
the Investment Limited Partner and the limited partners and/or holders of
beneficial assignee certificates thereof.
(b) The Partnership shall elect under Temporary Treasury Regulation
Section 1.469-4T(k) (2) to treat its rental real estate activities as a
separate activity from the activities of any other entity.
(cb) 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 a holder of a beneficial assignee certificate of the
Investment Limited Partner, the Partnership shall elect, upon the request of
the Investment Limited Partner, pursuant to Section 754 of the Code, to
adjust the basis of the Partnership property. Any adjustments made pursuant
to said Section 754 shall affect only the successor in interest to the
transferring Partner or partner or holder of a beneficial assignee
certificate thereof. Each Partner will furnish the Partnership all
information necessary to give effect to 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 forty-five (45) days after the end of each fiscal
year of the Partnership, (A) a balance sheet as of the end of such
fiscal year, a statement of income, a statement of partners' equity,
and a statement of cash flows, each for the year then ended, all of
which, except the statement of cash flows, shall be prepared in
accordance with generally accepted accounting principles and
accompanied by a report of the Auditors containing an opinion of the
Auditors, and (B) a report of the activities of the Partnership during
the period covered by the report. With respect to any distribution to
the Investment Limited Partner, the report called for shall separately
identify distributions from (1) Cash Flow from operations during the
period, (2) Cash Flow from operations during a prior period which had
been held as reserves, (3) proceeds from disposition of property and
investments, (4) lease payments on net leases with builders and
sellers, (5) reserves from the gross proceeds of the Capital
Contribution of the Investment Limited Partner, (6) borrowed monies,
and (7) transactions outside of the ordinary course of business with a
description thereof.
(ii) Within thirty (30) days after the end of each fiscal year
of the Partnership, all information relating to the Partnership and/or
the Apartment Complex which is necessary, in the view of the Tax
Accountants, for the preparation of the Limited Partners' Federal
income tax returns.
(iii) Within thirty (30) days after the end of each quarter of a
fiscal year of the Partnership, a report containing:
(A) a balance sheet, which may be unaudited;
(B) a statement of income for the quarter then ended, which
may be unaudited;
(C) a statement of cash flows for the quarter then ended,
which may be unaudited; and
(D) a certification of the General Partners that the Apartment
Complex and its tenants are in compliance with all applicable
federal, state and local requirements and regulations;
(E) a low-income housing tax credit monitoring form, a copy of
the rent roll for the Apartment Complex, a statement of income
and expenses, an operating statement and an Occupancy/Rental
Report, all in the form specified by Boston Capital
Communications Limited Partnership;
(F) all other information which would be pertinent to a
reasonable investor regarding the Partnership and its activities
during the quarter covered by the report.
(b) Within sixty (60) days after the end of each fiscal year of the
Partnership a copy of the annual report to be filed with the United States
Department Treasury concerning the status of the Apartment Complex as low-
income housing and any reports filed in connection with compliance
monitoring conducted by the Authority.
(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 any
Project Document or in the payment of any mortgage, taxes, interest or
other obligation on secured or unsecured debt,
(ii) any reserve has been reduced or terminated by application
of funds therein for purposes materially different from those for
which such reserve was established,
(iii) the General Partners have 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 FmHA or any Authority.
(g) Within fifteen (15) 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. Promptly
after Permanent Mortgage Closing, the General Partners shall send to Boston
Capital Communications Limited Partnership a closing binder containing
photocopies of the fully-executed versions of all documents signed in
connection with the Permanent Mortgage. The General Partners hereby consent
to any Authority's providing Boston Capital Communications Limited
Partnership with copies of all material communications between any such
office and the General Partners and/or the Partnership, including, but not
limited to, any notices of default. From and after any date upon which the
General Partners receive notice from the Investment Limited Partner that the
Investment Limited Partner would like copies of the monthly rent rolls for
the Apartment Complex to be sent to Boston Capital Communications Limited
Partnership, the General Partners shall send copies of the rent rolls to
Boston Capital Communications Limited Partnership no later than ten (10)
days after the expiration of each month.
(i) If the earlier of (A) the Completion Date or (B) the date upon
which tenants first occupied apartment units in the Apartment Complex shall
have occurred six months or more prior to the date upon which the Investment
Limited Partner acquired its Interest in the Partnership, then the General
Partners shall cause to be prepared and delivered to the Investment Limited
Partner within sixty (60) days of the Admission Date the following items:
(i) An unaudited statement of income of the Partnership for
the year (or such shorter period as there may be from the date of the
most recent audited statement of income of the Partnership) ended on
the date upon which the Investment Limited Partner acquired its
Interest in the Partnership; and
(ii) An audited statement of income of the Partnership for any
fiscal year of the Partnership ending between (A) the earlier of (1)
the Completion Date or (2) the date upon which tenants first occupied
apartment units in the Apartment Complex 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 prepare, or cause the Auditors to prepare, and deliver to
each Limited Partner a Tax Credit basis worksheet for each building in the
Apartment Complex, all in a form specified by Boston Capital Communications
Limited Partnership.
(k) If the General Partners do not cause the Partnership to fulfill
its obligations under Section 12.7(a) (i) and/or Section 12.7(a) (ii) within
the time periods set forth therein, the General Partners shall pay as
damages the sum of $500 per day (plus interest at a rate equal to the
general base rate of interest established by 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. 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.
(l) On or before January 31 of each Partnership fiscal year, the
Partnership shall send to the Investment Limited Partner copies of the
certificates, memoranda of insurance or other evidence satisfactory to the
Investment Limited Partner that insurance policies required to be maintained
on the Apartment Complex pursuant to Section 6.5(c) are in force,
accompanied by a certificate of the General Partners stating that such
insurance policies satisfy the requirements of Section 6.5(c).
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 the
Prospectus. Extraordinary circumstances shall only be presumed to exist
where there is an emergency situation requiring immediate action and the
services required are not immediately available from unaffiliated parties.
All services rendered under such circumstances must be rendered pursuant to
a written contract which must contain a clause allowing termination without
penalty on sixty (60) days' notice. Goods and services provided under such
circumstances must be provided at the lesser of actual cost or the price
charged for such goods or services by independent parties.
(c) In the event extraordinary circumstances arise, the Investment
General Partner and its Affiliates may provide construction services in
connection with the Apartment Complex. Neither the Investment General
Partner nor any of its Affiliates shall provide such services unless it
believes it has an adequate staff to do so and unless such provision of
goods and construction services is part of its ordinary and ongoing business
in which it has previously engaged, independent of the activities of the
Investment Limited Partner. Any such services must be reasonable for and
necessary to the Investment Limited Partner, actually furnished to the
Investment Limited Partner, and provided at the lower of 10% of the
construction contract rate with respect to the Apartment Complex or 90% of
the competitive price charged for such services by independent parties for
comparable goods and services in the same geographic location (except that
in the case of transfer agent, custodial and similar banking-type fees, and
insurance fees, the compensation, price or fee shall be at the lesser of
costs or the compensation, price or fee of any other Person rendering
comparable services as aforesaid). Cost of services as used herein means
the pro rata cost of personnel, including an allocation of overhead directly
attributable to such personnel, based on the amount of time such personnel
spent on such services or other method of allocation acceptable to the
accountants for the Investment Limited Partner.
(d) All services provided by the Investment General Partner or any
Affiliate thereof pursuant to Section 12.8(c) must be rendered pursuant to
the Investment Partnership Agreement or a written contract which precisely
describes the services to be rendered and all compensation to be paid and
shall contain a clause allowing termination without penalty upon sixty (60)
days' notice to the Investment General Partner by a vote of a majority in
interest of the limited partners and assignees of beneficial interests in
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 wavier,
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.
However, Schedule A shall not be amended on account of any such
distribution.
The Partnership shall amend the Certificate at least once each
calendar quarter to effect the substitution of substituted Limited Partners,
although the General Partners may elect to do so more frequently. In the
case of assignments, where the assignee does not become a Substituted
Limited Partner, the Partnership shall recognize the assignment not later
than the last day of the calendar month following receipt of notice of
assignment and all documentation required in connection therewith hereunder.
Notwithstanding the foregoing provisions of this Section 13.2, no such
amendments to the Certificate need be filed by the General Partners if the
Certificate is not required to and does not identify the Limited Partners or
their Capital Contributions in such capacity.
13.3 Notices
Any notice called for under this Agreement shall be in writing and
shall be deemed adequately given if actually delivered or if sent by
registered or certified mail, postage prepaid, to the party for whom such
notice is intended at such party's last address of record on the Partnership
books.
13.4 Word Meanings
The words such as "herein," "hereinafter," "hereof" and "hereunder"
refer to this Agreement as a whole and not merely to a subdivision in which
such words appear unless the context otherwise requires. The singular shall
include the plural, and vice versa, and each gender (masculine, feminine and
neuter) shall include the other genders, unless the context requires
otherwise. Each reference to a "Section" or an "Article" refers to the
corresponding Section or Article of this Agreement, unless specified
otherwise. References to Treasury Regulations (permanent or temporary) or
Revenue Procedures shall include any successor provisions.
13.5 Binding Effect
The covenants and agreements contained herein shall be binding upon
and inure to the benefit of the heirs, executors, administrators, successors
and assigns of the respective parties hereto.
13.6 Applicable Law
This Agreement shall be construed and enforced in accordance with the
laws of the State.
13.7 Counterparts
This Agreement may be executed in several counterparts and all so
executed shall constitute one agreement binding on all parties hereto,
notwithstanding that all the parties have not signed the original or the
same counterpart.
13.8 Financing Regulations
So long as any of the Project Documents are in effect, (a) each of the
provisions of this Agreement shall be subject to, and the General Partners
covenant to act in accordance with, the Project Documents; (b) the Project
Documents shall govern the rights and obligations of the Partners, their
heirs, executors, administrators, successors and assigns to the extent
expressly provided therein; (c) upon any dissolution of the Partnership or
any transfer of the Apartment Complex, no title or right to the possession
and control of the Apartment Complex and no right to collect the rent
therefrom shall pass to any Person who is not, or does not become, bound by
the Project Documents and other FmHA documents in a manner satisfactory to
FmHA; (d) no amendment to any provision of the Project Documents shall
become effective without the prior written consent of FmHA (if required);
and (e) the affairs of the Partnership shall be subject to FmHA regulation,
and no action shall be taken which would require the consent or approval of
FmHA unless the prior consent or approval of FmHA shall have been obtained.
No new Partner shall be admitted to the Partnership, and no Partner shall
withdraw from the Partnership or be substituted for without the consent of
FmHA (if such consent is then required). No amendment to this Agreement
relating to matters governed by FmHA regulations or requirements shall
become effective until the prior written consent of FmHA (if required) to
such amendment shall have been obtained.
Any conveyance or transfer of title to all or any portion of the
Apartment Complex required or permitted under this Agreement shall in all
respects be subject to all conditions, approvals and other requirements of
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 FmHA 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 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; 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.
WITNESS the execution hereof under seal as of the 1st day of July,
1996.
ORIGINAL (WITHDRAWING) GENERAL PARTNERS:
LIMITED PARTNERS:
/s/ Xxxxx X. Xxxx /s/ Xxxxx X. Xxxx
Xxxxx X. Xxxx Xxxxx X. Xxxx
/s/ Xxxx X. Xxxxxxx /s/ Xxxx X. Xxxxxxx
Xxxx X. Xxxxxxx Xxxx X. Xxxxxxx
/s/ Xxxx X. Xxxxxxxxx /s/ Xxxx X. Xxxxxxxxx
Xxxx X. Xxxxxxxxx Xxxx X. Xxxxxxxxx
INVESTMENT LIMITED PARTNER: SPECIAL LIMITED PARTNER:
BOSTON CAPITAL TAX CREDIT BCTC 94, INC.
FUND IV LIMITED PARTNERSHIP,
a Delaware limited
partnership By: /s/ Xxxxxx Xxxx Xxx
Xxxxxx Xxxx Xxx
Attorney in fact for
By: Boston Capital Associates Xxxx X. Xxxxxxx
XX Limited Partnership,
its general partner
By: C & M Associates d/b/a
Boston Capital Associates,
its general partner
By: /s/ Xxxxxx Xxxx Xxx
a general partner
STATE OF California SS.
COUNTY OF Sacramento_______________
BEFORE ME, the undersigned Notary Public in and for said County and
State, personally appeared the above-named Xxxx X. Xxxxxxx, known to me to
be the person who executed the foregoing instrument, and, being duly sworn,
acknowledged that the statements therein are true and that he did sign the
same as his free act and deed.
WITNESS my hand and official seal this 12th _____ day of June,
____________, 1991_.
Notary Public
Name (Printed)
My Commission Expires:
My County of Residence:
STATE OF California
COUNTY OF Sacramento SS.________________
BEFORE ME, the undersigned Notary Public in and for said County and
State, personally appeared the above-named Xxxx X. Xxxxxxxxx, known to me to
be the person who executed the foregoing instrument, and, being duly sworn,
acknowledged that the statements therein are true and that he did sign the
same as his free act and deed.
WITNESS my hand and official seal this ____ day of _______, 1991_.
Notary Public
Name (Printed)
My Commission Expires:
My County of Residence:
STATE OF California
COUNTY OF Sacramento SS.
BEFORE ME, the undersigned Notary Public in and for said County and
State, personally appeared the above-named Xxxx X. Xxxxxxxxx, known to me to
be the person who executed the foregoing instrument, and, being duly sworn,
acknowledged that the statements therein are true and that he did sign the
same as his free act and deed.
WITNESS my hand and official seal this ____ day of _______, 1991_.
Notary Public
Name (Printed)
My Commission Expires:
My County of Residence:
COMMONWEALTH OF MASSACHUSETTS )
SS.
COUNTY OF SUFFOLK )
BEFORE ME, the undersigned Notary Public in and for sad County and
Commonwealth, personally appeared the above-named _________________________
known to me to be a general partner of C & M Associates d/b/a Boston Capital
Associates, which is the general partner of Boston Capital Associates IIV
Limited Partnership, Boston Capital Associates IIV Limited Partnership being
the general partner of Boston Capital Tax Credit Fund IIV Limited
Partnership, who, being duly sworn, acknowledged that he did sign the
foregoing instrument, that the statements therein contained are true and
that the same is the duly authorized free act and deed of Boston Capital Tax
Credit Fund IIV Limited Partnership.
WITNESS my hand and official seal this ____ day of _______________,
199_.
Notary Public
Name (Printed)
My Commission Expires:
My County of Residence:
COMMONWEALTH OF MASSACHUSETTS )
) SS.
COUNTY OF )
BEFORE ME, the undersigned Notary Public in and for said County and
Commonwealth, personally appeared the above-named __________________ known
to me to be the __________________ of BCTC 94, Inc., who, being duly sworn,
acknowledged that he did sign the foregoing instrument, that the statements
therein contained are true and that the same is the duly authorized free act
and deed of BCTC 94, Inc.
WITNESS my hand and official seal this _____ day of _____________,
1995.
Notary Public
Name (Printed)
My Commission Expires:
My County of Residence:
PAHRUMP VALLEY INVESTORS, A
WYOMING LIMITED PARTNERSHIP
Schedule A
As of
July 1, 1996
General Partners Capital Contributions
Xxxxx X. Xxxx $33.33
0000 Xxxxxxx Xxxxx
Xxxxxxx Xxx, XX 00000
Xxxx X. Xxxxxxx $33.33
0000 Xxxxxx Xxxx
Xxxxxx, XX 00000
Xxxx X. Xxxxxxxxx $33.34
0000 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxx 00000
________
$100.00
Investment Total Agreed-to Paid-In
Limited Partner Capital Contribution Capital Contribution*
Boston Capital Tax Credit $339,599 $100
Fund IV Limited
Partnership
c/o Boston Capital
Partners, Inc.
000 Xxxxxxxx Xxxxxx
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 Certificate
Agreement to which this Schedule is attached.
