OHIO INVESTORS LIMITED PARTNERSHIP
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
Dated as of May 17, 1996
TABLE OF CONTENTS
Preliminary Statement...........................................1
ARTICLE I.......................................................1
Defined Terms...................................................1
ARTICLE II.....................................................22
Name and Business..............................................22
2.1 Name; Continuation...................................22
2.2 Office and Resident Agent............................22
2.3 Purpose..............................................22
2.4 Term and Dissolution.................................22
ARTICLE III....................................................23
Mortgage, Refinancing and Disposition of Property..............23
3.1 Personal Liability...................................23
3.2 Refinancings.........................................24
3.3 Sale of Assets.......................................25
3.4 Real Estate Commissions..............................26
ARTICLE IV.....................................................26
Partners; Capital..............................................26
4.1 Capital and Capital Accounts.........................26
4.2 General Partner......................................27
4.3 Investment Limited Partners, Special Limited Partner and Original
Limited
Partners.......................................................27
4.4 Liability of the Limited Partners....................28
4.5 Special Rights of the Special Limited Partner........28
4.6 Meetings.............................................31
ARTICLE V......................................................31
Capital Contributions of the Investment Limited Partners
and the Special Limited Partner................................31
5.1 Payments.............................................31
5.2 Return of Capital Contributions......................36
ARTICLE VI.....................................................38
Rights, Powers and Duties of General Partner...................38
6.1 Authorized Acts......................................38
6.2 Restrictions on Authority............................39
6.3 Personal Services; Other Business Ventures...........41
6.4 Business Management and Control......................42
6.5 Duties and Obligations...............................43
6.6 Representations and Warranties.......................46
6.7 Liability on Mortgages...............................49
6.8 Indemnification of the General Partner...............50
6.9 Indemnification of the Partnership and the Limited Partners51
6.10 Operating Deficits...................................51
6.11 Obligation to Complete the Construction of the Apartment Complex52
6.12 Certain Payments to the General Partner and Others...52
6.13 Delegation of General Partner Authority..............53
6.14 Assignment to Partnership............................54
6.15 Contracts with Affiliates............................54
6.16 Tax Matters Partner..................................55
ARTICLE VII....................................................56
Withdrawal of a General Partner; New General Partners..........56
7.1 Voluntary Withdrawal.................................56
7.2 Reconstitution.......................................57
7.3 Successor General Partner............................57
7.4 Interest of Predecessor General Partner..............58
7.5 Event of Bankruptcy as to a General Partner; Removal of a General
Partner and Transfer of Its Interest...........................59
7.6 Designation of New General Partners..................60
7.7 Amendment of Certificate; Approval of Certain Events.61
7.8 Valuation and Sale of Interest of Former General Partner61
ARTICLE VIII...................................................62
Transferability of Limited Partner Interests...................62
8.1 Assignments..........................................62
8.2 Substituted Limited Partner..........................63
8.3 Restrictions.........................................63
ARTICLE IX.....................................................64
Borrowings.....................................................64
ARTICLE X......................................................64
Profits, Losses, Tax Credits, Distributions and Capital Accounts64
10.1 Profits, Losses and Tax Credits......................64
10.2 Cash Distributions Prior to Dissolution..............66
10.3 Distributions Upon Dissolution.......................68
10.4 Special Provisions...................................69
10.5 Authority of the General Partner to Vary Allocations to Preserve
and Protect the Partners' Intent...................................73
ARTICLE XI.....................................................74
Management Agent...............................................74
11.1 General..............................................74
11.2 Fees.................................................74
11.3 Removal and Replacement..............................75
11.4 Lack of Management Agent.............................75
ARTICLE XII....................................................75
Books and Records, Accounting, Tax Elections, Etc..............75
12.1 Books and Records....................................75
12.2 Bank Accounts........................................76
12.3 Auditors.............................................76
12.4 Cost Recovery and Elections..........................77
12.5 Special Basis Adjustments............................77
12.6 Fiscal Year..........................................77
12.7 Information to Partners..............................78
12.8 Expenses of the Partnership..........................80
ARTICLE XIII...................................................81
General Provisions.............................................81
13.1 Restrictions by Reason of Section 708 of the Code....81
13.2 Amendments to Certificates...........................82
13.3 Notices..............................................82
13.4 Word Meanings........................................82
13.5 Binding Effect.......................................83
13.6 Applicable Law.......................................83
13.7 Counterparts.........................................83
13.8 Financing Regulations................................83
13.9 Separability of Provisions...........................84
13.10 Paragraph Titles.....................................84
13.11 Amendment Procedure..................................84
13.12 Extraordinary Partner Expenses.......................84
13.13 Time of Admission....................................84
OHIO INVESTORS LIMITED PARTNERSHIP
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
Preliminary Statement
OHIO INVESTORS LIMITED PARTNERSHIP (the "Partnership") was formed as an
Ohio limited partnership pursuant to a Certificate of Limited Partnership
dated as of May 31, 1995 and filed in the Filing Office on June 8, 1995, as
amended and restated in a Restated Certificate of Limited Partnership (as
amended and restated, the "Certificate") dated as of February 9, 1996 and
filed in the Filing Office on February 20, 1996. Pursuant to a partnership
agreement dated as of February 15, 1996, which agreement provides for the
conversion of Ohio Investors, an Ohio general partnership into the
Partnership, Xxxxxx X. Xxxxxx ("Xxxxxx") and Xxxxxxx X. Xxxxxxx ("Xxxxxxx")
are the original limited partners of the Partnership (the "Original Limited
Partners") and, in substitution for Washington Arms Investors, Ltd., an Ohio
limited liability company ("WAI"), Xxxxxx and Xxxxxxx also are the original
general partners of the Partnership (the "Original General Partners"), as
amended by a Restated Agreement of Limited Partnership dated February 29,
1996, providing for the admission of BOSTON CAPITAL CORPORATE TAX CREDIT FUND
III, A LIMITED PARTNERSHIP, a Massachusetts limited partnership ("BCCTCF"), as
Limited Partner, and providing for the withdrawal of the Original Limited
Partners (as amended, the "Original Agreement").
The parties desire to amend and restate the Original Agreement to (i)
provide for the withdrawal from the Partnership of the Original General
Partners, (ii) provide for the admission of BCCC, INC., a Massachusetts
corporation ("BCCC") as the Special Limited Partner, (iii) provide for the
admission of BOSTON CAPITAL TAX CREDIT FUND IV L.P., a Delaware limited
partnership ("BCTCF"), as an Investment Limited Partner, (iv) provide for the
admission of WASHINGTON ARMS INVESTORS, LTD., an Ohio limited liability
company as the General Partner, and (v) more fully set forth the rights and
obligations of the Partners.
In consideration of the mutual agreements set forth herein, it is agreed
and certified, and the Original Agreement is hereby amended and restated in
its entirety as follows:
ARTICLE I
Defined Terms
The defined terms used in the Agreement shall have the meanings
specified below:
"Act" means the Revised Uniform Limited Partnership Act as in effect in
the State.
"Actual Credit" means, with respect to a particular Fiscal Year, the
total amount of Tax Credit properly allocable by the Partnership to the
Investment Limited Partners for such Fiscal Year. The Actual Credit shall be
retroactively revised if the amount of Tax Credit properly allocable to the
Investment Limited Partners is revised as the result of an audit or is
recaptured.
"Additional Limited Partner" means any holder of an Interest designated
as an Additional Limited Partner pursuant to the provisions of Section 4.5(b)
or Section 7.4 or Section 7.4.
"Adjusted Capital Account Deficit" means, with respect to any Partner,
the deficit balance, if any, in such Partner's Capital Account as of the end
of a Partnership Fiscal Year, after giving effect to the following
adjustments:
(i) Such Capital Account shall be increased by the amount of any
Deficit Restoration Obligation of such Partner.
(ii) Such Capital Account shall be decreased by the Qualified Income
Offset Items.
The foregoing definition of Adjusted Capital Account Deficit and the
application of such term in the manner provided in this Agreement is intended
to comply with the provisions of Section 1.704-1(b)(2)(ii)(d) of the
Allocation Regulations and shall be interpreted consistently therewith.
"Admission Date" means the first date on which all parties hereto shall
have executed this Agreement.
"Adverse Consequences" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, reasonable
amounts paid in settlement, liabilities, obligations, taxes, liens, losses,
expenses and fees, including court costs and reasonable attorneys' fees and
expenses.
"Affiliate" means as to a specified Person, (i) such Person; (ii) each
member of the Immediate Family of such Person; (iii) each legal
representative, successor or assignee of any Person referred to in the
preceding clauses (i) or (ii); (iv) each trustee of a trust for the benefit of
any Person referred to in the preceding clauses (i) or (ii); or (v) any other
Person (a) who directly or indirectly controls, is controlled by, or is under
common control with such Person, (b) who is an officer of, director of,
partner in or trustee of, or serves in a similar capacity with respect to,
such Person or of which such Person is an officer, director, partner or
trustee, or with respect to which such Person serves in a similar capacity,
(c) who, directly or indirectly, is the beneficial owner of ten percent (10%)
or more of any class of equity securities of such Person or of which such
Person is directly or indirectly the owner of ten percent (10%) or more of
any class of equity securities, (d) who is an officer, director, general
partner, trustee or holder of ten percent (10%) or more of the voting
securities or beneficial interests of any Person referred to in the foregoing
clauses (v) (b) or (v) (c), or (e) who, whatever such Person's title, performs
functions for such Person or any Affiliate of such Person similar to a
Chairman or member of the Board of Directors, or executive officer such as the
President, Executive Vice President or Senior Vice President, Corporate
Secretary, or Treasurer, or any Person holding a five percent (5%) or more
equity interest in such Person, or any Person having the power to direct or
cause the direction of such Person whether through the ownership of voting
securities, by contract or otherwise. An Affiliate of any Investment Limited
Partner or of any Investment General Partner does not include a Person who is
a partner in a Partnership or joint venture with any Investment Limited
Partner or any other Affiliate of any Investment Limited Partner if such
Person is not otherwise an Affiliate of any Investment Limited Partner or any
Investment General Partner. For purposes of this definition, the term
Affiliate shall not be deemed to include any law firm (or member or associate
thereof) providing legal services to any Investment Limited Partner, any
Investment General Partner, the General Partner or any Affiliate of any of
them.
"AFR" means the "applicable federal rate" as defined and determined in
the manner set forth in Section 1274 of the Code.
"Agency" means the Credit Agency or any other Governmental Authority
with jurisdiction over the Apartment Complex, or the business and operations
of the Partnership.
"Agreement" means this First Amended and Restated Agreement of Limited
Partnership, including Schedule A, as amended from time to time.
"Allocation Regulations" means the Treasury Regulations issued under
Sections 704(b) and 752 of the Code, as the same may be modified or amended
from time to time. In the event that the Allocation Regulations are revised
or amended subsequent to the date of this Agreement, references herein to
sections or paragraphs of the Allocation Regulations shall be deemed to be
references to the applicable sections or paragraphs of the Allocation
Regulations as then in effect.
"Apartment Complex" means the real property located in Dayton,
Xxxxxxxxxx County, Ohio, as more fully described in Exhibit A attached hereto,
together with (i) all buildings and other improvements constructed or to be
constructed thereon and (ii) all furnishings, equipment and personal property
located thereon or otherwise covered by the Mortgages.
"Applicable Percentage" has the meaning set forth in Section 42(b) of
the Code.
"Applied Amounts" shall have the meaning set forth in Section 6.10.
"Asset Management Fee" means the fee payable to the Investment Limited
Partners or any Affiliate thereof pursuant to the provisions of Section
6.12(b).
"Assignee" shall have the meaning set forth in Section 4.1(c).
"Auditors" means Xxxxxxx, Xxxxx & Xxxxx of Cincinnati, Ohio, or such
other firm of independent certified public accountants as may be engaged by
the General Partner with the reasonable Consent of the Special Limited Partner
for the purposes of preparing the Partnership's income tax returns, auditing
the books and records of the Partnership and certifying financial reports of
the Partnership.
"BCCC" means BCCC, Inc., a Massachusetts corporation, and its successors
and assigns.
"BCCTCF" means Boston Capital Corporate Tax Credit Fund III, A Limited
Partnership, a Massachusetts limited partnership, and its successors and
assigns.
"BCP Refinance Amount" means the maximum loan amount allowable assuming
(i) an annual interest rate equal to the interest rate on the First Refinance
Loan, (ii) a term and amortization schedule equal to that of the First
Refinance Loan and (iii) an annual debt service payment of $243,000.
"BCTCF" means Boston Capital Tax Credit Fund IV L.P., a Delaware limited
partnership, and its successors and assigns.
"Best Knowledge" shall mean and include, in the case of a specified
Person, (i) actual knowledge and (ii) that knowledge which a prudent
businessperson (including, in the case of an Entity, the general or managing
partners, officers, directors and members of such Entity) should have obtained
in the management of his or her business affairs after making due inquiry and
exercising due diligence with respect thereto. In connection therewith, the
knowledge (both actual and constructive) of any general or managing partner,
director, officer or member of an Entity shall be deemed to be the knowledge
of the Entity.
"Breakeven" means the first day following a period of three (3)
consecutive calendar months during each of which, as determined by the
Auditors, the Apartment Complex has produced income (other than rental
subsidies) actually received by the Partnership on a cash basis from normal
operations plus rental subsidies on an accrual basis at least equal to all
cash requirements of the Apartment Complex on an accrual basis (not including
fees and distributions to Partners payable out of Cash Flow (including,
without limitation, the Asset Management Fee, the Partnership Management Fee
and the Incentive Management Fee) but including all debt service, real estate
taxes, assuming full assessment and reserve requirements imposed upon the
Apartment Complex by the Project or this Agreement) and, on an annualized
basis, all projected expenditures, including those of a seasonal nature, which
might reasonably be expected to be incurred on an unequal basis during a full
annual period of operation. If free rent or other rental concessions shall
have been granted to tenants, the calculation of income pursuant to the
preceding sentence shall be adjusted so that the effect of such concessions is
amortized equally over the term of all leases (excluding renewal periods) to
which it applies. The determination of the Auditors that Breakeven has
occurred shall be subject to confirmation by the Special Limited Partner;
provided, however, that in the event that the Investor Limited Partner does
not dispute the Auditor's determination within ten (10) days after having
received the Auditors' determination letter, then Breakeven shall be deemed to
have occurred.
"Capital Account" has the meaning set forth in Section 4.1(b).
"Capital Contribution" means the total value of cash or property
contributed and agreed to be contributed to the Partnership by each Partner,
as set forth in Schedule A. Any reference in this Agreement to the Capital
Contribution of a then Partner shall include a Capital Contribution previously
made by any prior Partner for the Interest of such then Partner.
"Capital Proceeds" means the proceeds of a Capital Transaction.
"Capital Transaction" means a refinancing of any Partnership
indebtedness or a sale, exchange, eminent domain taking, damage or destruction
(whether insured or uninsured), insured title defect or other disposition of
all or any portion of the Apartment Complex (other than an event generating
proceeds of any business or rental interruption insurance), but excluding the
payment of Capital Contributions.
"Carryover Certification" means the date on which the Investment Limited
Partners shall have received, in a form and in substance satisfactory to the
Investment Limited Partners, the certification of the Auditors that, with
respect to the carryover allocation of 1994 Tax Credits, as of a date no
later than December 31, 1994, the Partnership 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, 1996, 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 Available for Debt Service Requirements" for any period of three
(3) consecutive calendar months means the excess of (i) all cash actually
received by the Partnership on a cash basis from normal operations during such
period, but specifically excluding the proceeds of insurance (other than
business or rental interruption insurance), loans, Capital Transactions or
Capital Contributions over (ii) all cash requirements of the Partnership
(excluding debt service on the Dayton Loan) properly allocable to such period
of time on an accrual basis (not including distributions to Partners out of
Cash Flow of the Partnership or fees payable from Cash Flow including, without
limitation, the Asset Management Fee, the Partnership Management Fee and the
Incentive Management Fee) and, on an annualized basis, all projected
expenditures, including those of a seasonal nature, which might reasonably be
expected to be incurred on an unequal basis during a full annual period of
operation as determined by the Auditors but specifically excluding Debt
Service Requirements. For purposes of this definition, (i) cash requirements
of the Partnership shall include to the extent not otherwise covered above,
full funding of reserves (including, without limitation, funding of the
Replacement Reserve), normal repairs, real estate taxes at fully assessed
levels assuming a fully improved property and necessary capital improvements
to the extent not covered by funded reserves, provided, however, that for the
purposes of calculating a Debt Service Coverage Ratio under Sections 3.2 and
5.1(a) cash requirements of the Partnership shall not include the expenses
associated with the Lead Paint Report and the performance of the Lead Paint
Procedures and the recommendations of the Phase I Environmental Report dated
March 26, 1996, and (ii) if free rent or other rental concessions shall have
been granted to tenants, the calculation of rental revenues under clause (i)
of the preceding sentence shall be adjusted so that the effect of such
concessions is amortized equally over the term of all leases (excluding
renewal periods) to which it applies.
"Cash Expenditures" means all disbursements of cash during a specified
Fiscal Year (other than distributions to Partners), including, without
limitation, payment of operating expenses, payment of principal and interest
on the Partnership's indebtedness (other than payments of principal and
interest on the Dayton Loan, any Subordinated Loans or Voluntary Loans), the
cost of repairs to the Apartment Complex, amounts paid in to reserves by the
General Partner and the payment of any fees other than the Asset Management
Fee, the Partnership Management Fee and the Development Fee. In addition, the
net increase during such Fiscal Year in any escrow account or reserve
maintained by or for the Partnership shall be considered a Cash Expenditure
during such Fiscal Year. The term Cash Expenditures shall not include
Development Costs. Cash Expenditures payable to Partners or Affiliates of
Partners shall be paid after Cash Expenditures payable to third parties.
"Cash Flow" means the excess of Cash Receipts over Cash Expenditures.
Cash Flow shall be determined separately for each Fiscal Year or portion
thereof.
"Cash Receipts" means all cash receipts of the Partnership from whatever
source derived other than from a Capital Transaction, including, without
limitation, rental revenues, government subsidy payments, Capital
Contributions (except to the extent Capital Contributions are used to pay
Development Costs). In addition, the net reduction in any Fiscal Year in the
amounts of any escrow account or reserve maintained by or for the Partnership
(including, without limitation, the Operating Reserve and the Replacement
Reserve) shall be considered a cash receipt of the Partnership for such Fiscal
Year. Notwithstanding the foregoing, at the election of the General Partner,
Cash Receipts received near the end of a Fiscal Year and intended for use in
meeting the Partnership's obligations (including the cost of acquiring assets
or paying debts or expenses) in the subsequent Fiscal Year shall not be deemed
to be received until such following Fiscal Year.
"Certificate" shall have the meaning set forth in the Preliminary
Statement.
"City" means the City of Dayton, Ohio.
"Class Contribution" means the aggregate Capital Contributions of all
members of a particular class of Partners (i.e., the General Partner, the
Investment Limited Partners, 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 later of: (i) the date the Investment
Limited Partners shall have received copies of all requisite certificates or
permits permitting occupancy of 100% of the apartments units in the Apartment
Complex as issued by each Agency having jurisdiction; provided, however, that
if such certificates or permits are of a temporary nature, the Completion Date
shall not be deemed to have occurred unless the General Partner certifies to
the Investment Limited Partners that any work remaining to be completed is for
so-called "punch list items" and the General Partner knows of no reason why
permanent certificates of occupancy will not be issued upon completion of such
"punch list items"; or (ii) the date as of which the Inspecting Consultant
certifies that the work to be performed by the Contractor under the
Construction Contract is substantially complete. Any representation by the
General Partner under this Agreement that the Completion Date has occurred
shall be subject to confirmation by the Special Limited Partner pursuant to a
physical inspection of the Apartment Complex; provided, however, that in the
event that the Special Limited Partner does not make such physical inspection
of the Apartment Complex within 10 business days after having received a
written representation of the General Partner that the Completion Date has
occurred, then the Special Limited Partner will be deemed to have waived the
physical inspection requirement.
"Compliance Period" means the fifteen (15)-year period commencing with
the first year of the Credit Period.
"Consent of the Investment Limited Partners" means the prior written
consent or approval of each Investment Limited Partner which, unless otherwise
specifically provided herein, may be given or withheld in its sole discretion.
The Consent of the Investment Limited Partners shall be exercised by and
through each respective Investment General Partner, acting in the name and on
behalf of such Investment Limited Partner.
"Consent of the Special Limited Partner" means the prior written consent
or approval of the Special Limited Partner which, unless otherwise
specifically provided herein, may be given or withheld in its sole discretion.
"Construction Contract" means the construction contract dated as of
June 3, 1994 by and between the Contractor and the Partnership, as amended.
"Construction Lender" means SNB or any other Lender providing
construction financing for the Apartment Complex.
"Construction Loan" means the construction loan, in the amount of
$1,800,000 provided by the Construction Lender to the Partnership pursuant to
the terms of the Construction Loan Documents.
"Construction Loan Agreement" means the Loan Agreement dated
July 27, 1994 by and between the Construction Lender and the Partnership, as
amended.
"Construction Loan Documents" means the Construction Note, the
Construction Mortgage, the Construction Loan Agreement and all other documents
executed and/or delivered in connection with the Construction Loan.
"Construction Mortgage" means the Mortgage securing the Partnership's
obligations under the Construction Note.
"Construction Note" means the promissory note executed by the
Partnership to evidence its obligations with respect to the Construction Loan,
which note is or shall be secured by the Construction Mortgage.
"Contractor" means Xxxxxxxxx Construction, Inc., an Ohio corporation,
and its successors.
"Controlling Person" has the meaning set forth in Section 15 of the
Securities Act of 1933, as amended.
"Cost Certification" means the written certification of the Auditors
dated November 16, 1995, issued in a form and in substance reasonably
satisfactory to the Special Limited Partner, as to the itemized amounts of the
construction and development costs of the Apartment Complex and the Actual
Credit pertaining to each building in the Apartment Complex.
"Credit Agency" means the Ohio Housing Finance Agency, and its
successors.
"Credit Period" has the meaning set forth in Section 42(f)(1) of the
Code.
"Credit Recovery Loan" means a constructive interest-bearing advance of
the Investment Limited Partners, as more fully described in Section 5.1(g).
Credit Recovery Loans and interest thereon shall not be treated as loans or
interest, respectively, for accounting, tax or liability purposes or for the
purposes of Section 6.2(a)(i). For the purposes of Article X, the term Credit
Recovery Loan shall not include any portion of such a deemed advance which
shall have theretofore been paid to the Investment Limited Partners.
"Credit Shortfall" shall have the meaning set forth in Section 5.1(g).
"Dayton Loan" means the HOME Investment Partnership Program loan in the
amount of $200,000 to be provided by the City to the Partnership pursuant to
the terms of the Dayton Loan Documents.
"Dayton Loan Agreement" means the HOME Agreement dated June 15, 1995
between the City and Ohio Investors detailing the terms of the Dayton Loan,
which agreement has been assigned to and assumed by the Partnership, as
amended.
"Dayton Loan Documents" means the Dayton Loan Agreement, the Dayton Loan
Mortgage, the Dayton Loan Note and all other documents executed and/or
delivered in connection with the Dayton Loan.
"Dayton Loan Mortgage" means the mortgage securing the Partnership's
obligations under the Dayton Loan Note.
"Dayton Loan Note" means the promissory note executed by Ohio Investors
and assured by the Partnership to evidence its obligations with respect to the
Dayton Loan.
"Debt Service Coverage Ratio" means, for any period of three (3)
consecutive months, with each month considered individually, a fraction, the
numerator of which is the Cash Available for Debt Service Requirements with
respect to such period and the denominator of which is the Debt Service
Requirements for such period. The achievement by the Partnership of a
specified Debt Service Coverage Ratio shall be confirmed by the Auditors and
shall be subject to the approval of the Special Limited Partner, which shall
not be unreasonably withheld, provided, however, that no objection by the
Special Limited Partner to the determination of the Auditors shall be valid
unless the General Partner is notified of such objection, and the specific
reasons therefor, within seven (7) business days following the receipt by the
Special Limited Partner of the Auditor's determination letter and in the event
that the Special Limited Partner does not so notify the General Partner within
such seven business day period, the Special Limited Partner will be deemed to
have waived its right to object to such determination.
"Debt Service Requirements" means for any period of three (3)
consecutive calendar months, all debt service, reserves, mortgage insurance
premium, tax and insurance escrows (if any) and/or other cash requirements
imposed with respect to the Mortgage or any other indebtedness (except for
the Dayton Loan, Subordinated Loans and Voluntary Loans) properly allocable to
such period of time on an annualized accrual basis as determined by the
Auditors. To the extent the relevant three (3)-month period includes any
period prior to Permanent Mortgage Commencement, Debt Service Requirements for
such period shall be computed by adding to the foregoing amounts the amount
(if any) by which the debt service on such Permanent Loan for a three (3)-
month period beginning after principal amortization has commenced exceeds the
actual debt service on such Permanent Loan (and any previous Mortgage Loan
which may have then been in place) for the relevant three (3)-month period.
"Deficit Restoration Obligation" means, for each Partner, the sum of (i)
any amounts which such Partner is obligated to restore to the Partnership in
accordance with the provisions of Sections 1.704-1(b)(2)(ii)(c), 1.704-
1(b)(2)(ii)(h) or any other applicable provisions of the Allocation
Regulations, (ii) such Partner's Share of Partnership Minimum Gain if any, and
(iii) such Partner's Share of Partner Nonrecourse Debt Minimum Gain, if any.
"Developer" means WAI (in its capacity as an independent developer and
not as a General Partner), and its successors.
"Development Agreement" means the Development Agreement, dated as of
January 10, 1995, by and between the Developer and Ohio Investors as assigned
to the Partnership by an assignment and assumption agreement dated May 17,
1996.
"Development Costs" means any and all costs and expenses necessary to
(i) cause the construction of the Apartment Complex to be completed, in a good
and workmanlike manner, free and clear of all mechanics', materialmen's or
similar liens, in accordance with the Plans and Specifications, (ii) equip the
Apartment Complex with all necessary and appropriate fixtures, equipment and
articles of personal property (including, without limitation, refrigerators
and ranges), (iii) obtain all required certificates of occupancy for the
apartment units and other space in the Apartment Complex, (iv) pay the
Development Fee, (v) finance the construction of the Apartment Complex and
achieve Permanent Mortgage Commencement in accordance with the provisions of
the Project Documents, (vi) discharge all Partnership liabilities and
obligations arising out of any casualty generating insurance proceeds for the
Partnership, (vii) fund any Partnership reserves required hereunder or under
any of the Project Documents, (viii) repay and discharge the Construction
Loan, and (ix) pay any other costs or expenses necessary to achieve the
Completion Date and Permanent Mortgage Commencement.
"Development Fee" means the fees payable by the Partnership to the
Developer pursuant to the terms of the Development Agreement for its services
in connection with the development and rehabilitation of the Apartment
Complex.
"Disposition" (including the forms Dispose and Disposing) means, as to a
specified Partner, the assignment, sale, transfer, exchange or other
disposition of all or any part of its Interest.
"Economic Risk of Loss" has the meaning set forth in Treasury Regulation
Section 1.752-2.
"Eligible Basis" has the meaning set forth in Section 42(d) of the Code.
"Entity" means any Person, general partnership, limited partnership,
limited liability company, corporation, joint venture, trust, business trust,
cooperative or association.
"Event of Bankruptcy" means with respect to any Person,
(i) the entry of a decree or order for relief by a court having
jurisdiction in respect of such Person in an involuntary case
under the federal bankruptcy laws, as now or hereafter
constituted, or any other applicable federal or state bankruptcy,
insolvency or other similar law, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or similar
official) of such Person or for any substantial part of his
property, or ordering the winding-up or liquidation of his affairs
and the continuance of any such decree or order unstayed and in
effect for a period of sixty (60) consecutive days;
(ii) the commencement by such Person of a voluntary case under the
federal bankruptcy laws, as now constituted or hereafter amended,
or any other applicable federal or state bankruptcy, insolvency or
other similar law, or the consent by him to the appointment of or
taking possession by a receiver, liquidator, assignee, trustee,
custodian, sequestrator (or similar official) of such Person or
for any substantial part of his property, or the making by him of
any assignment for the benefit of creditors, or the taking of
corporate action by the Person in furtherance of any of the
foregoing; or
(iii) the commencement against such Person of an involuntary case under
the federal bankruptcy laws, as now constituted or hereafter
amended, which has not been vacated, discharged or bonded within
sixty (60) consecutive days.
"Event of Default" shall have the meaning set forth in Section 5.1(h).
"Excess Refinancing Proceeds" means, in connection with the First
Refinancing Loan only, the excess, if any, of the proceeds of the First
Refinancing Loan over the sum of (i) any amounts necessary to discharge the
Construction Loan and the Permanent Loan, (ii) any amounts required to pay any
other debts or obligations of the Partnership which are then due (other than
Subordinated Loans), (iii) any costs or expenses incurred in connection with
the refinancing of the Permanent Loan, including without limitation, loan
origination fees, title insurance premiums, commitment fees, brokerage
commissions, if any, and attorney's fees, (iv) any amounts required to be paid
or set aside for any other purpose in order to satisfy conditions to or
established in connection with the funding of the First Refinancing Loan and
(v) the Refinance Reserve Amount.
"Extended Use Agreement" means the extended use housing commitment to be
executed by the Partnership in accordance with the requirements of the Credit
Agency and the provisions of Section 42(h)(6)(A) of the Code.
"Filing Office" means the Office of the Secretary of State of the State
of Ohio.
"Final Completion" means the completion of the Apartment Complex,
including all common and out buildings, as set forth in all of the
Construction Contract. The Investment Limited Partners reserve the right to
confirm the achievement of Final Completion with a physical inspection of the
site.
"First Refinancing Loan" shall have the meaning set forth in
Section 3.2(b).
"Fiscal Year" means the twelve (12)-month period which begins on the
first day of January and ends on the thirty-first day of December of each
calendar year (or ends on the date of final dissolution for the year in which
the Partnership is wound up or dissolved).
"Xxxxx" means Xxxxxxxx Xxxxx.
"General Partner" means WAI and any Person who becomes a General Partner
as provided herein, in its capacity as a general partner of the Partnership.
At any and all times where there is more than one General Partner, the term
General Partner shall mean such General Partners.
"Governmental Authority" means HUD, the Credit Agency or any other
federal, state or local governmental authority having jurisdiction over the
particular matter to which reference is being made.
"Gross Asset Value" means, with respect to any asset, the asset's
adjusted basis for federal income tax purposes, except as follows:
(i) The initial Gross Asset Value of any asset contributed by a
Partner to the Partnership shall be the gross fair market value of
such asset, as determined by the contributing Partner and the
Partnership;
(ii) The Gross Asset Values of all Partnership assets shall be adjusted
to equal their respective gross fair market values, as determined
by the General Partner, as of the following times: (a) the
acquisition of an additional interest in the Partnership by any
new or existing Partner in exchange for more than a de minimis
Capital Contribution; (b) the distribution by the Partnership to a
Partner of more than a de minimis amount of Partnership property
as consideration for an interest in the Partnership; and (c) the
liquidation of the Partnership within the meaning of Section
1.704-1(b)(2)(ii)(g) of the Allocation Regulations; provided,
however, that the adjustments pursuant to clauses (a) and (b)
above shall be made only if the General Partner reasonably
determines that such adjustments are necessary or appropriate to
reflect the relative economic interests of the Partners in the
Partnership;
(iii) The Gross Asset Value of any Partnership asset distributed to any
Partner shall be the gross fair market value of such asset on the
date of distribution; and
(iv) The Gross Asset Values of Partnership assets shall be increased
(or decreased) to reflect any adjustments to the adjusted basis of
such assets pursuant to Code Section 734(b) or Code Section
743(b), but only to the extent that such adjustments are taken
into account in determining Capital Accounts pursuant to Section
1.704-1(b)(2)(iv)(m) of the Allocation Regulations and Section 4.1
hereof; provided, however, that Gross Asset Values shall not be
adjusted pursuant to this clause (iv) to the extent that the
General Partner determines that an adjustment pursuant to clause
(ii) hereof is necessary or appropriate in connection with a
transaction that would otherwise result in an adjustment pursuant
to this clause (iv).
If the Gross Asset Value of an asset has been determined or adjusted
pursuant to Section (i), (ii) or (iv) hereof, such Gross Asset Value shall
thereafter be adjusted by the depreciation taken into account with respect to
such asset for purposes of computing Profits or Losses.
"Guarantors" means, joint and severally, Xxxxxxx and Xxxxx, and each of
their successors.
"Guaranty" means the Guaranty, dated as of May 17, 1996, of the
Guarantors of all of the obligations of the General Partner hereunder and of
the Developer as set forth in the Development Agreement, as amended.
"HAP Contract" means the Housing Assistance Payment Contract, dated
August 10, 1994, by and between Ohio Investors and HUD, as amended.
"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. The term Hazardous Material
also includes oil and any other substance known to be hazardous.
"HUD" means the United States Department of Housing and Urban
Development, and its successors.
"Immediate Family" means with respect to any Person, such Person's
spouse, parents, parents-in-law, descendants, nephews, nieces, brothers,
sisters, brothers-in-law, sisters-in-law, children-in-law and grandchildren-
in-law, and trusts created for the benefit of any of the foregoing.
"Incentive Management Agreement" means the agreement pursuant to which
the Supervisory Management Agent agrees to perform additional supervisory
management services and is paid the Incentive Management Fee therefor.
"Incentive Management Fee" means the fee paid to the Supervisory
Management Agent pursuant to the Incentive Management Agreement.
"Includable Items" shall have the meaning set forth in Section 6.11.
"Initial Adjustment Date" shall have the meaning set forth in Section
5.1(e).
"Initial 100% Occupancy Date" means the first date on which not less
than 100% of the 93 apartment units in the Apartment Complex shall have been
leased to, and not less than 93% of such apartments units shall be physically
occupied by tenants on such date meeting the terms of the Minimum Set-Aside
Test under executed leases at rentals meeting the requirements of the Rent
Restriction Test.
"Initial Operating Period" means the period commencing on the Completion
Date and ending on the last day of the sixtieth (60th) month following such
date.
"Inspecting Consultant" means the consultant retained by any Lender
(including, without limitation, the Construction Lender) to monitor the
progress of the rehabilitation of the Apartment Complex and to certify as to
the completion of such construction.
"Installment" means an installment of the Investment Limited Partners'
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 Partners, an
amount equal to the Capital Contribution of the Investment Limited Partners,
divided by 0.73 and (ii) as to any other Partner, an amount equal to its paid-
in Capital Contribution.
"Investment General Partners" means, as to BCCTCF, C&M Associates d/b/a
Boston Capital Associates, a Massachusetts general partnership and Boston
Capital Partners Corporation, a Massachusetts corporation,and as to BCTCF,
Boston Capital Associates IV L.P., a Delaware limited partnership,and in any
case, in each Entity's capacity as the general partners of an Investment
Limited Partner, as is appropriate in each particular context, and any other
Person who may become a successor or additional general partner of any
Investment Limited Partner.
"Investment Limited Partner" or "Investment Limited Partners" means
BCCTCF and BCTCF and any Person or Persons who replace such Entity as
Substituted Limited Partner, but shall not include any Additional Limited
Partner.
"Investment Partnership Agreement" means the Agreement of Limited
Partnership of an Investment Limited Partner, as amended from time to time.
"Lead Paint Procedures" means (i) "dust removal" to the extent and using
the methods recommended in Section 4.1 of the Lead Paint Report,
(ii) obtaining a full risk assessment (the "Full Risk Assessment") of the
Apartment Complex as recommended in Section 4 of the Lead Paint Report, and
(iii) performing abatement of hazards identified in the Full Risk Assessment.
The cost of these Lead Paint Procedures shall be borne by the Partnership.
"Lead Paint Report" means the Lead Hazard Screen Risk Assessment Report
dated March 28, 1996, prepared by CT&E Environmental Services Inc. for
Environmental Assessment Services regarding the Apartment Complex.
"Lender" means any Person (other than the General Partner or its
Affiliates) who makes a loan to the Partnership, whether or not such loan is
secured by a Mortgage, or the successors and assigns of such Person in such
capacity.
"Limited Partners" means the Investment Limited Partners, the Special
Limited Partner and any Additional Limited Partner.
"Liquidating Event" shall have the meaning set forth in Section 2.4.
"Managing General Partner" means any Person designated as such pursuant
to the provisions of Section 6.4.
"Management Agent" means Hendy Management Co., Inc., an Ohio
corporation, in its capacity as the initial management and rental agent for
the Apartment Complex, and any successor management and rental agent
designated or appointed at any time.
"Management Agreement" means the agreement between the Partnership and
the Management Agent providing for the management of the Apartment Complex.
"Management Fee" means the Management Fee to which reference is made in
Section 11.1.
"Material Agreement" means any agreement to which the Partnership is a
party or to which the Apartment Complex is subject, the termination of which
would have a material adverse impact on the Apartment Complex or the business
and operations of the Partnership.
"Minimum Set-Aside Test" means the set aside test selected by the
Partnership pursuant to Section 42(g) of the Code whereby at least 40% of the
units in the Apartment Complex must be occupied by individuals with incomes
equal to 60% or less of area median income, as adjusted for family size.
"Mortgage" means any mortgage indebtedness of the Partnership evidenced
by any Note and secured by any mortgage on the Apartment Complex from the
Partnership to any Lender; and, where the context admits, the term "Mortgage"
shall mean and include any of the mortgages securing said indebtedness and any
other documents pertaining to said indebtedness which were required by the
Lender as a condition to making such Mortgage Loan. In case any Mortgage is
replaced by any subsequent mortgage or mortgages, such term shall refer to any
such subsequent mortgage or mortgages. The term "mortgage" means any
mortgage, mortgage deed, deed of trust, deed to secure debt or any similar
security instrument, and "foreclose" and words of like import include the
exercise of a power of sale under a mortgage or comparable remedies.
"Mortgage Loan" means a loan to the Partnership made by any Lender and
secured by a Mortgage.
"Mortgage Loan Documents" means the Construction Loan Documents, the
Permanent Loan Documents and/or the Dayton Loan Documents, as the context may
require.
"Nonrecourse Debt" or "Nonrecourse Liability" means any indebtedness for
which none of the Partners has any Economic Risk of Loss other than through
his or its interest in the Partnership Property securing such indebtedness, as
defined in Section 1.752-1(a)(2) of the Allocation Regulations.
"Nonrecourse Deductions" has the meaning set forth in Section 1.704-
2(b)(1) of the Allocation Regulations.
"Note" means and includes any Note from the Partnership to a Lender
evidencing a Mortgage Loan, and shall also mean and include any Note
supplemental to said original Note issued to a Lender or any Note issued to a
Lender in substitution for any such original Note.
"Ohio Investors" means Ohio Investors, an Ohio general partnership a/k/a
Ohio Investment Company, an Ohio general partnership and their successors, as
the context may require.
"Operating Deficit" means, for any specified period of time, the amount
by which the Cash Receipts of the Partnership are less than the amount
necessary to pay all Cash Expenditures of the Partnership for the same
corresponding period of time.
"Operating Profits or Losses" means, with respect to any Fiscal Year,
the Profits or Losses of the Partnership for such Fiscal Year other than
Profits or Losses from a Capital Transaction.
"Operating Reserve" shall have the meaning set forth in Section
6.5(e)(ii).
"Original Agreement" has the meaning set forth in the Preliminary
Statement.
"Original General Partners" has the meaning set forth in the Preliminary
Statement.
"Original Limited Partners" has the meaning set forth in the Preliminary
Statement.
"Partner" means any General Partner or Limited Partner.
"Partner Nonrecourse Debt" has the meaning set forth in Section 1.704-
2(b)(4) of the Allocation Regulations.
"Partner Nonrecourse Debt Minimum Gain" has the meaning set forth in
Sections 1.704-2(i)(2) and (3) of the Allocation Regulations.
"Partner Nonrecourse Deductions" has the meaning set forth in Section
1.704-2(i)(1) of the Allocation Regulations.
"Partnership" means the limited partnership continued pursuant to this
Agreement.
"Partnership Management Fee" shall have the meaning set forth in
Section 6.12(c).
"Partnership Minimum Gain" has the meaning set forth in Section 1.704-
2(d) of the Allocation Regulations.
"Percentage Interests" means the interests of the Partners in Profits
and Losses, tax-exempt income, non-deductible, non-capitalizable expenditures
and Tax Credits, as set forth in Schedule A.
"Xxxxxxx" means Xxxxxxx X. Xxxxxxx.
"Permanent Lender" means SNB or any other Lender providing permanent
financing for the Apartment Complex who has been approved by the Special
Limited Partner and the General Partner, except as otherwise provided in
Section 3.2.
"Permanent Loan" means any permanent loan to be provided by the
Permanent Lender to the Partnership pursuant to the terms of the Permanent
Loan Documents.
"Permanent Loan Commitment Date" means February 12, 1996.
"Permanent Loan Documents" means the Permanent Note, the Permanent
Mortgage and all other documents executed and/or delivered in connection with
the Permanent Loan.
"Permanent Mortgage" means the Mortgage securing the Partnership's
obligations under the Permanent Note.
"Permanent Mortgage Commencement" means the payment and discharge of the
Construction Loan and the execution and delivery of the Permanent Loan
Documents.
"Permanent Note" means the Promissory Note to be executed by the
Partnership to evidence its obligations with respect to the Permanent Loan,
which Note shall be secured by the Permanent Mortgage.
"Person" means any individual or Entity.
"Phase I Environmental Reports" means those certain environmental
reports written and delivered by ERAtech Environmental, Inc. of Dayton, Ohio,
dated May 26, 1994 and March 26, 1996, each with respect to the Apartment
Complex.
"Plans and Specifications" means the plans and specifications for the
rehabilitation of the Apartment Complex, including, without limitation,
specifications for materials, and all properly approved amendments and
modifications thereof.
"Prime Rate" means the rate of interest announced from time to time by
the Wall Street Journal as its base rate.
"Profits or Losses" shall have the meaning set forth in Section
10.4(b)(v).
"Project Documents" means and includes the Mortgage Loan Documents, the
Construction Contract, this Agreement, the Development Agreement, the Phase I
Environmental Reports, the Extended Use Agreement, the Guaranty, the HAP
Contract, the Purchase Agreement, the Management Agreement, the Incentive
Management Agreement, all other instruments delivered to (or required by) any
Lender and all other documents relating to the Apartment Complex and by which
the Partnership is bound, as amended or supplemented from time to time.
"Projected Credit" means $189,084 for 1996 and $206,273 per annum for
each of the Fiscal Years 1997 through 2005 (inclusive), provided, however,
that upon the occurrence of any of the events described in Section 5.1(e), the
Projected Credit shall thereafter be the Revised Projected Credit.
"Projected Rents" means the rents described in Exhibit B attached hereto
and made a part hereof.
"Purchase Agreement" means the Contract of Sale, dated
November 26, 1993, by and between HUD and Ohio Investors, including all
exhibits and riders thereto, as amended.
"Qualified Basis" has the meaning set forth in Section 42(c) of the
Code.
"Qualified Income Offset Item" means (1) an allocation of loss or
deduction that, as of the end of each year, reasonably is expected to be made
(a) pursuant to Section 704(e)(2) of the Code to a donee of an interest in the
Partnership, (b) pursuant to Section 706(d) of the Code as the result of a
change in any Partner's Interest, or (c) pursuant to Treasury Regulation
Section 1.751-1(b)(2)(ii) as the result of a distribution by the Partnership
of unrealized receivables or inventory items and (2) a distribution that, as
of the end of such year, reasonably is expected to be made to a Partner to the
extent it exceeds offsetting increases to such Partner's Capital Account which
reasonably are expected to occur during or prior to the Partnership taxable
year in which such distribution reasonably is expected to occur.
"Reconstitution Period" shall have the meaning set forth in Section
7.2(b).
"Reduction Amount" shall have the meaning set forth in Section 5.1(f).
"Reduction Year" shall have the meaning set forth in Section 5.1(f).
"Refinance Reserve" shall have the meaning set forth in Section 3.2(c).
"Refinance Reserve Amount" means the difference between the principal
amount of the First Refinance Loan and the BCP Refinance Amount.
"Regulations" means the rules and regulations applicable to the
Apartment Complex or the Partnership of the Credit Agency, HUD, the City of
Dayton and any other Governmental Authority having jurisdiction over the
Partnership and/or the Apartment Complex.
"Related Person" means a Person related to a Partner within the meaning
of Treasury Regulation Section 1.752-4(b).
"Rent Restriction Test" means the test pursuant to Section 42 of the
Code whereby the gross rent charged to tenants of the low-income units in the
Apartment Complex may not exceed thirty percent (30%) of the qualifying income
levels.
"Rental Achievement" means the later of (i) first time following three
(3) consecutive full calendar months of operations (with each month considered
individually) that the Apartment Complex generates a 1.15 to 1.00 Debt Service
Coverage Ratio, which Debt Service Coverage Ratio is based on debt service for
a Permanent Loan made pursuant to the terms set forth in Section 3.2(b), or
(ii) receipt and acceptance by the Partnership of a firm commitment for the
First Refinancing Loan on terms at least as favorable as set forth in Section
3.2(b).
"Replacement Reserve" shall have the meaning set forth in
Section 6.5(e).
"Repurchase Amount" shall have the meaning set forth in Section 5.2(a).
"Requisite Approvals" means any required approvals of each Lender and
Agency to an action proposed to be taken by the Partnership.
"Revised Projected Credit" has the meaning set forth in Section 5.1(e).
"Sales Preparation Fee" means the fee payable to the General Partner for
its services in connection with the sale of the Apartment Complex or a
refinancing of the Permanent Loan, which fee is payable as set forth in
Section 10.2(b).
"Schedule A" means Schedule A to this Agreement, as amended from time to
time.
"Service" means the Internal Revenue Service.
"Share of Partner Nonrecourse Debt Minimum Gain" means, for each Partner
an amount equal to his or its "share of partner nonrecourse debt minimum gain"
as determined in accordance with Section 1.704-2(i)(5) of the Allocation
Regulations.
"Share of Partnership Minimum Gain" means for each Partner, an amount
equal to his or its "share of partnership minimum gain" as determined in
accordance with Section 1.704-2(g) of the Allocation Regulations.
"Site" has the meaning given to it in the Federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. Sec.
9601 et seq., as amended, and shall also include any meaning given to it in
any similar state or local statutes, ordinances, regulations or by-laws.
"SNB" means Society National Bank of Cleveland, Ohio, and its
successors.
"Special Limited Partner" means BCCC, and any Person who becomes a
Special Limited Partner as provided herein, in its capacity as a special
limited partner of the Partnership.
"Specified Proceeds" means (i) the proceeds of all Mortgage Loans, (ii)
the net rental income, if any, generated by the Apartment Complex prior to
Permanent Mortgage Commencement which is permitted by the Lenders to be
applied to the payment of Development Costs, (iii) the Capital Contributions
of the Investment Limited Partners, (iv) the Capital Contributions of the
General Partner in the amounts set forth in Schedule A as of the Admission
Date and (v) any insurance proceeds arising out of casualties occurring prior
to Permanent Mortgage Commencement.
"State" means the State of Ohio.
"State Designation" means the date on which the Partnership receives an
allocation in proper form pursuant to Section 42 of the Code from the Credit
Agency of 1994 Tax Credits, as evidenced by the execution by or on behalf of
the Credit Agency of one or more Form(s) 8609. For the purposes of
determining State Designation, each building in the Apartment Complex shall be
treated as having received an allocation of Tax Credit in an amount equal to
the lesser of (i) the amount of Tax Credit carryover allocation received from
the Credit Agency as to such building or (ii) the amount of Tax Credits set
forth on the Form 8609 as to such building.
"Subordinated Loan" means any loan made by the General Partner to the
Partnership pursuant to Section 6.5(e), Section 6.10, Section 6.12(b) or any
other advance made by the General Partner which is characterized as a
Subordinated Loan herein.
"Subordinated Loan Period" shall have the meaning set forth in
Section 6.5(e).
"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.
"Supervisory Management Agent" means WAI.
"Syndication Expenses" means all expenditures classified as syndication
expenses pursuant to Treasury Regulation Section 1.709-2(b). Syndication
Expenses shall be taken into account under this Agreement at the time they
would be taken into account under the Partnership's method of accounting if
they were deductible expenses.
"Tax Accountants" means Xxxxxxx, Xxxxxx & Xxxxxxxxx of Bethesda,
Maryland or such other firms of independent certified public accountants as
may be engaged by the Special Limited Partner to review the Partnership income
tax returns.
"Tax Credit" means the low-income housing tax credit described in
Section 42 of the Code.
"Tax Credit Set-Aside" means the date on which the Partnership received
a carryover allocation of 1994 Tax Credits from the Credit Agency in an annual
dollar amount of not less than $208,356.
"Title Policy" means the owner's title insurance policy, or at the
option of the Special Limited Partner an endorsement thereto, with an
effective date on or after the Admission Date, in the amount of not less than
$2,460,044 issued by First American Title Insurance Company to the
Partnership, evidencing the Partnership's ownership of the Apartment Complex
subject only to such exclusions, exceptions, conditions and stipulations as
may be approved by the Special Limited Partner in its sole discretion and
endorsed with a Fairway endorsement and a non-imputation endorsement.
"Xxxxxx" means Xxxxxx X. Xxxxxx.
"Vessel" has the meaning given to it in the Federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. Sec.
9601 et seq., as amended, and shall also include any meaning given to it in
any similar state or local statutes, ordinances, regulations or by-laws.
"Voluntary Loans" shall have the meaning set forth in Article IX.
"WAI" means Washington Arms Investors, Ltd., an Ohio limited liability
company, and its successors.
"Withdrawal" (including the forms Withdraw, Withdrawing and Withdrawn)
means, as to a General Partner, the occurrence of death, adjudication of
insanity or incompetence, Event of Bankruptcy, dissolution, liquidation, or
voluntary or involuntary withdrawal or retirement from the Partnership for any
reason, including whenever a General Partner may no longer continue as a
General Partner by law or pursuant to any terms of this Agreement. Withdrawal
also shall mean the sale, assignment, transfer or encumbrance by a General
Partner of its interest as a General Partner other than a pledge of assignment
by a General Partner of its Interest required pursuant to the terms of the
Construction Loan Documents and as approved in writing by the Special Limited
Partner. A General Partner which is a corporation, limited liability company
or partnership shall be deemed to have sold, assigned, transferred or
encumbered its interest as a General Partner in the event (as a result of one
or more transactions) of any sale, assignment or other transfer (but
specifically excluding any transfer occurring pursuant to the laws of descent
and distribution) or encumbrance of a controlling interest in a corporate or
limited liability company General Partner or of a general partner interest in
a General Partner which is a partnership to a Person who is not an Affiliate
of the General Partner. For purposes of this definition of Withdrawal, the
term "controlling interest" shall mean the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise.
ARTICLE II
Name and Business
2.1 Name; Continuation
The name of the Partnership is Ohio Investors Limited Partnership. The
Partners agree to continue the Partnership which was formed pursuant to the
provisions of the Act.
2.2 Office and Resident Agent
(a) The principal mailing address of the Partnership is c/o Century
Castings, Inc., 00000 Xxxxxxxxx Xxxx, Xxxxxxx, Xxxxxxxxxx 00000, Attn:
Xxxxxxx Xxxxxxx, at which office there shall be maintained those
records required by the Act to be kept by the Partnership. The
Partnership may have such other or additional offices as the General
Partner shall deem desirable. The General Partner may at any time
change the location of the principal office and shall give due notice
thereof to the Limited Partners. The principal place of business of
the Partnership in Ohio is 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxx, Xxxx
00000.
(b) The resident agent for the Partnership in the State for
service of process is as follows:
QI Services, Inc.
2100 PNC Center
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
2.3 Purpose
The purpose of the Partnership is to acquire, hold, invest in,
secure financing for, construct, rehabilitate, develop, improve,
maintain, operate, lease and otherwise deal with the Apartment
Complex. The Partnership shall operate the Apartment Complex in
accordance with any applicable Regulations. The Partnership shall not
engage in any other business or activity.
2.4 Term and Dissolution
(a) The Partnership shall continue in full force and effect
until December 31, 2050, except that the Partnership shall be
dissolved and its assets liquidated prior to such date upon the first
to occur of the following events ("Liquidating Events"):
(i) The sale or other disposition of all or
substantially all of the assets of the Partnership;
(ii) The Withdrawal of a General Partner, unless the
Partnership is continued as provided in Section 7.2(a);
(iii) The election to dissolve the Partnership made in
writing by the General Partner with the Consent of the
Investment Limited Partners and any Requisite Approvals;
(iv) The entry of a final decree of dissolution of the
Partnership by a court of competent jurisdiction; or
(v) Any other event which causes the dissolution of the
Partnership under the Act if the Partnership is not
reconstituted pursuant to the provisions of Section 7.2 or
Section 7.3.
(b) Upon the dissolution of the Partnership, the General
Partner (or for purposes of this paragraph, its trustees, receivers or
successors) shall cause the cancellation of the Certificate and shall
liquidate the Partnership assets and apply and distribute the proceeds
thereof in accordance with the provisions of Section 10.3, unless the
Investment Limited Partners elect to reconstitute the Partnership and
continue its business as provided in Section 7.2(b), in which case the
Partnership assets shall be transferred to the new Partnership as
provided in such Section. Notwithstanding the foregoing, if, during
liquidation, the General Partner shall determine that an immediate
sale of part or all of the Partnership's assets would be
impermissible, impractical or cause undue loss to the Partners, the
General Partner may defer liquidation of, and withhold from
distribution for a reasonable time, any assets of the Partnership
except those necessary to satisfy Partnership debts and obligations
(other than Subordinated Loans).
ARTICLE III
Mortgage, Refinancing and Disposition of Property
3.1 Personal Liability
The General Partner and its 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 Loan Documents. However, from and after
the date of Permanent Mortgage Commencement, neither the General
Partner nor any Related Person shall at any time bear, nor shall the
General Partner permit any other Partner or any Related Person to
bear, the Economic Risk of Loss for the payment of any portion of any
Mortgage Loan unless, prior to the effectiveness of the transaction in
which such Economic Risk of Loss is created or assumed, the General
Partner shall have obtained, at the expense of the Partnership, an
opinion from reputable tax counsel, in form and substance reasonably
satisfactory to the Special Limited Partner, to the effect that such
Economic Risk of Loss will not result in the reallocation of Tax
Credits or Losses from the Investment Limited Partners and the Special
Limited Partner to the General Partner. The General Partner shall
cause the Partnership to elect promptly, to the extent permitted and
in the manner prescribed by any Agency or Lender having jurisdiction,
that all debt service payments made by the Partnership to the holder
of the Permanent Mortgage shall be applied first to interest
determined at the stated rate set forth in the Permanent Note, and
then to principal due with respect to the Permanent Note.
3.2 Refinancings
(a) The Partnership may decrease, increase or refinance any
Mortgage Loan and may make any required transfer or conveyance of
Partnership assets for security or mortgage purposes, provided,
however, any such decrease, increase or refinancing of any Mortgage
(except for the discharge of the Construction Loan in accordance with
the Construction Loan Documents, and the borrowing of the original
principal amount of the Permanent Loan and as otherwise set forth in
Section 3.2(b)) may be made by the General Partner only with the
Consent of the Special Limited Partner.
(b) Subject to the provisions of Section 3.2(c), the General
Partner is authorized at any time before the first anniversary of
Permanent Mortgage Commencement to refinance the Permanent Loan by
obtaining a Permanent Loan (the "First Refinancing Loan") either
(i) from a bank or other lending institution on the following terms
and conditions: (1) the loan must be non-recourse, subject to normal
and customary exclusions, (2) shall bear interest at a fixed rate with
no accrual of interest, (3) have a term of not less than fifteen (15)
years (unless the loan fully amortized over such shorter term), (4)
require annual debt service payments which result in a Debt Service
Coverage Ratio for each of the four (4) months prior to the funding of
the loan of not less than 1.15, (5) have an amortization schedule of
not more than eighteen (18) years nor less than fifteen (15) years
(unless such shorter amortization period is equal to the term of the
Loan), and (6) be in the principal amount of not more than $2,250,000,
or (ii) utilizing taxable bond financing on the following terms:
(1) the loan must be non-recourse, subject to normal and customary
exclusions, (2) shall bear interest at a fixed rate with no accrual of
interest, (3) have a term which ends not later than the date on which
the second stage units (as set forth in the HAP Contract) in the
Apartment Complex are no longer eligible to receive rental assistance
payments under the HAP Contract, (4) have an amortization schedule of
the same length as the term of the loan, (5) be in a principal amount
of not more than $2,250,000, (6) utilize bonds which are rated as at
least investment grade by either Xxxxx'x or Standard & Poors' rating
service, and (7) require annual debt service and all related payments
under the bonds, which payments shall not increase in the aggregate
during the term of the bond loan, and which result in a Debt Service
Coverage Ratio for each of the four (4) months prior to the funding of
such loan of not less than 1.15, provided, that, in computing such
Debt Service Coverage Ratio, there shall be taken into account
principal and interest payments, fully funded reserves as required by
the bond loan documents, this Agreement and the Project Documents, all
operating expenses on an accrual basis, and all guaranty and other
fees in respect of the bonds. Notwithstanding the terms of this
Section 3.2(b), if the General Partner elects to utilize the terms and
debt service payments of the Permanent Loan made by SNB in connection
with the satisfaction of the Rental Achievement condition to the
payment of the Fourth Installment of the Investment Limited Partners'
Capital Contribution, then the General Partner shall not have the
authority to refinance the Permanent Loan without the Consent of the
Special Limited Partner.
(c) In the event that the Partnership borrows the First
Refinance Loan as provided in Section 3.2(b), prior to giving effect
to the provisions of Clause First of Section 10.2(b) the net proceeds
of such loan shall be used first to fund a segregated interest-bearing
reserve account (the "Refinance Reserve") in an initial amount equal
to the Refinance Reserve Amount. Funds from the Refinance Reserve
shall be released and distributed as Capital Proceeds pursuant to
Section 10.2(b) as follows: (i) 50% of the Refinance Reserve Amount
upon (1) receipt by the Partnership of audited Partnership financial
statements for the year in which the First Refinance Loan was borrowed
(or such subsequent year if applicable), (2) achievement of a Debt
Service Coverage Ratio by the Partnership of not less than 1.15 for
the year in which the First Refinance Loan was borrowed, provided,
however, that such Debt-Service Coverage Ratio shall be calculated
based upon the debt service on the First Refinance Loan and any other
Mortgage Loans then outstanding and the Cash Expenditures as reported
in the audited financial statements required by clause (1) above,
(3) absence of an Event of Default under this Agreement or an event
which would require the repurchase of the Interest of the Investment
Limited Partner under Section 5.2, and (4) certification that the
covenants, representations and warranties set forth in Sections 6.5
and 6.6 remain true and correct, provided, however, that for the
purposes of this Section 3.2(c)(i)(4) only, no default shall be deemed
to exist under Section 6.5(i)(iii) if on or before December 31, 1996
the Partnership has completed the dust removal as set forth in Section
4.1 of the Lead Paint Report, has obtained the Full Risk Assessment
and has completed any replacement of window xxxxx and encapsulation of
window and door frames and any other mouthable areas recommended by
the Full Risk Assessment; (ii) the remainder of the Refinance Reserve
Amount upon (1) the satisfaction of the conditions set forth in clause
(i) above for any applicable years subsequent to the year in which the
initial release under clause (i) occurred, and (2) a site visit by the
Special Limited Partner which reasonably confirms that the Apartment
Complex is being operated in accordance with the standards and
requirements set forth in Sections 6.5 and 6.6.
All activity (except the pre-approved releases set forth above
in this Section 3.2(c)) with respect to the Refinance Reserve shall
require the signatures of the General Partner and the Special Limited
Partner. Funds held in the Refinance Reserve may be invested in
short-term investment grade securities or other investments as shall
be approved by the General Partner and the Special Limited Partner.
Interest accruing on the Refinance Reserve Amount shall remain in the
Refinance Reserve and become a part of the Refinance Reserve Amount.
Prior to the release of the Refinance Reserve Amount as set forth
above and to the extent not funded from the Operating Reserve, such
funds shall be released from the Refinance Reserve and applied to
cover Operating Deficits, if any, provided, however, that
notwithstanding anything to the contrary set forth herein, the
application of such funds shall not constitute a Subordinated Loan.
Further, except as otherwise provided herein, funds may be released
from the Refinance Reserve upon the joint approval of the General
Partner and the Special Limited Partner.
3.3 Sale of Assets
The Partnership may sell, lease, exchange or otherwise transfer
or convey all or substantially all the assets of the Partnership only
with the Consent of the Special Limited Partner, which consent shall
not be unreasonably withheld in connection with a sale which occurs
after the Compliance Period. Notwithstanding the foregoing and except
as set forth in Section 6.2(a)(vi), no Consent of the Special Limited
Partner shall be required for the execution and delivery of the
Construction Loan Documents, the leasing of apartments to tenants in
the normal course of operations or the leasing of all or substantially
all the apartments to a public housing authority at rents satisfactory
to any Agency or Lender as expressed in writing, provided (subject to
the Rent Restriction Test) that such rents are not less than the
Projected Rents.
3.4 Real Estate Commissions
The total compensation (excluding any Sales Preparation Fee) to
all Persons for the sale of the Apartment Complex shall be limited to
a Competitive Real Estate Commission, which in no event shall exceed
five percent (5%) of the contract price for the sale of the Apartment
Complex without the reasonable Consent of the Special Limited Partner.
ARTICLE IV
Partners; Capital
4.1 Capital and Capital Accounts
(a) The capital of the Partnership shall be the aggregate
amount of the cash and the Gross Asset Value of property contributed
by the General Partner and by the Limited Partners as set forth in
Schedule A. No interest shall be paid by the Partnership on any
Capital Contribution to the Partnership. Schedule A shall be amended
from time to time to reflect the withdrawal or admission of Partners,
any changes in the Partnership Interests held by a Partner arising
from the transfer of an Interest to or by such Partner and any change
in the amounts to be contributed or agreed to be contributed by any
Partner. No Partner shall have the right to withdraw or receive a
return of any of its Capital Contributions except as set forth in this
Agreement.
(b) An individual Capital Account shall be established and
maintained for each Partner, including any additional or substituted
Partner who shall hereafter receive an interest in the Partnership.
The Capital Account of each Partner shall be maintained in accordance
with the following provisions:
(i) To each Partner's Capital Account there shall be
credited such Partner's Capital Contributions, such Partner's
distributive share of Profits, and any items in the nature of
income or gain that are specially allocated pursuant to Section
10.4 hereof, and the amount of any Partnership liabilities that
are assumed by such Partner or that are secured by any
Partnership Property distributed to such Partner;
(ii) To each Partner's Capital Account there shall be
debited the amount of cash and the Gross Asset Value of any
Partnership Property distributed to such Partner pursuant to any
provision of this Agreement, such Partner's distributive share
of Losses, and any items in the nature of expenses or losses
that are specially allocated pursuant to Section 10.4 hereof,
and the amount of any liabilities of such Partner that are
assumed by the Partnership or that are secured by any property
contributed by such Partner to the Partnership.
In the event that the Gross Asset Values of Partnership
assets are adjusted pursuant to this Agreement, the Capital Accounts
of all Partners shall be adjusted simultaneously to reflect the
aggregate net adjustment as if the Partnership recognized gain or loss
equal to the amount of such aggregate net adjustment.
(c) The original Capital Account established for any Assignee
(as hereinafter defined) shall be in the same amount as, and shall
replace, the adjusted Capital Account of the Partner which such
Assignee succeeds, and, for the purpose of the Agreement, such
Assignee shall be deemed to have made the Capital Contribution, to the
extent actually paid in, of the Partner which such Assignee succeeds.
The term "Assignee," as used in this paragraph, shall mean a Person
who shall become entitled to receive a share of the Profits, Losses,
Tax Credits and distributions of the Partnership by reason of such
Person succeeding to the Interest of a Partner by assignment of all or
any part of an Interest. To the extent an Assignee receives less than
100% of the Interest of a Partner, such Assignee's Capital Account and
Capital Contribution shall be in proportion to the Partnership
Interest such Assignee receives, and the Capital Account and Capital
Contribution of the Partner who retains a partial interest in the
Partnership shall continue, and not be replaced, in proportion to the
Partnership Interest such Partner retains.
(d) The foregoing provisions and other provisions of this
Agreement relating to the maintenance of the Capital Accounts are
intended to comply with the Allocation Regulations, and shall be
interpreted and applied in a manner consistent with such Allocation
Regulations.
4.2 General Partner
(a) The Original General Partners hereby withdraw as general
partners of the Partnership and acknowledge that they no longer have
any Interest in, or rights or claims against the Partnership as
Partners as of the Admission Date.
(b) The General Partner is hereby admitted to the Partnership
as a General Partner as of the Admission Date and agrees to be bound
by the terms and provisions of the Project Documents and this
Agreement. The name, address and Capital Contribution of the General
Partner are as set forth on Schedule A.
4.3 Investment Limited Partners, Special Limited Partner and
Original Limited Partners
(a) Each of the Special Limited Partner and BCTCF is hereby
admitted to the Partnership as a Limited Partner as of the Admission
Date and agrees to be bound by the terms and provisions of the Project
Documents and this Agreement. BCTCF was admitted as a Limited Partner
on February 29, 1996 and hereby agrees to continue as an Investment
Limited Partner and be bound by the terms and provisions of the
Project Documents and this Agreement. The name and address of the
Investment Limited Partners and the Special Limited Partner are as set
forth on Schedule A.
(b) Except as otherwise specifically set forth in Sections 4.5
or 7.4, the General Partner shall have no authority to admit
additional Limited Partners without the Consent of the Investment
Limited Partners.
(c) Each of the Investment Limited Partners and the Special
Limited Partner represent and warrant that it is acquiring its
Interest for its own account, for investment purposes and not with the
intent to resell such Interest.
4.4 Liability of the Limited Partners
Neither the Investment Limited Partners, the Special Limited
Partner nor any Person who becomes an Additional Limited Partner shall
be liable for any debts, liabilities, contracts or obligations of the
Partnership; such Persons shall be liable only to pay their respective
Capital Contributions as and when the same are due hereunder and under
the Act.
4.5 Special Rights of the Special Limited Partner
(a) Notwithstanding any other provisions herein (other than
Section 13.8), to the extent the law of the State is not inconsistent,
the Special Limited Partner shall have the right, subject to any
Requisite Approvals, to:
(i) amend this Agreement provided, however, that no such
amendment affect the vested rights (including, without
limitation, the right to vote hereunder, the right to receive
any fees, allocable share of Cash Flow or other distributions,
or Profits or Losses and Tax Credits hereunder) or alter any of
the liabilities, obligations or rights of any General Partner
without its prior written consent;
(ii) dissolve the Partnership provided, however, that
such dissolution shall not be caused by the Special Limited
Partner unless the General Partner has violated a material
provision of any Project Document, which violation has a
material adverse effect on the Partnership or any of its
Partners and which violation has not been cured within any
applicable cure period specified;
(iii) remove any General Partner and elect a new General
Partner (A) on the basis of the performance and discharge of
such General Partner's obligations constituting fraud, bad
faith, gross negligence, wilful misconduct or material breach of
fiduciary duty, or (B) upon the occurrence of any of the
following:
(1) such General Partner shall have violated any
material provisions of any Project Document or other
document required in connection with any Mortgage which
has resulted in notice of a default thereunder, or shall
have violated any material provisions of any Regulations
applicable to the Apartment Complex, in each case which
results in any Adverse Consequences to the Partnership and
has not been cured within any applicable cure period
provided therein and further provided that, in the event
of a dispute regarding the existence of such a violation
or default, such dispute shall be resolved pursuant to the
arbitration provisions set forth in Section 5.1(i);
(2) such General Partner shall have
violated any material provision of this Agreement,
including, but not limited to, any obligation to fund any
Partnership expenses under Section 6.10 and such default
has a material adverse effect on the Partnership or any of
its Partners and has not been cured within ten (10) days
after receipt of written notice from the Special Limited
Partner to the General Partner, or such General Partner
shall have violated any provisions of applicable law and
further provided that, in the event of a dispute regarding
the existence of such a violation or default, such dispute
shall be resolved pursuant to the arbitration provisions
set forth in Section 5.1(i);
(3) any Mortgage shall be in default
and such default shall not be cured within any applicable
cure period set forth in the Mortgage Loan Documents and
further provided that, in the event of a dispute regarding
the existence of such a violation or default, such dispute
shall be resolved pursuant to the arbitration provisions
set forth in Section 5.1(i); 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, provided that the General Partner
has been removed pursuant to Section 4.5(a)(iii) above; and
(v) approve or disapprove the sale of all or
substantially all of the assets of the Partnership.
(b) Upon the removal of a General Partner,
(i) without any further action by any Partner, the
Special Limited Partner 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 Partners
shall determine is the minimum appropriate interest in order to
assure the continued status of the Partnership as a partnership
under the Code and under the Act,
(ii) the remaining portion of the economic Interest of
the removed General Partner shall automatically be converted to
an equal economic Interest as an Additional Limited Partner, and
(iii) the new General Partner shall automatically be
irrevocably delegated all of the powers, duties and obligations
of the General Partners pursuant to Section 6.13. The Special
Limited Partner or any successor General Partner proposed by the
Special Limited Partner shall have the option, exercisable in
its sole discretion, to acquire the Additional Limited Partner
Interest, or any portion thereof, of any removed General Partner
upon payment of the agreed or then present fair market value of
such Interest or portion thereof. If such value is not agreed
to, the fair market value of the Interest shall be as determined
by a qualified, MAI-designated state-licensed real estate
appraiser selected by the removed General Partner. If the
Special Limited Partner does not accept such value, it may
select a second similarly-qualified appraiser. If the values
determined by both such appraisers differ by no more than 10%,
then the purchase price shall be the arithmetic mean of the two.
If the values differ by more than 10%, then the two appraisers
shall appoint a third similarly-qualified appraiser, who shall
also determine a value. In such a case, the final purchase
price shall be the arithmetic mean of the two values closest in
absolute dollars. The method of payment to the removed General
Partner shall be fair; and must protect the solvency and
liquidity of the Partnership. The method of payment will be
deemed presumptively fair where it provides for a promissory
note bearing interest at the AFR payable out of the proceeds of
a Capital Transaction as set forth in Section 10.2(b) hereof.
In addition, upon removal, the Partnership must promptly pay to
the removed General Partner all amounts then accrued and owing
to the removed General Partner; provided, however, that
notwithstanding the language of Section 6.12, Article X,
Article XI and any other provision hereof, no removed General
Partner or any Affiliate thereof shall be entitled to receive
any fee, compensation or other remuneration from the
Partnership, other than any such fee, compensation or other
remuneration (including, without limitation, the Development
Fee) which had already been earned in full prior to the date of
such removal. The Partnership is not authorized to enter into
any arrangement whereby any fee, compensation or other
remuneration could be payable directly or indirectly to any
General Partner or Affiliate thereof in a manner inconsistent
with the immediately preceding sentence unless the prior written
consent of the Special Limited Partner shall have been obtained
to such particular arrangement. The Partnership may offset
against any payments to a General Partner removed under this
Section 4.5 any monetary damages suffered by the Partnership as
a consequential result of any breach of the obligations of such
General Partner hereunder. A General Partner so removed will
not be liable as a general partner for any obligations of the
Partnership incurred after the effective date of its removal.
Each General Partner hereby grants to the Special Limited
Partner an irrevocable (to the extent permitted by applicable
law) power of attorney coupled with an interest solely to
execute and deliver any and all documents and instruments on
behalf of such General Partner and the Partnership as the
Special Limited Partner may deem to be necessary or appropriate
in order to effect the provisions of this Section 4.5 and to
enable the new General Partner to manage the business of the
Partnership.
(c) In order to implement the provisions of Section 4.5(a)(v),
the General Partner is hereby required, within five (5) days after its
receipt of any offer to purchase the Apartment Complex or all of the
Interests in the Partnership, to send a copy of such offer (or a
written description of any such oral offer) to each of the Limited
Partners. In connection with any proposed sale of the Apartment
Complex, the Special Limited Partner (or its designee) shall have the
right to (i) receive and review copies of all documents relating to
the proposed sale, (ii) participate in the negotiations of the terms
and conditions of the proposed sale, (iii) meet with the proposed
purchaser, and (iv) provide such other services in connection with the
proposed sale as it deems to be appropriate.
4.6 Meetings
The General Partner or Limited Partners holding more than ten
percent (10%) of the then outstanding Limited Partner Interests may
call meetings of the Partnership for any matters for which the Limited
Partners may vote as set forth in this Agreement. A list of the names
and addresses of all Limited Partners shall be maintained as part of
the books and records of the Partnership and shall be made available
upon request to any Limited Partner or his representative at his cost.
Upon receipt of a written request either in person or by certified
mail stating the purpose(s) of the meeting, the General Partner shall
provide all Limited Partners within ten (10) days after receipt of
said request, written notice of a meeting and the purpose of such
meeting to be held on a date not less than fifteen (15) nor more than
sixty (60) days after receipt of said request, at a time convenient to
the Limited Partners. All meetings shall be held at the principal
office of the Partnership.
ARTICLE V
Capital Contributions of the Investment Limited Partners
and the Special Limited Partner
5.1 Payments
(a) The Special Limited Partner's Capital Contribution of $10
shall be paid in full in cash on the Admission Date. The Investment
Limited Partners' Capital Contribution (to be paid in accordance with
their Percentage Interests) shall be paid in cash installments (the
"Installments"), as follows:
(i) $665,300 (the "First Installment") on the latest of
(A) the Admission Date, (B) the Permanent Loan Commitment Date,
or (C) Tax Credit Set-Aside;
(ii) $120,175 (the "Second Installment"), on the latest
of (A) the Completion Date, (B) Cost Certification, (C) receipt
of an updated Title Policy in form and substance satisfactory to
the Special Limited Partner, (D) issuance of Forms 8609 for each
building in the Apartment Complex, (E) full compliance, as
reasonably determined by the Special Limited Partner, with all
due diligence recommendations made in writing by the Special
Limited Partner to the General Partner in respect of the
Apartment Complex, (F) receipt of written documentation in form
and substance reasonably satisfactory to the Special Limited
Partner that evidences the payment in full of all sums owed to
the Contractor pursuant to the Construction Contract, or (G)
receipt of estoppel letters in form and substance reasonably
satisfactory to the Special Limited Partner from each Lender;
(iii) $120,175 (the "Third Installment") upon Final
Completion;
(iv) $201,900 (the "Fourth Installment") on the latest to
occur of (A) the Initial 100% Occupancy Date, (B) Permanent
Mortgage Commencement, or (C) Rental Achievement; and
(v) $25,000 (the "Fifth Installment") upon receipt of a
copy of the Partnership's properly filed federal tax return for
the year in which Rental Achievement occurs;
provided, however, that (x) the General Partner shall give the
Investment Limited Partners not less than twenty-one (21) days'
written notice prior to the due date of each Installment subsequent to
the First Installment, and (y) no Installment shall be due unless and
until all conditions to the payment of all prior Installments have
been satisfied.
(b) The obligation of the Investment Limited Partners to pay
each Installment is conditioned upon delivery by the General Partner
to the Investment Limited Partners 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
Partner 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 Partners to pay the First
Installment is also conditioned upon delivery by the General Partner
to the Investment Limited Partners of (x) a legal opinion of
independent counsel to the Partnership, the General Partner, the
Developer and the Guarantors, which opinion(s) must be satisfactory to
the Investment Limited Partners as to form, content and identity of
counsel and (y) a photocopy of a binding commitment, in form and
substance satisfactory to the Special Limited Partner, to issue the
Title Policy and endorsements thereto in form and substance
satisfactory to the Special Limited Partner, including a Fairway
endorsement and a non-imputation endorsement. In no event shall any
Installment become due until all of the conditions for all of the
Installments listed prior to the Installment in question in
Section 5.1(a) shall have been satisfied and all of such prior
Installments shall have become due. Notwithstanding the foregoing,
however, if at any time prior to the date when an Installment becomes
due and payable, the Partnership has an Operating Deficit which the
General Partner would be required to fund pursuant to Section 6.10,
then the Investment Limited Partners may, at their option, waive the
requirement of the delivery of the Payment Certificate or any other
condition with respect to part or all of such Installment and pay such
part or all of such Installment, provided that the proceeds of the
amount so paid are used by the Partnership to fully fund such
Operating Deficit; provided, however, that if the proceeds of such
amount so paid are designated in Section 6.12 to be used to pay
fee(s), then such proceeds shall be utilized to pay such fee(s) and
the recipient(s) thereof shall be required to, and hereby agree to,
utilize the proceeds of such fee(s) to fund such Operating Deficit, in
which case the Investment Limited Partners are hereby authorized to
directly fund such Operating Deficit, with the funds so applied being
deemed to have been paid as aforesaid.
(c) The Payment Certificate for each Installment other than
the First Installment shall be dated and delivered not less than ten
(10) nor more than thirty (30) days prior to the due date for such
Installment.
(d) If, as of the date when an Installment would otherwise be
due, any statement required to be made in the Payment Certificate for
such Installment cannot be truthfully made, the General Partner shall
notify the Investment Limited Partners of the reason why such
statement would be untrue if made, and the Investment Limited Partners
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 Partners shall not have irrevocably lost,
in the good faith judgment of the Investment General Partners, any
material tax or other benefits hereunder (other than tax benefits for
which the Investment Limited Partners have been fully compensated
pursuant to the provisions of paragraphs (e), (f) and (g) of this
Section 5.1), then the Investment Limited Partners shall pay such
Installment to the Partnership thirty (30) days after delivery by the
General Partner to the Investment Limited Partners of the Payment
Certificate together with an explanation of the manner in which each
such statement had become true.
(e) In the event that on or at any time prior to the end of
the first year of the Credit Period (the "Initial Adjustment Date"),
the Investment Limited Partners shall receive a written certification
of the Auditors indicating that the aggregate Actual Credit during the
Credit Period will be less than the aggregate Projected Credit during
the Credit Period, then (i) the next succeeding Installments of the
Capital Contributions of the Investment Limited Partners shall be
reduced by an amount equal to the product of (X) the difference
between (1) the aggregate Projected Credit during the Credit Period
and (2) the aggregate Actual Credit during the Credit Period and (Y)
0.746, and (ii) the Projected Credit for each Fiscal Year shall
thereafter be redefined to mean the Actual Credit, as so determined
(the "Revised Projected Credit"). Any such reduction pursuant to this
Section 5.1(e) shall be made first to the Installment, if any, next
due to be paid by the Investment Limited Partners, and any balance of
such amount payable by the General Partner in excess of the amount of
such Installment shall be applied to succeeding Installments, if any,
provided that if the amount of any such reductions exceeds the sum of
the remaining Installments, if any, then an amount equal to the amount
of such excess shall be paid by the General Partner to the Investment
Limited Partners promptly after demand is made therefor, as a payment
of liquidated damages for breach of warranty, regardless of the reason
for the occurrence of such event (unless such reduction was caused by
an act or omission of the Investment Limited Partners or their
Affiliates or the Tax Accountants, in which event no such reduction or
payment shall be required). No reduction of any Installment or any
payment by the General Partner pursuant to this Section 5.1(e) shall
be deemed to be a Capital Contribution by the General Partner to the
Partnership, nor shall any such payment constitute a return of capital
to the Investment Limited Partners.
(f) If with respect to any Fiscal Year all or a portion of
which occurs during the Initial Operating Period (except as already
provided for in Section 5.1(e)), the Actual Credit is or was less than
the Projected Credit (or the Revised Projected Credit, if applicable)
for such Fiscal Year (a "Reduction Year"), then the Capital
Contributions of the Investment Limited Partners shall be reduced or
the General Partner shall pay to the Investment Limited Partners, as
provided herein, the Reduction Amount. The Reduction Amount shall be
equal to the sum of (A) the excess of the Projected Credit (or the
Revised Projected Credit, if applicable) for such Fiscal Year over the
Actual Credit for such Fiscal Year multiplied by 0.746 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 Partners as a result of such shortfall, assuming
that each limited partner and/or holder of a beneficial assignee
certificate in an Investment Limited Partner used all of the Tax
Credits allocated to it in the Fiscal 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
Fiscal Year. The Investment Limited Partners shall be eligible to be
paid a Reduction Amount as hereinabove described with respect to each
Reduction Year. Any Reduction Amount shall first be applied to the
Installment next due to be paid by the Investment Limited Partners,
with any portion of such Reduction Amount in excess of the amount of
such Installment then being applied to succeeding Installments,
provided that if no further Installments remain to be paid or if the
Reduction Amount shall exceed the sum of the amounts of the remaining
Installments, then the entire Reduction Amount or the balance of the
Reduction Amount, as the case may be, shall be paid by the General
Partner to the Investment Limited Partners promptly after demand is
made therefor, as a payment of damages for breach of warranty,
regardless of the reason for the occurrence of such event (unless such
reduction was caused by an act or omission of the Investment Limited
Partners or their Affiliates, in which event no Reduction Amount shall
be payable). No payment by the General Partner pursuant to this
Section 5.1(f) shall be deemed to be a Capital Contribution to the
Partnership nor shall any such payment constitute a return of capital
to the Investment Limited Partners.
(g) In the event that, for any reason, at any time after the
end of the Initial Operating Period (except as already provided for in
Section 5.1(e)), the amount of the Actual Credit shall be less than
the Projected Credit (or the Revised Projected Credit, if applicable)
with respect to any Fiscal Year of the Partnership (such difference
being hereinafter referred to as a "Credit Shortfall"), the Investment
Limited Partners shall be treated as having made a constructive
advance to the Partnership (in accordance with their Percentage
Interests) with respect to such Fiscal Year (a "Credit Recovery
Loan"), which shall be deemed to have been made on January 1 of such
Fiscal Year in an amount equal to the sum of (A) the Credit Shortfall
for such Fiscal Year plus (B) the amount of any recapture, interest or
penalty payable by the limited partners and/or the holders of
beneficial assignee certificates of an Investment Limited Partner as a
result of the Credit Shortfall for such Fiscal Year, assuming that
each limited partner and/or holder of a beneficial assignee
certificate in the Investment Limited Partner used all of the Tax
Credits allocated to him in the Fiscal Year of allocation and that
each such Person was subject to interest at the rate set forth in
Section 6621(a)(2) of the Code and to the penalty for understatement
of tax set forth in Section 6662(d) of the Code. Credit Recovery
Loans shall be deemed to bear simple (not compounded) interest from
the respective dates on which such principal advances shall have been
deemed to have been made under this Section 5.1(g) at a rate of nine
percent (9%) per annum. Credit Recovery Loans shall be payable by the
Partnership as provided in Section 10.2(b), Clause Third.
(h) (i) Each of the Investment Limited Partner hereby
grants to the Partnership a security interest in such
Investment Limited Partner's Interest as collateral
security for the payment, when due in accordance with the
terms of this Agreement, of the Capital Contributions of
the Investment Limited Partners. Except as hereinafter
provided in Section 5.1(i), upon any default by an
Investment Limited Partner in the payment of its Capital
Contributions as and when they are due and payable (an
"Event of Default"), which Event of Default has not been
cured within ten (10) business days following notice
thereof by the Partnership to such Investment Limited
Partner, the Partnership or its assignee shall have all
the rights and remedies, with respect to the security
interest hereby granted by such Investment Limited
Partner, of a secured party under Article 9 of the Uniform
Commercial Code as in effect in the State, as well as
those rights and remedies expressly set forth in Section
5.1(h)(ii). Upon request, such Investment Limited Partner
will execute a UCC-1 financing statement evidencing the
security interest granted hereby and will deliver such
statement to the Partnership.
(ii) If, after notice thereof from the General
Partner, such Investment Limited Partner fails to cure the
Event of Default as set forth in Section 5.1(h)(i), such
Event of Default shall be curable by payment of the
Installment(s) due under this Agreement plus interest at
the Prime Rate from the date such Installment(s) was due.
All rights and benefits of a defaulting Investment Limited
Partner attributable to such Partner's Interest in the
Partnership shall be suspended during the period of
default, which suspension shall commence on the date of
the Event of Default and shall terminate on the date of
the curing of such Event of Default, or upon the removal
of the defaulting Investment Limited Partner pursuant to a
foreclosure of the security interest granted by
Section 5.1(h)(i). If such suspension is in effect at the
end of the Partnership's Fiscal Year, the profits and
losses and tax credits attributable to the defaulting
Investment Limited Partner's Interest during the period of
suspension, which have not been allocated to such
defaulting Investment Limited Partner in a tax return
filed by the Partnership, shall be allocated to the non-
defaulting Partners, pro rata in accordance with their
Interests.
(i) Notwithstanding the provisions of Section 5.1(h) above, in
the event of a dispute regarding the existence of an Event of Default,
such dispute shall be resolved by binding arbitration and until the
issuance of a final arbitration award confirming the existence of an
Event of Default, the Partnership shall not be entitled to exercise
any of its rights or remedies under Section 5.1(h) above. Such
arbitration shall be conducted in accordance with the Rules of
Commercial Arbitration of the American Arbitration Association by a
single arbitrator appointed pursuant to those rules. The arbitration
shall take place in the City of Dayton, Ohio. The scope of the
arbitrator's award shall be solely limited to a determination of
whether an Event of Default has occurred. If the arbitrator
determines that an Event of Default has occurred, then if requested by
the Investment Limited Partners within twenty (20) days following
receipt of the award, the arbitrator shall provide the parties with a
written explanation of the facts underlying the determination, which
shall become part of the award. The prevailing party shall be awarded
the costs of such arbitration, provided, however, that each party
shall bear the costs of its own attorneys and witnesses.
5.2 Return of Capital Contributions
(a) Failure to Achieve Development and/or Tax Credit
Benchmarks and Standards. If (i) all 93 apartment units in the
Apartment Complex shall not have been placed in service by December
31, 1996 (for purposes of satisfying the requirements of Section
42(h)(1)(E)(i) of the Code with respect to the 1994 Tax Credit
carryover allocation), or (ii) the Completion Date has not occurred
prior to December 31, 1995, or (iii) Permanent Mortgage Commencement
shall not have occurred prior to March 31, 1996 (or any later date
fixed by the General Partner with the Consent of the Special Limited
Partner), or (iv) the Partnership shall fail to meet the Minimum Set-
Aside Test or the Rent Restriction Test by the close of the first year
of the Credit Period and/or fails to continue to meet either of such
tests at any time during the sixty (60)-month period commencing on
such date, or (v) prior to Permanent Mortgage Commencement,
(A) foreclosure proceedings shall have commenced under any Mortgage
and such proceedings shall not have been dismissed within thirty (30)
days or (B) any of the commitments of a Lender to provide a Mortgage
Loan and/or any subsidy financing shall be terminated or withdrawn and
not reinstated or replaced within sixty (60) days with terms at least
as favorable to the Partnership or terms for which the Consent of the
Special Limited Partner and any Requisite Approvals shall have been
obtained, or (vi) if at any time it shall be determined by the Service
that a Carryover Certification could not be issued or was issued in
error, or (vii) if by the date which is twelve (12) months following
the Completion Date, Rental Achievement shall not have been achieved,
or (viii) at any time the General Partner fails to make a Subordinated
Loan and such failure continues for ten (10) days, then within five
(5) days of the occurrence thereof, the General Partner shall send to
the Investment Limited Partners and the Special Limited Partner notice
of such event and of the General Partner's obligation to repurchase
the Interests of the Investment Limited Partners and the Special
Limited Partner by paying to the Investment Limited Partners and the
Special Limited Partner an amount (the "Repurchase Amount") equal to
each such Partner's Invested Amount minus the amount of any Tax
Credits allocable to such Partner's Interest pursuant to this
Agreement which will not be recaptured as a result of the disposition
of said Partner's Interest or otherwise and minus the portion, if any,
of such Partner's Capital Contribution which shall not yet have been
paid (or deemed to have been paid) to the Partnership plus the amount
of any third-party costs, including, without limitation, attorney's
fees incurred by or on behalf of such Partner in implementing this
Section 5.2(a) in the event the Investment Limited Partners and/or the
Special Limited Partner require(s) such a repurchase. If either the
Special Limited Partner or the Investment Limited Partners elects to
require a repurchase of its Interest and the payment to it of an
amount equal to its Repurchase Amount, it shall send notice thereof to
the Partnership within thirty (30) days after the mailing date of the
General Partner's notice, or at any time after the occurrence of any
of the foregoing if the General Partner shall not have sent a notice
thereof, and the General Partner shall within sixty (60) days after
the Partnership receives any such notice from a Partner requesting the
purchase of its Interest repurchase the Interest of such Partner by
paying to such Partner an amount equal to its Repurchase Amount. If,
following receipt of the General Partner's notice, either the Special
Limited Partner or the Investment Limited Partners fails to send
notice to the General Partner by the end of such thirty (30)-day
period requesting the General Partner to purchase its Interest, the
Special Limited Partner and/or the Investment Limited Partners, as the
case may be, shall be deemed to have waived its right to cause the
General Partner to purchase its Interest as a result of the event
described in the General Partner's notice. No such waiver, however,
shall affect the right of the Special Limited Partner and/or the
Investment Limited Partners to cause the General Partner to purchase
its Interest upon the occurrence of any other event described in this
Section 5.2(a), or upon any subsequent occurrence of the event
described in the General Partner's notice.
(b) Lender Disapproval. If any Agency or Lender shall
disapprove, or fail to give any required approval of, the Investment
Limited Partners and/or the Special Limited Partner as a Limited
Partner hereunder within one hundred eighty (180) days of the
Admission Date, then the Partner being disapproved or not approved
shall, effective as of such time or such later time as may be elected
by the Partner being disapproved or not approved as may be specified
by such Agency or Lender in its disapproval, at the option of the
Partner being disapproved or not approved (if not directed by such
Agency or Lender to withdraw), cease to be a Limited Partner. The
General Partner shall, within ten (10) days of the effective date of
such cessation, pay to the Partner being disapproved or not approved
an amount equal to its Capital Contributions paid in (and those deemed
to have been paid) to the Partnership plus the amount of any third
party costs, including, but not limited to attorney's fees, incurred
by or on behalf of such Partner in implementing this Section 5.2(b).
(c) Substitution and Indemnification. Upon the receipt by the
Investment Limited Partners and/or the Special Limited Partner of the
amount due to it pursuant to Section 5.2(a), the Interest of such
Partner shall terminate, and the General Partner shall indemnify and
hold harmless such Partner from and against any Adverse Consequences
to which such Partner (as a result of its participation hereunder) may
be subject, provided that such Adverse Consequences do not result from
such Partner's acts or omissions.
(d) Waiver of Repurchase Right. Each of the Investment
Limited Partners and the Special Limited Partner shall have the right
to irrevocably waive its right to have its Interest repurchased
pursuant to any clause or clauses of Section 5.2(a), or any portion
thereof, at any time during which any of such rights shall be in
effect. Such a waiver shall be exercised by delivery to the General
Partner of a written notice stating that the rights being waived
pursuant to any specified clause or clauses of Section 5.2(a), or any
specified portion thereof, are thereby waived for a specified period
of time.
(e) Additional General Partner. If the General Partner shall
fail to make on the due date therefor any payment required under
Section 5.2(a) or Section 5.2(b), time being of the essence, at any
time thereafter the Special Limited Partner shall have the option,
exercisable in its sole discretion, to cause itself or its designee to
be admitted as an additional General Partner, receiving from the
existing General Partner, in consideration of the payment of ten
dollars ($10.00), a one per cent (1%) interest in the Profits, Losses,
Tax Credits and distributions of the Partnership, with the Special
Limited Partner retaining its status as such and its economic interest
in the Partnership as the Special Limited Partner (or its designee as
an additional General Partner). If the Special Limited Partner
exercises the option described in this Section 5.2(e), each of the
other General Partner hereby agrees that all of its rights and powers
hereunder as a General Partner shall automatically be irrevocably
delegated to the Special Limited Partner pursuant to Section 6.13
without the necessity of any further action by any Partner. Each
Partner hereby grants to the Special Limited Partner an irrevocable
(to the extent permitted by applicable law) power of attorney coupled
with an interest to take any action and to execute, deliver and file
or record any and all documents and instruments on behalf of such
Partner and the Partnership as the Special Limited Partner may deem
necessary or appropriate in order to effectuate the provisions of this
Section 5.2(e) and to allow the additional General Partner to manage
the business of the Partnership. The admission of the Special Limited
Partner or its designee as an additional General Partner shall not
relieve any other General Partner of any of its economic obligations
hereunder in existence at the time of such admission, and such
additional General Partner shall fully indemnify and hold harmless
each other General Partner from and against any and all Adverse
Consequences sustained by any such other General Partner as a result
of the actions of the additional General Partner (other than Adverse
Consequences arising solely from the negligence or misconduct of such
other General Partner).
ARTICLE VI
Rights, Powers and Duties of General Partner
6.1 Authorized Acts
Subject to the provisions of Section 6.2, Section 6.3,
Section 6.15 and all other provisions of this Agreement, the General
Partner for, in the name and on behalf of the Partnership, is hereby
authorized, in furtherance of the purposes of the Partnership:
(i) to acquire by purchase, lease, exchange or otherwise
any real or personal property;
(ii) to construct, rehabilitate, operate, maintain,
finance and improve, and to own, sell, convey, assign, mortgage
or lease any real estate and any personal property;
(iii) to borrow money and issue evidences of indebtedness
and to secure the same by mortgage, pledge or other lien on the
Apartment Complex or any other assets of the Partnership;
(iv) to execute the Mortgage Loan Documents and the other
Project Documents and all such other documents as the General
Partner deems to be necessary or appropriate in connection with
the acquisition, development, construction, rehabilitation and
financing of the Apartment Complex;
(v) to prepay in whole or in part, refinance or modify
any Mortgage Loan or other financing affecting the Apartment
Complex;
(vi) to employ the Management Agent (which may be an
Affiliate of the General Partner) and, subject to the provisions
of Article XI, to pay reasonable compensation for its services;
(vii) to employ its Affiliates to perform services for, or
sell goods to, the Partnership;
(viii) to execute contracts, including without
limitation the Purchase Agreement, with any Agency, the State
or any subdivision or agency thereof or any other Governmental
Authority to make apartments or tenants in the Apartment Complex
eligible for any public-subsidy program;
(ix) to execute leases of some or all of the apartment
units of the Apartment Complex to individuals and/or to a public
housing authority and/or to a non-profit corporation,
cooperative or other non-profit Entity;
(x) to employ or engage such engineers, architects,
technicians, accountants, attorneys and other Persons, as may be
necessary, convenient or incidental to the accomplishment of the
purposes of the Partnership; and
(xi) to enter into any kind of activity and to perform
and carry out contracts of any kind which may be lawfully
carried on or performed by a partnership and to file all
certificates and document which may be required under the laws
of the State.
6.2 Restrictions on Authority
(a) Notwithstanding any other Section of this Agreement, the
General Partner shall have no authority to perform any act in
violation of any applicable law, Agency or other government
regulations, the requirements of any Lender, or the Project Documents.
In the event of any conflict between the terms of this Agreement and
any applicable Regulations or requirements of any Lender, the terms of
such Regulations or the requirements of such Lender, as the case may
be, shall govern. Subject to the provisions of Section 6.2(b), the
General Partner, acting in its capacity as General Partner, shall not
have the authority, without the Consent of the Special Limited
Partner:
(i) to have unsecured borrowings in excess of twenty
thousand dollars ($20,000.00) in the aggregate at any one time
outstanding, except borrowings constituting Subordinated Loans
or Credit Recovery Loans;
(ii) to borrow from the Partnership or commingle
Partnership funds with the funds of any other Person;
(iii) following the Completion Date, to construct any new
or replacement capital improvements on the Apartment Complex
which substantially alter the character or use of the Apartment
Complex or which cost in excess of twenty thousand dollars
($20,000.00) in a single Fiscal Year, except (x) replacements
and remodeling in the ordinary course of business or under
emergency conditions or (y) construction paid for from insurance
proceeds;
(iv) to acquire any real property in addition to the
Apartment Complex;
(v) following Permanent Mortgage Commencement, and
except as otherwise specifically provided in Section 3.2, to
increase, decrease or modify the terms of or refinance any
Mortgage Loan;
(vi) to rent apartments in the Apartment Complex such
that the Apartment Complex would not meet the requirements of
the Minimum Set-Aside Test or the Rent Restriction Test;
(vii) to sell, exchange or otherwise convey or transfer
the Apartment Complex or substantially all the assets of the
Partnership;
(viii) to terminate any Material Agreement;
(ix) to cause the Partnership to commence a proceeding
seeking any decree, relief, order or appointment in respect to
the Partnership under the federal bankruptcy laws, as now or
hereafter constituted, or under any other federal or state
bankruptcy, insolvency or similar law, or the appointment of a
receiver, liquidator, assignee, custodian, trustee, sequestrator
(or similar official) for the Partnership or for any other
substantial part of the Partnership's business or property, or
to cause the Partnership to consent to any such decree, relief,
order or appointment initiated by any Person other than the
Partnership;
(x) with the exception of the HAP Contract and the
Dayton Loan Documents, to execute contracts with any Agency, the
State or any subdivision or agency thereof or any other
Governmental Authority to make apartments or tenants in the
Apartment Complex eligible for any public-subsidy program;
(xi) to amend any construction or rehabilitation contract
if such amendment will result in an aggregate change in the
contract price of more than $5,000;
(xii) to pledge or assign any of the Capital Contributions
of the Investment Limited Partners or the proceeds thereof
(except to the extent required by the terms of the Construction
Loan Documents and agreed to in writing by the Special Limited
Partner); or
(xiii) to do any act required to be approved or
ratified by all limited partners under the Act.
(b) In the event that any General Partner violates any
provision of Section 6.2(a) and such violation continues for ten (10)
days after receipt of written notice from the Special Limited Partner
by the General Partner, the Special Limited Partner in its sole
discretion, may cause itself or its designee to be admitted as an
additional General Partner without any further action by any other
Partner. Upon any such admission of an additional General Partner,
each existing General Partner shall be deemed to have assigned
proportionally to the additional General Partner, automatically and
without further action, such portion of its General Partnership
Interest so that the additional General Partner shall receive a one
percent (1%) interest in the Profits, Losses, Tax Credits and
distributions of the Partnership in consideration of one dollar
($1.00) and any other consideration which may be agreed upon. An
additional General Partner so admitted shall automatically become the
Managing General Partner and shall be irrevocably delegated all of the
power and authority of all of the General Partner pursuant to Section
6.13. Each Partner hereby grants to the Special Limited Partner a
special power of attorney, irrevocable to the extent permitted by law
and coupled with an interest, to amend this Agreement and to do
anything else which, in view of the Special Limited Partner, may be
necessary or appropriate to accomplish the purposes of this Section
6.2(b) or to enable any additional General Partner admitted pursuant
to this Section 6.2(b) to manage the business of the Partnership. The
admission of the Special Limited Partner as an additional General
Partner shall not relieve any other General Partner of any of its
economic obligations hereunder in existence at the time of such
admission, and such additional General Partner shall fully indemnify
and hold harmless each other General Partner from and against any and
all Adverse Consequences sustained by any such other General Partner
as a result of the action of the additional General Partner (other
than Adverse Consequences arising solely from the negligence or
misconduct of such other General Partner).
(c) Neither the Investment General Partner nor any Affiliate
thereof shall be given an exclusive right to sell, or exclusive
employment to sell, the Apartment Complex.
6.3 Personal Services; Other Business Ventures
No General Partner or Affiliate thereof shall receive any salary
or other direct or indirect compensation for any services or goods
provided in connection with the Partnership or the Apartment Complex,
except as may be specifically provided in Section 6.12, Section 6.15
and Article XI or as to which the reasonable Consent of the Special
Limited Partner shall have been obtained to the precise terms thereof
prior to the commencement of such services or the provision of such
goods. Any Partner may engage independently or with others in other
business ventures of every nature and description, including the
ownership, operation, management, syndication and development of real
estate; neither the Partnership nor any other Partner shall have any
rights in and to such independent ventures or the income or profits
derived therefrom.
6.4 Business Management and Control
(a) Subject to the provisions of this Agreement, the General
Partner shall have the exclusive right to control the business of the
Partnership. If at any time there is more than one General Partner,
the powers and duties of the General Partners hereunder shall be
exercised in the first instance by a Managing General Partner who,
subject to the terms and provisions of this Agreement, shall manage
the business and affairs of the Partnership. The Managing General
Partner may bind the Partnership by executing and delivering, in the
name and on behalf of the Partnership, any documents which this
Agreement authorizes the General Partners to execute hereunder without
the requirement that any other General Partner execute such documents.
The initial Managing General Partner shall be WAI; if it is unwilling
or unable to serve in such capacity or shall cease to be a General
Partner, the remaining General Partners may from time to time
designate a new Managing General Partner. If for any reason no
designation is in effect, the powers of the Managing General Partner
shall be exercised by a majority in interest of the General Partners.
Any action required or permitted to be taken by a corporate General
Partner hereunder may be taken by such of its proper officers or
agents as it shall validly designate for such purpose.
(b) The Managing General Partner shall have control over the
business of the Partnership and shall have all rights, powers and
authority conferred by law as necessary, advisable or consistent in
connection therewith. Without limiting the generality of the
foregoing, the Managing General Partner shall have the right, power
and authority to execute any documents relating to the acquisition,
financing, rehabilitation, operation and sale of all or any portion of
the Apartment Complex with the prior approval of the other General
Partners, if any. The Managing General Partner shall be responsible
for administering any construction loan draw requests for the
development of the Apartment Complex.
(c) Neither the Investment Limited Partners nor the Special
Limited Partner shall have any right to take part in the management or
control of the business of the Partnership or to transact any business
in the name of the partnership. No provision of this Agreement which
makes the Consent of the Investment Limited Partners or the Consent of
the Special Limited Partner a condition for the effectiveness of an
action taken by the General Partner is intended, and no such
provisions shall be construed, to give the Investment Limited Partners
or the Special Limited Partner, as the case may be, any participation
in the control of the Partnership business. Each of the Special
Limited Partner and the Investment Limited Partners hereby consents to
the exercise by the General Partner of the powers conferred on it by
law and this Agreement, and the General Partner agrees to exercise
control of the business of the Partnership only in accordance with the
provisions of this Agreement. Notwithstanding the foregoing, in no
event may the provisions of this Section 6.4 be invoked by any General
Partner or by any other Person as a defense against or as an
impediment to the ability of either the Investment Limited Partners or
the Special Limited Partner to take any action hereunder.
6.5 Duties and Obligations
(a) The General Partner shall manage the affairs of the
Partnership to the best of its ability, shall use its diligent and
good faith efforts to carry out the purpose of the Partnership, and
shall devote to the Partnership such time as may be necessary for the
proper performance of its duties and the business of the Partnership.
The General Partner shall promptly take all action which may be
necessary or appropriate for the proper development, construction,
maintenance and operation of the Apartment Complex in accordance with
the provisions of this Agreement, the Project Documents and any
applicable laws and Regulations, including the Act. The General
Partner is responsible for the management and operation of the
Partnership, including the oversight of the rent-up and operational
stages of the Apartment Complex. At a minimum, the General Partner
shall be responsible for and shall cause the Apartment Complex to be
operated in accordance with the HAP Contract and the standards for HUD
projects as set forth in 24 CFR, Part 290.10 and any rules and orders
issued thereunder.
(b) Subject to the provisions of Section 6.5(g), the General
Partner shall use its diligent good faith efforts to cause the
Partnership to generate Cash Flow for distribution to the Partners at
the maximum realizable level in view of (i) any applicable
Regulations, (ii) the Minimum Set-Aside Test, (iii) the Rent
Restriction Test, (iv) the Projected Rents and (v) the Purchase
Agreement and the HAP Contract, and, if necessary, the General Partner
also shall use its diligent good faith efforts to obtain approvals and
implementation of appropriate adjustments in the rental schedule of
the Apartment Complex.
(c) The General Partner shall cause the Partnership to obtain
and keep in force, during the term of the Partnership, comprehensive
casualty insurance, including, but not limited to, fire, earthquakes
and other risks generally included under "extended coverage" policies,
workers compensation and public liability insurance in favor of the
Partnership (i) with such companies and in such amounts as shall be
satisfactory to the Lenders, or, if the Lenders impose no specific
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) no less than such amounts
as may be reasonably requested by the Special Limited Partner from
time to time, and (C) in any event, sufficient to prevent the
Partnership from becoming a co-insurer under any such policies. No
deductibles on such policies may exceed $2,500. 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 any Agency or any Lender, the General Partner also
shall cause the Partnership to obtain and keep in force a builder's
risk policy in favor of the Partnership in an amount not less than the
greater of (i) the full replacement value of the Apartment Complex
(excluding the value of the underlying land, the site utilities and
the foundations) or (ii) such other amount as shall be required by any
Agency or Lender. Throughout the term of the Partnership, the General
Partner shall provide copies of all such policies (or binders) to the
Special Limited Partner promptly after their receipt thereof. The
General Partner shall cause the applicable insurer to name each of the
Investment Limited Partners and the Special Limited Partner as an
"additional insured" on each Partnership insurance policy.
(d) If at any time there is more than one General Partner, the
obligations of the General Partners hereunder shall be the joint and
several obligations of each General Partner. Except as otherwise
provided in Sections 4.5(b) and 7.1, such obligations shall survive
any Withdrawal of a General Partner from the Partnership.
(e) (i) The General Partner shall establish and maintain
reasonable reserves (the "Replacement Reserve") to provide for working
capital needs, improvements, replacements and any other contingencies
of the Partnership. At a minimum, on the Admission Date, the General
Partner shall cause the Partnership to deposit $48,000 into the
Replacement Reserve and further fund such Replacement Reserve with
monthly deposits from Cash Flow in the amount of $1,937.50; provided
that, to the extent that Cash Flow (as determined before deduction of
such reserve deposit) for any Fiscal Year shall be insufficient to
make such deposit in full, the General Partner shall fund such
shortfall from its own funds as a Subordinated Loan; and
(ii) In addition to the requirements of Section
6.5(e)(i), in order to fund Cash Expenditures of the Partnership which
exceed Cash Receipts available for the payment thereof, on or prior
to the Admission Date, the General Partner (or its designee), shall
deposit $50,000 into a segregated reserve account (the "Operating
Reserve") to secure the General Partner's obligation to fund operating
expenses until the fifth anniversary of Rental Achievement (the
"Subordinated Loan Period"). Funds held in the Operating Reserve may
be released to pay operating expenses with the reasonable approval of
the Special Limited Partner, which approval shall be deemed to have
been given if no objection is delivered by the Special Limited Partner
within ten (10) days of the Special Limited Partner's receipt of a
written request by the General Partner for such proposed release. Any
funds utilized from the Operating Reserve to pay Partnership operating
expenses shall constitute Subordinated Loans. Upon the fifth
anniversary of Rental Achievement, any funds remaining in the
Operating Reserve shall be released to the General Partner upon the
achievement of Breakeven.
(f) Each General Partner shall be bound by the provisions of
the Project Documents, and no additional General Partner (including,
without limitation, the Special Limited Partner if it becomes an
additional General Partner) shall be admitted if he, she or it has not
first agreed to be bound by this Agreement (and assume the obligations
of a General Partner hereunder) and by the Project Documents to the
same extent and under the same terms as each of the other General
Partners.
(g) The General Partner shall take all actions reasonably
appropriate to ensure that the Investment Limited Partners receive the
full amount of the Projected Credit, including, without limitation,
the rental of apartments to appropriate tenants and the filing of
annual certifications as may be required. In this regard, the General
Partner shall, inter alia, cause (i) the Partnership to satisfy the
Minimum Set-Aside Test, the Rent Restriction Test and all other
requirements imposed from time to time under the Code with respect to
rental levels and occupancy by qualified tenants by the close of the
first year of the Credit Period and throughout the Compliance Period
so as to permit the Partnership to be entitled to the maximum
available Tax Credit (ii) the Partnership to comply with all State Tax
Credit monitoring procedures, (iii) all dwelling units in the
Apartment Complex to be leased for initial periods of not less than
six months to individuals satisfying the Rent Restriction Test, (iv)
the Partnership to make all appropriate Tax Credit elections in a
timely fashion, and (v) all rental units in the Apartment Complex to
be of equal quality with comparable amenities available to low-income
tenants on a comparable basis without separate fees in accordance with
Section 42 of the Code.
(h) On or before the Admission Date, the General Partner shall
provide to the Special 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
Authority, including any applicable Credit Agency, setting forth
estimates with respect to construction, rehabilitation and mortgage
financing costs and initial rental income and operating expense
figures for the Apartment Complex.
(i) The General Partner shall (i) not store or dispose of
(except in compliance with all laws, ordinances, and regulations
pertaining thereto) any Hazardous Material at the Apartment Complex,
or at or on any other Site or Vessel owned, occupied, or operated
either by any General Partner, any Affiliate of a General Partner, or
any Person for whose conduct any General Partner is or was
responsible; (ii) neither directly nor indirectly transport or arrange
for the transport of any Hazardous Material (except in compliance with
all laws, ordinances, and regulations pertaining thereto);
(iii) complete the Lead Paint Procedures on or before December 31,
1996, and (iv) provide the Investment Limited Partners with written
notice (x) upon any General Partner's obtaining knowledge of any
potential or known release, or threat of release, of any Hazardous
Material at or from the Apartment Complex or any other Site or Vessel
owned, occupied, or operated by any General Partner, any Affiliate of
a General Partner or any Person for whose conduct any General Partner
is or was responsible or whose liability may result in a lien on the
Apartment Complex; (y) upon any General Partner's receipt of any
notice to such effect from any federal, state, or other Governmental
Authority; and (z) upon any General Partner's obtaining knowledge of
any incurrence of any expense or loss by any such government authority
in connection with the assessment, containment, or removal of any
Hazardous Material for which expense or loss any General Partner may
be liable or for which expense or loss a lien may be imposed on the
Apartment Complex.
(j) The General Partner shall promptly request in writing of
the Permanent Lender that the Permanent Lender cause the Special
Limited Partner to be named as an "interested party" in the Permanent
Mortgage Loan Documents, so that the Permanent Lender will notify the
Special Limited Partner of any default under the Permanent Mortgage or
the General Partner shall itself notify the Special Limited Partner of
any such default.
(k) The General Partner shall provide the Special Limited
Partner with a true and accurate copy of each Construction Loan
requisition and any supporting documents and information which has
been submitted for approval by the Construction Lender (whether
submitted before or after the Admission Date).
(l) The General Partner shall have a fiduciary responsibility
for the safekeeping and use of all funds and assets of the
Partnership, whether or not in its immediate possession or control.
The General Partner shall not employ, or permit another to employ,
such funds or assets in any manner except for the exclusive benefit of
the Partnership. No General Partner shall contract away the fiduciary
duty owed at common law to the Limited Partners.
(m) From and after the Admission Date, the General Partner
shall cause the Partnership to hire and maintain such professional,
trained security personnel as shall be necessary to reasonably ensure
the security of the Apartment Complex and the safety of the tenants
and staff thereof. The quality and level of such security personnel
shall be equal to that which a reasonably prudent project owner would
maintain. The cost of such security personnel shall be an operating
expense and shall be provided for as a separate line item in the
Partnership's annual operating budget, which line item shall be in an
amount (as reasonably adjusted each year to account for cost
increases) not less than as set forth in the Partnership's 1996 annual
budget, a copy of which is attached hereto as Exhibit C.
(n) The General Partner shall cause the Partnership to follow
the recommendations as to asbestos-containing materials as set forth
in Section 6.3 of the Phase I Environmental Report dated March 26,
1996. Further, the General Partner shall cause the Partnership to
follow the recommendations as to Radon levels as set forth in Section
6.8 of the Phase I Environmental Report dated March 26, 1996. The
cost of any of the procedures required by this subsection (n) shall be
borne by the Partnership and such costs shall be specifically included
in the General Partner's indemnity set forth in Section 6.9(c).
6.6 Representations and Warranties
The General Partner represents and warrants to the Investment
Limited Partners and the Special Limited Partner as follows:
(a) The Partnership is a duly organized limited partnership
validly existing and in good standing under the laws of the State and
has complied with all filing requirements necessary for its existence
and to preserve the limited liability of the Investment Limited
Partners.
(b) No event or proceeding has occurred or is pending or, is
to the Best Knowledge of the General Partner, threatened which would
(i) materially adversely affect the Partnership or its properties, or
(ii) materially adversely affect the ability of the General Partner or
any of its Affiliates to perform their respective obligations
hereunder or under any other agreement with respect to the Apartment
Complex, other than legal proceedings which have been bonded against
without recourse to Partnership assets in such manner as to stay the
effect of the proceedings or otherwise have been adequately provided
for. This subparagraph shall be deemed to include, without
limitation, the following: (x) legal actions or proceedings before
any court, commission, administrative body or other Governmental
Authority having jurisdiction over the zoning applicable to the
Apartment Complex; (y) labor disputes; and (z) acts of any
Governmental Authority.
(c) No default (or event which, with the giving of notice or
the passage of time or both, would constitute a default), except as
disclosed in writing to the Special Limited Partner, has occurred and
is continuing under this Agreement or under any material provision of
the Project Documents, and the Project Documents are in full force and
effect.
(d) Except as specifically permitted under Section 3.1, no
Partner or Related Person bears (or will bear) the Economic Risk of
Loss with respect to the Permanent Mortgage Loan. No General Partner
has, either on its own behalf or on behalf of the Partnership,
incurred any financial obligation with respect to the Partnership
prior to the Admission Date, other than as disclosed in writing to the
Special Limited Partner prior to the Admission Date.
(e) The Apartment Complex will be, is being or has been
constructed in a timely manner in conformity with the Project
Documents. There is no violation by the Partnership or the General
Partner of any zoning, environmental or similar regulation applicable
to the Apartment Complex which could have a material adverse effect
thereon, and the Partnership has to the General Partner's Best
Knowledge complied and will comply with all applicable municipal and
other laws, ordinances and regulations relating to such construction
and use of the Apartment Complex. All appropriate public utilities,
including, but not limited to, water, electricity, gas (if 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 initial occupancy of such unit.
(f) The Partnership owns good and marketable fee simple title
to the Apartment Complex, subject to no material liens, charges or
encumbrances other than those which (i) are both permitted by the
Project Documents and are noted or excepted in the Title Policy, (ii)
do not materially interfere with use of the Apartment Complex (or any
part thereof) for its intended purpose or, other than the permitted
Mortgages, have a material adverse effect on the value of the
Apartment Complex, or (iii) have been bonded or insured against in
such a manner as to preclude the holder of such lien or such surety or
insurer from having any recourse to the Property or the Partnership
for payment of any debt secured thereby, which bond(s) or insurance
have been approved by the Lenders.
(g) The execution and delivery of all instruments and the
performance of all acts heretofore or hereafter made or taken
pertaining to the Partnership or the Apartment Complex by each
Affiliate of a General Partner which is a corporation or limited
liability company have been or will be duly authorized by all
necessary corporate or other actions, and the consummation of any such
transactions with or on behalf of the Partnership will not constitute
a breach or violation of, or a default under, the charter or by-laws
of such Affiliate or any agreement by which such Affiliate or any of
its properties is bound, nor constitute a violation of any law,
administrative regulation or court decree.
(h) Any General Partner (or partner or member of a General
Partner) which is a corporation or limited liability company (a
"Corporation/LLC") has been duly organized, is validly existing and in
good standing under the laws of its state of organization and has all
requisite corporate and other power to be a General Partner and to
perform its duties and obligations as contemplated by this Agreement
and the Project Documents. Neither the execution and delivery by any
Corporation/LLC of this Agreement nor the performance of any of the
actions of any Corporation/LLC contemplated hereby has constituted or
will constitute a violation of (a) the articles of incorporation,
operating agreement, by-laws and any other organizational documents of
such Corporation/LLC, (b) any agreement by which such Corporation/LLC
is bound or to which any of its property or assets is subject, or (c)
any law, administrative regulation or court decree.
(i) No Event of Bankruptcy has occurred with respect to any
General Partner.
(j) All accounts of the Partnership required to be maintained
under the terms of the Project Documents, including, but not
necessarily limited to, any account for replacement reserves, are
currently funded to the levels required by any Agency or Lender.
(k) The General Partner has and will continue to have a net
worth of not less than $180,000, provided however, that for the
purposes of computing such net worth under this subsection only, any
amounts advanced to the General Partner under a demand promissory note
from the Guarantors and subsequently expended by the General Partner
to satisfy its obligations hereunder shall be deemed not to reduce the
net worth of the General Partner.
(l) All anticipated payments and expenses required to be made
or incurred in order to complete the construction of the Apartment
Complex in conformity with the Project Documents, to fund any reserves
hereunder or under any other Project Document required to be funded at
or prior to the later of the Admission Date or Permanent Mortgage
Commencement, to satisfy all requirements under the Project Documents
and to pay the Development Fee and all other fees, have been or will
be paid or provided for utilizing only (i) the funds available from
the Construction Loan, (ii) the Capital Contributions of the
Investment Limited Partners, (iii) the Capital Contributions of the
General Partner in the amounts set forth on Schedule A as of the
Admission Date, (iv) the available net rental income, if any, earned
by the Partnership prior to Permanent Mortgage Commencement (to the
extent that it is permitted to be used for such purposes by any Agency
or Lender), (v) any Cash Flow generated subsequent to Permanent
Mortgage Commencement (to the extent provided in Section 10.2(a)),
(vi) any insurance proceeds and (vii) any funds furnished by the
General Partner pursuant to Sections 6.5(e) and 6.11(a).
(m) The aggregate amount of Tax Credit which is expected to be
allocated by the Partnership to the Investment Limited Partners is
$189,084 for 1996, $206,273 per annum for each of the years 1997
through 2005 (inclusive), provided, however, that the General Partner
shall have no liability to the Investment Limited Partners or the
Special Limited Partner for any breach of the representation contained
in this paragraph (m) if (but only to the extent that) the adjuster
provisions set forth in Sections 5.1(e), (f) and (g) have become
operative and all required payments or adjustments have been made
thereunder in accordance with the terms thereof.
(n) The Apartment Complex will be, is being or has been
constructed and operated in a manner which satisfies Section 42 of the
Code and shall continue to satisfy all existing and anticipated
restrictions applicable to projects generating Tax Credits.
(o) To the Best Knowledge of the General Partner, no General
Partner, Affiliate of a General Partner or Person for whose conduct
any General Partner is or was responsible has ever: (i) owned,
occupied, or operated a Site or Vessel on which any Hazardous Material
was or is stored, transported, or disposed of, except if such storage,
transport or disposition was and is at all times in compliance with
all laws, ordinances, and regulations pertaining thereto; (ii)
directly or indirectly transported, or arranged for transport, of any
Hazardous Material (except if such transport was and is at all times
in compliance with all laws, ordinances and regulations pertaining
thereto); (iii) caused or was legally responsible for any release or
threat of release of any Hazardous Material; (iv) received
notification from any federal, state or other Governmental Authority
of (x) any potential, known, or threat of release of any Hazardous
Material from the Apartment Complex or any other Site or Vessel owned,
occupied, or operated by any General Partner, by any Affiliate of a
General Partner, or by any Person for whose conduct any General
Partner is or was responsible or whose liability may result in a lien
on the Apartment Complex; or (y) the incurrence of any expense or loss
by any such Governmental Authority or by any other Person in
connection with the assessment, containment, or removal of any release
or threat of release of any Hazardous Material from the Apartment
Complex or any such Site or Vessel.
(p) To the Best Knowledge of the General Partner, no Hazardous
Material was ever or is now stored on, transported, or disposed of on
the land comprising the Apartment Complex, except to the extent any
such storage, transport or disposition was at all times in compliance
with all laws, ordinances, and regulations pertaining thereto.
(q) The General Partner has fulfilled and will continue to
fulfill all of its duties and obligations under Section 6.5.
6.7 Liability on Mortgages
Neither any General Partner nor any Related Person shall at any
time bear the Economic Risk of Loss for the payment of any portion of
any Mortgage Loan, and the General Partner shall not permit any other
Partner or any Related Person to bear the Economic Risk of Loss for
the payment of any portion of any Mortgage Loan, except as may be
expressly permitted pursuant to the provisions of Article III with the
Consent of the Special Limited Partner.
6.8 Indemnification of the General Partner
(a) No General Partner or any Affiliate thereof shall have
liability to the Partnership or to any Limited Partner for any loss
suffered by the Partnership which arises out of any action or inaction
of any General Partner or Affiliate thereof if such General Partner or
Affiliate thereof in good faith determined that such course of conduct
was in the best interest of the Partnership and such course of conduct
did not constitute gross negligence or willful misconduct of such
General Partner or Affiliate thereof.
(b) A General Partner or any Affiliate thereof shall be
indemnified by the Partnership from and against any Adverse
Consequences sustained in connection with the business and operations
of the Partnership, provided that all of the following conditions are
met: (i) such General Partner has determined, in good faith, that the
course of conduct which caused the loss, judgment, liability, expense
or amount paid in settlement was in the best interests of the
Partnership; and (ii) such Adverse Consequences were not the result of
gross negligence or willful misconduct on the part of such General
Partner or Affiliate thereof; and (iii) such indemnification or
agreement to hold harmless is recoverable only out of the assets of
the Partnership and distributions thereof, and not from the Limited
Partners.
(c) Notwithstanding the above, no Partner or any Affiliate
thereof performing services for the Partnership or any broker-dealer
shall be indemnified for any Adverse Consequences arising from or out
of an alleged violation of federal or state securities laws unless
there has been a successful adjudication on the merits of each count
involving securities laws violations as to the particular indemnitee
and the court finds that indemnification of the settlement and related
costs should be made. In any claim for indemnification for federal or
state securities law violations, the party seeking indemnification
shall, prior to seeking court approval for such indemnification, place
before the court the positions of the Securities and Exchange
Commission, the Massachusetts Securities Division and any other
applicable state securities administrator with respect to the issue of
indemnification for securities law violations.
(d) The Partnership shall not incur the cost of the portion of
any insurance, other than public liability insurance or course of
construction insurance, which insures any party against any liability
as to which such party is herein prohibited from being indemnified.
(e) The Partnership may indemnify Affiliates of a General
Partner under this Section 6.8 only if the loss involves an activity
in which such Affiliates acted in the capacity of a General Partner.
(f) For purposes of this Section 6.8 only, the term
"Affiliate" shall mean any Person performing services on behalf of the
Partnership who (i) directly or indirectly controls, is controlled by
or is under common control with a General Partner; (ii) owns or
controls ten percent (10%) or more of the outstanding voting
securities of a General Partner; (iii) is an officer, director,
partner or trustee of a General Partner; or (iv) if a General Partner
is an officer, director, partner or trustee, in any company for which
such General Partner acts in any such capacity. For purposes of this
Section 6.8 only, the term "controls" and any form of such term shall
mean the power to direct the management and policies of a Person,
directly or indirectly, whether through ownership of voting
securities, by contract or otherwise.
6.9 Indemnification of the Partnership and the Limited
Partners
(a) The General Partner will indemnify and hold the
Partnership and the Limited Partners harmless from and against any and
all Adverse Consequences which the Partnership or any Limited Partner
may incur by reason of (i) the past, present or future actions or
omissions of the General Partner or any of its Affiliates constituting
gross negligence or willful misconduct, or (ii) any liabilities to
which either the Partnership or the Apartment Complex is subject other
than (x) any Mortgage Loan Document or (y) any payables or necessary
contractual obligations incurred pursuant to the requirements of any
Agency or Lender in connection with the operation of the Apartment
Complex in the ordinary course of business.
(b) Notwithstanding the foregoing, no General Partner shall be
liable to a Limited Partner or the Partnership for any act or omission
for which the Partnership is required to indemnify such General
Partner under Section 6.8.
(c) The General Partner shall indemnify, defend, and hold the
Limited Partners harmless from and against any Adverse Consequences
related to or arising out of the presence of any Hazardous Material at
the Apartment Complex (other than any Adverse Consequences resulting
from the acts or omissions of the Limited Partners or those arising
out of items expressly disclosed in the Phase I Environmental Reports
and not otherwise expressly required by this Agreement to be abated or
remediated). Any claim or loss described in the immediately preceding
sentence may be defended, compromised, settled, or pursued by the
Limited Partners with counsel of the Limited Partners' selection, but
at the expense of General Partner. Notwithstanding anything else set
forth herein, this indemnification shall survive the withdrawal of any
General Partner and/or the termination of this Agreement.
6.10 Operating Deficits
Subject to any Requisite Approvals, the General Partner shall be
obligated during the Subordinated Loan Period, to promptly advance
funds to eliminate any Operating Deficit, provided however, that the
balance of such Subordinated Loans shall not be required to exceed
$300,000 at any time prior to the first anniversary of Rental
Achievement, $240,000 at any time between the first and second
anniversaries of Rental Achievement, $180,000 at any time between the
second and third anniversaries of Rental Achievement, $120,000 at any
time between the third and fourth anniversaries of Rental Achievement,
and $60,000 at any time between the fourth and fifth anniversaries of
Rental Achievement. In any case in which the General Partner
otherwise would be required to advance funds under this Section 6.10,
any amounts then held in the Operating Reserve may be released and
disbursed for the purpose of eliminating the Operating Deficit before
the General Partner shall be required to advance their own funds. In
the event that the General Partner shall fail to make any such advance
as aforesaid, (a) the Partnership shall utilize amounts (the "Applied
Amounts") otherwise payable to the General Partner or its Affiliates
under Section 6.12 and/or Article X to meet the obligations of the
General Partner pursuant to this Section 6.10, with such utilization
of Applied Amounts constituting payment and satisfaction of the
corresponding amounts payable to the General Partner or its Affiliates
under Section 6.12 and/or Article X, with the proceeds thereof being
applied to such obligations, and with the obligation of the
Partnership to make such payments to the General Partner or its
Affiliates pursuant to Section 6.12 and/or Article X being deemed to
have been satisfied to the extent thereof and (b) the Special Limited
Partner shall have the option, exercisable in its sole discretion, to
cause it or one or more of its designees to be admitted to the
Partnership as additional General Partner(s). An additional General
Partner so admitted shall automatically, without the need for any
further action by any Partner, become the Managing General Partner and
shall be delegated all of the powers and authority of all of the
General Partners pursuant to Section 6.13, and each Partner hereby
grants to any such additional General Partner a power of attorney,
coupled with an interest and irrevocable to the extent permitted by
law, to execute and deliver any and all instruments and documents
which it believes to be necessary or appropriate in order to
accomplish the purposes of this Section 6.10 and to manage the
business of the Partnership. The admission of an additional General
Partner shall not relieve any other General Partner of any of its
economic obligations hereunder, and each other General Partner shall
indemnify and hold harmless the additional General Partner from and
against any and all Adverse Consequences sustained after such
additional General Partner's admission to the Partnership in
connection with the additional General Partner's status as a General
Partner (other than Adverse Consequences arising solely out of the
negligence or misconduct of such additional General Partner). For the
purpose of this Section 6.10, all expenses shall be paid on a sixty
(60)-day current basis. Moreover, the General Partner may in its sole
discretion at any time advance funds to the Partnership to pay
operating expenses and/or debt service of the Partnership in order to
facilitate the Partnership's compliance with the Rent Restriction
Test. All advances pursuant to Section 6.5(e) and this Section 6.10
(including any Applied Amounts), except advances from the Operating
Reserve, shall constitute non-interest-bearing Subordinated Loans.
Subordinated Loans shall be repaid in accordance with the provisions
of Article X. The form and provisions of all Subordinated Loans shall
conform to any applicable Regulations.
6.11 Obligation to Complete the Construction of the Apartment
Complex
(a) The Developer, in its capacity as the Developer and not as
a General Partner, shall be obligated to complete the construction of
the Apartment Complex and achieve Permanent Mortgage Commencement in
the manner set forth in this Agreement and the Development Agreement.
(b) The completion of the Apartment Complex shall be secured
by the Guaranty.
6.12 Certain Payments to the General Partner and Others
(a) As reimbursement for certain advances and as compensation
for the Developer's services in connection with the development and
rehabilitation of the Apartment Complex, the Partnership shall pay to
the Developer a development fee (the "Development Fee") in the amount
and at the times set forth in the Development Agreement. If the
Development Fee has not been fully paid by the tenth anniversary of
the Completion Date, the General Partner shall make a Capital
Contribution to the Partnership in an amount sufficient to enable the
Partnership to pay any unpaid portion of the Development Fee.
(b) The Partnership shall pay to the Special Limited Partner
or an Affiliate thereof a fee (the "Asset Management Fee") commencing
in 1996 for its services in connection with the Partnership's
accounting matters relating to the Investment Limited Partners and
assisting with the preparation of tax returns and the reports
required by Section 12.7 in the annual amount of $10,000. The Asset
Management Fee shall be payable from Cash Flow in the manner and
priority set forth in Section 10.2(a); provided however, that if in
any Fiscal Year, Cash Flow is insufficient to pay the full amount of
the Asset Management Fee, the General Partner shall advance the amount
of such deficiency to the Partnership as a Subordinated Loan.
(c) In consideration of the services of the General Partner in
managing the day-to-day business and affairs of the Partnership, the
Partnership shall pay to the General Partner an annual fee (the
"Partnership Management Fee") commencing in 1996 in the amount of
$20,000. The Partnership Management Fee shall be payable from Cash
Flow in the manner and priority set forth in Section 10.2(a);
provided, however, that if in any Fiscal Year Cash Flow is
insufficient to pay the full amount of the Partnership Management Fee,
the unpaid portion shall accrue and be payable out of available Cash
Flow in succeeding Fiscal Years.
6.13 Delegation of General Partner Authority
(a) If there shall be more than one General Partner serving
hereunder, each General Partner may from time to time, by an
instrument in writing, delegate all or any of his powers or duties
hereunder to another General Partner or General Partners.
(b) Each contract, deed, mortgage, lease and other instrument
executed by any General Partner shall be conclusive evidence in favor
of every Person relying thereon or claiming thereunder that at the
time of the delivery thereof (i) the Partnership was in existence,
(ii) this Agreement had not been amended in any manner so as to
restrict the delegation of authority among General Partners (except as
shown in certificates or other instruments duly filed in the Filing
Office) and (iii) the execution and delivery of such instrument was
duly authorized by the General Partners. Any Person may always rely
on a certificate addressed to him and signed by any General Partner
hereunder:
(1) as to who are the General Partners or Limited
Partners hereunder;
(2) as to the existence or nonexistence of any fact
which constitutes a condition precedent to acts by the General
Partners or in any other manner germane to the affairs of the
Partnership;
(3) as to who is authorized to execute and deliver any
instrument or document of the Partnership;
(4) as to the authenticity of any copy of this Agreement
and any amendments thereto; or
(5) as to any act or failure to act by the Partnership
or as to any other matter whatsoever involving the Partnership
or any Partner.
6.14 Assignment to Partnership
The Developer and the General Partner hereby transfer and assign
to the Partnership all of their right, title and interest in and to
the Apartment Complex and in and to all of the Project Documents,
including, but not limited to, the following: (i) all contracts with
architects, supervising architects, engineers and contractors with
respect to the development of the Apartment Complex; (ii) all plans,
specifications and working drawings heretofore prepared or obtained in
connection with the Apartment Complex; (iii) all governmental
commitments and approvals obtained, and applications therefore,
including, but not limited to those relating to planning, zoning,
building permits and Tax Credits; (iv) any and all commitments with
respect to any Mortgage(s); and (v) any and all contracts or rights
with respect to any agreements with any Agency or Lender.
6.15 Contracts with Affiliates
(a) The General Partner or any Affiliate thereof may act as
Management Agent upon the terms and conditions set forth in Article
XI.
(b) The General Partner or any Affiliates thereof shall have
the right to contract or otherwise deal with the Partnership for the
sale of goods or services to the Partnership in addition to those set
forth herein, if (i) compensation paid or promised for such goods or
services is reasonable (i.e., at fair market value) and is paid only
for goods or services actually furnished to the Partnership, (ii) the
goods or services to be furnished shall be reasonable for and
necessary to the Partnership, (iii) the fees, terms and conditions of
such transaction are at least as favorable to the Partnership as would
be obtainable in an arm's-length transaction, and (iv) no agent,
attorney, accountant or other independent consultant or contractor who
also is employed on a full-time basis by the General Partner or any
Affiliate shall be compensated by the Partnership for his services.
Any contract (except the Management Agreement) covering such
transactions shall be in writing and shall be terminable without
penalty on sixty (60) days written notice. Any payment made to the
General Partner or any Affiliate for such goods or services shall be
fully disclosed to all Limited Partners in the reports required under
Article XII. Neither the General Partner nor any Affiliate shall, by
the making of lump-sum payments to any other Person for disbursement
by such other Person, circumvent the provisions of this Section
6.15(b).
6.16 Tax Matters Partner
(a) The General Partner hereby is designated as Tax Matters
Partner of the Partnership, and shall engage in such undertakings as
are required of the Tax Matters Partner of the Partnership as provided
in treasury regulations pursuant to Section 6231 of the Code. Each
Partner, by the execution of this Agreement, consents to such
designation of the Tax Matters Partner and agrees to execute, certify,
acknowledge, deliver, swear to, file and record at the appropriate
public offices such documents as may be necessary or appropriate to
evidence such consent.
(b) The Tax Matters Partner hereby is authorized, but not
required:
(i) to enter into any settlement agreement with the
Service with respect to any tax audit or judicial review, in
which agreement the Tax Matters Partner may expressly state that
such agreement shall bind the other Partners, except that such
settlement agreement shall not bind any Partner who (within the
time prescribed pursuant to the Code and treasury regulations
thereunder) files a statement with the Service providing that
the Tax Matters Partner shall not have the authority to enter
into a settlement agreement on the behalf of such Partner;
(ii) in the event that a notice of final administrative
adjustment at the Partnership level of any item required to be
taken into account by a Partner for tax purposes (a "Final
Adjustment") is mailed to the Tax Matters Partner, to seek
judicial review of such Final Adjustment, including the filing
of a petition for readjustment with the Tax Court, the District
Court of the United States for the district in which the
Partnership's principal place of business is located, or the
United States Claims Court;
(iii) to intervene in any action brought by any other
Partner for judicial review of a Final Adjustment;
(iv) to file a request for an administrative adjustment
with the Service at any time and, if any part of such request is
not allowed by the Service, to file an appropriate pleading
(petition or complaint) for judicial review with respect to such
request;
(v) to enter into an agreement with the Service to
extend the period for assessing any tax which is attributable to
any item required to be taken into account by a Partner for tax
purposes, or an item effected by such item; and
(vi) to take any other action on behalf of the Partners
or the Partnership in connection with any administrative or
judicial tax proceeding to the extent permitted by applicable
law or Regulations.
(c) The Partnership shall indemnify and reimburse the Tax
Matters Partner for all expenses, including legal and accounting fees,
claims, liabilities, losses and damages incurred in connection with
any administrative or judicial proceeding with respect to the tax
liability of the Partners. The payment of all such expenses shall be
made before any distributions are made from Cash Flow or any
discretionary reserves are set aside by the General Partner. The
General Partner shall have the obligation to provide Partnership funds
for such purpose, but only to the extent of available Partnership
resources. The taking of any action and the incurring of any expense
by the Tax Matters Partner in connection with any such proceeding,
except to the extent required by law, is a matter in the sole
discretion of the Tax Matters Partner and the provisions on
limitations of liability of the General Partner and indemnification
set forth in Section 6.8 of this Agreement shall be fully applicable
to the Tax Matters Partner in its capacity as such.
ARTICLE VII
Withdrawal of a General Partner; New General Partners
7.1 Voluntary Withdrawal
(a) Except as set forth in Section 7.1(b) below, no General
Partner shall have the right to Withdraw voluntarily from the
Partnership or to sell, assign or encumber its Interest without the
Consent of the Investment Limited Partners and each of the other
General Partners (if any) and, if required, any Requisite Approvals.
(b) Notwithstanding the foregoing:
(i) A General Partner may at any time propose to the
Investment Limited Partners a Person to serve as such General
Partner's successor or if at such time there be more than one
General Partner, to serve as a successor to one or more of the
General Partners desiring to withdraw. If the Investment
Limited Partners have consented thereto or if, pursuant to
Section 7.5, such a consent is not required, and any Requisite
Approvals are obtained to such withdrawal and the admission of
such successor, all Partners hereby agree, subject to the
provisions of Section 7.5, that this Agreement and the
Certificate shall be appropriately amended to effect such
withdrawal and admission.
(ii) If the Special Limited Partner or its designee
becomes a General Partner pursuant to the provisions of Section
4.5(b), Section 5.2(e), Section 6.2(b) or Section 6.10, it shall
not require the consent of any other General Partner (except
WAI, which consent shall not be unreasonably withheld) to
transfer all or any portion of its Interest as a General
Partner, other than as may be required under the Act.
(iii) The General Partner may pledge or assign its
Interest to the Construction Lender as security for the
Partnership's obligations under the Construction Loan Documents,
provided that the form and substance of such pledge or
assignment has been approved by the Special Limited Partner.
7.2 Reconstitution
(a) In the event of the Withdrawal of a General Partner, the
Partnership shall not be dissolved or required to be wound up if (i)
at the time of such Withdrawal there is at least one remaining General
Partner and that General Partner carries on the business of the
Partnership (any such remaining General Partner being hereby
authorized to carry on the business of the Partnership), or (ii)
within ninety (90) days after such Withdrawal all remaining Partners
agree in writing to continue the business of the Partnership and to
the appointment, effective as of the date of such Withdrawal, of one
or more additional General Partners.
(b) If it is determined, by a court of competent jurisdiction,
that the Partnership has dissolved prior to the occurrence of a
Liquidating Event, or if upon the Withdrawal of a General Partner, the
Partners fail to appoint a substitute General Partner effective as of
such event and to agree to continue the business of the Partnership as
provided in this Section 7.2, then within an additional ninety (90)
days after such determination or the last day of such ninety (90) day
period, as the case may be (the "Reconstitution Period"), the
Investment Limited Partners may elect to reconstitute the Partnership
and continue its business on the same terms and conditions set forth
in this Agreement by forming a new limited partnership on terms
identical to those set forth in this Agreement and having as a General
Partner a Person designated by the Investment Limited Partners. Upon
any such election by the Investment Limited Partners, all Partners
shall be bound thereby and shall be deemed to have consented thereto.
Unless such an election is made within the Reconstitution Period, the
Partnership shall wind up its affairs in accordance with the
provisions of Section 10.3 hereof. If such an election is made within
the Reconstitution Period, then:
(i) The reconstituted limited partnership shall
continue until the occurrence of a Liquidating Event as
provided in Section 2.4;
(ii) If the successor General Partner is not a
former General Partner, then the provisions of Section
7.4(d) shall apply; and
(iii) All necessary steps shall be taken to cancel
this Agreement and the Certificate and to enter into a new
partnership agreement and certificate of limited
partnership, and the successor General Partner shall be
obligated to take such steps.
7.3 Successor General Partner
(a) Upon the occurrence of any Withdrawal, the remaining
General Partners may designate a Person to become a successor General
Partner to the Withdrawing General Partner. Except as provided in
Section 7.5 and subject to the provisions of Section 7.5, any Person
so designated, subject to any Requisite Approvals, the Consent of the
Investment Limited Partners and, if required by the Act or any other
applicable law, the consent of any other Partner so required, shall
become a successor General Partner upon his written agreement to be
bound by the Project Documents and by the provisions of this
Agreement.
(b) If any Withdrawal shall occur at a time when there is no
remaining General Partner and the Partners do not unanimously elect to
continue the business of the Partnership in accordance with the
provisions of clause (ii) of Section 7.2(a) above, then the Investment
Limited Partners shall have the right, subject to any Requisite
Approvals and the provisions of Section 7.5, to designate a Person to
become a successor General Partner upon his written agreement to be
bound by the Project Documents and by the provisions of this
Agreement.
(c) If the Investment Limited Partners elect to reconstitute
the Partnership and admit a successor General Partner pursuant to this
Section 7.3, the relationship of the Partners in the reconstituted
Partnership shall be governed by this Agreement.
7.4 Interest of Predecessor General Partner
(a) Except as provided in Section 7.3(a), no assignee or
transferee of all or any part of the Interest as a General Partner of
a General Partner shall have any automatic right to become a General
Partner. Until the acquisition of the Interest of a Withdrawing
General Partner pursuant to Section 7.4(d) or 7.8, such Interest shall
be deemed to be that of an assignee and the holder thereof shall be
entitled only to such rights as an assignee may have as such under the
laws of the State.
(b) Anything herein contained to the contrary notwithstanding,
any General Partner who Withdraws voluntarily in violation of
Section 7.1 shall remain liable for all of its obligations under this
Agreement, for all its other obligations and liabilities hereunder
incurred or accrued prior to the date of its Withdrawal and for any
loss or damage which the Partnership or any of its Partners may incur
as a result of such Withdrawal (except as provided in Section 6.7),
except for any loss or damage attributable to the default, negligence
or misconduct of a successor General Partner admitted in its place
under this Agreement.
(c) The estate (which term, for purposes of this
Section 7.4(c), shall include the heirs, distributees, estate,
executors, administrators, guardian, committee, trustee or other
personal representative) of a Withdrawn General Partner shall be
liable for all his liabilities and obligations hereunder, except as
provided in this Section 7.4(c). In the event of the death, insanity
or incompetency of a General Partner, his estate shall remain liable
for all of his obligations and liabilities hereunder incurred or
accrued prior to the date of such event, and for any damages arising
out of any breach of this Agreement by him, but his estate shall not
have any obligation or liability on account of the business of the
Partnership or the activities of the other General Partners after his
death, insanity or incompetency unless it becomes a General Partner
pursuant to Section 7.3(a).
(d) The Disposition of the General Partner Interest of a
General Partner who or which Withdraws voluntarily in compliance with
this Agreement shall be accomplished in such manner as shall be
acceptable to the remaining General Partners and shall reasonably be
approved by Consent of the Investment Limited Partners. Except as
provided in the preceding sentence, upon the Withdrawal of a General
Partner (other than a General Partner who or which is removed as such
pursuant to Section 4.5), such Withdrawn General Partner shall be
deemed to have automatically transferred to the remaining General
Partners, in proportion to their respective General Partner Interests,
or, if there shall be no remaining General Partner, then to the
Partnership for the benefit of the remaining Partners, all or such
portion of the General Partner Interest of such Withdrawn General
Partner which, when aggregated with the existing General Partner
Interests of all such remaining General Partners, will be sufficient
to assure such remaining General Partners a 1% interest in all
Profits, Losses, Tax Credits and distributions of the Partnership
under Article X. No documentation shall be necessary to effectuate
such transfer, which shall be automatic, and no consideration shall be
payable therefor. For the purposes of Article X, the effective date
of the transfer pursuant to the provisions of this Section 7.4(d) of
the General Partner Interest of a Withdrawn General Partner shall be
deemed to be the date on which such Withdrawal occurs. That portion
of the General Partner Interest (the "Remaining Interest") of the
Withdrawing General Partner which shall not have been transferred
pursuant to this Section 7.4(d) shall be (i) purchased by the
Partnership in accordance with the provisions of Section 7.8 in the
case of a General Partner who or which Withdraws in violation of
Section 7.1 hereof and (ii) in all other cases (except a removed
General Partner), shall be retained by such Withdrawing General
Partner (or pass to legal representatives thereof) who or which shall
have the status of a Special Limited Partner, but with the right to
receive only that share of the Profits, Losses, Tax Credits and
distributions of the Partnership to which the Withdrawing General
Partner, as such, would have been entitled had he or it remained,
reduced to the extent of the General Partner Interest transferred
hereunder, but such Withdrawing Partner (or his or its legal
representatives, as the case may be) shall not be considered to be a
Special Limited Partner for the purpose of exercising any rights
reserved to the Special Limited Partner under this Agreement or
sharing the benefits allocated to the Special Limited Partner under
Article X hereof and shall not participate in the votes or consents of
the Limited Partners hereunder; provided, however, that in the case of
a General Partner who or which Withdraws involuntarily without
violation of this Agreement, the Partnership shall have the option
(but not the obligation), exercisable by notice to the holder of such
Interest within six months following the date of such Withdrawal, to
acquire the Remaining Interest of such Withdrawing General Partner (or
the Special Limited Partner Interest deriving therefrom) in accordance
with the valuation and payment provisions of Section 7.8.
7.5 Event of Bankruptcy as to a General Partner; Removal of a
General Partner and Transfer of Its Interest
(a) If an Event of Bankruptcy shall have occurred as to a
General Partner, the Special Limited Partner may (i) replace such
General Partner with a successor general partner (the "Successor")
willing to serve as a General Partner and reallocate to the Successor
(and the bankrupt General Partner hereby assigns to the Successor in
such event) the interest of the bankrupt General Partner in Profits,
Losses, Tax Credits, Cash Flow and Capital Proceeds (provided,
however, that in no event shall any fees which are earned be so
reallocated), or (ii) add an additional General Partner willing to
serve as such with such of the powers of the bankrupt General Partner
hereunder as the Special Limited Partner may designate and make a
similar reallocation to that contemplated by the foregoing clause (i),
which the bankrupt General Partner hereby ratifies in such event.
Upon the selection of the Successor as aforesaid and his admission as
a General Partner, the bankrupt General Partner shall not have any
further rights, powers, liabilities or obligations under this
Agreement and/or in respect of the Apartment Complex, provided,
however, that the bankrupt General Partner shall continue to be
responsible for (1) any loss caused by the nonperformance of its
obligations under this Agreement and/or in respect of the Apartment
Complex to be performed prior to the Completion Date and (2) the
furnishing of any funds required to be furnished by it under
Sections 6.10 and 6.11 (any such sums advanced by the bankrupt General
Partner pursuant to this clause (2) shall be deemed to be Capital
Contributions except to the extent treated as Subordinated Loans
pursuant to Section 6.10). If all or any part of the General Partner
Interest of a General Partner is reallocated pursuant to this
Section 7.5, such General Partner shall be entitled to receive the
fair market value of the Interest (or portion thereof) so reallocated;
such fair market value shall be determined and paid in accordance with
Section 7.8. No exercise of rights pursuant to this Section 7.5 need
be delayed pending determination of such value.
(b) From and after the date of the occurrence of an Event of
Bankruptcy as to any General Partner, the obligation of the Investment
Limited Partners to pay the Installments shall be suspended, and such
obligation shall be reinstated only when such Event of Bankruptcy
shall have been cured in a manner approved in writing by the Special
Limited Partner. Notwithstanding the foregoing, if an Event of
Bankruptcy occurs as to a General Partner when another viable General
Partner remains who is not in default with respect to its obligations
hereunder, the payment obligation of the Investment Limited Partners
shall be suspended only if such Event of Bankruptcy has a material
adverse impact on the Investment Limited Partners' tax benefits
hereunder for which the Investment Limited Partners have not been
fully compensated under the adjuster provisions set forth in
Section 5.1.
(c) Each Partner (including any General Partner removed as
aforesaid) hereby irrevocably nominates and appoints the Special
Limited Partner and each of its officers, with full power of
substitution, as the attorney-in-fact of such Partner, in his name,
place and xxxxx, to make, execute and deliver any and all amendments
to this Agreement, the Certificate, business certificates and
instruments of like tenor which may be necessary or appropriate to
give effect to the provisions of this Section 7.5.
(d) Inasmuch as the interests of the Partners under this
Agreement depend on the continuing existence of viable General
Partners willing and able to perform the functions of the General
Partners under this Agreement, the rights of, and payments to, the
General Partners have been agreed on in consideration, among other
things, of the agreement and ability of the General Partners to
perform such functions, and the inclusion of this Section 7.5 in this
Agreement has been a material inducement to each of the Investment
Limited Partners and the Special Limited Partner to enter into this
Agreement. Each Partner hereby ratifies and confirms any action
authorized by the provisions of this Section 7.5.
7.6 Designation of New General Partners
(a) The General Partners may, with the written consent of all
Partners, at any time designate new General Partners, each with such
Interest as a General Partner in the Partnership as the General
Partners may specify, subject to any Requisite Approvals.
(b) Any new General Partner shall, as a condition of receiving
any interest in the Partnership property, agree to be bound by the
Project Documents and any other documents required in connection
therewith and by the provisions of this Agreement, to the same extent
and on the same terms as any other General Partner.
7.7 Amendment of Certificate; Approval of Certain Events
(a) Upon the admission of a new General Partner pursuant to
the preceding provisions of this Article VII, Schedule A shall be
amended to reflect such admission and an amendment to the Certificate,
also reflecting such admission, shall be filed as required by the Act.
(b) Each Partner hereby consents to and authorizes any
admission or substitution of a General Partner or any other
transaction, including, without limitation, the continuation of the
Partnership business, which has been authorized under the provisions
of this Agreement, and hereby ratifies and confirms each amendment of
this Agreement necessary or appropriate to give effect to any such
transaction.
7.8 Valuation and Sale of Interest of Former General Partner
(a) Subject to the provisions of Section 7.4(d), if the
business of the Partnership is continued after the Withdrawal of a
General Partner, or if, following such event, the Partnership is
reconstituted, in each case as contemplated by this Agreement, the
Partnership shall purchase such General Partner's Interest (which
term, and words of like import, as used in this Section 7.8 shall
refer only to the "Remaining Interest" of such Withdrawing General
Partner as defined in Section 7.4(d) in all cases where applicable)
for a price equal to the fair market value thereof. The fair market
value shall be based upon either the agreed value of such Interest or,
if such value is not agreed to, the fair market value of such Interest
as determined by a qualified, MAI-designated state-licensed real
estate appraiser selected by the Withdrawing General Partner. If the
Partnership does not accept such value, it may select a second
similarly-qualified appraiser. If the values determined by both such
appraisers are within 10%, then the purchase price shall be the
arithmetic mean of the two. If the values differ by more than 10%,
then the two appraisers shall appoint a third similarly-qualified
appraiser, who shall also determine a value. The final purchase price
shall be the arithmetic mean of the two values closest in absolute
dollars. Notwithstanding the foregoing, if a General Partner is
removed for cause, or if a General Partner has voluntarily Withdrawn
from the Partnership in contravention of the terms of this Agreement,
the purchase price paid to such General Partner for its Interest shall
be reduced by an amount determined by an arbitrator mutually agreeable
to the Partnership and the General Partner to adequately compensate
the Partnership for any monetary damages arising from the action of
such General Partner leading to its removal, or for the fact of its
violation of the terms of this Agreement.
(b) Promptly after the determination of the purchase price of
a former General Partner's Interest pursuant to Section 7.8(a), the
Partnership shall deliver to such former General Partner a promissory
note of the Partnership for such purchase price, payable in five equal
consecutive annual installments commencing on the first anniversary of
the date of such note. Such promissory note shall bear simple
interest at the rate per annum which is at all times equal to the
Prime Rate then in effect for obligations of like term, payable on the
last day of each calendar quarter during which such note is
outstanding; provided, however, that if such note is delivered
following a Withdrawal of a General Partner which is voluntary on its
part in violation of this Agreement or a removal for cause, then
(i) such note shall neither be secured nor bear interest, and (ii) the
principal payable to the withdrawing General Partner shall be limited
in amount and date of payment to distributions available from the
proceeds of a Capital Transaction as set forth in Section 10.2(b).
Within one hundred twenty (120) days after the determination of the
purchase price of the former General Partner's Interest, the
Partnership may, with the consent of all remaining General Partners
and the Consent of the Investment Limited Partners, sell such Interest
to one or more Persons, who may be Affiliates of the remaining General
Partner or General Partners, and admit such Person or Persons to the
Partnership as substitute General Partners; provided, however, that
the purchase price to be paid to the Partnership for the Interest of
the former General Partner shall not be less than its purchase price
as determined by the appraisal and, if applicable, arbitration
described above. Such substitute General Partner or Partners may pay
said purchase price in installments in the manner set forth above in
this Section 7.8(b).
ARTICLE VIII
Transferability of Limited Partner Interests
8.1 Assignments
(a) Except by operation of law (including the laws of descent
and distribution) or pursuant to the provisions of Section 8.1(b), no
Limited Partner may assign all or any part of its Interest without the
written consent of the General Partner, the giving or withholding of
which is exclusively within its discretion.
(b) A Limited Partner, without the consent of the General
Partner (except that prior to the payment of the final Installment of
the Investment Limited Partners' Capital Contribution, the General
Partner shall have reasonable consent rights to the assignment of any
Investment Limited Partner's Interest, but only in the event that the
proposed assignee does not have the financial condition reasonably
sufficient make any Installments outstanding at the time of such
assignment), may assign to any Person all or any portion of the
economic benefits of the ownership of such Limited Partner's Interest;
provided, however, that such assignment shall not be binding on the
Partnership until there shall have been filed with the Partnership by
registered mail certified copies of an executed and acknowledged
assignment and the written acceptance by the assignee of all the terms
and provisions of this Agreement; if such assignment and acceptance
are not so filed, the Partnership need not recognize such assignment
for any purpose. An assignee of a Limited Partner who does not become
a Substituted Limited Partner shall have the right to receive the
allocable share of any Profits, Losses, Tax Credits or distributions
of the Partnership to which the assigning Limited Partner would have
been entitled with respect to the Interest (or portion thereof) so
assigned if no such assignment had been made by such Limited Partner,
but such assignee shall not have any of the voting or consent rights
of the assignor Limited Partner. Any assigning Limited Partner whose
permitted assignee becomes a Substituted Limited Partner shall
thereupon cease to be a Limited Partner and shall no longer have any
of the rights or privileges of a Limited Partner. Where the assignee
does not become a Substituted Limited Partner, the Partnership shall
recognize such assignment not later than the last day of the calendar
month following receipt of notice of assignment and all documentation
required in connection therewith.
(c) Each assignee of a Limited Partner Interest (or any
portion thereof) who desires to make a further assignment of its
Interest shall be subject to all the provisions of this Article VIII.
8.2 Substituted Limited Partner
(a) No Limited Partner shall have the right to substitute an
assignee as Limited Partner in its place. Subject to the provisions
of Section 8.3, the General Partner may, in its sole discretion,
permit an assignee to become a Substituted Limited Partner. The
consent of the General Partner to an assignment of a Limited Partner's
Interest under Section 8.1 shall not, in and of itself, constitute its
consent to the admission of the assignee as a Substituted Limited
Partner under this Section 8.2.
(b) Any Substituted Limited Partner shall execute such
instrument or instruments as shall be required by the General Partner
to signify the agreement of such Substituted Limited Partner to be
bound by all the provisions of this Agreement and shall pay the
Partnership's reasonable legal fees and filing costs in connection
with its substitution as a Limited Partner.
8.3 Restrictions
(a) No Disposition of a Limited Partner Interest may be made
if such Disposition would violate the provisions of Sections 8.1, 8.2
or 13.1.
(b) In no event shall all or any part of a Limited Partner
Interest be Disposed of to a minor (other than to a descendant by
reason of death) or to an incompetent.
(c) The General Partner may, in addition to any other
requirement it may impose, require as a condition of any Disposition
of a Limited Partner Interest that the transferor (i) assume all costs
incurred by the Partnership in connection therewith and (ii) furnish
the Partnership and the other Partners with an opinion of counsel
satisfactory to counsel to the Partnership that such Disposition
complies with applicable federal and state securities laws.
(d) Any sale, exchange, transfer or other Disposition of a
Limited Partner Interest in contravention of any of the provisions of
this Section 8.3 shall be void and ineffectual and shall not bind or
be recognized by the Partnership.
(e) Notwithstanding any other provision contained in this
Article VIII, if at any time there is more than one Investment Limited
Partner, each Investment Limited Partner shall have a right of first
refusal to purchase the Interest of any other Investment Limited
Partner who wishes to sell or otherwise transfer its Interest at a
price equal to and on terms identical to those of the prospective
purchaser thereof, to the extent reasonably practical, and shall have
at least fifteen (15) business days in which to exercise such right
after receiving notice thereof. If there shall be more than two non-
selling or transferring Investment Limited Partners, each of which
desires to exercise such a right of first refusal, they may do so pro
rata or, to the extent one does not so desire to exercise such right,
to the extent of the entire Interest being so sold or transferred.
(f) No transfer or assignment under this Article VIII shall be
permitted if in the opinion of the Special Tax Counsel, such transfer
or assignment shall cause a tax termination of the Partnership or
shall cause the Partnership to be taxed as other than a partnership.
ARTICLE IX
Borrowings
All Partnership borrowings shall be subject to the terms of this
Agreement and may be made from any source, including Partners and
their Affiliates. Any Partnership borrowings from any Partner shall
be subject to any Requisite Approvals. If any Partner shall lend any
monies to the Partnership, the amount of any such loan shall not
increase such Partner's Capital Contribution. If any Partner shall so
lend monies, each such loan (a "Voluntary Loan") shall be an
obligation of the Partnership and (except for Subordinated Loans)
shall be repayable to such Partner on the same basis and with the same
rate of interest as would be applicable to a comparable loan to the
Partnership from a third party. Funds advanced by the General Partner
to the Partnership pursuant to the provisions of Section 6.11 shall
not constitute borrowings for the purposes of this Article IX or for
any other purposes.
ARTICLE X
Profits, Losses, Tax Credits, Distributions and Capital Accounts
10.1 Profits, Losses and Tax Credits
(a) Subject to the provisions of Section 10.1(b) and Section
10.4, for each Partnership Fiscal Year or portion thereof, all
Operating Profits and Losses, tax-exempt income, losses, non-
deductible non-capitalizable expenditures and Tax Credits incurred or
accrued on or after the Commencement Date shall be allocated ninety-
nine percent (99%) to the Investment Limited Partners (in accordance
with their Percentage Interests) and one percent (1%) to the General
Partner.
(b) Except as otherwise specifically provided in this Article,
all Profits and Losses arising from a Capital Transaction shall be
allocated to the Partners as follows:
As to Profits:
First, that portion of Profits
(including any Profits treated as ordinary income for
federal income tax purposes) shall be allocated to the
Partners who have negative Capital Account balances in
proportion to the amounts of such balances, provided that
no Profits shall be allocated to a Partner under this
Clause First to increase any such Partner's Capital
Account above zero; and
Second, Profits in excess of the amounts
allocated under Clause First above shall be allocated to
and among the Partners in the same percentages as cash is
distributed under Clauses Eleventh, Thirteenth and
Fourteenth of Section 10.2(b);
As to Losses:
First, an amount of Losses shall be
allocated to the Partners to the extent and in such
proportions as shall be necessary such that, after giving
effect thereto, the respective balances in all Partners'
Capital Accounts shall be in the ratio of 99% for the
Investment Limited Partners (in accordance with their
Percentage Interests) and 1% for the General Partner;
Second, an amount of Losses shall be
allocated to the Partners until the balance in each
Partner Capital Account equals the amount of such
Partner's Capital Contribution (after the allocation under
Clause First above);
Third, an amount of Losses shall be
allocated to the Partners to the extent of and in
proportion to such Partners' Capital Account balances
(after the allocations under Clauses First and Second
above); and
Fourth, any remaining amount of Losses
after the allocation under Clauses First, Second and Third
above shall be allocated to the Partners in accordance
with the manner in which they bear the Economic Risk of
Loss associated with such Loss; provided, however, that in
the event that no Partner bears an Economic Risk of Loss
then any remaining Losses shall be allocated 99% to the
Investment Limited Partners (in accordance with their
Percentage Interests) and 1% to the General Partner.
10.2 Cash Distributions Prior to Dissolution
(a) Cash Flow
Subject to any Requisite Approvals, Cash Flow for each
Fiscal Year or portion thereof shall be applied as follows:
First, to the payment of the Asset
Management Fee for such Fiscal Year and for any previous
Fiscal Year(s) as to which the Asset Management Fee shall
not yet have been paid in full;
Second, to the payment of the
Partnership Management Fee for such Fiscal Year and for
any previous Fiscal Year(s) as to which the Partnership
Management Fee shall not yet have been paid in full;
Third, to the payment of any unpaid
portion of the Development Fee;
Fourth, to the repayment of any
Subordinated Loans, with any such payments to be applied
first to accrued but unpaid interest and then to
principal;
Fifth, to the payment of the Incentive
Management Fee; and
Sixth, the balance thereof, if any,
shall be distributed annually, seventy-five (75) days
after the end of the Fiscal Year, 20% to the Investment
Limited Partners (in accordance with their Percentage
Interests) and 80% to the General Partner.
(b) Distributions of Capital Proceeds
Prior to dissolution, if Capital Proceeds are available
for distribution from a Capital Transaction, such Capital Proceeds
shall be applied or distributed as follows (subject to the provisions
of Section 3.2(c)):
First, to the payment of all matured
debts and liabilities of the Partnership (including, but
not limited to, all expenses of the Partnership incident
to such Capital Transaction, any amounts due to a General
Partner who voluntarily withdraws from the Partnership in
accordance with this Agreement, and any unpaid portion of
the Development Fee), excluding (i) debts and liabilities
of the Partnership to Partners or their Affiliates (other
than the Development Fee, any amounts due to a General
Partner who voluntarily withdraws from the Partnership in
accordance with this Agreement, but including those
promissory notes provided for in clause Twelfth of this
Section 10.2(b)); and (ii) all unpaid fees owing to the
General Partner or its Affiliates; and to the
establishment of any reserves which the General Partner
and the Auditors shall deem reasonably necessary for
contingent, unmatured or unforeseen liabilities or
obligations of the Partnership;
Second, to the payment of any accrued
and unpaid Asset Management Fee;
Third, to the payment of any accrued but
unpaid Partnership Management Fee;
Fourth, as to the First Refinancing Loan
and any subsequent releases from the Refinance Reserve
only, to the General Partner in the amount of the Excess
Refinancing Proceeds;
Fifth, to the payment to the Investment
Limited Partners of the full amount (including interest)
of any Credit Recovery Loans;
Sixth, to the General Partner as payment of a Sales
Preparation Fee in the aggregate amount of $350,000;
Seventh, to the repayment of any Subordinated Loans,
with any such payments to be applied first to accrued but
unpaid interest and then to principal;
Eighth, to the repayment of any
remaining unpaid debts and liabilities owed to Partners or
Affiliates thereof by the Partnership for Partnership
obligations (exclusive of Credit Recovery Loans and
Subordinated Loans) to any of them, including, but not
limited to, accrued and unpaid amounts due in respect of
any and all fees (except the Development Fee) due and
payable to the General Partner or its Affiliates as set
forth in Section 6.12; provided, however, that any debts
or obligations to be repaid to any Limited Partner or
Affiliate thereof pursuant to this Clause Eighth shall be
repaid prior to the repayment of any such debts or
obligations to any General Partner or Affiliate thereof;
Ninth, pro rata 75% to the Investment Limited
Partners (in accordance with their Percentage Interests)
and 25% to the General Partner until the Investment
Limited Partners have received under this clause Ninth an
amount equal to their Capital Contributions;
Tenth, pro rata 25% to the Investment Limited
Partners (in accordance with their Percentage Interests)
and 75% to the General Partner until the General Partner,
when added to any amounts received pursuant to clauses
Sixth and Ninth of this Section 10.2(b), has received
under this clause Tenth an amount equal to $1,000,000;
Eleventh, to the payment of each Limited
Partner of an amount equal to the positive balance of its
Capital Account;
Twelfth, to the payment of any outstanding principal
and interest in respect of any promissory notes executed
by the Partnership pursuant to Sections 4.5(b)(iii) or
7.8(b) and not already provided for in Clause First of
this Section 10.2(b);
Thirteenth, to the payment of each
General Partner of an amount equal to the positive balance
of its Capital Account;
Fourteenth, subject to the provisions of
Section 10.3(a), any balance 49.999% to the Investment
Limited Partners (in accordance with their Percentage
Interests), .001% to the Special Limited Partner and 50%
to the General Partner.
10.3 Distributions Upon Dissolution
(a) Upon dissolution and termination, after payment of, or
adequate provision for, the debts and obligations of the Partnership,
the remaining assets of the Partnership shall be distributed to the
Partners in accordance with the positive balances in their Capital
Accounts after taking into account all Capital Account adjustments for
the Partnership Fiscal Year, including adjustments to Capital Accounts
pursuant to Sections 10.1(b) and 10.3(b). In the event that a General
Partner or Additional Limited Partner has a negative balance in its
Capital Account following the liquidation of the Partnership or such
Partner's Interest, after taking into account all Capital Account
adjustments for the Partnership Fiscal Year in which such liquidation
occurs, such Partner shall pay to the Partnership in cash an amount
equal to the negative balance in such Partner's Capital Account. Such
payment shall be made by the end of such Fiscal Year (or, if later,
within ninety (90) days after the date of such liquidation) and shall,
upon liquidation of the Partnership, be paid to recourse creditors of
the Partnership or distributed to other Partners in accordance with
the positive balances in their Capital Accounts.
(b) With respect to assets distributed in kind to the Partners
in liquidation or otherwise, (i) any unrealized appreciation or
unrealized depreciation in the values of such assets shall be deemed
to be Profits and Losses realized by the Partnership immediately prior
to the liquidation or other distribution event; and (ii) such Profits
and Losses shall be allocated to the Partners in accordance with the
provisions of Section 10.1(b), and any property so distributed shall
be treated as a distribution of an amount in cash equal to the excess
of such fair market value over the outstanding principal balance of
and accrued interest on any debt by which the property is encumbered.
For the purposes of this Section 10.3(b), the terms "unrealized
appreciation" or "unrealized depreciation" shall mean the difference
between the fair market value of such assets, taking into account the
fair market value of the associated financing (but subject to the
provisions of Section 7701(g) of the Code), and the Partnership's
adjusted basis for such assets as determined under the applicable
provisions of the Allocation Regulations. This Section 10.3(b) is
merely intended to provide a rule for allocating unrealized gains and
losses upon liquidation or other distribution event, and nothing
contained in this Section 10.3(b) or elsewhere herein is intended to
treat or cause such distributions to be treated as sales for value.
The fair market value of such assets shall be determined by an
appraiser to be selected by the General Partner with the reasonable
Consent of the Special Limited Partner.
10.4 Special Provisions
(a) Except as otherwise provided in this Agreement, all
Profits, tax-exempt income, Losses, non-deductible non-capitalizable
expenditures, Tax Credits and cash distributions shared by a class of
Partners shall be shared by each Partner in such class in the ratio of
such Partner's paid-in Capital Contribution to the paid-in Class
Contribution of the class of Partners of which such Partner is a
member.
(b) Notwithstanding the foregoing provisions of this
Article X:
(i) If (a) the Partnership incurs recourse obligations
or Partner Nonrecourse Debt (including, without limitation,
Voluntary Loans or Subordinated Loans) or (b) the Partnership
incurs Losses from extraordinary events which are not recovered
from insurance or otherwise (collectively "Recourse
Obligations") in respect of any Partnership Fiscal Year, then
the calculation and allocation of Profits and Losses shall be
adjusted as follows: first, an amount of deductions
attributable to the Recourse Obligations shall be allocated to
the General Partner; and second, the balance of such deductions
shall be allocated as provided in Section 10.1(a).
(ii) If any Profits arise from the sale or other
disposition of any Partnership asset which shall be treated as
ordinary income under the depreciation recapture provisions of
the Code, then the full amount of such ordinary income shall be
allocated among the Partners in the proportions that the
Partnership deductions from the depreciation giving rise to such
recapture were actually allocated. In the event that
subsequently-enacted provisions of the Code result in other
recapture income, no allocation of such recapture income shall
be made to any Partner who has not received the benefit of those
items giving rise to such other recapture income.
(iii) If the Partnership shall receive any purchase money
indebtedness in partial payment of the purchase price of the
Apartment Complex and such indebtedness is distributed to the
Partners pursuant to the provisions of Section 10.2(b) or
Section 10.3, the distributions of the cash portion of such
purchase price and the principal amount of such purchase money
indebtedness hereunder shall be allocated among the Partners in
the following manner: On the basis of the sum of the principal
amount of the purchase money indebtedness and cash payments
received on the sale (net of amounts required to pay Partnership
obligations and fund reasonable reserves), there shall be
calculated the percentage of the total net proceeds
distributable to each class of Partners based on Section 10.2(b)
or Section 10.3, as applicable, treating cash payments and
purchase money indebtedness principal interchangeably for this
purpose, and the respective classes shall receive such
respective percentages of the net cash purchase price and
purchase money principal. Payments on such purchase money
indebtedness retained by the Partnership shall be distributed in
accordance with the respective portions of principal allocated
to the respective classes of Partners in accordance with the
preceding sentence, and if any such purchase money indebtedness
shall be sold, the sale proceeds shall be allocated in the same
proportion.
(iv) Income, gain, loss and deduction with respect to any
asset which has a variation between its basis computed in
accordance with the applicable provisions of the Allocation
Regulations and its basis computed for federal income tax
purposes shall be shared among the Partners so as to take
account of such variation in a manner consistent with the
principles of Section 704(c) of the Code and Section 1.704-
1(b)(2)(iv)(g) of the Allocation Regulations.
(v) The terms "Profits" and "Losses" used in this
Agreement shall mean income and losses, and each item of income,
gain, loss, deduction or credit entering into the computation
thereof, as determined in accordance with the accounting methods
followed by the Partnership and computed in accordance with
Treasury Regulation Section 1.704-1(b)(2)(iv). Profits and
Losses for federal income tax purposes shall be allocated in the
same manner as set forth in this Article X, except as provided
in Section 10.4(b)(iv).
(vi) Nonrecourse Deductions shall be allocated 1% to the
General Partner and 99% to the Investment Limited Partners (in
accordance with their Percentage Interests).
(vii) Partner Nonrecourse Deductions shall be allocated to
and among the Partners in the manner provided in the Allocation
Regulations.
(viii) Subject to the provisions of Section
10.4(xix), if there is a net decrease in Partnership Minimum
Gain for a Partnership Fiscal Year, the Partners shall be
allocated items of Partnership income and gain in accordance
with the provisions of Section 1.704-(2)(f) of the Allocation
Regulations.
(ix) Subject to the provisions of Section 10.4(xix), if
there is a net decrease in Partner Nonrecourse Debt Minimum Gain
for a Partnership Fiscal Year then any Partner with a Share of
such Partner Nonrecourse Debt Minimum Gain shall be allocated
items of Partnership income and gain in accordance with the
provisions of Section 1.704-2(i)(4) of the Allocation
Regulations.
(x) Subject to the provisions of 10.4(vi) through
10.4(ix) above, in the event that any Limited Partner
unexpectedly receives any adjustments, allocations or
distributions described in Section 1.704-1(b)(2)(ii)(d)(4), (5)
or (6) of the Allocation Regulations, items of Partnership
income and gain shall be specially allocated to each such
Partner in an amount and manner sufficient to eliminate, to the
extent required by the Allocation Regulations, the Adjusted
Capital Account Deficit of such Limited Partner as quickly as
possible. This Section 10.4(x) is intended to constitute a
"qualified income offset" provision within the meaning of the
Allocation Regulations and shall be interpreted consistently
therewith.
(xi) Subject to the provisions of Sections 10.4(vi)
through 10.4(x) above, in no event shall any Limited Partner be
allocated Losses which would cause it to have an Adjusted
Capital Account Deficit as of the end of any Partnership Fiscal
Year. Any Losses which are not allocated to a Limited Partner
by reason of the application of the provisions of this Section
10.4(xi) shall be allocated to the General Partner.
(xii) Subject to the provisions of Sections 10.4(vi)
through 10.4(xi) above, in the event that any Limited Partner
has an Adjusted Capital Account Deficit at the end of any
Partnership Fiscal Year, items of Partnership income and gain
shall be specially allocated to each such Limited Partner in the
amount of such Adjusted Capital Account Deficit as quickly as
possible.
(xiii) Syndication Expenses for any Fiscal Year or
other period shall be specially allocated to the Investment
Limited Partners (in accordance with their Percentage
Interests).
(xiv) For purposes of determining the Profits, Losses, Tax
Credits or any other items allocable to any period, Profits,
Losses, Tax Credits and any such other items shall be determined
on a daily, monthly, or other basis, as determined by the
General Partner using any permissible method under Code Section
706 and the Treasury Regulations thereunder.
(xv) To the extent that interest on loans (or other
advances which are deemed to be loans) made by a General Partner
to the Partnership is determined to be deductible by the
Partnership in excess of the amount of interest actually paid by
the Partnership, such additional interest deduction(s) shall be
allocated solely to such General Partner.
(xvi) Notwithstanding anything to the contrary contained
herein, the General Partner (or, if there is more than one
General Partner, all of the General Partners as a group) shall
be allocated not less than 1% of each material item of
Partnership income, gain, loss, deduction and credit
("Partnership Items") at all times during the existence of the
Partnership, provided, however, that temporary nonconformance
with the provisions of this Section 10.4(xvi) shall be permitted
to the extent permitted by Revenue Procedure 89-12 or any
successor provisions. Subject to the foregoing, in the event
that there is no allocation of a material Partnership Item to
the General Partner(s) hereunder or if the amount of any
material Partnership Item allocable to the General Partner(s)
hereunder shall not equal 1% of the aggregate amount allocable
to all the Partners without giving effect to this provision,
then the amount of such Partnership Item(s) otherwise allocable
to the Limited Partners hereunder shall be correspondingly
reduced in order to assure the General Partner(s) of its or
their 1% share. Any such reduction shall be applied to reduce
the share of all classes of Limited Partners in proportion to
their respective Interests.
(xvii) For purposes of determining each Partner's
proportionate share of the excess Nonrecourse Liabilities of the
Partnership pursuant to Section 1.752-3(a)(3) of the Allocation
Regulations, the Investment Limited Partners shall be deemed to
have a 99% interest in Profits and the General Partner shall be
deemed to have a 1% interest in Profits.
(xviii) Any recapture of any Tax Credit shall be
allocated to and among the Partners in the same manner in which
the Partners share the expenditures giving rise to such Tax
Credit.
(xix) If for any Fiscal Year the application of the
minimum gain chargeback provisions of Section 10.4(viii) or
Section 10.4(ix) of this Agreement would cause distortion in the
economic arrangement among the Partners and it is not expected
that the Partnership will have sufficient other income to
correct that distortion, the General Partner may request a
waiver from the Commissioner of the Service of the application
in whole or in part of Section 10.4(viii) or Section 10.4(ix) in
accordance with Section 1.704-2(f)(4) of the Allocation
Regulations. Furthermore, if additional exceptions to the
minimum gain chargeback requirements of the Allocation
Regulations have been provided through revenue rulings or other
Service pronouncements, the General Partner is authorized to
cause the Partnership to take advantage of such exceptions if to
do so would be in the best interest of a majority in interest of
the Partners.
(xx) In the event that any fee payable to any General
Partner or any Affiliate thereof shall instead be determined to
be a non-deductible, non-capitalizable distribution from the
Partnership to a Partner for federal income tax purposes, then
there shall be allocated to such General Partner an amount of
gross income equal to the amount of such distribution.
(xxi) In applying the provisions of Article X with respect
to distributions and allocations, the following ordering of
priorities shall apply:
(1) Capital Accounts shall be deemed
to be reduced by Qualified Income Offset
Items.
(2) Capital Accounts shall be reduced by
distributions of Cash Flow under Clause Sixth
of Section 10.2(a).
(3) Capital Accounts shall be reduced by
distributions of Capital Proceeds under
Clauses Eleventh, Thirteenth and Fourteenth of
Section 10.2(b).
(4) Capital Accounts shall be increased by any
minimum gain chargeback under Section
10.4(b)(viii) or Section 10.4(b)(ix).
(5) Capital Accounts shall be increased by any
qualified income offset required under Section
10.4(b)(x).
(6) Capital Accounts shall be increased by
allocations of Operating Profits under Section
10.1(a).
(7) Capital Accounts shall be reduced by
allocations of Operating Losses under Section
10.1(a).
(8) Capital Accounts shall be reduced by
allocations of Losses under Section 10.1(b).
(9) Capital Accounts shall be increased by
allocations of Profits under Section 10.1(b).
(xxii) To the maximum extent permitted under the
Code, allocations of Profits and Losses shall be modified so
that the Partners' Capital Accounts reflect the amount they
would have reflected if adjustments required by Sections
10.4(b)(x), 10.4(b)(xi) and 10.4(b)(xii) had not occurred.
10.5 Authority of the General Partner to Vary Allocations to
Preserve and Protect the Partners' Intent
(a) It is the intent of the Partners that each Partner's
distributive share of Profits, tax-exempt income, Losses, non-
deductible non-capitalizable expenditures and Tax Credits (and items
thereof) shall be determined and allocated in accordance with this
Agreement to the fullest extent permitted by Section 704(b) of the
Code and the Allocation Regulations. In order to preserve and protect
the determinations and allocations provided for in this Agreement, the
General Partner is hereby authorized and directed to allocate Profits,
tax-exempt income, Losses, non-deductible non-capitalizable
expenditures and credits (and items thereof) arising in any Fiscal
Year differently than otherwise provided for in this Agreement to the
extent that allocating Profits, tax-exempt income, Losses, non-
deductible non-capitalizable expenditures or credits (or any item
thereof) in the manner provided for herein would cause the
determinations and allocations of each Partner's distributive share of
Profits, tax-exempt income, Losses, non-deductible non-capitalizable
expenditures or credits (or any item thereof) not to be permitted by
Section 704(b) of the Code. Any allocation made pursuant to this
Section 10.5 shall be deemed to be a complete substitute for any
allocation otherwise provided for in this Agreement, and no amendment
of this Agreement or approval of any Partner shall be required.
(b) In making any allocation (the "New Allocation") under
Section 10.5(a), the General Partner is authorized to act only after
having been advised in writing by the Tax Accountants that, under
Section 704(b) of the Code and/or the Allocation Regulations, (i) the
New Allocation is necessary, and (ii) the New Allocation is the
minimum modification of the allocations otherwise provided for in this
Agreement necessary in order to assure that, either in the then-
current Fiscal Year or in any preceding Fiscal Year, each Partner's
distributive share of Profits, tax-exempt income, Losses, non-
deductible non-capitalizable expenditures and Tax Credits (or any item
thereof) is determined and allocated in accordance with this Agreement
to the fullest extent permitted by Section 704(b) of the Code and the
Allocation Regulations.
(c) If the General Partner is required by Section 10.5(a) to
make any New Allocation in a manner less favorable to the Limited
Partners than is otherwise provided for herein, then the General
Partner is authorized and directed, only after having been advised in
writing by the Tax Accountants that such an allocation is permitted by
Section 704(b) of the Code and the Allocation Regulations, to allocate
Profits, tax-exempt income, Losses, non-deductible non-capitalizable
expenditures and credits (and any item thereof) arising in later years
in such manner so as to bring the allocations of Profits, tax-exempt
income, Losses, non-deductible non-capitalizable expenditures and
credits (and each item thereof) to the Limited Partners as nearly as
possible to the allocations thereof otherwise contemplated by this
Agreement.
(d) New Allocations made by the General Partner under Section
10.5(a) and Section 10.5(c) in reliance upon the advice of the Tax
Accountants shall be deemed to be made pursuant to the fiduciary
obligation of the General Partner to the Partnership and the Limited
Partners, and no such allocation shall give rise to any claim or cause
of action by any Limited Partner.
ARTICLE XI
Management Agent
11.1 General
(a) The General Partner shall engage the Management Agent to
manage the Apartment Complex pursuant to the Management Agreement.
The Management Agent shall receive a Management Fee of those amounts
payable from time to time by the Partnership to the Management Agent
for management services in accordance with a management contract
approved by any Agency or Lender with the right to approve the same,
or, when any such management contract is not subject to the approval
of any Agency or Lender, in accordance with a reasonable and
competitive fee arrangement. The initial Management Agent shall be
Hendy Management Co., Inc. From and after the Admission Date, the
Partnership shall not enter into any Management Agreement or modify or
extend any Management Agreement unless (i) the General Partner shall
have obtained the prior Consent of the Special Limited Partner to the
identity of the Management Agent and the terms of the Management
Agreement or the modification or extension thereof and (ii) such new
Management Agreement or modified or extended Management Agreement
provides that it is terminable by the Partnership on thirty (30) days'
notice by the Partnership in the event of any change in the identity
of the General Partner.
(b) In addition, at or prior to the Admission Date, the
Partnership shall enter into the Incentive Management Agreement with
the Supervisory Management Agent. Such agreement shall provide for
payment of an Incentive Management Fee to the Supervisory Management
Agent in consideration of the services provided for therein.
11.2 Fees
Notwithstanding the provisions of Section 11.1, however, should
the Investment General Partner or an Affiliate thereof perform
property management services for the Partnership, property management,
rent-up or leasing fees shall be paid to the Investment General
Partner or such Affiliate only for services actually rendered and
shall be in an amount equal to the lesser of (i) fees competitive in
price and terms with those of non-affiliated Persons rendering
comparable services in the locality where the Apartment Complex is
located and which could reasonably be available to the Partnership, or
(ii) five percent (5%) of the gross revenues of the Apartment Complex.
No duplicate property manager fees shall be paid to any Person.
11.3 Removal and Replacement
If (i) the Apartment Complex shall be subject to a substantial
building code violation which shall not have been cured within six
months after notice from a Governmental Authority or (ii) the
Partnership shall not have achieved a 1.15 to 1.00 Debt Service
Coverage Ratio during any Fiscal Year commencing on January 1, 1996,
or (iii) an Event of Bankruptcy shall occur with respect to the
Management Agent, or (iv) the Management Agent shall commit willful
misconduct or gross negligence in its conduct of its duties and
obligations under the Management Agreement or (v) there is any change
in the Persons acting as General Partners (to which the Special
Limited Partner has not consented), or (vi) the Management Agent is
cited by the Credit Agency or any other Tax Credit monitoring or
compliance agency of the State or any other Governmental Authority for
a violation of any applicable rules, regulations or requirements,
including, without limitation, non-compliance with the Minimum Set-
Aside Test, the Rent Restriction Test or any other Tax Credit-related
provision, then, upon request by the Special Limited Partner and
subject to Agency and Lender approval, if required, the General
Partner shall cause the Partnership to promptly terminate the
Management Agreement with the Management Agent and appoint a new
Management Agent selected by the Special Limited Partner, which new
Management Agent shall not be an Affiliate of a General Partner. Each
General Partner hereby grants to the Special Limited Partner an
irrevocable (to the extent permitted by applicable law) power of
attorney coupled with an interest to take any action and to execute
and deliver any and all documents and instruments on behalf of such
General Partner and the Partnership as the Special Limited Partner may
deem to be necessary or appropriate in order to effectuate the
provisions of this Article XI. Subject to any Requisite Approvals,
the Partnership shall not enter into any future management arrangement
or renew or extend any existing management arrangement unless such
arrangement is terminable without penalty upon the occurrence of the
events described in this Article XI.
11.4 Lack of Management Agent
The General Partner shall have the duty to manage the Apartment
Complex during any period when there is no Management Agent.
ARTICLE XII
Books and Records, Accounting, Tax Elections, Etc.
12.1 Books and Records
The Partnership shall maintain all books and records which are
required under the Act or by any Governmental Authority and may
maintain such other books and records as the General Partner in its
discretion deem advisable. Each Limited Partner, or its duly
authorized representatives, shall have access to the records of the
Partnership at the principal office of the Partnership at any and all
reasonable times, and may inspect and copy any of such records. A
list of the name and addresses of all of the Limited Partners shall be
maintained as part of the books and records of the Partnership and
shall be mailed to any Limited Partner upon request. The Partnership
may require reimbursement for any out of pocket expenses which it
incurs as a result of the exercise by any Limited Partner of its
rights under this Section 12.1, including, without limitation,
photocopying expenses.
12.2 Bank Accounts
The bank accounts of the Partnership shall be maintained in the
Partnership's name with such financial institutions as the General
Partner shall determine. Withdrawals shall be made only in the
regular course of Partnership business on such signature or signatures
as the General Partner may determine. All deposits (including
security deposits and other funds required to be escrowed by any
Lender or Agency) and other funds not needed in the operation of the
business shall be deposited, if required by applicable law and to the
extent permitted by applicable Agency or Lender requirements, in
interest bearing accounts or invested in United States Government
obligations maturing within one year.
12.3 Auditors
(a) The Auditors shall prepare, for execution by the General
Partner, all tax returns of the Partnership. Prior to the filing of
the Partnership tax returns, and in no event later than February 15 of
each Fiscal Year, the Auditors shall deliver the tax returns for the
prior Fiscal Year to the Tax Accountants for their review and comment.
If a dispute arises between the Auditors and the Tax Accountants over
the proper preparation of the tax returns and such dispute cannot be
resolved by the Auditors and the Tax Accountants by March 1 of such
Fiscal Year, then the Tax Accountants shall make the final decision
with respect to whether any changes are necessary. The Partnership
shall reimburse the Investment Limited Partners and their Affiliates
for all costs and expenses paid to the Tax Accountants for the
aforementioned services.
(b) The Auditors shall certify all annual financial reports to
the Partners in accordance with generally accepted auditing standards.
(c) If the Partnership fails to fulfill any of its obligations
under Section 12.7(a)(i) and/or Section 12.7(a)(ii) within the time
periods set forth therein, at any time thereafter upon written notice
from the Special Limited Partner, the General Partner shall appoint
replacement Auditors. If no such notice from the Special Limited
Partner is delivered, the Consent of the Special Limited Partner must
be received to the appointment of replacement Auditors. If the
General Partner fails to appoint replacement Auditors within thirty
(30) days of the notice from the Special Limited Partner to replace
the Auditors, then the Special Limited Partner shall appoint
replacement Auditors of its own choosing, the cost of which shall be
borne by the Partnership as a Partnership expense. All of the
Partners hereby grant to the Special Limited Partner a special power
of attorney, irrevocable to the extent permitted by law, coupled with
an interest, to so appoint replacement Auditors and to anything else
which in the judgment of the Special Limited Partner may be necessary
or appropriate to accomplish the purposes of this Section 12.3(c).
(d) On or prior to the date which is thirty (30) days after
the Admission Date, the General Partner shall cause the Partnership
(i) in writing, to engage the Auditors to perform the services
required herein and (ii) to deliver to the Investment Limited Partners
copies of all such engagement letters and agreements.
12.4 Cost Recovery and Elections
(a) With respect to all depreciable assets for which cost
recovery deductions are permitted, the Partnership shall elect to use,
so far as permitted by the provisions of the Code, accelerated cost
recovery methods. However, the Partnership may change to another
method of cost recovery if such other method is, in the opinion of the
Auditors, more advantageous to the Investment Limited Partners (and
the limited partners and/or holders of beneficial assignee
certificates thereof).
(b) Subject to the provisions of Section 12.5, all other
elections required or permitted to be made by the Partnership under
the Code shall be made by the General Partner in such manner as will,
in the opinion of the Auditors, be most advantageous to the Investment
Limited Partners 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
an 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 an Investment Limited Partner, the Partnership shall
elect, upon the request of such Investment Limited Partner, pursuant
to Section 754 of the Code, to adjust the basis of the Partnership
property. Any adjustments made pursuant to said Section 754 shall
affect only the successor in interest to the transferring Partner or
partner or holder of a beneficial assignee certificate thereof. Each
Partner will furnish the Partnership all information necessary to give
effect to any such election.
12.6 Fiscal Year
Unless otherwise required by law, the Fiscal Year and tax year
of the Partnership shall be the calendar year. The books of the
Partnership shall be maintained on an accrual basis.
12.7 Information to Partners
(a) The General Partner shall cause to be prepared and
distributed to all Persons who were Partners at any time during a
Fiscal Year of the Partnership:
(i) Within forty-five (45) days after the end of each
Fiscal Year of the Partnership, (A) a balance sheet as of the
end of such Fiscal Year, a statement of income, a statement of
partners' equity, and a statement of cash flows, each for the
Fiscal Year then ended, all of which, except the statement of
cash flows, shall be prepared in accordance with generally
accepted accounting principles and accompanied by a report of
the Auditors containing an opinion of the Auditors, and (B) a
report of the activities of the Partnership during the period
covered by the report.
(ii) Within thirty (30) days after the end of each Fiscal
Year of the Partnership, all information relating to the
Partnership and/or the Apartment Complex which is necessary, in
the view of the Tax Accountants, for the preparation of the
Limited Partners' federal income tax returns for the prior
Fiscal Year.
(iii) Within thirty (30) days after the end of each
quarter of a Fiscal Year of the Partnership, a report
containing:
(A) a balance sheet, which may be
unaudited;
(B) a statement of income for the
quarter then ended, which may be unaudited;
(C) a statement of cash flows for the
quarter then ended, which may be unaudited;
(D) a certification of the General
Partner that the Apartment Complex and its tenants are in
compliance with all applicable federal, state and local
requirements and regulations;
(E) a Tax Credit monitoring form, a
copy of the rent roll for the Apartment Complex for each
month during such quarter, a statement of income and
expenses, an operating statement and an Occupancy/Rental
Report, all in a form specified by the Special Limited
Partner;
(F) all other information which would
be pertinent to a reasonable investor regarding the
Partnership and its activities during the quarter covered
by the report; and
(b) Upon the reasonable written request of the Investment
Limited Partners for further information with respect to any matter
covered in item (a) or item (b) above, the General Partner shall
furnish such information within thirty (30) days of receipt of such
request.
(c) Prior to October 15 of each Fiscal Year, the Partnership
shall send to the Investment Limited Partners an estimate of the
Investment Limited Partners' share of the Tax Credits, Profits and
Losses of the Partnership for federal income tax purposes for the
current Fiscal Year. Such estimate shall be prepared by the General
Partner and the Auditors and shall be in the form specified by the
Special Limited Partner.
(d) Within fifteen (15) days after the end of any calendar
quarter during which:
(i) there is a material default by the Partnership under
any Project Document or in the payment of any mortgage, taxes,
interest or other obligation on secured or unsecured debt,
(ii) any reserve has been reduced or terminated by
application of funds therein for purposes materially different
from those for which such reserve was established,
(iii) any General Partner has received any notice of a
material fact which may substantially affect further
distributions or Tax Credit allocations to any Limited Partner,
or
(iv) any Partner has pledged or collateralized its
Interest in the Partnership, the General Partner shall send the
Investment Limited Partners a detailed report of such event.
(e) After the Admission Date, the Partnership shall send to
the Investment Limited Partners copies of all applicable periodic
reports covering the status of project operations and any matters
relating to the Tax Credit as are required by any Lender or Agency.
(f) The General Partner hereby consents to each Lender or
Agency providing the Special Limited Partner with copies of all
material communications between any such Lender or Agency and the
General Partner and/or the Partnership, including, but not limited to,
any notices of default.
(g) If the earlier of (A) the Completion Date or (B) the date
upon which tenants first occupied apartment units in the Apartment
Complex after the construction of such units, shall have occurred six
(6) months or more prior to the date on which any Investment Limited
Partner acquired its Interest in the Partnership, then the General
Partner shall cause to be prepared and delivered to the Investment
Limited Partners 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 any Investment Limited
Partner acquired its Interest in the Partnership; and
(ii) An audited statement of income of the Partnership
for any fiscal year of the Partnership ending between (A) the
earlier of (1) the Completion Date or (2) the date upon which
tenants first occupied apartment units in the Apartment Complex
after the rehabilitation of such units and (B) the date upon
which any Investment Limited Partner acquired its Interest in
the Partnership.
(h) Promptly after Permanent Mortgage Commencement, the
General Partner shall send to the Special Limited Partner a closing
binder containing photocopies of the fully executed versions of all
documents signed in connection with the Permanent Mortgage. From and
after any date upon which the General Partner receives notice from the
Special Limited Partner that the Special Limited Partner would like
copies of the monthly rent rolls for the Apartment Complex to be sent
to the Special Limited Partner, the General Partner shall send copies
of the rent rolls to the Special Limited Partner no later than ten
(10) days after the expiration of each month.
(i) If the General Partner does not cause the Partnership to
fulfill its obligations under Section 12.7(a)(i) and/or Section
12.7(a)(ii) within the time periods set forth therein, the General
Partner shall pay as damages the sum of $150 per day to the Investment
Limited Partners until such obligations shall have been fulfilled.
Such damages shall be paid forthwith by the General Partner, and the
failure to pay any such damages shall constitute a material default by
the General Partner hereunder. In addition, if the General Partner
shall fail to pay any such damages, the General Partner and its
Affiliates shall forthwith cease to be entitled to the distribution of
any Cash Flow or Capital Proceeds to which they may otherwise be
entitled hereunder. Such distributions of Cash Flow and Capital
Proceeds shall be restored only upon the payment of such damages in
full, and any amount of such damages not so paid shall be deducted
against distributions of Cash Flow and Capital Proceeds otherwise due
to the General Partner or its Affiliates.
12.8 Expenses of the Partnership
(a) All expenses of the Partnership shall be billed directly
to and paid by the Partnership.
(b) Except in extraordinary circumstances, neither the
Investment General Partner nor any Affiliate thereof shall be
permitted to contract or otherwise deal with the Partnership for the
sale of goods or services or the lending of money to the Partnership
or the General Partners, except for (i) management services, subject
to the restrictions set forth in Article XI, (ii) loans made by, or
guaranteed by, the Investment General Partner or any of its Affiliates
and (iii) those dealings, contracts or provision of services described
in the Investment Partnership Agreement. Extraordinary circumstances
shall only be presumed to exist where there is an emergency situation
requiring immediate action and the services required are not
immediately available from unaffiliated parties. All services
rendered under such circumstances must be rendered pursuant to a
written contract which must contain a clause allowing termination
without penalty on sixty (60) days' notice. Goods and services
provided under such circumstances must be provided at the lesser of
actual cost or the price charged for such goods or services by
independent parties.
(c) In the event that extraordinary circumstances arise, the
Investment General Partner and its Affiliates may provide construction
services in connection with the Apartment Complex. Neither the
Investment General Partner nor any of its Affiliates shall provide
such services unless it believes it has an adequate staff to do 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 Partners. Any
such services must be reasonable for and necessary to the Partnership,
actually furnished to the Partnership, and provided at the lower of
ten percent (10%) of the construction contract rate with respect to
the Apartment Complex or ninety percent (90%) of the competitive price
charged for such services by independent parties for comparable goods
and services in the same geographic location (except that in the case
of transfer agent, custodial and similar banking-type fees, and
insurance fees, the compensation, price or fee shall be at the lesser
of costs or the compensation, price or fee of any other Person
rendering comparable services as aforesaid). Cost of services as used
herein means the pro rata cost of personnel, including an allocation
of overhead directly attributable to such personnel, based on the
amount of time such personnel spend on such services or other method
of allocation acceptable to the accountants for the Investment Limited
Partners.
(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 Partners.
(e) No compensation or fees may be paid by the Partnership to
the Investment General Partner or its Affiliates except as described
in the Investment Partnership Agreement.
ARTICLE XIII
General Provisions
13.1 Restrictions by Reason of Section 708 of the Code
No Disposition of an Interest may be made if the Interest sought
to be Disposed of, when added to the total of all other Interests
Disposed of within the period of twelve consecutive months prior to
the proposed date of the Disposition, would, in the opinion of the Tax
Accountants or tax counsel to the Partnership, result in the
termination of the Partnership under Section 708 of the Code. This
Section 13.1 shall have no application to any required repurchase of
the Investment Limited Partners' Interests. 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 Partners may waive the
provisions of this Section 13.1 at any time as to a Disposition or
series of Dispositions, and in the event of such a waiver, this
Section 13.1 shall have no force or effect upon such Disposition or
series of Dispositions.
13.2 Amendments to Certificates
To the extent required by the Act, within one hundred twenty
(120) days after the end of the Partnership Fiscal Year in which the
Investment Limited Partners shall have received any distributions
under Article X, the General Partner shall file an amendment to the
Certificate reducing the amount of its allocable share of such
distribution the amount of Capital Contribution of the Investment
Limited Partners as stated in the last previous amendment to the
Certificate. However, Schedule A shall not be amended on account of
any such distribution.
The Partnership shall amend the Certificate at least once each
calendar quarter to effect the substitution of Substitute Limited
Partners, although the General Partner may elect to do so more
frequently. In the case of assignments, where the assignee does not
become a Substitute Limited Partner, the Partnership shall recognize
the assignment not later than the last day of the calendar month
following receipt of notice of assignment and all documentation
required in connection therewith hereunder.
Notwithstanding the foregoing provisions of this Section 13.2,
no such amendments to the Certificate need be filed by the General
Partner if the Certificate is not required to and does not identify
the Limited Partners or their Capital Contributions in such capacity.
13.3 Notices
Except as otherwise specifically provided herein, all notices,
demands or other communications hereunder shall be in writing and
shall be deemed to have been given when the same are (i) deposited in
the United States mail and sent by certified or registered mail,
postage prepaid, return-receipt requested, (ii) delivered to a
nationally recognized overnight delivery service, (iii) sent by
telecopier or other facsimile transmission, answerback requested, or
(iv) delivered personally, in each case, to the parties at the
addresses set forth below or at such other addresses as such parties
may designate by notice to the Partnership:
(a) If to the Partnership, at the office of the Partnership
set forth in Section 2.2.
(b) If to a Partner, at its address set forth in the Schedule,
with copies to Xxxxxxx X. Xxxxxx, Esq., Xxxxxxxxx, Powers & Xxxxxxx,
P.C., Xxx Xxxxxx Xxxxxx, 00xx Xxxxx, Xxxxxx, XX, 00000 and Xxxxxx X.
Xxxxx, Esq., Xxxxxxx & Xxxx, 2100 PNC Center, 000 Xxxx Xxxxx Xxxxxx,
Xxxxxxxxxx, XX 00000-0000.
13.4 Word Meanings
The words such as "herein," "hereinafter," "hereof" and
"hereunder" refer to this Agreement as a whole and not merely to a
subdivision in which such words appear unless the context otherwise
requires. The singular shall include the plural, and vice versa, and
each gender (masculine, feminine and neuter) shall include the other
genders, unless the context requires otherwise. Each reference to a
"Section" or an "Article" refers to the corresponding Section or
Article of this Agreement, unless specified otherwise. References to
Treasury Regulations (permanent or temporary) or Revenue Procedures
shall include any successor provisions.
13.5 Binding Effect
The covenants and agreements contained herein shall be binding
upon and inure to the benefit of the heirs, executors, administrators,
successors and assigns of the respective parties hereto.
13.6 Applicable Law
This Agreement shall be construed and enforced in accordance
with the laws of the State.
13.7 Counterparts
This Agreement may be executed in several counterparts and all
so executed shall constitute one agreement binding on all parties
hereto, notwithstanding that all the parties have not signed the
original or the same counterpart.
13.8 Financing Regulations
(a) So long as any of the Project Documents are in effect, (i)
each of the provisions of this Agreement shall be subject to, and the
General Partner covenants to act in accordance with, the Project
Documents; (ii) the Project Documents shall govern the rights and
obligations of the Partners, their heirs, executors, administrators,
successors and assigns to the extent expressly provided therein; (iii)
upon any dissolution of the Partnership or any transfer of the
Apartment Complex, no title or right to the possession and control of
the Apartment Complex and no right to collect the rent therefrom shall
pass to any Person who is not, or does not become, bound by the
Project Documents in a manner satisfactory to the Lenders and any
Agency (to the extent that its approval is required); (iv) no
amendment to any provision of the Project Documents shall become
effective without the prior written consent of any Lender and/or
Agency (to the extent that its approval is required); and (v) the
affairs of the Partnership shall be subject to the Regulations, and no
action shall be taken which would require the consent or approval of
any Lender and/or Agency unless the prior consent or approval of such
Lender and/or Agency, as the case may be, shall have been obtained.
No new Partner shall be admitted to the Partnership, and no Partner
shall withdraw from the Partnership or be substituted for without the
consent of any Lender and/or Agency (if such consent is then
required). No amendment to this Agreement relating to matters
governed by the Regulations or requirements shall become effective
until any Requisite Approvals to such amendment shall have been
obtained.
(b) Any conveyance or transfer of title to all or any portion
of the Apartment Complex required or permitted under this Agreement
shall in all respects be subject to all conditions, approvals and
other requirements of any Regulations applicable thereto.
13.9 Separability of Provisions
Each provision of this Agreement shall be considered separable
and (a) if for any reason any provision is determined to be invalid,
such invalidity shall not impair the operation of or affect those
portions of this Agreement which are valid, and (b) if for any reason
any provision would cause the Investment Limited Partners or the
Special Limited Partner (in its capacity as a Limited Partner) to be
bound by the obligations of the Partnership (other than the
Regulations and the other requirements of any Agency or Lender), such
provision or provisions shall be deemed void and of no effect.
13.10 Paragraph Titles
All article and section headings in this Agreement are for
convenience of reference only and are not intended to qualify the
meaning of any article or section.
13.11 Amendment Procedure
This Agreement may be amended by the General Partner only with
the Consent of the Investment Limited Partners and the Consent of the
Special Limited Partner.
13.12 Extraordinary Partner Expenses
Any and all costs and expenses incurred by any Partner in
connection with exercising rights and remedies against any other
Partner with respect to this Agreement, including, without limitation,
reasonable attorneys' fees, shall be paid by the non-prevailing
Partner on demand. All amounts due to such prevailing Partner
pursuant to this provision shall bear interest from demand at the
Prime Rate.
13.13 Time of Admission
BCCTCF was admitted as a Limited Partner of the Partnership on
February 29, 1996. BCTCF shall be deemed to have been admitted to the
Partnership as of the effective date of this Agreement for all
purposes set forth herein.
WITNESS the execution hereof under seal as of the 17th day of
May, 1996.
ORIGINAL (WITHDRAWING)
GENERAL PARTNERS:
/s/ Xxxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxx
/s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
GENERAL PARTNER:
WASHINGTON ARMS INVESTORS, LTD., an
Ohio limited liability company
By: /s/ Xxxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxx, Manager
SPECIAL LIMITED PARTNER:
BCCC, INC., a Massachusetts
corporation,
By: /s/ Xxxxxx Xxxx Xxx
Xxxxxx Xxxx Xxx, as Attorney-in-Fact
for Xxxx X. Xxxxxxx, President
INVESTMENT LIMITED PARTNERS:
BOSTON CAPITAL CORPORATE TAX CREDIT
FUND III, A LIMITED PARTNERSHIP, a
Massachusetts limited partnership, by
its general partner, C&M Associates
d/b/a Boston Capital Associates, a
Massachusetts general partnership
By: /s/ Xxxxxx Xxxx Xxx
Xxxxxx Xxxx Xxx, as Attorney-in-Fact
for Xxxx X. Xxxxxxx, a Partner
BOSTON CAPITAL TAX CREDIT FUND IV
L.P., a Delaware limited partnership,
by its general partner, Boston
Capital Associates IV L.P., a
Delaware limited partnership, by its
general partner, C&M Associates d/b/a
Boston Capital Associates, a
Massachusetts general partnership
By: /s/ Xxxxxx Xxxx Xxx
Xxxxxx Xxxx Xxx, as Attorney-in-Fact
for Xxxx X. Xxxxxxx, a Partner
CONSENTS AND AGREEMENTS
The undersigned hereby executes this Agreement for the sole purpose
of agreeing to the provisions of Article XI of the foregoing First
Amended and Restated Agreement of Limited Partnership notwithstanding
any provision of the Management Agreement to the contrary.
HENDY MANAGEMENT CO., INC., an Ohio corporation
By:
______________________________
OHIO INVESTORS LIMITED PARTNERSHIP
SCHEDULE A
As of May 17, 1996
Percentage Interests
of Operating Profits
General Partner Capital Contribution and Losses and Tax Credits
Washington Arms Investors,
Ltd.
c/o Century Castings, Inc.
00000 Xxxxxxxxx Xxxx
Xxxxxxx, XX 00000 $100 1%
Percentage Interests of
Operating Profits and
Special Limited Partner Capital Contribution Losses and Tax Credits
BCCC, Inc.
c/o Boston Capital Partners,
Inc.
Xxx Xxxxxx Xxxxx, 00xx Xxxxx
Xxxxxx, XX 00000
$10 0%
Percentage
Interests of
Total Agreed-To Operatig Profits
Investment Capital Paid-in Capital and Losses and
Limited Partner Contribution* Contribution** Tax Credits
Boston Capital Corporate
Tax Credit Fund III, A
Limited Partnership
Xxx Xxxxxx Xxxxx, 00xx
Xxxxx
Xxxxxx, XX 00000 $928,691 $742,633 81.18%
Boston Capital Tax Credit
Fund IV L.P.
Xxx Xxxxxx Xxxxx, 00xx
Xxxxx
Xxxxxx, XX 00000 $203,859 $163,017 17.82%
*When the conditions to an Installment have been satisfied, the
Investment Limited Partners shall contribute the amount of such
Installment in the following ratios: BCCTCF - 82%; BCTCF - 18%.
**Paid-in Capital Contribution as of the date of this Schedule A.
Future Installments of Capital Contribution are subject to adjustment
and are due at the times and subject to the conditions set forth in
the Agreement to which this Schedule is attached.
EXHIBIT A
LEGAL DESCRIPTION
EXHIBIT B
PROJECTED RENTS
EXHIBIT C
PROJECT BUDGET - 1996