XXXXXXXX-XXXXX II ASSOCIATES,
A WASHINGTON LIMITED PARTNERSHIP
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
Dated as of June 1, 1996
XXXXXXXX-XXXXX II ASSOCIATES,
A WASHINGTON LIMITED PARTNERSHIP
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
Preliminary Statement
Xxxxxxxx-Xxxxx II Associates, a Washington Limited Partnership
(the "Partnership") was formed as a Washington limited partnership
pursuant to an Agreement of Limited Partnership dated January 1, 1994,
as amended by the First Amended Agreement dated as of the 27th day of
March 1996 (the "Original Agreement"), by and among Xxxxx X. Xxxxxxxx
and Xxxxx X. Xxxxx as general partners and Xxxxx X. Xxxxxxxx and
Xxxxx X. Xxxxx as limited partners. A Certificate of Limited
Partnership with respect thereto dated January 1, 1994 (the "Original
Certificate") was filed in the Filing Office on January 12, 1994. The
Original Agreement was amended by the Amendment to First Amended
Limited Partnership Agreement dated as of April 1, 1996 (as so
amended, the "Amended Original Agreement") pursuant to which Xxxxx X.
Xxxxxxxx and Xxxxx X. Xxxxx withdrew as limited partners and the
Investment Limited Partner was admitted as the sole limited partner.
The Partnership also filed an Application for Foreign Limited
Partnership with the Department of State of Arizona on October 31,
1994. Certain capitalized terms used herein shall have the respective
meanings specified in Article I.
In consideration of mutual agreements set forth herein, it is
agreed and certified, and the Original Agreement is hereby amended and
restated in its entirety, as follows:
ARTICLE I
Defined Terms
The defined terms used in this Agreement shall have the meanings
specified below:
Actual Credit means, with respect to a particular year, the
total amount of Tax Credit properly allocable by the Partnership to
the Investment Limited Partner for such year. The Actual Credit shall
be retroactively revised if the amount of Tax Credit properly
allocable to the Investment Limited Partner is revised after audit or
recaptured.
Additional Limited Partner means any holder of an Interest
designated as an Additional Limited Partner pursuant to Section 4.5(b)
or Section 7.4.
Admission Date means April 1, 1996.
Affiliate means as to any named Person (or as to every Partner
if no Person is specifically named) : (i) such Person or any member of
his Immediate Family; (ii) the legal representative, successor or
assignee of, or any trustee of a trust for the benefit of, any such
Person or member of his Immediate Family; (iii) any Entity of which a
majority of the voting interests is owned by any one or more of the
Persons referred to in the preceding clauses (i) and (ii); (iv) any
officer, director, trustee, employee, stockholder (10% or more) or
partner of any Person referred to in the preceding clauses (i), (ii),
and (iii); and (v) any Person directly or indirectly controlling,
controlled by or under direct or indirect common control with, any
Person referred to in any of the preceding clauses.
Agency means, as applicable, FmHA, the Authority and/or any
other governmental agency having jurisdiction over the particular
matter to which reference is being made.
Aggregate Cost means the sum of (i) the Total Capital
Contributions made or anticipated to be made by the Investment Limited
Partner plus (ii) the proportionate amount of the mortgage loans on,
and other debts related to, the Apartment Complex, which proportionate
amount is equal to the Investment Limited Partner's initial pro rata
interest in the profits, losses, and tax credits of the Partnership.
The amount of the Aggregate Cost determined upon payment of the last
of the four Installments of the Capital Contribution of the Investment
Limited Partner shall not thereafter be reduced.
Agreement means this Amended and Restated Agreement of Limited
Partnership, including Schedule A, as amended from time to time.
Apartment Complex means the real property located in Coolidge,
Pinal County, Arizona, as more fully described in the Mortgage,
together with (i) all buildings and other improvements constructed or
to be constructed thereon and (ii) all furnishings, equipment and
personal property covered by the Mortgage.
Applicable Federal Rate means the "applicable federal rate" as
defined in Section 1274(d) of the Code.
Applicable Percentage has the meaning given to it in Section
42 (b) of the Code.
Asset Management Fee means the fee payable to BCCLP or an
Affiliate thereof pursuant to Section 6.12(c).
Auditors means Ruljancich, Blume, Xxxxxxxxx & Co., of Bellevue,
Washington, or such other firm of independent certified public
accountants as may be engaged by the General Partners with the consent
of Boston Capital for the purposes of preparing the Partnership income
tax returns, auditing the books and records of the Partnership and
certifying financial reports of the Partnership.
Authority means the Department of Commerce of the State of
Arizona.
BCCLP means Boston Capital Communications Limited Partnership, a
Massachusetts limited partnership, and its successors and assigns.
Boston Capital means Boston Capital Partners, Inc., a
Massachusetts corporation, its successors and assigns.
Breakeven means any month, as certified by the General Partners
to the Investment Limited Partner in writing, together with a
statement fully disclosing the basis therefor and the manner of
calculation thereof, during which the rental income (including any
government subsidiaries) of the Partnership actually received on a
cash basis (excluding prepaid rent) shall have exceeded all the
Partnership's expenses for such month on an accrual basis (including,
but not limited to, (a) all operational costs and expenses, (b) all
items payable in connection with any Mortgage, and (c) the funding of
any reserves required by any Lender or Agency and/or pursuant to the
terms of this Agreement), except for depreciation, amortization and
other non-cash charges, distributions of Cash Flow and Capital
Transaction proceeds to the Partners and the fees payable pursuant to
this Agreement. If free rent or other rental concessions shall have
been granted to tenants, the calculation of income pursuant to the
preceding sentence shall be adjusted so that the effect of such
concessions is amortized equally over the term of all leases
(excluding renewal periods) to which it applies. For purposes of the
foregoing, expenses shall (i) include monthly payments of principal
and interest in the amount specified in any Mortgage regardless of any
forbearance thereof, (ii) include a ratable portion of the annual
amount (as estimated by the General Partners) of those reasonable
expenses (such as utilities and maintenance expenses) which might
reasonably be expected to be incurred on an unequal basis during a
full annual period of operation, and (iii) be adjusted, if necessary,
so that the expenses of real estate taxes and insurance are based on
the General Partners' estimate of the full value of the Apartment
Complex after the completion of Construction.
Breakeven Confirmation means the date upon which the Investment
Limited Partner receives a copy of the Federal income tax return of
the Partnership for the Partnership fiscal year in which the Breakeven
Point shall have occurred.
Breakeven Point means the first time after the later to occur of
(i) the Admission Date or (ii) Permanent Mortgage Commencement, that
Breakeven shall have occurred for three consecutive months.
Capital Account has the meaning specified in Section 4.1(b).
Capital Contribution means the total value of cash or property
contributed and agreed to be contributed to the Partnership by each
Partner, as shown in Schedule A. Any reference in this Agreement to
the Capital Contribution of a then Partner shall include a Capital
Contribution previously made by any prior Partner for the Interest of
such then Partner.
Capital Transaction means any transaction the proceeds of which
are not includable in determining Cash Flow including, without
limitation, the sale or other disposition of all or substantially all
of the assets of the Partnership, but excluding the payment of Capital
Contributions and loans to the Partnership (other than a financing
pursuant to which funds are available for distribution to the
Partners.)
Carryover Certification means the date upon which the Investment
Limited Partner shall have received, in a form and in substance
satisfactory to the Investment Limited Partner, the certification of
the Auditors that as of a date no later than December 31, 1994, the
Partnership had incurred capitalizable costs with respect to the
Apartment Complex of at least ten percent (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)(E)(ii) of the
Code.
Cash Flow means the profits or losses of the Partnership from
and after the Commencement Date subject to any applicable Agency
requirements and to the following adjustments:
(a) Cost recovery deductions of buildings, improvements and
personal property and amortization of any financing fees
shall not be deducted;
(b) Mortgage amortization shall be deducted;
(c) Mortgage interest which is included in determining profits
and losses but which is not currently payable in cash
shall be deducted when actually paid;
(d) Payments to reserves under Section 6.5(e) shall be
deducted;
(e) Any amounts paid for capital expenditures shall be
deducted, unless paid from any replacement reserve or
funded through insurance;
(f) The proceeds of any loan, sale, exchange, eminent domain
taking, damage or destruction (whether insured or
uninsured), or other disposition, of all or any part of
the Apartment Complex (other than the proceeds of any
business or rental interruption insurance) shall not be
included;
(g) Any rent or interest subsidy payments received shall be
included;
(h) The fees set forth in Sections 6.12, and any fee payable
in from the proceeds of any transaction referred to in
clause (f) above shall not be deducted; and
(i) Prior to the later of Permanent Mortgage Commencement or
the Admission Date, an amount equal to the amount, if any,
of net rental income applied to complete the construction
of the Apartment Complex pursuant to Section 6.11 shall be
deducted.
Certificate means the Original Certificate as amended from time
to time (including any amendment thereto effected by or in connection
with this Agreement).
Class Contribution means the aggregate Capital Contributions of
all members of a particular class of Partners (i.e., the General
Partners, the Investment Limited Partner, the Special Limited Partner
or any Additional Limited Partner.)
Code means the Internal Revenue Code of 1986, as amended from
time to time, and the regulations (permanent or temporary) issued
thereunder. References herein to any Code section shall include any
successor provisions.
Commencement Date means April 1, 1996.
Competitive Real Estate Commission means that real estate or
brokerage commission paid for the purchase or sale of the Apartment
Complex or other Partnership property which is reasonable, customary
and competitive in light of the size, type and location of the
Apartment Complex or other property.
Completion Date means the date upon which the Apartment Complex
has been completed as evidenced by the issuance by the inspecting
architect and by each governmental agency having jurisdiction of
certificates of substantial completion or occupancy (or local
equivalents) with respect to 100% of the apartment units in the
Apartment Complex.
Compliance Period means the fifteen (15)-year period commencing
with the first year of the Credit Period.
Consent of the Investment Limited Partner means the prior
written consent or approval of the Investment Limited Partner.
Construction and Development Fee means the fee described in
Section 6.12(b).
Construction Lender means Midland Mortgage Investment Corp., of
Clearwater, Florida, in its capacity as holder of the Construction
Mortgage, or its successors or assigns in such capacity.
Construction Mortgage means the financing for the construction
of the Apartment Complex provided by the Construction Lender in a
principal amount of up to $1,143,703.
Construction Mortgage Closing means the first date upon which
the Construction Mortgage shall have closed in all respects other than
the disbursement of funds thereunder.
Contractor Payment Letter means a letter (or final lien waiver)
from the contractor stating that the Partnership has fully complied
with its obligations under the construction contract for the Apartment
Complex and all amounts payable thereunder for the construction of the
Apartment Complex through the completion thereof have been paid in
full.
Controlling Person has the meaning given to it in the context
Section 15 of the Securities Act of 1933, as amended.
Cost Certification means the date upon which each Limited
Partner shall have received the written certification of the Auditors,
in a form and in substance satisfactory to Boston Capital, as to the
itemized amounts of the construction and development costs of the
Apartment Complex and the Eligible Basis and Applicable Percentage
pertaining to each building in the Apartment Complex.
Credit Period has the meaning given to it in Section 42(f)(1) of
the Code.
Credit Recovery Loan means a constructive interest-bearing
advance of the Investment Limited Partner as more fully described in
Section 5.1(f) . Credit Recovery Loans and interest thereon shall not
be treated as loans or interest, respectively, for accounting, tax or
liability purposes or for the purposes of Section 6.2(a)(1) . For the
purposes of Article X, the term Credit Recovery Loan shall not include
any portion of such an advance which shall have theretofore been paid
to the Investment Limited Partner.
Credit Shortfall has the meaning given to it in Section 5.1(f).
Disposition (including the forms Dispose and Disposition) means,
as to a Limited Partner, the assignment, sale, transfer, exchange or
other disposition of all or any part of its Interest.
Due Diligence Compliance means the full satisfaction on or prior
to the due date for the Second Installment, in the judgment of the
Investment Limited Partner in its sole discretion, of the
requirements, if any, made pursuant to the due diligence letter from
Boston Capital to the General Partners dated as of the date hereof.
Economic Risk of Loss has the meaning set forth in Treasury
Regulation Section 1.752-2.
89-12 Requirements means the requirements set forth in Internal
Revenue Procedure 89-12 which are prerequisites to the issuance,
assuming that each General Partner is a corporation, by the Service of
an advance ruling that the Partnership will be taxed as a partnership
and not as an association taxable as a corporation for Federal income
tax purposes.
Eligible Basis has the meaning given to it in Section 42(d) of
the Code.
Entity means any general partnership, limited partnership,
corporation, joint venture, trust, business trust, cooperative or
association.
Event of Bankruptcy means with respect to any Person,
(i) the entry of a decree or order for relief by a court
having jurisdiction in respect of such Person or in respect of
any Controlling Person of such Person in a case under the
federal bankruptcy laws, as now or hereafter constituted, or any
other applicable federal or state bankruptcy, insolvency or
other similar law, or the appointment of a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or similar official)
of such Person or of any Controlling Person of such Person for
any substantial part of such Person's property or of the
property of any Controlling Person of such Person, or the
issuance of an order for the winding-up or liquidation of such
Person's affairs or the affairs of any Controlling Person of
such Person and the continuance of any such decree or order
unstayed and in effect for a period of sixty (60) consecutive
days, or
(ii) the commencement by such Person or by any
Controlling Person of such Person of a proceeding seeking any
decree, order or appointment referred to in clause (i), the
consent by such Person or by any Controlling Person of such
Person to any such decree, order or the appointment, or taking
of any action by such Person or by any Controlling Person of
such Person in furtherance of any of the foregoing.
Filing Office means the office of the Secretary of State of the
State.
FmHA means the Farmers Home Administration of the United States
Department of Agriculture.
FmHA Loan Agreement means the FmHA Loan Agreement by and between
the Partnership and FmHA, as amended from time to time.
General Partners means the Persons designated as the General
Partners in Schedule A and any Persons who become General Partners as
provided herein, in their capacities as general partners of the
Partnership. At any and all times where there is only one General
Partner, the term General Partners shall mean such sole General
Partner.
Hazardous Material shall have the collective meanings given to
the terms "hazardous material", "hazardous substances" and "hazardous
wastes" in the Federal Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. Sec. 9601 et sec.,
as amended, and to the term "radioactive materials" in the context of
the Atomic Energy Act, 28 U.S.C. Sec. 2344, and also includes any
meanings given to such terms in any similar state or local statutes,
ordinances, regulations or by-laws. In addition the term Hazardous
Material also includes oil and any other substance known to be
hazardous.
HUD means the United States Department of Housing and Urban
Development.
Immediate Family means, with respect to any Person, such
Person's spouse, parents, parents-in-law, descendants, nephews,
nieces, brothers, sisters, brothers-in-law, sisters-in-law, children-
in-law and grandchildren-in-law.
Initial 100% Occupancy Date means the first date upon which not
less than 95% of the apartment units in the Apartment Complex shall
have been leased to and physically occupied by Qualified Tenants and
not less than 100% of the Units have been, at one time, occupied by a
Qualified Tenant.
Installment means an installment of the Investment Limited
Partner's Capital Contribution paid or payable to the Partnership
pursuant to Section 5.1.
Interest means the entire interest of a Partner in the
Partnership at any particular time, including the right of such
Partner to any and all benefits to which a Partner may be entitled
hereunder and the obligation of such Partner to comply with the terms
of this Agreement.
Invested Amount means (i) as to the Investment Limited Partner,
an amount equal to the Capital Contribution of the Investment Limited
Partner divided by 74%. and (ii) as to any other Partner, an amount
equal to its Capital Contribution.
Investment General Partner means Boston Capital
Associates IV, L.P., a Delaware limited partnership, in its capacity
as the general partner of the Investment Limited Partner, and any
other Person who may become a successor or additional general partner
of the Investment Limited Partner.
Investment Limited Partner means Boston Capital Tax Credit
Fund IV, L.P. , a Delaware limited partnership (specifically Series 26
thereof), and any Person or Persons who replace it as Substituted
Limited Partner, but shall not include any Special Limited Partner or
Additional Limited Partner.
Investment Partnership Agreement means the Agreement of Limited
Partnership of the Investment Limited Partner, as amended from time to
time.
Lender means the Construction Lender and Permanent Lender, each
in its capacity as maker of a Mortgage loan, or its successors and
assigns in such capacity.
Limited Partners means the Investment Limited Partner, the
Special Limited Partner and any Additional Limited Partner.
Management Agent means the management and rental agent for the
Apartment Complex.
Management Agreement means the agreement between the Partnership
and the Management Agent providing for the management of the Apartment
Complex.
Management Fee means the Management Fee to which reference is
made in Article XI.A.
Minimum Set-Aside Test means the set aside test selected by the
Partnership pursuant to Section 42(g) of the Code whereby at least 40%
of the units in the Apartment Complex must be occupied by individuals
with incomes equal to 60% or less of area median income, as adjusted
for family size.
Mortgage means the mortgage indebtedness of the Partnership to a
Lender; and where the context admits Mortgage shall mean and include
the mortgage note evidencing such indebtedness, the mortgage or deed
of trust and security agreement securing such indebtedness, the loan
agreement and all other documentation related thereto which evidence
and secure such indebtedness, including any Lender documentation
related thereto.
Original Agreement has the meaning specified in the Preliminary
Statement.
Original Certificate has the meaning specified in the
Preliminary Statement.
Partner means any General Partner or Limited Partner.
Partner Non-Recourse Debt means any Partnership liability
(a) that is considered non-recourse under Treasury Regulation
Section 1.1001-2 or for which the creditor's right to repayment is
limited to one or more assets of the Partnership and (b) for which any
Partner or Related Person bears the economic risk of loss.
Partner Non-Recourse Debt Minimum Gain means the amount of
partner nonrecourse debt minimum gain and the net increase or decrease
in partner nonrecourse debt minimum gain determined in a manner
consistent with Treasury Regulations Sections 1.704-2(d) and
1.704(g)(3).
Partnership means the limited partnership continued pursuant to
this Agreement.
Partnership Minimum Gain means the amount determined by
computing, with respect to each Partnership Non-Recourse Liability,
the amount of gain, if any, that would be realized by the Partnership
if it disposed of (in a taxable transaction) the property subject to
such liability in full satisfaction of such liability, and by then
aggregating the amounts so computed. Such computations shall be made
in a manner consistent with Treasury Regulation Section 1.704-2(d).
Partnership Non-Recourse Liability means any Partnership
liability (or portion thereof) for which no Partner or Related Person
bears the Economic Risk of Loss.
Permanent Lender means FmHA, in its capacity as holder of the
Permanent Mortgage, together with its successors and assigns in such
capacity.
Permanent Mortgage means the permanent financing provided, or to
be provided, by the Permanent Lender for the Apartment Complex
following the completion thereof in the initial principal amount of
$1,143,703.
Permanent Mortgage Commencement means the first date on which
all of the following shall have occurred: (a) the Completion Date;
(b) the principal amount and maturity date of the Permanent Mortgage
shall have been finally determined; and (c) amortization of the
Permanent Mortgage shall have commenced.
Person means any individual or Entity.
Project Documents means and includes the Construction Mortgage
and the Permanent Mortgage, the FmHA Loan Agreement, the Rental
Assistance Agreement, the Management Agreement, all other instruments
delivered to (or required by) the Construction Lender and/or the
Permanent Lender and all other documents relating to the Apartment
Complex and by which the Partnership is bound, as amended or
supplemented from time to time.
Projected Credit for the Investment Limited Partner means
$31,857 for 1996, $62,231 per annum for each of the years 1997 through
2005 (inclusive) and $30,374 for 2007; provided, however, that the
Projected Credit for 2007 shall be reduced by the amount, if any, by
which the Actual Credit for 1996 exceeds $31,857 and provided further
that upon the occurrence of any of the events described in clauses
(i), (ii) and (iii) of Section 5.1(g), the Projected Credit shall
thereafter be the Revised Projected Credit.
Oualified Basis has the meaning given to it in Section 42(c) of
the Code.
Qualified Income Offset Item means (1) an allocation of loss or
deduction that, as of the end of each year, reasonably is expected to
be made (a) pursuant to Section 704(e)(2) of the Code to a donee of an
interest in the Partnership, (b) pursuant to Section 706(d) of the
Code as the result of a change in any Partner's Interest, or
(c) pursuant to Regulation Section 1.751-(b)(2)(ii) as the result of a
distribution by the Partnership of unrealized receivables or inventory
items and (2) a distribution that, as of the end of such year,
reasonably is expected to be made to a Partner to the extent it
exceeds offsetting increases to such Partner's Capital Account which
reasonably are expected to occur during or prior to the Partnership
taxable year in which such distribution reasonably is expected to
occur.
Qualified Tenant means a tenant (i) with income not exceeding
that permitted by the Minimum Set-Aside Test who leases a unit in the
Apartment Complex under a lease having an original term of not less
than 6 months at a rent meeting the requirements of the Rent
Restriction Test and (ii) complying with any other requirements
imposed by the Project Documents.
Related Person means a person related to a Partner within the
meaning of Treasury Regulation Section 1.752-4(b).
Rental Assistance Agreement means the Rental Assistance
Agreement by and between the Partnership and FmHA, as said agreement
may be amended from time to time, and any successor agreement.
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.
Revised Projected Credit has the meaning given to it in
Section 5.1(g).
Schedule A means Schedule A to this Agreement as amended from
time to time.
Service means the Internal Revenue Service.
Site has the meaning given to it in the Federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980,
42 U.S.C. Sec. 9601 et seq., as amended, and shall also include any
meaning given to it in any similar state or local statutes,
ordinances, regulations or by-laws.
Special Limited Partner means BCTC 94, Inc., a Massachusetts
corporation, and any Person who becomes a Special Limited Partner as
provided herein, in its capacity as a special limited partner of the
Partnership.
State, for purposes of the organization of the Partnership,
means the State of Washington and, for purposes of the Apartment
Complex and Tax Credits, means the State of Arizona.
State Designation means the date upon which the authorized
agency of the State of Arizona finally allocates to the Partnership
Tax Credit for the building(s) constituting the Apartment Complex in
an annual dollar amount of not less than $62,860, as evidenced by the
execution by or on behalf of such agency of Form(s) 8609. For the
purposes of determining State Designation, each building in the
Apartment Complex shall be treated as having received an allocation of
Tax Credit in an amount equal to the lesser of (i) the amount of Tax
Credit carryover allocation received from the authorized agency of the
State as to such building or (ii) the amount of Tax Credit set forth
on the Form 8609 as to such building.
Subordinated Loan means any loan made by the General Partners to
the Partnership pursuant to Section 6.10.
Substituted Limited Partner means any Person who is admitted to
the Partnership as Limited Partner under Section 8.2 or acquires the
Interest of a Limited Partner pursuant to Section 5.2.
Tax Accountants means Xxxxxxx, Xxxxxx & Xxxxxxxxx of Bethesda,
Maryland or such other firms of independent certified public
accountants as may be engaged by Boston Capital to review the
Partnership income tax returns.
Tax Credit means the low-income housing tax credit pursuant to
Section 42 of the Code.
Tax Credit Set-Aside means the date upon which the Partnership
received a reservation, effective for the year 1994, the year the
Apartment Complex received an allocation of Tax Credit, by the
authorized agency of the State of Arizona of Tax Credit for the
building(s) constituting the Apartment Complex in an annual dollar
amount of not less than $63,850, which reservation shall not have
expired or been revoked prior to the date on which the First
Installment is paid.
Uniform Act means the Uniform Limited Partnership Act as adopted
by the State.
Vessel has the meaning given to it in the Federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980,
42 U.S.C. Sec. 9601 et seq., as amended, and shall also include any
meaning given to it in any similar state or local statutes,
ordinances, regulations or by-laws.
Withdrawal (including the forms Withdraw, Withdrawing and
Withdrawn) means, as to a General Partner, the occurrence of death,
adjudication of insanity or incompetence, Event of Bankruptcy,
dissolution, liquidation, or voluntary or involuntary withdrawal or
retirement from the Partnership for any reason, including whenever a
General Partner may no longer continue as a General Partner by law or
pursuant to any terms of this Agreement. Withdrawal shall also mean
the sale, assignment, transfer or encumbrance by a General Partner of
its interest as a General Partner. A General Partner which is a
corporation or partnership shall be deemed to have sold, assigned,
transferred or encumbered its interest as a General Partner in the
event (as a result of one or more transactions) of any sale,
assignment or other transfer (but specifically excluding any transfer
occurring pursuant to the laws of descent and distribution) of a
controlling interest in a corporate General Partner or of a general
partner interest in a General Partner which is a partnership. For
purposes of this definition of Withdrawal, "controlling interest"
shall mean the power to direct the management and policies of such
person, directly or indirectly, whether through the ownership of
voting securities, by contract or otherwise.
Working Capital Loan means a loan made by the General Partners
to the Partnership as described in Section 9.
ARTICLE II
Name and Business
2.1 Name; Continuation
The name of the Partnership is Xxxxxxxx-Xxxxx II Associates, a
Washington Limited Partnership. The Partners agree to continue the
Partnership which was formed pursuant to the provisions of the Uniform
Act.
2.2 Office and Resident Agent
(a) The principal office of the Partnership is 0000 000xx
Xxxxxx, X.X., Xxxxx X-000, Xxxxxxxx, Xxxxxxxxxx 00000 at which office
there shall be maintained those records required by the Uniform Act to
be kept by the Partnership. The Partnership may have such other or
additional offices as the General Partners shall deem desirable. The
General Partners may at any time change the location of the principal
office and shall give due notice thereof to the Limited Partners.
(b) The resident agent in the State for the Partnership for
service of process is as follows:
Xxxxx X. Xxxxxxxx
0000 000xx Xxxxxx XX
Xxxxx X-000
Xxxxxxxx, Xxxxxxxxxx 00000
2.3 Purpose
The purpose of the Partnership is to acquire, hold, invest in,
construct, develop, improve, maintain, operate, lease and otherwise
deal with the Apartment Complex. The Partnership shall operate the
Apartment Complex in accordance with any applicable Agency regulations
and requirements. The Partnership shall not engage in any other
business or activity.
2.4 Term and Dissolution
The Partnership shall continue in full force and effect until
December 31, 2050, except that the Partnership shall be dissolved and
its assets liquidated prior to such date upon:
(a) The sale or other disposition of all or substantially all
of the assets of the Partnership;
(b) A General Partner dying, being adjudicated bankrupt,
insane or incompetent, (if a corporation or partnership) being
dissolved or liquidated, or voluntarily or involuntarily withdrawing
from the Partnership for any reason, including an inability to
continue serving as a General Partner by law or pursuant to the terms
of this Agreement, if (i) the remaining General Partner(s), if any,
shall fail to continue the business of the Partnership and
reconstitute the Partnership as a successor limited partnership as
provided in Section 7.2 and (ii) the Investment Limited Partner shall
fail to exercise the right provided in Section 7.3;
(c) The election to dissolve the Partnership made in writing
by the General Partners with the Consent of the Investment Limited
Partner and the approval (if required) of any Agency;
(d) The entry of a final decree of dissolution of the
Partnership by a court of competent jurisdiction; or
(e) Any other event which causes the dissolution of the
Partnership under the Uniform Act if the Partnership is not
reconstituted pursuant to Section 7.2 or Section 7.3.
Upon dissolution of the Partnership, the General Partners (or
for purposes of this paragraph, their trustees, receivers or
successors) shall cause the cancellation of the Certificate, liquidate
the assets of the Partnership and apply and distribute the proceeds
thereof in accordance with Section 10.3. Notwithstanding the
foregoing, if, during liquidation, the General Partners shall
determine that an immediate sale of part or all of the Partnership's
assets would be impermissible, impractical or cause undue loss to the
Partners, the General Partners may defer liquidation of, and withhold
from distribution for a reasonable time, any assets of the Partnership
except those necessary to satisfy Partnership debts and obligations
(except the Working Capital Loan and Subordinated Loans).
ARTICLE III
Mortgage, Refinancing and Disposition of Property
A. The General Partners and their Affiliates, jointly and
severally, are hereby authorized to incur personal liability for the
repayment of funds advanced by the Construction Lender (and interest
thereon) pursuant to the Construction Mortgage. However, from and
after Permanent Mortgage Commencement, neither any General Partner nor
any Related Person shall at any time bear, nor shall the General
Partners permit any other Partner or any Related Person to bear, the
Economic Risk of Loss for the payment of any portion of any Mortgage.
The General Partners shall cause the Partnership to elect promptly, to
the extent permitted and in the manner prescribed in FmHA, that all
debt service payments made by the Partnership to FmHA shall be applied
first to interest determined at the stated rate set forth in the
promissory note to FmHA, all as provided under FmHA regulations, and
then to principal due under the Permanent Mortgage.
B. The Partnership may decrease, increase or refinance the
Permanent Mortgage and may make any required transfer or conveyance of
Partnership assets for security or mortgage purposes, provided,
however, any such decrease (except through the Permanent Mortgage
amortization schedule anticipated at Permanent Mortgage Commencement),
increase or refinancing of the Permanent Mortgage may be made by the
General Partners only with the Consent of the Investment Limited
Partner.
C. The Partnership may sell, lease, exchange or otherwise
transfer or convey all or any substantial part of the assets of the
Partnership only with the Consent of the Investment Limited Partner.
Notwithstanding the foregoing and except as set forth in
Section 6.2(a)(6), no Consent of the Investment Limited Partner shall
be required for the leasing of apartments to tenants in the normal
course of operations or the leasing of all or substantially all the
apartments to a public housing authority at rents satisfactory to the
Lender and/or Agency as expressed in writing.
D The total compensation to all Persons for the sale of the
Apartment Complex shall be limited to a Competitive Real Estate
Commission, not to exceed six percent (6%) of the contract price for
the sale of the Apartment Complex.
ARTICLE IV
Partners; Capital
4.1 Capital and Capital Accounts
(a) The Capital Contribution of each Partner shall be as set
forth on Schedule A. No interest shall be paid on any Capital
Contribution. No Partner shall have the right to withdraw its Capital
Contribution or to demand and receive property of the Partnership in
return for its Capital Contribution, except as may be specifically
provided in this Agreement or required by law.
(b) An individual Capital Account shall be established and
maintained on behalf of each Partner, including any additional or
substituted Partner who shall hereafter receive an interest in the
Partnership. In accordance with Treasury Regulation Section 1.704-
1(b), the Capital Account of each Partner shall consist of (i) the
amount of cash such Partner has contributed to the Partnership plus
(ii) the fair market value of any property such Partner has
contributed to the Partnership net of any liabilities assumed by the
Partnership or to which such property is subject plus (iii) the amount
of profits or income (including tax-exempt income) allocated to such
Partner less (iv) the amount of losses and deductions allocated to
such Partner less (v) the amount of all cash distributed to such
Partner less (vi) the fair market value of any property distributed to
such Partner net of any liabilities assumed by such Partner or to
which such property is subject less (vii) such Partner's share of any
other expenditures which are not deductible by the Partnership for
Federal income tax purposes or which are not allowable as additions to
the basis of Partnership property and shall be (viii) subject to such
other adjustments as may be required under the Code. The Capital
Account of a Partner shall not be affected by any adjustments to basis
made pursuant to Section 743 of the Code but shall be adjusted with
respect to adjustments to basis made pursuant to Section 734 of the
Code.
The original Capital Account established for any Substituted
Partner (as hereinafter defined) shall be in the same amount as, and
shall replace, the Capital Account of the Partner which such
Substituted Partner succeeds, and, for the purposes of this Agreement,
such Substituted Partner shall be deemed to have made the Capital
Contribution, to the extent actually paid in, of the Partner which
such Substituted Partner succeeds. The term "Substituted Partner" as
used in this paragraph, shall mean a Person who shall become entitled
to receive a share of the allocations and distributions of the
Partnership by reason of such Person succeeding to all or any part of
the Interest of a Partner by assignment of all or any part of a
Partner's Interest. To the extent a Substituted Partner receives less
than 100% of the Interest of a Partner he succeeds, the original
Capital Account of such transferee Substituted Partner and his Capital
Contribution shall be in proportion to the portion of the transferor
Partner's Interest prior to the transfer which the transferee
receives, and the Capital Account of the transferor Partner who
retains a portion of his former Interest and his Capital Contribution
shall continue, and not be replaced, in proportion to the portion of
the transferor Partner's Interest prior to the transfer which the
transferor Partner retains. Nothing in this Section 4.1(b) shall
affect the limitations on transferability of Interests set forth in
Article VII or Article VIII.
4.2 General Partners
The name, address and Capital Contribution of each General
Partner are as set forth on Schedule A.
4.3 Investment Limited Partner and Special Limited Partner
The Investment Limited Partner and the Special Limited Partner
were admitted to the Partnership as the sole Limited Partners pursuant
to the Amended Original Agreement as of the Commencement Date and
hereby agree to be bound by the terms and provisions of the Project
Documents and this Agreement. The names and addresses of the
Investment Limited Partner and the Special Limited Partner are as set
forth on Schedule A. The General Partners shall have no authority to
admit additional Limited Partners without the Consent of the
Investment Limited Partner.
4.4 Liability of the Limited Partners
None of the Investment Limited Partner, the Special Limited
Partner and any Person who becomes an Additional Limited Partner shall
be liable for any debts, liabilities, contracts or obligations of the
Partnership and shall only be liable to pay their respective Capital
Contributions as and when the same are due hereunder and under the
Uniform Act.
4.5 Special Rights of the Investment Limited Partner
(a) Notwithstanding any other provision herein, to the extent
the law of the State is not inconsistent, each of the Investment
Limited Partner and the Special Limited Partner shall have the right,
subject to the prior written consent of any Agency (if such consent is
required) to:
(i) amend this Agreement in any particular provided that
no amendment to this Agreement may, except as
otherwise set forth herein:
(a) Without the consent of the adversely affected
Partner(s) enlarge the obligations of any
Partner under this Agreement or create any
additional class of Partnership Interests
except for cause as determined in good faith,
but in the sole discretion of, the Investment
Limited Partner and/or the Special Limited
Partner;
(b) Modify the order and method provided herein
for allocation of profits, losses, credits and
distribution of Net Cash Flow and Net Cash
Proceeds and net proceeds resulting from the
liquidation of the Partnership, without the
consent of each adversely affected Partner,
except for cause as determined in good faith,
but in the sole discretion of, the Investment
Limited Partner and/or the Special Limited
Partner;
(c) Amend this Paragraph 4.5(a)(i) without the
consent of all Partners;
(ii) dissolve the Partnership;
(iii) remove any General Partner and elect a new General
Partner (A) on the basis of the performance and
discharge of such General Partner's obligations
constituting fraud, bad faith, negligence,
misconduct or breach of fiduciary duty, or (B) upon
the occurrence of any of the following: (1) such
General Partner shall have violated any provisions
of any Project Document or other document required
in connection with any Mortgage, or any provisions
of any Agency regulations applicable to the
Apartment Complex; (2) such General Partner shall
have violated any provision of this Agreement,
including, but not limited to, any obligation to
fund any Partnership expense under Section 6.10, or
such General Partner shall have violated any
provision of applicable law; (3) any Mortgage shall
have gone into default; or (4) such General Partner
shall have conducted its own affairs or the affairs
of the Partnership in such a manner as would
(a) cause the termination of the Partnership for
Federal income tax purposes; or (b) cause the
Partnership to be treated for Federal income tax
purposes as an association taxable as a corporation;
(iv) continue the business of the Partnership with a
substitute General Partner; and
(v) approve or disapprove the sale of all or
substantially all of the assets of the Partnership.
(b) Upon the removal of a General Partner, (i) without any
further action by any Partner, the Special Limited Partner 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
Partner shall determine is the minimum appropriate interest in order
to assure the continued status of the Partnership as a partnership
under the Code and under the Uniform Act, (ii) the remaining portion
of the Interest of the removed General Partner shall automatically be
converted to an equal Interest as an Additional Limited Partner,
(iii) the economic Interest of the Special Limited Partner as the
Special Limited Partner shall continue unaffected by the new status of
the Special Limited Partner or its designee as a General Partner, and
(iv) the new General Partners pursuant to Section 6.13. The Special
Limited Partner or any successor General Partner proposed by the
Special Limited Partner shall have the option, exercisable in its sole
discretion, to acquire the Additional Limited Partner Interest, or any
portion thereof, of any removed General Partner upon payment of the
agreed or then present fair market value of such Interest or portion
thereof. Any dispute as to the value of the Interest or portion
thereof to be acquired pursuant to the immediately preceding sentence
shall be submitted to a committee composed of three qualified real
estate appraisers, one chosen by the removed General Partner, one
chosen by the successor General Partner, and the third chosen by the
two so chosen. The proceedings of such committee shall conform to the
rules of the American Arbitration Association, as far as appropriate,
and its decision shall be final and binding. The expense of
arbitration shall be born equally by the removed General Partner and
the Partnership. The method of payment to the removed General Partner
shall be fair and must protect the solvency and liquidity of the
Partnership. The method of payment will be deemed presumptively fair
where it provides for an interest-bearing promissory note coming due
in no less than five (5) years with equal installments each year. In
addition, upon removal, the Partnership must promptly pay to the
removed General Partner all amounts then accrued and owing to the
removed General Partner; provided, however, that notwithstanding the
language of Section 6.12, Article X, Article XI and any other
provision hereof, no removed General Partner or any Affiliate thereof
shall be entitled to receive any fee, compensation or other
remuneration from the Partnership, other than (i) the above-described
payment for the Interest, or portion thereof, of the removed General
Partner, and (ii) any such fee, compensation or other remuneration
which had already been earned in full prior 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 agreement. The
Partnership may offset against any payments to a General Partner
removed under this Section 4.5 any damages suffered by the Partnership
as a result of any breach of the obligations of such General Partner
hereunder. A General Partner so removed will not be liable as a
General Partner for any obligations of the Partnership incurred after
the effective date of its removal. Each General Partner hereby grants
to the Special Limited Partner an irrevocable (to the extent permitted
by applicable law) power of attorney coupled with an interest to
execute and deliver any and all documents and instruments on behalf of
such General Partner and the Partnership as the Special Limited
Partner may deem to be necessary or appropriate in order to effect the
provisions of this Section 4.5 and to enable the new General Partner
to manage the business of the Partnership.
(c) In order to implement Section 4.5(a)(v) , the General
Partners are hereby required, within five (5) days after their receipt
of any offer to purchase the Apartment Complex or all of the Interests
in the Partnership, to send a copy of such offer (or a written
description of any such oral offer) to each of the Limited Partners.
If, within thirty (30) days of its receipt of any such copy of such an
offer, the Special Limited Partner shall send notice to the General
Partners that the Special Limited Partner desires that the Partnership
accept such offer, then the General Partners shall be required to
accept such offer on behalf of the Partnership and proceed with all
deliberate speed to close such transaction unless otherwise instructed
by the Special Limited Partner at any point prior to the closing of
such transaction. To the extent, if any, that the Special Limited
Partner shall determine, in its discretion, that the General Partners
are not proceeding appropriately with respect to any such offer or
closing, each Partner hereby grants to the Special Limited Partner an
irrevocable (to the extent permitted by law) power of attorney coupled
with an interest to execute and deliver any and all documents and
instruments on behalf of the Partnership and any Partner as the
Special Limited Partner may deem to be necessary or appropriate in
order to effect the acceptance of and/or closing pursuant to any such
offer in such a manner as the Special Limited Partner shall, in its
discretion, determine to be appropriate.
4.6 Meeting
The General Partner or Limited Partners holding more than ten
percent (10%) of the then outstanding Limited Partner Interests may
call meetings of the Partnership for any matters for which the Limited
Partners may vote as set forth in this Agreement. A list of the names
and addresses of all Limited Partners shall be maintained as part of
the books and records of the Partnership and shall be made available
upon request to any Limited Partner or his representative at his cost.
Upon receipt of a written request either in person or by certified
mail stating the purpose(s) of the meeting, the General Partners shall
provide all Limited Partners within ten (10) days after receipt of
said request, written notice (either in person or by certified mail)
of a meeting and the purpose of such meeting to be held on a date not
less then fifteen (15) nor more than sixty (60) days after receipt of
said request, at a time convenient to the Limited Partners. All
meetings shall be held at the principal office of the Partnership.
ARTICLE V
Capital Contributions of the Investment Limited Partner
and the Special Limited Partner
5.1 Payments
(a) The Special Limited Partner's Capital Contribution of $10
shall be paid in full in cash on the Admission Date. The Investment
Limited Partner's Capital Contribution shall be paid in cash
installments (the "Installments"), as follows:
(1) $186,694 (the "First Installment") on the latest of
(i) the Admission Date, (ii) Tax Credit Set-Aside,
(iii) Construction Mortgage Closing or
(iv) Permanent Mortgage Commitment;
(2) $74,678 (the "Second Installment") on the latest to
occur of (i) the Completion Date, (ii) Cost
Certification, (iii) receipt by the Investment
Partnership of an endorsement to the owner's title
insurance policy in form and substance satisfactory
to the Investment Limited Partner in its sole
discretion, (iv) Due Diligence Compliance, and (v)
receipt of the Contractor Payment Letter;
(3) $97,016 (the "Third Installment") on the latest to
occur of (i) the Initial 100% Occupancy Date,
(ii) Permanent Mortgage Commencement, (iii) State
Designation; or (iv) Breakeven Point and
(4) $15,000 (the "Fourth Installment") on Breakeven
Confirmation;
provided, however, that the General Partners shall give the Investment
Limited Partner not less than ten (10) days' written notice prior to
the due date of each Installment subsequent to the First Installment.
(b) The obligation of the Investment Limited Partner to pay
each Installment is conditioned upon delivery by the General Partners
to the Investment Limited Partner of a written certificate (the
"Payment Certificate") stating that as of the date of such certificate
(i) all the conditions to the payment of such Installment have been
satisfied and (ii) all representations and warranties of the General
Partners contained in this Agreement are true and correct. Except as
provided in the final sentence of this Section 5.1(b), acceptance by
the Partnership of any Installment shall constitute a confirmation
that, as of the date of payment, all such conditions are satisfied and
all such representations and warranties are true and correct. In
addition, the obligation of the Investment Limited Partner to pay the
First Installment is also conditioned upon delivery by the General
Partners to the Investment Limited Partner of both (i) a legal opinion
of independent counsel to the Partnership, which opinion must be
satisfactory to the Investment Limited Partner as to form, content and
identity of counsel and (ii) a photocopy of an owner's title insurance
policy, or an endorsement thereto, issued to the Partnership with
respect to the Apartment Complex with an effective date on or after
the Admission Date, in an insured amount not less than $1,583,165,
from a title insurance company reasonably satisfactory to the
Investment Limited Partner and evidencing the Partnership's ownership
of the Apartment Complex subject only to such exclusions, exceptions,
conditions and stipulations as shall be acceptable to the Investment
Limited Partner, in its sole discretion. In no event shall any
Installment become due until all of the conditions for all of the
Installments listed prior to the Installment in question in
Section 5.1(a) shall have been satisfied and all of such prior
Installments shall have become due. Notwithstanding the foregoing,
however, if at any time prior to the date when an Installment becomes
due and payable, the Partnership has an "Operating Deficit" (expenses
in excess of revenues which the General Partners would be required to
fund pursuant to Section 6.10), then the Investment Limited Partner
may, at its option, waive the requirement of the delivery of the
Payment Certificate or any other condition with respect to part or all
of such Installment and pay such part or all of such Installment,
provided that the proceeds of the amount so paid are used by the
Partnership to fully fund such Operating Deficit; provided, however,
that if the proceeds of such amount so paid are designated in
Section 6.12 or Section 10.2(c) to be used to pay fee(s) or special
distribution(s), then such proceeds shall be utilized to pay such
fee(s) or special distribution(s) and the General Partners, on their
behalf and on behalf of any of their Affiliates to the extent any of
the foregoing are recipient(s) thereof shall be required to, and
hereby agree to, utilize the proceeds of such fee(s) or special
distribution(s) to fund such Operating Deficit, in which case the
Investment Limited Partner is hereby authorized to directly fund such
Operating Deficit and the funds so applied shall be deemed to have
been paid as aforesaid.
(c) The Payment Certificate for each Installment shall be
dated and delivered not less than ten (10) nor more than thirty
(30) days prior to the due date for such Installment.
(d) If, as of the date when an Installment would otherwise be
due, any statement required to be made in the Payment Certificate for
such Installment cannot be truthfully made, the General Partners shall
notify the Investment Limited Partner of the reason why such statement
would be untrue if made, and the Investment Limited Partner shall not
be required to pay such Installment; provided, however, that if
(i) any such statement can subsequently be truthfully made and
(ii) the Investment Limited Partner shall not have irrevocably lost,
in the good faith judgment of the Investment General Partner, any
material tax or other benefits hereunder, then the Investment Limited
Partner shall pay such Installment to the Partnership thirty (30) days
after delivery by the General Partners to the Investment Limited
Partner of the Payment Certificate together with an explanation of the
manner in which each such statement had become true.
(e) If with respect to any year all or a portion of which
occurs during the 60-month period commencing on the later of (i) the
Admission Date or (ii) the date on which the first building in the
Apartment Complex is placed in service for the purposes of Section 42
of the Code (a "Reduction Year") the Actual Credit is or was less than
the Projected Credit, then the General Partners shall pay to the
Investment Limited Partner the Reduction Amount. The Reduction Amount
shall be equal to the sum of (A) the excess of the Projected Credit
for such year over the Actual Credit for such year multiplied by .81
plus (B) the amount of any recapture, interest or penalty payable by
the limited partners of the Investment Limited Partner as a result of
such shortfall, assuming that each limited partner in the Investment
Limited Partner used all of the Tax Credits allocated to it in the
year of allocation and that such Person was subject to interest at the
rate set forth in Section 6621(a)(2) of the Code and to the penalty
for understatement of tax set forth in Section 6662(d) of the Code.
The Auditors shall make their determination of the amount of the
Actual Credit with respect to each Reduction Year within thirty (30)
days following the end of such year but such amount shall be subject
to later adjustment by the Auditors or by the Service in connection
with an audit. The Investment Limited Partner shall be eligible to be
paid a Reduction Amount as hereinabove described with respect to each
Reduction Year and may receive multiple payments of Reduction Amounts
in the event of multiple changes in the Actual Credit. Any Reduction
Amount shall, at the option of the Investment Limited Partner,
(i) first be applied to the Installment next due to be paid by the
Investment Limited Partner, with any portion of such Reduction Amount
in excess of the amount of such Installment then being applied to
succeeding Installments, provided that if no further Installments
remain to be paid or if the Reduction Amount shall exceed the sum of
the amounts of the remaining Installments, then the entire Reduction
Amount or the balance of the Reduction Amount, as the case may be,
shall be paid by the General Partners to the Investment Limited
Partner promptly after demand is made therefor, as a payment of
damages for breach of warranty, regardless of the reason for the
occurrence of such event and/or (ii) be paid in its entirety by the
General Partners directly to the Investment Limited Partner promptly
after demand is made therefor, as a payment of damages for breach of
warranty, regardless of the reason for the occurrence of such event.
(f) In the event that, for any reason, with respect to any
fiscal year commencing after the sixty (60)-month anniversary of the
later of (i) the Admission Date or (ii) the date on which the first
building in the Apartment Complex is placed in service for the
purposes of Section 42 of the Code, the amount of the Actual Credit
shall be less than the Projected Credit (such difference being
hereinafter referred to as a "Credit Shortfall"), the Investment
Limited Partner shall be treated as having made a constructive advance
to the Partnership with respect to such year (a "Credit Recovery
Loan"), which shall be deemed to have been made on January 1 of such
year in an amount equal to the sum of (i) the Credit Shortfall for
such year plus (ii) the amount of any recapture, interest or penalty
payable by the limited partners of the Investment Partnership as a
result of the Credit Shortfall for such year, assuming that each
limited partner in the Investment Limited Partner used all of the Tax
Credits allocated to it in the year of allocation and that each such
Person was subject to interest at the rate set forth in
Section 6621(a)(2) of the Code and to the penalty for understatement
of tax set forth in Section 6662(d) of the Code. Credit Recovery
Loans shall be deemed to bear simple (not compounded) interest from
the respective dates on which such constructive advances shall have
been deemed to have been made under this Section 5.1(f) at 9% per
annum. Credit Recovery Loans shall be payable by the Partnership as
provided in Section 10.2(b) Clause Third.
(g) In the event that (i) State Designation does not occur by
December 31, 1996 and/or evidence thereof in the form of fully
executed Forms 8609 is not received by the Partnership by Xxxxx 0,
0000, (xx) by March 1, 1997, the Limited Partners shall not have
received a written certification of the Auditors in a form and in
substance satisfactory for the purpose of achieving Cost Certification
and indicating that the product of the Apartment Complex's Eligible
Basis and its Applicable Percentage is such that the Apartment Complex
will be eligible to receive Tax Credit in an annual amount of at least
$62,860, or (iii) at any time after the Completion Date the product of
the Apartment Complex's Eligible Basis and its Applicable Percentage
is determined by the Auditors, the Tax Accountants or the Service to
be such that the Apartment Complex will not be eligible to receive Tax
Credit in an annual dollar amount of at least $62,860, then (a) the
General Partners shall pay to the Investment Limited Partner an amount
equal to .81 of the product of (A) difference between (i) $628,600 and
(ii) the total amount of Tax Credit allocated to the Partnership and
(B) .60 and (b) the Projected Credit for each year shall thereafter be
redefined to mean 99% of the annual amount of Tax Credit actually so
allocated and available to the Partnership for such year (the "Revised
Projected Credit"). Any amount payable by the General Partners to the
Investment Limited Partner pursuant to this Section 5.1(g) shall, at
the option of the Investment Limited Partner, (i) be applied first to
the Installment, if any, next due to be paid by the Investment Limited
Partner, and any balance of such amount payable by the General
Partners in excess of the amount of such Installment shall be applied
to succeeding Installments, if any, provided that if such amount
payable by the General Partners 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 Partners to the Investment Limited
Partner promptly after demand is made therefor, as a payment of
damages for breach of warranty, regardless of the reason for
occurrence of such event, or (ii) be paid in its entirety by the
General Partners directly to the Investment Limited Partner promptly
after demand is made therefor, as a payment of damages for breach of
warranty, regardless of the reason for the occurrence of such event.
5.2 Return of Capital Contributions
(a) Failure to Achieve Development and/or Tax Credit
Benchmarks and Standards. If (i) all 28 of the apartment units in the
Apartment Complex shall not have been placed in service by
December 31, 1996 or (ii) by December 31, 1996 (or any later date
fixed by the General Partners with the Consent of the Investment
Limited Partner) less than 28 apartment units in the Apartment Complex
shall have been occupied by tenants meeting the terms of the Minimum
Set-Aside Test under executed leases which shall have received any
necessary Agency or Lender approvals at rental levels meeting the
requirements of the Rent Restriction Test, or (iii) Permanent Mortgage
Commencement shall not have occurred prior to February 1, 1997 (or any
later date fixed by the General Partners with the Consent of the
Investment Limited Partner), or (iv) State Designation shall not have
occurred by December 31, 1996 and/or evidence thereof, in the form of
fully executed Forms 8609 is not received by the Partnership by
March 31, 1997 (or any later date fixed by the General Partner with
the Consent of the Investment Limited Partner) , or by said date the
General Partners shall not have made any payment as described in the
last sentence of Section 5.1(g) or, if the Investment Limited Partner
shall have elected to have all or a portion of any payment under
Section 5.1(g) applied toward future Installment obligations of the
Investment Limited Partner, amendments to this Agreement and, if
applicable, to the Certificate shall not have been adopted and, in the
case of the Certificate, if applicable, filed in the Filing Office,
reflecting such event, or (v) the Partnership shall fail to meet the
Minimum Set-Aside Test or the Rent Restriction Test by the close of
the first year of the Credit Period and/or fails to continue to meet
either of those Tests at any time during the sixty (60)-month period
commencing on such date or (vi) prior to Permanent Mortgage
Commencement, (a) foreclosure proceedings shall have commenced under
the Construction Mortgage and such proceedings shall not have been
dismissed within thirty (30) days, (b) any of the commitments of any
Lender or Agency to provide the Permanent Mortgage and/or any subsidy
financing shall be terminated or withdrawn and not reinstated or
replaced within sixty (60) days with terms equally or more favorable
to the Investment Limited Partner or terms for which the Consent of
the Investment Limited Partner and (if required) the approval of any
Agency shall have been obtained, or (c) the Construction Lender shall
have irrevocably refused to make any further advances under the
Construction Mortgage and such decision shall not have been reversed
or the Construction Lender replaced within thirty (30) days, or (vii)
if by December 31, 1996 (or any later date fixed by the General
Partners with the Consent of the Investment Limited Partner), the
Investment Limited Partner shall not have received, in form and
substance satisfactory to the Investment Limited Partner, the
certification of the Auditors that as of a date no later than
December 31, 1994, the Partnership had incurred capitalizable costs
with respect to the Apartment Complex of at least ten percent (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 is a "qualified building" for the purposes of
Section 42(h)(1)(E)(ii) of the Code, or (viii) if at any time it shall
be determined by the Service or by the Tax Accountants that as of
December 31, 1994 the Partnership had not incurred capitalizable costs
with respect to the Apartment Complex of at least ten percent (10%) of
the Partnership's reasonably expected basis in the Apartment Complex
as of December 31, 1996, or (ix) Breakeven shall not have occurred by
March 31, 1997, then the General Partners shall, within five (5) days
of the occurrence thereof, send to the Investment Limited Partner and
the Special Limited Partner notice of such event and of the General
Partners' obligation to repurchase the Interests of the Investment
Limited Partner and the Special Limited Partner by paying to the
Investment Limited Partner and the Special Limited Partner an amount
(the "Repurchase Amount") equal to each such Partner's Invested Amount
minus the amount, if any, of such Partner's Capital Contribution which
shall not yet have been paid (or deemed to have been paid) to the
Partnership plus the amount of any third party costs, including, but
not limited to, attorney' s fees incurred by or on behalf of such
Partner in implementing this Section 5.2(a) in the event the
Investment Limited Partner and/or the Special Limited Partner requires
such a repurchase. If either the Special Limited Partner or the
Investment Limited Partner elects to require a repurchase of its
Interest and the payment to it of an amount equal to its Repurchase
Amount, it shall send notice thereof to the Partnership within thirty
(30) days after the mailing date of the General Partners' notice, or
at any time after the occurrence of any of the foregoing if the
General Partners shall not have sent such a notice thereof, and the
General Partners shall within ten (10) days after the Partnership
receives any such notice from a Partner requiring the purchase of its
Interest repurchase the Interest of such Partner and the Special
Limited Partner by paying to each such Partner an amount equal to its
Repurchase Amount.
(b) Lender Disapproval. If the Construction Lender and/or
Permanent Lender shall disapprove, or fail to give any required
approval of, the Investment Limited Partner and/or the Special Limited
Partner as a Limited Partner hereunder within one hundred eighty (180)
days of the Admission Date, then the Investment Limited Partner being
disapproved or not approved shall, effective as of such time or such
later time as may be selected by the Partner being disapproved or not
approved (or such other time as may be specified by the Lender and/or
Agency in its disapproval), at the option of the Partner being
disapproved or not approved (if not directed by the Lender and/or
Agency to withdraw), cease to be a Limited Partner. The General
Partners shall, within ten (10) days of the effective date of such
cessation, pay to the Partner being disapproved or not approved an
amount equal to its Invested Amount minus the amount, if any, of such
Partner's Capital Contribution which shall not yet have been paid (or
deemed to have been paid) to the Partnership plus the amount of any
third party costs, including, but not limited to attorney's fees,
incurred by or on behalf of such Partner in implementing this
Section 5.2(b).
(c) Substitution and Indemnification. Upon receipt by the
Investment Limited Partner and/or the Special Limited Partner of the
amount due to it pursuant to either Section 5.2(a) or Section 5.2(b) ,
the Interest of such Partner shall terminate, and the General Partners
shall indemnify and hold harmless such Partner from any losses,
damages, and liabilities to which such Partner (as a result of its
participation hereunder) may be subject.
(d) Waiver of Repurchase Right. The Investment Limited
Partner shall have the right to irrevocably waive its right to have
its Interest repurchased pursuant to any clause or clauses of
Section 5.2(a), or any portion thereof, at any time during which any
of such rights shall be in effect. Such a waiver shall be exercised
by delivery to the General Partners of a written notice stating that
the rights being waived pursuant to any specified clause or clauses of
Section 5.2(a), or any specified portion thereof, are thereby waived
from that date forward.
(e) Additional General Partner. If the General Partners shall
fail to make on the due date therefor any payment required under
Section 5.2(a) or Section 5.2(b), time being of the essence, at any
time thereafter the Special Limited Partner shall have the option,
exercisable in its sole discretion, to cause itself or its designee to
be admitted as an additional General Partner, whereupon such
additional General Partner shall automatically be transferred from the
pre-existing General Partners, proportionally from their Interests, in
consideration of $10, a one percent (1%) interest in all the profits,
losses, tax credits and distributions of the Partnership, such
transfer notwithstanding, the Special Limited Partner shall also
retain its status as such and its interest in the Partnership as the
Special Limited Partner shall not be affected. Upon any such
admission of the Special Limited Partner or its designee as an
additional General Partner, each of the General Partners hereby agrees
that all of its rights and powers hereunder as a General Partner shall
automatically be irrevocably delegated to the Special Limited Partner
pursuant to Section 6.13 without the necessity of any further action
by any Partner. Each Partner hereby grants to the Special Limited
Partner an irrevocable (to the extent permitted by applicable law)
power of attorney coupled with an interest to take any action and to
execute, deliver and file or record any and all documents and
instruments on behalf of such Partner and the Partnership as the
Special Limited Partner may deem necessary or appropriate in order to
effectuate the provisions of this Section 5.2(e) and to allow the
additional General Partner to manage the business of the Partnership.
The admission of the Special Limited Partner or its designee as an
additional General Partner shall not relieve any other General Partner
of any of its economic obligations hereunder, and each other General
Partner shall fully indemnify and hold harmless the additional General
Partner against any and all losses, judgments, liabilities, expenses
and amounts paid in settlement of any claims sustained in connection
with its capacity as a General Partner.
ARTICLE VI
Rights, Powers and Duties of General Partners
6.1 Authorized Acts
Subject to Section 6.2, Section 6.3, and all other provisions of
this Agreement, the General Partners for, in the name and on behalf of
the Partnership, are hereby authorized to do the following in
furtherance of the purposes of the Partnership:
(1) To acquire by purchase, lease, exchange or otherwise any
real or personal property;
(2) To construct, operate, maintain, finance and improve, and
to own, sell, convey, assign, mortgage or lease any real estate and
any personal property;
(3) To borrow money and issue evidences of indebtedness and to
secure the same by mortgage, pledge or other lien on the Apartment
Complex or any other assets of the Partnership;
(4) To execute the Construction and Permanent Mortgages, the
other Project Documents and all such other documents as the General
Partners deem necessary or appropriate in connection with the
acquisition, development and financing of the Apartment Complex;
(5) To prepay in whole or in part, refinance or modify the
Construction and Permanent Mortgages or any other financing affecting
the Apartment Complex;
(6) To employ the Management Agent (which may be an Affiliate
of the General Partners) and to pay reasonable compensation for its
services;
(7) To employ their respective Affiliates to perform services
for, or sell goods to, the partnership;
(8) To execute contracts with the State of Arizona or any
subdivision or agency thereof or any other government agency to make
apartments or tenants in the Apartment Complex eligible for any
public-subsidy program;
(9) To execute leases of some or all of the apartment units of
the Apartment Complex to a public housing authority and/or to a non-
profit corporation, cooperative or other non-profit Entity; and
(10) To enter into any kind of activity and to perform and
carry out contracts of any kind which may be lawfully carried on or
performed by a partnership and to file all certificates and documents
which may be required under the laws of the State.
6.2 Restrictions on Authority
(a) Notwithstanding any other Section of this Agreement, the
General Partners shall have no authority to perform any act in
violation of applicable law, Agency or other government regulations,
requirements of any Lender, or the Project Documents. In the event of
any conflict between the terms of this Agreement and any applicable
Agency or other government regulations or requirements of the Lender,
the terms of such regulations or requirements shall govern. Neither
shall the General Partners have any authority to do any of the
following acts without the Consent of the Investment Limited Partner
and the prior written consent of the Special Limited Partner:
(1) To borrow in excess of $10,000 in the aggregate at
any one time outstanding on the general credit of the
Partnership, except borrowings constituting Subordinated Loans
or the Working Capital Loan;
(2) To borrow from the Partnership or commingle
Partnership funds with funds of any other Person;
(3) Following the Completion Date, to construct any new
or replacement capital improvements on the Apartment Complex
which substantially alter the Apartment Complex or its use or
which are at a cost in excess of $10,000 in a single Partnership
fiscal year, except (a) replacements and remodeling in the
ordinary course of business or under emergency conditions or (b)
construction paid for from insurance proceeds;
(4) To acquire any real property in addition to the
Apartment Complex;
(5) Following Permanent Mortgage Commencement, to
increase, decrease (except through the amortization schedule
provided for in the Permanent Mortgage Commencement), modify the
terms of or refinance the Permanent Mortgage;
(6) To knowingly 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;
(7) To sell, exchange or otherwise convey or transfer
the Apartment Complex or substantially all the assets of the
Partnership;
(8) To terminate any agreement with any Agency and/or
Lender;
(9) To cause the Partnership to commence a proceeding
seeking any decree, relief, order or appointment in respect to
the Partnership under the federal bankruptcy laws, as now or
hereafter constituted, or under any other federal or state
bankruptcy, insolvency or similar law, or the appointment of a
receiver, liquidator, assignee, custodian, trustee, sequestrator
(or similar official) for the Partnership or for any substantial
part of the Partnership's business or property, or to cause the
Partnership to consent to any such decree, relief, order or
appointment initiated by any Person other than the Partnership;
(10) To amend the Construction Contract, except for
change orders approved by the Lender;
(11) To pledge or assign any of the Capital Contribution
of the Investment Limited Partner or the proceeds thereof; or
(12) To do any act required to be approved or ratified by
all limited partners under the Uniform Act.
(b) In the event that any General Partner violates any
provision of Section 6.2(a), the Special Limited Partner, in its sole
discretion, may cause itself or its designee to be admitted as an
additional General Partner without any further action by any other
Partner. Upon any such admission of an additional General Partner,
each pre-existing General Partner shall be deemed to have assigned
proportionally to the additional General Partner, automatically and
without further action, such portion of its interest so that the
additional General Partner shall receive not less than a one percent
(1%) interest in the profits, losses, tax credits and distributions of
the Partnership in consideration of the payment of $1.00 and any other
consideration which may be agreed upon. An additional General Partner
so admitted shall automatically become the Managing General Partner
and be irrevocably delegated all of the power and authority of all of
the General Partners pursuant to Section 6.13. Any such additional
General Partner shall have the right to withdraw as a General Partner
at any time, leaving the pre-existing General Partners once again as
the only General Partners, the provisions of Article VII
notwithstanding. Each Partner hereby grants to the Special Limited
Partner a special power of attorney, irrevocable to the extent
permitted by law and coupled with an interest, to amend the
Certificate and this Agreement and to do anything else which, in the
view of the Special Limited Partner, may be necessary or appropriate
to accomplish the purposes of this Section 6.2(b) or to enable any
additional General Partner admitted pursuant to this Section 6.2 (b)
to manage the business of the Partnership. The admission of an
additional General Partner shall not relieve any other General Partner
of any of its obligations hereunder, and each other General Partner
shall fully indemnify and hold harmless the additional General Partner
from and against any and all losses, judgments, liabilities, expenses
and amounts paid in settlement of any claims sustained in connection
with its capacity as a General Partner.
(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
No General Partner or Affiliate thereof shall receive any salary
or other direct or indirect compensation for any services or goods
provided in connection with the Partnership or the Apartment Complex,
except as may be specifically provided in Section 6.12 and Article XI
or as to which the prior written consent of the Special Limited
Partner shall have been obtained to the precise terms thereof prior to
the commencement of such services or the provision of such goods. Any
Partner may engage independently or with others in other business
ventures of every nature and description including the ownership,
operation, management, syndication and development of competing real
estate; neither the Partnership nor any other Partner shall have any
rights in and to such independent ventures or the income or profits
derived therefrom.
6.4 Business Management and Control; Tax Matters Partner
Subject to the provisions of this Agreement, the General
Partners shall have the exclusive right to control the business of the
Partnership. The Investment Limited Partner shall have no right to
take part in the management or control of the business of the
Partnership or to transact any business in the name of the
Partnership. No provision of this Agreement which make the Consent of
the Investment Limited Partner a condition for the effectiveness of an
action taken by the General Partners is intended, and no such
provision shall be construed, to give the Investment Limited Partner
any participation in the control of the Partnership business. Each of
the Special Limited Partner and the Investment Limited Partner hereby
consents to the exercise by the General Partners of the powers
conferred on them by law and this Agreement, and the General Partners
agree to exercise control of the business of the Partnership only in
accordance with the provisions of this Agreement. 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 an impediment
to the ability of either the Investment Limited Partner or the Special
Limited Partner to take any action hereunder. All Partners hereby
agree that Xxxxx X. Xxxxxxxx shall serve as the "Tax Matters Partner."
In the case of litigation, the Tax Matters Partner is required to file
suit in the United States Tax Court unless the Consent of the
Investment Limited Partner is obtained to file suit in the United
States Claims Court or the United States District Court. Nothing
herein shall be construed to restrict the Partnership from engaging
the Auditors to assist the Tax Matters Partner in discharging its
duties hereunder.
6.5 Duties and Obligations
(a) The General Partners shall manage the affairs of the
Partnership to the best of their ability, shall use their best efforts
to carry out the purpose of the Partnership, and shall devote to the
Partnership such time as may be necessary for the proper performance
of their duties and the business of the Partnership. The General
Partners shall promptly take all action which may be necessary or
appropriate for the proper development, maintenance and operation of
the Apartment Complex in accordance with the provisions of this
Agreement, the Project Documents and applicable laws and regulations
including, without limitation, funding the Construction and
Development Fee to the extent Capital Contributions are insufficient.
The General Partners shall be responsible for the management and
operation of the Partnership, including the oversight of the rent-up
and operational stages of the Apartment Complex.
(b) The General Partners shall use their best efforts to cause
the Partnership to generate Cash Flow for distribution to the Partners
at the maximum realizable level in view of (i) any applicable Agency
and other regulations, (ii) the Minimum Set-Aside Test and (iii) the
Rent Restriction Test, and, if necessary, the General Partners shall
also use their best efforts to obtain approvals and implementation of
appropriate adjustments in the rental schedule of the Apartment
Complex.
(c) The General Partners shall cause the Partnership to obtain
and keep in force, during the term of the Partnership, comprehensive
casualty insurance, including, but not limited to, fire and other
risks generally included under "extended" coverage, policies,
workmen's compensation and public liability insurance in favor of the
Partnership (i) with such companies and in such amounts as shall be
satisfactory to the Lenders and any Agency, or, if the Apartment
Complex is no longer subject to Lender or Agency regulation or
requirements, as shall be customary for apartment complexes similar to
the Apartment Complex and (ii) in amounts which shall be (A) no less
than those amounts which are customary in the area for apartment
complexes similar to the Apartment Complex, (B) in the case of the
"extended coverage, portion, no less than the full original
replacement value of the Apartment Complex, (C) no less than such
amounts as may be reasonably requested by the Investment Limited
Partner and/or the Special Limited Partner from time to time, and (D)
in any event, sufficient to prevent the Partnership from becoming a
co-insurer under any such policies. No deductibles on such policies
may exceed $1,000. The public liability insurance in favor of the
Partnership shall be in an amount not less than $5,000,000. Through
the Completion Date, or such later date as may be required by the
Construction Lender or any Agency, the General Partners shall also
cause the Partnership to obtain and keep in force a builder's risk
policy in favor of the Partnership in an amount not less than the
greater of (i) the full replacement value of the Apartment Complex
(excluding the value of the underlying land, the site utilities and
the foundations) or (ii) such other amount as shall be required by any
Agency or the Construction Lender. Throughout the term of the
Partnership, the General Partners shall provide copies of all such
policies (or binders) to the Investment Limited Partner promptly after
their receipt thereof or upon request but no less frequently than
annually. Upon the request of the Investment Limited Partner to the
General Partners, the General Partners shall cause the applicable
insurer to name the Investment Limited Partner as an "additional
insured" on each Partnership insurance policy.
(d) The obligations of the General Partners hereunder shall be
the joint and several obligations of each General Partner. Except as
otherwise provided in Sections 4.5(b) and 7.1, such obligations shall
survive any Withdrawal of a General Partner from the Partnership.
(e) The General Partners shall establish and maintain
reasonable reserves to provide for working capital needs,
improvements, replacements and any other contingencies of the
Partnership. At a minimum, the General Partners shall cause the
Partnership to annually deposit $11,437 from its Cash Flow into
replacement reserves; to the extent that Cash Flow (as determined
before deduction of this reserve deposit) for any year shall be
insufficient to make such deposit in full, the General Partners shall
fund such shortfall from their own funds as a Subordinated Loan during
the operating deficit period. The General Partners' obligation to so
fund the replacement reserve shall be suspended when said reserves
total $114,370.
(e)(2) In addition to the requirements of Section 6.5(e)(1), in
order to meet operating expenses of the Partnership which exceed
operating income available for the payment thereof, the General
Partners (or their designee), in their capacity as the recipient of
the Construction and Development Fee, shall deposit $24,000, or such
other amount as shall be required by FmHA, of the proceeds of the
portion of the Construction and Development Fee which is payable from
the proceeds of the Third Installment into a segregated reserve
account (the "Operating Reserve Account") to secure the General
Partners' obligation to fund operating expenses until Rental
Achievement has occurred. Any withdrawals from the Operating Reserve
Account shall be allowed only with the approval of the FmHA and shall
require the written approval of the Special Limited Partner. Any such
approval, disapproval, or request for additional information will be
given by the Special Limited Partner within three (3) business days of
a written request therefore by the General Partners. Upon the
occurrence of the fifth anniversary of Breakeven, the funds, if any,
remaining in such Operating Reserve Account at such time shall be
returned to the General Partners (or their designee as the recipient
of the Construction and Development Fee) , if allowed by FmHA. Any
funds utilized from such operating Reserve Account to pay Partnership
operating expenses shall constitute Subordinated Loans.
(f) Each General Partner shall be bound by the Project
Documents, and no additional General Partner shall be admitted if he,
she or it has not first agreed to be bound by this Agreement (and
assume the obligations of a General Partner hereunder) and by the
Project Documents to the same extent and under the same terms
as the other General Partners.
(g) The General Partners shall take all actions necessary to
ensure that the Investment Limited Partner receives the full amount of
the Projected Credit, including, without limitation, the rental of
apartments to Qualified Tenants and the filing of annual
certifications as may be required. In this regard, the General
Partners shall, inter alia, cause (i) the Partnership to satisfy all
requirements imposed from time to time under the Code with respect to
rental levels and occupancy by Qualified Tenants by the close of the
first year of the Credit Period and throughout the Compliance Period
so as to permit the Partnership to be entitled to the Tax Credit
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 Arizona Tax Credit monitoring procedures, (iii) all
dwelling units in the Apartment Complex to be leased for periods of
not less than six months to persons 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.
(h) On or before the Admission Date, the General Partners
shall provide to the Investment Limited Partner either (i) an
appraisal of the Apartment Complex prepared by a competent independent
appraiser or (ii) HUD project cost and budget analysis on Form 2264,
or any successor HUD form, any comparable form of a state or other
governmental agency, including any applicable Tax Credit allocation
agency, setting forth estimates with respect to construction and
mortgage financing costs and initial rental income and operating
expense figures for the Apartment Complex.
(i) The General Partners shall (i) not store (except in
compliance with all laws, ordinances, and regulations pertaining
thereto) or dispose of any Hazardous Material at the Apartment
Complex, or at or on any other Site or Vessel owned, occupied, or
operated either by any General Partner, any Affiliate of a General
Partner, or any Person for whose conduct any General Partner is or was
responsible; (ii) neither directly nor indirectly transport or arrange
for the transport of any Hazardous Material (except in compliance with
all laws, ordinances, and regulations pertaining thereto); (iii)
provide the Investment Limited Partner with written notice (x) upon
any General Partner's obtaining knowledge of any potential or known
release, or threat of release, of any Hazardous Material at or from
the Apartment Complex or any other Site or Vessel owned, occupied, or
operated by any General Partner, any Affiliate of a General Partner or
any Person for whose conduct any General Partner is or was responsible
or whose liability may result in a lien on the Apartment Complex; (y)
upon any General Partner's receipt of any notice to such effect from
any Federal, state, or other governmental authority; and (z) upon any
General Partner's obtaining knowledge of any incurrence of any expense
or loss by any such governmental authority in connection with the
assessment, containment, or removal of any Hazardous Material for
which expense or loss any General Partner may be liable or for which
expense or loss a lien may be imposed on the Apartment Complex.
(j) The General Partners shall promptly request in writing of
FmHA that FmHA cause the Investment Limited Partner to be named as an
"interested party" in the Permanent Mortgage documents, so that FmHA
will notify the Investment Limited Partner of any default or other
problem under the Permanent Mortgage.
6.6 Representations and Warranties
The General Partners represent and warrant to the Investment
Limited Partner and the Special Limited Partner as follows:
(1) The Partnership is a duly organized limited partnership
validly existing and in good standing under the laws of the State of
Washington and has complied with all filing requirements necessary for
its existence and to preserve the limited liability of the Investment
Limited Partner and the Special Limited Partner. The Partnership is
duly qualified as a foreign partnership and in good standing under the
laws of the State of Arizona.
(2) No event or proceeding has occurred or is pending or
threatened which would (a) materially adversely affect the Partnership
or its properties, or (b) materially adversely affect the ability of
the General Partners or any of their Affiliates to perform their
respective obligations hereunder or under any other agreement with
respect to the Apartment Complex, other than legal proceedings which
have been bonded against without recourse to Partnership assets in
such manner as to stay the effect of the proceedings or otherwise have
been adequately provided for. This subparagraph shall be deemed to
include, without limitation, the following: (x) legal actions or
proceedings before any court, commission, administrative body or other
governmental authority having jurisdiction over the zoning applicable
to the Apartment Complex; (y) disputes with suppliers of labor and/or
materials; and (z) acts of any governmental authority.
(3) No default (or event which, with the giving of notice or
the passage of time or both, would constitute a default) has occurred
and is continuing under this Agreement or under any provision of the
Project Documents, and the same are in full force and effect.
(4) No Partner or Related Person bears the Economic Risk of
Loss with respect to the Permanent Mortgage. No General Partner has,
either on its own behalf or on behalf of the Partnership, incurred any
financial responsibility with respect to the Partnership prior to the
Admission Date, other than as disclosed in writing to the Investment
Limited Partner prior to the Admission Date.
(5) The Apartment Complex is being or has been completed in a
timely manner in conformity with the Project Documents. There is no
violation by the Partnership or the General Partners of any zoning,
environmental or similar regulation applicable to the Apartment
Complex which could have a material adverse effect thereon, and the
Partnership has complied with all applicable municipal and other laws,
ordinances and regulations relating to such construction and use of
the Apartment Complex. All appropriate public utilities, including,
but not limited to, water, electricity, gas (if called for in the
plans and specifications), and sanitary and storm sewers, are or will
be available and operating properly for each unit in the Apartment
Complex at the time of the first occupancy of such unit.
(6) The Partnership owns good and marketable fee simple title
to the Apartment Complex, subject to no material liens, charges or
encumbrances other than those which (a) are both permitted by the
Project Documents and are noted or excepted in the title insurance
policy number 84,204 dated April 25, 1996, in the amount of $1,583,165
issued by First American Title Insurance Company to the Partnership,
and (b) do not materially interfere with use of the Apartment Complex
(or any part thereof) for its intended purpose or have a material
adverse effect on the value of the Apartment Complex.
(7) The execution and delivery of all instruments and the
performance of all acts heretofore or hereafter made or taken
pertaining to the Partnership or the Apartment Complex by each
Affiliate of a General Partner which is a corporation have been or
will be duly authorized by all necessary corporate or other action,
and the consummation of any such transactions with or on behalf of the
Partnership will not constitute a breach or violation of, or a default
under, the charter or by-laws of such Affiliate or any agreement by
which such Affiliate or any of its properties is bound, nor constitute
a violation of any law, administrative regulation or court decree.
(8) Any General Partner which is a corporation (a
"Corporation") has been duly organized, is validly existing and in
good standing under the laws of its state of incorporation and has all
requisite corporate power to be a General Partner and to perform its
duties and obligations as contemplated by this Agreement and the
Project Documents. Neither the execution and delivery by any
Corporation of this Agreement nor the performance of any of the
actions of any Corporation contemplated hereby has constituted or will
constitute a violation of (a) the articles of organization or by-laws
of such Corporation, (b) any agreement by which such Corporation is
bound or to which any of its property or assets is subject, or (c) any
law, administrative regulation or court decree.
(9) No Event of Bankruptcy has occurred with respect to any
General Partner.
(10) All accounts of the Partnership required to be maintained
under the terms of the Project Documents, including, but not
necessarily limited to, any account for replacement reserves, are
currently funded to the levels required by the Lenders and/or any
Agency.
(11) If the only General Partner(s) are one or more
corporations, then the General Partner(s) have a net worth which
satisfies the 89-12 Requirements.
(12) All payments and expenses required to be made or incurred
in order to complete construction of the Apartment Complex in
conformity with the Project Documents, to fund any reserves hereunder
or under any other Project Document required to be funded at or prior
to the later of the Admission Date or Permanent Mortgage Commencement,
to satisfy all requirements under the Project Documents and/or which
form the basis for determining the principal sum of the Permanent
Mortgage and to pay the Construction and Development Fee have been or
will be paid or provided for utilizing only (a) the funds available
from the Construction Mortgage, (b) the Capital Contribution of the
Investment Limited Partner, (c) the Capital Contributions of the
General Partners in the amounts set forth on Schedule A as of the
Admission Date, (d) the available net rental income, if any, earned by
the Partnership prior to Permanent Mortgage Commencement (to the
extent that it is permitted to be used for such purposes by the
Lenders and/or any Agency), (e) any insurance proceeds and (f) the
funds furnished by the General Partners pursuant to Sections 6.5(a)
and 6.11.
(13) The amount of Tax Credit which is expected to be allocated
by the Partnership to the Investment Limited Partner is the Projected
Credit.
(14) The Apartment Complex is being developed in a manner which
satisfies and shall continue to satisfy, all restrictions, including
tenant income and rent restrictions, applicable to projects eligible
for Tax Credits.
(15) No General Partner, Affiliate of a General Partner or
Person for whose conduct any General Partner is or was responsible has
ever: (i) owned, occupied, or operated a Site or Vessel on which any
Hazardous Material was or is stored, transported, or disposed of,
except if such storage, transport or disposition was and is at all
times in compliance with all laws, ordinances, and regulations
pertaining thereto; (ii) directly or indirectly transported, or
arranged for transport, of any Hazardous Material (except if such
transport was or is at all times in compliance with all laws,
ordinances and regulations pertaining thereto); (iii) caused or was
legally responsible for any release or threat of release of any
Hazardous Material; (iv) received notification from any Federal, state
or other governmental authority of (x) any potential, known, or threat
of release of any Hazardous Material from the Apartment Complex or any
other Site or Vessel owned, occupied, or operated by any General
Partner, by any Affiliate of a General Partner, or any Person for
whose conduct any General Partner is or was responsible or whose
liability may result in a lien on the Apartment Complex; or (y) the
incurrence of any expense or loss by any such governmental authority
or by any other Person in connection with the assessment, containment,
or removal of any release or threat of release of any Hazardous
Material from the Apartment Complex or any such Site or Vessel.
(16) To the best of the General Partner's knowledge, no
Hazardous Material was ever or is now stored on, transported, or
disposed of on the land comprising the Apartment Complex, except to
the extent any such storage, transport or disposition was at all times
in compliance with all laws, ordinances, and regulations pertaining
thereto.
(17) The General Partners have fulfilled and will continue to
fulfill all of their duties and obligations under Section 6.5.
6.7 Liability on the Permanent Mortgage
Neither any General Partner nor any Related Person shall at any
time bear the Economic Risk of Loss for the payment of any portion of
any Mortgage, and the General Partners shall not permit any other
Partner or any Related Person to bear the Economic Risk of Loss for
the payment of any portion of any Mortgage, except as may be expressly
permitted pursuant to Article III.
6.8 Indemnification of the General Partners
(a) No General Partner nor any Affiliate thereof shall have
liability to the Partnership or to any Limited Partner for any loss
suffered by the Partnership which arises out of any action or inaction
of any General Partner or Affiliate thereof if such General Partner or
Affiliate thereof in good faith determined that such course of conduct
was in the best interest of the Partnership and such course of conduct
did not constitute negligence or misconduct of such General Partner or
Affiliate thereof.
(b) A General Partner or any Affiliate thereof may be
indemnified by the Partnership against losses, judgments, liabilities,
expenses and amounts paid in settlement of any claims sustained in
connection with the Partnership, provided that all of the following
conditions are met: (i) such General Partner has determined, in good
faith, that the course of conduct which caused the loss, judgment,
liability, expense or amount paid in settlement was in the best
interests of the Partnership; and (ii) such loss, judgment, liability,
expense or amount paid in settlement was not the result of negligence
or misconduct on the part of the General Partner or Affiliate thereof;
and (iii) such indemnification or agreement to hold harmless is
recoverable only out of the assets of the Partnership, and not from
the Limited Partners.
(c) Notwithstanding the above, no General Partner or any
Affiliate thereof performing services for the Partnership or any
broker-dealer shall be indemnified for any losses, liabilities or
expenses arising from or out of an alleged violation of Federal or
state securities laws unless (i) there has been a successful
adjudication on the merits of each count involving securities laws
violations as to the particular indemnitee and, the court approves the
indemnification of such litigation costs, (ii) such claims have been
dismissed with prejudice on the merits by a court of competent
jurisdiction as to the particular indemnitee and, the court approves
the indemnification of such litigation costs or (iii) a court of
competent jurisdiction approves a settlement of the claims against a
particular indemnitee and the court finds that indemnification of the
settlement and related costs should be made. In any claim for
indemnification for Federal or state securities law violations, the
party seeking indemnification shall, prior to seeking court approval
for such indemnification, place before the court the positions of the
Securities and Exchange Commission, and any applicable state
securities administrator with respect to the issue of indemnification
for securities law violations.
(d) The Partnership shall not incur the cost of the portion of
any insurance, other than public liability insurance, which insures
any party against any liability as to which such party is herein
prohibited from being indemnified.
(e) The Partnership may indemnify Affiliates of the General
Partner under this Section 6.8 only if the loss involves activity in
which such Affiliates acted in the capacity of a General Partner.
(f) For purposes of this Section 6.8 only, the term
"Affiliate", shall mean any Person performing services on behalf of
the Partnership who (i) directly or indirectly controls, is controlled
by or is under common control with a General Partner; (ii) owns or
controls ten percent (10%) or more of the outstanding voting
securities of a General Partner; (iii) is an officer, director,
partner or trustee of a General Partner; or (iv) if a General Partner
is an officer, director, partner or trustee, is any company for which
such General Partner acts in any such capacity.
6.9 Indemnification of the Partnership and the Limited
Partners
(a) The General Partners will indemnify and hold the
Partnership and the Limited Partners harmless from and against any and
all losses, damages and liabilities which the Partnership or any
Limited Partner may incur by reason of the (a) past, present or future
actions or omissions of the General Partner or any of their
Affiliates, or (b) any liabilities to which either the Partnership or
the Apartment Complex is subject; provided, however, that the
foregoing indemnification shall not apply to (i) any Mortgage or (ii)
necessary contractual obligations incurred pursuant to Agency or
Lender requirements in connection with the operation of the Apartment
Complex in the ordinary course of business.
(b) Notwithstanding the foregoing, no General Partner shall be
liable to a Limited Partner or the Partnership for any act or omission
for which the Partnership is required to indemnify such General
Partner under Section 6.8.
(c) The General Partners shall indemnify, defend, and hold the
Investment Limited Partner harmless from and against any claim brought
or threatened against the Investment Limited Partner or loss (as well
as from any and all attorneys', fees and expenses incurred in
connection with any such claim or loss) on account of the presence of
any Hazardous Material at the Apartment Complex. Any claim or loss
described in the immediately preceding sentence may be defended,
compromised, settled, or pursued by the Investment Limited Partner
with counsel of the Investment Limited Partners' selection, but at the
expense of the General Partners. Notwithstanding anything else set
forth herein, this indemnification shall survive the withdrawal of any
General Partner and/or the termination of this Agreement.
6.10 Operating Deficits
Subject to the prior written consent of any Agency (if such
consent shall be required under applicable Agency regulations), the
General Partners shall be obligated from the later to occur of (i)
Permanent Mortgage Commencement or (ii) the Admission Date to promptly
advance funds to meet operating expenses (including, without
limitation, the funding of the reserves required pursuant to Section
6.5(e) of this Agreement) and debt service of the Partnership which
exceed operating income available for the payment thereof. This
obligation shall continue until 60 months after Breakeven; provided,
however, that for purposes of this Section 6.10 only, the General
Partners shall be deemed to have met the General Partners' replacement
reserve obligation hereunder so long as replacement reserves are
funded to not less than 95% of the FmHA requirements. In the event
that the General Partners shall fail to make any such advance as
aforesaid, the Partnership shall utilize amounts (the "Applied Fees")
otherwise payable to the General Partners or Affiliates thereof under
Section 6.12 and/or Article X to meet the obligations of the General
Partners pursuant to this Section 6.10, with such utilization of
Applied Amounts constituting payment and satisfaction of the
corresponding amounts payable to the General Partners or Affiliates
thereof pursuant to Section 6.12 and/or Article X, with the proceeds
thereof being applied to such obligations, and the obligation of the
Partnership to make such installment payments to the General Partners
or the Affiliates thereof pursuant to Section 6.12 and/or Article X
being deemed satisfied to the extent thereof 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 Partners(s) . An additional
General Partner so admitted shall automatically, without the need for
any further action by any Partner, become the Managing General Partner
and be delegated all of the power and authority of all of the General
Partners pursuant to Section 6.13, and each Partner hereby grants to
any such additional General Partner a power of attorney, coupled with
an interest and irrevocable to the extent permitted by law, to execute
and deliver any and all instruments and documents which it believes to
be necessary or appropriate in order to accomplish the purposes of
this Section 6.10 and to manage the business of the Partnership. The
admission of an additional General Partner shall not relieve any other
General Partner of any of its obligations hereunder, and each other
General Partner shall fully indemnify and hold harmless each
additional General Partner from and against any and all losses,
judgments, liabilities, expenses and amounts paid in settlement of any
claims sustained in connection with its capacity as a General Partner.
For the purpose of this Section 6.10, all expenses shall be paid on a
sixty (60)-day current basis. Moreover, the General Partners may in
their discretion at any time advance funds to the Partnership to pay
operating expenses and/or debt service of the Partnership in order to
facilitate the Partnership's compliance with the Rent Restriction
Test. All advances pursuant to this Section 6.10 (including any
Applied Fees) shall be Subordinated Loans repayable without interest
in accordance with the provisions of Article X. The form and
provisions of all Subordinated Loans shall conform to any applicable
rules and regulations.
6.11 Obligation to Complete the Construction of the Apartment
Complex
(a) The General Partners shall complete the construction of
the Apartment Complex substantially in accordance with the plans and
specifications approved by the Lenders and/or any Agency and all
requirements necessary to obtain the required certificates of
occupancy for dwelling units, or cause the same to be completed, in a
good and workmanlike manner, free and clear of all mechanics',
materialmen's or similar liens, and shall equip the Apartment Complex
or cause the same to be equipped with all necessary and appropriate
fixtures, equipment and articles of personal property, including
refrigerators and ranges, and shall cause all necessary certificates
of occupancy for all apartment units in the Apartment Complex to be
obtained, all in accordance with the Project Documents. If the
proceeds of the Construction and Permanent Mortgages, the net rental
income, if any, of the Apartment Complex generated prior to the later
of Permanent Mortgage Commencement or the Admission Date and which is
permitted by the Lenders and/or any Agency to be utilized for any of
the purposes hereinafter set forth, the Capital Contribution of the
Investment Limited Partner, the Capital Contributions of the General
Partners in the amounts set forth on Schedule A as of the Admission
Date, and any insurance proceeds arising out of casualties prior to
the later of Permanent Mortgage Commencement or the Admission Date as
available from time to time are insufficient to (i) acquire and
complete the construction of the Apartment Complex and satisfy all
other obligations, all as provided in the first sentence of this
Section 6.11(a), (ii) make the special distributions to the General
Partners described in Section 10.2(c), (iii) pay the Construction and
Development Fee, (iii) arrive at Permanent Mortgage Commencement in
conformity with the Project Documents, (iv) discharge all Partnership
liabilities and obligations arising out of any casualty giving rise to
any such insurance proceeds, and (v) provide for all other payments
and expenses required to be made or incurred through the later of
Permanent Mortgage Commencement or the Admission Date, including the
funding of any reserves required hereunder or under any Project
Document and the repayment in full of all obligations under the
Construction Mortgage, the General Partners shall be responsible for
and obligated to pay such deficiencies and shall, to the extent
permitted under the Project Documents and any applicable regulations
or requirements of the Lenders and/or any Agency, be reimbursed at or
prior to the later of Permanent Mortgage Commencement or the Admission
Date only out of the proceeds designated in this sentence available
from time to time after payment of all costs described in this
sentence. Any amounts not reimbursed through the later of Permanent
Mortgage Commencement or Admission Date only out of the proceeds of
the Capital Contribution of the Investment Limited Partner as provided
in Section 5.1 shall not be reimbursable or otherwise change the
Interest of any Person in the Partnership but shall be borne by the
General Partners in their capacity as developers; provided, however,
that, notwithstanding the foregoing, to the extent any such amounts
represent items which are properly included in the Partnership's
Qualified Basis and result in an increase in the amount of Tax Credit
allocated and available to the Partnership over and above the amount
of Tax Credit required in order to achieve State Designation
("Includable Items"), the General Partners shall make an additional
Capital Contribution in the amount of the Includable Items and the
Partnership shall utilize the proceeds of such additional Capital
Contribution to pay the Includable Items. In the event that the
General Partners shall fail to fund any such deficiency as required by
this Section 6.11, an amount not in excess of the next installment of
the Construction and Development Fee due to the General Partners or
any of their Affiliates under Section 6.12 or any other provision
hereof shall be applied by the Partnership to meet such obligation of
the General Partners, and, to the extent there may still be a
deficiency, any amounts otherwise payable as the Annual Partnership
Management Fee or distributable to the General Partners pursuant to
Article X shall be so applied. Any such application of funds as
described in the immediately preceding sentence shall constitute a
payment of the amount of the Fee or such other item which such funds
had been earmarked to pay, and the obligation of the General Partners
to advance such amount under this Section 6.11 shall be satisfied to
the extent of such application.
6.12 Certain Payments to the General Partners and Others
(a) The Partnership shall pay to the General Partners a fee
(the "Annual Partnership Management Fee") commencing in 1997 for their
services in connection with the administration of the day to day
business of the Partnership in an annual amount equal to $1,000 per
annum. The Annual Partnership Management Fee for each fiscal year of
the Partnership shall be payable from Cash Flow in the manner and
priority set forth in Section 10.2(a); provided, however, that if in
any fiscal year commencing with 1997, Cash Flow is insufficient to
pay the full amount of the Partnership Management Fee, the unpaid
portion thereof shall accrue and be payable on a cumulative basis in
the first year in which there is sufficient Cash Flow or from the
proceeds of a Capital Transaction as provided in Article X.
(b) In consideration of their consultation, advice and other
services in connection with the construction and development of the
Apartment Complex and as consideration for the assignment described in
Section 6.14, the Partnership shall pay to the General Partners (or
their designee) a construction and development fee (the "Construction
and Development Fee") in the principal amount of $187,162, which fee
shall be earned in full as to the date the Apartment Complex is
completed. The Construction and Development Fee shall be payable $468
from the proceeds of the First Installment, $74,678 from the proceeds
of the Second Installment, $97,016 from the proceeds of the Third
Installment and $15,000 from the proceeds of the Fourth Installment.
(c) The Partnership shall pay to BCCLP or an Affiliate thereof
a fee (the "Asset Management Fee") commencing in 1997 for its services
in connection with the Partnership's accounting matters relating to
the Investment Limited Partner and assisting with the preparation of
tax returns and the reports required by Section 12.7 in the annual
amount of $1,000 per annum beginning in 1997. The Asset Management
Fee shall be payable from Cash Flow in the manner and priority set
forth in Section 10.2 (a) ; provided, however, that if in any fiscal
year commencing with 1996, Cash Flow is insufficient to pay the full
amount of the Asset Management Fee, the unpaid portion thereof shall
accrue and be payable on a cumulative basis in the first year in which
there is sufficient Cash Flow or from the proceeds of a Capital
Transaction as provided in Article X.
(d) The General Partners or an Affiliate thereof may serve as
a real estate broker in connection with the sale of the Apartment
Complex, provided that the total compensation to all Persons for the
sale of the Apartment Complex, including any such compensation to the
General Partners or their Affiliates, shall be limited to a
Competitive Real Estate Commission not to exceed six percent (6%) of
the contract price for the sale of the Apartment Complex.
6.13 Delegation of General Partner Authority
If there shall be more than one General Partner serving
hereunder, each General Partner may from time to time, by an
instrument in writing, delegate all or any of his powers or duties
hereunder to another General Partner or General Partners. Pursuant to
the foregoing, the General Partners hereby designate Xxxxx X. Xxxxx as
Managing General Partner and delegate to him all of the powers and
duties of the General Partner hereunder. In the event Xxxxx X. Xxxxx
ceases to be a General Partner, the remaining General Partner(s) shall
assume management responsibility unless and until they appoint a new
Managing General Partner.
Every contract, deed, mortgage, lease and other instrument
executed by any General Partner shall be conclusive evidence in favor
of every Person relying thereon or claiming thereunder that at the
time of the delivery thereof (a) the Partnership was in existence, (b)
this Agreement had not been amended in any manner so as to restrict
the delegation of authority among General Partners (except as shown in
certificates or other instruments duly filed in the Filing Office) and
(c) the execution and delivery of such instrument was duly authorized
by the General Partners. Any Person may always rely on a certificate
addressed to him and signed by any General Partner hereunder:
(1) As to who are the General Partners or Limited Partners
hereunder;
(2) As to the existence or nonexistence of any fact which
constitutes a condition precedent to acts by the General Partners or
in any other manner germane to the affairs of the Partnership;
(3) As to who is authorized to execute and deliver any
instrument or document of the Partnership;
(4) As to the authenticity of any copy of this Agreement and
amendments thereto; or
(5) As to any act or failure to act by the Partnership or as
to any other matter whatsoever involving the Partnership or any
Partner.
6.14 Assignment to Partnership
The General Partners hereby transfer and assign to the
partnership all of their right, title, and interest in and to the
Apartment Complex and in and to all of the Project Documents,
including, but not limited to, the following: (i) all contracts with
architects, supervising architects, engineers and contractors with
respect to the development of the Apartment Complex; (ii) all plans,
specifications and working drawings heretofore prepared or obtained in
connection with the Apartment Complex; (iii) all governmental
commitments and approvals obtained, and applications therefor,
including, but not limited to, those relating to planning, zoning,
building permits and Tax Credit; (iv) any and all commitments with
respect to any Mortgage(s); (v) any and all contracts or rights with
respect to any agreements with the Construction Lender or FmHA; and
(vi) any other work product related to the Apartment Complex and/or
the Partnership.
ARTICLE VII
Withdrawal of a General Partner; New General Partners
7.1 Withdrawal
(a) No General Partner shall Withdraw from the Partnership
(other than by reason of death or adjudication of incompetence or
insanity) or sell, assign or encumber its Interest without the Consent
of the Investment Limited Partner and all the other General Partners,
except that if the Special Limited Partner or a designee thereof
becomes a General Partner pursuant to 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 to transfer all or any portion of its
interest as a General Partner, other than as may be required under the
Uniform Act. In the event of any Withdrawal by a General Partner in
violation of this Section 7.1, such General Partner, in addition to
being subject to any and all other legal remedies which may be pursued
by the Partners, shall forfeit to the Special Limited Partner or its
designee, such General Partner's Interest and all unpaid fees from the
Partnership and shall remain liable for all of the Withdrawing
Partner's obligations under this Agreement. In addition, upon such
Withdrawal and transfer, the Special Limited Partner or its designee
shall automatically become a General Partner without further action by
the Withdrawing General Partner or any other Partner, and each Partner
hereby consents to such transfer and to the admission of the Special
Limited Partner or its designee as a General Partner in such a
situation. Such transfer shall occur automatically upon such
withdrawal without further action by such Withdrawing General Partner.
(b) If at any time the only General Partners shall be one of
more corporations (or partnerships with corporations as sole general
partners), they shall be obligated to have a net worth which satisfies
the 89-12 Requirements. If the General Partners shall at any time
fail to meet the requirements of this Section 7.1(b), then they shall
be deemed to have withdrawn from the Partnership in violation of the
provisions of this Section 7.1 and shall be subject to the provisions
of Section 7.1(a). Notwithstanding the foregoing, the provisions of
this Section 7.1(b) shall not apply to the Special Limited Partner or
its designee in the event it becomes the sole General Partner.
7.2 Obligation to Continue
Upon the Withdrawal of a General Partner, the remaining General
Partners shall have the right and obligation to continue the business
of the Partnership employing its assets and name, all as contemplated
by the Uniform Act. Within thirty (30) days after they obtain
knowledge of the Withdrawal of a General Partner, the remaining
General Partners shall notify the Investment Limited Partner or its
designee of such Withdrawal.
7.3 Withdrawal of All General Partners
If, following the Withdrawal of a General Partner, there is no
remaining General Partner, the Investment Limited Partner and the
Special Limited Partner may elect, within ninety (90) days after the
event of the Withdrawal of the sole General Partner, to reconstitute
the Partnership and continue the business of the Partnership for the
balance of the term specified in Section 2.4 by selecting a successor
General Partner. If the Investment Limited Partner and the Special
Limited Partner elect to reconstitute the Partnership pursuant to this
Section 7.3 and admit the designated successor General Partner, the
relationship among the then Partners shall be governed by this
Agreement.
7.4 Interest of General Partner After Permitted Withdrawal
In the event of the Withdrawal of a General Partner not in
violation of Section 7.1 and except as otherwise provided in Section
4.5(b), the Withdrawing General Partner hereby covenants and agrees to
transfer to the remaining General Partners or to a successor General
Partner selected in accordance with Section 7.3, as the case may be,
such portion of the Withdrawing General Partner's Interest as such
remaining or successor General Partners may designate, such transfer
to be made in consideration of the payment by the transferee of either
the agreed value of such Interest or, if such value is not agreed to,
the fair market value of such Interest as determined by a committee of
three qualified real estate appraisers, one selected by the
Withdrawing General Partner, one selected by the transferee and a
third selected by the other two. The portion of the Withdrawing
General Partner's Interest designated to be transferred in accordance
with the provisions of this Section 7.4 shall be sufficient to ensure
the continued treatment of the Partnership as a partnership under the
Code and as a limited partnership under the Uniform Act, and, for the
purposes of Article X, shall be deemed to be effective as of the date
of Withdrawal, but the Partnership shall not make any distributions to
the designated transferee until the transfer shall have been made.
Any holder of any portion of the Interest of a Withdrawing General
Partner which is not designated to be transferred to the remaining or
successor General Partners pursuant to the provisions of this Section
7.4 shall become an Additional Limited Partner but (i) with the same
share of the profits, losses, tax credits, Cash Flow and other
distributions to which the holder of such Interest was entitled when
held as a General Partner Interest, and (ii) shall not participate in
the votes or Consents of the Investment Limited Partner hereunder.
The admission of any successor or additional General Partner shall be
subject to the consent of the Lenders and any Agency (if required) and
the Consent of the Investment Limited Partner.
7.5 Admission of Additional General Partner(s) under Certain
Circumstances
In the event each of the General Partners is a corporation and
the General Partners at any time, or from time to time, fail to have a
net worth which satisfies the 89-12 Requirements, the Special Limited
Partner or its designee(s) shall be admitted (and each hereby agrees
to be admitted), automatically and without further action by them or
any Partner, as additional General Partner(s), notwithstanding any
other provision of this Agreement. The General Partners hereby agree
to take all action necessary to implement this Section 7.5. Further,
the General Partners agree in such event to give prompt written notice
thereof to each Lender and Agency. If any Lender or Agency rejects
the admission of any additional General Partner so admitted as a
General Partner, then such additional General Partner shall withdraw
as a General Partner promptly after an additional General Partner
acceptable to each Lender and Agency is admitted to the Partnership.
Simultaneously with such admission, each of the previously admitted
General Partners shall be deemed to have assigned proportionally to
the additional General Partner(s) , automatically and without further
action, such portion of its General Partner Interest so that the
additional General Partner shall receive not less than a one percent
(1%) interest (or such greater percentage as may be required either
(i) in the opinion of the Tax Accountants, to assure the partnership
status of the Partnership for Federal income tax purposes or (ii) by
any Agency) in the profits, losses, tax credits and distributions of
the Partnership in consideration of $1.00 and any other consideration
which may be agreed upon. An additional General Partner so admitted
shall automatically become the Managing General Partner and be
irrevocably delegated all of the power and authority of all of the
General Partners pursuant to Section 6.13. Each such additional
General Partner shall remain a General Partner until a Lender or
Agency shall object thereto in writing or until such time as, in the
opinion of the Tax Accountants, the Partnership would continue to be
treated as a partnership for Federal income tax purposes
notwithstanding their Withdrawal. At such time, each such additional
General Partner may, at its option, then Withdraw without the approval
of the Limited Partners upon reassignment of its entire Interest to
the remaining General Partners. Each partner hereby grants to the
Special Limited Partner a special power of attorney, irrevocable to
the extent permitted by law and coupled with an interest, to amend the
Certificate and this Agreement and to do anything else which, in the
view of the Special Limited Partner, may be necessary or appropriate
to accomplish the purposes of this Section 7.5 or to manage the
business of the Partnership. The admission of an additional General
Partner shall not relieve any other General Partner of any of its
economic obligations hereunder, and each other General Partner shall
fully indemnify and hold harmless the additional General Partner from
and against any and all losses, judgments liabilities, expenses and
amounts paid in settlement of any claims sustained in connection with
its capacity as a General Partner.
ARTICLE VIII
Transferability of Limited Partner Interests
8.1 Assignments
(a) Except by operation of law (including the laws of descent
and distribution), no Limited Partner may assign all or any part of
its Interest without the written consent of the General Partners, the
giving or withholding of which is exclusively within their discretion.
(b) A Limited Partner, without consent of the General
Partners, 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, and shall only have, the
right to receive the share of allocations and distributions of the
Partnership to which the assigning Limited Partner would have been
entitled with respect to the Interest (or portion thereof) so assigned
if no such assignment had been made by such Limited Partner. Any
assigning Limited Partner whose permitted assignee becomes a
Substituted Limited Partner shall thereupon cease to be a Limited
Partner and shall no longer have any of the rights or privileges of a
Limited Partner. Where the assignee does not become a Substituted
Limited Partner, the Partnership shall recognize such assignment not
later than the last day of the calendar month following receipt of
notice of assignment and all documentation required in connection
therewith.
(c) Every assignee of a Limited Partner Interest (or any
portion thereof) who desires to make a further assignment of its
Interest shall be subject to all the provisions of this Article VIII.
8.2 Substituted Limited Partner
No Limited Partner shall have the right to substitute an
assignee as Limited Partner in its place. Subject to Section 8.3, the
General Partners may, however, in their sole discretion, permit an
assignee to become a Substituted Limited Partner. The consent of the
General Partners to an assignment of a Limited Partner Interest under
Section 8.1 shall not, in and of itself, constitute permission under
this Section 8.2.
Any Substituted Limited Partner shall execute such instrument or
instruments as shall be required by the General Partners to signify
the agreement of such Substituted Limited Partner to be bound by all
the provisions of this Agreement and shall pay the Partnership's
reasonable legal fees and filing costs in connection with its
substitution as a Limited Partner.
8.3 Restrictions
(a) No Disposition may be made if such Disposition would
violate Section 13.1.
(b) In no event shall all or any part of a Limited Partner
Interest be Disposed of to a minor (other than to a descendant by
reason of death) or to an incompetent.
(c) The General Partners may, in addition to any other
requirement they may impose, require as a condition of any Disposition
that the transferor (i) assume all costs incurred by the Partnership
in connection therewith and (ii) furnish the Partnership and the other
Partners with an opinion of counsel satisfactory to counsel to the
Partnership that such Disposition complies with applicable Federal and
state securities laws.
(d) Any sale, exchange, transfer or other Disposition in
contravention of any of the provisions of this Section 8.3 shall be
void and ineffectual and shall not bind or be recognized by the
Partnership.
ARTICLE IX
Working Capital Loan; Borrowings
9.1 Working Capital Loan
In order to comply with Paragraph 5(a) of the FmHA Loan Agreement, the
General Partners have advanced to the Partnership $24,078, which
amount has been deposited by the Partnership in its general operating
account (the "Working Capital Loan") . The Working Capital Loan shall
not bear interest and shall be repaid (i) to the extent permitted by
FmHA, out of Partnership funds not required for other Partnership
purposes, (ii) out of any funds which FmHA designates as a return to
the Partnership of such deposit to the Partnership's general operating
account or (iii) as set forth in Article X.
9.2 Borrowings
All Partnership borrowings shall be subject to the terms of this
Agreement, including, but not limited to, the restrictions of Section
6.2, and may be made from any source, including Partners and their
Affiliates. Any Partnership borrowings from any Partner shall be
subject to the prior written consent of FmHA (if required under
applicable FmHA regulations or requirements) . If any Partner shall
lend any monies to the Partnership, the amount of any such loan shall
not be an increase of such Partner's Capital Contribution. If any
Partner shall so lend monies, each such loan shall be an obligation of
the Partnership and (except for advances required by Section 9.1 and
Subordinated Loans) shall be repayable to such Partner on the same
basis and with the same rate of interest as would be applicable to a
comparable loan to the Partnership from a third party. Funds provided
by the General Partners to the Partnership pursuant to Section 6.11(a)
shall not constitute borrowings for the purposes of this Section 9.2
or for any other purposes.
ARTICLE X
Profits, Losses, Tax Credits, Distributions and Capital Accounts
10.1 Profits, Losses and Tax Credits
(a) Except as otherwise specifically provided in this Article,
for each Partnership fiscal year or portion thereof, all profits, tax-
exempt income, losses, non-deductible non-capitalizable expenditures,
and tax credits incurred or accrued on or after the Commencement Date,
other than those arising from a Capital Transaction, shall be
allocated 99% to the Investment Limited Partner and 1% to the General
Partners.
(b) Except as otherwise specifically provided in this Article,
all profits and losses arising from a Capital Transaction shall be
allocated to the Partners as follows:
As to profits:
First, an amount of profit it equal to the aggregate negative
balances (if any) in the Capital Accounts of all Partners having
negative balance Capital Accounts shall be allocated to such Partners
in proportion to their negative Capital Account balances until as such
Capital Accounts shall have zero balances; and
Second, an amount of profits shall be allocated to each of the
Partners until the positive balance in the Capital Account of each
Partner equals, as nearly as possible, the amount of cash which would
be distributed to such Partner if the aggregate amount in the Capital
Accounts of all Partners were cash available to be distributed in
accordance with the provisions of Clauses Third, Sixth, Seventh, and
Eighth of Section 10.2(b) (after giving effect to the provisions of
the last paragraph of said Section 10.2(b)).
As to losses:
First, an amount of losses equal to the aggregate positive
balances (if any) in the Capital Accounts of all Partners having
positive balance Capital Account shall be allocated to such Partners
in proportion to their positive Capital Account balances until as such
Capital Accounts shall have zero balances; provided, however, that if
the amount of losses so to be allocated is less than the sum of the
positive balances in the Capital Accounts of those Partners having
positive balances in their Capital Accounts, then such losses shall be
allocated to the Partners in such proportions and in such amounts so
that the Capital Account balances of each Partner shall equal, as
nearly as possible, the amount such Partner would receive if an amount
equal to the excess of (a) the sum of all Partners' balances in their
Capital Accounts computed prior to the allocation of losses under this
Clause First over (b) the aggregate amount of losses to be allocated
to the Partners pursuant to this Clause First were distributed to the
Partners in accordance with the provisions of Clauses Third, Sixth,
Seventh, and Eighth of Section 10.2(b) (after giving effect to the
provisions of the last paragraph of said Section 10.2(b)).
Second, the balance, if any, of such losses shall be allocated
1% to the General Partners and 99% to the Investment Limited Partner.
(c) Notwithstanding the foregoing provisions of Sections
10.1(a) and 10.1(b), in no event shall any losses be allocated to any
Limited Partner, if and to the extent that such allocation would
cause, as of the end of the Partnership taxable year, the negative
balance in the Investment Limited Partner's Capital Account to exceed
such Partner, s obligation (actual or deemed under Treasury Section 1.
704b)(2) ii)(c) to restore a deficit balance in such Partner's Capital
Account plus such Partner's share of Partnership Minimum Gain plus
such Partner's share of Partner Non-Recourse Debt Minimum Gain. Any
losses which are not allocated to a Partner by virtue of the
application of this Section 10.1(shall be allocated to the General
Partners. For purposes of this Section 10.1(c), a Partner's Capital
Account shall be treated as reduced by Qualified Income Offset Items.
10.2 Cash Distributions Prior to Dissolution
(a) Cash Flow
Subject to Agency and Lender approval (if required), Cash Flow
for each fiscal year or portion thereof of the Partnership shall be
applied as follows:
First, to the payment of the Asset Management Fee for such year
and for any previous year(s) as to which the Asset Management Fee
shall not yet have been paid in full;
Second, to the repayment of any Subordinated Loans;
Third, to the payment of the Partnership Management Fee; and
Fourth, the balance thereof, if any, shall be distributed
annually, within seventy-five (75) days after the end of the fiscal
year, 10% to the Investment Limited Partner and 90% to the General
Partners; provided, however, that during such time as Agency
regulations are applicable to the Apartment Complex, the total amount
of Cash Flow which may be so distributed to the Partners in respect to
any fiscal year shall not exceed such amounts as Agency regulations
permit to be distributed.
(b) Distributions of other than Cash Flow
Prior to dissolution, if the General Partners shall determine
from time to time that cash is available for distribution from a
Capital Transaction, such cash shall be applied or distributed as
follows:
First, to the payment of all matured debts and liabilities of
the Partnership (including, but not limited to, all expenses of the
Partnership incident to the Capital Transaction), excluding (i) debts
and liabilities of the Partnership to Partners or their Affiliates and
(ii) all unpaid fees owing to the General Partners or their
Affiliates; and to the establishment of any reserves which the General
Partners and the Auditors shall deem reasonably necessary for
contingent, unmatured or unforeseen liabilities or obligations of the
Partnership;
Second, if the Permanent Mortgage is in place at the time of
such Capital Transaction or if such Capital Transaction constitutes a
refinancing of the Permanent Mortgage, to the General Partners in an
aggregate amount equal to 5%. of the proceeds remaining after the
payment of the items set forth in Clause First of this Section
10.2(b).
Third, to the payment of any accrued and unpaid Asset Management
Fee;
Fourth, to the payment to the Investment Limited Partner of the
full amount (including interest) of any Credit Recovery Loans;
Fifth, to the repayment of any Subordinated Loans;
Sixth, to the repayment of any then-unpaid debts and liabilities
owed to Partners or Affiliates thereof by the Partnership for
Partnership obligations (exclusive of Credit Recovery Loans, Working
Capital Loans and Subordinated Loans) to any of them; provided,
however, that any debts or obligations to be repaid to any Limited
Partner or Affiliate thereof pursuant to this Clause Sixth shall be
repaid prior to the repayment of any such debts or obligations to any
General Partner or Affiliate thereof;
Seventh, to the repayment to each Limited Partner of an amount
equal to its Invested Amount, in each case minus any prior
distributions made to such Partner under this Clause Seventh, but
never an amount less than zero;
Eighth, to the repayment to the General Partners of their paid-
in Capital Contributions minus any prior distributions made to them
under this Clause Eighth and Section 10.2(a) Clause Fourth, but never
an amount less than zero;
Ninth, to the repayment of the Working Capital Loan; and
Tenth, any balance, 39.999% to the Investment Limited Partner,
.001% to the Special Limited Partner, and 60% to the General Partners.
Notwithstanding the foregoing, however, for the purpose of
determining the amounts to be distributed under Clauses Eighth and
Tenth for a particular Capital Transaction, any distribution to the
General Partners under Clause Second for such Capital Transaction
shall be credited against and reduce any distributions which would
otherwise be made to the General Partners under Clauses Eighth and
Tenth (with such credit operating first against Clause Eighth
distributions and then against Clause Tenth distributions), and the
amount not distributed to the General Partners under Clauses Eighth
and Tenth as a result thereof shall be distributed as if it were
additional proceeds of such Capital Transaction. Any proceeds of a
Capital Transaction distributed to the General Partners under Clause
Second which are not currently credited against a distribution to the
General Partners under either of Clause Eighth or Clause Tenth from
such Capital Transaction shall be applied as additional credits
against any distributions to the General Partners under either of
Clauses Eighth and Tenth which may be the result of any future Capital
Transactions.
(c) Special Distributions.
The Partnership shall make special cash distributions to the
General Partners from the proceeds of the Installments totaling
$142,380, payable as follows: $60,095 from the First Installment as a
return of the Capital Contributions made by the General Partners; and
$82,285 from the First Installment as payment of Developer's Overhead.
The special cash distributions shall be treated as distributions
pursuant to Section 731 of the Code.
10.3 Distributions Upon Dissolution
(a) Upon dissolution and termination, after payment of, or
adequate provision for, the debts and obligations of the Partnership,
the remaining assets of the Partnership shall be distributed to the
Partners in accordance with the positive balances in their Capital
Accounts after taking into account all Capital Account adjustments for
the Partnership taxable year, including adjustments to Capital
Accounts pursuant to Sections 10.1(b) and 10.3(b). In the event that a
General Partner or Additional Limited Partner has a negative balance
in its Capital Account following the liquidation of the Partnership or
such Partner's Interest, after taking into account all Capital Account
adjustments for the Partnership taxable year in which such liquidation
occurs, such Partner shall pay to the Partnership in cash an amount
equal to the negative balance in such Partner's Capital Account. Such
payment shall be made by the end of such taxable year (or, if later,
within 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
Section 10.1 (b), and any property so distributed shall be treated as
a distribution of an amount in cash equal to the excess of such fair
market value over the outstanding principal balance of and accrued
interest on any debt by which the property is encumbered. For the
purposes of this Section 10.3(b), "unrealized appreciation" or
"unrealized depreciation" shall mean the difference between the fair
market value of such assets, taking into account the fair market value
of the associated financing (but subject to Section 7701(g) of the
Code), and the Partnership's adjusted basis for such assets as
determined under Regulation Section 1. 704-1(b) . This Section 10.3(b)
is merely intended to provide a rule for allocating unrealized gains
and losses upon liquidation or other distribution event, and nothing
contained in this Section 10.3(b) or elsewhere herein is intended to
treat or cause such distributions to be treated as sales for value.
The fair market value of such assets shall be determined by an
appraiser to be selected by the General Partner with the Consent of
the Investment Limited Partner.
10.4 Special Provisions
(a) Except as otherwise provided in this Agreement, all
profits, tax exempt income, losses, non-deductible non-
capitalizable expenditures, tax credits and cash distributions shared
by a class of Partners shall be shared by each Partner in such class
in the ratio of such Partner's paid-in Capital Contribution to the
paid-in Class Contribution of the class of Partners of which such
Partner is a member.
(b) Notwithstanding the foregoing provisions of this Article
X:
(i) If (a) the Partnership incurs recourse obligations or
Partner Non-Recourse Debt (including, without limitation, Subordinated
Loans) or (b) the Partnership incurs losses from extraordinary events
which are not recovered from insurance or otherwise (collectively
"Recourse Obligations") in respect of any Partnership taxable year,
then the calculation and allocation of profits and losses shall be
adjusted as follows: first, an amount of deductions attributable to
the Recourse obligations (consisting of deductions other than cost
recovery deductions) shall be allocated to the General Partners; and
second, the balance of deductions (including all cost recovery
deductions) shall be allocated as provided in Section 10.1(a) . For
purposes of this section, extraordinary events include casualty
losses, losses resulting from liability to third parties for tortious
injury, losses resulting from a breach of legal duty by the
Partnership or by the General Partners, and losses resulting from
other liabilities which are not incurred in the ordinary course of
business. Nothing in this Section 10.4 (b)(I) shall prevent the
Partnership from recovering an extraordinary loss from a General
Partner who is liable therefor by law or under this Agreement.
(ii) If any Recourse Obligations shall be repaid from Cash Flow
Generated in respect of any Partnership taxable year, then the
allocation of profits and losses under Section 10.1(a) for such year
shall be adjusted as follows: first, the General Partners shall be
allocated an amount of the gross income of the Partnership equal to
the lesser of (i) the amount of items of Loss previously allocated to
the General Partner under Section 10.4(b)(i) and not previously offset
by allocations of Profits or items thereof, and (ii) the amount of the
Excess Expenses repaid in such year.
(iii) If the Partnership shall receive any purchase money
indebtedness in partial payment of the purchase price of the Apartment
Complex and such indebtedness is distributed to the Partners pursuant
to the provisions of Section 10.2(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 Partner 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 Partners shall
receive such respective percentages of the net cash purchase price and
purchase money principal. Payments on such purchase money
indebtedness retained by the Partnership shall be distributed in
accordance with the respective Partners in accordance with the
preceding sentence, and if any such purchase money indebtedness shall
be sold, the sale proceeds shall be allocated in the same proportion.
(iv) Income, gain, loss and deduction with respect to any asset
which has a variation between its basis computed in accordance with
Treasury Regulation Section 1. 704-1(b) and its basis computed for
Federal income tax purposes shall be shared among the Partners so as
to take account of such variation in a manner consistent with the
principles of Section 704(c) of the Code and Treasury Regulation
Section 1.704-1(b)(2)(iv)(g).
(v) The terms "profits" and "losses" used in this Agreement
shall mean income and losses, and each item of income, gain, loss,
deduction or credit entering into the computation thereof, as
determined in accordance with the accounting methods followed by the
Partnership and computed in accordance with Treasury Regulation
Section 1.704-1(b). Profits and losses for Federal income tax purposes
shall be computed and allocated in the same manner as set forth in
this Article X, except as provided in Section 10.4(b)(iv).
(vi) If there is a net decrease in Partnership minimum Gain
during a Partnership taxable year, each Partner will be allocated
items of income and gain for such year (and, if necessary, subsequent
years) in an amount equal to such Partner's share of the net decrease
in Partnership Minimum Gain during the year, before any other
allocation of Partnership items for such taxable year. A Partner
shall not be subject to this mandatory allocation of income or gain to
the extent that any of the exceptions provided in Treasury Regulation
Section 1. 704-2(f) (2) - (5) applies. All allocations pursuant to
this Section 10.4(b) (vi) shall be in accordance with Treasury
Regulation Section 1.704-2(f). This provision is a "minimum gain
chargeback" within the meaning of Treasury Regulation Section 1.704-
2(f) and shall be construed as such.
(vii) If there is a net decrease in Partner Non-Recourse Debt
Minimum Gain during a Partnership taxable year, then each Partner with
a share of the minimum gain attributable to such debt at the beginning
of such year will be allocated items of income and gain for such year
(and, if necessary, subsequent years) in an amount equal to such
Partner's share of the net decrease in Partner Non-Recourse Debt
Minimum Gain chargeback to the extent that any of the exceptions
provided in Treasury Regulation Section 1.704-2T(i) (4) applied
consistently with Treasury Regulation Section 1. 704-2(f)2)(5) under
Section 704 of the Code.
(viii) If a Limited Partner unexpectedly receives (a) an
allocation of loss or deduction or expenditures described in Section
705(a)(2)(B) of the Code made (1) pursuant to Section 704(e)(2) of the
Code to a donee of an Interest, (2) pursuant to Section 706(d) of the
Code as the result of a change in any Partner's Interest, or (3)
pursuant to Regulation Section 1.751-1(b)(2)(ii) as a result of a
distribution by the Partnership of unrealized receivables or inventory
items or (b) a distribution, and such allocation and/or distribution
would cause the negative balance in such Partner's Capital Account to
exceed (i) such Partner's share of Partnership Minimum Gain plus (ii)
the amount of such Partner's obligation (actual or deemed) , to
restore a negative balance in such Partner's Capital Account, plus
(iii) such Partner's share of Partner Non-Recourse Debt Minimum Gain,
then such Partner shall be allocated items of income and gain in an
amount and manner sufficient to eliminate such negative balance as
quickly as possible. For purposes of this Section 10.4 (b) (viii) , a
Partner' s Capital Account shall be treated as reduced by Qualified
Income Offset Items.
(ix) In the event that any f fee payable to the General Partner
or any Affiliate thereof shall instead be determined to be a non-
deductible, non-capitalizable distribution from the Partnership to a
Partner for Federal income tax purposes, then there shall be allocated
to such General Partner in the year(s) of payment an amount of gross
income equal to the amount of such distribution in such year.
(x) In applying the provisions of Article X with respect to
distributions and allocations, the following ordering of priorities
shall apply:
(1) Capital Accounts shall be deemed to be reduced by
Qualified Income Offset Items.
(2) Capital Accounts shall be reduced by distributions of
Cash Flow under Section 10.2(a).
(3) Capital Accounts shall be reduced by distributions from
Capital Transactions under Section 10.2(b).
(4) Capital Accounts shall be increased by any minimum gain
chargeback under Section 10.4 (b) (vi) or Section 10.4(b)(vii).
(5) Capital Accounts shall be increased by any qualified
income offset under Section 10.4(b)(viii).
(6) Capital Accounts shall be increased by allocations of
profits under Section 10.1(a).
(7) Capital Accounts shall be reduced by allocations of losses
under Section 10.1(a).
(8) Capital Accounts shall be reduced by allocations of
losses under Section 10.1(b)
(9) Capital Accounts shall be increased by allocations of
profits under Section 10.1(b),
(xi) To the maximum extent permitted under the Code,
allocations of profits and losses shall be modified so that the
Partners' Capital Accounts reflect the amounts they would have
reflected if adjustments required by Sections 10.4(b) vi), 10.4(b)
(vii) and 10.4(b) (viii) had not occurred.
10.5 Authority of the General Partners to Vary Allocations to
Preserve and Protect the Partners' Intent
(a) It is the intent of the Partners that each Partner's
distributive share of profits, tax-exempt income, losses, non-
deductible non-capitalizable expenditures and credits (and items
thereof) shall be determined and allocated in accordance with this
Agreement to the fullest extent permitted by Section 704 (b) of the
Code. In order to preserve and protect the determinations and
allocations provided for in this Agreement, the General Partners are
hereby authorized and directed to allocate profits, tax-exempt income,
losses, nondeductible non-capitalizable expenditures and credits (and
items thereof) arising in any year differently than otherwise provided
for in this Agreement to the extent that allocating profits, tax-
exempt income, losses, nondeductible non-capitalizable expenditures or
credits (or any item thereof) in the manner provided for herein would
cause the determinations and allocations of each Partner's
distributive share of profits, tax-exempt income, losses, non-
deductible non-capitalizable expenditures, or credits (or any item
thereof) not to be permitted by Section 704 (b) of the Code and the
Treasury Regulations promulgated thereunder. Any allocation made
pursuant to this Section 10.5 shall be deemed to be a complete
substitute for any allocation otherwise provided for in this
Agreement, and no amendment of this Agreement or approval of any
Partner shall be required.
(b) In making any allocation (the "New Allocation") under
Section 10. 5 (a) , the General Partners are authorized to act only
after having been advised in writing by the Tax Accountants that,
under Section 704 (b) of the Code, (i) the New Allocation is
necessary, and (ii) the New Allocation is the minimum modification of
the allocations otherwise provided for in this Agreement necessary in
order to assure that, either in the then-current year or in any
preceding year, each Partner's distributive share of profits, tax-
exempt income, losses, non-deductible non-capitalizable expenditures,
and credits (or any item thereof) is determined and allocated in
accordance with this Agreement to the fullest extent permitted by
Section 704(b) of the Code.
(c) If the General Partners are required by Section 10. 5 (a)
to make any New Allocation in a manner less favorable to the Limited
Partners than is otherwise provided for herein, then the General
Partners are authorized and directed, only after having been advised
in writing by the Tax Accountants that such an allocation is permitted
by Section 704 (b) of the Code, to allocate profits, tax-exempt
income, losses, non-deductible non-capitalizable expenditures, and
credits (and any item thereof) arising in later years in such manner
so as to bring the allocations of profits, tax-exempt income, losses,
non-deductible non-capitalizable expenditures, and credits (and each
item thereof) to the Limited Partners as nearly as possible to the
allocations thereof otherwise contemplated by this Agreement.
(d) New Allocations made by the General Partners under Section
10.5(a) and Section 10.5(c) in reliance upon the advice of the Tax
Accountants shall be deemed to be made pursuant to the fiduciary
obligation of the General Partners to the Partnership and the Limited
Partners, and no such allocation shall give rise to any claim or cause
of action by any Limited Partner.
ARTICLE XI
Management Agent
A. The General Partner shall engage the Management Agent to
manage the 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 the Agency (if such approval is required), or when the
Apartment Complex is not subject to Agency regulation, in accordance
with a reasonable and competitive fee arrangement. From and after the
Admission Date, the Partnership shall not enter into any Management
Agreement or modify or extend any Management Agreement unless (i) the
General Partners shall have obtained the prior written consent of the
Special Limited Partner to the identity of the Management Agent and
the terms of the Management Agreement or the modification or extension
thereof and (ii) such new Management Agreement or modified or extended
Management Agreement provides that it is terminable by the Partnership
on thirty (30) days' notice by the Partnership in the event of any
change in the identity of the General Partners.
B. No duplicate property management fees shall be paid to any
Person.
C. If (i) the Management Agent is the General Partner or an
Affiliate of the General Partner, and (a) the Apartment Complex shall
be subject to a substantial building code violation which shall not
have been cured within six months after notice from the applicable
governmental agency or department or (b) the Partnership shall not
have Cash Flow of at least $200 during any year after 1997, or (ii) an
Event of Bankruptcy shall occur with respect to the Management Agent,
or (iii) the Management Agent shall commit willful misconduct or gross
negligence in its conduct of its duties and obligations under the
Management Agreement or (iv) there is any change in the identity of
the General Partners, or (v) the Management Agent is cited by any
Agency, including any Tax Credit monitoring or compliance agency of
the State of Arizona or any other governmental agency for a violation
or alleged violation of any applicable rules, regulations or
requirements, including, but not limited to, non-compliance with the
Minimum Set-Aside Test, the Rent Restriction Test or any other Tax
Credit-related provision, then upon request by the Special Limited
Partner and subject to Agency and/or Lender approval, if required, the
General Partners must cause the Partnership to promptly terminate the
Management Agreement with the Management Agent and appoint a new
Management Agent selected by the Special Limited Partner, which new
Management Agent shall not be an Affiliate of the General Partner.
Each General Partner hereby grants to the Special Limited Partner an
irrevocable (to the extent permitted by applicable law) power of
attorney coupled with an interest to take any action and to execute
and deliver any and all documents and instruments on behalf of such
General Partner and the Partnership as the Special Limited Partner may
deem to be necessary or appropriate in order to effectuate the
provisions of this Article XI.C. Subject to Agency and/or Lender
approval, if required, the Partnership shall not enter into any future
management arrangement or renew or extend any existing management
arrangement unless such arrangement is terminable without penalty upon
the occurrence of the events described in this Article XI.
D. The General Partners shall have the duty to manage the
Apartment Complex during any period when there is no Management Agent.
ARTICLE XII
Books and Records, Accounting, Tax Elections, Etc.
12.1 Books and Records
The Partnership shall maintain all books and records which are
required under the Uniform Act or by any governmental agency having
jurisdiction and may maintain such other books and records as the
General Partners in their discretion deem advisable. Every Limited
Partner, or its duly authorized representatives, shall at all times
have access to the records of the Partnership at the principal office
of the Partnership at any and all reasonable times, and may inspect
and copy any of such records. A list of the names and addresses of all
of the Limited Partners shall be maintained as part of the books and
records of the Partnership and shall be mailed to any Limited Partner
upon request. A reasonable charge for copy work may be charged by the
Partnership.
12.2 Bank Accounts
The bank accounts of the Partnership shall be maintained in the
Partnership's name with such financial institutions as the General
Partners shall determine. Withdrawals shall be made only in the
regular course of Partnership business on such signature or signatures
as the General Partners may determine. All deposits (including
security deposits and other funds required to be escrowed by FmHA) and
other funds not needed in the operation of the business shall be
deposited, if required by applicable law and to the extent permitted
by applicable Agency or Mortgage requirements, in interest-bearing
accounts or invested in United States Government obligations maturing
within one year.
12.3 Auditors
(a) The Auditors shall prepare, for execution by the General
Partners, all tax returns of the Partnership. Prior to the filing of
the Partnership tax returns, and in no event later than February 15 of
each year, the Auditors shall deliver the tax returns for such year to
the Tax Accountants for their review and comment. If a dispute arises
between the Auditors and the Tax Accountants over the proper
preparation of the tax returns and such dispute cannot be resolved by
the Auditors and the Tax Accountants by March 1 of such year, then the
Tax Accountants shall make the final decision on whether any changes
are necessary. The Partnership shall reimburse BCCLP for all costs
and expenses paid to the Tax Accountants for the aforementioned
services. (b) The Auditors shall audit and certify all annual
financial reports to the Partners in accordance with generally
accepted auditing standards.
(c) If the Partnership fails to fulfill any of its obligations
under Section 12.7(a) (i) and/or Section 12.7(a)(ii) within the time
periods set forth therein, at any time thereafter upon notice from the
Special Limited Partner that a change in the identity of the Auditors
is desired, the General Partners, on behalf of the Partnership, shall
promptly terminate the Partnership' s engagement of the Auditors, and
the prior written consent of the Special Limited Partner must be
received to the appointment of replacement Auditors. If no such
consent is received to the appointment of replacement Auditors within
thirty (30) days of the notice from the Special Limited Partner to
replace the Auditors, then the Special Limited Partner shall appoint
replacement Auditors of its own choosing, the cost of which shall be
borne by the Partnership as a Partnership expense. All Partners
hereby grant to the Special Limited Partner a special power of
attorney, irrevocable to the extent permitted by law, coupled with an
interest, to so appoint replacement Auditors and to anything else
which in the view of the Special Limited Partner may be necessary or
appropriate to accomplish the purposes of this Section 12.3(c).
12.4 Cost Recovery and Elections
(a) With respect to all depreciable assets for which cost
recovery deductions are permitted, the Partnership shall elect to use,
so far as permitted by the provisions of the Code, accelerated cost
recovery methods. However, the Partnership may change to another
method of cost recovery if such other method is, in the opinion of the
Auditors, more advantageous to the Investment Limited Partner and the
limited partners and/or holders of beneficial assignee certificates
thereof.
(b) Subject to the provisions of Section 12.5, all other
elections required or permitted to be made by the Partnership under
the Code shall be made by the General Partners in such manner as will,
in the opinion of the Auditors, be most advantageous to the Investment
Limited Partner and the limited partners and/or holders of beneficial
assignee certificates thereof.
12.5 Special Basis Adjustments
In the event of a transfer of all or any part of the Interest of
the Investment Limited Partner or a transfer of all or any part of an
interest of a partner and/or holders of beneficial assignee
certificates of the Investment Limited Partner, the Partnership shall
elect, upon the request of the Investment Limited Partner, pursuant to
Section 754 of the Code, to adjust the basis of the Partnership
property. Any adjustments made pursuant to said Section 754 shall
affect only the successor in interest to the transferring Partner or
partner or holder of beneficial assignee certificate thereof. Each
Partner will furnish the Partnership all information necessary to give
effect to such election.
12.6 Fiscal Year
The fiscal and tax year of the Partnership shall be the calendar
year. The books of the Partnership shall be kept on an accrual basis.
12.7 Information to Partners
(a) The General Partners shall cause to be prepared and
distributed to all Persons who were Partners at any time during a
fiscal year of the Partnership:
(i) Within seventy-five (75) days after the end of each
fiscal year of the Partnership, (A) a balance sheet
as of the end of such fiscal year, a statement of
income, a statement of partners' equity, and a
statement of cash flows, each for the year then
ended, all of which, except the statement of cash
flows, shall be prepared in accordance with
generally accepted accounting principles and
accompanied by a report of the Auditors containing
an opinion of the Auditors, and (B) a report of the
activities of the Partnership during the period
covered by the report. With respect to any
distribution to the Investment Limited Partner, the
report called for shall separately identify
distributions from (1) Cash Flow from operations
during the period, (2) Cash Flow from operations
during a prior period which had been held as
reserves, (3) proceeds from disposition of property
and investments, (4) lease payments on net leases
with builders and sellers, (5) reserves from the
gross proceeds of the Capital Contribution of the
Investment Limited Partner, (6) borrowed monies, and
(7) transactions outside of the ordinary course of
business with a description thereof.
(ii) Within forty-five (45) days after the end of each
fiscal year of the Partnership, all information
relating to the Partnership and/or the Apartment
Complex which is necessary, in the view of the Tax
Accountants, for the preparation of the Limited
Partners' Federal income tax returns together with a
draft of the Partnership's Federal income tax return
and, promptly following the filing thereof with the
Service, a final copy of such return as filed.
(iii) Within forty-five (45) days after the end of each
quarter of a fiscal year of the Partnership, a
report containing:
(A) a balance sheet, which may be unaudited;
(B) a statement of income for the quarter then
ended, which may be unaudited;
(C) a statement of cash flows for the quarter then
ended, which may be unaudited;
(D) a certification of the General Partners that
the Apartment Complex and its tenants are in
compliance with all applicable federal, state, and
local requirements and regulations;
(E) a low-income housing tax credit monitoring
form, a copy of the rent roll for the Apartment
Complex, a statement of income and expenses, an
operating statement and an Occupancy/Rental Report,
all in the form specified by BCCLP;
(F) all other information which would be pertinent
to a reasonable investor regarding the Partnership
and its activities during the quarter covered by the
report and
(b) Within sixty (60) days after the end of each fiscal year
of the Partnership a copy of the annual report to be filed with the
Department of the Treasury concerning the status of the Apartment
Complex as low-income housing and any reports filed in connection with
the compliance monitoring conducted by the Authority.
(c) Upon the written request of the Investment Limited Partner
for further information with respect to any matter covered in item (a)
or item (b) above, the General Partners shall furnish such information
within thirty (30) days of receipt of such request.
(d) Prior to October 15 of each year, the Partnership shall
send to the Investment Limited Partner an estimate of the Investment
Limited Partner's share of the tax credits, profits and losses of the
Partnership for Federal income tax purposes for the current fiscal
year. Such estimate shall be prepared by the General Partners and the
Auditors and shall be in the form specified by BCCLP.
(e) Within fifteen (15) days after the end of any calendar
quarter during which:
(i) there is a material default by the Partnership under
the Project Documents or in payment of any mortgage,
taxes, interest or other obligation on secured or
unsecured debt,
(ii) any reserve has been reduced or terminated by
application of funds therein for purposes materially
different from those for which such reserve was
established,
(iii) any General Partner has received any notice of a
material fact which may substantially affect further
distributions or Tax Credit allocations to any
Limited Partner, or
(iv) any Partner has pledged or collateralized its
Interest in the Partnership, the General Partner
shall send the Investment Limited Partner a detailed
report of such event.
(f) After the Admission Date, the Partnership shall send to
the Investment Limited Partner, on or before the tenth day of each
month, the monthly housing credit monitoring form, and copies of all
applicable periodic reports covering the status of project operations
from the previous period, as may be required by any Agency or the
Authority.
(g) On or before May 1st of each of the Partnership's fiscal
year, the Partnership shall send to the Investment Limited Partner a
report on operations, in the form supplied by BCCLP.
(h) The General Partners shall cause the Partnership to send
to the Investment Limited Partner a copy of each Construction Mortgage
draw requisition and any notification or correspondence from the
Construction Lender indicating that any such draw will not be paid as
requisitioned. Upon receipt, the Partnership shall send to the
Investment Limited Partner copies of the Form(s) 8609 evidencing the
Tax Credit allocation. Promptly after Permanent Mortgage
Commencement, the General Partners shall send to BCCLP a closing
binder containing photocopies of the fully-executed versions of all
documents signed in connection with the Permanent Mortgage. The
General Partners hereby consent to any Agency, providing BCCLP with
copies of all material communications between any such office and the
General Partners and/or the Partnership, including, but not limited
to, any notices of default. From and after any date upon which the
General Partners receive notice from the Investment Limited Partner
that the Investment Limited Partner would like copies of the monthly
rent rolls for the Apartment Complex to be sent to BCCLP, the General
Partners shall send copies of the rent rolls to BCCLP no later than
ten (10) days after the expiration of each month.
(i) If the earlier of (A) the Completion Date or (B) the date
upon which tenants first occupied apartment units in the Apartment
Complex shall have occurred six months or more prior to the date upon
which the Investment Limited Partner acquired its Interest in the
Partnership, then the General Partners shall cause to be prepared and
delivered to the Investment Limited Partner within sixty (60) days of
the Admission Date the following items:
(i) An unaudited statement of income of the Partnership
for the year (or such shorter period as there may be
from the date of the most recent audited statement
of income of the Partnership) ended on the date upon
which the Investment Limited Partner acquired its
Interest in the Partnership; and
(ii) An audited statement of income of the Partnership
for any fiscal year of the Partnership ending
between (A) the earlier of (1) the Completion Date
or (2) the date upon which tenants first occupied
apartment units in the Apartment Complex and (B) the
date upon which the Investment Limited Partner
acquired its Interest in the Partnership.
(j) Within thirty (30) days of the Completion Date, the
General Partners shall prepare, or cause the Auditors to prepare, and
deliver to each Limited Partner a Tax Credit basis worksheet for each
building in the Apartment Complex, all in a form specified by BCCLP.
(k) If the General Partners do not cause the Partnership to
fulfill its obligations under Section 12.7(a)(i) and/or Section
12.7(a) (ii) within the time periods set forth therein, the General
Partners may be required by the Investment Limited Partner to pay as
damages the sum of $250 per day, commencing 15 days after the
respective due dates until the financial information and/or reports
are received (plus interest at a rate equal to the general base rate
of interest established by The First National Bank of Boston or its
successors and assigns and announced by it as the rate charged by it
to its prime commercial customers on short-term unsecured borrowings
as its "base rate" from time to time in effect plus 3%), to the
Investment Limited Partner until such obligations shall have been
fulfilled. Such damages shall be paid forthwith by the General
Partners, and failure to so pay shall constitute a material default of
the General Partners hereunder. In addition, if the General Partners
shall so fail to pay, the General Partners and their Affiliates shall
forthwith cease to be entitled to the payment of any Cash Flow or
Capital Transaction proceeds to which they may otherwise be entitled
hereunder. Such payments of the Annual Partnership Management Fee,
Cash Flow and Capital Transaction proceeds shall be restored only upon
the payment of such damages in full, and any amount of such damages
not so paid shall be deducted against payments of Cash Flow and
Capital Transaction proceeds otherwise due to the General Partners or
their Affiliates.
(1) On or before January 31 of each Partnership fiscal year,
the Partnership shall send to the Investment Limited Partner copies of
the certificates, memoranda of insurance or other evidence
satisfactory to the Investment Limited Partner that insurance policies
required to be maintained on the Apartment Complex pursuant to Section
6.5(c) are in force, accompanied by a certificate of the General
Partners stating that such insurance policies satisfy the requirements
of Section 6.5(c).
12.8 Expenses of the Partnership
(a) All expenses of the Partnership shall be billed directly
to and paid by the Partnership.
(b) Except in extraordinary circumstances, neither the
Investment General Partner nor any Affiliate thereof shall be
permitted to contract or otherwise deal with the Partnership for the
sale of goods or services or the lending of money to the Partnership
or the General Partners, except for (i) management services, subject
to the restrictions set forth in Article XI.B, (ii) loans made by, or
guaranteed by, the Investment General Partner or any of its
Affiliates, and (iii) those dealings, contracts or provision of
services described in the Investment Partnership Agreement or the
Prospectus.
Extraordinary circumstances shall only be presumed to exist
where there is an emergency situation requiring immediate action and
the services required are not immediately available from unaffiliated
parties. All services rendered under such circumstances must be
rendered pursuant to a written contract which must contain a clause
allowing termination without penalty on sixty (60) days' notice.
Goods and services provided under such circumstances must be provided
at the less or actual cost of the price charged for such goods or
services by independent parties.
(c) In the event extraordinary circumstances arise, the
Investment General Partner and its Affiliates may provide construction
services in connection with the Apartment Complex. Neither the
Investment General Partner nor any of its Affiliates shall provide
such services unless it believes it has an adequate staff to do so and
unless such provision of goods and construction services is part of
its ordinary and ongoing business in which it has previously engaged,
independent of the activities of the Investment Limited Partner. Any
such services must be reasonable for and necessary to the Investment
Limited Partner, actually furnished to the Investment Limited Partner,
and provided at the lower of 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 spent on such services or other method of allocation
acceptable to the accountants for the Investment Limited Partner.
(d) All services provided by the Investment General Partner or
any Affiliate thereof pursuant to Section 12.8(c) must be rendered
pursuant to the Investment Partnership Agreement or a written contract
which precisely describes the services to be rendered and all
compensation to be paid and shall contain a clause allowing
termination without penalty upon sixty (60) days, notice to the
Investment General Partner by a vote of a majority in interest of the
limited partners and assignees of beneficial interests in the
Investment Limited Partner.
(e) No compensation or fees may be paid by the Partnership to
the Investment General Partner or its Affiliates, except as described
in the Investment Partnership Agreement or in the prospectus of the
Investment Partnership.
ARTICLE XIII
General Provisions
13.1 Restrictions By Reason of Section 708 of the Code
No Disposition may be made if the Interest sought to be Disposed
of, when added to the total of all other Interests Disposed of within
the period of twelve consecutive months prior to the proposed date of
the Disposition, could, in the opinion of tax counsel to the
Partnership, result in the termination of the Partnership under
Section 708 of the Code. This Section 13.1 shall have no application
to any required repurchase of the Investment Limited Partner's
Interest. Any Disposition in contravention of any of the provisions
of this Section 13.1 shall be void ab initio and ineffectual and shall
not bind or be recognized by the Partnership. Notwithstanding the
foregoing provisions of this Section 13.1, however, the Investment
Limited Partner may waive the provisions of this Section 13.1 at any
time as to a Disposition or series of Dispositions, and in the event
of such a waiver, this Section 13.1 shall have no force or effect upon
such Disposition or series of Dispositions.
13.2 Amendments to Certificate
Within one hundred twenty (120) days after the end of any
Partnership fiscal year in which the Investment Limited Partner shall
have received any distributions under Article X, the General Partners
shall file an amendment to this Agreement reducing by the amount of
its allocable share of such distribution the amount of Capital
Contribution of the Investment Limited Partner as stated in the last
previous amendment to this Agreement. However, Schedule A shall not
be amended on account of any such distribution. T h e Partnership
shall amend the Certificate as necessary to effect the substitution of
substituted Limited Partners.
Notwithstanding the foregoing provisions of this Section 13.2,
no such amendments to this Agreement need be filed by the General
Partners if the Certificate is not required to and does not identify
the Limited Partners or their Capital Contributions in such capacity.
13.3 Notices
Any notice called for under this Agreement shall be in writing
and shall be deemed adequately given if actually delivered or if sent
by registered or certified mail, postage prepaid, to the party for
whom such notice is intended at such party's last address of record on
the Partnership books.
13.4 Word Meanings
The words such as "herein," "hereinafter," "hereof" and
"hereunder" refer to this Agreement as a whole and not merely to a
subdivision in which such words appear unless the context otherwise
requires. The singular shall include the plural, and vice versa, and
each gender (masculine, feminine and neuter) shall include the other
genders, unless the context requires otherwise. Each reference to a
"Section" or an "Article" refers to the corresponding Section or
Article of this Agreement, unless specified otherwise. References to
Treasury Regulations (permanent or temporary) or Revenue Procedures
shall include any successor provisions.
13.5 Binding Effect
The covenants and agreements contained herein shall be binding
upon and inure to the benefit of the heirs, executors, administrators,
successors and assigns of the respective parties hereto.
13.6 Applicable Law
This Agreement shall be construed and enforced in accordance
with the laws of the State.
13.7 Counterparts
This Agreement may be executed in several counterparts and all
so executed shall constitute one agreement binding on all parties
hereto, notwithstanding that all the parties have not signed the
original or the same counterpart.
13.8 Financing Regulations
So long as any of the Project Documents are in effect, (a) each
of the provisions of this Agreement shall be subject to, and the
General Partners covenant to act in accordance with, the Project
Documents; (b) the Project Documents shall govern the rights and
obligations of the Partners, their heirs, executors, administrators,
successors and assigns to the extent expressly provided therein; (c)
upon any dissolution of the Partnership or any transfer of the
Apartment Complex, no title or right to the possession and control of
the Apartment Complex and no right to collect the rent therefrom shall
pass to any Person who is not, or does not become, bound by the
Project Documents and other FmHA documents in a manner satisfactory to
the FmHA; (d) no amendment to any provision of the Project Documents
shall become effective without the prior written consent of FmHA (if
required); and (e) the affairs of the Partnership shall be subject to
FmHA regulation and no action shall be taken which would require the
consent or approval of FmHA unless the same is f first obtained. No
new Partner shall be admitted to the Partnership, and no Partner shall
withdraw from the Partnership or be substituted for without the
consent of FmHA (if such consent is then required) . No amendment to
this Agreement relating to matters governed by FmHA regulations or
requirements shall become effective until the prior written consent of
FmHA (if required) to such amendment shall have been obtained.
Any conveyance or transfer of title to all or any portion of the
Apartment Complex required or permitted under this Agreement shall in
all respects be subject to all conditions, approvals and other
requirements of FmHA rules and regulations applicable thereto.
13.9 Separability of Provisions
Each provision of this Agreement shall be considered separable
and (a) if for any reason any provision is determined to be invalid,
such invalidity shall not impair the operation of or affect those
portions of this Agreement which are valid, and (b) if for any reason
any provision would cause the Investment Limited Partner to be bound
by the obligations of the Partnership (other than the rules and
regulations of FmHA and the requirements of any other Lender), such
provision or provisions shall be deemed void and of no effect.
13.10 Paragraph Titles
All article and section headings in this Agreement are for
convenience of reference only and are not intended to qualify the
meaning of any article or section.
13.11 Amendment Procedure
This Agreement may be amended by the General Partners only with
the Consent of the Investment Limited Partner and the prior written
consent of the Special Limited Partner.
13.12 Extraordinary Limited Partner Expenses
Any and all costs and expenses incurred by the Investment
Limited Partner and/or the Special Limited Partner in connection with
exercising rights and remedies against the General Partners with
respect to this Agreement, including without limitation, reasonable
attorneys' fees, shall be paid by the General Partners on demand. All
amounts due to the Investment Limited Partner and/or the Special
Limited Partner pursuant to this provision shall bear interest from
demand at a rate of 9%.
If any General Partner breaches any provision of this Agreement,
the Investment Limited Partner and/or the Special Limited Partner may
employ an attorney or attorneys to protect its rights hereunder, and
the General Partners shall pay on demand the reasonable attorneys'
fees and expenses incurred by the Investment Limited Partner and/or
the Special Limited Partner, whether or not a legal action is actually
commenced against any General Partner by reason of such breech. All
amounts due to the Investment Limited Partner and/or the Special
Limited Partner pursuant to this provision shall bear interest from
demand at a rate equal to 9%.
13.13 Time of Admission
The Investment Limited Partner shall be deemed to have been
admitted to the Partnership as of the Commencement Date for all
purposes of this Agreement, including Article X hereof; provided,
however, that if regulations are issued under the Code or an amendment
to the Code is adopted which would require, in the opinion of the
Auditors, that the Investment Limited Partner be deemed admitted on a
date other than as of the Commencement Date, then the General Partners
shall select a permitted admission date which is most favorable to the
Investment Limited Partner.
WITNESS the execution hereof under seal as of the 1st day of
June, 1996.
INVESTMENT LIMITED PARTNER:
BOSTON CAPITAL TAX CREDIT
FUND IV, L.P., a Delaware limited
partnership
By: Boston Capital
Associates IV, L.P.,
its general partner
By: /s/Xxxxxx Xxxx Xxx
Xxxxxx Xxxx Xxx,
Attorney-in-Fact for
Xxxx X. Xxxxxxx,
its duly authorized President
GENERAL PARTNER:
/s/Xxxxx X. Xxxxxxxx
Xxxxx X. Xxxxxxxx
/s/Xxxxx X. Xxxxx
Xxxxx X. Xxxxx
SPECIAL LIMITED PARTNER:
BCTC 94, INC.
By: /s/Xxxxxx Xxxx Xxx
Xxxxxx Xxxx Xxx,
Attorney-in-Fact for
Xxxx X. Xxxxxxx,
its duly authorized President
CONSENT AND AGREEMENT
The undersigned hereby executes this Agreement for the sole
purpose of agreeing to the provisions of Article XI of the foregoing
Amended and Restated Agreement and Certificate of Limited Partnership
notwithstanding any provision of the Management Agreement to the
contrary.
Management Agent
CHA PROPERTY MANAGEMENT, INC.
a Washington corporation
By: /s/Xxxxx X. Xxxxxxxx
Xxxxx X. Xxxxxxxx, President
STATE OF WASHINGTON )
) ss.
COUNTY OF KING )
BEFORE ME, the undersigned Notary Public in and for said County
and State, personally appeared the above-named Xxxxx X. Xxxxxxxx,
known to me to be the person who executed the foregoing instrument,
and being duly sworn, acknowledged that the statements therein
contained are true and that he did sign the same as his free act and
deed.
WITNESS my hand and official seal this __ day of June, 1996.
Notary Public:
________________________________________
My Commission Expires:
STATE OF WASHINGTON )
) ss.
COUNTY OF KING )
BEFORE ME, the undersigned Notary Public in and for said County
and State, personally appeared the above-named Xxxxx X. Xxxxx, known
to me to be the person who executed the foregoing instrument, and
being duly sworn, acknowledged that the statements therein contained
are true and that he did sign the same as his free act and deed.
WITNESS my hand and official seal this __ day of June, 1996.
Notary Public:
__________________________________
My Commission Expires:
COMMONWEALTH OF MASSACHUSETTS )
) ss.
COUNTY OF SUFFOLK )
BEFORE ME, the undersigned Notary Public in and for said County
and Commonwealth, personally appeared the above-named Xxxxxx Xxxx Xxx,
known to me to be Attorney-in-Fact for Xxxx X. Xxxxxxx, a general
partner of Boston Capital Associates IV, L.P., which is a general
partner of Boston Capital Tax Credit Fund IV, L.P., and who, being
duly sworn, acknowledged that she did sign the foregoing instrument,
that the statements therein contained are true and that the same is
the her free act and deed of said Xxxx X. Xxxxxxx, C&M Associates
d/b/a Boston Capital Tax Credit Fund IV, L.P.
WITNESS my hand and official seal this ____ day of June, 1996.
___________________________________
Notary Public
___________________________________
Name (Printed)
My Commission Expires:
My County of Residence:
COMMONWEALTH OF MASSACHUSETTS )
) ss.
COUNTY OF SUFFOLK )
BEFORE ME, the undersigned Notary Public in and for said County
and Commonwealth, personally appeared the above-named Xxxxxx Xxxx Xxx,
Attorney-in-Fact for Xxxx X. Xxxxxxx, known to me to be the President
of BCTC 94, Inc., who being duly sworn, acknowledged that she did sign
the foregoing instrument, that the statements therein contained are
true and that the same is the duly authorized free act and deed of
said Xxxx X. Xxxxxxx and BCTC 94, Inc.
WITNESS my hand and official seal this __ day of June, 1996.
_______________________________
Notary Public
_______________________________
Name (Printed)
My Commission Expires:
My County of Residence:
Coolidge Pinal II Associates,
A Washington Limited Partnership
Schedule A
As of
June 1, 1996
General Partners Capital Contribution
Xxxxx X. Xxxxxxxx $30,098
000 000xx Xxxxxx, XX
Xxxxxxxx 0, Xxxxx 000
Xxxxxxxx, XX 00000
Xxxxx X. Xxxxx $30,097
000-000xx Xxxxxx, XX
Xxxxxxxx 0, Xxxxx 000
Xxxxxxxx, XX 00000
$60,195
=====
Special Limited Partner Capital Contribution
BCTC 94, Inc. $10
c/o Boston Capital
Partners, Inc.
Xxx Xxxxxx Xxxxx
Xxxxxx, XX 00000
Investment Total Agreed-to Paid-In
Limited Partner Capital Contribution Capital
Contribution*
Boston Capital Tax Credit $373,388 $186,694
Fund IV, L.P.
c/o Boston Capital
Partners, Inc.
Xxx Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
_____________________________
*Paid-in Capital Contribution as of the date of this Schedule A.
Future Installments of Capital Contribution are subject to adjustment
and are due at the times and subject to the conditions set forth in
the Agreement to which this Schedule is attached.
BOS1: 8703_1
