EXHIBIT 3.2
REAL ESTATE ASSOCIATES LIMITED IV
RESTATED CERTIFICATE AND
AGREEMENT OF LIMITED PARTNERSHIP
This Restated Certificate and Agreement of Limited Partnership by
and
among National Partnership Investments
Corp., a California corporation with
principal offices at 1880 Century Park
East, Los Angeles, California 90067
(the "Corporate General Partner"), and
National Partnership Investments
Associates, a limited partnership ("NPIA"
or the "Non-Corporate General
Partner"), the general partner of which is
Nicholas G. Ciriello, an individual
residing at 418 South Lucerne Boulevard,
Los Angeles, California 90020
(hereinafter collectively referred to as
the "General Partner"), and Bruce E.
Nelson, an individual residing at 812
Levering Avenue, Los Angeles, California
90024 ("Initial Limited Partner"), is
entered into as of ________ ___, 1982.
Such Initial Limited Partner, and any
additional or substituted limited
partners hereafter admitted to the Limited
Partnership as herein provided, are
referred to collectively as the "Limited
Partners" and individually as a
"Limited Partner." The term "Partners"
shall mean all General and Limited
Partners, and the term "Partner" means any
General or limited Partner.
W I T N E S S E T H:
WHEREAS, on August 24, 1981, the Partnership was formed pursuant
to
the laws of the State of California;
WHEREAS, the General Partners and the Initial Limited Partner
desire
to change certain provisions in, and
restate in full, their agreement; and
WHEREAS, it is the intention of the parties thereto to admit
additional Limited Partners to the
Partnership for the purpose of acquiring
additional capital therefor;
NOW, THEREFORE, the parties hereto hereby agree as follows:
Section 1:
Formation.
1.1 The General Partners and the Initial Limited Partner do
hereby
form a limited partnership (the
"Partnership") under the Limited Partnership
Act of the State of California.
Section 2:
Name.
2.1 The business of the Partnership shall be conducted under the
name
Real Estate Associates Limited IV, which
name may be changed by the General
Partners by written notice to the Limited
Partners.
Section 3:
Addresses of Parties.
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3.1 The principal place of business of the Partnership shall be
at
1880 Century Park East, Suite 919, Los
Angeles, California 90067, or at such
other place as the General Partners may
from time to time designate in writing
to the Limited Partners. The Partnership
may also maintain such other offices
at such other places as the General
Partners may deem advisable.
3.2 The addresses of the General Partners shall be those stated
in
the first paragraph of this Agreement, or
at such other places as the General
Partners may from time to time designate in
writing to the Limited Partners.
The addresses of the Limited Partners shall
be those stated after their names
on Schedule A hereto or in any amended
certificate hereto. A Limited Partner
may change such address by written notice
to the General Partners, which
notice shall become effective upon
receipt.
Section 4:
Business of the Partnership.
4.1 The business of the Partnership shall be:
(a) primarily to acquire interests as a limited partner in any
partnership or joint venture (a "local limited partnership")
which
will (a) acquire, lease, hold, finance, construct, improve,
rehabilitate, manage, and/or operate government-assisted or
other
housing projects (the "Projects" and the interests of the
Partnership
in the local limited partnerships shall be referred to as
"Project
Interests"), (ii) monitor and supervise management of
construction
and operations of the Projects, (iii) arrange for and supervise
the
conversion of any Project to other uses, or (iv) perform any act
for
a purpose authorized by this Agreement; or to directly acquire
existing conventional housing projects (which shall be included
within the definition "Projects");
(b) to acquire, hold (in the Partnership's name or under any
other title arrangement selected by the General Partners),
lease,
sell, mortgage, convey, or refinance any real or personal
property,
including, but not limited to, the Project Interests described
in
paragraph (a) above;
(c) to hold, own, maintain, manage, improve, develop, operate,
sell, transfer, convey, lease, mortgage, exchange, or otherwise
dispose of or deal in or with Projects and Project Interests
described in paragraph
(a) above; and
(d) to perform any acts to accomplish the foregoing purposes.
Section 5:
Contributions to Capital; Additional Limited Partners.
5.1 The capital of the Limited Partnership shall be divided into
no
less than 1 and up to 20 General Partners
Interests and no less than 480 and
up to 14,000 non-assessable limited
partnership interests, each of which
limited partnership interest is hereinafter
referred to as a "Limited
Partnership Interest."
5.2 The General Partners shall contribute an aggregate of $12,500
to
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the capital of the Partnership, for which
the General Partners shall be
credited with the ownership of one General
Partners Interest, and shall have
such interest in and to the profits and
losses thereof as is described in
Section 7 hereof. Upon liquidation of the
Partnership, the General Partners
will discharge any debit balance in their
capital accounts by contributing to
the Partnership an amount up to the
difference between 1% of total capital
contributions to the Partnership and
$12,500. The General Partners may, but
are not required to, purchase Limited
Partnership Interests and will
accordingly have as Limited Partners such
additional pro rata interest in and
to the profits and losses of the
Partnership pursuant to Section 7 hereof.
5.3 (a) The Initial Limited Partner has contributed $4,550 to
the
capital of the Partnership pursuant to a
promissory note, for which he has
received a Unit and has the right, but not
the obligation, to purchase
additional Units as provided herein.
Furthermore, upon the admission of
additional Limited Partners to the
Partnership, the Initial Limited Partner
may relinquish his Unit and withdraw such
investment and cease to be a Limited
Partner.
(b) The General Partners are authorized to admit additional
Limited
Partners to the Partnership by selling not
more than 14,000 Limited
Partnership Interests for cash to selected
persons as may apply to become
Limited Partners pursuant to the terms of
an offering described in a
Prospectus (the "Prospectus") to which this
Agreement will be annexed, by
completing a subscription agreement (the
"Subscription Agreement") in the form
to be set forth in the Prospectus, provided
that no person admitted as a
Limited Partner shall have been permitted
to purchase more than 50 Units,
subject, however, to the right of the
General Partners to establish special
requirements for larger subscriptions.
(c) The Limited
Partnership Interests shall be sold to Limited
Partners in "Units." The minimum investment
shall be one Unit at a purchase
price of $5,000 per Unit. Each Unit shall
consist of two Limited Partnership
Interests and one warrant which will
entitle the purchaser of a Unit to
acquire two additional Limited Partnership
Interests ("Additional Limited
Partnership Interests") during the period
January 1, 1983 to and including
January 21, 1983 at $2,500 each. The
Partnership shall have the right to offer
for sale, at the best prices reasonably
obtainable (which may be less than
$2,500 per Limited Partnership Interest),
any Limited Partnership Interest not
purchased pursuant to the exercise of
Warrants. The foregoing sums relating to
the purchase of Units and Limited
Partnership Interests shall be paid to the
Partnership concurrently with the
recordation in the Official Records of Los
Angeles County, California, of an amendment
of this Agreement reflecting the
admission of each Limited Partner to the
Partnership or increase in the number
of Limited Partnership Interests held by
such Limited Partner, as the case may
be. Investors whose subscriptions have been
accepted by the General Partners
will be admitted as Limited Partners within
15 days after the minimum of
$1,200,000 from the sale of Units has been
received by the General Partners.
Thereafter, investors will be admitted as
Limited Partners no later than the
last day of the calendar month following
the date the General Partners accept
their subscriptions. The General Partners
will accept or reject subscriptions
within three days after receipt
thereof.
(d) The Partnership presently contemplates the public offering of
a
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maximum of 3,000 Units at an offering price
of $5,000 per Unit or an aggregate
offering price of $15,000,000. These Units
represent 6,000 Limited Partnership
Interests and 3,000 Warrants to purchase an
aggregate of 6,000 Additional
Limited Partnership Interests at a price of
$2,500 per Additional Limited
Partnership Interest, or an aggregate
exercise purchase price of $15,000,000,
provided, that if the Additional Limited
Partnership Interests can not be sold
for $2,500 each, the General Partner shall
have the authority to offer and
sell such Interests at the best prices that
can be reasonably obtained. A
sales commission of 9% shall be paid to
E.F. Hutton & Company Inc. ("Hutton")
with respect to the sale of Units; a sales
commission of 8-3/4% shall be paid
to Hutton with respect to the sale of
Limited Partnership Interests pursuant
to the exercise of Warrants, provided,
however, that the sales commission to
be charged on Limited Partnership Interests
available for sale by the
Partnership upon failure to exercise
Warrants shall be 9%. The Partnership
will also reimburse Hutton for certain
expenses. In anticipation of receipt of
subscriptions for in excess of 3,000 Units,
the Partnership will register with
the Securities and Exchange Commission a
total of 3,300 Units (covering an
aggregate of 6,600 Limited Partnership
Interests and Warrants to purchase an
aggregate of 6,600 Additional Limited
Partnership Interests) and will grant to
Hutton the right, exercisable in its sole
discretion, to sell these additional
Units so registered (on the same terms and
conditions as the other Units) on
behalf of the Partnership. Such right to
sell an additional 300 Units will
expire on the date of termination of the
offering and will provide additional
compensation for Hutton.
(e) No Partner shall have the right, except as provided in
Section
5.3(a), to withdraw or reduce his capital
contribution. No Limited Partner
shall have the right to bring an action for
partition against the Partnership
or to demand or receive property other than
cash in return for his capital
contribution. No Limited Partner shall have
priority over any other Limited
Partner, either as to the return of his
capital contribution or as to profits,
losses, or distributions.
(f) The net proceeds to the Partnership will be $4,550 for each
Unit.
Except as otherwise provided in Section
7.3, a person acquiring Units will
participate with other Limited Partners in
the income, gains, losses,
deductions, credits, and cash distributions
on a pro rata basis in accordance
with the number of Limited Partnership
Interests owned. A capital account
shall be maintained for each Partner. To
each Account shall be credited (i)
the amount of money paid by a Partner to
the Partnership to acquire his
Limited Partnership Interests (but not
Warrants), (ii) the Partner's
distributive share of Profits, and (iii)
the Partner's distributive share of
any tax-exempt Partnership income, and from
each Capital Account there shall
be debited (iv) the net fair market value
of property distributed to the
Partner, (v) the amount of money
distributed to the Partner, (vi) the
Partner's distributive share of Losses, and
(vii) the Partner's distributive
share of Partnership expenditures not
deductible in computing taxable income
and not properly capitalized.
(g) To accomplish the purpose of this Section 5.3, the General
Partners are hereby authorized to do all
things necessary to admit such
additional Limited Partners, including, but
not limited to, registering the
Units and Additional Limited Partnership
Interests under the Securities Act of
1933, as amended, pursuant to the rules and
regulations of the Securities and
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Exchange Commission, qualifying the Units
and Additional Limited Partnership
Interests for sale with state securities
regulatory authorities or perfecting
exemptions from qualification, and entering
into such underwriting or agency
arrangements for the solicitation of the
Units and Additional Limited
Partnership Interests upon such terms and
conditions as the General Partners
may deem advisable.
5.4 Proceeds from contributions for Units and Additional
Limited
Partnership Interests and other Partnership
funds shall be held by the General
Partners as fiduciaries for the exclusive
use of the Partnership and after the
start of Partnership operations shall be
temporarily invested in U.S. Treasury
Bills and Bonds, bank certificates of
deposit, bank repurchase obligations,
commercial paper (investment grade), and
tax-exempt notes and bonds, or
registered investment companies holding
such securities. Interest thereon
shall inure to the benefit of the
Partnership, and the Limited Partners, as
such, shall not receive interest on funds
contributed by them. Any funds
(other than designated reserves) not
invested or committed for investment in
Projects or Project Interests within 18
months from the effective date of the
Prospectus shall be distributed pro rata to
the Limited Partners as a return
of capital.
Section 6:
Organizational Expenses.
6.1 The Partnership shall pay all costs of qualifying and
offering
the Units and Additional Limited
Partnership Interests (including sales
commissions) and all formation and
organization expenses, including expenses
associated with the selection and
acquisition of Projects (which expenses are,
however, subject to the limitation set
forth in Section 9.6.1 hereof). The
General Partners will be liable for the
amount, if any, by which the aggregate
organizational expenses and sales
commissions exceed 15% of the gross proceeds
from the sale of Units and Additional
Limited Partnership Interests.
Section 7:
Profits and Losses.
7.1 Prior to the amendment to this Agreement for the purpose of
admitting additional Limited Partners to
the Partnership in accordance with
Section 5.3(b) hereof, the General Partners
shall be allocated, as they may
agree between themselves, 99% of each item
of income, gain, loss, deduction,
and credit (collectively, "Partnership Tax
Items" and individually
"Partnership Tax Item"). During such
period, the Initial Limited Partner shall
be allocated 1% of each Partnership Tax
Item. At all times thereafter, except
as provided in Section 7.2 and the
remainder of this Section, the General
Partners shall be allocated 1% and the
Limited Partners as a class shall be
allocated 99% of each Partnership Tax Item.
Income recognized by the
Partnership upon expiration of Warrants
shall be allocated 1% to the General
Partners and 99% to the non-exercising
Limited Partners in proportion to their
respective Limited Partnership
Interests.
7.2 Upon the total or partial liquidation of the Partnership or
the
disposition or partial disposition of a
Project or Project Interest, income
and losses of the Partnership shall be
allocated as follows. Income not
exceeding an amount equal to the sum of the
negative adjusted capital account
balances of all Partners with such balances
(computed after any distributions
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made under Section 9.6.2) shall be
allocated among such Partners in proportion
to their respective negative capital
account balances and without regard to
Section 7.3; and income in excess thereof
shall be allocated 1 % to the
General Partners and 99% to the Limited
Partners as a class. Losses not
exceeding an amount equal to the sum of the
positive adjusted capital account
balances of all Partners with such balances
(computed after any distributions
under Section 9.6.2) shall be allocated
among such Partners in proportion to
their respective positive adjusted capital
account balances and without regard
to Section 7.3; and losses in excess
thereof shall be allocated 1% to the
General Partners and 99% to the Limited
Partners as a class. Notwithstanding
any other provision of this Agreement, the
General Partners shall be allocated
at least 1 % of each Partnership Tax
Item.
7.3 Each Limited Partner shall be allocated the same fractional
share
of each Partnership Tax Item allocable to
Limited Partners as a class as the
total number of Limited Partnership
Interests owned by him divided by the
total number of Limited Partnership
Interests outstanding, subject to the
following exception. Commencing with the
1983 taxable year, each Partnership
Tax Item allocable to Limited Partners as a
class shall be allocated 62-1/2%
to holders of Additional Limited
Partnership Interests, and 37-1/2% to holders
of 1982 Partnership Interests until the
total amount of each Partnership Tax
Item allocated to each Additional Limited
Partnership Interest equals the
total amount of each Partnership Tax Item
(including a weighted average of
each 1982 Partnership Tax Item) allocated
to each 1982 Partnership Interest.
The weighted average of each 1982
Partnership Tax Item shall be a fraction,
the numerator of which is an amount,
consisting of the product, for each month
until January 1, 1983, of the total amount
of that Partnership Tax Item
allocated to the group comprised of 1982
Limited Partnership Interests
purchased through that month times the
number of months remaining, including
the month in question, until January 1,
1983, and the denominator of which is
an amount, consisting of the product, for
each month until January 1, 1983, of
1982 Limited Partnership Interests
purchased through that month times the
number of months remaining, including the
month in question, until January 1,
1983. As each Partnership Tax Item is so
equalized between 1982 Limited
Partnership Interests and Additional
Limited Partnership Interests, this
allocation shall cease as to that
Partnership Tax Item.
7.4 In determining whether Partnership Tax Items are realized,
paid,
accrued, or incurred during any period in
which any Limited Partner is a
member of the Partnership, such Items shall
be allocated on any basis
permitted by Section 706(c) of the Internal
Revenue Code of 1954, as
determined by the General Partners. In the
event of the transfer of a Limited
Partnership Interest, the distributive
share of these Partnership Tax Items
(in respect of the Limited Partnership
Interest so transferred) shall be
allocated between the transferor and the
transferee in accordance with this
Section.
Section 8:
Cash Distributions.
8.1 The General Partners shall distribute annually substantially
all
of the Partnership's Net Cash Flow as
defined herein. Except as provided
Section 8.2 hereof, the General Partners
shall be entitled to receive 1% of
the Net Cash Flow to be distributed, but
any such distributions to the General
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Partners shall be reduced by the amount
paid as an Annual Management Fee as
set forth in Section 9.5 hereof. The
Limited Partners as a class shall receive
the balance of the distributed Net Cash
Flow, which shall be distributed among
Limited Partners as Partnership Tax Items
are allocated to them under Section
7.3.
8.2 Upon the total or partial liquidation of the Partnership or
the
disposition or partial disposition of a
Project or Project Interest, net
assets available for distribution remaining
after all distributions required
to be made under Section 9.6.2 shall be
distributed to the Partners in
proportion to their positive adjusted
capital account balances (computed after
the allocation of income or loss under
Section 7.2).
8.3 "Net Cash Flow" shall mean the Partnership's share of all
receipts derived from the ownership of
Projects and Project Interests therein
(exclusive of any proceeds from the sale or
financing of Projects or Project
Interests, refinancing or other
extraordinary transactions not in the ordinary
course of business) less (a) expenses, (b)
such reserves as the General
Partners deem reasonably necessary for the
proper operation of the
Partnership's business, and (c) any fees
and expenditures authorized by this
Agreement (except for construction
expenditures paid out of capital or loan
proceeds). The General Partners may at
their discretion reinvest or distribute
all or any portion of the proceeds from the
disposition or refinancing of any
Project or Project Interest therein,
provided that in the event of a sale, the
Partners shall have first received any
distributions to which they are
entitled under Section 9.6.2. To the extent
that such proceeds are not
reinvested or committed within twelve
months from the date of the receipt of
such proceeds, they shall be distributed.
Distributions of the net proceeds
from the sale or financing of Projects or
Project Interests, refinancing
thereof, or other extraordinary
transactions not in the ordinary course of
business shall be distributed to the
General and Limited Partners in the same
manner as net cash is distributed under
Section 8.2.
8.4 The General Partners shall designate a record date to
determine
Partners entitled to cash distributions,
which shall not be less than 15 days
nor more than 30 days before each cash
distribution. The Partnership shall
cause to be maintained records reflecting
the name, address, and number of
Limited Partnership Interests and General
Partners Interests held by each
Partner for the purpose of determining
recipients of cash distributions and
notices.
Section 9:
The General Partners.
9.1 The General Partners shall have complete discretion in the
management and control of the business of
the Partnership for the purposes
herein stated, shall make all decisions
affecting the business of the
Partnership and shall manage and control
the affairs of the Partnership to the
best of their abilities and use their best
efforts to carry out the purposes
of the Partnership. The powers of the
General Partners include, but are not
limited to, the powers:
(a) to expend the capital and profits of the Partnership in
furtherance of the Partnership's business;
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(b) to
acquire, hold (in the Partnership's name or, in the best
interest of the Partnership, under any other title arrangement
selected by the General Partners), lease, sell, mortgage, convey,
or
refinance any real or personal property, including Projects and
Project Interests, at such price and upon such terms, as they deem
to
be in the best interests of the Partnership, including the power
to
vote to amend a local limited partnership agreement in such a
manner
as to reduce the limited partnership interest of the Partnership
in
the local limited partnership, to vote to reduce the
Partnership's
interests in the profits, losses, and special allocations of the
local
limited partnerships and assign a part of the limited
partnership
interest in such partnership, provided that such action is
necessary
to preserve the economic value of the -------- Partnership's
Project
Interest;
(c) to monitor the
construction and operations of any of the
Projects, Project Interests, or other Partnership property and to
make
recommendations with respect thereto;
(d) to retain independent consultants to evaluate the Projects,
Project Interests, and other Partnership property;
(e) to borrow money and execute promissory notes and to secure
the same by mortgage upon the Partnership's property;
(f) to invest in short-term debt obligations (including
obligations of federal and state governments and their agencies,
bank
repurchase obligations, commercial paper, and certificates of
deposit
of commercial banks, savings banks, or savings and loan
associations)
such funds as are temporarily not required for investment in
Projects,
Project Interests, or other Partnership property;
(g) to lend money or provide advances in furtherance of the
Partnership's purposes; and
(h) to enter into and carry out agreements of any kind,
provided
that all contracts with the General Partners or their affiliates
must
provide for termination by the Partnership on 60 days written
notice,
without penalty, and to do any and all other acts and things
necessary, proper, convenient, or advisable to effectuate and
carry
out the purposes of the Partnership.
9.2 The General Partners shall (a) diligently and faithfully
devote
such of their time to the business of the
Partnership as they deem necessary to
conduct it for the greatest advantage of
the Partnership; (b) file and publish
all certificates, notices, statements, or
other instruments required by law for
formation and operation of the Partnership
in all appropriate jurisdictions;
(c) cause the Partnership to carry adequate
public liability, property damage,
and other insurance, any or all of which
may name the General Partners as the
sole insured; (d) indemnify and hold the
Partnership harmless from any loss,
damage or liability due to, or arising out
of, any General Partner's breach of
fiduciary duty; and (e) maintain capital
accounts on the books and records of
the Partnership in respect of each interest
in the Partnership. The General
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Partners may become Limited Partners and
thereby become entitled to all of the
rights of Limited Partners to the extent of
the Limited Partnership Interests
so acquired, provided that such acquisition
of Limited Partnership Interests
shall not reduce any liability of the
General Partners under this Agreement.
Notwithstanding the foregoing, the General
Partners shall have fiduciary
responsibility for the safekeeping and use
of all funds and assets of the
Partnership, whether or not in their
immediate possession or control and they
shall not employ, or permit another to
employ, such funds, or assets in any
manner except for the exclusive benefit of
the Partnership.
9.3 Notwithstanding any provision in this Agreement to the
contrary,
it is understood and agreed that (i) in
conducting, carrying on, and managing
the business of the Partnership, the
General Partners shall be bound by the
following investment policies, which may
not be changed, altered, or amended
except as provided in Section 14 hereof and
(ii) the General Partners shall
endeavor to conduct the Partnership's
business in accordance with the policies
set forth in the Prospectus:
(a) except for interim commitments in short-term government
obligations, commercial paper (investment grade), certificates
of
deposit, bank repurchase obligations, and tax-exempt notes and
bonds
or registered investment companies holding such securities,
investments will be initially limited to Project Interests,
provided
that (i) not less than 75% of the amount of -------- public
offering
proceeds available for investment will be invested in Project
Interests in partnerships or joint ventures which will own or
lease
federal, state, or local government-assisted housing projects and
(ii)
the Partnership may subsequently refinance or convert such
Project
Interests to other uses with a view to realizing higher revenue
or
capital gains, although reinvestment of cash flow (excluding
proceeds
resulting from a disposition or refinancing of property) shall not
be
allowed.
(b) Projects or Project Interests will be acquired with a view
toward maximizing tax deductions, with cash income and
long-term
appreciation as additional considerations, and not with a view
to
early resale;
(c) the Partnership will seek to avoid depreciation recapture
and
defer taxes by not selling any Projects or Project Interests
within
ten years, except (i) to qualified tenant cooperatives as defined
in
the Internal Revenue Code, and (ii) under circumstances described
in
the
Prospectus;
(d) upon any sale or refinancing, the Partnership shall not
reinvest any proceeds thereof;
(e) the Partnership may (a) borrow money only against
individual
Projects or Project Interests to acquire Projects or interests
therein, to defray expenses or preserve its interest in each
individual Project or interest therein, but may not pledge or
encumber
other Projects or Project Interests for this purpose, and (ii)
borrow
only such amount for which the Partnership can reasonably expect
to
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meet debt service requirements from anticipated Net Cash Flow.
The
Partnership may make or cause its affiliates to make loans or
advances
for the acquisition of Projects or Project Interests, but such
affiliates may not receive interest or other financing charges or
fees
in excess of the amounts which would be charged by unrelated banks
for
comparable loans for the same purpose in the locality of the
Project
or in amounts which otherwise are unreasonable or require any
prepayment charge or penalty, provided that in connection with any
of
the foregoing transactions, (A) the -------- Partnership shall
not
enter into transactions involving the use of "all-inclusive" or
"wrap-around" notes except as permitted by the Rules of the
Department
of Corporations of the State of California, and (B) the
Partnership
shall not incur any indebtedness whereby the lender will have
or
acquire, at any time as a result of making such loan, any direct
or
indirect interest in the profits, capital, or property of the
Partnership other than as a secured creditor;
(f) the Partnership shall not (i) issue senior securities,
except
as set forth in the preceding paragraph and even then only at par
or
at a premium, (ii) invest in other issuers for the purpose of
exercising control (other than local limited partnerships own
