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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
ownin
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