AMENDED AND RESTATED OPERATING AGREEMENT
HURRICANE HILLS, L.C.
TABLE OF CONTENTS
ARTICLE I CONTINUATION OF COMPANY
1.01 Continuation
1.02 Name
1.03 Principal Executive Offices; Agent for Service of
Process
1.04 Term
1.05 Recording
ARTICLE II DEFINED TERMS
ARTICLE III PURPOSE AND BUSINESS OF THE COMPANY
3.01 Purpose of the Company
3.02 Authority of the Company
ARTICLE IV [INTENTIONALLY DELETED]
ARTICLE V REPRESENTATIONS, WARRANTIES AND COVENANTS; DUTIES AND
OBLIGATIONS
5.01 Representations, Warranties and Covenants
Relating to the Apartment Complex and the Company
5.02 Duties and Obligations Relating to the Apartment
Complex and the Company
ARTICLE VI MEMBERS, COMPANY INTERESTS AND OBLIGATIONS OF THE COMPANY
6.01 Members, Capital Contributions and Company Interests
6.02 Return of Capital Contribution
6.03 Withholding of Capital Contribution Upon Default
6.04 Legal Opinions
6.05 Repurchase Obligation
ARTICLE VII CHANGES IN MANAGERS
7.01 Withdrawal of a Member-Manager
7.02 Admission of a Successor or Member-Manager
7.03 Effect of Bankruptcy, Death, Withdrawal, Dissolution
or
Incompetence of a Member-Manager
ARTICLE VIII ASSIGNMENT TO
THE COMPANY
8.01 Assignment or Contracts, etc
ARTICLE IX RIGHTS, OBLIGATIONS AND POWERS OF THE MANAGING MEMBER
9.01 Management of the Company
9.02 Limitations Upon the Authority of the Member-Manager
9.03 Management Purposes
9.04 Delegation of Authority
9.05 Member-Manager or Affiliates Dealing with Company
9.06 Other Activities
9.07 Liability for Acts and Omissions
9.08 [Intentionally Deleted]
9.09 Construction of the Apartment Complex, Construction
Cost Overruns, Operating Deficits
9.10 Development Fee
9.11 Incentive Company Management Fee
9.11.1 Asset Management Fee
9.12 Withholding of Fee Payments
9.13 Removal of the Member-Manager
9.14 Selection of Management Agent
9.15 Removal of the Management Agent
9.16 Replacement of the Management Agent
9.17 Subordinated Loans to the Company
9.18 Reserve Fund for Replacements
ARTICLE X TRANSFERS OF, AND RESTRICTIONS ON TRANSFERS OF INTERESTS OF
MEMBERS
10.01 Purchase for Investment
10.02 Restrictions on Transfer of Member's Interests
10.03 Admission of Substitute or Additional Members
10.04 Rights of Assignee of Company Interest
ARTICLE XI RIGHTS AND OBLIGATIONS OF MEMBERS
11.01 Management of the Company
11.02 Limitation on Liability of Members
11.03 Other Activities
11.04 Ownership by Member of Corporate Member-Manager
or Affiliate
ARTICLE XII ALLOCATION OF TAXABLE INCOME, TAX LOSSES, TAX CREDITS AND CASH
DISTRIBUTIONS
12.01 Allocation of Taxable Income, Tax Losses and Tax
Credits
12.02 Allocation of Taxable Income and Tax Losses
from Capital Transactions
12.03 Distribution of Cash Flow
12.04 Distributions of Distributable Proceeds from Capital
Transactions and Distributable Proceeds from Refinancings
12.05 Allocations Among Members
12.06 Qualified Income Offset
12.07 Minimum Gain Allocations
12.08 Regulatory Allocations
12.09 Members' Company Non-recourse Liabilities
12.10 Tax Allocations: Code Section 704(c)
12.11 Tax matters partner
12.12 Capital Accounts
12.13 Authority of Member-Manager to Vary Allocations to
Preserve and Protect Member's Intent
ARTICLE XIII SALE,
DISSOLUTION AND
LIQUIDATION
13.01 Dissolution of the Company
13.02 Winding Up and Distribution
13.03 [Intentionally Deleted]
ARTICLE XIV BOOKS AND RECORDS, ACCOUNTING TAX ELECTIONS, ETC.
14.01 Books and Records
14.02 Bank Accounts
14.03 Accountants
14.04 Reports to Members
14.05 Section 754 Elections
14.06 Fiscal Year and Accounting Method
ARTICLE XV AMENDMENTS
15.01 Proposal and Adoption of Amendments
ARTICLE XVI CONSENTS, VOTING AND MEETINGS
16.01 Method of Giving Consent
16.02 Submissions to Members
16.03 Meetings; Submission of Matter for Voting
ARTICLE XVII GENERAL
PROVISIONS
17.01 Burden and Benefit
17.02 Applicable Law
17.03 Counterparts
17.04 Separability of Provisions
17.05 Entire Agreement
17.06 Liability of the Investment Member
17.07 Environmental Protection
17.08 Notices to the Investment Member
17.09 Notices to the Member-Manager
17.10 Resolution of Inconsistencies
17.11 Additional Instruments
17.12 Withdrawal of Initial Member
HURRICANE HILLS, L.C.
AMENDED AND RESTATED OPERATING AGREEMENT
This Amended and Restated Operating Agreement is made and
entered into as of the ____ day of September, 1996, by and among the
undersigned parties.
WHEREAS, Articles of Organization for Hurricane Hills, L.C. (the
"Company") were filed with the Utah Department of Commerce, Division
of Corporation and Commercial Code on April 26, 1996 as file number LC
013314 (the "Articles"); and
WHEREAS, as of April 26, 1996, Xxxxx X. Xxxxx, as the Managing
Member (the "Member-Manager") and Xxxxx Construction Company (the
"Initial Member"), executed an Operating Agreement for Hurricane
Hills, L.C., a Utah limited liability company (the "Agreement") for
the formation of the Company pursuant to the Utah Limited Liability
Act (the "Act").
WHEREAS, the Company has been formed to acquire, develop,
construct, own, maintain and operate a 50-unit multifamily apartment
complex intended for rental to individuals and families of low and
moderate income, known as Hurricane Hills, and to be located in
Hurricane, Utah (the "Apartment Complex"); and
WHEREAS, the Company has acquired title to the Apartment Complex
subject to mortgages and other liens securing construction and
permanent mortgage loans; and
WHEREAS, the parties hereto now desire to enter into this
Amended and Restated Operating Agreement to (i) continue the Company;
(ii) admit Boston Capital Tax Credit Fund IV L.P., a Delaware limited
partnership, to the Company as a Member, and BCTC 94, Inc., a
Massachusetts corporation, to the Company as the a Special Member;
(iii) withdraw the Initial Member from the Company; (iv) reassign
Interests in the Company; and (v) set forth all of the provisions
governing the Company.
NOW, THEREFORE, in consideration of the foregoing, of mutual
promises of the parties hereto and of other good and valuable
consideration, the receipt and sufficiency of which hereby are
acknowledged, the parties hereby agree to continue the Company
pursuant to the Act, as set forth in this Amended and Restated
Operating Agreement, which reads in its entirety as follows:
ARTICLE I
CONTINUATION OF PARTNERSHIP
1.01. Continuation. The undersigned hereby continue the Company
as a limited liability company under the Act.
1.02. Name. The name of the Company is HURRICANE HILLS, L.C.
1.03. Principal Executive Offices; Agent for Service of
Process. The principal executive and record office of the Company and
the resident agent for service of process shall be Xxxxx X. Xxxxx,
0000 Xxxxxxxx Xxxxxx, Xx. Xxxxxx, Xxxx 00000. The Company may change
the location of its principal executive office to such other place or
places as may hereafter be determined by the Member-Manager. The
Member-Manager shall promptly notify all other Members of any change
in the principal executive office. The Company may maintain such
other offices at such other place or places as the Member-Manager may
from time to time deem advisable.
1.04. Term. The term of the Company commenced as of April 26,
1996 and shall continue for a period not to exceed ninety-nine (99)
years, but may be sooner dissolved in accordance with the provisions
of this Agreement.
1.05. Recording. Upon the execution of this Amended and
Restated Operating Agreement by the parties hereto, the Member-Manager
shall take all necessary action required by law to perfect and
maintain the Company as a limited liability company under the laws of
the State and to effectuate the admission of the Investment Member and
BCTC-94, Inc. as Members and the withdrawal of the Initial Member
hereunder, and shall register the Company under any assumed or
fictitious name statute or similar law in force and effect in the
State.
ARTICLE II
DEFINED TERMS
In addition to the abbreviations of the parties set forth in the
preamble to this Agreement, the following defined terms used in this
Agreement shall have the meanings specified below:
"40-60 Set-Aside Test" means the Minimum Set-Aside Test whereby
at least 40% of the units in the Apartment Complex must be occupied by
individuals, with incomes of 60% or less of area median income, as
adjusted for family size.
"Accountants" means such firm of independent certified public
accountants as may be engaged by the Member-Manager, with the Consent
of BCTC-94, Inc., to prepare the Company income tax returns and to be
responsible for the Company's audit and tax matters reporting
obligations under Section 13.04 hereof.
"Act" or "UCA" means the Utah Limited Liability Company Act
(UCA, Title 48, Chapter 2b), as amended from time to time during the
term of the Company.
"Actual Credit" means as of any point in time, the total amount
of the Tax Credits actually allocated by the Company to the Investment
Member, representing ninety-nine percent (99%) of the Tax Credits
actually received by the Company, as shown on the applicable tax
return of the Company.
"Admission Date" means the date upon which the Investment Member
is admitted to the Company.
"Affiliate", with respect to a Person, means (1) a Person that,
directly or indirectly, through one or more intermediaries, controls,
is controlled by or is under common control with the Person, (2) a
Person who owns or controls at least ten percent of the outstanding
voting interests of the Person, (3) a Person who is an officer,
director, manager or general partner of the Person, or (4) a Person
who is an officer, director, manager, general partner, trustee, member
or owns at least ten percent of the outstanding voting interests of a
Person described in clauses (1) through (3) of this sentence.
"Affiliated Company" means any limited liability company, other
than the Company, in which the Member-Manager or an Affiliate of a
Member is a managing member or member and the Investment Member or an
Affiliate of the Investment Member is a member, or any limited
partnership in which the Member-Manager or an Affiliate of the Member-
Manager is a general partner and any Member or an Affiliate of any
Member is a limited partner.
"Agency" means the State of Utah Housing Finance Agency in its
capacity as the designated agency of the State of Utah to allocate
Low-Income Housing Tax Credits, acting through any authorized
representative.
"Agreement" means this Amended and Restated Operating Agreement,
as amended from time to time.
"Apartment Complex" means the land owned by the Company located
at 0000 Xxxx 00 Xxxxx, Xxxxxxxxx, Xxxx and the 50-unit multifamily
rental housing development and other improvements being constructed
thereon, and to be owned and operated therein by the Company, and
known as Hurricane Hills.
"Applicable Percentage" has the meaning given to it in Section
42(b) of the Code.
"Articles" means the Articles of Organization for Hurricane
Hills, L.C. filed with the Utah Department of Commerce Division of
Corporation and Commercial Code on April 26, 1996 as file number LC
013314, or any certificate of formation of limited liability company
or any other instrument or document which is required under the law of
the State to be signed and sworn to by the Members of the Company and
filed in the appropriate public offices within the State to perfect or
maintain the Company as a limited liability company under the laws of
the State, to effect the admission, withdrawal or substitution of any
Member of the Company, or to protect the limited liability of the Tax
Members as members under the laws of the State.
"Asset Management Fee" means the fee payable by the Company to
Boston Capital, or an Affiliate thereof, pursuant to Section 8.11.1.
"Bankruptcy" or "Bankrupt" as to any Person means the filing of
a petition for relief as to any such Person as debtor or bankrupt
under the Bankruptcy Act of 1898 or the Bankruptcy Code of 1978 or
like provision of law including all federal bankruptcy law and Utah
insolvency law (except if such petition is contested by such Person
and has been dismissed within 90 days); insolvency of such Person as
finally determined by a court proceeding; filing by such Person of a
petition or application to accomplish the same or for the appointment
of a receiver or a trustee for such Person or a substantial part of
his assets; commencement of any proceedings relating to such Person
under any other reorganization, arrangement, insolvency, adjustment of
debt or liquidation law of any jurisdiction, whether now in existence
or hereinafter in effect, either by such Person or by another,
provided that if such proceeding is commenced by another, such Person
indicates his approval of such proceeding, consents thereto or
acquiesces therein, or such proceeding is contested by such Person and
has not been finally dismissed within 90 days.
"BCTC 94, Inc." means BCTC 94, Inc., a Delaware corporation,
which is a Special Member of the Company.
"Book Depreciation" has the meaning set forth in Section 12.12C.
"Book Profits and Losses" means the Taxable Income or Tax Losses
of the Company, adjusted for purposes of determining and maintaining
the Members' Capital Accounts as provided in Section 12.12.
"Boston Capital" means Boston Capital Partners, Inc., a
Massachusetts corporation.
"Capital Account" means the capital account of a Member as
described in Section 12.12.
"Capital Contribution" with respect to any Member, means the
total amount of money and the initial Gross Asset Value of any
property (other than money) contributed or agreed to be contributed,
as the context requires, to the Company by each Member pursuant to the
terms of this Agreement. Any reference to the Capital Contribution of
a Member shall include the Capital Contribution made by a predecessor
holder of the Interest of such Member.
"Capital Transaction" means the sale, exchange or disposition
(other than leasing in the ordinary course of business) of any Company
property that is not in the ordinary course of business, or casualty
damage to or condemnation of any Company property, or any substantial
interest therein or portion thereof.
"Carryover Certification" means the date upon which the
Investment Member shall have received, in a form and in substance
satisfactory to the Investment Member, the certification of the
Accountants that as of a date no later than December 31, 1996, the
Company had incurred capitalizable costs with respect to the Apartment
Complex of at least ten percent (10%) of the Company's reasonably
expected basis in the Apartment Complex as of December 31, 1996, so
that each building in the Apartment Complex constitutes a "qualified
building" for the purposes of Section 42(h)(1)(E)(ii) of the Code.
"Cash Flow" means, with respect to any year or other applicable
period, (a) all Revenues received by the Company during such period,
plus (b) any amounts which the Member-Manager, acting jointly with
BCTC 94, Inc., and subject to the approval of the Lender, if required,
releases from the Reserve Fund for Replacements as being no longer
necessary to hold as part of the Reserve Fund for Replacements, less
(i) all operating expenses and obligations of the Company paid or
payable (on a thirty-day current basis) during the applicable period,
including without limitation escrow deposits for taxes and insurance,
maintenance and repairs, (ii) all sums due or currently required to be
paid under the terms of the Mortgage Loan(s) or any other third-party
indebtedness of the Company, and (iii) all amounts from Revenues, if
any, added or required to be added to the Reserve Fund for
Replacements during such period. In no event will deductions in
determining Cash Flow pursuant to clauses (i) and (ii) above include
payments made on account of: the Asset Management Fee, amounts due on
any Subordinated Loans, the Incentive Company Management Fee, and/or
the Deferred Development Fee.
Cash Flow shall be determined separately for each fiscal year
and shall not be cumulative.
"Code" means the Internal Revenue Code of 1986, as amended from
time to time, or any corresponding provision or provisions of
succeeding law.
"Company" means Hurricane Hills, L.C.
"Competing Activity" means an activity that competes with or is
benefited by the Company's present or prospective activities. A
passive investment in an Entity engaged in a Competing Activity is
itself a Competing Activity only if the investor and the Entity are
Affiliates.
"Compliance Period" has the meaning ascribed to such term in
Section 42 of the Code.
"Consent" means the prior written consent or approval of BCTC
94, Inc. and/or the Investment Member and/or any other Member, as the
context may require, to do the act or thing for which the consent is
solicited.
"Construction Contract" means that certain construction contract
dated June 29, 1996 in the amount of $3,549,200.00 (including all
exhibits and attachments thereto) entered into between the Company and
the Contractor pursuant to which the Apartment Complex is being
constructed.
"Construction Lender" means Bank One, Arizona, NA, in its
capacity as maker of the Construction Loan.
"Construction Loan" means the initial Mortgage Loan to the
Company pursuant to the Construction Loan Agreement, in the principal
amount of $1,840,000.
"Construction Loan Agreement" means the Loan Agreement between
the Company and the Construction Lender dated September __, 1996
pursuant to which the proceeds of the Mortgage Loan will be or was
advanced.
"Contractor" means Xxxxx Construction Company in its capacity as
the general construction contractor for the Apartment Complex.
Contractor is an Affiliate of the Member-Manager.
"Cost Certification" means the date upon which each Tax Member
shall have received the written certification of the Accountants, 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 (in
each case, as defined in Section 42(d) of the Code), pertaining to
each building in the Apartment Complex.
"Counsel" or "Counsel for the Company" shall mean Jones, Waldo,
Xxxxxxxx & XxXxxxxxx or such other attorney or law firm upon which the
Investment Member and the Member-Manager shall agree; provided,
however, that if any section of this Agreement either (i) designates
particular counsel for the purpose described therein, or (ii) provides
that counsel for the purpose described therein shall be chosen by
another method or by another Person, then such designation or
provision shall prevail over this general definition.
"Credit Shortfall" means the amount by which the Actual Credit
is less than the Projected Credit (or Revised Projected Credit) for
any year or portion thereof.
"Debt Service" means scheduled principal and interest payments
on indebtedness under the Mortgage Loan(s) determined on an annual
basis for each year of Company Operations, but excluding (i) principal
and interest due on acceleration of the Mortgage Loan upon occurrence
of an event of default and (ii) balloon payments of principal and
interest due upon expiration of the term of the Mortgage Loan.
"Debt Service Coverage Ratio" means the ratio of (i) rental and
miscellaneous income of the Company from the operation of the
Apartment Complex in the ordinary course of business and all other
income of the Company including unrestricted earnings on reserve or
escrow funds other than proceeds of any loans to the Company and
investment earnings on funds on deposit in the Reserve Fund for
Replacements minus all accrued operational costs of the Apartment
Complex; including, but not limited to an operating expense calculated
at a minimum of $1,670 per unit, taxes, assessments, Reserve Fund for
Replacements deposits, maintenance and repairs, fees due and payable
(other than the Incentive Company Management Fee, the Asset Management
Fee and the Deferred Development Fee), and a ratable portion of the
annual amount (as reasonably estimated by the Member-Manager) of those
seasonal or periodic expenses (such as utilities, maintenance expenses
and real estate taxes) which might reasonably be expected to be
incurred on an unequal basis during a full annual period of
operations, but excluding amounts due under Subordinated Loans to (ii)
Debt Service.
"Deferred Development Fee" means any portion of the Development
Fee, if any, not actually paid to and received by the Developer from
the Installments, the payment of which is deferred and payable only in
accordance with Sections 6.01(a) and 12.03(A) hereof.
"Developer" means Xxxxx Construction Company; Developer is an
Affiliate of the Member-Manager.
"Development Fee" is also known as the Contractor's Profit and
Overhead and means those fees payable by the Company to the Developer
pursuant to Section 9.10 of this Agreement.
"Development Sources" means the aggregate of: (a) the proceeds
of the First Mortgage Loan; (b) the Second Mortgage Loan; (c) the
Capital Contributions of the Member-Manager, as set forth in Section
5.01(a) of this Agreement; (d) not more than $2,242,395.00 of the
Capital Contributions of the Investment Member to the Company; and (e)
any rental income of the Company for the period prior to Final
Closing.
"Distributable Proceeds from Capital Transactions" means the
excess of all cash receipts and other consideration arising from the
sale or other disposition of all or any portion of the Apartment
Complex or any proceeds realized from condemnation, casualty, or title
defect, but excluding proceeds, if any, from rental interruption
insurance or a temporary condemnation in the nature of a lease, over
the sum of the following, to the extent paid out of such cash receipts
or other consideration: (i) the amount of cash disbursed or to be
disbursed in connection with or as an expense of such sale or other
disposition, (ii) the amount necessary for the payment of all debts
and obligations of the Company arising from or otherwise related to
such sale or other disposition or to which the Apartment Complex is
subject and which are otherwise then due (other than debts and
obligations owed to the Members and their Affiliates, which shall be
satisfied in the order set forth in Section 11.04), and (iii) any
amounts set aside by the Member-Manager for reserves which the Member-
Manager deem reasonably necessary for contingent, unmatured or
unforeseen liabilities of the Company.
"Distributable Proceeds from Refinancings" means the excess of
the gross proceeds of any borrowing by the Company over the sum of the
following, to the extent paid out of such gross proceeds: (i) any
amounts disbursed to repay then existing loans of the Company and to
pay and provide for all debts and obligations of the Company then to
be paid or which are otherwise then due (other than debts and
obligations owed to the Members and their Affiliates, which shall be
satisfied in the order set forth in Section 11.04), (ii) all
reasonable expenses of such borrowings, including, without limitation,
all commitment fees, brokers' commissions, and attorneys' fees, (iii)
all amounts paid to improve the Apartment Complex or for any other
purpose in order to satisfy conditions to or established in connection
with such borrowings, and (iv) any amounts used to meet the operating
expenses of the Apartment Complex or set aside by the Member-Manager
for reserves which the Member-Manager deems reasonably necessary for
contingent, unmatured, or unforeseen liabilities of the Company.
"Eligible Basis" has the meaning given to it in Section 42(d) of
the Code.
"Entity" means an association, relationship or artificial person
through or by means of which an enterprise or activity may be lawfully
conducted, including, without limitation, a partnership, trust,
limited liability company, corporation, joint venture, cooperative or
association.
"Excess Development Costs" means all funds in excess of the
Development Sources which are required to (i) complete construction of
the Apartment Complex, including paying any final cost overruns and
the cost of any change orders which have been approved by the Lender
and which are not funded from Development Sources, (ii) achieve
Substantial Completion, (iii) achieve Initial Closing and Final
Closing and satisfy any escrow deposit requirements which are
conditions to the Final Closing, including without limitation, any
amounts necessary for local taxes, utilities, insurance premiums and
other amounts which are required, (iv) pay any applicable loan
assessment fees, discounts or other costs and expenses incurred by the
Company as a result of the occurrence of the Initial Closing or the
Final Closing, (v) make the required initial pro rata deposit for
1996 into the Reserve Fund for Replacements, and (vi) pay any
Operating Deficits incurred by the Company prior to the occurrence of
Rental Achievement.
"Extended Use Commitment" means the agreement between the
Company and the Agency, which is intended to meet the definition of a
"long term commitment to low-income housing" as required by Section
42(h)(6) of the Code and the requirements of the Agency's Low-Income
Housing Tax Credit Program.
"Final Closing" means the occurrence of both of the following:
(i) Substantial Completion, and (ii) the conversion to the Mortgage
Loan (including Second Mortgage Loan) from construction loan to
permanent loan status pursuant to the terms of the Loan Documents and
upon satisfaction or waiver of all conditions to such conversion set
forth therein.
"Gross Asset Value" means, with respect to any asset, the
asset's adjusted basis for federal income tax purposes, except as
adjusted pursuant to Section 11.12B.
"Guarantor" means Xxxxx X. Xxxxx, individually and not as
Member-Manager, pursuant to an Unlimited Guaranty from Xxxxx X. Xxxxx
dated as of the date herewith, guaranteeing the obligations of the
Member-Manager to the Company ("Guaranty").
"Incentive Company Management Fee" means the fee payable by the
Company to the Member-Manager pursuant to Section 8.11 of this
Agreement.
"Initial Closing" means September ___, 1996, the date the first
disbursement of proceeds of the Mortgage Loan was authorized to be
made to the Company under the Construction Loan Agreement.
"Initial 94% Occupancy Date" means the first date, after the
completion of construction, upon which 94% of the apartment units in
the Apartment Complex have been leased to, and forty-seven (47) of the
units are currently occupied by, qualified tenants under executed
Agency approved leases, if any such approval is applicable.
"Installment" means an Installment of the Investment Member's
Capital Contribution paid or payable to the Company pursuant to
Section 5.01.
"Interest" or "Company Interest" means the ownership interest of
a Member in the Company at any particular time, including the right of
such Member to any and all benefits to which such Member may be
entitled as provided in this Agreement and in the Act, together with
the obligations of such Member to comply with all the terms and
provisions of this Agreement and of said Act. Such Interest of each
Member shall, except as otherwise specifically provided herein, be
that percentage of the aggregate of such benefit or obligation
specified by Section 6.01 as such Member's Percentage Interest.
"Invested Amount" means (i) as to the Investment Member, an
amount equal to the paid-in Capital Contribution of the Investment
Member divided by .73 and (ii) as to any other Member, an amount equal
to its paid-in Capital Contribution.
"Investment Member" means Boston Capital Corporate Tax Credit
Fund IV L.P., a Delaware limited partnership, which is a Member of the
Company.
"Land" means the tracts of land located on 0000 Xxxx 00 Xxxxx,
Xxxxxxxxx, Xxxx, upon which the Apartment Complex will be located.
"Lender" shall mean the Construction Lender and/or the Permanent
Lender, and/or the Second Lender, as applicable, or its/their
successors and assigns in such capacity, including any substitute
Lenders permitted pursuant to Section 9.02(b)(v) hereof, each acting
through any authorized representative.
"Liquidator" means the Member-Manager or, if there are none at
the time in question, such other Person who may be appointed in
accordance with applicable law and who shall be responsible for taking
all action necessary or appropriate to wind up the affairs of, and
distribute the assets of, the Company upon its dissolution.
"Loan Documents" means, collectively, the Construction Loan
Agreement, Variable Rate Promissory Note in the amount of $840,000,
Fixed Rate Promissory Note in the amount of $1,000,000, dated as of
September __, 1996 (collectively, the "Construction Notes") the
Multifamily Deed of Trust, Assignment of Rents and Financing Statement
dated September ___, 1996 ("Construction Deed of Trust"), Assignment
of Construction Contract, Unconditional Guaranty of Payment Agreement
dated September __, 1996 and any other documents related to the
Mortgage Loan from the Company to or for the benefit of the
Construction Lender, as the same may be assigned or transferred to the
Permanent Lender or any other successor or assignee; Fixed Rate
Promissory Note in the amount of $1,000,000, including the Addendum to
Multifamily Note and Special Addendum to Multifamily Note dated as of
___________, 1996 (the "Permanent Note") the Multifamily Deed of
Trust, Assignment of Rents and Financing Statement including the Rider
to Multifamily Instrument dated __________, 1996 ("Permanent Deed of
Trust"), and any other documents related to the Mortgage Loan from the
Company, to or for the benefit of the Permanent Lender, as the same
may be assigned or transferred; the Trust Deed Note in the amount of
$312,500 (the "Trust Deed Note"), the Trust Deed with Assignment of
Rents (the "Trust Deed") dated September ___, 1996 from the
Partnership to or for the benefit of the Second Lender as the name may
be assigned or transferred; the zero coupon bond ("Bond") purchased by
the Developer and deposited with the Treasurer of the State of Utah,
and the Subordination Agreement by and among the Second Lender, the
Construction Lender and the Permanent Lender, or any successors and/or
assignees.
"Low-Income Housing Tax Credit" means the low-income housing tax
credit allowed for low-income housing projects pursuant to Section 42
of the Code.
"Management Agent" means Xxxxx Xxxxx Management, the management
and rental agent for the Apartment Complex and/or its successors
and/or assigns, as described in Section 9.05 hereof. The Management
Agent is an Affiliate of the Member-Manager.
"Management Agreement" means the agreement between the Company
and the Management Agent providing for the management of the Apartment
Complex.
"Member-Manager" means Xxxxx X. Xxxxx of 0000 Xxxxxxxx Xxxxxx,
Xx. Xxxxxx, Xxxx 00000 and/or any other Person or Entity admitted as a
Member who is vested with authority to manage the Company pursuant to
this Agreement, including particularly but without limitation Article
VIII, and their respective successors pursuant to this Agreement,
including particularly the provisions of Section 7.03 and 9.13.
"Member-Manager's Special Capital Contribution" has the meaning
ascribed to such term in Section 5.1 of this Agreement.
"Member(s)" means any one of, or collectively, the Investment
Member, BCTC 94, Inc., and the Member-Manager, and any such other
Person which may join the Company in such Person's capacity as a
"member" as such term is defined pursuant to the Act.
"Member Loan Nonrecourse Deductions" means any deductions of the
Company that are attributable to a nonrecourse liability for which a
Member bears the risk of loss within the meaning of Treasury
Regulation Section 1.704-2(i).
"Member Nonrecourse Debt Minimum Gain" has the meaning
attributed to "partner loan nonrecourse debt minimum gain" in Treasury
Regulation 1.704-2(i)(3).
"Minimum Gain" means the amount determined by computing, with
respect to each non-recourse liability of the Company, the amount of
Taxable Income, if any, that would be realized by the Company if it
disposed of (in a taxable transaction) the property subject to such
liability in full satisfaction thereof, and by then aggregating the
amounts so computed, in accordance with Treasury Regulation 1.704-
2(d). For purposes of determining the amount of such Taxable Income
with respect to a liability, the adjusted basis, for federal income
tax purposes, of the asset subject to the liability shall be allocated
among all the liabilities that the asset secures in the manner set
forth in Treasury Regulation 1.704-2(d)(2) (or successor provisions).
If Company property subject to one or more non-recourse liabilities of
the Company is, under Treasury Regulation 1.704-1(b)(2)(iv)(d),(f), or
(r), properly reflected on the books of the Company at a book value
that differs from the adjusted tax basis of such property, then the
determination of Minimum Gain shall be made with reference to such
book value.
"Minimum Set-Aside Test" means the set-aside test selected by
the Company pursuant to Section 42(g) of the Code with respect to the
percentage of units in its Apartment Complex to be occupied by tenants
with incomes equal to no more than a certain percentage of area median
income. The Company has selected or will select the 40-60 Set-Aside
Test as the Minimum Set-Aside Test.
"Mortgage(s)" means, collectively, the Construction Deed of
Trust, the Permanent Deed of Trust and the Trust Deed given by the
Company to the respective Lender securing the Mortgage Loan(s).
"Mortgage Loan(s)" means, the Construction Loan in the total
principal amount of $1,840,000 made to the Company by the Construction
Lender, as evidenced by the Loan Documents including without
limitation the Construction Notes given by the Company to the Lender,
secured by the Mortgage and other related security documents and
financing statements, and the subsequent Permanent Loans in the
original principal amount of $1,000,000 secured by a first mortgage
(the "First Mortgage Loan") and a Second Mortgage Loan in the original
principal amount of $312,500 extended to take-out the Construction
Loan, and all related security documents and financing statements.
"Net Capital Contribution" means an amount equal to a Member's
paid-in Capital Contribution, less the aggregate amount of cash
distributions, if any, made to such Member hereunder, excluding
repayment of loans or fees for services, as provided in the definition
of Cash Flow.
"Nonrecourse Deductions" has the meaning set forth in Section
1.704-2(c) of the Treasury Regulations. The amount of Nonrecourse
Deductions for a Fiscal Year of the Company equals the net increase,
if any, in the amount of Minimum Gain during that Fiscal Year,
determined according to the provisions of Treasury Regulation Section
1.704-2(c).
"Notice" means a writing containing the information required by
this Agreement to be communicated to a Member and sent by registered
or certified mail, postage prepaid, return receipt requested, to such
Member at the last known address of such Member, the date of registry
thereof or the date of the certification receipt therefor being deemed
the date of such Notice; provided, however, that any written
communication containing such information sent to such Member actually
received by such Member shall constitute Notice for all purposes of
this Agreement.
"Operating Agreement" means this Amended and Restated Operating
Agreement, as amended from time to time.
"Operating Deficit" means the amount by which (i) the income of
the Company from rental payments made by tenants of the Apartment
Complex and all other income of the Company, including unrestricted
earnings on reserve or escrow funds (other than proceeds of any loans
to the Company and investment earnings on funds on deposit in the
Reserve Fund for Replacements) for a particular period of time, is
exceeded by (ii) the sum of all the operating expenses, including all
Debt Service payments, operating and maintenance expenses, deposits
into the Reserve Fund for Replacements, any Lender's fee payments, and
all other Company obligations or expenditures, excluding payments to
the Member-Manager, payments for construction of the Apartment Complex
and fees and other expenses and obligations of the Company to be paid
from the Capital Contributions of the Investment Member to the Company
pursuant to this Agreement, during the same period of time.
"Operating Deficit Loan" means a loan made pursuant to Section
9.09(b) herein.
"Percentage Interest" means the percentage Interest of each
Member as set forth in Section 6.01 herein.
"Permanent Lender" means ARCS Affordable Housing in its capacity
as maker of the Permanent Mortgage Loan, or its successors and assigns
in such capacity, including any substitute Lenders permitted pursuant
to Section 9.02(b)(v) hereof, each acting through any authorized
representative.
"Permanent Loan(s)" means the Mortgage Loan upon take-out by the
Permanent Lender and by the Second Lender in the maximum aggregate
loan amount of $1,000,000.
"Person" means any individual, partnership, corporation, trust
or other Entity.
"Plans and Specifications" means the plans and specifications
for construction of the Apartment Complex, referred to in the
Construction Contract and any changes thereto made in accordance with
the terms of this Agreement.
"Pledge Agreement" has the meaning set forth in Section 9.10 of
this Agreement.
"Project Documents" means and includes the Loan Documents, the
Extended Use Commitment, the Management Agreement, the Pledge
Agreement and all other instruments delivered to (or required by) the
Lender or the Agency and all other documents relating to the Apartment
Complex and by which the Company is bound, as amended or supplemented
from time to time.
"Projected Credit" means Low-Income Housing Tax Credits in the
amount of $276,317.00 for 1997, $367,606.00 per year for each of the
years 1998 through 2006, and $91,289.00 for 2007, which the Member-
Manager has projected to be the total amount of the Tax Credits which
will be allocated to the Investment Member by the Company,
constituting ninety-nine percent (99%) of the Tax Credits which are
projected to be available to the Company; provided, however, that if
the Actual Credit for 1997 is greater than (or less than) $276,317.00,
the Projected Credit for the year 2007 shall be reduced (increased) by
an amount equal to the amount by which the Actual Credit for 1997
exceeds (or is less than) $276,317.00.
"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 cannot exceed 30% of the qualifying
income levels of those units under Section 42.
"Rental Achievement" means the date upon which the following
conditions shall have occurred for any three consecutive full calendar
months, with each such calendar month taken individually, after
Substantial Completion:
(a) The Company shall have maintained a Debt Service Coverage
Ratio of not less than 1.10; and
(b) The Apartment Complex shall have achieved a 94% occupancy
rate.
"Reserve Fund for Replacements" means the reserve fund for
replacements with respect to the Apartment Complex as established
pursuant to the provisions of Section 9.18(a) of this Agreement.
"Revenues" means all cash receipts of the Company during any
period except for Capital Contributions, proceeds from the
liquidation, sale or refinancing of Company property or of a Capital
Transaction, or the proceeds of any loan to the Company.
"Revised Projected Credit" has the meaning set forth in Section
6.01(d)(i) herein.
"Second Lender" means Xxxxx Xxxxxx Housing Trust Fund in its
capacity as second mortgagee and maker of the Second Mortgage Loan, or
its successors and assigns in such capacity, including any substitute
Lenders permitted pursuant to Section 9.02(b)(v) hereof, each action,
through any authorized representative.
"Second Mortgage Loan" means a second Mortgage Loan to the
Company from the Second Lender in the original principal amount of
$312,500, which Second Mortgage Loan shall be secured by a zero-coupon
bond as set forth pursuant to Section 6.06 hereof and as more
specifically set forth under those Loan Documents applicable to the
Second Mortgage Loan.
"Share of Minimum Gain" means for each Member, the excess of
(1) the sum of (a) the aggregate Non-Recourse Deductions allocated to
such Member (and such Member's predecessors in interest) up to that
time and (b) the aggregate distributions to such Member (and such
Member's predecessors in interest) up to that time of proceeds of a
non-recourse liability that are allocable to an increase in Company
Minimum Gain over (2) the sum of (a) such Member's (and such Member's
predecessors' in interest) aggregate share of the net decrease in
Company Minimum Gain up to that time and (b) such Member's (and such
Member's predecessors' in interest) aggregate share of the decreases
up to that time in Company Minimum Gain resulting from re-valuations
of Company Property subject to one or more non-recourse liabilities of
the Company, as more fully set forth in Treasury Regulation 1.704-
2(g).
"Special Member" means BCTC 94, Inc., which is a Member of the
Company.
"State" means the State of Utah.
"State Designation" means, with respect to the Apartment
Complex, the final allocation by the Agency of Low-Income Housing Tax
Credits, as evidenced by the receipt by the Company of IRS Form 8609
executed by the Agency as to all buildings in the Apartment Complex.
In the event that State Designation is anticipated to occur more than
60 days after the Agency's receipt of Cost Certification, then, for
purposes of Section 6.01(c) hereof, State Designation shall mean
evidence of the Agency's receipt of Cost Certification, provided that
the Company has received a valid Carryover Allocation of 1996 Tax
Credits which remains in full force and effect.
"Subordinated Loan" means any loan made by the Member-Manager to
the Company pursuant to Section 9.17.
"Substantial Completion" means the date upon which the Company
has received all necessary certificates of substantial completion or
certificates of occupancy from the applicable governmental
jurisdiction(s) or authority(ies) and by the inspecting architect for
one hundred percent (100%) of the apartment units in the Apartment
Complex; provided, however, that Substantial Completion shall not be
deemed to have occurred if on such date any liens or other
encumbrances as to title to the Land and the Apartment Complex exist,
other than those securing the Mortgage Loan and/or those Consented to
by the Investment Member.
"Substitute Member" means any Person admitted to the Company as
a Member pursuant to Section 10.03.
"Syndication Expenses" means all expenditures classified as
syndication expenses pursuant to Treasury Regulation Section 1.709-
2(B). Syndication Expenses shall be taken into account in determining
and maintaining Capital Accounts pursuant to Section 11.12 of this
Agreement at the time they would be taken into account under the
Company's method of accounting if they were deductible expenses.
"Tax Credit" means the Low-Income Housing Tax Credit.
"Tax Credit Set Aside" means the date upon which the Company
receives a reservation, effective for 1996, and subject to a carryover
allocation of Tax Credits meeting the requirements of Section
42(h)(1)(E) of the Code and Treasury Regulations for an allocation of
Tax Credit for the building(s) constituting the Apartment Complex in
an annual dollar amount of not less than $370,117, which reservation
shall not have expired or been revoked prior to the date on which the
First Installment is paid. The Tax Credit Set Aside for the Company
was issued by the Agency through a Conditional Reservation Letter to
the Company dated May 1, 1996.
"Tax Members" means the Investment Member and BCTC 94, Inc.
"Taxable Income" and "Tax Losses" means the Company's taxable
income or tax losses, respectively, for each fiscal year (or part
thereof) as determined for federal income tax purposes, including,
where the context requires, all items of income, gain, loss, deduction
and credit which enter into the computation thereof.
"UCA" shall have the same meaning as "Act" as set forth herein.
ARTICLE III
PURPOSE AND BUSINESS OF THE COMPANY
3.01. Purpose of the Company. The Company has been organized
to acquire the Land and to develop, finance, construct, own, maintain,
operate and sell or otherwise dispose of the Apartment Complex, in
order to obtain long-term appreciation, cash income, Tax Credits and
tax losses and to manage the Apartment Complex in a manner that
provides and preserves safe, decent, affordable housing and needed
supportive services.
3.02. Authority of the Company. In order to carry out its
purpose, the Company is empowered and authorized to do any and all
acts and things necessary, appropriate, proper, advisable, incidental
to or convenient for the furtherance and accomplishment of its
purpose, and for the protection and benefit of the Company, including
but not limited to the following:
(a) acquire ownership of the Land;
(b) construct, operate, maintain, improve, buy, own, sell,
convey, assign, mortgage, rent or lease any real estate and any
personal property necessary to the operation of the Apartment Complex;
(c) provide housing, subject to the Minimum Set-Aside Test and
the Rent Restriction Test and consistent with the requirements of the
Project Documents so long as any Project Documents remain(s) in force;
(d) enter into any kind of activity, and perform and carry out
contracts of any kind necessary to, or in connection with, or
incidental to, the accomplishment of the purposes of the Company;
(e) borrow money and issue evidences of indebtedness in
furtherance of the Company business and secure any such indebtedness
by mortgage, pledge, or other lien;
(f) maintain and operate the Apartment Complex, including
hiring the Management Agent (which Management Agent may be any of the
Members or an Affiliate thereof) and entering into any agreement for
the management of the Apartment Complex during its rent-up and after
its rent-up period;
(g) subject to the approval of the Agency and/or the Lender,
if required, and to other limitations expressly set forth elsewhere in
this Agreement, negotiate for and conclude agreements for the sale,
exchange, lease or other disposition of all or substantially all of
the property of the Company, or for the refinancing of any mortgage
loan on the property of the Company;
(h) enter into the Loan Documents with the Lender and grant
the Mortgages, enter into the Mortgage Loan and all other documents
required by the Lender with respect to the Mortgage Loan, and the
Extended Use Commitment with the Agency, providing for regulations
with respect to rents, profits, dividends and the disposition of the
Apartment Complex and the long-term use of the Apartment Complex for
low-income housing;
(i) rent dwelling units in the Apartment Complex from time to
time, in accordance with the provisions of the Code applicable to Low-
Income Housing Tax Credits and in accordance with applicable federal,
state and local regulations, collecting the rents therefrom, paying
the expenses incurred in connection with the Apartment Complex, and
distributing the net proceeds to the Members, subject to any
requirements which may be imposed by the Extended Use Commitment and
the Loan Documents; and
(j) do any and all other acts and things necessary or proper
in furtherance of the Company business.
ARTICLE IV
(INTENTIONALLY DELETED)
ARTICLE V
REPRESENTATIONS, WARRANTIES AND COVENANTS;
DUTIES AND OBLIGATIONS
5.01. Representations, Warranties and Covenants Relating to
the Apartment Complex and the Company. As of the date hereof, the
Member-Manager hereby represents, warrants and covenants to the
Company and to the Members that:
(a) the construction and development of the Apartment Complex
has begun or shall commence within three (3) business days from the
date of the Initial Closing and shall be completed in a timely and
workmanlike manner in accordance with (i) all applicable requirements
of the Construction Contract and the Project Documents, (ii) all
applicable requirements of all appropriate governmental entities, and
(iii) the Plans and Specifications of the Apartment Complex that have
been or shall be hereafter approved by the Lender and any applicable
governmental entities, as such Plans and Specifications may be changed
from time to time with the approval of the Lender and any applicable
governmental entities, if such approval shall be required;
(b) at the time of commencement of construction, at Initial
Closing and as of the date hereof, the Land was, and is properly zoned
for the Apartment Complex, all consents, permissions and licenses
required by all applicable governmental entities have been obtained
(excepting however the building permits which cannot be issued until
certain conditions contained in an Order of Conditions dated as of
________________ from ______________ have been met, but which such
conditions the Member-Manager shall meet or shall cause to be met on a
timely basis in good faith, and excepting any certificates of
occupancy which must be obtained prior to the occupancy of the
Apartment Complex, which such certificates will be obtained by the
Member-Manager on behalf of the Company), and the Apartment Complex
conformed and conforms to all applicable federal, state and local land
use, zoning, environmental and other governmental laws and
regulations;
(c) all appropriate public utilities, including sanitary and
storm sewers, water, gas and electricity, are currently available and
will be operating properly for those units in the Apartment Complex at
the time of first occupancy of such units;
(d) at Initial Closing and as of the date hereof, good and
marketable fee simple title to the Apartment Complex was and is held
by the Company, and title insurance policies of a financially
responsible institution acceptable to the Lender and to BCTC 94, Inc.,
in the amount of the replacement cost of the Apartment Complex, which
amount shall not be less than the aggregate of the Capital
Contributions of the Member-Manager and the Investment Member and the
principal amount of the Mortgage Loan (as to the Company) in favor of
the Lender and the Company, respectively, were issued on or before
Initial Closing, and shall remain in full force and effect, subject
only to such easements, covenants, restrictions and such other
standard exceptions as are normally included in owner's or mortgagee's
title insurance policies and which are acceptable to BCTC 94, Inc. and
the Lender and shall contain a non-imputation endorsement as to the
Investment Member and BCTC 94, Inc. and such other endorsements as
deemed reasonably necessary by the Lender and BCTC 94, Inc.;
(e) the Member-Manager is not aware of any default under any
agreement, contract, lease, or other commitment, or of any claim,
demand, litigation, proceedings or governmental investigation pending
or threatened against it, the Apartment Complex or the Company, or
related to the business or assets of the Company or of the Apartment
Complex, which claim, demand, litigation, proceeding or governmental
investigation could result in any judgment, order, decree, or
settlement which would materially and adversely affect the business or
assets of the Company, the Member-Manager, or of the Apartment
Complex;
(f) except for the commitment fees paid to the Lender, neither
the Member-Manager nor any Affiliate of the Member-Manager or the
Company, has entered, or shall enter, into any agreement or contract
for the payment of any Mortgage Loan discounts, additional interest
(except for additional interest pursuant to the terms of the
Construction Loan), yield maintenance or other interest charges or
financing fees or any agreement providing for the guarantee of payment
of any such interest charges or financing fees relating to the
Mortgage Loan, except for such certain exceptions to non-recourse
liability as enforceable against Xxxxx X. Xxxxx as a "Key Principal"
of the Company pursuant to the Mortgage Loans.
(g) the execution of this Agreement, the incurrence of the
obligations set forth in this Agreement, and the consummation of the
transactions contemplated by this Agreement do not violate any
provision of law, any order, judgment or decree of any court binding
on the Company, the Member-Manager or any of them or their Affiliates,
any provision of any indenture, agreement, or other instrument to
which the Company or they or either of them is a party or by which the
Company or the Apartment Complex is affected, and is not in conflict
with, and will not result in a breach of or constitute a default under
any such indenture, agreement, or other instrument or result in
creating or imposing any lien, charge, or encumbrance of any nature
whatsoever upon the Apartment Complex;
(h) the Construction Contract has been entered into between
the Company and the Contractor; no other consideration or fee shall be
paid to the Contractor, in its capacity as the Contractor, other than
the amounts set forth in the Construction Contract or as evidenced by
change orders approved by the Lender or as otherwise disclosed in
writing to and approved by the Investment Member; and all change
orders that have been submitted by the Contractor to date have been
paid in full;
(i) at Initial Closing and as of the date hereof, a builder's
risk insurance policy was and is in full force and effect, and fire
and extended coverage insurance and earthquake insurance, each for the
full replacement value of the Apartment Complex (excluding the value
of the Land, site utilities, landscaping and foundations) which shall
include flood insurance, if the Apartment Complex is in a flood hazard
area designated by the United States Department of Housing and Urban
Development, evidence of worker's compensation insurance provided by
applicable subcontractors of the Apartment Complex in amounts at least
equal to the amounts required by law and the Loan Documents and public
liability insurance in the amount of not less than $3,000,000 (of
which up to $2,000,000 may be provided under an umbrella policy), all
in favor of the Company and naming the Investment Member as an
additional insured and loss payee, are in full force and effect and
will be maintained in full force and effect during the term of the
Company; all such policies shall be in amounts and with insurers
satisfactory to BCTC 94, Inc., and shall be paid for out of Company
assets; following Substantial Completion, the Member-Manager, on
behalf of the Company, will maintain $3,000,000 of liability insurance
covering the Land and the Apartment Complex;
The term "full replacement value" as used herein shall mean and
include the total cost of replacement of the Apartment Complex at each
respective stage of construction thereof up to completion.
(j) neither the Member-Manager nor the Company have incurred
any financial responsibility with respect to the Apartment Complex
prior to the date of execution of this Agreement, other than such
expenses incurred in the ordinary course of construction of similar
Projects with respect to such items including without limitation,
architect's fees, engineering fees and expenses, permits and such
other fees costs and expenses as have been disclosed to the Investment
Member;
(k) at the time of Initial Closing and at Final Closing, at
the time of execution of this Agreement, and at Substantial
Completion, the Company was, is and will continue to be a valid
limited liability company, duly organized under the laws of the State,
had, has and shall continue to have full power and authority to
acquire the Land and to construct, develop, operate and maintain the
Apartment Complex in accordance with the terms of this Agreement, and
had taken and shall continue to take all action under the laws of the
State and any other applicable jurisdiction that is necessary to
protect the limited liability of the Members and to enable the Company
to engage in its business;
(l) no restrictions on the sale or refinancing of the
Apartment Complex, other than the restrictions set forth in the Loan
Documents, in the Extended Use Commitment, and as set forth in this
Agreement, exist as of the date hereof, and no such restrictions
shall, at any time while the Investment Member is a Member, be placed
upon the sale or refinancing of the Apartment Complex;
(m) the Apartment Complex is being developed in a manner which
satisfies, and shall continue to satisfy, all restrictions, including
tenant income and rent restrictions, applicable to projects generating
Low-Income Housing Tax Credits under Section 42 of the Code;
(n) the Projected Credits applicable to the Apartment Complex
are $276,317 for 1997, $367,606 per year for each of the years 1998
through 2006, and $91,289 for 2007, which the Member-Manager has
projected to be the total amount of the Tax Credits of which will be
allocated to the Investment Member by the Company, constituting
ninety-nine percent (99%) of the Tax Credits which are projected to be
available to the Company; provided, however, that if the Actual Credit
for 1997 is greater than (or less than) $276,317, the Projected Credit
for the year 2007 shall be reduced (increased) by an amount equal to
the amount by which the Actual Credit for 1997 exceeds (or is less
than) $276,317;
(o) the Company shall obtain from the Agency, not later than
December 31, 1996, a duly authorized, valid and binding Carryover
Allocation of Low-Income Housing Tax Credits as to the Apartment
Complex in an amount not less than $370,117 per year.
(p) the Company shall satisfy all conditions to the Agency's
allocation of Tax Credits set forth in the Carryover Allocation dated
no later than December 31, 1996 and all exhibits thereto and all other
documents entered into with the Agency, within the time periods
specified and in each case to the extent required to be satisfied as
of the date hereof, and is in full compliance with the Agency's
requirements;
(q) to the best of its knowledge after due inquiry, at the
time of the execution of this Agreement, the Member-Manager has fully
complied with all applicable material provisions and requirements of
any and all purchase and/or lease agreements, loan agreements, Project
Documents and other agreements with respect to the acquisition,
development, financing, construction and operation of the Apartment
Complex; it shall take, and/or cause the Company to take, all actions
as shall be necessary to achieve and maintain continued compliance
with the provisions, and fulfill all applicable requirements, of such
agreements.
(r) the obligations of the Member-Manager will be guaranteed
by Xxxxx X. Xxxxx or another person approved by the Investment Member.
Any payments made by Xxxxx X. Xxxxx, individually, pursuant to the
Guaranty and not in his capacity as the Member-Manager, directly to
the Company or the Investment Member pursuant to the Guaranty
("Payment on Guaranty") shall be deemed to relieve the Member-Manager
of such payment obligation.
5.02. Duties and Obligations Relating to the Apartment Complex
and the Company. The Member-Manager shall have the following duties
and obligations with respect to the Apartment Complex and the Company:
(a) all requirements shall be met which are necessary to
obtain or achieve (i) compliance with the Minimum Set-Aside Test, the
Rent Restriction Test, and any other requirements necessary for the
Apartment Complex to initially qualify, and to continue to qualify,
for Tax Credits, including all requirements set forth in the Extended
Use Commitment, (ii) issuance of all necessary certificates of
occupancy, including all governmental approvals required to permit
occupancy of all of the apartment units in the Apartment Complex,
(iii) Initial Closing and Final Closing, and (iv) compliance with all
provisions of the Project Documents;
(b) while conducting the business of the Company, it shall not
act in any manner which it knows or should have known after due
inquiry will (i) cause the termination of the Company for federal
income tax purposes without the Consent of the Investment Member, or
(ii) cause the Company to be treated for federal income tax purposes
as an association taxable as a corporation;
(c) the Apartment Complex shall be managed upon Substantial
Completion so that (i) no less than eighty percent (80%) of the gross
income from the Apartment Complex in every year is rental income from
dwelling units in the Apartment Complex used to provide living
accommodations not on a transient basis, (ii) the rental of all units
in the Apartment Complex complies with the tenant income limitations
and other restrictions under the Rent Restriction Test and as set
forth in the Extended Use Commitment and all applicable documents
entered into in connection with the Mortgage Loan, and (iii) one
hundred percent (100%) of the units in the Apartment Complex are
occupied or held for occupancy by individuals with incomes of sixty
percent (60%) or less of area median income as adjusted for family
size;
(d) the Member-Manager shall exercise good faith in all
activities relating to the conduct of the business of the Company,
including the development, operation and maintenance of the Apartment
Complex, and shall take no action with respect to the business and
property of the Company which is not reasonably related to the
achievement of the purpose of the Company;
(e) all of (i) the fixtures, maintenance supplies, tools,
equipment and the like now and to be owned by the Company or to be
appurtenant to, or to be used in the operation of the Apartment
Complex, as well as (ii) the rents, revenues and profits earned from
the operation of the Apartment Complex, will be free and clear of all
security interests and encumbrances except for the Mortgage Loan and
the Mortgages, and any additional security agreements executed in
connection therewith;
(f) the Member-Manager will execute on behalf of the Company
all documents necessary to elect, pursuant to Sections 732, 743 and
754 of the Code, to adjust the basis of the Company's property upon
the request of the Investment Member, if, in the sole opinion of the
Investment Member, such election would be advantageous to the
Investment Member and any such elections (including elections made at
the direction or with the consent of the Investment Member) shall not
reduce the obligations of the Member-Manager pursuant to Section
6.01(d);
(g) the Member-Manager shall comply and cause the Company to
comply with the provisions of all applicable governmental and
contractual obligations;
(h) the Member-Manager shall be responsible for the payment of
any fines or penalties imposed by the Agency or the Lender pursuant to
the Project Documents and any documents executed in connection with
obtaining Tax Credits (other than with respect to payments of
principal or interest under the Mortgage Loan from and after Final
Closing);
(i) the Member-Manager shall promptly notify the Investment
Member of any written or oral notice of (i) any default or failure of
compliance with respect to the Mortgage Loan or any other financial,
contractual or governmental obligation of the Company or the Member-
Manager (in the case of the Member-Manager, if such default or failure
of compliance may have a material adverse impact on the Company or its
operations), or (ii) any IRS proceeding regarding the Apartment
Complex or the Company;
(j) the Member-Manager shall, during and after the period in
which it is a Member, provide the Company with such information and
sign such documents as are necessary for the Company to make timely,
accurate and complete submissions of federal and state income tax
returns;
(k) within thirty (30) days following the Admission Date, the
Member-Manager shall submit to Boston Capital evidence of the
Company's engagement of Accountants, who have been approved by BCTC
94, Inc., to be responsible for the Company's audit and tax matter
reporting obligations under Section 14.04 hereof. BCTC 94, Inc.
hereby acknowledges that the accounting firm of Xxxxxx Xxxxxx, CPA is
approved by BCTC 94, Inc. as the initial Accountant for the Company.
(l) the Member-Manager shall provide to BCTC 94, Inc., for its
approval and Consent, prior to execution, a copy of the Extended Use
Commitment to be entered into between the Company and the Agency.
(m) the Member-Manager guarantees that Substantial Completion
will occur no later than 15 months after Initial Closing and Final
Closing will occur no later than three months thereafter.
ARTICLE VI
MEMBERS, MEMBER INTERESTS
AND OBLIGATIONS OF THE COMPANY
6.01. Members, Capital Contributions and Company
Interests.
(a) The Member-Manager, its principal addresses or places of
business, its Capital Contributions and Percentage Interests are as
follows:
Xxxxx X. Xxxxx $100.00
1.00%
0000 Xxxxxxxx Xxxxxx
Xx. Xxxxxx, Xxxx 00000
Pursuant to Section 9.10, the entire Development Fee is to be
paid from the proceeds of Capital Contributions under Section 6.01(c).
In the event that the Company has not paid all or part of the Deferred
Development Fee when the final payment is due pursuant to the
Development Agreement and Section 9.10 hereof, the Member-Manager
shall contribute to the Company an amount equal to any such remaining
balance (the "Member-Manager's Special Capital Contribution") and the
Company shall thereupon make payment of the balance due under the
Development Agreement.
The Investment Member, its principal office or place of
business, its Capital Contribution and its Percentage Interest is as
follows:
Boston Capital Tax
98.99%
Credit Fund IV L.P.
(Series 24) (as more
$2,242,395
c/o Boston Capital specifically set
Partners, Inc. forth in subparagraph
One Boston Place (c) immediately below)
00xx Xxxxx
Xxxxxx, XX 00000
(ii) The Special Member, its principal office or place of
business, its Capital Contribution and its Percentage Interest is as
follows:
BCTC 94, Inc. $ 10.00
0.01%
c/o Boston Capital
Partners, Inc.
Xxx Xxxxxx Xxxxx,
00xx Xxxxx
Xxxxxx, XX 00000
(c) Subject to the provisions of this Agreement, including
without limitation, the provisions of Sections 6.01(d) and 6.03, the
Investment Member shall be obligated to make Capital Contributions to
the Company in the aggregate amount of $2,242,394 in four (4)
installments (the "Installments"), which Installments shall be due and
payable in cash by the Investment Member, solely from capital
contributions of its investor limited partners, within twenty-one
(21) days after the Investment Member shall have received evidence,
reasonably satisfactory to it, of the occurrence of each of the
conditions set forth below as to the applicable Installment, as
follows:
(i) $1,111,197 or 49.55% on the latest to occur of (A) Tax
Credit Set Aside, (B) Initial Closing, (C) receipt by Boston Capital
of an acceptable commitment of the Permanent Lender regarding the
Permanent Loan, (D) the Admission Date (the "First Installment");
(ii) $811,197 or 36.18% on the latest to occur of (A)
Substantial Completion, (B) Cost Certification, (C) receipt by the
Company of a Carryover Allocation on or before December 31, 1996 (D)
State Designation (E) receipt of an updated title insurance policy
satisfactory to BCTC 94, Inc., (F) confirmation by Boston Capital that
each of the itemized outstanding due diligence matters identified on
Exhibit 6.01 have been completed by the Member-Manager to the
reasonable satisfaction of Boston Capital, (G) receipt of a payoff
letter from the Contractor stating that all amounts payable to the
Contractor have been paid in full and that the Company is not in
violation of the Construction Contract, (H) receipt of an estoppel
letter reasonably satisfactory to BCTC 94, Inc. from the Permanent
Lender and the Second Lender, or (I) satisfaction of all of the
conditions to the payment of the First Installment (the "Second
Installment");
(iii) $300,000 or 13.38% on the latest to occur of (A) Initial
94% Occupancy Date, (B) Final Closing, (D) Rental Achievement, or (E)
satisfaction of all of the conditions to the payment of the First and
Second Installments (the "Third Installment");
(iv) $20,000 or 0.89% on the later to occur of (A) the receipt
by the Investment Member of the Company's federal income tax return
for the year in which Rental Achievement occurred or (B) satisfaction
of all conditions to the payment of the First, Second, and Third
Installments (the "Fourth Installment").
As a condition precedent to each payment set forth above other than
the First Installment, the Member-Manager shall, not less than twenty
(20) days nor more than thirty (30) days prior to the time such
Installment is due, give the Investment Member Notice in the form of a
written certification that: (A) all conditions precedent to such
Installment have been satisfied, (B) the representations, warranties
and covenants given by the Member-Manager in Section 5.01(a) are valid
and accurate, where still applicable, with respect to the Member-
Manager, the Company and/or the Apartment Complex, as of the date of
such certificate, and (C) to the best of their knowledge, after due
inquiry, no condition exists which would, pursuant to Section 6.03,
entitle the Investment Member to withhold the payment of such
Installment. Based upon the giving of such Notice, such Installment
shall be made on the due date therefor, or if such Notice is not
timely given, then within twenty-one (21) days after receipt of such
Notice.
(d) (i) Upon the occurrence of Cost Certification and State
Designation, if ninety-nine percent (99%) of the aggregate amount of
Tax Credits: (A) for which the Company would be eligible with respect
to the Apartment Complex based upon the Cost Certification, and/or (B)
allocated by the Agency with respect to the Apartment Complex, is less
than the aggregate amount of the Projected Credit (the "Allocation
Differential"), then the Capital Contribution of the Investment Member
shall be reduced by the "Adjustment Amount". The Adjustment Amount
shall be equal to the Allocation Differential multiplied by eighty one
and 37/100 percent (81.371%). Any such reduction in Capital
Contribution shall be applied to reduce the Second Installment and if,
and to the extent necessary, the Third Installment and if, and to the
extent necessary, the Fourth Installment. If no further Installments
are due to be paid, then the entire amount of such reduction shall be
repaid by the Company to the Investment Member promptly after demand
is made therefor. The Member-Manager is obligated to provide such
funds to the Company as shall be necessary to cause the aforesaid
payment to be made by the Company to the Investment Member. In the
event that there is a reduction in Capital Contributions equal to the
Adjustment Amount, then the amount of the Projected Credit shall be
proportionately reduced to reflect the Allocation Differential, and
thereafter shall be referred to as the "Revised Projected Credit".
(ii) If at any time the Accountants determine that, for
any fiscal year or portion thereof during the Company's operation,
ending on the date five (5) years from and after the date of
Substantial Completion (the "Reduction Period"), the Actual Credit for
such fiscal year or portion thereof is less than the Projected Credit
(or Revised Projected Credit) applicable to such fiscal year or
portion thereof, then the Capital Contribution of the Investment
Member shall be reduced by the Reduction Amount. The Reduction Amount
shall be equal to the sum of (A) the Credit Shortfall multiplied by
eighty-one and 37/100 percent (87.31%), and (B) the amount of any
recapture, interest or penalty payable by the limited partners of the
Investment Member (assuming pass through of all such liability in the
year incurred and a tax rate equal to the maximum individual rate
applicable in such year) as a result of the Credit Shortfall for such
year. Any reduction in Capital Contribution shall first be applied to
reduce the Installment next due to be paid by the Investment Member,
and any portion of such reduction in excess of such Installment shall
be applied to reduce succeeding Installments. If no further
Installments are due to be paid, then the entire amount of such
reduction shall be repaid by the Company to the Investment Member
promptly after demand is made therefor. The Member-Manager is
obligated to provide such funds to the Company as shall be necessary
to cause the aforesaid payment to be made by the Company to the
Investment Member.
(iii) In the event that, for any reason, at any time after
the Reduction Period, there is a Credit Shortfall with respect to any
fiscal year during the Company's operation, the Investment Member
shall be treated as having made a constructive advance to the Company
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 (A) the Credit Shortfall for such year, plus (B) the
amount of any recapture, interest or penalty payable by the limited
partners of the Investment Member (assuming pass-through of all such
liability in the year incurred and a tax rate equal to the maximum
individual rate applicable in such year) as a result of the Credit
Shortfall for such year. Credit Recovery Loans shall be deemed to
bear simple (not compounded) interest, from the respective dates on
which such principal advances are deemed to have been made under this
Section 6.01(d) (iii) at 9% per annum. Credit Recovery Loans shall be
repayable by the Company as provided in Sections 12.03(A)(c) and
12.04(A)(b).
(f) Without the Consent of all of the Members, no additional
Persons may be admitted as additional Members and Capital
Contributions may be accepted only as and to the extent expressly
provided for in this Article VI.
6.02. Return of Capital Contribution. Except as provided in
this Agreement, no Member shall be entitled to demand or receive the
return of his Capital Contribution.
6.03. Withholding of Capital Contribution Upon Default. In the
event that: (a) either the Member-Manager, or any successor Member-
Manager shall not have substantially complied with any material
provisions under this Agreement, after Notice from the Investment
Member of such noncompliance and failure to cure such noncompliance
within a period of sixty (60) days from and after the date of such
Notice, or (b) Lender shall have declared the Company to be in default
under the Mortgage Loan or (c) foreclosure proceedings shall have been
commenced against the Apartment Complex, then the Company and the
Investment Member, at its sole election, may cause the withholding of
payment of any Installment otherwise payable to the Company.
Notwithstanding the provisions herein, in the event that an
Installment payment becomes due during the cure period stated in this
Section 6.03(a), the Investment Member, at its sole election, may
cause the withholding of any payment of any such Installment otherwise
payable to the Company until the termination of such cure period, and
then, according to the provisions herein.
All amounts so withheld by the Investment Member under this
Section 6.03 shall be promptly released to the Company only after the
Member-Manager or the Company has cured the default justifying the
withholding, as demonstrated by evidence reasonably acceptable to the
Investment Member.
6.04. Legal Opinions. As a condition precedent to payment of
the First Installment, the Investment Member shall have received the
opinion of Jones, Waldo, Xxxxxxxx & XxXxxxxxx, counsel to the Company
and to the Member-Manager, which opinion shall be in form and
substance satisfactory to the Investment Member and shall explicitly
state that Xxxxxxxx, Xxxxx & Xxxxxx, of Boston, Massachusetts, counsel
to the Member, may explicitly rely upon them.
6.05. Repurchase Obligation.
(a) If (i) the Company does not receive a Carryover Allocation
of Tax Credits by December 31, 1996; (ii) Substantial Completion has
not occurred and/or the Apartment Complex is not placed in service by
December 1997; (iii) the Company has not received State Designation by
December 1, 1997; (iv) Rental Achievement does not occur within twelve
(12) months from and after the occurrence of Substantial Completion;
(v) the Company fails to initially meet the Minimum Set-Aside Test and
the Rent Restriction Test within twelve (12) months of the date that
the Apartment Complex is placed in service; (vi) the Company fails to
meet either the Minimum Set-Aside Test and the Rent Restriction Test
at anytime during the first sixty (60) months after initial
achievement of the Minimum Set Aside and Rent Restriction Tests (vii)
Final Closing has not occurred by December 1997; (viii) an event of
default described in Section 6.03(a), (b) and/or (c) shall exist and
shall not have been cured within 30 days after the occurrence of such
default; (ix) the Member-Manager fails to make Subordinated Loans as
required by this Agreement; then the Member-Manager shall, within 30
days of the occurrence thereof, send to the Investment Member Notice
of such event and of its obligation to purchase the Interest of the
Investment Member hereunder and pay to the Investment Member the
Invested Amount in the event the Investment Member in its sole
discretion requires such purchase of its Interest. Thereafter, the
Member-Manager, within 30 days of its receipt of Notice from the
Investment Member of such election, shall acquire the entire Interest
of the Investment Member in the Company by making payment to the
Investment Member, in cash, of an amount equal to the Invested Amount.
(b) If the Lender and/or the Agency shall disapprove the
Investment Member as a Member hereunder within 180 days of its
admission to the Company, then the Investment Member shall, effective
as of such time (or such other time as may be specified by the Lender
and/or the Agency in its disapproval), cease to be a Member. The
Member-Manager shall, within 10 days of the effective date of such
termination, purchase the Interest of the Investment Member in the
Company and pay to the Investment Member an amount equal to its Net
Capital Contribution.
(c) Upon receipt by the Investment Member of any such payment of
its Net Capital Contribution or the Invested Amount, as applicable,
the Interest of the Investment Member shall terminate, the Investment
Member shall execute, acknowledge and deliver such documents of
assignment as the Member-Manager shall require and effectuate the
termination or transfer of its Interest, and the Member-Manager shall
indemnify and hold harmless the Investment Member from any losses,
damages, and/or liabilities to which the Investment Member (as a
result of its participation hereunder) may be subject, except as and
to the extent of any losses, damages and/or liabilities arising from
the Investment Member's own negligence, misconduct or fraud.
6.06 Member-Manager Development Agreement and Bond Purchase for
Second Mortgage Loan.
Pursuant to the terms of the Second Mortgage Loan, the
Member-Manager shall enter into a Development Agreement with the
Developer dated as of the date of this Agreement (the "Development
Agreement") pursuant to which the Developer shall purchase a zero
coupon bond from Bank One, Arizona, NA, in the face amount of $85,000
(the "Bond"). The Bond shall be deposited in escrow with the
Treasurer of the State of Utah as escrow agent for the benefit of the
Company upon receipt of 90% of the Second Mortgage Loan Proceeds and
for the purpose of funding certain "residuals" of the Second Mortgage
Loan due fifteen years from the date of closing of the Second Mortgage
Loan (the "residual funding"). Any rents received by the Company from
any HUD Section 8 Certificate Holder Tenants in excess of those
approved by the Utah Housing Finance Agency, currently set at
$117/unit/month ("Excess Rents") shall be deposited into a separate
interest-bearing account at a federally insured lending institution
acceptable to and jointly controlled by the Member-Manager and the
Investment Member, and distributed annually to the Developer for the
purpose of reimbursing the Developer for the cost of the Bond in
accordance with the Trust Deed Note and the Trust Deed until such time
as the Bond cost has been fully repaid.
ARTICLE VII
CHANGES IN MANAGERS
7.01. Withdrawal of a Member-Manager.
(a) A Member-Manager may withdraw from the Company or sell,
transfer or assign his or its Interest as Member-Manager only with the
prior Consent of the other Members, and of the Lender, if required,
and only after being given written approval by the necessary parties
as provided in Section 7.02, and by the Lender, if required, of the
Member-Manager(s) to be substituted for him or it or to receive all or
part of his or its Interest as Member-Manager.
(b) In the event that a Member-Manager withdraws from the
Company or sells, transfers or assigns his or its entire Interest
pursuant to Section 7.01(a), he or it shall be and shall remain liable
for all obligations and liabilities incurred by him or it as Member-
Manager, or arising out of any events occurring before such
withdrawal, sale, transfer or assignment shall have become effective,
but shall be free of any obligation or liability incurred on account
of the activities of the Company from and after the time such
withdrawal, sale, transfer or assignment shall have become effective,
including without limitation, liability for new advances in Operating
Deficit Loans, Subordinated Loans, Reserve Fund Replacements, payments
under Section 6.05, Asset Management Fees and Contributions for
Development Fees.
In the event that the Member-Manager withdraws from the Company
or sells, transfers or assigns its entire interest pursuant to Section
7.01(a), the Guarantor shall remain liable for all obligations and
liabilities so long as, and to the extent of the Member-Manager, and
shall be free of any obligation or liability similarly as the Member-
Manager, hereunder.
7.02. Admission of a Successor or Additional Member-Manager. A
Person shall be admitted as a Member-Manager of the Company only if
the following terms and conditions are satisfied:
(a) the withdrawal of any withdrawing Member-Manager and the
admission of such Person shall have been Consented to by each of the
remaining Members or their successors, and Consented to, if required,
by the Lender;
(b) the successor or additional Person shall have accepted and
agreed to be bound by (i) all the terms and provisions of this
Agreement, by executing a counterpart hereof, and (ii) all the terms
and provisions of the Loan Documents, including by executing a
counterpart thereof to the extent required by a Lender, and (iii) all
the terms and provisions of such other documents or instruments as may
be required or appropriate in order to effect the admission of such
Person as a Member-Manager, and an amendment to this Agreement and/or
the Certificate, as applicable, evidencing the admission of such
Person as a Member-Manager shall have been filed and all other actions
required by Section 1.05 in connection with such admission shall have
been performed;
(c) if the successor or additional Person is a corporation or
a limited liability company, it shall have provided the Company with
evidence satisfactory to counsel for the Company of its authority to
become a Member-Manager, to do business in the State and to be bound
by the terms and provisions of this Agreement; and
(d) counsel for the Company shall have rendered an opinion
that the admission of the successor or additional Person is in
conformity with the Act and that none of the actions taken in
connection with the admission of the successor Person will cause the
termination or dissolution of the Company or will cause it to be
classified other than as a partnership for federal income tax
purposes.
7.03. Effect of Bankruptcy, Death, Withdrawal, Dissolution
or Incompetence of a Member-Manager.
(a) In the event of the Bankruptcy of a Member-Manager or the
withdrawal, death or dissolution of a Member-Manager or an
adjudication that a Member-Manager is incompetent (which term shall
include, but not be limited to, insanity), all of the remaining
Members within ninety (90) days after receiving Notice of such
Bankruptcy, withdrawal, death, dissolution or adjudication of
incompetence elects to designate a successor Member-Manager if there
is no Member-Manager remaining and continue the Company upon the
admission of such successor Member-Manager to the Company, the Company
shall be dissolved.
(b) Upon the Bankruptcy, death, dissolution or adjudication of
incompetence of a Member-Manager, such Member-Manager shall
immediately cease to be a Member-Manager and his or its Interest shall
without further action be converted to the Interest of a non-managing
Member; that if such Bankrupt, dissolved, incompetent provided that,
if such Bankrupt, dissolved, incompetent or deceased Member-Manager is
the sole remaining Member-Manager, the converted Company Interest of
such replaced Member-Manager shall be ratably reduced to the extent
necessary to insure that the substitute Member-Manager holds a 1%
Percentage Interest (as set forth in Section 6.01) and will receive a
50% distribution of the Member-Manager's percentage pursuant to
Section 12.04A(f); such replaced Member-Manager whose Interest has
been converted to that of a non-manager Member shall remain entitled
to his or its proportionate share of the remainder of the distribution
pursuant to Section 12.04A(f), and shall be entitled to repayment of
all loans previously made and fees accrued but not paid, up to such
time of conversion, but shall not be entitled to repayment of any
loans made or fees accrued subsequent to such time of conversion, and
shall be released from liabilities incurred after conversion, as
provided in Section 7.01(b).
Except as set forth above, such conversion of a Member-Manager
Interest to the Interest of a non-manager Member shall not affect any
rights, obligations or liabilities (including without limitation, any
of the Member-Manager's obligations under Section 9.09 herein) of the
Bankrupt, deceased, dissolved or incompetent Member-Manager existing
prior to the Bankruptcy, death, dissolution or incompetence of such
person as a Member-Manager (whether or not such rights, obligations or
liabilities were known or had matured).
(c) If, at the time of the withdrawal, Bankruptcy, death,
dissolution or adjudication of incompetence of a Member-Manager, the
Bankrupt, deceased, dissolved or incompetent Member-Manager was not
the sole Member-Manager of the Company, the remaining Member-Manager
or Member-Managers shall promptly (i) give Notice to the Members of
such Bankruptcy, death, dissolution or adjudication of incompetence,
and (ii) make such amendments to this Agreement and execute and file
such amendments or documents or other instruments as are necessary to
reflect the conversion of the Interest of the Bankrupt, deceased,
dissolved or incompetent Member-Manager and his having ceased to be a
Member-Manager. The remaining Member-Manager or Member-Managers are
hereby granted an irrevocable power of attorney to execute any or all
documents on behalf of the Members and the Company and to file such
documents as may be required to effectuate the provisions of this
Section 7.03.
ARTICLE VIII
ASSIGNMENT TO THE COMPANY
8.01 Assignment or Contracts, etc. The Member-Manager hereby
transfers and assigns to the Company all of its right, title and
interest in and to the Apartment Complex, including the following:
(i) all contracts with engineers and contractors with respect
to the construction or development of the Apartment Complex;
(ii) all plans, specifications and working drawings, heretofore
prepared or obtained in connection with the Apartment Complex and all
governmental approvals obtained, including planning, zoning and
building permits;
(iii) any and all commitments with respect to the Mortgage
Loan; and
(iv) any other work product related to the Apartment Complex.
ARTICLE IX
RIGHTS, OBLIGATIONS AND POWERS
OF THE MEMBER-MANAGER
9.01. Management of the Company.
(a) Except as otherwise set forth in this Agreement and except
for matters on which the Members' approval is required by the Act or
this Agreement, the Member-Manager, within the authority granted to
such Member-Manager under this Agreement, shall have full, complete
and exclusive discretion to manage and control the business of the
Company for the purposes stated in Article III, shall make all
decisions affecting the business of the Company and shall manage and
control the affairs of the Company to the best of his ability and use
his best efforts to carry out the purpose of the Company. In so
doing, the Member-Manager shall take all actions necessary or
appropriate to protect the interests of the Members and of the
Company. The Member-Manager shall devote such of its/their time as is
necessary to the affairs of the Company.
(b) Except as otherwise set forth in this Agreement and
subject to the applicable Lender's rules and regulations and the
provisions of the Project Documents, the Member-Manager (acting for
and on behalf of the Company), in extension and not in limitation of
the rights and powers given by law or by the other provisions of this
Agreement, shall, in his sole discretion, have the full and entire
right, power and authority in the management of the Company business
to do any and all acts and things necessary, proper, convenient or
advisable to effectuate the purpose of the Company. In furtherance
and not in limitation of the foregoing provisions, the Member-Manager
is specifically authorized and empowered to execute and deliver, on
behalf of the Company, the Project Documents and to execute any and
all other instruments and documents, and amendments thereto, as shall
be required in connection with the Mortgage Loan, including, but not
limited to, executing any mortgage, note, contract, building loan
agreement, bank resolution and signature card, release, discharge, or
any other document or instrument in any way related thereto or
necessary or appropriate in connection therewith; provided, however,
that copies of all applications for advances of Mortgage Loan proceeds
which occur after the Admission Date shall be provided to the
Investment Member prior to the disbursement of any funds pursuant
thereto. All decisions made for and on behalf of the Company by the
Member-Manager shall be binding upon the Company. No person dealing
with the Member-Manager shall be required to determine said Member-
Manager's authority to make any undertaking on behalf of the Company,
nor to determine any facts or circumstances bearing upon the
existence of such authority.
(c) Subject to the terms of this Operating Agreement, the
Member-Manager shall be responsible for the management and
administration of the Company business and shall have all rights and
authority generally conferred on managers under the Act or necessary,
advisable or consistent with accomplishing the purpose of the Company.
Subject to the Consent of the Special Member, which Consent shall not
be unreasonably withheld, the Member-Manager shall have the power to
assign duties and may delegate any of his powers, rights and
obligations hereunder and may appoint, employ, contract or otherwise
deal with any person for the transaction of business of the Company,
which person may, but only under the supervision of the Member-Manager
perform any acts or services for the Company as the Member-Manager may
approve. The delegating or assigning of such day to day activities as
are consistent with the reasonable and ordinary course of managing a
project of similar nature to the Apartment Complex and which such
activities are not considered, in the reasonable opinion of the
Special Member, to affect the Company in any adverse fashion or to be
inconsistent with accomplishing the purpose of the Company are
included in the responsibilities of the Member-Manager which do not
require Consent of the Special Member. For purposes of illustration
and not to be construed as a limitation, such activities as the hiring
of a resident manager to act in the capacity as a superintendent (as
such term is used and applied in the ordinary course of business) to
the Apartment Complex shall not require the Consent of the Special
Member.
(d) Notwithstanding anything to the contrary contained herein,
the Tax Members reserve the right, at their option to conduct a lease
audit on twenty five (25%) percent of the initial leases executed in
connection with the Apartment Complex in order to ensure compliance
with the applicable Rent Restriction Test, Minimum Set Aside Test, or
any other applicable tenant restriction test ("Lease Audit"). The Tax
Members shall select at their option, any combination of leases which
shall comprise the Lease Audit (the "Selected Leases"). The Lease
Audit shall consist of a review of the complete tenant files in
connection with the Selected Leases, including but not limited to any
tenant financial information. Further, the Lease Audit shall be
conducted with the cooperation of, and at the sole cost and expense of
the Member-Manager if the Lease Audit reveals a material
noncompliance. If the Lease Audit does not reveal a material
noncompliance the Tax Members shall bear the cost of such audit.
9.02. Limitations Upon the Authority of the Member- Manager.
(a) The Member-Manager shall not have any authority to:
(i) perform any act in violation of any applicable law
or regulation thereunder;
(ii) perform any act in violation of the provisions of
the Extended Use Commitment, the Loan Documents, or any other Project
Documents;
(iii) do any act required to be approved or ratified
in writing by all Members under the Act unless the right to do so is
expressly otherwise given in this Agreement;
(iv) rent apartments in the Apartment Complex such that
the Apartment Complex would not meet the requirements of the Rent
Restriction Test or Minimum Set-Aside Test or to any individuals where
income exceeds 60% of area median income, as adjusted for family size;
or
(v) borrow from the Company or commingle Company funds
with funds of any other Person.
(b) The Member-Manager shall not, without the Consent of the
Special Member, have any authority to:
(i) sell or otherwise dispose of, at any time, all or
substantially all of the assets of the Company;
(ii) borrow in excess of $10,000 in the aggregate at any
one time outstanding on the general credit of the Company, except
borrowings constituting Subordinated Loans or Credit Recovery Loans;
(iii) following Substantial Completion, 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 Company 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;
(iv) acquire any real property on behalf of the Company
in addition to the Apartment Complex; or
(v) refinance the Mortgage Loan, provided that, with the
Consent of the Special Member, the Member-Manager may substitute, in
whole or in part, the Mortgage Loan with other permanent first
mortgage financing, provided such financing (a) is without recourse to
any Member of the Company, (b) has a term that ends no earlier than
the last day of the "Compliance Period" as defined in Code Section 42,
(c) has fixed debt service no greater than the fixed debt service
applicable to the Mortgage Loan during the Permanent Term and (d)
permits use of refinancing proceeds only for Company purposes approved
by the Investment Member.
9.03. Management Purposes. In conducting the business of the
Company, the Member-Manager shall be bound by the Company's purpose(s)
set forth in Article III.
9.04. Delegation of Authority. Subject to Section 9.05 hereof,
the Member-Manager may employ, contract, or otherwise deal with any
Person in connection with the performance of its management
responsibilities hereunder, provided such Person acts only under the
supervision of the Member-Manager.
9.05. Member-Manager or Affiliates Dealing with Company.
(a) Xxxxx Xxxxx Management shall be the Management Agent
for a one year term after Substantial Completion. Thereafter, and as
long as there exists no event of default under this Agreement, such
term shall be extended on a six (6) month basis. Additionally,
thereafter the Member-Manager or any Affiliate may act as Management
Agent on such terms and conditions permitted by applicable regulations
of the Lender and the Agency, and may receive compensation at the
highest rates approved and permitted by the Lender or the Agency at
any time; provided, however, that the Management Agent may not receive
compensation in excess of six percent (6%) of gross rental receipts
received from tenants of the Apartment Complex ("Property Management
Fee").
(b) Notwithstanding anything contained to the contrary
herein, the Property Management Fee shall be subordinate at all times
to any payments for Debt Service. The Management Agent shall not be
entitled at any time to receive any payments in connection with a
Property Management Fee until such time as the Investment Member in
its sole and reasonable discretion is satisfied that all Debt Service
payments and any costs, fees or charges in connection therewith have
been paid current, and no event of default exists under any of the
Loan Documents.
(c) The Member-Manager or any Affiliates thereof shall
have the right to contract or otherwise deal with the Company for the
sale of goods or services to the Company in addition to those set
forth herein, including the Construction Contract which is excluded
from this Section 9.05, if (A) compensation paid or promised for such
goods or services is reasonable (i.e., at fair market value) and is
paid only for goods or services actually furnished to the Company, (B)
the goods or services to be furnished shall be reasonable for and
necessary to the Company, (C) the fees, terms and conditions of such
transaction are at least as favorable to the Company as would be
obtainable in an arm's-length transaction, (D) no agent, attorney,
accountant or other independent consultant or contractor with the
exception of Xxxxx Construction Company, or such other consultant or
contractor as may be employed by Xxxxx Construction Company as is
reasonable and necessary in order to construct and develop the
Project, who also is employed on a full-time basis by the Member-
Manager or any Affiliate shall be compensated by the Company for his
services.
Any contract covering such transactions shall be in writing and
shall be terminable without penalty on sixty (60) days Notice. Any
payment made to the Member-Manager or any Affiliate for such goods or
services shall be fully disclosed to all Members in the reports
required under Section 14.04. Neither the Member-Manager nor any
Affiliate shall, by the making of lump-sum payments to any other
Person for disbursement by such other Person, circumvent the
provisions of this Section 9.05(c).
9.06. Other Activities.
(a) The Member-Manager and any Affiliates thereof may engage in
or possess interests in other business ventures of every kind and
description for their own account, including, without limitation,
serving as manager of a limited liability company or as general
partner of a partnerships which own, either directly or through
interests in other limited liability companies or partnerships,
government-assisted housing projects similar to the Apartment Complex.
Neither the Company nor any of the Members shall have any rights by
virtue of this Agreement in or to such other business ventures or to
the income or profits derived therefrom.
9.07. Liability for Acts and Omissions. No Member-Manager
shall be liable, responsible or accountable in damages or otherwise to
any of the Members for any act or omission performed or omitted by him
or it, or any of them, in good faith on behalf of the Company and in a
manner reasonably believed by him or it or any of them to be within
the scope of the authority granted to him or it or any of them by
this Agreement and in the best interest of the Company, except for
gross negligence, willful misconduct, fraud or any material breach of
his or its or their fiduciary duty as Member-Manager with respect to
such acts or omissions. Any loss or damage incurred by any Member-
Manager by reason of any act or omission performed or omitted by him
or it or any of them in good faith on behalf of the Company and in a
manner reasonably believed by him or it or any of them to be within
the scope of the authority granted to him or it by this Agreement and
in the best interests of the Company (but not, in any event, any loss
or damage incurred by any Member-Manager by reason of gross
negligence, willful misconduct, fraud or any material breach of his or
its or their fiduciary duty as Member-Manager with respect to such
acts or omissions, or liabilities of the Members chargeable to the
Member-Manager) shall be paid from Company assets to the extent
available (but the Tax Members shall not have any personal liability
to the Member-Manager under any circumstances on account of any such
loss or damage incurred by the Member-Manager or on account of the
payment thereof). If the guaranties by Xxxxx X. Xxxxx, in his
individual capacity or as the Member-Manager, required by this
Agreement, cause any loans or obligations of the Company to be
considered recourse loans for tax purposes, Xxxxx X. Xxxxx shall not
be responsible for the resulting tax consequences of such
classification and the Investment Member shall hold Xxxxx X. Xxxxx
harmless with respect to such tax consequences.
9.08. [Intentionally Deleted.]
9.09. Construction of the Apartment Complex, Construction Cost
Overruns, Operating Deficits.
(a) (i) The Company has entered into the
Construction Contract. The Member-Manager shall be
responsible for:
(A) achieving completion of
construction of the Apartment Complex on a
timely basis in accordance with the Plans and
Specifications, this Agreement and the Project
Documents;
(B) meeting all requirements for
obtaining all necessary permanent,
unconditional certificates of occupancy for
all the apartment units in the Apartment
Complex;
(C) fulfilling all actions
required of the Company to assure that the
Apartment Complex satisfies the Minimum Set-
Aside Test and the Rent Restriction Test; and
(D) causing the making of the
Mortgage Loan by the Lender and the
achievement of Initial Closing and Final
Closing.
(ii) The Member-Manager hereby is obligated
to pay all Excess Development Costs; the Company
shall have no obligation to pay any Excess
Development Costs.
(iii) In the event that the Member-
Manager shall fail to pay any such Excess
Development Costs as required in this Section
9.09(a), an amount not in excess of such Excess
Development Costs shall be released to the Company
pursuant to the terms of the Pledge Agreement (as
defined in Section 9.10), and applied by the Company
as an offset against such obligations of the Member-
Manager.
Any such direction and application of funds
otherwise payable or to be released to the Developer
as aforesaid shall be deemed to have been paid by
the Company to the Developer and then applied to
reduce the amount of the Excess Development Costs,
and the Company's obligation to make installment
payments to the Developer pursuant to Section
9.10(a), or to release such funds pursuant to the
Pledge Agreement, as well as the Investment Member's
obligation to make future Installments, if any,
shall be deemed satisfied to the extent of the funds
applied to reduce the Member-Manager's obligation to
fund Excess Development Costs, and the obligations
of the Member-Manager pursuant to Sections 9.09(a)
(i) or 9.09(a) (ii) shall be deemed satisfied to the
extent of the funds applied.
(iv) The Member-Manager's obligations under
this Section 9.09(a) and 9.09(b) shall be guaranteed
by Xxxxx X. Xxxxx, individually and not in his
capacity as Member-Manager hereunder, pursuant to a
Guaranty of even date herewith.
(b) (i) Pursuant to the Development Agreement and
Section 6.06 hereof, once the Developer has been reimbursed for the
cost of the Bond, Excess Rents shall be applied to reduce the
remaining principal balance of the Second Mortgage Loan, provided that
there is no Operating Deficit. If there is an Operating Deficit, all
or part of the Excess Rents, as necessary, shall be applied to
eliminate such deficit.
(ii) In the event that, at any time (subject to the
hereinafter set forth limitations), an Operating Deficit shall exist,
the Member-Manager shall provide such funds to the Company as shall be
necessary to pay such Operating Deficit(s) in the form of a loan to
the Company (the "Operating Deficit Loan(s)"). An Operating Deficit
Loan shall be a Subordinated Loan payable in accordance with the
provisions of Section 9.17; Operating Deficit Loans shall bear no
interest. Notwithstanding anything contained herein to the contrary,
the Member-Manager shall be obligated to make such Operating Deficit
Loans to the Company at any time, as necessary, for a period
commencing upon execution hereof and extending for a period not to
exceed ten years from the date of Substantial Completion (the
"Operating Deficit Guarantee"). Said Operating Deficit Guarantee
shall be unlimited in the first five (5) years and thereafter shall be
secured by a one-year renewable letter of credit (the "Letter(s) of
Credit") issued each year in years 6 through 10 in the maximum
principal amount of Twenty Thousand and 00/100 ($20,000.00) Dollars
which Letter of Credit shall be in form and substance acceptable to
the Investment Member.
In the event that the Member-Manager shall fail to make
any such Operating Deficit Loan as aforesaid, the Company shall
utilize amounts otherwise payable to the Member-Manager first from
installments of the Incentive Company Management Fee pursuant to
Section 9.11 of this Agreement; secondly, as necessary, from the
Property Management Fee pursuant to Section 9.05 of this Agreement;
and third, as necessary from amounts otherwise payable to the
Developer as payment of the Development Fee pursuant to Section 9.10
of this Agreement, or if applicable, from the next installment of the
Development Fee to be released to the Developer pursuant to the Pledge
Agreement (a "Pledge Release"), to meet the obligations of the
Member-Manager pursuant to this Section 9.09(b). Amounts so utilized
shall also constitute the payment and satisfaction of, as applicable,
(i) installments of the Incentive Company Management Fee payable to
the Member-Manager, and/or (ii) payment of the Property Management Fee
payable to the Management Agent, and/or (iii) a Pledge Release, and
the obligation of the Company to make such installment, fee payments
or Pledge Release, pursuant to such sections herein or in the Pledge
Agreement, as well as the Investment Member's obligation to make
future installments, fee payments, or Pledge Release shall be reduced
correspondingly. For the purposes of this Section 9.09(b), all
expenses shall be paid on a sixty (60) day current basis.
9.10. Development Fee. The Company has entered into a
Development Agreement of even date herewith (the "Development
Agreement") with the Developer for its services in connection with the
development and construction of the Apartment Complex. In
consideration for such services, a Development Fee in the total amount
of $200,000.00 shall be payable by the Company to the Developer,
solely from the Capital Contributions by the Investment Member, except
as provided in Section 5.02(g).
The Development Fee shall be due and payable by the
Company to the Developer with the proceeds of the Third Installment,
which such Development Fee shall be deposited by the Developer into a
separate segregated interest-bearing account pledged to the Company
for the benefit of the Investment Member and over which the Investment
Member and the Company shall maintain joint signature control (the
"Cash Account") pursuant to the terms of the Development Agreement and
that certain Pledge and Security Agreement from Developer to the
Investment Member dated as of the date herewith (the "Pledge
Agreement").
The Deferred Development Fee, if any shall be payable only
in accordance with Sections 12.03(b) and 12.04(c)(6) or, if not sooner
paid, on December 31, 2005.
9.11. Incentive Company Management Fee. The Company has
entered into a Company Management Services Agreement with the Member-
Manager of even date herewith for its services in managing the
business of the Company for the period from the date hereof throughout
the term of the Company, an annual Incentive Company Management Fee in
the amount of $5,000 per annum, commencing in 1997, and pro rated for
1996 based upon the dates that the units are placed in service. Such
agreement includes provisions to the effect that in return for its
services in administering and directing the business of the Company,
maintaining appropriate books and records relating to all financial
affairs of the Company, and reporting periodically to the Members, the
Lender and the Agency with respect to the financial and administrative
affairs of the Company and the Apartment Complex, the Company shall
pay to the Member-Manager, from the Cash Flow and/or from Proceeds of
Capital Transactions of the Company available for distribution and in
accordance with Sections 12.03A(e), 12.04(b)(4) and 9.09(b) an annual
Incentive Company Management Fee.
Such fee shall be payable in accordance with the provisions of
any applicable regulations of the Lender or the Agency and of the
Project Documents and shall be in an amount equal to $5,000 per year,
commencing in 1997 and payable from Cash Flow, with a pro rata share
due in 1996.
9.11.1 Asset Management Fee. The Company shall pay to Boston
Capital, or an Affiliate thereof, an annual Asset Management Fee in
the amount of $5,000 per annum, commencing in 1997, with a pro rata
share due in 1996 based upon the dates that the units are placed in
service, for its services in assisting with the preparation of the
reports required pursuant to Section 14.04. The Asset Management Fee
shall be payable from Cash Flow as provided in Section 12.03A(a) and
from proceeds from Capital Transaction as provided in Section 12.04
A(b)(1) ; provided, however, that if in any Fiscal Year, Cash Flow
and/or proceeds from Capital Transactions are insufficient to pay the
Asset Management Fee, the Member-Manager shall make a Subordinated
Loan to the Company in an amount sufficient to pay such fee. If the
Member-Manager fails to make such Subordinated Loans, any unpaid
portion of said Asset Management Fee shall accrue, without interest,
and shall be payable on a cumulative basis in the first year in which
there is sufficient Cash Flow available for the payment of such fee,
or, in the first year in which proceeds of a Capital Transaction are
available.
9.12. Withholding of Fee Payments. In the event that (a) a
Member-Manager or any successor Member-Manager shall not have
substantially complied with any material provisions under this
Agreement, or (b) any financing commitment of any lender, or any
agreement entered into by the Company for financing related to the
Apartment Complex shall have terminated prior to their respective
termination date(s), or (c) foreclosure proceedings shall have been
commenced against the Apartment Complex then (i) such Member-Manager
shall be in default of this Agreement, and the Company shall withhold
payment of any installment or fees payable pursuant to Sections 9.10,
9.11 and 9.05, and (ii) the Member-Manager shall be liable for the
Company's payment of any and all installments or payments of either
the Incentive Company Management Fee or the Property Management Fee
payable pursuant to Sections 9.11 and 9.05, respectively, to the
extent that the Investment Member has withheld any Installment(s)
pursuant to Section 6.03 as a result of the above-described default.
All amounts so withheld by the Company under this Section 9.12
shall be promptly released only after the Member-Manager has cured the
default justifying the withholding, as demonstrated by evidence
reasonably acceptable to the Investment Member.
9.13. Removal of the Member-Manager.
(a) BCTC 94, Inc., acting on behalf of the Investment Member,
so long as the Investment Member is a Member, shall have the right to
remove any or all Member-Manager(s) (i) for any intentional misconduct
or gross negligence in the discharge of its duties and obligations as
a Member-Manager (provided that such misconduct or failure results in,
or is likely to result in, a material detriment to or an impairment of
the Apartment Complex or assets of the Company), or (ii) upon the
occurrence of any of the following:
(A) such Member-Manager shall have violated any of the
material provisions of the Extended Use Commitment, the Loan
Documents, or any provisions of any other Project Document or other
document required in connection with the Mortgage Loan, or any
provisions of the Agency regulations applicable to the Apartment
Complex;
(B) such Member-Manager shall have violated any material
provision of this Agreement or any provision of applicable law, which
violations shall include, without limitation (i) withdrawal of the
Member-Manager without the Consent of the Investment Member pursuant
to the Section 7.01(a), or (ii) the failure of the Member-Manager to
make Subordinated Loans required under this Agreement;
(C) such Member-Manager shall have caused either
Mortgage Loan to go into default; or
(D) such Member-Manager shall have conducted its own
affairs or the affairs of the Company in such manner as would: (1)
cause the termination of the Company for federal income tax purposes;
or (2) cause the Company to be treated for federal income tax purposes
as an association, taxable as a corporation.
(b) BCTC 94, Inc. shall give Notice to all Members of its
determination that any such Member-Manager shall be removed. The
Member-Manager shall have thirty (30) days after receipt of such
Notice to cure any default or other reason for such removal, in which
event it shall remain as Member-Manager. If, at the end of such
thirty (30) day cure period such Member-Manager has not cured any
default or other reason for such removal, (i) without any further
action by any Member, BCTC 94, Inc. or its designee shall
automatically become a Member-Manager and acquire in consideration of
a cash payment of $5 such portion of the Interest of the removed
Member-Manager as counsel to the Investment Member shall determine is
the minimum appropriate interest in order to assure the continued
status of the Company as a limited liability company under the Code
and under the Act, (ii) the remaining portion of the economic Interest
of the removed Member shall automatically be converted to an equal
economic Interest as an additional Member (the "Additional Member"),
provided that such removed Member-Manager and any guarantor of its
obligations shall have no further liability to the Company or the
Members for liabilities incurred after the date of withdrawal, but
shall be and remain liable for all obligations and liabilities
incurred by such removed Member-Manager, or arising out of any events
occurring before such removal became effective, including but not
limited to its obligations set forth in Section 9.09 hereof. (iii)
the economic Interest of BCTC 94, Inc. as the Special Member shall
continue unaffected by the new status of BCTC 94, Inc. or its designee
as a Member-Manager, and (iv) the new Member-Manager shall
automatically be irrevocably delegated all of the powers and duties of
the Member-Manager hereunder.
(c) BCTC 94, Inc. or any successor Member-Manager proposed by
the Special Member shall have the option, exercisable in its sole
discretion, to acquire the Additional Member Interest, or any portion
thereof, of any removed Member-Manager 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 Member-Manager, one chosen by
the successor Member-Manager, 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 Member-Manager and the Company.
The method of payment will be deemed presumptively fair where it
provides for a promissory note bearing simple interest at eight
percent (8%) per annum coming due in no less than five (5) years with
equal installments each year, and a cash down payment of fifteen
percent (15%).
(d) Upon removal, no Member-Manager or any Affiliate thereof
shall be entitled to receive any fee, compensation or other
remuneration from the Company, other than the above-described payment
for the Interest, or portion thereof, of the Removed Member-Manager or
pursuant to Section 9.13(b) above. The Company is not authorized to
enter into any arrangement whereby any fee, compensation or other
remuneration could be payable directly or indirectly to any Member-
Manager or Affiliate thereof in a manner inconsistent with the
immediately preceding sentence unless the prior written consent of
BCTC 94, Inc. shall have been obtained to such particular arrangement.
The Company may offset against any payments to a Member-Manager
removed under this Section 9.13 any damages suffered by the Company as
a result of any breach of the obligations of such Member-Manager
hereunder. A Member-Manager so removed will not be liable as a
Member-Manager for any obligations of the Company incurred after the
effective date of its removal, but shall be and remain liable for all
obligations and liabilities incurred by it as Member-Manager before
such removal became effective, including, but not limited to, its
obligations set forth in Section 9.09 hereof.
(e) The Member-Manager hereby grants to each of the Investment
Member and BCTC 94, Inc. an irrevocable power of attorney, coupled
with an interest, to execute any and all documents on behalf of the
Members and the Company as shall be legally necessary and sufficient
to effect all of the foregoing provisions of this Section 9.13. The
election by the Investment Member to remove such Member-Manager under
this Section shall not limit or restrict the availability and use of
any other remedy which the Investment Member or any other Member might
have with respect to the Member-Manager in connection with their
undertakings and responsibilities under this Agreement.
(f) The Members voting unanimously may remove the Member-
Manager pursuant to this Section 9.13 upon sixty (60) days written
notice to all Members. Such removal of the Member-Manager shall also
be conditioned upon the successful appointment by the Member-Manager
of a substitute Member-Manager which substitute Member-Manager shall
be approved by the Members, which approval shall not be unreasonably
withheld.
9.14. Selection of Management Agent. The Company, with the
approval of the Lender and the Agency, if required, shall engage such
person, firm or company as the Member-Manager may select, and as the
Investment Member may approve, which approval shall not be
unreasonably withheld (hereinafter referred to as "Management Agent")
to manage the operation of the Apartment Complex during the rent-up
period and following Substantial Completion for a period of one year,
and thereafter such management contract may be extended on a month to
month basis unless terminated for cause. The Management Agent shall
be paid a management fee subject to the approval of the Lender and the
Agency, if required. The contract between the Company and the
Management Agent and the management plan for the Apartment Complex
shall be in a form acceptable to the Lender and the Agency, if
required. Xxxxx Xxxxx Management hereby is approved by the parties
hereto as the initial Management Agent.
9.15. Removal of the Management Agent. The Member-Manager (i)
may, upon receiving any required approval of the Lender and the
Agency, dismiss the Management Agent as the entity responsible for the
Apartment Complex under the terms of the contract between the Company
and the Management Agent, and (ii) at the request of the Investment
Member, shall remove the Management Agent in the event that (A) the
Investment Member, in its sole discretion, determines that the
Management Agent (if such Management Agent is other than Xxxx Xxxxx
Management) does not possess the necessary experience to properly
manage the Apartment Complex or (B) the Management Agent is declared
Bankrupt, is dissolved, or makes an assignment for the benefit of its
creditors, or for any intentional misconduct by the Management Agent
or gross negligence in the discharge of its duties and obligations as
Management Agent, including, without limitation, for any action or
failure to take any action which:
(1) violates any material provision of the
Management Agreement entered into with the Company and approved
by the Lender, and/or any provision of the Extended Use
Commitment and/or the Loan Documents applicable to the Apartment
Complex, or the Lender approved management plan for the
Apartment Complex, or
(2) violates any material provision of this
Agreement or provision of applicable law.
9.16. Replacement of the Management Agent. Upon the removal of
the Management Agent as the entity responsible for the management of
the Apartment Complex, a substitute Management Agent, which may be an
Affiliate of any of the Member-Manager, shall be named by the Member-
Manager, by joint agreement with the Tax Members, subject to the
approval of the Lender, if required.
9.17. Subordinated Loans to the Company. In the event that
additional funds are required by the Company for any purpose relating
to the business of the Company or for any of its obligations,
expenses, costs or expenditures, the Company may borrow such funds as
are needed from any Members or other Person or organization, including
the Member-Manager, for such period of time and on such terms as the
Member-Manager, the Investment Member and the Lender, if so required,
may agree and at the rate of interest then prevailing for comparable
loans (except for Operating Deficit Loans made pursuant to Section
9.09(b), which shall bear interest only as provided in Section
9.09(b)); provided however, that no such additional loans shall be
secured by any mortgage or other encumbrance on the property of the
Company without the prior approval of the Investment Member and the
approval of the Lender, if required; except that such approvals shall
not be required in the case of the hypothecation of personal property
purchased by the Company and not included in the security agreements
executed by the Company at the time of Initial Closing. Loans made
under this Section shall be repaid as set forth in Section 12.01 of
this Agreement, but any amount of any such loan that is outstanding at
the time of the occurrence of any of the events described in Sections
12.04 or 13.01 shall be repaid as provided in Section 12.04A(c)(4). A
Member-Manager is not obligated to make any Subordinated Loans except
as provided for in Section 9.11.1 and 9.09(b).
9.18. Reserve Fund for Replacements.
(a) Reserve Fund for Replacements. The Company shall
establish a Reserve Fund for Replacements with respect to the
Apartment Complex, as required by the Lender and BCTC 94, Inc. The
Company shall make deposits into the Reserve Fund equal to $7,500
annually commencing in 1997 through and including 2001, with a pro
rata share to be paid for 1996 (the "Initial Required Deposit") and
thereafter, commencing in 2002, the Company shall make deposits into
the Reserve Fund equal to $8,750 annually (the "Working Required
Deposit") (collectively, the Initial Required Deposit and the Working
Required Deposit shall be known as the "Required Deposit"); such
deposits may be suspended only as approved by the Lender and/or BCTC
94, Inc. Funds in the Reserve Fund for Replacements are intended to
be employed for the replacement as needed of fixtures, equipment,
structural elements and other components of the Apartment Complex of a
capital nature. All interest earnings on funds on deposit in the
Reserve Fund for Replacements shall be retained therein for the
aforesaid purposes. The Reserve Fund for Replacement shall remain
under the joint control of the Member-Manager and BCTC 94, Inc.
Withdrawals from the Reserve Fund for Replacements shall be made only
with the Consent, or upon the direction, of the Lender; provided,
however, if such Consent of the Lender is not required, such
withdrawals may be made only with the Consent, or upon the direction,
of the Member-Manager and BCTC 94, Inc.
(b) Operating Deficit Reserve. The Company shall not be
required to establish an Operating Deficit Reserve for the Project.
ARTICLE X
TRANSFERS OF, AND RESTRICTIONS ON TRANSFERS
OF INTERESTS OF MEMBERS
10.01. Purchase for Investment.
(a) The Investment Member hereby represents and warrants
to the Member-Manager and to the Company that the acquisition of its
Interest is made as principal for its account for investment purposes
only and not with a view to the resale or distribution of such
Interest, except insofar as the Securities Act of 1933 and any
applicable securities law of any state or other jurisdiction permit
such acquisitions to be made for the account of others or with a view
to the resale or distribution of such Interest without requiring that
such Interest, or the acquisition, resale or distribution thereof, be
registered under the Securities Act of 1933 or any applicable
securities law of any state or other jurisdiction.
(b) The Investment Member agrees that it will not sell,
assign or otherwise transfer its Interest or any fraction thereof to
any Person who does not similarly represent and warrant and similarly
agree not to sell, assign or transfer such Interest or fraction
thereof to any Person who does not similarly represent and warrant and
agree.
(c) The Investment Member shall not sell, assign or
otherwise transfer its Interest or any fraction thereof to any Person
until the Investment Member has provided the Company with a legal
opinion, reasonably satisfactory to the Member-Manager, that such
sale, assignment or other transfer does not violate any state or
federal securities laws or require the Interest to be registered under
any such laws.
10.02. Restrictions on Transfer of Member's Interests.
(a) Under no circumstances will any offer, sale,
transfer, assignment, hypothecation or pledge of any Member Interest
be permitted unless the Member-Manager, in its sole discretion, shall
have Consented.
(b) The Member whose interest is being transferred shall
pay such reasonable expenses as may be incurred by the Company in
connection with such transfer.
10.03. Admission of Substitute or Additional Members.
(a) Subject to the other provisions of this Article X,
an assignee of the Interest of a Member (which shall be understood to
include any purchaser, transferee, donee, or other recipient of any
disposition of such Interest) shall be admitted as a Substitute or
Additional Member of the Company only upon the satisfactory completion
of the following:
(i) Consent of all remaining Members (which may
be withheld in their sole discretion) and the Consent of the Lender, if
required, shall have been given;
(ii) the assignee shall have accepted and agreed to
be bound by the terms and provisions of this Agreement by executing a
counterpart thereof or an appropriate amendment hereto, and such other
documents or instruments as the Member-Manager may require in order to
effect the admission of such Person as a Member;
(iii) an amended Agreement and/or Certificate
evidencing the admission of such Person as a Member shall have been
filed for recording pursuant to the requirements of the Act to the
extent required in order to effectuate the admission of such Person as
a Member;
(iv) the assignee shall have represented and agreed
in writing as required by Section 10.01;
(v) if the assignee is a corporation, the assignee
shall have provided the Member-Manager with evidence satisfactory to
counsel for the Company of its authority to become a Member under the
terms and provisions of this Agreement; and
(vi) the assignee or the assignor shall have
reimbursed the Company for all reasonable expenses, including all
reasonable legal fees and recording charges, incurred by the Company
in connection with such assignment.
(b) For the purpose of allocation of profits, losses and
credits, and for the purpose of distributing cash of the Company, a
Substitute or Additional Member shall be treated as having become, and
as appearing in, the records of the Company as a Member upon his
signing of an amendment to this Agreement, agreeing to be bound
hereby.
(c) The Member-Manager shall cooperate with the Person
seeking to become a Substitute or Additional Member by preparing the
documentation required by this Section and making all official filings
and publications. The Company shall take all such action, including
the filing of any amended Agreement and/or Certificate evidencing the
admission of any Person as a Member, and the making of any other
official filings and publications, as promptly as practicable after
the satisfaction by the assignee of the Interest of a Member of the
conditions contained in this Article IX to the admission of such
Person as a Member of the Company. Any cost or expense incurred in
connection with such admission shall be borne by the Company to the
extent of available Company assets, and otherwise by such assignee.
(d) In the event an assignment by any Member of his (its)
Interest where the nontransferring Members are entitled
to receive a majority of the nontransferred profits of
the Company pursuant to the UCA 48-2b-131 and such
nontransferring Members do not consent to the proposed
transfer or assignment, the transferee of the Interest
of the Member has no right to participate in the
management of the business and affairs of the Company
or to become a Member. In that event, the transferee
or assignee is entitled to receive only the share of
profits or other compensation by way of income and the
return of Contributions to which that Member would
otherwise be entitled.
10.04. Rights of Assignee of Company Interest.
(a) Except as provided in this Article and as required
by operation of law, the Company shall not be obligated for any
purpose whatsoever to recognize the assignment by any Member of his
(its) Interest until the Company has received actual Notice thereof.
(b) Any Person who is the assignee of all or any portion
of a Member's Interest, but does not become a Substitute or Additional
Member and desires to make a further assignment of such Interest,
shall be subject to all the provisions of this Article X to the same
extent and in the same manner as any Member desiring to make an
assignment of his (its) Interest.
ARTICLE XI
RIGHTS AND OBLIGATIONS
OF MEMBERS
11.01. Management of the Company. No Member who is not a
Member-Manager shall take part in the management or control of the
business of the Company nor transact any business in the name of the
Company. Except as otherwise expressly provided in this Agreement, no
Member who is not a Member-Manager, shall have the power or authority
to bind the Company or to sign any agreement or document in the name
of the Company. No Member who is not a Member-Manager, shall have any
power or authority with respect to the Company except insofar as the
consent of any Member shall be expressly required and except as
otherwise expressly provided in this Agreement.
11.02. Limitation on Liability of Members. The liability of
each Member for the obligations of the Company shall be limited to its
Capital Contribution as and when payable under the provisions of this
Agreement. No Member shall have any other liability to contribute
money to, or in respect of the liabilities or obligations of, the
Company, nor shall any Member be personally liable for any obligations
of the Company. No Member who is not a Member-Manager shall be
obligated to make loans to the Company.
Notwithstanding this provision, the Member-Manager shall execute
a guaranty in his individual capacity and not as Member-Manager, which
guarantees all obligations of the Member-Manager hereunder.
11.03. Other Activities. Any Member may engage in or possess
interests in other business ventures of every kind and description for
its own account, including without limitation, serving as general or
limited partner of a partnerships or members or managers of other
limited liability companies which own, either directly or through
interests in a partnerships, or other limited liability companies,
government-assisted housing projects similar to the Apartment Complex.
Neither the Company nor any of the Members shall have any right by
virtue of this Agreement in or to such other business ventures to the
income or profits derived therefrom.
11.04. Ownership by Member of Corporate Member-Manager or
Affiliate. No Member shall, at any time, either directly or
indirectly, own any stock or other interest in any corporate Member-
Manager if such ownership by itself or in conjunction with other stock
or other interests owned by other Members would, in the opinion of
Xxxxxxxx, Xxxxx & Xxxxxx or other tax counsel to the Investment
Member, jeopardize the classification of the Company as a partnership
for federal income tax purposes. In the event of any violation of the
provisions of this Section by any one or more Members, such Member or
Members shall either dispose of their Interests in the Company
(subject to and in compliance with the provisions of Article X) or of
their stock or other interest in the corporate Member-Manager or
Affiliates to the extent necessary so that, in the opinion of counsel
for the Company, the classification of the Company as a partnership
for federal income tax purposes is no longer in jeopardy. The
obligation of any such disposition required of more than one Member
shall be shared among them on an equitable basis. Notwithstanding the
foregoing, neither the Member-Manager nor any Member shall be liable
in damages to the Company or to any Member by reason of any violation
of this Section, except for damages arising (a) out of any material
misrepresentation by any Member relating to the ownership of stock or
other interest in a corporate Member-Manager or any affiliate by him
or by any member of his family (within the meaning of the attribution
rules set forth in Section 318 of the Code), or (b) out of any failure
by any Member to dispose of his Interest in the Company or of his
stock or other interest in a corporate Member-Manager or Affiliate
within a reasonable time after Notice to such Member by the Company of
the obligations to make such disposition.
ARTICLE XII
ALLOCATION OF TAXABLE INCOME, TAX LOSSES, TAX CREDITS
AND CASH DISTRIBUTIONS
12.01. Allocation of Taxable Income, Tax Losses and Tax
Credits.
A. General. Subject to the special allocations set forth in
this Article XII, Taxable Income, Tax Credits and Tax Losses for each
fiscal year of the Company (or part thereof) other than those to be
allocated pursuant to Section 12.01B or Section 12.02 hereof, shall be
allocated 99% to the Investment Member and 1% to the Member-Manager.
B. Nonrecourse Deductions. Nonrecourse Deductions for any
fiscal year or other period shall be specially allocated 99% to the
Investment Member and 1% to the Member-Manager.
C. Member Loan Nonrecourse Deductions. Any Member Loan
Nonrecourse Deductions for any Fiscal Year or other period shall be
specially allocated to the Member who bears the economic risk of loss
with respect to the loan to which such Member Loan Nonrecourse
Deductions are attributable in accordance with Treasury Regulations
Section 1.704-2(i).
12.02. Allocation of Taxable Income and Tax Losses from
Capital Transactions. Subject to the special allocations set forth in
this Article XII, Taxable Income and Tax Losses from Capital
Transactions shall be allocated to the Members as follows:
(i) Taxable Income from Capital Transactions shall be
allocated:
(a) first, to the Members with negative Capital Accounts
pro rata in such amounts as will result in the elimination of the
negative Capital Accounts of such Members; provided, however, that if
Taxable Income to be allocated pursuant to this Section 12.02(i)(a) is
insufficient to eliminate all negative Capital Accounts, such Taxable
Income will be allocated to Members with negative Capital Accounts in
the proportion that each such Member's negative Capital Account bears
to the total of all such Negative Capital Accounts;
(b) second, in the amount and to the extent necessary to
increase the Members' respective Capital Accounts to equal the amounts
distributable under Sections 12.04 A (c) and 12.04 A (e);
(c) then, the balance, if any, of such Taxable Income
shall be allocated 80% to the Member-Manager and 20% to the Investment
Member.
(ii) Tax Losses from Capital Transactions shall be
allocated:
(a) first, to the extent of the respective positive
balances in the Members' Capital Accounts; and
(b) any balance, 99% to the Tax Members and 1% to the
Member-Manager.
(iii) Notwithstanding the foregoing provisions, if Taxable
Income to be allocated includes income treated as ordinary income for
federal income tax purposes because such Taxable Income is
attributable to the recapture of depreciation under Section 1245 or
1250 of the Code, such Taxable Income, to the extent treated as
ordinary income, shall be allocated to and reported by the Members in
proportion to their accumulated depreciation allocations. The
Company shall keep records of such allocations of depreciation to the
Members. In determining the accumulated depreciation allocations of
the Members, depreciation deductions for each taxable year shall be
deemed allocated to the Members in the same proportion as the Taxable
Income or Tax Losses in that particular taxable year were allocated to
the Members.
12.03 Distribution of Cash Flow.
Subject to Lender approval, if required, Cash Flow shall be
determined for each fiscal year and shall be applied or distributed at
such time or times as the Member-Manager deems appropriate, but in no
event less than once in each fiscal year, in the following order of
priority:
(a) First, to payment of the Asset Management Fee
currently due, together with any accrued but unpaid Asset Management
Fees;
(b) Second, to the repayment of any Deferred Development
Fee, if any;
(c) Third, to repayment of any amounts due with respect
to any Subordinated Loans (including, without limitation, Operating
Deficit Loans made under Section 9.09(b); and
(d) Fourth, to payment of the Incentive Company
Management Fee together with any accrued but unpaid Incentive Company
Management Fee;
(e) Fifth, to repayment of the Investment Member of any
Reduction Amount pursuant to Section 6.01(d)(ii) or Credit Recovery
Loan pursuant to Section 6.01(d)(iii);
(f) Any balance, 80% to the Member-Manager and 20% to
the Investment Member.
12.04 Distributions of Distributable Proceeds from Capital
Transactions and Distributable Proceeds from Refinancings.
A. Distributable Proceeds from Capital Transactions and
Distributable Proceeds from Refinancings (other than liquidating
distributions pursuant to Section 13.02) shall be distributed in the
following order of priority:
(a) First, to the payment of any debts and liabilities
(including unpaid fees but excluding any debts, liabilities and/or
fees owed to any Members) and to the establishment of any required
reserves;
(b) Second, if the Permanent Mortgage Loans are in place
at the time of such Capital Transaction or if such Capital Transaction
constitutes a refinancing of the Permanent Mortgage Loans, to the
payment of the Member-Manager in an amount equal to five (5%) percent
of the proceeds after deductions made pursuant to this Section 12.04
A(a);
(c) Third, to the payment of any debts and liabilities
(including unpaid fees) owed to the Members or any Affiliates by the
Company for Company obligations, including the repayment of any Credit
Recovery Loans made pursuant to Section 6.01(d)(iii) or any
Subordinated Loans made pursuant to Section 9.09(b) and the funding of
reserves under Section 9.18; provided, however, that the foregoing
debts and liabilities owed to Members and their Affiliates shall be
paid or repaid, as applicable, in the following order of priority if
and to the extent applicable:
(1) The Asset Management Fees currently due, if any, together
with any accrued and unpaid Asset Management Fees,
(2) The Incentive Company Management Fee currently due, if any
together with any accrued and unpaid Incentive Company Management Fee;
(3) The repayment of the Investment Member of any Reduction
Amount pursuant to Section 6.01(d)(ii) together with any accrued or
unpaid interest or Credit Recovery Loan Pursuant to Section
6.01(d)(iii) together with any accrued or unpaid interest,
(4) Subordinated Loans to the Member-Manager,
(5) Any other such debts and liabilities; provided, however,
that all such other debts and liabilities owed to the Investment
Member shall be paid prior to any such debts and liabilities owed to
the Member-Manager; and
(6) The Deferred Developer Fee, if any.
(d) then to the Investment Member in an amount equal to
its Invested Amount;
(e) then to each Member-Manager in an amount equal to
its Invested Amount less any amounts received pursuant to this Section
12.04 A(b);
(f) then, except in the case of a refinancing of the
Mortgage Loan, to each Member in an amount equal to the positive
balance in such Member's Capital Account following adjustments made
pursuant to this Section 12.04A.
(g) the balance, if any, 80% to the Member-Manager and
20% to the Investment Member.
B. Distributable Proceeds from Capital Transactions and
Distributable Proceeds from Refinancings shall be distributed within
90 days after the end of the fiscal quarter in which such Capital
Transaction or Refinancing occurs. Distributions of Distributable
Proceeds from Capital Transactions and Distributable Proceeds from
Refinancings to the Members shall be made only after Capital Accounts
have been adjusted to reflect all previous allocations of Taxable
Income and Tax losses to the Members, for distributions of Cash Flow,
and for any other distributions of Distributable Proceeds form Capital
Transactions or Distributable Proceeds from Refinancings.
C. Amounts remaining in the Operating Deficit Reserve at the
time of any of the foregoing distributions shall be utilized by the
Company to reduce any amounts which remain outstanding under the
Development Agreement, and if no such amounts remain outstanding, then
to the Member-Manager.
12.05 Allocations Among Members.
A. For purposes of determining the Taxable Income (or Tax
Losses) or any other items allocable to any period, Taxable Income (or
Tax Losses) and any such other items shall be determined on a daily,
monthly, or other basis, as determined by the Member-Manager using any
permissible method under Code Section 706 and the Treasury Regulations
thereunder.
B. Taxable Income, Tax Losses, and Tax Credits for all
purposes of this Agreement shall be determined in accordance with the
accrual accounting method. Except as otherwise provided in this
Agreement, all items of Company income, gain, loss, deduction, and any
other allocations, including allocation of Book Profits and Losses,
shall be divided among the Members in the same proportions as they
share Taxable Income, Tax Credits, and Taxable Losses, as the case may
be, for such fiscal year.
C. In any year in which a Member sells, assigns or transfers
all or any portion of an Interest to any Person who during such year
is admitted as a substitute Member, the share of all Taxable Income,
Tax Losses, and Tax Credits, allocated to and of all Cash Flow and all
cash proceeds distributable under Section 11.04 distributed to, all
Members which is attributable to the Interest sold, assigned or
transferred shall be divided between the assignor and the assignee
using any one of the following methods as determined by agreement
between the assignor and assignee: (i) ratably on the basis of the
number of days in such year before, and the number of days on and
after, the execution by the assignee of this Agreement, or (ii) by
dividing the Company fiscal year into two segments, the first segment
being the time period in such year before the execution by the
assignee of this Agreement and the second segment being the time
period in such year beginning on the date of execution of this
Agreement, and allocating Taxable Income, Tax Losses, Tax Credits,
Cash Flow, and all cash proceeds distributable in each such segment
among the persons who were Members during that segment, or (iii) using
such other method as provided by the Code or regulations thereunder.
D. In the event that there is a determination that there is
any original issue discount or imputed interest attributable to the
Capital Contribution of any Member, or any loan between a Member and
the Company, any income or deduction of the Company attributable to
such imputed interest or original issue discount on such Capital
Contribution or loan (whether stated or unstated) shall be allocated
solely to such Member.
E. In the event that the deduction of all or a portion of any
fee paid or incurred by the Company to a Member or an Affiliate of a
Member is disallowed for federal income tax purposes by the Internal
Revenue Service with respect to a taxable year of the Company, the
Company shall then allocate to such Member an amount of gross income
of the Company for such year equal to the amount of such fee as to
which the deduction is disallowed.
F. If any Member's Interest in the Company is reduced but not
eliminated because of the admission of new Members or otherwise, or if
any Member is treated as receiving any items of property described in
Section 751(a) of the Code, the Member's Interest in such items of
Section 751(a) property that was property of the Company while such
Person was a Member shall not be reduced, but shall be retained by the
Member so long as the Member has an Interest in the Company and so
long as the Company has an Interest in such property.
G. The Members are aware of the income tax consequences of
the allocations made by this Article XII and hereby agree to be bound
by the provisions of this Article XII in reporting their shares of
Company income and loss for income tax purposes.
12.06 Qualified Income Offset.
(i) Notwithstanding any other provision of this Article
XII, in the event any Member unexpectedly receives (a) an adjustment
to the Capital Account balance of such Member as described in Section
1.704-1(b)(2)(ii)(d)(4) of the Treasury Regulations, (b) an allocation
to such Member of loss or deduction of the type described in Section
1.704-1(b)(2)(ii)(d)(5) of the Treasury Regulations, or (c) a
distribution to such Member in excess of any offsetting increase in
the Member's Capital Account balance during or prior to the year of
distribution, items of Company Taxable Income and of income that
constitute a credit to such Member's Capital Account shall be
specially allocated to such Member in an amount and manner sufficient
to eliminate, to the extent required by the Treasury Regulations under
Code Section 704(b), the Qualified Income Offset Amount (defined in
Section 12.06(ii) hereof) created by such adjustments, allocations, or
distributions as quickly as possible, provided that an allocation
pursuant to this Section 12.06(i) shall be made only if and to the
extent that such Member would have a Qualified Income Offset Amount
after all other allocations provided for in this Article have been
tentatively made as if this Section 12.06(i) were not in this
Agreement.
(ii) Notwithstanding anything to the contrary
contained in this Agreement, in no event shall Tax Losses of the
Company be allocated to a Member if such allocation would result in
such Member having a "Qualified Income Offset Amount" (as defined
below). As used herein, the term "Qualified Income Offset Amount"
for a Member means the deficit balance, if any, in such Member's
Capital Account as of the end of the relevant fiscal year after giving
effect to the following adjustments: (i) credit to such Capital
Account an amount equal to (a) the Member's Share of Minimum Gain
immediately prior to the allocation or distribution and (b) the sum of
such Member's allocable share of any recourse indebtedness of the
Company as determined under Section 752 of the Code and any
unconditional obligation of such Member to contribute additional
amounts to the capital of the Company in the future (to the extent not
previously taken into account in determining such Member's share of
recourse liabilities of the Company) and (ii) debit to such Capital
Account the allocations or distributions described in Section 12.06(i)
that, as of the end of the taxable year, are reasonably expected to be
made to such Member. All Tax Losses in excess of the limitation set
forth in this Section 12.06(ii) shall be allocated first to those
Members who would not have a Qualified Income Offset Amount after
taking into account such obligations, and any excess losses shall be
allocated among the Members in accordance with provisions of
Section 12.01A.
12.07. Minimum Gain Allocations.
A. Notwithstanding any other provisions of this Article XII,
if in any year there is a net decrease in the amount of the Company's
Minimum Gain, each Member will be allocated items of Taxable Income
and gain for such year equal to that Member's share of the net
decrease in Minimum Gain, within the meaning of Treasury Regulation
1.704-2(g)(2), and subject to the exceptions set forth in Treasury
Regulation 1.704-2(f).
Allocations of Taxable Income and gain (hereinafter referred to
as a "Minimum Gain Chargeback") required pursuant to this Section
12.07 shall consist first of gains recognized from the disposition of
items of Company property subject to one or more nonrecourse
liabilities of the Company to the extent of the decrease in Minimum
Gain attributable to the disposition of such items of property (or if
such gains exceed the amount of the Minimum Gain Chargeback required
for such taxable year, the Minimum Gain Chargeback shall consist of a
proportionate share of each such gain), and the remainder of such
Minimum Gain Chargeback shall consist of a pro-rata portion of the
other items of Taxable Income and gain of the Company for that year.
If the amount of the Minimum Gain Chargeback requirement exceeds the
Company's Taxable Income and gains for the taxable year, the excess
shall carry over to subsequent years.
B. If in any year there is a net decrease (within the meaning
of Treasury Regulations Section 1.704-2(i)(3) in Member Nonrecourse
Debt Minimum Gain, any Member with a share of that Member Nonrecourse
Debt Minimum Gain (determined under Treasury Regulation 1.704-2(i)(5))
as of the beginning of the year shall be allocated items of profits
and gains for that year (and if necessary, subsequent years) equal to
that Member's share of the net decrease in Member Nonrecourse Debt
Minimum Gain in accordance with Treasury Regulation Section 1.704-
2(i)(4).
12.08 Regulatory Allocations. The allocations set forth in
Sections 12.01B, 12.01C, 12.06 and 12.07 herein (the "Regulatory
Allocations") are intended to comply with certain requirements of
Treasury Regulation Section 1.704-1(b). It is the intent of the
Members that, to the extent possible, all Regulatory Allocations shall
be offset either with other Regulatory Allocations or with special
allocations of other items of Taxable Income, Tax Losses and items of
income, gain, loss, or deduction pursuant to this Section 12.08.
Therefore, notwithstanding any other provision of this Article (other
than the Regulatory Allocations), the Member-Manager shall make such
offsetting special allocations of Taxable Income, Tax Losses, and
items of income, gain, loss, or deduction in whatever manner it
determines appropriate so that, after such offsetting allocations are
made, each Capital Account balance is, to the extent possible, equal
to the Capital Account balance such Member would have had if the
Regulatory Allocations were not part of the Agreement and all items
were allocated pursuant to Sections 12.01A and 12.02. In exercising
its discretion under this Section 12.08, the Member-Manager shall take
into account future Regulatory Allocations under Section 12.07 that,
although not yet made, are likely to offset other Regulatory
Allocations previously made under Sections 12.01B and 12.01C.
12.09 Members' Company Non-recourse Liabilities. For purposes
of Code Section 752, each Member's share of Company non-recourse
liabilities shall be determined in accordance with Treasury Regulation
1.752-3(a) or successor regulation. In this connection, for purposes
of determining each Member's proportionate share of the excess non-
recourse liabilities of the Company pursuant to Treasury Regulation
1.752-3(a), the Investment Member shall have a 99% interest in Company
Taxable Income or profits and the Member-Manager shall have a 1%
interest in Company Taxable Income or profits.
12.10 Tax Allocations: Code Section 704(c). In accordance with
Code Section 704(c) and the Treasury Regulations thereunder, income,
gain, loss, and deduction with respect to any property contributed to
the capital of the Company shall be allocated among the Members so as
to take account of any variation between the adjusted basis of such
property to the Company for federal income tax purposes and its
initial Gross Asset Value (computed in accordance with Section 12.12
hereof).
In the event the Gross Asset Value of any Company properties is
adjusted pursuant to Section 12.12 hereof, subsequent allocations of
income, gain, loss, and deduction with respect to such asset shall
take into account any variation between the adjusted basis of such
asset for federal income tax purposes and its Gross Asset Value in the
same manner as under Code Section 704(c) and the Treasury Regulations
thereunder.
Any elections or other decisions relating to such allocations
shall be made by the Member-Manager with the Consent of the Member, in
any manner that reasonably reflects the purpose and intention of this
Agreement. Allocations pursuant to this Section are solely for
purposes of federal, state, and local taxes and shall not affect, or
in any way be taken into account in computing, any Member's Capital
Account or share of Book Profits and Losses, other items, or
distributions pursuant to any provision of this Agreement.
12.11. Tax Matters Partner.
A. The Member-Manager is hereby designated as Tax Matters
Partner of the Company, and shall engage in such undertakings as are
required of the Tax Matters Partner of the Company, as provided in
regulations pursuant to Section 6231(a)(7) of the Code. Each Member,
by its execution of this Agreement, Consents to such designation of
the Tax Matters Partner and agrees to execute, certify, acknowledge,
deliver, swear to, file and record at the appropriate public offices
such documents as may be necessary or appropriate to evidence such
Consent.
B. The Tax Matters Partner is hereby authorized, but not
required:
(a) to enter into any settlement with the Internal
Revenue Service or the Secretary with respect to any tax audit or
judicial review, in which agreement the Tax Matters Partner may
expressly state that such agreement shall bind the other Members,
except that such settlement agreement shall not bind any Member who
(within the time prescribed pursuant to the Code and regulations
thereunder) files a statement with the Secretary providing that the
Tax Matters Partner shall not have the authority to enter into a
settlement agreement on behalf of such Member;
(b) in the event that a notice of a final administrative
adjustment at the Company level of any item required to be taken into
account by a Member for tax purposes (a "final adjustment") is mailed
to the Tax Matters Partner, to seek judicial review of such final
adjustment, including the filing of a petition for readjustment with
the Tax Court, the District Court of the United States for the
district in which the Company's principal place of business is
located, or the United States Claims Court;
(c) to intervene in any action brought by any other
Member for judicial review of a final adjustment;
(d) to file a request for an administrative adjustment
with the Internal Revenue Service at any time and, if any part of such
request is not allowed by the Internal Revenue Service, to file a
petition for judicial review with respect to such request;
(e) to enter into an agreement with the Internal Revenue
Service to extend the period for assessing any tax which is
attributable to any item required to be taken into account by a Member
for tax purposes, or an item affected by such item; and
(f) to take any other action on behalf of the Members or
the Company in connection with any administrative or judicial tax
proceeding to the extent permitted by applicable law or regulations.
C. The Company shall indemnify and reimburse the Tax Matters
Partner for all expenses, including legal and accounting fees, claims,
liabilities, losses and damages incurred in connection with any
administrative or judicial proceeding with respect to the tax
liability of the Members. The payment of all such expenses shall be
made before any distributions are made or any discretionary reserves
are set aside by the Member-Manager. The taking of any action and the
incurring of any expense by the Tax Matters Partner in connection with
any such proceeding, except to the extent required by law, is a matter
in the sole discretion of the Tax Matters Partner and the provisions
on limitations of liability of the Member-Manager and indemnification
set forth in Section 9.07 of this Agreement shall be fully applicable
to the Tax Matters Partner in its capacity as such.
12.12 Capital Accounts
A. A Capital Account shall be maintained on the books of the
Company for each Member, which shall be (i) credited with its Capital
Contributions and the amount of any Company liabilities that are
assumed by such Member or that are secured by any Company property
distributed to such Member; (ii) credited with its distributive share
of Taxable Income and any income of the Company that is exempt from
federal income tax and not otherwise taken into account in computing
Taxable Income; (iii) charged with its distributive share of Tax
Losses and any nondeductible expenditures of the Company (including
Syndication Expenses) described in Code Section 705(a)(2)(B) or
treated as Code Section 705(a)(2)(B) expenditures pursuant to Treasury
Regulation Section 1.704-1(b)(2)(iv)(i) and not otherwise taken into
account under this Section 12.12; and (iv) charged with any
distributions to it and with the amount of any liabilities of such
Member that are assumed by the Company or that are secured by any
property contributed by such Member to the Company.
In the case of property other than cash contributed to the
Company or distributed to a Member, each Member's Capital Account will
be credited with the Gross Asset Value of property contributed to the
Company (net of liabilities assumed by the Company and liabilities to
which such contributed property is subject) and shall be debited with
the cash and the Gross Asset Value of property distributed to it (net
of liabilities assumed by such Member and liabilities to which such
distributed property is subject). In the event the Gross Asset Values
of Company assets are adjusted pursuant to Section 12.12B hereof, the
Capital Accounts of all Members shall be adjusted simultaneously to
reflect the aggregate net adjustment as if the Company recognized gain
or loss equal to the amount of such aggregate net adjustment.
Upon the sale, exchange or other transfer of an Interest, or the
assignment of such Interest to a new Member, the Capital Account of
the transferor Member shall carry over to the transferee Member.
B. For purposes of determining and maintaining the Members'
Capital Accounts, the Gross Asset Value of Company assets shall be
adjusted as follows:
(i) The initial Gross Asset Value of any asset
contributed by a Member to the Company shall be the gross fair market
value of such asset, as determined by the contributing Member and the
Company;
(ii) The Gross Asset Values of all Company assets
shall be adjusted to equal their respective gross fair market values,
as determined by the Member-Manager, as of the following times: (a)
the acquisition of an additional Interest in the Company by any new or
existing Member in exchange for more than a de minimis Capital
Contribution; (b) upon liquidation of the Company, or upon the
distribution by the Company to a Member of more than a de minimis
amount of money or other Company property to a retiring or continuing
Member as consideration for an Interest in the Company or (c) under
generally accepted industry accounting practices, provided
substantially all of the Company's property (excluding money) consists
of stock, securities, commodities, options, warrants, futures, or
similar instruments that are readily tradable on an established
securities market; and
(iii) If the Gross Asset Value of an asset has been
determined or adjusted pursuant to subsection (i) or (ii) of this
Section 12.12B, such Gross Asset Value shall thereafter be adjusted by
the Book Depreciation taken into account with respect to such asset
for purposes of computing Book Profits and Losses, as set forth in
Section 12.12B.
C. For purposes of determining and maintaining the Members'
Capital Accounts and the computation of Book Profits and Losses only,
the following adjustments shall be made to the calculation of Taxable
Income and Tax Losses reflected in the Members' Capital Accounts:
(i) Gain or loss resulting from any disposition of
Company property with respect to which gain or loss is recognized for
federal income tax purposes shall be computed by reference to the
Gross Asset Value of the property disposed of, notwithstanding that
the adjusted tax basis of such property differs from its Gross Asset
Value; and
(ii) In lieu of the depreciation, amortization, and
other cost recovery deductions taken into account in computing such
Taxable Income or Tax Losses, there shall be taken into account Book
Depreciation for such fiscal year or other period, computed as
hereinafter set forth.
(iii) For this purpose, "Book Depreciation" means,
for each fiscal year or other period, an amount equal to the
depreciation, amortization, or other cost recovery deduction allowable
with respect to an asset for such year or other period, except that if
the Gross Asset Value of an asset differs from its adjusted basis for
federal income tax purposes at the beginning of such year or other
period, Book Depreciation shall be an amount which bears the same
ratio to such beginning Gross Asset Value as the federal income tax
depreciation, amortization, or other cost recovery deductions for such
year or other period bears to such beginning adjusted tax basis.
(iv) Allocations of Book Profits and Losses among
the Members shall be made in accordance with the provisions of this
Article XII respecting allocations of Taxable Income and Tax Losses
among the Members.
12.13. Authority of Member-Manager to Vary Allocations to
Preserve and Protect Member's Intent.
(a) It is the intent of the Members that each Member's
distributive share of income, gain, loss, deduction, or credit (or
item thereof) shall be determined and allocated in accordance with
this Article XII 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 Article XII, the Member-Manager
hereby are authorized and directed to allocate income, gain, loss,
deduction, or credit (or item thereof) arising in any year differently
than otherwise provided for in this Article XII to the extent that
allocating income, gain, loss, deduction or credit (or item thereof)
in the manner provided for in Article XII would cause the
determinations and allocations of each Member's distributive share of
income, gain, loss, deduction, or credit (or item thereof) not to be
permitted by Section 704 (b) of the Code and Treasury Regulations
promulgated thereunder. Any allocation made pursuant to this Section
12.13 shall be deemed to be a complete substitute for any allocation
otherwise provided for in this Article XII and no amendment of this
Agreement or approval of any Member shall be required.
(b) In making any allocation (the "new allocation")
under Section 12.13(a), the Member-Manager is authorized to act only
after having been advised by the Accountants that, under Section
704(b) of the Code and the Treasury Regulations thereunder, (i) the
new allocation is necessary, and (ii) the new allocation is the
minimum modification of the allocations otherwise provided for in this
Article XII necessary in order to assure that, either in the then
current year or in any preceding year, each Member's distributive
share of income, gain, loss, deduction, or credit (or item thereof) is
determined and allocated in accordance with this Article XII to the
fullest extent permitted by Section 704(b) of the Code and the
Treasury Regulations thereunder.
(c) If the Member-Manager is required by Section
12.13(a) to make any new allocation in a manner less favorable to any
Member than is otherwise provided for in this Article XII, then the
Member-Manager are authorized and directed, only after having been
advised by the Accountants that it is permitted by Section 704(b) of
the Code, to allocate income, gain, loss, deduction, or credit (or
item thereof) arising in later years in such manner so as to bring the
allocations of income, gain, loss, deduction, or credit (or item
thereof) to such Member as nearly as possible to the allocations
thereof otherwise contemplated by this Article XII.
(d) New allocations made by the Member-Manager under
Section 12.13(a) and Section 12.13(c) in reliance upon the advice of
the Accountants shall be deemed to be made pursuant to the fiduciary
obligation of the Member-Manager to the Company and the Members, and
no such allocation shall give rise to any claim or cause of action by
any Member.
ARTICLE XIII
SALE, DISSOLUTION AND LIQUIDATION
13.01. Dissolution of the Company. The Company shall be
dissolved upon the earlier of the expiration of the term of the
Company, or upon:
(a) subject to Section 7.03, the withdrawal, Bankruptcy,
death, dissolution or adjudication of incompetency of a Member-
Manager; who is at that time the sole Member-Manager.
(b) the sale or other disposition of all or
substantially all of the assets of the Company;
(c) the election by the Member-Manager, with the Consent
of BCTC 94, Inc.; or
(e) any other event causing the dissolution of the
Company under the laws of the State.
13.02. Winding Up and Distribution.
(a) In the event of dissolution and termination of the
Company, a full accounting of the assets and liabilities shall be
taken, and the assets shall be distributed in accordance with this
Section 13.02 as follows, after taking into account all other
allocations and distributions under this Agreement for the Fiscal
Year, including, without limitation, the allocations under Article XII
hereof;
(A) To the payment of all debts and liabilities of the
Company then due in the order of priority as provided by laws, except
those liabilities to Members on account of their Contributions (but
including fees and loans payable to Members);
(B) To the setting up of any reserves that the
Liquidator may deem reasonably necessary for any contingent or
unforeseen liabilities or obligations of the Company;
(C) To the Members, in an amount equal to the positive
balances in their Capital Accounts.
(b) The Liquidator shall file all certificates and
notices of the dissolution of the Company required by law. The
Liquidator shall proceed without any unnecessary delay to sell and
otherwise liquidate the Company's property and assets; provided,
however, that if the Liquidator shall determine that an immediate sale
of part or all of the Company property would cause undue loss to the
Members, then in order to avoid such loss, the Liquidator may, except
to the extent provided by the Act, defer the liquidation as may be
necessary to satisfy the debts and liabilities of the Company to
Persons other than the Members. Upon the complete liquidation and
distribution of the Company assets, the Members shall cease to be
Members of the Company, and the Liquidator shall execute, acknowledge
and cause to be filed all certificates and notices required by the law
to terminate the Company.
(c) Upon the dissolution of the Company pursuant to
Section 13.01, the Accountants shall promptly prepare, and the
Liquidator shall furnish to each Member, a statement setting forth the
assets and liabilities of the Company upon its dissolution. Promptly
following the complete liquidation and distribution of the Company
property and assets, the Accountants shall prepare, and the Liquidator
shall furnish to each Member, a statement showing the manner in which
the Company assets were liquidated and distributed.
13.03. Intentionally Deleted.
ARTICLE XIV
BOOKS AND RECORDS, ACCOUNTING
TAX ELECTIONS, ETC.
14.01. Books and Records. The books and records of the Company
shall be maintained on an accrual basis in accordance with sound
federal income tax accounting principles. These and all other records
of the Company, including information relating to the status of the
Apartment Complex, information with respect to the sale by the Member-
Manager or any Affiliate of goods or services to the Company, and any
information required to be maintained by the Act or any governmental
agencies having jurisdiction, shall be kept at the principal office of
the Company and shall be available for examination there by any
Member, or his duly authorized representative, at any and all
reasonable times. Any Member, or his duly authorized representative,
upon paying the costs of collection, duplication and mailing, shall be
entitled to a copy of the list of names and addresses of the Members
and of any of the books and records of the Company.
14.02. Bank Accounts. All funds of the Company not otherwise
invested shall be deposited in one or more accounts maintained in such
banking institutions as the Member-Manager shall determine, and
withdrawals shall be made only in the regular course of Company
business on such signature or signatures as the Member-Manager may,
from time to time, determine. No funds of the Company shall be
deposited in any financial institution in which any Member is an
officer, director or holder of any proprietary interest.
14.03. Accountants. The Accountants shall annually prepare for
execution by the Member-Manager all tax returns of the Company, shall
annually audit the books of the Company, and shall certify, in
accordance with generally accepted accounting principles, a balance
sheet, a profit and loss statement, and a cash flow statement. With
respect to each fiscal year during the Company's operations, at such
time as the Accountants shall have prepared the proposed tax return
for such year, the Accountants shall provide copies of such proposed
tax return to the Investment Member and to its accountants,
___________________, of _________________, for their review and
comment. Any comments and/or changes in such proposed tax return
reasonably recommended by the Investment Member's accountants shall be
taken into account and made by the Accountants prior to the completion
of such tax return for execution by the Member-Manager. The Company
shall reimburse Boston Capital Communications Limited Company, an
affiliate of the Investment Member, for its expenses incurred in
causing the Company's proposed tax return to be reviewed by the
Investment Member's accountants, if and to the extent that such review
results in material modifications to such proposed tax return. A full
detailed statement shall be furnished to all Members, showing such
assets, properties, and net worth and the profits and losses of the
Company for the preceding fiscal year. All Members shall have the
right and power to examine and copy, at any and all reasonable times,
the books, records and accounts of the Company.
14.04. Reports to Members.
(a) Within 30 days of the date of Substantial
Completion, the Member-Manager shall cause to be prepared and
distributed to the Investment Member, a Credit Basis Worksheet for
each building, and in the form specified by Boston Capital.
(b) The Member-Manager shall cause to be prepared and
distributed to the Investment Member and the Special Member at any
time during a fiscal year of the Company:
(i) By March 15 of the year after the end of
each fiscal year of the Company, (A) an audited financial statement
which includes a balance sheet as of the end of such fiscal year and
statements of income, Investment Member's equity, and changes in
financial position and a Cash Flow statement, for the year then ended,
all of which, except the Cash Flow statement, shall be prepared in
accordance with generally accepted accounting principles and
accompanied by an auditor's report containing an opinion of the
Accountants, and (B) a report of the activities of the Company during
the period covered by the report. Such report shall set forth
distributions to Members for the period covered thereby and 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 the
Apartment Complex or any other investments of the Company, (4) lease
payments on net leases with builders and sellers, and (5) reserves.
With respect to any distribution to the Investment Member, the report
called for shall separately identify distributions from (A) Cash Flow
from operations during the period, (B) Cash Flow from operations
during a prior period which had been held as reserves, (C) proceeds
from disposition of property and investments, (D) lease payments on
net leases with builders and sellers, (E) reserves from the gross
proceeds of the offering originally obtained from the Investment
Member, (F) borrowed monies, (G) loans or contributions from the
Investment Member, and (H) transactions outside of the ordinary course
of business with a description thereof. If the Completion Date had
not yet occurred as of December 31 in the year which is the subject of
the report, then this Section 14.04(a)(i) shall require only the
balance sheet for the year then ended.
(ii) By March 1 of the year after the end of
each fiscal year of the Company, all information necessary for the
preparation of the Investment Members' federal income tax returns,
together with a draft of the Company's federal income tax return for
such fiscal year.
(iii) Within thirty (30) days after the end
of each calendar quarter of a fiscal year of the Company, a report
containing:
(A) A balance sheet, which may be
unaudited; and
(B) a statement of income for the
quarter then ended, which may be unaudited; and
(C) A Low Income Housing Credit
Monitoring form, Rent Rolls, Statement of Income and Expenses,
Operating Statement and Occupancy Rental Report, all in the form
specified by Boston Capital; and
(D) A certification that the Apartment
Complex and its tenants are in compliance with all applicable federal
and state laws and regulation; and
(E) other pertinent information
regarding the Company and its activities during the quarter covered by
the report.
(c) Within ninety (90) days after the end of each fiscal year
of the Company the Member-Manager shall provide to the Investment
Member:
(i) A certification by the Member-Manager
that (A) all Mortgage Loan payments and taxes and
insurance payments with respect to the Apartment Complex are current
as of the date of the year-end report, (B) to the best of the Member-
Manager's knowledge and belief there is no default under the Project
Documents or this Agreement, or if there is any default, a description
thereof, and (C) to the best of the Member-Manager's knowledge and
belief there is no building, health or fire code violation or similar
violation of a governmental law, ordinance or regulation against the
Apartment Complex or, if there is any violation, a description
thereof;
(ii) the information specified in Section
14.04(b);
(iii) to the extent not previously disclosed
in a report required hereunder a descriptive statement of all
transactions during the fiscal year between the Company and the
Member-Manager and/or any Affiliate, including the nature of the
transaction and the payments involved (including accrued cash or other
payments);
(iv) a Cash Flow statement; and
(v) if required, a copy of the annual report
to be filed with the United States Treasury concerning the status of
the Apartment Complex as low income housing and, if required, a
certificate to the Agency concerning the same.
(d) Upon the written request of the Investment Member for
further information with respect to any matter covered in items (a) or
(b) above, the Member-Manager shall utilize its best efforts to
furnish such information within 30 days of receipt of such request.
(e) Prior to October 15 of each year, the Member-Manager, on
behalf of and at the expense of the Company, shall send to the
Investment Member an estimate of the Investment Member's share of the
Tax Credits, identified by building, and of profits and losses of the
Company for federal income tax purposes for the current fiscal year,
all in the form specified by Boston Capital. Such estimate shall be
prepared by the Member-Manager and the Accountants.
(f) Within 15 days after the end of any calendar month during
which
(i) there is a material default by the Company 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) the Member-Manager have received any notice of a
material fact which may substantially affect further distributions, or
(iv) any Member has pledged or collateralized his
Interest in the Company, the Member-Manager shall send the Investment
Member a detailed report of such event.
(g) On or before the Admission Date, the Member-Manager, on
behalf of the Company, shall send to the Investment Member a copy of
all requests for disbursements or other extensions of credit under the
Construction Loan which have been submitted to the Construction Lender
prior to the Admission Date. After the Admission Date, the Member-
Manager, on behalf of the Company, shall send to the Investment
Member, on or before the tenth day of each month, a copy of (i) all
reports required by the Agency, filed the previous month and covering
the status of project operations and (ii) each request for a
disbursement or other extensions of credit under the Construction Loan
submitted to the Construction Lender during the previous month. In
addition, within thirty (30) days after the occurrence of Substantial
Completion, the Member-Manager, on behalf of the Company, shall
prepare and send to the Investment Member a Credit Basis Worksheet for
each building within the Apartment Complex, in the format provided by
Boston Capital. The Member-Manager shall provide to the Investment
Member such other reports from time to time as may be reasonably
required by the Investment Member with the reasonable consent of the
Member-Manager or by federal or state agencies having jurisdiction.
(h) (i) In the event that, and in such circumstances beyond
the control of the Member-Manager, the reports or information provided
for in Sections 14.04 (b)(i) and/or 14.04(b)(ii) above are, at any
time, not provided within the time period(s) specified in such
Sections, the Member-Manager shall be obligated to pay to the
Investment Member the sum of $200 per day, as liquidated damages, for
each day from the date upon which such reports or information is(are)
due pursuant to the provisions of the aforesaid Sections until the
date upon which such reports or information is (are) provided.
(ii) In the event that the reporting
requirements set forth in any of the above provisions of this Section
14.04 are not met, the Investment Member, in its reasonable
discretion, may direct the Member-Manager to dismiss the Accountants,
and to designate successor Accountants, subject to the approval of the
Investment Member; provided, however, that if the Member-Manager and
the Investment Member cannot agree on the designation of successor
Accountants, the successor Accountants shall be designated by the
Investment Member in its sole discretion. These costs shall not
exceed the average of three bids from qualified Accountants obtained
by the Member-Manager. The Investment Member shall give the Member-
Manager at least 60 days' Notice of any material change in the
reporting requirements set forth herein.
14.05. Section 754 Elections. In the event of a transfer of
all or any part of the Interest of a Member-Manager or of a Member,
the Company may elect, pursuant to Sections 743 and 754 of the Code
(or any corresponding provision of succeeding law), to adjust the
basis of the Company property if, in the opinion of the Investment
Member, based upon the advice of the Accountants, such election would
be most advantageous to the Investment Member. Each Member agrees to
furnish the Company with all information necessary to give effect to
such election.
14.06. Fiscal Year and Accounting Method. The fiscal year of
the Company shall be the calendar year. All Company accounts shall be
determined on the accrual basis.
ARTICLE XV
AMENDMENTS
15.01. Proposal and Adoption of Amendments. This Agreement may
be amended, after giving 20 days' Notice to the Members hereunder (a)
by the Member-Manager with the Consent of the Members, which Consent
(except in the case of any proposed amendment which the Members
reasonably determine to be adverse to their interests as Members)
shall not be unreasonably withheld or (b) by the Members with the
Consent of the Member-Manager which Consent (except in the case of any
proposed amendment which the Member-Manager reasonably determine to be
adverse to their interests as Members) shall not be unreasonably
withheld or delayed. In determining whether or not to give its
Consent to an amendment prepared by the Members, the Member-Manager
agrees to take into account the investment objectives of the
Investment Member. The proposed amendment hereunder shall become
effective at such time as it has been approved in writing by all
Members.
ARTICLE XVI
CONSENTS, VOTING AND MEETINGS
16.01. Method of Giving Consent. Any Consent required by this
Agreement may be given by a written Consent given by the consenting
Member and received by the Member-Manager at or prior to the doing of
the act or thing for which the Consent is solicited.
16.02. Submissions to Members. The Member-Manager shall give
the Members Notice of any proposal or other matter required by any
provision of this Agreement or by law to be submitted for
consideration and approval of the Members. Such Notice shall include
any information required by the relevant provision or by law.
16.03. Meetings; Submission of Matter for Voting. Subject to
the provisions of Section 11.01, a majority in Interest of the Members
shall have the authority to convene meetings of the Company and to
submit matters to a vote of the Members.
ARTICLE XVII
GENERAL PROVISIONS
17.01. Burden and Benefit. 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.
17.02. Applicable Law. This Agreement shall be construed
and enforced in accordance with the laws of the State.
17.03. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original copy and
all of which together shall constitute one agreement binding on all
parties hereto, notwithstanding that all the parties shall not have
signed the same counterpart.
17.04. Separability of Provisions. Each provision of this
Agreement shall be considered separable and if for any reason any
provision which is not essential to the effectuation of the basic
purposes of this Agreement is determined to be invalid and contrary to
any existing or future law, such invalidity shall not impair the
operation of or affect those provisions of this Agreement which are
valid.
17.05. Entire Agreement. This Agreement and the ancillary
agreements executed in connection herewith set forth all (and is
intended by all parties to be an integration of all) of the
representations, promises, agreements and understandings among the
parties hereto with respect to the Company, the Company business and
the property of the Company, and there are no representations,
promises, agreements or understandings, oral or written, express or
implied, among them other than as set forth or incorporated herein.
17.06. Liability of the Investment Member. Notwithstanding
anything to the contrary contained herein, neither the Investment
Member nor any of its partners, general or limited, shall have any
personal liability to any of the parties to this Agreement with regard
to the representations and covenants extended, or the obligations
undertaken, by the Investment Member under this Agreement. In the
event that the Investment Member shall be in default under any of the
terms of this Agreement, the sole recourse of any party hereto for any
indebtedness due hereunder, or for any damages resulting from any such
default by the Investment Member, shall be against the capital
contributions of the investor limited partners of the Investment
Member allocated to, and remaining for investment in, the Company;
provided however, that under no circumstances shall the liability of
the Investment Member for any such default be in excess of the
aggregate of: (a) the amount of Capital Contribution payable by the
Investment Member to the Company, under the terms of this Agreement,
at the time of such default, and (b) an amount equal to reasonable
attorneys' fees reasonably and necessarily incurred by the Member-
Manager in obtaining payment of any Installment(s) not made by the
Investment Member when due and payable pursuant to the provisions of
this Agreement, provided that if the Investment Member wrongfully does
not make its required Capital Contribution when due, as provided
hereunder, its allocation of Tax Credits, Losses and distributions
shall be proportionately reduced in favor of the Member-Manager.
17.07. Environmental Protection.
(a) The Member-Manager represents and warrants that
(i) they have no actual knowledge of any deposit, storage, disposal,
burial, discharge, spillage, uncontrolled loss, seepage or filtration
of any Hazardous Substances at, upon, under or within the Land or any
contiguous real estate, and (ii) neither of them has caused or
permitted to occur, and neither of them shall permit to exist, any
condition which may cause a discharge of any Hazardous Substances at,
upon, under or within the Land or on any contiguous real estate.
(b) The Member-Manager further represents and warrants
that neither it nor any of its Affiliates (i) has been, or will be
involved in operations at or, pursuant to its best efforts, near the
Land, which operations could lead to (A) the imposition of liability
under the Hazardous Waste Laws on the Company or on any other
subsequent or former owner of the Land or (B) the creation of a lien
on the Land under the Hazardous Waste Laws or under any similar laws
or regulations; and (ii) has permitted, or will permit, any tenant or
occupant of the Apartment Complex to engage in any activity that could
impose liability under the Hazardous Waste Laws on such tenant or
occupant, on the Land or on any other owner of the Apartment Complex.
(c) The Member-Manager shall comply strictly and in all
respects with the requirements of the Hazardous Waste Laws and related
regulations and with all similar laws and regulations.
(d) The Member-Manager shall at all times indemnify and
hold harmless the Investment Member against and from any and all
claims, suits, actions, debts, damages, costs, charges, losses,
obligations, judgments, and expenses, of any nature whatsoever,
suffered or incurred by the Investment Member, under or on account of
the Hazardous Waste Laws or any similar laws or regulations, including
the assertion of any lien thereunder, suffered or incurred by the
Investment Member as the result of the required removal or remediation
under applicable Hazardous Waste Laws or any similar laws or
regulations of contamination of the Land attributable to the release
of Hazardous Substances thereon or thereunder except for claims,
suits, actions, debts, damages, costs, charges, losses, obligations,
judgments, or expenses arising from the Investment Member's own
negligence, misconduct or fraud. The obligations of the person who is
the Member-Manager as of the date of this Agreement with respect to
the contamination of the Land under this subsection (d) shall exclude
liability of such person for contamination occurring after the date,
if ever, that such person ceases to be the Member-Manager.
(e) For purposes of this Section 17.07, "Hazardous
Substances" means oil, petroleum or chemical liquids or solids, liquid
or gaseous products or any hazardous wastes or hazardous substances,
as those terms are used in the Hazardous Waste Laws; and "Hazardous
Waste Laws" means the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, and any other federal, state
or local law governing Hazardous Substances, as such laws may be
amended from time to time. Anything herein to the contrary
notwithstanding, the definition of Hazardous Substances shall not
include such building materials used in the ordinary course for
similar type construction including, without limitation, concrete or
asphalt to be used at the Land, or other materials used and/or stored
in compliance with applicable Hazardous Waste Laws.
17.08. Notices to the Investment Member. Any Notice
required by the provisions of this Agreement to be given to the
Investment Member shall be addressed as follows:
Boston Capital Tax Credit Fund IV, L.P.
c/o Boston Capital Members, Inc.
Xxx Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
ATTN: Xxxxxx X. Xxxxxxxx, Acquisition Associate
And a copy to: Xxxxxxxx, Xxxxx & Xxxxxx
Xxx Xxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, XX 00000-0000
ATTN: Xxxxxxx X. XxXxxxxx, Esq.
17.09. Notices to the Member-Manager. Any Notice
required by the provisions of this Agreement to be given to the
Member-Manager shall be addressed as follows:
Xxxxx X. Xxxxx
0000 Xxxxxxxx Xxxxxx
Xx. Xxxxxx, Xxxx 00000
ATTN: Xxxxx X. Xxxxx, Member-Manager
And a copy to: Jones, Waldo, Xxxxxxxx & XxXxxxxxx
000 X. Xxxxxxxxxx, Xxxxx 000
Xx. Xxxxxx, XX 00000
ATTN: Xxxxxxx Xxxxxxxx, Esq.
17.10. Resolution of Inconsistencies. If there are
inconsistencies between this Agreement and the Articles, the Articles
shall control. If there are inconsistencies between this Agreement
and the Act, this Agreement shall control, except to the extent the
inconsistencies relate to provisions of the Act that the Members
cannot alter by agreement. Without limiting the generality of the
foregoing, unless the language or context clearly indicates a
different intent, the provisions of this Agreement pertaining to the
company's governance and financial affairs and the rights of the
Members upon withdrawal, transfer, removal and Dissolution shall
supersede the provisions of the Act relating to the same matters.
17.11. Additional Instruments. Each Member shall execute and
deliver any document or statement necessary to give effect to the
terms of this Agreement or to comply with any law, rule or regulation
governing the Company's formation and activities.
17.12. Withdrawal of Initial Member. Xxxxx Construction
Company hereby withdraws as the Initial Member of the Company.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties have affixed their signatures
and seals to this Amended and Restated Operating Agreement of
Hurricane Hills, L.C., as of the date first written above.
WITNESS: MEMBERS
___________________________ By: /s/ Xxxxx X. Xxxxx
Witness Xxxxx X. Xxxxx, Member-
Manager
BOSTON CAPITAL TAX CREDIT FUND IV
L.P.
By: Boston Capital Associates IV
L.P., its Managing Partner
By: C&M Associates d/b/a
Boston Capital Associates,
its general partner
___________________________ By:/s/ Xxxxxx Xxxx Xxx
Witness: Xxxxxx Xxxx
Xxx, as
Attorney-in-
Fact of Xxxx
X. Xxxxxxx,
Partner
SPECIAL MEMBER:
ATTEST:
BCTC 94, Inc.
___________________________ By: /s/ Xxxxxx Xxxx Xxx
Xxxxxx Xxxx Xxx,
Attorney-
in-Fact for Xxxx X. Xxxxxxx,
President
WITNESS: GUARANTOR:
___________________________ /s/ Xxxxx X. Xxxxx
Xxxxx X. Xxxxx, individually
WITHDRAWING INITIAL
MEMBER:
ATTEST: XXXXX CONSTRUCTION COMPANY
___________________________ By: /s/ Xxxxx X. Xxxxx
Name: Xxxxx X. Xxxxx
Title: President
COUNTY OF )
: ss
COMMONWEALTH OF MASSACHUSETTS )
Before me, the undersigned Notary Public in and for the
aforesaid County and State, then personally appeared Xxxxxx Xxxx Xxx,
in her capacities as (i) Attorney-in-Fact of Xxxx X. Xxxxxxx, in his
capacity as a general partner of C&M Associates d/b/a Boston Capital
Associates and President of Boston Capital Members Corporation, as the
general partner of Boston Capital Tax Credit Fund IV L.P. as Member of
HURRICANE HILLS, L.C., and (ii) Attorney-in-Fact for Xxxx X. Xxxxxxx
of BCTC 94, Inc., as a Special Member of HURRICANE HILLS, L.C. and
being duly sworn, acknowledged the execution of the foregoing Amended
and Restated Operating Agreement.
Witness my hand and notarial seal this ____ day of September,
1996.
____________________
__
Notary Public
My Commission
Expires:
COUNTY OF _________ )
ss
STATE OF )
Before me, the undersigned Notary Public in and for the
aforesaid County and State, then personally appeared Xxxxx X. Xxxxx,
(i) in his capacity as President of the Withdrawing Initial Member of
HURRICANE HILLS., L.C., (ii) in his capacity as the Member-Manager of
HURRICANE HILLS, L.C., and (iii) individually as Guarantor, being duly
sworn, acknowledged the execution of the foregoing Amended and
Restated Operating Agreement.
Witness my hand and notarial seal this day of September,
1996.
____________________
___
Notary Public
My Commission
Expires:
