Common use of Operating Deficit Reserve Clause in Contracts

Operating Deficit Reserve. (a) On or before the date hereof, Borrower shall deposit with Bondowner Representative an amount not less than $ (the "Operating Deficit Reserve") in an account or sub-account maintained by Bondowner Representative (the "Operating Deficit Reserve Account"). Bondowner Representative shall have the sole right to make withdrawals from such Operating Deficit Reserve. All investment earnings on funds in the Operating Deficit Reserve shall be calculated by Bondowner Representative and added to and become part of the Operating Deficit Reserve. If applicable law requires and provided that no Event of Default exists under any of the Loan Documents, Bondowner Representative shall pay to Borrower the interest earned on the Operating Deficit Reserve once each year. Borrower hereby assigns to Bondowner Representative, and grants Bondowner Representative a first-priority security interest in, all of Borrower’s interest in the Operating Deficit Reserve Account and all deposits at any time contained therein and the proceeds thereof as additional security for ail of the Borrower’s obligations under this Instrument and the other Loan Documents. Any amounts deposited with Bondowner Representative under this Section 11.36 may be commingled with any other funds held by Bondowner Representative (provided that Bondowner Representative shall maintain separate sub-accounts for such Operating Deficit Reserve) and shall not operate to reduce the Loan, unless applied by Bondowner Representative for that purpose under Section 11.36(c). (b) Upon written request from the Borrower and satisfaction of the requirements set forth herein, including ail Operating Deficit Reserve Disbursement Conditions (as such term is defined below), Bondowner Representative shall disburse, or authorize disbursement of, amounts from the Operating Deficit Reserve Account, subject to the Bondowner Representative’s approval, to cover any Operating Deficit (as such term is defined below) in connection with the Improvements until all funds held in the Operating Deficit Reserve Account have been depleted. As used herein, an "Operating Deficit" shall exist if and to the extent that cash flow from the Improvements is insufficient to pay normal operating expenses and maintenance of the Improvements, Impositions (as defined in Section 11.24) and regularly scheduled debt service of the Borrower; provided that such normal operating expenses and maintenance, Impositions or debt service shall not include any items which are to be paid from any other reserves or accounts maintained pursuant to the terms of this Loan Agreement or any subordinate loan documents. (c) Upon the occurrence of an Event of Default, Borrower shall immediately lose all of its rights to receive disbursements from the Operating Deficit Reserve unless and until all amounts secured by this Loan Agreement have been paid and the lien of this Loan Agreement DWT 27W)9087v3 008X2XX-000046 has been released by Bondowner Representative. Upon any such Event of Default, Bondowner Representative may, in its sole and absolute discretion, use the Operating Deficit Reserve (or any portion thereof) for any purpose, including but not limited to (i) repayment of any indebtedness secured by this Loan Agreement, including but not limited to principal prepayments and the prepayment premium applicable to such full or partial prepayment (as applicable); provided, however, that such application of funds shall not cure or be deemed to cure any default or Event of Default; (ii) reimbursement of Bondowner Representative for all losses and expenses (including, without limitation, reasonable legal fees) suffered or incurred by Bondowner Representative as a result of such default or Event of Default; or (iii) payment of any amount expended in exercising (and exercise) all rights and remedies available to Bondowner Representative at law or in equity or under this Instrument or under any of the other Loan Documents. (d) Nothing in this Instrument shall obligate Bondowner Representative to apply all or any portion of the Operating Deficit Reserve on account of any default or Event of Default by Borrower or to repayment of the indebtedness secured by this Instrument or in any specific order of priority.

Operating Deficit Reserve. (ai) On or before The Partnership shall establish the date hereofOperating Deficit Reserve as a separate, Borrower interest-bearing account with a financial institution acceptable to BCTC 94, Inc. and shall deposit with Bondowner Representative an therein initial funds in the amount not less than $ of $200,000 (the "Operating Deficit ReserveInitial Reserve Fund Deposit") in an account or sub-account maintained by Bondowner Representative from the proceeds of the applicable Installment pursuant to the following schedule: (x) $100,000 upon Substantial Completion; and (y) $100,000 upon Substantial Completion from proceeds of the "$100,000 Note. The Operating Deficit Reserve Account"shall be increased annually to the extent of Cash Flow pursuant to Section 11.03(A)(a). Bondowner Representative shall have Funds in the sole right to make withdrawals from such Operating Deficit ReserveReserve are intended to be employed solely for the payment of Operating Deficits. All investment interest earnings on funds on deposit in the Operating Deficit Reserve shall be calculated by Bondowner Representative and added to and become part retained therein for the aforesaid purposes. The Operating Deficit Reserve shall remain under joint control of the Operating Deficit Reserve. If applicable law requires General Partner and provided that no Event of Default exists under any of the Loan DocumentsBCTC 94, Bondowner Representative shall pay to Borrower the interest earned on Inc. Withdrawals from the Operating Deficit Reserve once each year. Borrower hereby assigns to Bondowner Representativeshall be made only with the Consent, or upon the direction, of the General Partner and grants Bondowner Representative a first-priority security interest inBCTC 94, all of Borrower’s interest in the Inc. (ii) The Operating Deficit Reserve Account and all deposits at any time contained therein and shall be released to the proceeds thereof as additional security for ail Partnership upon the later to occur of (x) the termination of the Borrower’s obligations under this Instrument and "tax credit compliance period" and/or the other Loan Documents. Any amounts deposited with Bondowner Representative under this Section 11.36 may be commingled with any other funds held by Bondowner Representative (provided that Bondowner Representative shall maintain separate sub-accounts for such Operating Deficit Reserve) and shall not operate to reduce the Loan, unless applied by Bondowner Representative for that purpose under Section 11.36(c). (b) Upon written request from the Borrower and satisfaction of the requirements set forth herein, including ail Operating Deficit Reserve Disbursement Conditions ("extended use period" as such term is defined belowpursuant to IRC Section 42(h)(6), Bondowner Representative or (y) the termination, release or discharge of the City Loan. (iii) Notwithstanding anything to the contrary contained herein, in the event that the Project receives a five (5) year renewal of the HUD Section 8 McKinney Fund contracts (th▇ "▇▇▇▇ Year Section 8 Extension"), then at such time eighty percent (80%) of the balance of the Operating Deficit Reserve shall disbursebe disbursed to the General Partner subject to Section 8.18(b)(iv) below, or authorize and provided that (x) the Partnership maintains a minimum Operating Deficit Reserve balance of $100,000 and (y) all accrued fees payable to the Limited Partner have been paid (conditions (x) and (y) herein shall be referred to as the "Reserve Disbursement Conditions"). In the event that the Five Year Section 8 Extension is not granted, then the General Partner shall receive fifteen percent (15%) of the balance of the Operating Deficit Reserve upon each one-year renewal of said HUD Section 8 contracts, provided that the Reserve Disbursement Conditions are met prior to each disbursement ofof said funds. However, amounts in any event, funds shall be released from the Operating Deficit Reserve Account, subject to the Bondowner Representative’s approval, to cover any Operating Deficit (as such term is defined below) in connection with the Improvements until all funds held in the Operating Deficit Reserve Account have been depleted. As used herein, an "Operating Deficit" shall exist if and to the extent that cash flow from the Improvements is insufficient amount sufficient to pay normal operating expenses and maintenance any Deferred Developer Fee, if not sooner paid, on the last day of the Improvements, Impositions (as defined in Section 11.24) and regularly scheduled debt service period ending ten years after the issuance of the Borrower; provided that such normal operating expenses and maintenance, Impositions or debt service shall not include any items which are to be paid from any other reserves or accounts maintained pursuant to the terms Certificate of this Loan Agreement or any subordinate loan documentsOccupancy. (civ) Upon the occurrence of an Event of Default, Borrower shall immediately lose all of its rights to receive disbursements Funds released from the Operating Deficit Reserve unless pursuant to this Section 8.18(b)(iii) shall be disbursed (x) to the General Partner as a return of any General Partner Special Capital Contribution made pursuant to Section 5.01(a); (y) to the Developer in respect of any unpaid Deferred Developer Fee; and until all amounts secured by this Loan Agreement have been paid and then (z) to Balanced Housing Development Corporation as repayment of the lien Balance Housing Loan. If, at the time of this Loan Agreement DWT 27W)9087v3 008X2XX-000046 has been released by Bondowner Representative. Upon any such Event of Default, Bondowner Representative may, in its sole and absolute discretion, use release from the Operating Deficit Reserve (there is no Partnership obligation outstanding to the Developer in respect of the Deferred Developer Fee or any portion thereof) for any purposeto Balanced Housing Loan, including but not limited or to (i) repayment the General Partner in respect of any indebtedness secured by this Loan Agreement, including but not limited Special Capital Contributions made pursuant to principal prepayments and Section 5.01(a) the prepayment premium applicable to such full or partial prepayment (as applicable); provided, however, that such application of funds shall not cure or be deemed to cure any default or Event of Default; (ii) reimbursement of Bondowner Representative for all losses and expenses (including, without limitation, reasonable legal fees) suffered or incurred by Bondowner Representative as a result of such default or Event of Default; or (iii) payment of any amount expended in exercising (and exercise) all rights and remedies available to Bondowner Representative at law or in equity or under this Instrument or under any of the other Loan Documents. (d) Nothing in this Instrument shall obligate Bondowner Representative to apply all or any portion of released from the Operating Deficit Reserve on account of any default or Event of Default shall be treated as Partnership Revenue. (v) Notwithstanding anything to the contrary contained herein, in the event that there is a delay up to ninety (90) days in the receipt by Borrower or to repayment the Partnership of the indebtedness secured initial HUD Section 8 McKinney Funds (the "McKinney ▇▇▇▇▇") due the Part▇▇▇▇▇▇▇, and said McKinney Funds are to be rece▇▇▇▇ ▇▇ the Partnership to be applied retroactively, then the Initial Reserve Fund Deposit funds may be used by this Instrument or in any specific order the Partnership to pay for normal operating expenses of priority.the Partnership. Upon receipt by the Partnership of the McKinney Funds, said Initial ▇▇▇▇▇▇▇ Fund Deposit shall be replenished by the Partnership. ARTICLE IX