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pdfALLOCATION AGREEMENT
NEW MARKETS TAX CREDIT PROGRAM
COMMUNITY DEVELOPMENT FINANCIAL INSTITUTIONS FUND
Allocatee:
NMTC Program Control Number:
Employer Identification Number:
Address:
Date of Applicable Notice of Allocation Authority:
July 15, 2005 and as amended March 10, 2006
Date of Notice of Allocation:
June 1, 2006
Allocatee’s Fiscal Year End:
NMTC Allocation Amount:
By signing this Allocation Agreement and in consideration of the mutual covenants, conditions and agreements
hereinafter set forth, the parties hereto, by their respective Authorized Representatives, agree that the NMTC
Allocation provided hereunder shall be administered pursuant to the Organization Specific Terms and Conditions
attached hereto as Schedule 1 and the General Allocation Terms and Conditions, attached hereto as Schedule 2, and
made a material part hereof.
Community Development Financial Institutions
Fund
Allocatee
By:
Authorized Representative: Linda G. Davenport
Title: Deputy Director for Policy and Programs
By:
Authorized Representative:
Title:
NMTC Allocation Effective Date:
This Allocation Agreement comprises:
Schedule 1 - Organization Specific Terms and Conditions
Schedule 2 - General Allocation Terms and Conditions
Schedule 3 - Opinion of Counsel
Allocatee: [1]
Control No.: [2]
By executing this Allocation Agreement, each of the undersigned Subsidiary Allocatees agrees to all of the terms,
conditions, provisions, representations, warranties, covenants, and agreements set forth in this Allocation
Agreement and agrees that all such terms, conditions, provisions, representations, warranties, covenants, and
agreements apply to each of the undersigned Subsidiary Allocatees to the same extent as they apply to the
Allocatee, except for the provisions within Sections 2.4, 2.15, 3.1 and 4.1 of Schedule 2 that apply solely to the
Allocatee; it being understood that no Subsidiary Allocatee shall be deemed to have made any representation,
warranty, covenant or agreement on behalf of or with respect to the Allocatee or any other Subsidiary Allocatee.
Furthermore, each of the undersigned Subsidiary Allocatees represents and warrants that this Allocation Agreement
and all documents connected herewith constitute the legal, valid and binding obligations of such Subsidiary
Allocatee and are fully enforceable in accordance with their respective terms.
Subsidiary Allocatee
Subsidiary Allocatee
By:
Name:
Title:
By:
Name:
Title:
Subsidiary Allocatee
Subsidiary Allocatee
By:
Name:
Title:
By:
Name:
Title:
Subsidiary Allocatee
Subsidiary Allocatee
By:
Name:
Title:
By:
Name:
Title:
2
Schedule 1
Allocatee:
Control No.:
____________________________________
NEW MARKETS TAX CREDIT PROGRAM
ORGANIZATION SPECIFIC TERMS AND CONDITIONS
____________________________________
Schedule 1
Allocatee:
Control No.:
The provisions set forth below correspond to the specified sections in Schedule 2 (General
Allocation Terms and Conditions) of this Allocation Agreement.
Section 3.2(a): ELIGIBLE ACTIVITIES
Investments in, or loans to, non-real estate QALICBs:
Investments in, or loans to, QALICBs whose principal activities involve the
development or rehabilitation of real estate:
Investments in, or loans to, other CDEs:
Purchase of loans from other CDEs:
Financial Counseling and Other Services:
Section 3.2(b): SERVICE AREA
State
State FIPS
County
Section 3.2(c): SUBSIDIARY ALLOCATEES
Subsidiary Name
EIN
CDE Control Number
2
County FIPS
Schedule 1
Allocatee:
Control No.:
Section 3.2(d): UNRELATED ACTIVITIES
Unrelated Activities Clause:
Applicable
Not Applicable
Section 3.2(f): FLEXIBLE PRODUCTS
Flexible Products Clause:
Applicable
Not Applicable
Section 3.2(g): REQUIRED TRANSACTIONS
The Allocatee shall use the proceeds of its Qualified Equity Investments [minimally][solely] to
invest in the following projects:
Transaction Name
Address
Census Tract
Section 3.2(h): TARGETED DISTRESSED COMMUNITIES
Targeted Distressed Communities Clause:
Applicable
Section 3.2(i): LOAN PURCHASES INVESTMENT
Loan Purchases Investment Percentage:
Section 3.2(j): QUALIFIED EQUITY INVESTMENT USAGE
Qualified Equity Investment Usage Percentage:
3
Not Applicable
Schedule 1
Allocatee:
Control No.:
Section 3.3(b): RESTRICTIONS
Restrictions Clause:
Applicable
Not Applicable
FOR GO ZONE ALLOCATEES:
Section 3.3(b): RESTRICTIONS
Restrictions Clause:
Applicable
Not Applicable
The Allocatee shall make 100 percent of its QLICIs in Low-Income Communities, which may
include Targeted Populations, within the GO Zone.
The Allocatee shall maintain accountability to the residents of Low-Income Communities in the
Allocatee’s Service Area within the GO Zone. In order to satisfy this requirement, the Allocatee’s
governing board and/or advisory board must include one or more members that either: (a) reside in a
Low-Income Community within the GO Zone; or (b) otherwise represent the interests of residents of
Low-Income Communities within the GO Zone. With respect to satisfying (b), the individual and/or
the business or organization that he or she represents must principally serve the GO Zone.
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Schedule 2
Allocatee:
Control No.:
____________________________________
NEW MARKETS TAX CREDIT PROGRAM
GENERAL ALLOCATION TERMS AND CONDITIONS
____________________________________
TABLE OF CONTENTS
I.
Incorporation by Reference………………………………………………………
Page
1
II.
Definitions……………………………………………………………………….
2.1
Act……………………………………………………………………….
2.2
Affiliate………………………………………………………………….
2.3
Allocation Agreement……………………………………………………
2.4
Allocation Application…………………………………………………..
2.5
Allocation Date. . . . . . . .…………………………………………………
2.6
Control…………………………………………………………………...
2.7
Equity Investment………………………………………………………..
2.8
Financial Counseling and Other Services.………………………………
2.9
Gulf Opportunity Zone. …………………………………………………..
2.10 Low-Income Community…………………………………………………
2.11 Metropolitan Area…………….…………………………………………..
2.12 NMTC Allocation….……………………………………………………..
2.13 NMTC Program…….…………………………………………………….
2.14 NMTC Program Income Tax Regulations………………………………..
2.15 Notice of Allocation…………….. ……………………………………….
2.16 Qualified Active Low-Income Community Business…………………..…
2.17 Qualified Community Development Entity………………………………
2.18 Qualified Equity Investment……………………………………………...
2.19 Qualified Low-Income Community Investment………………………….
2.20 Reinvestment ……………………………………………………….……
2.21 Repayment……. … ………………………………………………………
2.22 Service Area …………………………………………………………….
2.23 Subsidiary………………………………………………………………..
2.24 Subsidiary Allocatee……………………………………………………..
2.25 Targeted Population………………………………………………………
2.26 Voting Securities…………………… ……………………………………
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III.
The NMTC Allocation……………………………….…………………………. 5
3.1
NMTC Allocation……………………………………………………….. 5
3.2
Authorized Uses of NMTC Allocation………………………………….. 5
3.3
Restrictions on the Use of NMTC Allocation…………………………… 9
3.4
Availability of NMTC Allocation………… ...…………………………. 10
3.5
Notice to Taxpayers of Qualified Equity Investment…………………… 10
IV.
Representations and Warranties……………………………………………….…
4.1
Organization, Standing and Powers………………………………………
4.2
Qualification………………………………………………………………
4.3
Authorization; Consents………………………………………………….
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4.4
4.5
4.6
4.7
4.8
4.9
4.10
4.11
Execution and Delivery; Binding Agreement………………………….….
No Conflicts……………………………………………………………….
Litigation…………………………………………………………………
Compliance with Other Instruments……………………………………..
Disclosure………………………………………………………………..
Taxes; Debts; Bankruptcy……………………………………………….
Debarment, Suspension and Other Responsibility Matters……………..
Status as a CDE.………………………………………………………...
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V.
Conditions Precedent to NMTC Allocation……………………………………..
5.1
Performance……………………………………………………………..
5.2
Opinion of Allocatee Counsel…………………………………………..
5.3
Representations and Warranties………………………………………..
5.4
Proceedings and Documents……………………………………………
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13
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13
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VI.
Covenants and Agreements of the Allocatee.……………………………………
6.1
Compliance with Government Requirements……………………………
6.2
Fraud, Waste, and Abuse…………………………………………….…..
6.3
Right to Inspect and Audit……………………………………………….
6.4
Retention of Records…………………………………………………….
6.5
Reports………………….……………………………………………….
6.6
Equal Credit Opportunity Act……………………………………………
6.7
Use of Allocation………………………………………………………...
6.8
Maintain Existence as a CDE……………………………..……………..
6.9
Advise the Fund of Certain Material Events…………………………….
6.10 Disclosure to Potential Investors ………………….…………………….
6.11 Common Enterprises…………………………………………………….
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VII.
Monitoring Fee…………………………………………………………………..
7.1
Monitoring/Compliance Fee…………………………………………….
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VIII.
Events of Default, Events of Recapture and Remedies…………………………..
8.1
Events of Default…………………………………………………………
8.2
Events of Recapture………………………………………………………
8.3
Remedies…………………………………………………………………
8.4
Referral to IRS……………………………………………………………
8.5
No Waiver………………………………………………………………..
8.6
Prior Notice to Allocatee of Sanctions.……………………………………
8.7
Joint and Several Liability……………………………………………….
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IX.
Miscellaneous……………………………………………………………………
9.1
Notices………………………………………………………………….
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9.2
9.3
9.4
9.5
9.6
9.7
9.8
9.9
9.10
9.11
9.12
9.13
9.14
9.15
Entire Agreement……………………………………………………….
Assignment……………………………………………………………..
Successors………………………………………………………………
Severability……………………………………………………………..
No Waiver………………………………………………………………
Applicable Law…………………………………………………………
Disclaimer of Relationships…………………………………………….
Counterparts………………………………………………………….…
Headings….…………………………………………………………….
Amendments……………………………………………………………
Survival of Representations and Warranties…………………………….
Termination……………………………………………………………...
Disclosure of Allocatee Reports by Fund………………………………..
Compliance with Non-Discrimination Statutes………………………….
iii
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ARTICLE I
INCORPORATION BY REFERENCE
26 C.F.R. Part 1, section 1.45D-1, as from time to time amended, the Act (as hereinafter
defined), and any regulations for the NMTC Program which may be later promulgated by the
Fund, are incorporated by reference and given the same force and effect as if set out in full text
herein. In the event of any inconsistency between 26 C.F.R. Part 1, section 1.45D-1, the Act, or
any applicable Fund regulations and the terms of this Allocation Agreement, and any
amendments thereto, the provisions of 26 C.F.R. Part 1, section 1.45D-1, the Act, and the
applicable Fund regulations shall govern.
ARTICLE II
DEFINITIONS
When used in this Allocation Agreement, the following terms shall have the meanings
specified below. Capitalized terms used but not defined herein shall have the respective
meanings assigned to them in the Act and/or the NMTC Program Income Tax Regulations (as
hereinafter defined).
2.1 Act. "Act" shall mean §121 of the Community Renewal Tax Relief Act of 2000, which
includes § 45D of the Internal Revenue Code (IRC) as enacted by section 1 (a)(7) of the
Consolidated Appropriations Act, 2001, Pub. L. No. 106-554 (December 21, 2000).
2.2 Affiliate. “ Affiliate” shall mean any legal entity that Controls, is Controlled by, or is under
common Control with the Allocatee.
2.3 Allocation Agreement. “Allocation Agreement” or “Agreement” shall mean this NMTC
Program Allocation Agreement between the Fund and the Allocatee and Subsidiary Allocatee, as
the case may be, including the Organization Specific Terms and Conditions (Schedule 1) and the
General Allocation Terms and Conditions (Schedule 2) and any attachments hereto, as such
Agreement may, from time to time, be amended in accordance with its terms.
2.4 Allocation Application. “Allocation Application” or “Application” shall mean the NMTC
Program Application Form, together with any permitted attachments submitted (either in
electronic or hard-copy format) by the Allocatee to the Fund, in response to the Notice of
Allocation Availability (NOAA) inviting applications for the NMTC Program that was published
in the Federal Register on July 15, 2005 and as amended March 10, 2006.
2.5 Allocation Date. “Allocation Date” shall mean the date, as determined by the Fund, that the
Allocatee has returned to the Fund an executed copy of this Allocation Agreement along with an
acceptable opinion of counsel as set forth in Attachment A attached hereto. Once the Fund has
determined the Allocation Date, the Fund will insert such date on the signature page of the
Allocation Agreement and provide the Allocatee with notification of the Allocation Date and a
copy of the signature page.
2.6 Control. “Control” shall mean:
(a) Ownership, control, or power to vote more than 50 percent of the outstanding shares
of any class of Voting Securities of any entity, directly or indirectly or acting through one
or more other persons;
(b) Control in any manner over the election of a majority of the directors, trustees,
general partners, managing members, managers (or individuals exercising similar
functions) of any other entity; or
(c) Power to exercise, directly or indirectly, a controlling influence over the management
policies or investment decisions of another entity, as determined by the Fund.
For purposes of this Allocation Agreement, the term “Control” does not include an investor’s
contractual right to remove a general partner, managing member, or manager of an Allocatee for
cause.
2.7 Equity Investment. “Equity Investment” shall mean pursuant to IRC § 45D(b)(6) and 26
C.F.R. 1.45D-1(c)(2), any stock (other than nonqualified preferred stock as defined in IRC §
351(g)(2)) in an entity that is a corporation and any capital interest in an entity that is a
partnership for federal tax purposes.
2.8 Financial Counseling and Other Services. “Financial Counseling and Other Services” shall
mean, pursuant to 26 C.F.R. 1.45D-1(d)(7), advice provided by a Qualified Community
Development Entity relating to the organization or operation of a trade or business.
2.9 Gulf Opportunity Zone. “Gulf Opportunity Zone” or “GO Zone” shall mean that portion of
the Hurricane Katrina disaster area determined by the President to warrant individual or
individual and public assistance from the Federal Government under the Robert T. Stafford
Disaster Relief and Emergency Assistance Act by reason of Hurricane Katrina. The Hurricane
Katrina disaster area is an area with respect to which a major disaster has been declared by the
President before September 14, 2005, under section 401 of the Gulf Opportunity Zone Act of
2005 (Pub. L. 109-135) by reason of Hurricane Katrina.
2.10 Low-Income Community. “Low-Income Community” shall mean any area as defined in
accordance with IRC § 45D(e).
2.11 Metropolitan Area. “Metropolitan Area” shall mean an area designated as such by the
Office of Management and Budget pursuant to 44 U.S.C. 3504(e) and 31 U.S.C. 1104(d) and
Executive Order 10253 (3 CFR 1949-1953 Comp., p.758), as amended.
2.12 NMTC Allocation. “NMTC Allocation” shall mean an allocation of tax credit authority
pursuant to the NMTC Program.
2
2.13 NMTC Program. “NMTC Program” shall mean the program authorized by the Act and
implemented pursuant to guidance published by the Fund at 66 Federal Register 21846 and 66
Federal Register 65806, the NMTC Program Income Tax Regulations (as hereinafter defined)
promulgated by the Internal Revenue Service, and applicable Notice of Allocation Availability.
2.14 NMTC Program Income Tax Regulations. “NMTC Program Income Tax Regulations”
shall mean the regulations promulgated by the Internal Revenue Service at 26 C.F.R. 1.45D-1,
together with any amendment or interpretation of those regulations as may be promulgated by
the Internal Revenue Service through guidance published in the Internal Revenue Bulletin or the
Federal Register, which provide guidance for taxpayers claiming the New Markets Tax Credit
under IRC § 45D.
2.15 Notice of Allocation. “Notice of Allocation” shall mean a notification to the Allocatee
from the Fund that informs the Allocatee that it has been approved by the Fund to receive a
NMTC Allocation subject to the terms and conditions set forth in the Notice of Allocation.
2.16 Qualified Active Low-Income Community Business. “Qualified Active Low-Income
Community Business” or “QALICB” shall mean any corporation (including a nonprofit
corporation), partnership or other business that meets the requirements set forth in IRC §
45D(d)(2) and 26 C.F.R. 1.45D-1(d)(4).
2.17 Qualified Community Development Entity. “Qualified Community Development Entity”
or “CDE” shall mean any domestic corporation or partnership, for Federal tax purposes, certified
as a CDE by the Fund pursuant to IRC § 45D(c).
2.18 Qualified Equity Investment. “Qualified Equity Investment” shall mean an Equity
Investment in a CDE that meets the requirements of IRC § 45D(b) and 26 C.F.R. 1.45D-1(c).
2.19 Qualified Low-Income Community Investment. “Qualified Low-Income Community
Investment” or “QLICI” shall have the same meaning as set forth in IRC § 45D(d) and 26 C.F.R.
1.45D-1(d).
2.20 Reinvestment. “Reinvestment” shall mean investment of QLICI Repayment(s) into
QLICIs.
2.21 Repayment. “Repayment” shall mean any QLICI equity capital or loan principal
returned or repaid to the Allocatee by a QLICI recipient.
2.22 Service Area. “Service Area” shall mean, for the purposes of this Allocation Agreement,
the geographic area encompassing Low-Income Communities in which the Allocatee is
authorized to make Qualified Low-Income Community Investments using the proceeds of
Qualified Equity Investments. The Allocatee’s authorized Service Area is set forth in Section
3.2(b) of this Allocation Agreement.
3
2.23 Subsidiary. “Subsidiary” shall mean any legal entity that is owned or Controlled directly
or indirectly by the Allocatee. This term includes series funds, which are separate investment
funds Controlled by the Allocatee.
2.24 Subsidiary Allocatee. “Subsidiary Allocatee” shall mean a Subsidiary of the Allocatee to
which the Fund has authorized the Allocatee to transfer all or a portion of its NMTC Allocation,
pursuant to Section 3.2(c) of this Allocation Agreement. A Subsidiary Allocatee must be a CDE
and must agree to abide by all of the terms and conditions contained in this Allocation
Agreement as such terms and conditions apply to the Allocatee. In addition, the Allocatee must,
at a minimum, at all times maintain a controlling influence over the investment decisions of the
Subsidiary Allocatee.
2.25 Targeted Population. “Targeted Population,” as defined in 12 U.S.C. 4702(20) and
related CDFI Fund and IRS Guidance documents, shall mean individuals, or an identifiable
group of individuals, including an Indian tribe, who (A) are low-income persons; or (B)
otherwise lack adequate access to loans or equity investments.
2.26 Voting Securities. “Voting Securities” shall mean (a) shares of common or preferred
stock, general or limited partnership shares or interests, or similar interests if the shares or
interest, by statute, charter, or in any manner, entitle the holder:
(i)
To vote for or select directors, trustees, or partners (or persons exercising
similar functions of the issuing company); or
(ii)
To vote on or to direct the conduct of the operations or other significant
policies of the issuing company.
(b) Nonvoting shares. Preferred shares, limited partnership shares or interests, or similar
interests are not Voting Securities if:
(i)
Any voting rights associated with the shares or interest are limited solely to the
type customarily provided by statute with regard to matters that would
significantly and adversely affect the rights or preference of the security or
other interest, such as the issuance of additional amounts or classes of senior
securities, the modification of the terms of the security or interest, the
dissolution of the issuing company, or the payment of dividends by the issuing
company when preferred dividends are in arrears;
(ii)
The shares or interest represent an essentially passive investment or financing
device and do not otherwise provide the holder with Control over the issuing
company; and
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(iii)
The shares or interest do not entitle the holder, by statute, charter, or in any
manner, to select or to vote for the selection of directors, trustees, or partners
(or persons exercising similar functions) of the issuing company.
ARTICLE III
THE NMTC ALLOCATION
3.1
NMTC Allocation. Subject to all of the terms and conditions hereof and in reliance upon
all representations, warranties, assurances, certifications and agreements contained herein, the
Fund hereby agrees to allocate to the Allocatee and the Allocatee hereby agrees to accept from
the Fund an NMTC Allocation. The amount of the NMTC Allocation represents the amount of
Qualified Equity Investments which may be issued by the Allocatee, and as to which NMTCs
may be claimed. If any of the conditions specified herein or in any document connected
herewith, including the Notice of Allocation, have not been fulfilled to the satisfaction of the
Fund, the Fund will, in its sole discretion, elect not to effectuate the NMTC Allocation until such
time as said conditions shall be fulfilled to the satisfaction of the Fund. Once the Fund has
determined that the conditions required herein, including the Notice of Allocation, have been met
and the Allocatee has returned to the Fund an executed copy of the Allocation Agreement along
with an acceptable opinion of counsel, the Fund will set the Allocation Date. This Allocation
Agreement will be effective as of the Allocation Date.
3.2
Authorized Uses of NMTC Allocation. The Allocatee shall use the proceeds of its
NMTC Allocation to make investments or Reinvestments only as follows:
(a)
At such time that the Allocatee has made 100 percent of its QLICIs or September
30, 2009, whichever date is earlier, and until the Allocatee redeems its first
Qualified Equity Investment related to its NMTC Allocation, the Allocatee shall
make at least 85 percent of its QLICIs (in terms of the aggregate dollar amount of
the QLICIs) in the types of activities listed in Schedule 1 of this Allocation
Agreement.
(b)
At such time that the Allocatee has made 100 percent of its QLICIs or September
30, 2009, whichever date is earlier, and until the Allocatee redeems its first
Qualified Equity Investment related to its NMTC Allocation, the Allocatee shall
make at least 85 percent of its QLICIs (in terms of the aggregate dollar amount of
the QLICIs) in the Service Area(s) listed in Schedule 1 of this Allocation
Agreement.
(c)
If applicable, the Allocatee may transfer all or part of its NMTC Allocation to the
Subsidiary Allocatees listed in Schedule 1 of this Allocation Agreement.
(d)
If applicable, as listed in Schedule 1 of this Allocation Agreement, the Allocatee
shall satisfy the requirements of IRC § 45D(b)(1)(B) and 26 C.F.R. 1.45D-1(c)(5)
with respect to the Qualified Equity Investments it receives by making QLICIs in
5
businesses in which persons unrelated to the Allocatee hold the majority equity
interest (as defined in IRC §45D(f)(2)(B)), and as determined subsequent to the
Allocatee making the QLICI. The requirement of this Section 3.2(d) does not
apply if an Allocatee becomes related to a business due to financial difficulties of
the business that were unforeseen at the time the Allocatee made a QLICI in the
business.
(e)
By September 30, 2009, the Allocatee shall issue at least 60 percent of its
Qualified Equity Investments related to its NMTC Allocation.
(f)
If applicable, at such time that the Allocatee has made 100 percent of its QLICIs
or September 30, 2009, whichever date is earlier, and until the Allocatee redeems
its first Qualified Equity Investment related to its NMTC Allocation, the
Allocatee shall demonstrate that QLICIs made in the form of loans to or
investments in CDEs or QALICBs (as opposed to loan purchases or the provision
of Financial Counseling and Other Services) incorporated terms and conditions
that, at the time the QLICIs were made, were flexible, non-conventional, or nonconforming with reference to either the Allocatee’s underwriting guidelines or
standard practice in the marketplace as documented by the Allocatee.
Specifically, the Allocatee must have made QLICIs that (a) are equity or equityequivalent financing, (b) have interest rates that are at least 25 percent lower than
the prevailing market rates for the particular product or at least 25 percent lower
than the Applicant’s current offerings for the particular product, or (c) meet at
least three of the following criteria, provided nothing in this Allocation
Agreement shall be construed to require the Allocatee to engage in unsafe or
unsound underwriting practices:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
(ix)
(x)
(xi)
Debt with equity features (i.e., debt with royalties; debt with
warrants; convertible debt);
Subordinated debt;
Below market interest rates;
Lower than standard origination fees;
A longer than standard period of interest only loan payments;
Higher than standard loan to value ratio;
A longer than standard amortization period;
More flexible borrower credit standards;
Nontraditional forms of collateral;
Lower than standard debt service coverage ratio; or
Loan loss reserve requirements that are less than standard.
Furthermore, to the extent that the Allocatee makes QLICIs in the form of loans
to or investments in CDEs (“Recipient CDEs”), the Allocatee shall require that
the Recipient CDE makes loans to or investments in QALICBs that (a) are equity
or equity-equivalent financing, (b) have interest rates that are at least 25 percent
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lower than the prevailing market rates for the particular product or at least 25
percent lower than the CDE’s current offerings for the particular product, or (c)
meet at least three of criteria i-xi above.
(g)
If applicable, the Allocatee shall use the proceeds of its Qualified Equity
Investments minimally or solely to make QLICIs in the project(s) listed in
Schedule 1 of this Allocation Agreement.
(h)
If applicable, at such time that the Allocatee has made 100 percent of its QLICIs
or September 30, 2009, whichever date is earlier, and until the Allocatee redeems
its first Qualified Equity Investment related to its NMTC Allocation, the
Allocatee shall have made at least 75 percent of the total dollar amount of its
QLICIs in areas that are (1) characterized by at least one of items (i) – (iii) on the
list below for each QLICI, (2) characterized by at least two of items (iv) – (xiv)
on the list below for each QLICI, or (3) characterized by item (xv) on the list
below as of the date the Allocatee closed the QLICI transaction:
(i)
Census tracts with poverty rates greater than 30 percent;
(ii)
If located within a non-Metropolitan Area, median family
income does not exceed 60 percent of statewide median family
income or if located within a Metropolitan Area, median family
income does not exceed 60 percent of the greater of statewide
median family income or the Metropolitan Area median family
income;
(iii)
Census tracts with unemployment rates at least 1.5 times the
national average;
(iv)
Federally designated Empowerment Zones, Enterprise
Communities, or Renewal Communities;
(v)
U.S. Small Business Administration (SBA) designated HUB
Zones, to the extent that the QLICIs will support businesses
that obtain HUB Zone certification from the SBA;
(vi)
Brownfield sites as defined under 42 U.S.C. 9601(39)
(vii)
Areas encompassed by a HOPE VI redevelopment plan;
(viii)
Federally designated as Native American or Alaskan Native
areas, Hawaiian Homelands, or redevelopment areas by the
appropriate Tribal or other authority;
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(ix)
Areas designated as distressed by the Appalachian Regional
Commission or Delta Regional Authority;
(x)
Colonias areas as designated by the U.S. Department of
Housing and Urban Development;
(xi)
Federally designated medically underserved areas, to the extent
that QLICI activities will support health related services;
(xii)
Located in a Hot Zone (defined as geographic areas designated
by the Fund as having greater levels of economic distress);
(xiii)
High Migration Rural County (defined as any county which,
during the 20 year period ending with the year in which the
most recent census was conducted, has a net out-migration of
inhabitants from the county of at least 10 percent of the
population of the county at the beginning of such period. See
IRC §45D(e)(5));
(xiv)
State or local tax-increment financing districts, enterprise zone
programs, or other similar state/local programs targeted
towards particularly economically distressed communities; or
(xv)
Counties for which the Federal Emergency Management
Agency (FEMA) has (a) issued a “major disaster declaration”
since July 15, 2005; and (b) made a determination that such
County is eligible for both “individual and public assistance;”
provided that, for areas not located within the GO Zone, the
initial project investment was made within 24 months of the
disaster declaration.
Furthermore, to the extent that the Allocatee makes QLICIs in the form of loans
to or investments in CDEs (“Recipient CDEs”), the Allocatee shall require that
the Recipient CDE makes loans to or investments in QALICBs in areas that are
(1) characterized by at least one of items (i) – (iii) on the list above for each loan
or investment, (2) characterized by at least two of items (iv) – (xiv) on the list
above for each loan or investment, or (3) characterized by item (xv) on the list
above for each loan or investment .
(i)
If applicable, the Allocatee shall require CDEs from which it purchases loans to
invest at least the designated percent of the proceeds of such loan sales, as listed
in Schedule 1 of this Allocation Agreement, in the form of QLICIs.
8
(j)
If applicable, at such time that the Allocatee has issued 100 percent of its
Qualified Equity Investments or September 30, 2009, whichever date is earlier,
and until the Allocatee redeems its first Qualified Equity Investment related to its
NMTC Allocation, the Allocatee shall use at least the designated percent of its
Qualified Equity Investments (in terms of the aggregate dollar amount of the
Qualified Equity Investments), as listed in Schedule 1 to this Allocation
Agreement, to make QLICIs.
To the extent that the Qualified Equity Investment finances loans to or
investments in CDEs (“Recipient CDEs”) that are not Affiliates of or Controlled
by the Allocatee, the standard set forth above in this section 3.2(j) shall be applied
only to Allocatee – not to the Recipient CDEs.
3.3
Restrictions on the Use of NMTC Allocation.
(a)
The Allocatee shall not use its NMTC Allocation in a manner other than as
authorized herein, unless the Allocatee consults with and obtains the prior written
approval of the Fund, which approval shall not be unreasonably withheld.
(b)
If applicable, the Allocatee shall use the proceeds of its Qualified Equity
Investments as directed in Schedule 1 (with respect to this Section 3.3(b)) of this
Allocation Agreement.
(c)
The Allocatee shall not transfer any portion of a NMTC Allocation to any
Subsidiary, except those Subsidiaries listed in Section 3.2(c) of this Allocation
Agreement, without the Fund’s prior written approval.
(d)
Pursuant to IRC § 45D(b)(2) and 26 C.F.R. 1.45D-1(c)(4)(ii), the Allocatee may
not designate Equity Investments that it issues as Qualified Equity Investments in
an amount that exceeds the total amount of its NMTC Allocation.
(e)
Pursuant to IRC § 45D(b)(1) and 26 C.F.R. 1.45D-1(c)(4)(i)(A), the Allocatee
may not designate any Equity Investment that it issues as a Qualified Equity
Investment if such investment is issued by the Allocatee more than five (5) years
after the Allocation Date.
(f)
Pursuant to 26 C.F.R. 1.45D-1(c)(4)(i)(B), the Allocatee may not designate an
Equity Investment that it issues to another CDE as a Qualified Equity Investment
if the CDE making the investment has received an NMTC Allocation.
(g)
A taxpayer that makes a Qualified Equity Investment in the Allocatee may not
receive a Bank Enterprise Award Program award in addition to NMTCs for
making the same Equity Investment in the Allocatee.
9
(h)
The Allocatee may not use the proceeds of its Qualified Equity Investments to
make loans to or investments in QALICBs whose principal business activity is the
rental to others of real property unless the proceeds of the loan or investment are
primarily used for: (1) costs in connection with new construction located on such
property; (2) costs in connection with the substantial rehabilitation of such
property; (3) costs in connection with the acquisition and substantial rehabilitation
of such property; (4) acquisition costs in connection with new construction; or (5)
take-out financing for a loan, equity investment, or other financing, the proceeds
of which were used for items (1), (2), (3), and/or (4) of this paragraph. Except as
provided in item (5) of this paragraph, the proceeds of such loans and investments
may not be used to re-finance or otherwise pay off an existing loan on the
property.
The restriction of this Section 3.3(h) does not apply to any loan to or investment
in a QALICB (the “first QALICB) that is controlled by (within the meaning of 26
C.F.R. 1.45D-1(d)(6)(ii)(B)) or under common control with another QALICB (the
“second QALICB”), provided that: (1) the principal business activity of the
second QALICB is not the rental to others of real property; and (2) the second
QALICB will be the primary user of all of the real property owned by the first
QALICB.
(i)
The Allocatee shall use the NMTC Allocation as authorized in Section 3.2 of this
Allocation Agreement, but only to the extent that such uses are generally
consistent with the strategies (including, but not limited to, the proposed product
offerings and markets served) set forth in the Allocation Application.
3.4
Availability of NMTC Allocation. On or after the Allocation Date, the Allocatee may
designate Qualified Equity Investments as to which NMTCs may be claimed with respect to
Equity Investments made on or after that date. An Allocatee may also designate as a Qualified
Equity Investment such Equity Investments in the Allocatee made pursuant to the requirements
set forth in 26 C.F.R. 1.45D-1(c)(3)(ii)(B).
3.5
Notice to Taxpayers of Qualified Equity Investment. In accordance with 26 C.F.R.
1.45D-1(g)(2), the Allocatee shall provide notice to any taxpayer who makes a Qualified Equity
Investment in the Allocatee at its original issue that the Equity Investment is a Qualified Equity
Investment entitling the taxpayer to claim a NMTC. The Allocatee shall provide such notice to
the taxpayer no later than 60 days after the date the taxpayer makes the Qualified Equity
Investment in the Allocatee. The notice shall contain the amount paid to the Allocatee for the
Qualified Equity Investment at its original issue and the taxpayer identification number of the
Allocatee.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
As of Allocation Date, the Allocatee hereby represents and warrants to the Fund the following:
4.1
Organization, Standing and Powers. The Allocatee is a domestic corporation or
partnership for Federal tax purposes. In addition, the Allocatee validly exists and is in good
standing (if applicable) under the laws of the State of its formation, and has all requisite
organizational power and authority to own and operate its assets and properties, to carry on its
business as it is now being conducted and to carry out the authorized use(s) of the NMTC
Allocation provided hereunder.
4.2
Qualification. The Allocatee is duly qualified, in good standing (if applicable) and
authorized to transact business in each jurisdiction where the conduct of the Allocatee’s business,
the carrying out of the authorized use(s) of the NMTC Allocation to be provided hereunder or the
ownership of its assets and properties requires such qualification, or, if not so qualified, the
Allocatee’s failure so to qualify shall not reasonably be expected to: (i) have a material adverse
effect on the financial condition or business operations of the Allocatee; (ii) impair the
Allocatee’s ability to carry out the authorized use(s) of the NMTC Allocation to be provided
hereunder; or (iii) impair the Allocatee’s right to enforce any material agreement to which it is a
party.
4.3
Authorization; Consents. The execution, delivery and performance by the Allocatee of
the Allocation Agreement and the carrying out of the authorized use(s) of the NMTC Allocation
provided hereunder are within the Allocatee’s powers and have been duly authorized by all
necessary corporate, partnership or limited liability company action and no consent, approval,
authorization or order of, notice to and filing with, any third party including, without limitation,
any governmental entity which has not been previously obtained, is required in connection with
such execution, delivery and performance. The Allocatee will make all such notices or filings
that may be required after the Allocation Date in accordance with the applicable time periods for
such notices or filings.
4.4
Execution and Delivery; Binding Agreement. This Allocation Agreement and all
documents connected herewith have been or will be, on or before the Allocation Date, duly
authorized, executed and delivered on behalf of the Allocatee and constitute, on the Allocation
Date, the legal, valid and binding obligations of the Allocatee enforceable in accordance with
their respective terms.
4.5
No Conflicts. The execution, delivery and performance by the Allocatee of this
Allocation Agreement and the carrying out of the authorized uses(s) of the NMTC Allocation
provided hereunder shall not result in any material violation of and shall not materially conflict
with, or result in a material breach of any of the terms of, or constitute a material default under,
any provision of Federal or State law to which the Allocatee is subject, the Allocatee’s
incorporation, charter, organization, formation or otherwise establishing documentation, bylaws
11
or any agreement, judgment, writ, injunction, decree, order, rule or regulation to which the
Allocatee is a party or by which it is bound.
4.6
Litigation. The Allocatee has neither actual nor constructive knowledge of any suit,
action, proceeding or investigation pending or threatened that questions the validity of this
Allocation Agreement or any action taken or to be taken pursuant hereto or contemplated hereby
including, but not limited to, the carrying out of the authorized use(s) of the NMTC Allocation to
be provided hereunder.
4.7
Compliance with Other Instruments. The Allocatee is not in material violation of any
provision of its incorporation, charter, organization, formation or otherwise establishing
documents, or in material violation of any loan agreement or other material agreement to which
it is a party. The Allocatee is not in material violation of any instrument, judgment, decree,
order, statute, rule or governmental regulation applicable to it, the violation of which might have
a material adverse effect on the business, affairs, operations, or condition of the Allocatee.
4.8
Disclosure. Neither this Allocation Agreement, the Allocation Application nor any
attachment hereto, nor any certification or other document referenced or incorporated herein or
therein and furnished to the Fund by the Allocatee contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements contained herein
or therein, in light of the circumstances under which they were made, not misleading. The
Allocatee has disclosed, in writing, to the Fund all facts that might reasonably be expected to
result in a material adverse effect upon the Allocatee’s ability either to conduct its principal
business or to carry out its proposed and herein authorized uses of the NMTC Allocation to be
provided hereunder. The Allocatee has not knowingly and willfully made or used a document or
writing containing any false, fictitious or fraudulent statement or entry as part of its
correspondence or communication with the Fund. The Allocatee acknowledges, under 18 U.S.C.
§ 1001, that if it knowingly and willfully makes or uses such document or writing, it or its
employee(s) or agents may be fined or imprisoned for not more than five years, or both.
4.9
Taxes; Debts; Bankruptcy. The Allocatee is not delinquent on any debts owed to Federal,
State or local governments including, but not limited to, amounts due under the Internal Revenue
Code. The Allocatee has never filed for bankruptcy and has neither actual nor constructive
knowledge of any pending or anticipated bankruptcy filings on its behalf.
4.10 Debarment, Suspension and Other Responsibility Matters. Pursuant to 31 C.F.R. 19.335,
neither the Allocatee nor any of its principals (as defined by 31 C.F.R. 19.995): (a) are presently
excluded or disqualified from covered transactions by any Federal department or agency; (b)
within the three-year period preceding the Allocation Date, have been convicted of or had a civil
judgment rendered against them for any of the offenses listed in 31 C.F.R. 19.800(a); (c) are
presently indicted for or otherwise criminally or civilly charged by a governmental entity
(Federal, State or local) with commission of any of the offenses listed in 31 C.F.R. 19.800(a); or
(d) within the three-year period preceding the Allocation Date, have had one or more public
transactions (Federal, State, or local) terminated for cause or default.
12
4.11 Status as a CDE. Since its certification as a CDE by the Fund, the Allocatee has neither
actual nor constructive knowledge of any changes that may adversely affect its (or any of its
Subsidiary Allocatees’) status as a certified CDE.
ARTICLE V
CONDITIONS PRECEDENT TO NMTC ALLOCATION
The obligation of the Fund to provide a NMTC Allocation to the Allocatee is subject to
the fulfillment, as determined by the Fund, in its sole discretion, of the following conditions
precedent, each of which shall be fulfilled prior to or as of the Allocation Date.
5.1
Performance. The Allocatee shall have performed and complied with all applicable
agreements and conditions contained herein required to be performed or complied with by it
before or on the Allocation Date.
5.2
Opinion of Allocatee Counsel. Unless otherwise determined by mutual agreement of the
Fund and the Allocatee, the Fund shall have received from the counsel for the Allocatee, an
acceptable opinion or acceptable opinions, as determined by the Fund, substantially in the form
set forth in Attachment A attached hereto.
5.3
Representations and Warranties. The representations and warranties set forth in this
Agreement, the Allocation Application and the Assurances and Certifications contained in the
Allocation Application are true and correct in all material respects as of the Allocation Date.
5.4
Proceedings and Documents. All corporate and other proceedings in connection with the
transactions contemplated by this Allocation Agreement and all documents and instruments
incident to such transactions which are necessary for the Allocatee’s execution and delivery of
the Allocation Agreement shall be satisfactory in substance and form to the Fund, and the Fund
shall have received from the Allocatee all such counterpart originals or certified or other
documents as the Fund may reasonably request.
ARTICLE VI
COVENANTS AND AGREEMENTS OF THE ALLOCATEE
The Allocatee shall duly perform and observe each and all of the following covenants
and agreements:
6.1
Compliance with Government Requirements. In carrying out its responsibilities pursuant
to this Allocation Agreement, the Allocatee shall comply with all applicable Federal, State and
local laws, regulations, ordinances, Office of Management and Budget (OMB) Circulars, and
Executive Orders.
13
6.2
Fraud, Waste and Abuse.
(a) If the Allocatee becomes aware at any time of the existence of fraud, waste or
abuse of the NMTC Allocation allocated pursuant to this Allocation Agreement,
the Allocatee shall promptly report such incidence(s) to the Office of Inspector
General of the U.S. Department of the Treasury.
(b) If a principal purpose of a transaction or a series of transactions is to achieve a
result that is inconsistent with the purposes of the Act, the NMTC Program
Income Tax Regulations, the Notice of Allocation Availability (70 FR 41075 and
as amended 71 FR 12423), or this Allocation Agreement, the Fund, in its sole
discretion, may treat the transaction or series of transactions as causing an event
of default subject to the remedies available under Section 8.3 of this Agreement.
6.3
Right to Inspect and Audit. The Allocatee shall submit such financial and activity
reports, records, statements, documents, and other information as may be requested by the Fund
and the U.S. Department of the Treasury to ensure compliance with this Allocation Agreement,
the provisions of the Internal Revenue Code and the NMTC Program Income Tax Regulations.
The United States Government including, but not limited
to, the U.S. Department of the Treasury, the Internal Revenue Service and the Comptroller
General, and their duly authorized representatives, shall have full and free access during
reasonable business hours to the Allocatee’s offices and facilities and all books, documents,
records and financial statements relevant to the NMTC Allocation provided hereunder. The
Allocatee shall permit any of these authorities to copy such documents as they deem appropriate.
The purposes of such inspections and/or audits will include, but not be limited to, ensuring that
representations, warranties, covenants, and/or certifications provided by the Allocatee are
accurate. Such inspections and/or audits may also be conducted to investigate a taxpayer’s claim
for a New Markets Tax Credit, including a potential event of recapture pursuant to IRC § 45D(g)
and 26 C.F.R. 1.45D-1(e)(2). The Fund will, consistent with applicable law, including the
Freedom of Information Act (5 U.S.C. § 552) and the Privacy Act (5 U.S.C. § 552a), maintain
the confidentiality of all financial and other proprietary information disclosed to the Fund
pursuant to this section. Furthermore, the Fund will, consistent with IRC § 6103, maintain the
confidentiality of, and adequately safeguard, return information as provided to the Fund pursuant
to this section.
6.4
Retention of Records. The Allocatee shall retain all financial records, supporting
documents, and any other records pertinent to the NMTC Allocation (including the Allocatee’s
designation of Qualified Equity Investments and making of QLICIs) as may be reasonably
necessary to demonstrate, among other things, the following:
(a)
the manner in which the NMTC Allocation provided hereunder is used;
(b)
compliance with the requirements of IRC § 45D, the NMTC Program Income Tax
Regulations and this Allocation Agreement; and
14
(c)
information to evaluate the results of the NMTC Program.
6.5
Reports. The Allocatee will be required to report on its compliance with the requirements
of the NMTC Program and this Allocation Agreement and to assist the Fund in evaluating the
results of the NMTC Program. Unless otherwise instructed by the Fund, the Allocatee will
submit its reports, except for audited financial statements, to the Fund electronically using the
Fund’s Community Investment Impact System (CIIS) and Allocation Tracking System. The
reports are as follows:
(a)
Notice of Receipt of Qualified Equity Investment. Within 60 days after the date
that a taxpayer makes an Equity Investment in the Allocatee and provided that the
Allocatee designates such investment as a Qualified Equity Investment, the Allocatee
shall notify the Fund using the Fund’s electronic Allocation Tracking System. Such
notice shall contain, but not be limited to, the following:
(i)
The identification of each taxpayer (including, but not limited to, the
name, taxpayer identification number, and address of the investment entity
and any partners, members, or other legal entities comprising such
investment entity) entitled to claim a NMTC as the result of a Qualified
Equity Investment designated by the Allocatee; and
(ii)
The form, date and dollar amount of Qualified Equity Investments issued
by the Allocatee.
(b)
Institution-Level Report: The institution-level report shall be submitted annually
through CIIS and may include, but not be limited to, organizational, financial, portfolio
and impact information, as well as:
(i)
Certifications and business activity data related to the Allocatee’s (and any
of its Subsidiary Allocatees’) maintenance of its status as a CDE;
(ii)
With respect to each Equity Investment that the Allocatee designates as a
Qualified Equity Investment, a certification that the requirements of IRC §
45D(b)(1)(B) and 26 C.F.R. 1.45D-1(c)(5) are met and that no recapture
event within the meaning of IRC § 45D(g) and 26 C.F.R. 1.45D-1(e)(2)
has occurred; and
(iii)
Any other information that the Fund deems appropriate to ensure
compliance with this Allocation Agreement and to evaluate the results of
the NMTC Program.
Unless otherwise provided in guidance issued by the Fund, no later than 180 days after the end of
the Allocatee’s fiscal year in which the Allocatee or its Subsidiary Allocatee(s) issues its first
15
Qualified Equity Investment and each fiscal year of the Allocatee thereafter, the Allocatee shall
deliver to the Fund the Allocatee’s institution-level report.
(c)
Audited Financial Statements. No later than 180 days after the end of the
Allocatee’s first fiscal year ending after the Allocation Date and each fiscal year of the
Allocatee thereafter, the Allocatee shall deliver to the Fund copies of the Allocatee’s
most recent statements of financial condition audited by an independent certified public
accountant covering the Allocatee’s fiscal year end .
(d)
Transaction-Level Report: The transaction-level report shall include:
(i)
specific data elements on each of the Allocatee’s QLICIs, including, but
not limited to, the location, type and amount of the QLICIs, and
information on the use of the proceeds of QLICIs by CDEs receiving
Equity Investments or loans from the Allocatee or CDEs selling loans to
the Allocatee; and
(ii)
any other information required to confirm the Allocatee’s compliance with
the terms of this Allocation Agreement, IRC § 45D and the NMTC
Program Income Tax Regulations.
Unless otherwise provided in guidance issued by the Fund, the Allocatee shall be required to
submit this report at least annually through CIIS, due no later than 180 days after the end of the
Allocatee’s fiscal year in which the Allocatee or its Subsidiary Allocatee(s) makes its first QLICI
and each fiscal year thereafter. In addition, the Fund reserves the right to require additional
submissions of information related to this report, but not more frequently than quarterly. If
additional submissions are required, the Allocatee will be notified of the specific due date for
each additional submission of information related to the transaction-level report at least 60 days
prior to the respective due date.
After the Institution-Level Reports and the Transaction-Level Reports are submitted to the Fund,
the Fund’s CIIS Help Desk will review the report and send any questions to the Allocatee. If the
Allocatee fails to respond to such questions within the Fund’s required timeframe, the report will
be considered not submitted.
6.6
Equal Credit Opportunity Act. The Allocatee shall provide its products and services in a
manner that is consistent with the Equal Credit Opportunity Act (15 U.S.C. § 1691), to the extent
that the Allocatee is subject to the requirements of such Act.
6.7
Use of Allocation. The Allocatee shall use its NMTC Allocation provided hereunder
only as permitted hereby.
6.8
Maintain Existence as a CDE. The Allocatee shall do all things reasonably necessary to
preserve, renew and keep in full force and effect its existence as a CDE.
16
6.9
Advise the Fund of Certain Material Events. The Allocatee shall advise the Fund in
writing in reasonable detail of any of the following events, within 20 calendar days of the
occurrence of such events:
6.10
(a)
any proceeding instituted against the Allocatee or its Affiliates in, by or before
any court, governmental or administrative body or agency, which proceeding or
its outcome could reasonably be expected to have a material adverse effect upon
the financial condition or business operations, of the Allocatee;
(b)
any material adverse change in the condition, financial or otherwise, or operations
of the Allocatee which would impair the Allocatee’s ability to carry out the
authorized uses of the NMTC Allocation to be provided hereunder;
(c)
the occurrence of any Event of Default, as that term is defined in Section 8.1
hereof, or any event which upon notice or lapse of time, or both, would constitute
an Event of Default;
(d)
the occurrence of any event that may be a recapture event pursuant to IRC §
45D(g) and 26 C.F.R. 1.45D-1(e)(2);
(e)
the merger or acquisition of the Allocatee by or with another entity;
(f)
the Allocatee’s Controlling Entity (as identified in the Allocation Application)
shall no longer have any ownership or management interest in the Allocatee;
provided that the foregoing shall not be deemed to prohibit mergers, asset
transfers, stock transfers, or similar transactions with respect to the Controlling
Entity that pertain to the business operations of the Controlling Entity and are not
primarily undertaken for the purpose of transferring Control of the Allocatee or
the NMTC Allocation.;
(g)
the replacement of any key management officials (e.g., the Executive Director,
the Chief Financial Officer, the Board Chairperson or their equivalents) that had
been named in the Allocation Application;
(h)
the occurrence of any event described in 31 C.F.R. 19.350; or
(i)
such other events that may be determined by the Fund, in its sole discretion, to be
material events, and for which the Fund issues related guidance.
Disclosure to Potential Investors. The Allocatee will make all disclosures required by
Federal or State law, including applicable securities laws, to taxpayers to whom the
Allocatee issues Qualified Equity Investments and will advise all such taxpayers to
perform all necessary due diligence prior to making an Equity Investment in the
Allocatee. The Allocatee will also inform all such taxpayers that the receipt of a NMTC
17
Allocation from the Fund shall not be deemed to be an assurance of any kind by the Fund
regarding the taxpayer’s Equity Investment in the Allocatee.
6.11
Common Enterprises. The Allocatee (or its Subsidiary Allocatees) shall not become an
Affiliate of or member of a common enterprise (as defined in the NOAA and related
Fund guidance) with another entity that received a NMTC Allocation in the CY 2006
round of the NMTC Program (or its Subsidiary transferee), at any time after the
submission of the Allocation Application. This prohibition, however, generally does not
apply to entities that are commonly Controlled solely because of common ownership by
Qualified Equity Investment investors, including investors that have received an NMTC
Allocation.
ARTICLE VII
MONITORING FEE
7.1
Monitoring/Compliance Fee. The Allocatee agrees to pay to the Fund an annual fee as
may be assessed by the Fund, to cover the full cost (as defined in OMB Circular A-25) to the
Fund associated with monitoring the Allocatee’s compliance with the requirements of the NMTC
Program. The Fund will provide the Allocatee with due dates and instructions for payment of
such fee at a later date.
ARTICLE VIII
EVENTS OF DEFAULT, EVENTS OF RECAPTURE AND REMEDIES
8.1
Events of Default. If any one or more of the following events occurs, the Fund, in its sole
discretion, may find the Allocatee to be in default
(a)
any representation, warranty, certification, assurance or any other statement of
fact set forth in the Allocation Application of the Allocatee including, but not
limited to, the Assurances and Certifications contained in the Application, is
found by the Fund to be inaccurate, false, or incomplete when made, in any
material respect;
(b)
any representation, warranty, certification, assurance or any other statement of
fact set forth in this Allocation Agreement as of the Allocation Date or any
representation or warranty set forth in any document, report, certificate, financial
statement or instrument now or hereafter furnished in connection with this
Allocation Agreement as of the Allocation Date or thereafter, is found by the
Fund to be inaccurate, false, or incomplete when made, in any material respect;
18
(c)
the failure of the Allocatee to observe, comply with or perform any term,
covenant, agreement or other provision contained in IRC § 45D, the NMTC
Program Income Tax Regulations, the Allocation Agreement or any instrument,
note or any other document delivered to the Fund in connection with or pursuant
to this Allocation Agreement;
(d)
the failure of the Allocatee to conduct its business in the usual and ordinary
course or to maintain its existence and right to carry on its business and duly
obtain all necessary renewals and extensions thereof and to maintain, preserve and
renew all such rights, powers, privileges and franchises to the extent that such
failure has a material adverse effect on the Allocatee, its financial condition or
business operations and impairs the Allocatee’s ability to carry out the authorized
use(s) of the NMTC Allocation to be provided hereunder; provided, however, that
no default will be deemed to occur in the event that the Allocatee ceases or omits
to exercise any rights, powers, privileges, or franchises that in the judgment of its
board of directors may no longer be exercised in the best interests of the
Allocatee; or
(e)
the occurrence of a material event (as defined in Section 6.9 of this Allocation
Agreement and with the exception of Section 6.9(c)) to the extent that such event
has a material adverse effect on the Allocatee, its financial condition or business
operations and impairs the Allocatee's ability to carry out the authorized uses of
the NMTC Allocation to be provided hereunder.
8.2
Events of Recapture. If any one of the following events occurs, a Qualified Equity
Investment issued by the Allocatee is subject to a recapture event as further defined in IRC
§45D(g) and 26 C.F.R. 1.45D-1(e):
(a)
the Allocatee ceases to be a certified CDE;
(b)
the proceeds of a Qualified Equity Investment issued by the Allocatee ceases
to be used as required by IRC §45D(b)(1)(B); or
(c)
a Qualified Equity Investment issued by the Allocatee is redeemed by the
Allocatee before the end of the 7-year credit period (as defined in 26 C.F.R.
1.45D-1(c)(5)(i)).
The Internal Revenue Service will determine all such events of recapture.
8.3
Remedies. If the Fund finds the Allocatee to be in default under Section 8.1 of this
Allocation Agreement, the Fund may, in its sole discretion, take any one or more of the
following actions, subject to Section 8.6 of this Agreement:
19
(a)
revoke approval of any other applications submitted to and declare as ineligible
any other applications pending before the Fund by the Allocatee or any of its
Affiliates under any of the Fund’s programs;
(b)
terminate or reallocate any unused portion of the NMTC Allocation authorized
hereunder;
(c)
bar the Allocatee or any of its Affiliates from applying for a NMTC Allocation
from the Fund or to any of the Fund’s programs;
(d)
require the Allocatee to convene a meeting(s) of its board of directors or other
governing body at which meeting(s) the Fund will be given the opportunity to
address the attendees with respect to the Fund’s evaluations and concerns
regarding the performance of the Allocatee under this Allocation Agreement;
(e)
notify taxpayers (as identified in Section 6.5 of this Allocation Agreement) of the
Allocatee’s default under this Allocation Agreement; and
(f)
take any other action permitted by the terms of this Allocation Agreement or
available at law or in equity (except for recapture events as set forth in Section 8.2
of this Allocation Agreement).
8.4
Referral to IRS. The Fund may provide reports to the Internal Revenue Service on the
activities of each Allocatee based on the Allocatee’s reports to the Fund. The Internal Revenue
Service may use such reports to, among other things, aid in its determination of whether: (i) a
Qualified Equity Investment issued by the Allocatee is subject to a recapture event as defined in
IRC § 45D(g) and 26 C.F.R. 1.45D-1(e)(2); (ii) a QLICI made by an Allocatee meets the
requirements of IRC § 45D and 26 C.F.R 1.45D-1; and (iii) an Allocatee continues otherwise to
meet the requirements of IRC § 45D and 26 C.F.R. 1.45D-1. The Fund may share with the IRS
any other information that it obtains, in such manner and at such times, as it deems appropriate,
consistent with IRC § 6103.
8.5
No Waiver. No course of dealing on the part of the Fund or any delay or failure on the
part of the Fund to exercise any right herein will operate as a waiver of the right or otherwise
prejudice the Fund's rights, powers and remedies under this Allocation Agreement, the Notice of
Allocation, the NOAA, any guidance documents published by the Fund, the Act, the NMTC
Program Income Tax Regulations or any other applicable law or regulation.
8.6
Prior Notice to Allocatee of Sanctions. Prior to exercising or imposing any remedy
contained herein, the Fund will provide the Allocatee with written notice of the incident(s)
giving rise to the default and the proposed remedy (or remedies). The Fund’s written notice will
give the Allocatee up to 90 calendar days from the date of the notice to respond to and to cure the
incident(s) giving rise to the default. If the Allocatee fails to respond and correct the incident(s)
20
giving rise to the default within the time period provided in the written notice, the Fund may, in
its sole discretion, impose or exercise the remedy (or remedies) set forth in its written notice.
Nothing in this Allocation Agreement, however, will provide the Allocatee with any right to any
formal or informal hearing or comparable proceeding not otherwise required by law. In the
event of a recapture event under IRC § 45D(g) and 26 C.F.R. 1.45D-1(e)(2), this section does
not apply.
8.7
Joint and Several Liability. The Allocatee and each of its Subsidiary Allocatees are
hereby jointly and severally liable for any event of default under Section 8.1 of this Allocation
Agreement whether the Allocatee or any of its Subsidiary Allocatees incurs such default. If such
an event of default occurs, the Fund may, in its sole discretion, subject to Section 8.6 of this
Allocation Agreement, impose any of the remedies listed in Section 8.3 of this Allocation
Agreement jointly or severally upon the Allocatee and its Subsidiary Allocatees, except that
Section 8.3(b) of this Allocation Agreement shall not be imposed with respect to any investment
commitments related to a NMTC Allocation made to a non-defaulting Allocatee or Subsidiary
Allocatee, as determined by the Fund. For purposes of this section, an investment commitment
must be evidenced by a written, signed document in which: (i) an investor commits to make an
investment in the Allocatee or Subsidiary Allocatee in a specified amount and on specified
terms; (ii) an investor has made an initial disbursement of investment proceeds related to such
investment commitment to the Allocatee or Subsidiary Allocatee; and (iii) the investor commits
to disburse the remaining investment proceeds based on specified amounts and payment dates.
ARTICLE IX
MISCELLANEOUS
9.1
Notices. All notices, requests, demands, consents, waivers and other communications
given under any provision of this Allocation Agreement shall be in writing and shall be delivered
by electronic mail, CIIS or the Allocation Tracking System, by hand, mailed by postage-prepaid
first-class mail or delivered by overnight courier service, to the addresses and individuals
indicated below, or to such different address or addresses as the addressee may have specified in
a notice duly given to the sender:
if to the Fund:
Community Development Financial Institutions Fund
Department of the Treasury
Attention: Grants Manager
601 13th Street, NW, Suite 200 South
Washington, DC 20005
[email protected]
if to the Allocatee:
Allocatee’s physical or electronic mailing address as listed in the Fund’s
electronic database.
21
Attention: Authorized Representative
All such notices shall be deemed as received on the date of actual receipt by the Fund or the
Allocatee.
9.2
Entire Agreement. This Allocation Agreement, the Schedules, the material provisions of
the Allocation Application and the attachments, exhibits, appendices and supplements to the
Application, and the Notice of Allocation between the Allocatee and the Fund with respect to the
NMTC Allocation contain the entire agreement of the parties with respect to the subject matter
hereof and supersede all prior agreements or understandings, written or oral, in respect thereof,
and no change, modification or waiver of any provision hereof shall be valid unless in writing
and signed by the party to be bound. The Allocation Application, including any attachments,
exhibits, appendices and supplements thereto, any Schedules, attachments, exhibits, appendices
and supplements to this Allocation Agreement, and said Notice of Allocation are incorporated in
and made a part of this Allocation Agreement.
9.3
Assignment. The Allocatee may not assign, pledge or otherwise transfer any rights,
benefits or responsibilities of the Allocatee under this Allocation Agreement except as set forth
in Section 3.2(c) of this Allocation Agreement, without the prior written consent of the Fund.
9.4
Successors. The rights, benefits and responsibilities of each of the parties hereto shall
inure to their respective successors, subject to this Section 9.4. If the Allocatee merges with or is
acquired by another entity, the Fund reserves the right to examine the new entity, which acquired
or merged with the Allocatee, to determine its acceptability as an Allocatee. If the Fund
determines that the new entity is not eligible or acceptable as an Allocatee, or if the new entity
does not agree to abide by all the provisions of this Allocation Agreement and shall continue
operations and performance as if there were no interruption in the parties to this Agreement, the
Fund may terminate the continued provision of the NMTC Allocation under this Allocation
Agreement and take any or all remedies it deems appropriate in accordance with Sections 8.3 and
8.6 herein.
9.5
Severability. If any provision of this Allocation Agreement shall for any reason be held
to be illegal, invalid or unenforceable, such illegality, invalidity or unenforceability shall not
affect any other provision of this Allocation Agreement, and this Allocation Agreement shall be
construed as if such illegal, invalid or unenforceable provision had never been contained herein.
9.6
No Waiver. No delay or failure on the part of either party in exercising any rights
hereunder, and no partial or single exercise thereof, shall constitute a waiver of such rights or of
any other rights hereunder.
9.7
Applicable Law. This Allocation Agreement shall be governed by and construed in
accordance with Federal law to the extent such Federal law is applicable, and to the extent
Federal law is not applicable, this Allocation Agreement shall be governed by and construed in
accordance with the law of the State of formation of the Allocatee or its Subsidiary Allocatees,
as the case may be.
22
9.8
Disclaimer of Relationships.
(a)
The Allocatee shall not be deemed to be an agency, department or instrumentality
of the United States merely by virtue of it being an Allocatee.
(b)
Nothing in this Allocation Agreement, nor any act of the Fund or the Allocatee,
shall be construed by either of them, or by a third party, to create any relationship
of third-party beneficiary, principal and agent, limited or general partner or joint
venture, or of any association or relationship whatsoever involving the Fund and
the Allocatee.
(c)
Notwithstanding any other provision of law, the Fund shall not be deemed to
control the Allocatee by reason of any NMTC Allocation provided hereunder for
the purpose of any other applicable law.
(d)
The Allocatee’s receipt of a NMTC Allocation from the Fund shall not be deemed
to be an assurance of any kind by the Fund regarding a taxpayer’s Equity
Investment in the Allocatee.
9.9
Counterparts. This Allocation Agreement may be executed in counterparts, each of
which shall constitute an original but all of which together shall constitute one and the same
instrument.
9.10 Headings. The headings contained in this Allocation Agreement are for convenience
only and shall not affect the meaning or interpretation of this Allocation Agreement.
9.11 Amendments. The terms of this Allocation Agreement may be amended, modified, or
supplemented by the mutual written consent of the parties hereto. All amendment requests must
be directed to the Grants Manager at [email protected].
Notwithstanding the above, the Fund may, upon reasonable notice to the Awardee, unilaterally
amend the Assistance Agreement for the sole purpose of making ministerial or administrative
changes or correcting scrivener’s errors.
9.12 Survival of Representations and Warranties. All representations, warranties, covenants,
and agreements made by the Allocatee in this Allocation Agreement or the Application,
including, without limitation, all Assurances and Certifications contained in the Application, or
in any document, report, certificate, financial statement, note or instrument now or hereafter
furnished in connection with this Allocation Agreement shall survive the execution and delivery
of this Allocation Agreement and the provision of any NMTC Allocation pursuant hereto, except
as otherwise agreed to by the Fund.
9.13 Termination. Unless otherwise mutually agreed upon in writing by the parties hereto, this
Allocation Agreement shall terminate at such time that:
23
(a)
the Fund determines that the Allocatee has submitted to the Fund all reports
required by this Allocation Agreement covering the 7-year credit period (as
defined in 26 C.F.R. 1.45D-1(c)(5)(i)) after the Allocatee issues its last Qualified
Equity Investment related to its NMTC Allocation; and
(b)
the Fund determines that the NMTC Allocation has been used as permitted hereby
or two years after the 7-year credit period (as defined in 26 C.F.R. 1.45D1(c)(5)(i)) after the Allocatee issues its last Qualified Equity Investment related to
its NMTC Allocation, whichever date is earlier.
This Section 9.13 shall not, in any manner, waive or supersede any rights, powers, or remedies
available to the Department of the Treasury or the Internal Revenue Service pursuant to the Act,
the Internal Revenue Code or any other applicable law or regulation.
9.14
Disclosure of Allocatee Reports by Fund. The Fund will, consistent with applicable law
(including IRC § 6103), make reports described in Article VI hereof available for public
inspection after deleting any materials necessary to protect privacy or proprietary interests. The
Fund will also make reports described in Article VI hereof available to the Internal Revenue
Service for the purpose of determining the Allocatee’s and its investors’ compliance with the
requirements of IRC § 45D and the NMTC Program Income Tax Regulations.
9.15 Compliance with Non-Discrimination Statutes. The Allocatee shall comply, to the extent
applicable, with all Federal statutes relating to non-discrimination, including, but not limited to:
Title VI of the Civil Rights Act of 1964; Title IX of the Education Amendments of 1972; Section
504 of the Rehabilitation Act of 1973; the Age Discrimination Act of 1975; the Drug Abuse
Office and Treatment Act of 1972; the Comprehensive Alcohol Abuse and Alcoholism
Prevention, Treatment and Rehabilitation Act of 1970; §§ 523 and 527 of the Public Health
Service Act of 1912; and Title VIII of the Civil Rights Act of 1968.
24
Schedule 3
Allocatee:
Control No.:
FORM OF OPINION OF COUNSEL
[This Form Must be Submitted on the Counsel’s Letterhead]
[Date]
TO:
Community Development Financial Institutions Fund
601 13th Street, N.W., Suite 200 South
Washington, D.C. 20005
Attention: Grants Manager
RE:
New Markets Tax Credit Program Allocation
[Name of Allocatee] [Control No. 05NMA00]
[If applicable][Name of Each Subsidiary Allocatee and the respective CDE No.]
Dear Ladies and Gentlemen:
The undersigned counsel represents the above-referenced [Allocatee] and [Subsidiary
Allocatees] as counsel in connection with an allocation of New Markets Tax Credits (NMTC) to
[Allocatee] from the Community Development Financial Institutions (CDFI) Fund in the third round
of the NMTC Program. We have reviewed the General Guidance (66 FR 21846); the CDE
Certification Guidance (66 FR 65806); the Notice of Allocation Availability for the NMTC Program
(70 FR 41075 and as amended 71 FR 12423); Section 45D of the Internal Revenue Code and the
regulations issued pursuant thereto; and made such other investigations of law, as we have deemed
appropriate. We have also reviewed the Allocation Agreement and such other documents and records
as we have deemed necessary to render this opinion. Capitalized terms contained herein shall have
the same meaning assigned to them in the Allocation Agreement.
Based upon the foregoing, the undersigned is of the opinion that:
a. The Allocatee is a domestic [corporation] [partnership] for Federal tax purposes.
[The Subsidiary Allocatee is a domestic corporation/ partnership for Federal tax
purposes]. The Allocatee is a [insert corporate form] and is validly existing and in
good standing (if applicable) under the laws of the State of ___________ and it is
legally authorized to transact business in each jurisdiction in which it is authorized
to use its NMTC Allocation to the extent such authorization is required to
undertake the activities related to its NMTC Allocation. The Allocatee is currently
transacting business in the State(s) of ___________. [The Subsidiary Allocatee is
a [insert corporate form] and is validly existing and in good standing (if
applicable) under the laws of the State of ___________ and it is legally authorized
to transact business in each jurisdiction in which it is authorized to use the NMTC
Allocation to the extent such authorization is required to undertake the activities
related to the NMTC Allocation. The Subsidiary Allocatee is currently transacting
business in the State(s) of________________.]
b. The execution, delivery and performance by the Allocatee [and the Subsidiary
Allocatees] of the Allocation Agreement are within the Allocatee’s [and
Subsidiary Allocatees’] corporate [partnership] powers and have been duly
authorized by all requisite corporate [partnership] action and no additional
authorizations are required which have not been previously obtained.
c. The execution, delivery and performance by the Allocatee [and the Subsidiary
Allocatees] of the Allocation Agreement shall not result in any violation of and
shall not conflict with, or result in a breach of any of the terms of, or constitute a
default under any provision of the Allocatee’s [and the Subsidiary Allocatees’]
incorporation, charter, organization, bylaws or other establishing documents or to
our knowledge any provision of Federal or State law to which the Allocatee [or the
Subsidiary Allocatees] is subject, or any agreement, judgment, writ, injunction,
decree, order, rule or regulation to which the Allocatee [or the Subsidiary
Allocatees] is a party or by which it is bound. The Subsidiary Allocatee(s) listed
in Section 3.2(c) of the Allocation Agreement are Subsidiaries of the Allocatee and
the Allocatee has a controlling influence over the investment decisions of each
Subsidiary Allocatee.
d. The Allocation Agreement and all documents related thereto to which the
Allocatee or the Subsidiary Allocatee is a party and executed and delivered by the
Allocatee or Subsidiary Allocatee as of the date hereof constitute the legal, valid
and binding obligations of the Allocatee [and the Subsidiary Allocatees]
enforceable in accordance with their respective terms.
e. To our knowledge, there is no suit, action, proceeding, or investigation, pending or
threatened against the Allocatee [or the Subsidiary Allocatees] that questions the
validity of the Allocation Agreement or any actions taken or to be taken pursuant
thereto.
2
This opinion is based upon the laws of the State(s) of _______ [this list must include the
incorporation laws of the Allocatee and Subsidiary Allocatee(s) State(s) of formation and the laws of
all States listed in opinion a. as States where the Allocatee and/or Subsidiary Allocatee(s) are
currently transacting business] and the Federal laws of the United States. This opinion is rendered
solely in connection with the CDFI Fund’s provision of the NMTC Allocation to the Allocatee [and
the Subsidiary Allocatees]. Accordingly, it may be relied upon only by the CDFI Fund and may not
be relied upon by any other party for any other purpose.
_______________________
Name of Counsel
By:____________________
3
| File Type | application/pdf |
| File Title | Global: |
| Author | chung-a-fungr |
| File Modified | 2007-01-09 |
| File Created | 2007-01-09 |