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HomeMy WebLinkAbout1984-07-17; City Council; 7820 Exhibit 04; OFFICIAL REQUEST TO STATE OF CALIFORNIA FOR MORTGAGE REVENUE BOND ALLOCATION Exhibit 04.. kf3 'ZBa ExHm- k *i 7/\7/iT$5? FLT$ and CITY OF CARLSBAD, CALIFORNIA ----------------------------------------------------------------- ----------------------------------------------------------------- DEVELOPER AGREEMENT Dated as of June 1, 1985 CITY OF CARLSBAD, CALIFORNIA SINGLE FAMILY RESIDENTIAL MORTGAGE REVENUE BONDS ISSUE OF 1985 __________________-_--------------------------------------------- ----------------------------------------------------------------- - .. TABLE OF CONTENTS (This Table of Contents is for convenience of reference only and is not a part of the Developer Agreement). ARTICLE I Page Definitions ............................................. 2 ARTICLE I1 REPRESENTATIONS Section 2.01. Representations, Warranties and Covenants Section 2.02. Representations, Warranties and Covenants of Issuer .............................. 6 of Developer ........................... 7 ARTICLE I11 ISSUANCE OF BONDS, APPLICATION OF BOND PROCEEDS Section 3.01. Agreement to Issue Bonds; Application of Bond Proceeds .......................... 9 Section 3.02. Limited Liability 9 ........................ ARTICLE IV RESERVATION OF FUNDS FOR LOANS FOR DEVELOPER RESERVED SINGLE FAMILY RESIDENCES Section 4.01. Reservation of Funds ..................... 9 Section 4.02. Developer's Best Efforts to Construct; Termination of Reservation of Funds ..... 10 Section 4.03. The Loans ................................ 11 Section 4.04. Developer Fee ............................ 11 Section 4.05. Representations, Warranties and Covenants of Developer Concerning Sales of Resideinces .............................. 12 Section 4.06. Developer to Submit Affidavit ........... 13 (i) - - ARTICLE V DEVELOPER Section 5.01. Liability of Developer .................. 13 Section 5.02. Merger or Consolidation of Developer .... 14 ARTICLE VI CAUSES PERMITTING TERMINATION Section 6.01. Causes of Termination Defined ........... 14 Section 6.02. Remedies ................................ 16 Section 6.03. No Remedy Exclusive ..................... 16 Section 6.04. Agreement to Pay Attorney's Fees and Expenses .............................. 16 ARTICLE VI1 MISCELLANEOUS PROVISIONS Section 7.01. Amendments, Changes and Modifications; Permit Approvals ...................... 17 Section 7.02. Changes in Applicable Law ............... 17 Section 7.03. Limitation on Rights of Bondholders ..... 17 Section 7.04. Governing Law ........................... 17 Section 7.05. Counterparts ............................ 18 Section 7.06. Notices ................................. 18 Section 7.07. Severability ............................ 18 Section 7.08. Further Assurances and Corrective Instruments ........................... 18 Section 7.09. Term of Agreement ....................... 18 Testimonium ........................................... 18 Signatures and Seals .................................. 18 EXHIBIT A - Form of Developer's Certificate EXHIBIT B - Information Relating to the Developer and the Residences (ii) .. c DEVELOPER AGREEMENT THIS DEVELOPER AGREEMENT (the "Developer Agreement"), dated as of the date set forth on the cover hereof, is by and between the developer whose name is set forth on the cover hereof and in Section 1 of Exhibit B hereto (the "Developer"), and the City of Carlsbad, California (the "Issuer"). WHEREAS, the Issuer has adopted a home mortgage finance program (the "Program") pursuant to Part 5 of Division 31 of the Health and Safety Code of the State of California (the "Act 'I ) ; WHEREAS, the Issuer has promulgated rules and regulations with respect to purchasing mortgage loans originated and made by qualified mortgage lenders to certain mortgagors to purchase residences within the incorporated area of the Issuer; WHEREAS, the Issuer proposes to issue, sell and deliver its Single Family Residential Mortgage Revenue Bonds, Issue of 1985 (the "Bonds" ) , pursuant to a purchase contract (the "Purchase Contract") between the Issuer and PaineWebber Incorporated (the "Underwriters"), for the purpose of providing funds to purchase mortgage loans pursuant to the Program; WHEREAS, the Issuer intends to enter into an indenture between itself and First Interstate Bank of California (the "Trustee") for the issuance of the Bonds (the "Indenture") , pursuant to which the Trustee will be empowered to purchase mortgage loans on certain residences subject, among other things, to certain terms and conditions hereinafter set forth; WHEREAS, the Issuer and the Developer are desirous of setting forth the terms and conditions upon which the Developer will designate residences and the Issuer will reserve funds from the purchase of the Bonds for the purchase of mortgage loans to finance the purchase of such residences; and WHEREAS, the Issuer has found and declared that such purchase of mortgage :loans will both further the purposes of the Act and be in the public interest, providing for and promoting the public health, safety, morals and welfare, by (i) increasing the supply of money available for mortgage loans and (ii) assisting low and moderate income persons and families in acquiring decent, safe and sanitary housing; .* NOW, THEREFORE, the parties hereto, intending to be legally bound hereby, and for and in consideration of the mutual promises, representations and agreements herein contained, hereby agree as follows: ARTICLE I DEFINITIONS Unless the context; clearly otherwise requires, each capitalized word or phrase appearing herein which is defined in the Indenture shall have the same meaning in this Developer Agreement as is given it in the Indenture. In addition thereto, unless the context clearly requires otherwise, the following terms shall have the following respective meanings: "Acquisition Cost" means the cost of acquiring a Residence from the seller as a completed residential unit, including: (i) all amounts paid, either in cash or in kind, by the purchaser (or a related party or for the benefit of the purchaser) to the seller (or a related person or for the benefit of the seller) as consideration for the Residence; (ii) if the Residence is incomplete, the reasonable cost of completing it (so that occupancy thereof is legally permitted); and, (iii) if the Residence is purchased subject to a ground rent, the capitalized value of the ground rent calculated using a discount rate equal to the Yield on the Bonds; but exclusive of: (i) usual and reasonable settlement or financing costs (but only to the extent that such amounts do not exceed the usual and reasonable costs which would be paid by the purchaser where financing is not provided through bonds the interest on which is excludable from the gross income of the recipient for federal income tax purposes), (ii) the value of services performed by the mortgagor or members of his or her family in completing the Residence, and (iii) the cost of land which has been owned by the mortgagor for at least two years before the date on which construction of the Residence begins. Agreement" means any of the Mortgage Sale and Service Agreements among the Issuer, the Trustee, the Compliance Agent and a Lending Institution, and all amendments or supplements thereto. 11 Average Area Purchase Price" means the most current average purchase price safe harbor limitations from time to time published by the Department of the Treasury for the San Diego Primary Metropolitan Statistical Area stated separately with respect to residences which have not been previously occupied ("Average Area Purchase Price - New") and residences If 05/30/85 5510p/2062/07 -2- a which have been previously occupied ("Average Area Purchase Price - Existing"); provided, however, that at its option or in the absence of such safe harbor limitations, the average area purchase price shall be determined by the Issuer in accordance with the Code. "Code" means the Internal Revenue Code of 1954, as amended, and all regulations and rulings promulgated thereunder. "Compliance Agent"' means the person or firm identified as such in the Agreement, and any successor thereto. "Deed of Trust" means the instrument securing a Loan. "Developer Agreement" means any of the agreements between the Issuer and a developer. Developer Fee" means the fee paid or to be paid to the If Issuer by the Developer for the Issuer's reservation of funds for the Developer, which, prior to the issuance of the Bonds, shall be in an amount equal to the percentage of the Developer's Reservation which is specified in Section 2 of Exhibit B (the "Initial Developer Fee") and which may, upon issuance of the Bonds, be reduced (but not increased) to such amount as may be specified in a Notice of Fee, Rate and Allocation (said amount being the "Final Developer Fee"). "Developer Reserved Single Family Residences" means Residences which are anticipated to be sold by the Developer and financed with Loa:ns pursuant to the Program (as more particularly described as to location and size and the draw-down schedule for funds attributable to such Residences in Sections 3, 4 and 5, respectively, of Exhibit B). "Developments" means all the Residences described in Exhibit B to each of the Developer Agreements. Existing Residence" means a Residence which has been 11 previously occupied and includes a unit in a condominium conversion. "First Time Homebuyer" means a person who has not had a present ownership interest, within the meaning of the Code, in his or her principal residence at any time during the three-year period ending on the date he or she executes a Note. "Force Majeure" means any cause or event, not within the Developer's agency or control, which prevents the Developer from fulfilling its obligations hereunder, including, without limitation, the following: acts of God; strikes, lock-outs or 05/3 0/85 5510p/2062/07 -3- - other industrial disturbances; acts of public enemies; orders or restraints of any kind of the government of the United States of America or of the State or political subdivision thereof or any of their departments, agencies or officials, or any civil or military authority; insurrections; riots; landslides; adverse weather conditions; earthquakes; fires; storms; droughts; floods; explosions; and breakage or accident to transmission wires, machinery, transmission pipes or canals. "Household Income" means the current adjusted gross income, for purposes of federal income taxation, of a potential mortgagor together with the current adjusted gross income of all persons over the age of 18 who reside or intend to reside with such mortgagor in the Residence, but exclusive of the income of any co-signer of a Note who does not reside or intend to reside therein, as evidenced by documentation satisfactory to the Lending Institution making the related Loan. "Lending Institution" means the financial institution identified as such in Section 11 of Exhibit B (which shall be one of the financial institutions approved as lending institutions by the City and its successors and assigns; provided, however, that the Developer may change such designation by providing written notice thereof to the Issuer, the Trustee, the financial institution which is being replaced as the Lending Institution and the new Lending Institution. Loan" means a loan evidenced by a Note secured by a Deed II of Trust which meets the requirements of the Agreement and which the Trustee, on behalf of the Issuer, has purchased or intends to purchase pursuant to the Agreement. "Loan-to-Value Ratio" means the ratio of the original principal amount of a Loan to the lesser of the initial appraised value or the purchase price of the Residence subject to the related Deed of Trust. "Maximum Acquisition Cost" means an amount which does not exceed 110 percent of the Average Area Purchase Price - New in the case of a New Residence or of the Average Area Purchase Price - Existing in the case of an Existing Residence. The Maximum Acquisition Cost shall be determined as of the earlier of the date the Lending Institution makes a commitment to provide financing or -the date the Residence is purchased. "Maximum Mortgage Loan Interest Rate" means the rate specified in Section 6 of Exhibit B. 05/30/85 5 5 1Op/2 0 62/07 - 4- "Median Household Income" means the highest of (i) statewide median household income for the State as determined by the Issuer, (ii) countywide median household income for the County of San Diego as determined by the Issuer, or (iii) median family income for the San Diego Primary Metropolitan Statistical Area for a family of four, as published by the United States Department of Housing and Urban Development and as may be adjusted from time to time by the Issuer, or as may be otherwise reasonably determined by the Issuer in accordance with the Act. "Mortgage Loan Interest Rate" means the interest rate of the Loans when held by the Trustee on behalf of the Issuer which rate shall be the rate specified in the Notice of Fee, Rate, and Allocation and which shall not exceed the Maximum Mortgage Loan Interest Rate, exclusive of any fee or charge for mortgage insurance or guaranty. "New Residence" means a Residence which has not been previously occupied. "Note" means the promissory note executed by a mortgagor to evidence such mortgagor's obligation to repay a Loan. "Notice Address" means : (a) As to the Issuer: City of Carlsbad 1200 Elm Avenue Carlsbact, California 92008 Attention: City Clerk With a copy to: City of Carlsbad 1200 Elm Avenue Carlsbad, California 92008 Attention: Director of Building and Planning (b) As to the Compliance Agent: United Guaranty Residential Insurance Company 201 North Elm Street Greensboro, North Carolina 27401 Attn: Mortgage Related Securities Department of Iowa 05/30/85 55 1Op/2 062/07 -5- (c) As to the Trustee: First Interstate Bank of California Trust Division 707 Wilshire Boulevard, 10th Floor Los Angeles, California 90017 Attention: (d) As to Developer: The address specified in Section 7 of Exhibit B. "Notice of Fee, Rnte, and Allocation" means a notice from the Issuer to the Trustee, the Compliance Agent, the Lending Institution(s) and the Developer specifying the Final Developer Fee, the Mortgage Loan Interest Rate, any reduction in the Developer's Reservation, and the Yield on the Bonds, which notice shall be provided within thirty days after the issuance of the Bonds. "Program Fund" means the fund by that name created pursuant to the Indenture and into which certain Bond proceeds and Developer Fees will be deposited and used to purchase Loans. "Reservation" means the amount of money which the Developer has requested be reserved in the Program Fund to purchase Loans, as specified in Section 8 of Exhibit B, provided that the Issuer may specify in the Notice of Fee, Rate and Allocation a reductio:n in said amount of not more than 30 percent if the Issuer deems such a reduction to be desirable in connection with the sale of the Bonds. "Residence" means real property and improvements thereon consisting of a single family detached or attached (condominium, rowhouse, townhouse) residential unit (but not including a mobile home, that is a residence transportable in one or more sections built on a permanent chassis) which can reasonably be expected to become the principal residence of the mortgagor within a reasonable period of time (which shall not exceed 60 days) after the Loan is made to the mortgagor and which is located within the unincorporated area of the Issuer; provided, however, that no condominium unit in a structure more than four stories in 'height shall be considered to be a Residence. "State" means the State of California. "Yield on the Bonds" means the yield on the Bonds as determined by the Issuer in accordance with the Code and as specified. by the Issuer in the Notice of Fee, Rate, and Allocation. 05/30/85 5510p/2062/07 -6- ARTICLE I1 REPRESENTATIONS Section 2.01. Representations, Warranties and Covenants of Issuer. The Issuer represents and warrants to, and covenants with, the Developer that: (a) The Issuer is a municipal corporation of the State, duly organized and existing under the Constitution and laws of the State. Pursuant to the Act, the Issuer has authorized or intends to authorize the execution and delivery of the Agreements, the Indenture and this Developer Agreement. (b) The Issuer has complied or intends to comply with all of the provisions of the Constitution and laws of the State, including the Act, applicable to, and has or intends to have full power and authority to consummate, all transactions contemplated by this Developer Agreement, the Agreement, and the Indenture and any and all other agreements relating thereto. (c) To accomplish the foregoing, the Issuer proposes to issue the Bonds concurrently with or following the execution of this Developer Agreement on the terms and bases set forth in the Indenture and the Purchase Contract and to use the proceeds thereof as specified herein and as further specified in the Agreement and the Indenture. (d) No officer or official of the Issuer has any prohibited interest as defined by the applicable laws of the State in the Developer or in the transactions contemplated by this Developer Agreement. (e) The Issuer will make any and all findings and determinations required or permitted to be made by it pursuant to this Developer Agreement in good faith and with due diligence. Section 2.02. Representations, Warranties and Covenants of Developer. The Developer represents and warrants to, and covenants with, the Issuer and, in order to induce the Underwriters to enter into the Purchase Contract with respect to the Bonds, the Underwriters, that: (a) It is a duly organized and existing corporation, sole proprietorship, partnership or joint venture, as specified in Section 9 of Exhibit B, authorized to do business in the State. 05/30/85 55 1Op/2 062/0 7 -7- (b) It will, during 36 months after the date of issuance of the Bonds, remain a real estate developer engaged in the business of constructing single-family residences, will remain in good standing and qualified to do business under the laws of the State and those of its then state of incorporation (if applicable), will not cease doing business, dissolve, or otherwise dispose of all or substantially all of its assets and will not voluntarily consolidate with or merge into any other entity or permit one or more other entities to consolidate with or merge into it; provided, that it may, without violating the agreement contained in this subsection, consolidate with or merge into another entity or permit one or more entities to consolidate with or merge into it, or,sell or otherwise transfer to another such entity all or substantially all of its assets as an entirety and thereafter cease doing business or dissolve, provided the surviving, resulting or transferee entity, as the case may be, shall be in good standing and qualified to do business under the laws of the state of its then incorporation (if applicable) and of the State and shall, after giving effect to such transaction, have a net worth substantially equal to or greater than that of the Developer immediately prior to such transaction, and shall assume in writing all of the obligations of the Developer under this Developer Agreement (in the case of such a transaction the Trustee, on behalf of the Issuer, shall release the Developer in writing from all 1i.ability hereunder concurrently with and contingent upon such assumption). (c) It has the power to execute, deliver and perform, and to enter into the transactions contemplated by, this Developer Agreement, and has duly authorized the execution, delivery and performance of this Developer Agreement. (d) The execution and delivery of this Developer Agreement, the consummation of the transactions contemplated hereby, and the fulfillment of or compliance with the terms and conditions of this Developer Agreement do not and will not conflict with or result in a breach of any of the terms, conditions or provisions of any legal restrictions or any agreement or instrument to which the Developer is now a party or by which it is bound, or constitute a default under any of the foregoing. (e) It will not knowingly take any action or permit any action which is within its control to be taken which would to its knowledge impair the exemption from federal income taxation of interest on the Bonds. (f) It will furnish to the Issuer and the Underwriters on or before the date on which the Bonds are issued a certificate in the form of Exhibit A. 05/30/85 5510p/2062/07 -a- (9) It will not participate in any other residential mortgage loan program financed by bonds issued by an entity other than the Issuer, the interest on which is exempt from federal income taxation, to obtain financing for the Developer Reserved Single Family Residences until all of its Reservation in excess of $50,000 shall have been used, or committed to be used, to purchase Loans, or to redeem Bonds, as provided in the Indenture; provided, however, that nothing contained herein shall be deemed to prevent the Developer from obtaining financing for such purposes from the California Housing Finance Agency if the sum of such financing plus the Reservation does not exceed the amount reasonably expected to be required for all of the Developer Reserved Single Family Residences. (h) It will make available Developer Reserved Single Family Residences to eligible purchasers seeking to use Loans in connection with the purchase thereof and will not withhold Developer Reserved Single Family Residences or the availability of Loans therefor in order to utilize other mortgage financing. (i) It has reviewed a copy of the proposed Agreement, is familiar with the contents thereof, and understands that the Loans must meet the requirements thereof. ARTICLE I11 ISSUANCE OF BONDS; APPLICATION OF BOND PROCEEDS Section 3.01. Agreement to Issue Bonds; Application of Bond Proceeds. The Issuer agrees to utilize its best efforts to issue, sell and deliver the Bonds to the Underwriters on the terms and bases set forth or to be set forth in the Indenture and the Purchase Contract. The proceeds of the Bonds will be deposited with Trustee and will be disbursed as provided in the Indenture, the Agreements and this Developer Agreement. Section 3.02. Limited Liability. All obligations of the Issuer incurred hereunder shall be limited obligations of the Issuer, payable solely out of Bond proceeds, certain fees, revenues and certain other amounts derived by the Issuer from the Loans (including earnings thereon and certain insurance proceeds with respect thereto) and certain reserve funds established in connection therewith (but not including a certain portion of the earnings on such funds, which portion is not subject to the lien of the Indenture), all as provided in the Indenture; and nothing contained herein shall create any indebtedness or be construed to create any moral obligation on the part of the Issuer or permit any person to compel the exercise of the taxing power of the Issuer to repay the Bonds. All obligations of the Issuer incurred hereunder shall be subordinated to the obligations of the Issuer to the holders of the Bonds, and shall be payable only after all obligations of the Issuer to the holders of the Bonds shall have been satisfied. 05/30/85 5510p/2062/07 -9- ARTICLE IV RESERVATION OF FUNDS FOR LOANS FOR DEVELOPER RESERVED SINGLE FAMILY RESIDENCES Section 4.01. Reservation of Funds. The Issuer hereby agrees to reserve funds in the Program Fund for the purchase of Loans on Developer Reserved Single Family Residences in an aggregate principal amount equal, as nearly as practicable, to the amount of the Developer ' s Reservation. Termination of Reservation of Funds. The Developer, subject to and in accordance with the provisions of this Developer Agreement, agrees to use its best efforts to construct and make available sufficient Developer Reserved Single Family Residences to enable the Lending Institution to originate and sell, before the date specified in Section 10 of Exhibit B, Loans at a purchase price of % of the principal amount thereof in an aggregate principal amount approximately equal to the Developer's Reservation. Notwithstanding the foregoing, the Developer may direct the Lending Institution to use up to 20 percent of the Developer's Reservation to originate Loans which otherwise comply with all the requirements of the Program for Residences which are not Developer Reserved Single Family Residences. Section 4.02. Developer's Best Efforts to Construct; The mixture of Developer Reserved Single Family Residences to be constructed and financed pursuant to this Developer Agreement, including the breakdown thereof by location and size and the draw-down schedule for Loan funds attributable to such Residences, is set forth in Sections 3, 4 and 5 of Exhibit B. Approximately six months after the date of issuance of the Bonds, and at any time thereafter, the Issuer may review the Developer's progress in constructing and making available Developer Reserved Single Family Residences. If as of any such date of review the cumulative amount of Loans indicated in the draw - down schedule set forth in Section 5 of Exhibit B hereto to be delivered on or before 90 days prior to such date has not been originated, the Issuer may, in its sole discretion, transfer to another developer or developers all or a portion of the Developer's Reservation for which the Lending Institution has not theretofore issued commitment letters. If such transfer occurs prior to the date eighteen months after the issuance of the Bonds, the Issuer may effect the transfer only if the transferee pays to the Developer the portion of the Developer Fee applicable to the amount so transferred. If such 05/30/85 55 1Op/2 062/0 7 -10- reallocation occurs after the date eighteen months after the issuance of the Bonds, the Issuer may effect the transfer without requiring the transferee to pay to the Developer any or all of the Developer Fee. The Developer may, with the written consent of the Issuer, transfer all or a portion of its Reservation to another developer which has previously entered into a Developer Agreement with the Issuer; and the portion of the Reservation so transferred may be used pursuant to said Developer Agreement. Upon a determination by the Trustee that the same will not adversely affect the rating of the Bonds, the Developer may, with the written consent of the Issuer, and following the Issuer having provided notice of the same to the Compliance Agent, transfer all or a portion of its Reservation to any other developer, who shall then enter into a Developer Agreement with the Issuer. The Developer's request for the Issuer's consent to such transfer shall set forth the terms and conditions of the transfer, a description of the proposed Developer Reserved Single Family Residences, the proposed transferee and the purpose for the transfer, all of which must conform to all requirements of the Program and otherwise be acceptable to the Issuer. Except in the case of (i) an assignment of the Developer's rights hereunder to a financial institution supplying construction financing for the Development, or (ii) the sale of a Development and an assignment of the Developer's rights hereunder to the purchaser thereof (either of which may be undertaken without the consent of the Issuer), no Reservation or portion thereof may be transferred to a developer who has not entered into a Developer Agreement with the Issuer except upon terms and conditions which have been first presented to and rejected by each of the developers who has entered into such a Developer Agreement; and the Developer requesting approval of any transfer shall pay any and all costs incurred by the Issuer, the Trustee and the Compliance Agent in connection with the processing of such request. Section 4.03. The Loans. The terms, conditions and requirements regardzg the purchase of Loans by the Issuer and the origination, sale and servicing of such Loans by the Lending Institutions shall be governed by the terms of the Agreement. The Issuer reserves the right to purchase Loans as the terms of the Agreement and the Indenture and sound financial practices dictate; and in no case shall the Issuer or the Trustee be required to purchase Loans in amounts which would exceed those set forth for any particular date in the draw-down schedule included in Section 5 of Exhibit €3. 05/30/85 5510p/2062/07 -11- * Section 4.04. Developer Fee. In consideration of the Issuer's agreement to reserve from the proceeds from the sale of the Bonds an amount approximately equal to the Developer's Reservation, the Developer hereby agrees to pay and deliver the Developer Fee to the Issuer prior to or at the execution of this Developer Agreement by the Issuer, to be held by the Issuer in trust and to be deposited by the Issuer with the Trustee concurrently with the delivery of the Bonds to the initial purchaser or purchasers thereof. Subsequent to the issuance of the Bonds, the Developer Fee shall not be refunded to Developer. The Developer understands that payment of the Developer Fee is a precondition to its participation in the Program and that such fee is relied upon by the bondholders as security for performan.ce by the Issuer of its obligations under the Bonds and the Indenture. The Developer hereby acknowledges that its Developer Fee is pledged to secure the payment of the principal of and interest on the Bonds in accordance with the terms of the Indenture. The Developer hereby acknowledges further that the Developer Fee constitutes a non-refundable loan commitment fee which the Trustee may retain upon any reallocation, shared a.llocation or termination of all or a portion of the unused portion of the Developer's Reservation notwithstanding that the Issuer or the Trustee may later secure a similar fee or fees from another Developer. If 90 days after its receipt of this Developer Agreement and the Developer Fee, the Issuer has not sold the Bonds at such prices and rates of interest as will enable it to purchase Loans bearing an annual rate of interest which is equal to or less than the Maximum Mortgage Loan Interest Rate, all rights and obligations of the parties hereunder shall terminate, except that the Developer Fee shall be returned to the Developer, with interest, if any, earned thereon, but minus such portion of the Developer Fee as may have been expended by the Issuer in connection with its activities relating to the Bonds and such portion thereof as may be required to be retained by the Issuer pursuant to Section 50191 of the California Health and Safety Code, within 30 days thereafter. Section 4.05. Representations, Warranties and Covenants of Developer Concerning Sales of Residences. The Developer hereby represents and warrants to, and covenants with, the Issuer that with respect to each Developer Reserved Single Family Residence which it constructs and sells, the following conditions will apply at the time of the sale of the Residence: 05/30/85 5 5 10p/2 0 62/07 -12- - (i) To the hest knowledge of the Developer, such Residence is to be occupied by a mortgagor who is a First Time Homebuyer (except that the mortgagor need not be a First Time Homebuyer in the case of Loans the aggregate principal amount of which does not exceed 10 percent of the principal amount of all Loans purchased with respect to the Developer's Reservation) as such mortgagor's principal place of residence (and not primarily for use in a trade or business or as a recreational home) within 60 days after the making of the Loan to such mortgagor, and the related Loan is made for the purpose of purchasing the Residence and not for the purpose of acquiring or replacing any existing loan on any such Residence (other than a construction loan or similar temporary financing); (ii) To the best knowledge of the Developer: (a) for each New Residence, the Household Income of the mortgagor does not exceed 150 percent of the Median Household Income; (b) for each Existing Residence, the Household Income of the mortgagor doe:: not exceed 120 percent of the Median Household Income; (c) for Loans for Existing Residences the sum of ae principal amounts of which is at least 20 percent of the total principal amount of all Loans for Existing Residences, the Household Income of the Mortgagor does not exceed 1:LO percent of the Median Household Income; (d) except as otherwise expressly indicated by the Developer in its affidavit, each Developer Reserved Single Family Residence was constructed by the Developer and has not been previously sold; (e) the Acquisition Cost of the Residence does not: exceed the Maximum Acquisition Cost; and (f) the total principal amount of all Loans for Existing Residences does not exceed 40 percent of the total principal amount of all Loans; (iii) The purchase contract for such Developer Reserved Single Family Residence was executed on or after the date hereof; (iv) The physical property financed by such Loan will be free of material damage, constructed in a good and workmanlike manner and will be in general good repair on the closing date of such Loan and at the time the property is offered for sa:Le it will be free of any and all mechanics' liens; 05/30/85 55 1Op/2 062107 -13- (v) The Developer Reserved Single Family Residence was offered for sale to qualifying buyers on either a first-come-first-served basis or a lottery basis (except to the extent that some other basis was required by law, as in the case of a condominium conversion, or to the extent that the Issuer specifically waives the provisions hereof by written notice to the Developer) without regard to race, color, religion, age, sex, marital status or national origin; and (vi) The Developer has no knowledge of any fact, circumstance or condition with respect to the mortgagor or the Loan which would lead the Developer to believe that the certifications made by the mortgagor to the Issuer are not true. Section 4.06. Developer to Submit Affidavit. In connection with, anzas a condition precedent to, the proposed purchase of a Loan for each Developer Reserved Single Family Residence, the Developer will execute and submit to the applicable Lending Institution an affidavit in the form specified in the Agreement. ARTICLE V DEVELOPER Section 5.01. Liability of Developer. If after the Trustee has purchased a Loan with respect to a Developer Reserved Single Family Residence it is determined by the Issuer that the Acquisition Cost of such Residence exceeded the Maximum Acquisition Cost, upon demand from the Trustee the Developer shall immediately purchase the Loan from the Trustee at a price equal to t:he principal amount thereof plus any unpaid interest thereon to the date of sale. Section 5.02. Merger or Consolidation of Developer. Any entity into which the Developer may be merged or consolidated, or any entity resu1ti:ng from any merger, conversion or consolidation to whic:h the Developer shall be a party, or any entity succeeding to the business of the Developer, shall be the successor of the Developer hereunder without the execution or filing of any docuinent or instrument, except as provided in Section 2.02(b) of this Developer Agreement, or any further act on the part of any of the parties hereto. ARTICLE VI CAUSES PERMITTING TERMINATION Section 6.01. Causes of Termination Defined. Upon the happening of any oncor more of the following events, the 05/30/85 5510p/2062/07 -14- - Issuer or the Trustee for and on behalf of the Issuer may terminate this Developer Agreement with respect to the Developer, as provided in Section 6.02 hereof and shall have the other remedies specified therein: (a) Failure by the Developer duly to observe or perform in any material respect any covenant, condition or agreement required by this Developer Agreement to be observed or performed by it (other than its agreement to have Loans originated against its Reservation by certain dates) for a period of thirty days after written notice thereof, specifying such failure and requesting that it be remedied, is given to the Developer by the Issuer or the Trustee, unless the Issuer or the Trustee (whichever has given notice) agrees in writing to an extension of such time period prior to its expiration; provided, however, if the failure stated in the notice cannot be corrected within the applicable period, the Issuer and the Trustee will not unreasonably withhold their consent to an extension of such time if corrective action is instituted by the Developer within the applicable period and diligently pursued until the default is corrected. Neither this provision nor any other provision hereof shall require the purchase by the Trustee of any Loan on or after the date specified in Section 4.02. (b) A decree or an order of a court, agency or supervisory authority having jurisdiction in the premises for the appointment of a conservator or receiver or liquidator in any insolvency, readjustment of debt, marshalling of assets and liabilities or similar proceedings, or for the winding-up or liquidation of the Developer's affairs, shall have been entered against the Developer and such decree or order shall have remained in force undischarged or unstayed for a period of 30 days. (c) The Developer shall consent to the appointment of a conservator, receiver or liquidator in any insolvency, readjustment of debt, marshalling of assets and liabilities of similar proceedings of or relating to the Developer or of or relating to all or substantially all of its property; (d) The Developer shall admit in writing its inability to pay its debts generally as they become due, file a petition to take advantage of any applicable bankrutpcy, insolvency or reorganization statute, make an assignment for the benefit of its creditors, or voluntarily suspend payment of its obligations. (e) Any litigation, at law or in equity, or any proceeding before any federal, state or municipal board or other governmental agency or instrumentality is instituted or threatened against the Developer, or any development 05/30/85 5510p/2062/07 - 15- - occurs in any such litigation, which in either event, may, in the reasonable judgment of the Issuer or the Trustee, materially adversely affect the financial condition or operations of the Developer or impair the ability of the Developer to perform its obligations under this Developer Agreement. The provisions of paragraph (a) above (but not the circumstances described in paragraphs (b) through (e) hereof) are subject to the following limitation: if by reason of Force Majeure the Developer is unable in whole or in part to carry out any agreement on its part herein contained, such event shall not be deemed a cause for termination during the continuance of such inability; provided, however, that neither Force Majeure nor any other event or cause shall require the purchase by the Trustee of any Loan on or after the date specified in Section 4.02. The Developer agrees, however, to remedy with all reasonable dispatch the cause or causes preventing it from carrying out such agreement; provided that the settlement of strikes, lockouts and other disturbances shall be entirely within the discretion of the Developer; and the Developer shall not be required to make settlement of strikes, lockouts and other disburbances by acceding to the demands of the opposing party or parties when such course is in the judgment of the Developer unfavorable to it. Termination of the Developer's rights and obligations hereunder shall not preclude a mortgagor thereafter purchasing a Developer Reserved Single Family Residence from receiving a Loan with respect to such property if such funds are otherwise available under the Program of the Issuer. Section 6.01 hereofxiall have happened and be continuing, the Issuer or the Trustee for and on behalf of the Issuer and the Trustee, may take any one or more of the following remedial steps : Section 6.02. Remedies. Whenever any event referred to in (a) By notice in writing to the Developer, the Issuer or the Trustee may, subject to applicable state and federal law, terminate all of the Developer's rights and obligations including, without limitation, the Developer's reservation of Loan funds. Ten days after the giving of such notice, the Issuer or the Trustee is hereby authorized and empowered, without limitation, to execute and deliver on behalf of the Developer any and all documents and other instruments, and -to do or accomplish all other acts or things necessary or appropriate to effect the purposes of such termination. The Developer agrees to cooperate with the Issuer and the Trustee in effecting the termination of its rights and obligations hereunder. 05/30/85 5510p/2062/07 -16- (b) Subject to the limitations contained in this Developer Agreement, the Issuer and the Trustee may take whatever other action at law or in equity may appear necessary or desirable to enforce performance and observance of any obligation, agreement or covenant of the Developer under t.his Developer Agreement. Any amounts collected pursuant to action taken under this Section shall be applied in accordance with the provisions of the Indenture. Section 6.03. No1 Remedy Exclusive. Unless otherwise - expressly provided, n.o remedy herein conferred upon or reserved to the Issuer or the Trustee is intended to be exclusive of any other available remed.y, but each remedy shall be cumulative and shall be in addition to other remedies given under this Developer Agreement or existing at law or in equity. or omission to exercise any right or power accruing upon the happening of any even.t set forth in Section 6.01 hereof shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. In order to entitle the Issuer or the Trustee to exercise any remedy reserved to it in this Article, it shall not be necessary to give any notice, other than such notice as may be required in this Article. No delay Section 6.04. Agreement to Pay Attorneys' Fees and Expenses. In the event the Developer should fail to perform its obligations under any of the provisions of this Agreement and the Issuer the Trustee should employ attorneys or incur other expenses for the enforcement of performance or observance of any obligation or agreement on the part of the Developer herein contained, the Developer agrees that it will pay or reimburse the Issuer or the Trustee on demand the reasonable fee of such attorneys and such other incurred expenses. ARTICLE VI1 MISCELLANEOUS PROVISIONS - Section 7.01. Amendments, Changes and Modifications; Permit Approvals. Subsequent to the issuance of the Bonds and prior to their payment in full (or provision for the payment thereof having been made in accordance with the provisions of the Indenture), this Developer Agreement may not be effectively amended, changed, modified, altered or terminated without the written approval of the Trustee, the consent of the Issuer and notice of any such event having been given to the Compliance Agent. The Issuer will not unreasonably withhold its consent to amendments to Exhibit B hereto (other than to the draw-down 05/30/85 5 5 1 Op/2 0 62/0 7 -17- schedule set forth in Section 5 thereof, with respect to which the Issuer shall have no obligation whatsoever to approve an amendment); provided, however, that it is expressly understood that it shall not be deemed unreasonable for the Issuer to withhold its consent to any such amendment in order to promote the public purposes of the Program; and provided further that the Developer must agree to advance all costs and expenses which the Issuer estimates will be incurred by it in connection with any such amendment. Furthermore, no amendment hereto shall be permitted which may adversely affect the rights of the Bondholders or the rating of the Bonds. the Act or the Codex; amended so as, in the opinion of counsel recognized to be expert in such matterstto reduce or eliminate any restriction therein applicable to the use of the proceeds of the Bonds, the Issuer may, at its option, similarly reduce or eliminate the comparable restriction contained herein so as to conform to such amendment by giving notice thereof to the Developer. Section 7.02. Changes in Applicable Laws. In the event Section 7.03. Limitation on Rights of Bondholders. No Bondholder (as defined in the Indenture) shall have any right to institute a suit with respect to this Developer Agreement except as provided in Article VI11 of the Indenture and only if for the equal benefit of all Bondholders. Section 7.04. Governing Law. This Developer Agreement shall be construed inaccordance with the laws of the State, and the obligations, rights and remedies of the parties hereunder shall be determined in accordance with such laws. Section 7.05. Counterparts. This Developer Agreement may be executed in several. counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. Section 7.06. -___ Notices. All notices, certificates or other communications hereunder shall be sufficiently given and shall be deemed given when personally delivered or mailed by registered mail, postage prepaid, addressed to the appropriate Notice Address. Duplicate copies of each notice, certificate or other communication given hereunder to the Issuer, the Developer, the Compliance Agent or the Trustee shall also be given to the others. The Issuer, the Developer, the Compliance Agent and the Trustee may, by notice given hereunder, designate any further or different addresses to which subsequent notices, certificates or other communications shall be sent. 05/30/85 5 5 1 Op/2 062/07 -18- * Section 7.07. Severability. In the event any provision of this Developer Agreement shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. ments. To the extentpermitted by law, the Issuer and the Developer severally aind not jointly agree that they will, from time to time, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such supplements hereto and such further instruments as may reasonably be required for carrying out the intention of or facilitating the performance of this Developer Agreement. shall be in full foG3 and effect from the date of the execution hereof and :shall continue in effect for the periods set forth in this Developer Agreement, and as such periods may be extended pursuant -to the terms hereof. Section 7.08. Further Assurances and Corrective Instru- Section 7.09. Term of Agreement. This Developer Agreement 05/30/85 5 5 1Op/2 062/07 -19- 1 IN WITNESS WHEREOF, the Developer and the Issuer have caused their names to be signed hereto by their respective officers thereunto duly authorized and their respective seals, duly attested, to be hereunto affixed, all as of the day and year first above written. DEVELOPER BY Its [DA-11 5510p/2062/07 4 U CITY OF CARLSBAD, CALIFORNIA BY Mayor (SEAL) City Clerk, City of Carlsbad [DA-2 ] 55 1Op/2 062/07 .+ - . EXHIBIT A Letterhead of DEVELOPER June , 1985 The City of Carlsbad, California PaineWebber Incorporated and the other Purchasers named in the Purchase Contract dated June , 1985 c/o PaineWebber Incorporated 100 California Street,, 12th Floor San Francisco, California 94111 - City of Carlsbad, California Single Family Residential Mortgage Revenue Bonds, Issue of 1985 Dear Ladies and Gentlemen: We refer to the representations and warranties heretofore made by us in the Developer Agreement dated June 1, 1985 to induce you to execute and deliver the Purchase Contract relating to the above mentioned Bonds. Moreover, we hereby certify that the information concerning us and our development which is set forth in the City's Official Statement with respect to the Bonds did not, as of the date of the Official Statement, and does not, as of the date hereof: (i) contain any untrue statement of a material fact, or (ii) omit to state any material fact which should be included therein for the purpose for which the Official Statement is to be used or which is necessary in order to make the statements contained therein, in light of the circumstances in which they were made, not misleading . We hereby reaffirm as of the date hereof and as though made at the date hereof the representations and warranties referred to above. Very truly yours, 05/30/85 5510p/2062/07 I .. - Y EXHIBIT B 1. Name of Developer: 2. The Initial Developer Fee is percent ( %) of the Developer's Reservation. 3. Location of Residences: 4. Approximate Size and Estimated Price of Residences: Number of Bedrooms/Area Estimated Price 5. Reservation Draw-Down Schedule: 1985 1986 1987 1988 January $ $ February $ $ March $ $ April $ $ May $ $ June $ $ July $ $ $ August $ $ $ September $ $ 5 October $ $ $ November $ $ $ December $ $ 6. The Maximum Mortgage Loan Interest Rate is charge for mortgage insurance or guaranty. percent ( %) per year, exclusive of any fee oJ 7. Developer's Notice Address: 8. Developer's Reservation: $ 0 5/3 0/8 5 55 1 Op/2 062/07 rl - ., k 9. Type of business organization of Developer (corporation, partnership, sole proprietorship or joint venture): 10. Last date on whic:h Loans may be sold to the Trustee (unless . Trustee extends such date as provided for in the Indenture): November 30, 1987. 11. Lending Institution: (Designate name of approved financial institution.) B-2 05/30/85 55 1Op/2 062/0 7