HomeMy WebLinkAbout1993-05-11; City Council; 12219; Multifamily Housing Revenue Refunding BondsK. * 5 c;YY OF CARLSBAD - AGWA BILL r?i
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v a AB # '2; 219 DEF TITLE: AUTHORIZATION TO ISSUE, SELL AND DEWER
MTG, 5/11 /93
DEPT. CM
MULTIFAMILY HOUSING REVENUE REFUNDING
BONDS (LA COSTA APARTMENTS) IN A PRINCIPAL AMOUNT NOT TO EXCEED CIT' $15,920,000
CIT
RECOMMENDED ACTION:
Adopt City Council Resolution No. 5 3 - 138 authorizing the issuance, sale and delivl
of Multifamily Housing Revenue Refunding Bonds in a principal amount not to excf
$15,920,000 for the purpose of refunding bonds previously issued by the City
finance the cost of a Multifamily Rental Housing Project, determining and prescrib:
certain matters relating thereto, and approving and authorizing the execution of rela
documents, agreements and actions (La Costa Partners).
I BACKGROUND:
!x CL B. 4
In 1985, the City of Carlsbad issued $15,920,000 million in Multifamily Housj
Revenue Bonds to provide financing for a 320-unit Multifamily Residential Ren
Project, known as the La Costa Apartments, located at 3393 Calle Cancuna in Carlsb;
General Partnership, to fund the construction of the units. The incentive to the City
participate in this project was the restriction of twenty percent (20%) of the units,
64 units total, to rents affordable to lower income (80% of county median or belo
households.
The La Costa Apartments are complete and have been operational for approximat
six (6) years. The property owners are current on their mortgage paymentsgut 1
project has a negative cash flow. Due to the recent decline in interest rates, 1
property owner has expressed a desire to refinance the project to reduce costs a:
thereby, begin to operate with a positive cash flow. The property owner has reques
that the City issue refunding bonds which would be used to redeem the prior bon
The interest rate on the initial bonds was 8.875%. The interest rate on the new bo1
will Yloat" at a substantially lower rate; this should resolve the negative cash fl
problem for the property owner.
The proceeds of the bonds were used to make a loan to La Costa Partners, a Califon
In very basic terms, the refunding of the bonds is similar to the process used
refinance a single family home. New bonds with a lower interest payment are used
pay off the old bonds. Consequently, the property owner will have lower montl
payments. The City will benefit in the process through the maintenance of the
housing units affordable to lower income households for a longer period of time. 7
longer the bonds are outstanding, the longer the City will have housing units restrici
to lower income affordability.
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On March 23, 1993, the City Council agreed to assist with the refinancing a
appointed a Financing Team to work on this project. The team is as follows:
0 Bond Counsel: Stradling, Yocca, Carlson and Rauth
0 Underwriter/Banker: Dean Witter (Senior Manager), Bank of America ((
Manager)
(Bank of America was subsequently removed from the role of co-manager at request of the property owners.)
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. _x < e Page Two of Agenda Bill No. J a I 21 7
FINANCING PROVISIONS:
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The Financing Team has been working on this project since March in an effort
negotiate the provisions/terms of the agreement for issuance of the refunding bon
and ultimate refinancing of the La Costa Apartments.
Bank of America has agreed to issue a letter of credit to provide the.credit enhanceme
necessary to this transaction. If the property owners default on the loan, Bank
America will be responsible for making the bond/loan payments. The City is g
obligated to repay the bonds.
The new term for the bonds will be 2011. However, the letter of credit provided
year 2000. At the time of expiration, the property owner must then take action
obtain an extension on the Bank's letter of credit or obtain the funds necessary to p
off the bonds in full. As stated previously, the term of the bonds dictates the minim1
term of affordability for the noted rental housing units.
As indicated, the interest rate for the new bonds will be a lower "floating" rate; tl
interest rate is based on the issuance of short term floating rate debt which means d
the interest rate could change weekly, but the maximum rate is set at 10%. The inter
rate, however, can be fixed at any time. The market for this short term floating 1;
debt would allow the issue to be placed today at a rate of about 2-1/2%. Since 1
market is changeable, this rate should be used by the City Council only as
indication, not as the expected interest rate for the new debt.
REGULATORY AGREEMENT:
Bank of America will initially run through 1995 and is expected to be extended to t
The following basic provisions will be outlined in the amended Regulatory Agreeme
1. Not less than 20% of the units, or 64 units total, shall be continuously occup:
by Lower Income Tenants at an "affordable rent".
2. The "affordable rents" for the restricted units shall not exceed 30% of 0:
twelfth of the maximum adjusted annual income of the household
appropriate size which is deemed to be a "lower income" (80% of median gr
income) household. When setting the rents for the restricted units, the prope
owner shall include a utility allowance based on the "Utility Rate Schedl
established for the City Housing Authoritfs Section 8 Rental Assista
Program.
3. The "affordable rent" on a restricted unit shall never exceed 90% of the low
rent charged for a comparable market-rate unit in the project.
Note: The current agreement allows. for a situation where the market rate re
could be lower than the restricted "lower income" units. Staff believes
agreement must include a provision which corrects this situation. The provis
outlined above will ensure that the market rate rents will never be lower til
the rents for the lower income affordable units.
4. Priority for the restricted units shall be given to households currently on
City's Section 8 Rental Assistance Waiting List.
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Page Three o ? Agenda Bill No. fa, ar 4 0
5. The City of Carlsbad will receive an annual fee equal to 23 basis points (0.23'
of the original principal amount of bonds payable in semi-annual installmer
6. The City of Carlsbad shall also receive an origination fee in the amount of
basis points (0.23%) of the amount of bonds payable at the closing.
CITY COUNCIL ACIION:
Staff recommends that the City Council approve the actions necessary to issue i
refunding bonds to refinance the La Costa Apartments. The following actions
required by the Council:
1. Approve Issuance of Bonds in the amount of $15,920,000.
2. Approve the following documents (as to form):
e First Supplemental Indenture. Amends the existing Indenture of Tr
e Indenture of Trust. Sets forth the rules of the financing between
to add provisions which technically facilitate this bond refunding.
City of Carlsbad, the Property Owner (La Costa Partners) and the F
Trust of California (the Trustee).
a Loan Aneement. This document includes the Note and Administrat
Agreement. It outlines the provisions whereby the City will loan
bond proceeds to the property owner.
0 Amended and Restated Remlatory Ameement. Sets forth the n
governing the units restricted as affordable in terms of rent :
occupancy.
e Redemption. Defeasance and Payment of Prior Bonds Anreem(
Provides for an agreement between the City and First Trust of Califor
on how the prior bonds will be repaid.
e Memorandum of Assiment of First Deed of Trust and Assinnmen1
Rents and Fixtures Filing. This document assigns the City's first dl
of trust interest in the Project and receipt of rents to the Bond Trus
are further assigned to Bank of America for issuing its letter of crec
e Subordination, Nondisturbance and Attornment Ameement. 1
document relates to a La Costa tenant which leased the laundry ra
in the Project. Under the agreement, the tenant agrees to subordir
its interest in the lease to the Bonds and the City agrees not to inted
with the tenant's right of possession.
to secure repayment of the Bonds. The remedies under this docum
e Intercreditor Am-eement. Places the Bank of America (the issuer of
Letter of Credit) in a position responsible for the enforcement of
refunding, including taking action in the event of default by
property owners.
.. 0 Page Four of Agenda Bill No. I 2,al'i 0
0 Form of Bond. Provides for the language to be printed on the bond.
4 Form of PrelLn;lary 0Kc;al Statement. JJasklly used by the Bo1
Underwriter (Dean Witter Reynolds Inc.) as information for buyers
the bonds.
0 Form of Bond Purchase Agreement. Outlines the agreement between t
City and the Underwriter as to how the Underwriter will purchase t
bonds from the City.
3. Appoint First Trust of California as Bond Trustee. First Trust of California
also the trustee for the prior bonds. The trustee will make and record all bo
transactions.
4. Appoint the Housing and Redevelopment Commission as the Propi
Administrator of the Bonds.
By approving the attached resolution, the Council will take the actions and approve 1
documentslagreements, outlined above. The "concept" of issuing the refunding bor
is fairly simple; however, the "execution" of the transaction can be relatively compll
Peter Ross, the Bond Underwriter, will be present at the public hearing to answer a
questions and/or provide any additional explanations regarding the transactions.
FISCAL. IMPACT:
The issuance of the refunding bonds for the La Costa Apartments has no direct financ
impact on the City of Carlsbad. The City is not obligated in any way to repay 1
bonds. In addition, the City will be compensated for staff costs associated with 1
financing and monitoring of the project for compliance with the affordable r(
provisions. An up-front origination fee of 0.23% ($36,616) will be paid to the City
cover the staff time and incidental costs related to issuance. In addition, the City v
also receive 0.23% annually to cover ongoing administrative costs.
Although the City is not directly responsible for the repayment of these bonds, 1
City's name is associated with this debt. It is in the City's best interest to assist 1
property owner by refunding this issue to help create a positive cash flow for 1
project, and avoid any possibility of default. In addition, the protection of 64 11
income units is important to the City's affordable housing program.
EXHIBITS:
1. Resolution No. 93 -1 38 authorizing the issuance, sale and delivery of Multifan
Housing Revenue bonds in a principal amount not to exceed $15,920,000
the purpose of refunding bonds previously issued to finance the cost
constructing the La Costa Apartments and all related documents, agreeme
and actions.
2. First Supplemental Indenture (on file in City Clerk's Ofice).
3. Indenture of Trust (on file in City Clerk's Office).
.. 0 Page Five of Agenda Bill No. 1 a! ai? 0
4. Loan Agreement, Including Form of Note and Administration Agreement (on f
in City Clerk’s Office).
5. Amended and Restated Regdatory Agreement (on file in City Clerk’s Office
6. Redemption, Defeasance and Payment of Prior Bonds Agreement (on file in C
Clerk‘s Office).
7. Memorandum of Assignment of First Deed of Trust and Assignment of Re.
and Fixtures Filing (on file in City Clerk’s Office).
8. Subordination, Nondisturbance and Attornment Agreement (on file in C
Clerk’s Office).
9. Intercreditor Agreement (on file in City Clerk’s office).
10. Form of Bond (see pages 3-13 of Indenture of Trust, Exhibit 3) (on file in C
Clerk’s office).
11. Form of Preliminary Official Statement (on file in City Clerk’s Office).
12. Form of Bond Purchase Agreement (on file in City Clerk’s Office).
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RESOLUTIONNO. 93-138 ,
A RESOLUTION OF THE QTY OF CARISBAD, CALIFORNIA
AUTHOFUZING THE ISSUANCE, SALE AND DELIVERY OF
MULTIFAMILY HOUSING REVENUE REFUNDING BONDS IN A
PRINCIPAL AMOUNT NOT TO EX- $15,920,000 .FOR THE
PURPOSE OF REFUNDING BONDS PREVIOUSLY ISSUED BY THE
ClTY To FINANCE THE COST OF A "ILY RENTAL
HOUSING PROJECX, DETERMINING AND PRESCRIBING CERTAIN
MA- RELATING THERETO, AND APPROVING AND
AUTHORIZING THE EXECUTION OF RELATED DOCUMENTS,
AGREEMENTS AND ACIlONS (LA COSTA PARTNERS)
WHEREAS, on March 19, 1985, pursuant to Chapter 7 of Part 5 of Division 31 of
Health and Safety Code of the State of California (the "Act"), the City adopted its Resolu
No. 7939 authorizing the issuance of the City's $15,920,000 Multifamily Housing Reve
Bonds, Series A of 1985 (La Costa Apartments Project) (the "Prior Bonds") secured b!
Indenture of Trust dated as of April 1,1985 (the "Prior Bonds Indenture") between the
and the Bank of California, N.A., the predecessor in interest to First Trust of Calif01
National Association, as trustee for the Prior Bonds (the "Prior Bonds Trustee"), to pro
financing for a 320-unit multifamily residential rental project know as La Costa Apartm
located in the City of Carlsbad (the "Project"), which was constructed by La Costa Parh
a California general partnership (the "Owner"); and
WHEREAS, the Owner desires to refinance the Project by prepaying the loan made j
the proceeds of the Prior Bonds and has requested that the City issue refunding bonc
refund the Prior Bonds, and the City has determined that the refunding of the Prior BI
will accomplish a valid public purpose of the City by continuing to provide housinj
lower income persons and families within the meaning of the Act, and the City now int
to issue its Variable Rate Demand Multifamily Housing Revenue Refunding Bonds, S
A of 1993 (La Costa Apartments Project) (the "Bonds"), the proceeds of which will be
exclusively to refund all outstanding Prior Bonds; and
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1 WHEREAS, the Owner has requested that the Prior Bonds Indenture be amended
2 permit the payment of a redemption prem;Um in an amount not to exceed $159,200 TA
3 // respect to the Prior Bonds to be made from the proceeds of a letter of credit to be provic
4 by Bank of America National Trust and Savings Association (the "Bank"); and
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WHEREAS, the City is authorized and wishes to issue revenue refunding bo
pursuant to the provisions of Article 11 of Chapter 3 of Part 1 of Division 2 of Title 5 of
Government Code of the State of California (the "Refunding Law") to refund the P
Bonds and wishes to amend the Prior Bonds Indenture to facilitate the refunding of
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Prior Bonds; and 10
11 WHEREAS, notice of a public'hearing regarding the issuance of the Bonds has been (
12 published in accordance with the requirements of Section 147(f) of the Internal Reve
13 Code of 1986 (the "Code") and
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WHEREAS, this City Council has conducted a public hearing regarding the issuanc 17
Bonds; and 16
applicable elected representatives to conduct a public hearing regarding the issuance of 15
WHEREAS, the members of the City Council (the "City Council") of the City are
I.8 I/ the Bonds and has determined the issuance of the Bonds to be in the public interest,
19 I proceeds of which are to be used to make a mortgage loan (the "Loan") evidenced 1
promissory note (the "Note") to the Owner to re-finance the Project, all in furtheran(
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21 I/ the purposes of the Refunding Law and the public safety, health and welfare of the citi 22
23 It of the State of California and the City; and
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WHEREAS, all acts, conditions and things required by the Refunding Law and b
other laws of the State of California, to exist, to have happened and to have been perfol
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have been performed in regular and due time, form and manner as required by law, an1 27
precedent to and in connection with the issuance of the Bonds exist, have happened,
City is now duly authorized and empowered, pursuant to each and every requiremen 28
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law, to issue the Bonds for the purpose, in the manner and upon the terms herein provid
and
WHEREAS, the Bonds are to be issued hereunder in an aggregate principal amount
to exceed $15,920,000 and are to be designated as the ''City of Carlsbad, California, V~
Rate Demand Multifamily Housing Revenue Refunding Bonds, Series A of 1993 (La Cc
Apartments Project"); and
WHEREAS, the forms of the various documents have been submitted to this City Cou
for approval;
NOW, THEREFORE, BE lT RESOLVED, by the City Council of the City of Carlsbal
follows:
1. The above recitals, and each of them, are true and correct.
2. In accordance with the procedures set forth in Section 1470 of the Code, this
Council hereby approves the issuance by the City of the Bonds in an aggregate princ
amount not to exceed $15,920,000, provided that the initial interest rate on the Bonds 6
not exceed 10% and the price thereof shall not be less than 100% of the aggregate prin(
amount thereof, all as may be specified in the Bond Purchase Agreement approved be
It is the purpose and intent of this City Council that this Resolution constitute approv;
the issuance of the Bonds by the applicable elected representative of the governmental
having jurisdiction over the area in which the Project is located in accordance with Sec
1470 of the Code.
3. The proposed forms of First Supplemental Indenture, Indenture of Trust
"Indenture"), Loan Agreement (including the form of Note and Administration Agree]
attached as Exhibits thereto), Amended and Restated Regulatory Agreement and Declar;
of Restrictive Covenants (the "Regulatory Agreement"), Agreement Regarding Redemp
Defeasance and Payment of Prior Bonds (the "Escrow Agreement"), Memorandu:
Assignment of First Deed of Trust and Assignment of Rents and Fixture Filing,
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* documents to be used in connection with the issuance of the Bonds and the amendmen 3
presented at this meeting are hereby each approved as the forms of said respec 2
Subordination, Nondisturbance and Attornment Agreement, and Intercreditor Agreem
the Prior Bonds Indenture. The Mayor and the City Clerk are hereby authorized
5 directed, for and in the name of the City, to execute and deliver each such documen
i3 11 substantially the form hereby approved, with such additions thereto and changes therei 7
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may be approved by the officers of the City executing the same, upon consultation with
City Attorney. Approval of such additions and changes shall be conclusively evidence.
the execution and delivery of such documents by such officers.
4. The form of the Bonds as set forth in the Indenture (as the Indenture mq
12 modified pursuant to the provisions of Section 3 hereof) is hereby approved. The M
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and the City Clerk are hereby authorized and directed to execute, by manual or facsi
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meeting is hereby approved in the form presented, and the underwriters named in the E l7
5. The form of the Preliminary Official Statement relating to the Bonds presented at 16
principal amount set forth hereinabove in accordance with the Indenture. 15
signature in the name and on behalf of the City and under its seal, Bonds in the aggre
Purchase Agreement (the "Underwriter") is hereby authorized to distriiute the Prelimi
19 /j I Official Statement to prospective purchasers in the form hereby approved, together
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such conforming changes therein or additions thereto as are determined necessary b
Mayor, upon consultation with the City Attorney, to make such Preliminary Oi
23 ll Statement "final" as of its date, within the meaning of Rule 15~2-12 of the Securitie:
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25 execute a final Official Statement in substantially the form of the Preliminary 01
26 Statement, together with changes therein and additions as are deemed necessary b
27 Mayor, upon consultation with the City Attorney, to make such Official Statement con
28 and accurate as of its date. Approval of such additions and changes shall be conclu:
Exchange Commission (the "Rule"), and the Mayor is hereby authorized and direct
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evidenced by the execution and delivery of the hal Official Statement by the Mayor. I
Underwriter is further authorized to distribute the final Official Statement to the purcha!
of the Bonds upon its execution as described above.
6. The form of Bond Purchase Agreement (the "Purchase Agreement") presented at
meeting and the sale of the Bonds pursuant thereto are hereby approved; and upon rec
of a completed Purchase Agreement, executed by a duly authorized representative of
Underwriter, the Mayor is authorized and directed to evidence the City's acceptance of
offer made thereby by executing and delivering the same in substantially the form he1
approved with such additions thereto and changes therein as may be approved by
Mayor, upon consultation with the City Attorney. Approval of such additions and cha
shall be conclusively evidenced by the execution and delivery of the Purchase Agreen
by the Mayor.
7. First Trust of California, National Association, (the "Trustee") is hereby appoi
as Trustee for the City and the owners of the Bonds with the powers and duties set f
in the Indenture, the Loan Agreement, the Escrow Agreement, the Intercreditor Agreen
and the Regulatory Agreement; provided, however, that the Financial Management Dire
may approve the selection of another trustee meeting the criteria set forth in the Inden
if such a substitution is deemed by the Financial Management Director to be advisab
consmate the delivery of the Bonds in a timely and cost efficient manner. The Tn
, or its agent appointed under the Indenture is hereby requested and directed to authent
the Bonds by executing the certificate of authentication and registration appearing the
and to deliver the Bonds, when duly executed and authenticated, in accordance with w
instructions executed on behalf of the City by the Financial Management Director, M
~ instructions said officer is hereby authorized and directed, for and in the name an
behalf of the City, to execute and deliver to the Trustee. Such instructions shall provid
the delivery of the Bonds in accordance with the Purchase Agreement, upon payment c
purchase price thereof. I I
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8. The Financial Management Director is hereby authorized to select a Prop
Administrator who shall enter into the Administration Agreement.
9. The proceeds of the Bonds shall be expended solely to refund the Prior Bonds a
to reimburse Bank of America National Trust and Savings Association for payment of 1
principal amount of the Prior Bonds as provided by the Indenture and the Esc~
Agreement. The City hereby approves the refinancing of the loan to the Ownel
accordance with the terms and conditions of the various documents described herein tc
executed by the Owner and the City.
10. All actions heretofore taken by the officers and agents of the City with respec
the sale and issuance of the Bonds are hereby approved, confirmed and ratified, and
Financial Management Director or the City Attorney is hereby authorized and direc
jointly and severally, for and in the name and behalf of the City, to do any and all b
and take any and all actions and execute and deliver any and all certificates, agreemc
and other documents necessary to accomplish the issuance, sale and delivery of the Bc
in accordance with the provisions of this resolution.
11. All resolutions or parts thereof in conflict herewith are, to the extent of s
conflict, hereby repealed.
12. If any section, paragraph or provisions of this Resolution shall be held to be inv
or unenforceable for any reason, the invalidity or unenforceability of such sect
paragraph or provision shall not affect any remaining provisions of the resolution.
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13. This resolution shall take effect on the date of its adoption.
PASSED, APPROVED AND ADOPTED at a regular meeting of the City Council of the C * of Carlsbad, California on the 1 1 th day of MAY , 1993, by
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following vote, to wit:
AYES: Council Members Lewis, Stanton, Kulchin, Nygaard, Finnil:
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NOES: None
ABSENT: None
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ATTEST:
ALETHA L. RAUTENKRANZ, City Clerk 1
I? I( (SEAL)
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f 0 PROOF OF PUBLICATION
(2015.5 C.C.P.)
STATE OF CALIFORNIA County of San Diego
I am a citizen o? the United States and a resident of the County aforesaid: I am over the age of eighteen years, and not a party to or interested in the above-entitled matter. I am the principal clerk of the printer of
Blade-Citizen
a newspaper of general circulation, printed and published daily in the City of Oceanside and qualified for
the City of Oceanside and the North County Judicial
district with substantial circulation in Bonsall, Fallbrook, Leucadia, Eminitas, Cardiff, Vista and CarJsbad, County of San Diego, and which newspaper has been adjudged a newspaper of general Circulation by the Superior Court of the County of San Diego, State of California, under the date of June 30,1989, case number 171349;
(set in type not smaller than nonpareil), has been published in each regular and entire issue of .said newspaper and not in any supplement thereof on the
I. that the notice, of which !he annexed is a printed copy
following dates, to-wit:
I ce&fd:%&arb) under penalty of perjury that the foregoing is true and correct.
7 1993
Dated at Oceanside,Califomia, this z .~ day of -.
od "* """""""""
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(61 9) 433-7333
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This space is for the County Clerk's Fil
~ ~~~~~
Proof of Publication of
Public Notice
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CITY OF CARLSBAD PUBLIC NOTICE
NOTICE OF PUBLIC HEARING RE ISSUANCE OF MULTIFAMILY HOUSING REVENUE REFUNDINE
NOTICE IS HEREBY GIVEN that at its regular meetinc 6:OO p.m. on Ma 11. 1993, in the City Council Char? Carlsbad Villa e &rive Carlsbad Califomla 92008 the ( the City of Caisbad wil conduct'a public hearing is reqt tion 147(f) of the Internal Revenue Code of 39% at whic and consider information concerning the possible issuanc of multifamily housing revenue refundmg bonds to refir
"Project"). The Project is owned and operated by La Co a California general partnership. The refunding bonds ( sued) wlll be m an aggregate amount not to exceed $15 will refund the City's previously issued $15,920,000 Mult
At least 20 percent of the rental unRs In the Project are r ing Revenue Bond. Series A of 1985 (La Costa Apartme
available for occupancy by low and moderate income pe ilies, as defined in Section 103(b) (12) (C) of thp Inter Code of 1954, as amended. ALL PERSONS HAVING ANY INFORMATION RELEV/ PROPOSED ISSUANCE OF THE REFUNDING E
TIME AND PLACE MENTIONED ABOVE TO PRESEF SCRIBED ABOVE ARE HEREBY INVITED TO APPE
FORMATION TO THE CITY COUNCIL. Dated: April 22, 1993 Aletha L. F
mi "R~~~~i~~~a!e~~~~gi~~~~c~~~~~~~~~~
Legal 36536 Apdl27.1993 . City Clerk
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t J
Clrlsbad SUN 0
Decreed A Legal Newspaper by the Superior Court of San Diego County
Mail all correspondence regarding public notice advertising to
W.C.C.N. Inc. 2841 Loker Ave. East, Carlsbad, CA 92008 (619) 431-4850
Proof of Publication
STATE OF CALIFORNIA, ss.
COUNTY OF SAN DIEGO,
I am a citizen of the United States and a resident of the county aforesaid;
I am over the age of eighteen years, and not a party to or interested in the above entitled m
I am principal clerk of the printer of the Carlsbad Sun, a newspaper of general circulation,
is published for the dissemination of local news and intelligence of a general character, and whit
per at all times herein mentioned had and still has a bona fide subscription list of paying subscr
which newspaper has been established, printed and published at regular intervals in the saj
Carlsbad, County of San Diego, State of California, for a period exceeding one 4
CITY OF CARLSBAD preceding the date of publicati
published weekly in the City of Carlsbad, County of San Diego, State of California, and which I
NOTICE OF PUBLIC HEARING ' notice hereinafter referred to; an
MULTIFAMILY HOUSING notice of which the annexed is RE ISSUANCE OF
REVENUE REFUNDING BONDS
that. at its regular meeting to be NOTICE IS HEREBY GIVEN
j held at 6:OO p.m. on May-11,1993 in
~ the City Council Chambers at 1200 ~ in any supplement thereof on tk Carlsbad Village Drive. Carlsbad. California92008. theCityCounci1 of, ing dates, to-wit: the City of Carlsbad will conduct a public hearing as required by Sec-
Code of 1986 at which it will hear tion 147(F) ofthe Internal Revenue ,
and consider information concern- 1
City of multifamily housing re- ing the possible issuance by.the
copy, has been published in ea(
and entire issue of said newspapc
April 29
' venue refunding bonds to refi-
housing project known as La Costa Apartments located at the south- east corner of La Costa Boulevard. and Rancho Santa Fe Road in the City of Carlsbad. California (the "Project"). The Project is owned and operated by La Costa Partners, a California general partnership.
issued) will be in an aggregate The refunding bonds (if any are
amount not to exceed $15.920.000 and will refund the City's previous- ly issued $15.920.000 Multifamily Housing Revenue Bonds. Series A of 1985 (La Costa Apartments Pro- I certify under penalty of perjury t
nance a 320-unit multifamily rental
ject).
units in the Project are required to be available for occupancy by low and moderate income persons or families, as defined in Section
venue Code of 1954, as amended. 103(b)(12)(C) of the Internal Re-
ALL PERSONS HAVING ANY
THE PROPOSED ISSUANCE OF INFORMATION RELEVANT TO
THE REFUNDING BONDS DE- SCRIBED ABOVE ARE HEREBY INVITED TO APPEAR AT THE
At least 20 percent of the rental :
TIME AND PLACE MENTIONED
ABOVE TO PRESENT SUCH IN- FORMATION TO THE CITY
COUNCIL. Dated: April 22, 1993 ALETHA L.
City Clerk '
RAUTENKRANZ
CJ 4291: April 29. 1993
foregoing is true and correct. Exec
Carlsbad, County of San Diego, SI
California on the 29th .
day of Apr1 I 9 1YYJ
1 LJ- Clerk of 1
1 I
FAX TRANSMITTAL
FROM FAX # (619 434-1987 TO FAX # (d,?!~) +33/- 4fff
DATE SENT: %&k . TIME SENT
NUMBER OF PAGES SENT, INCLUDING THIS PAGE 2-
TO: I
DEPARTMENT && d
COMPANY= e ,&
FROM:
CONTACT PHONE: fd19) 434’ff808
INSTRUCTIONS: L d &Ad*
DEPARTSENT ~’ dlL
J 1 J &&“&& ”, &y &&d
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ANY PROBLEMS WITH RECEMNG THIS FAX, CALI
(619) 434-2803
1200 Carlsbad Village Drive - Carlsbad, California 92008-1989 - (619) 434-2
iJp-2 i-$3 04 1 /$;id ;r,c;i <y;f":. 7-
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PUBLIC NOTICE
CITY OF CARLSEAD NOTICE OF PUBLIC HEAR 1NG RE LSSUANCE OF
MULTIFAMILY HOUSING RREVENUE REFUNDING 80NDS
NOTICE IS HEREBY GIVEN that, at its regular meeting to
. .held at 6:OO p.m. on May 11, .1'993 in the City Council Cham at 1200 Carlsbad village Urive,' CarlsBad, California 9200 the City Council of the City of Carlsbad will conduct a pr hearing as required by Section 147(f) of the Internal Rev€ Code of 1986 at which it will hear and consider informatic concerning the possibie issuance by the City of multifamil housing revenue refunding bonds to. refinance a 32n-unit multifamily rental housing project known as La Costa A2art located at the southeast corner of La Costa Boulevard and
Ranch Santa Fe Road in the City of Carlsbad, California { "Project"). The Project is owned and operated by La Cost; Partners, a California general partnership. The refundinc bands (if any arg issued) will be in an aggregate amount i exceed $15,920,000 and will refund the City's previously i
$15,920,000 Multifamiiy Housing Revenue Bonds, Series A of (La Costa Apartments Project).
At least 20 percent of the renta'l units in the Project
required to be available for occupancy by low and moderat'< income persons or families, as defined in Section 103(b)(l of the lnternal Revenue Code of 1959, as amended.
ALL PERSONS HAVING ANY INFORMATION RELEVANT TO THE PROPOSI ISSUANCE OF THE EFUNDING BONDS DESCRIBED ABOVE ARE HERESJ INVITED TO APPEAR AT THE TIME AND PLACE MENTIONED ABOVS Tc
PRESENT SUCH INFORNATION TO THE CITY COUNCIL,
\ Dated : April 22, 1993 Aletha L. Rautenkranz,
City Clerk "-,
Publish: April 27, 1993
04/13/93
0 0
City of Carlsbac
FAX TRANSMITTAL
FROM FAX # (619 434-1987 TO FAX # (dh) *Y- ydr7
DATE SENT: 4&/93 1 TIME SENT
NUMBER OF PAGES SENT, INCLUDING THIS PAGE: A
TO: L
DEPARTMENT 4% d-
COMPANY: hJ
FROM:
a.
DEPARTMVENT
CONTACT PHONE K19) 434-fC08
INSTRUCTIONS: r c7 /
/~A-u+~A.+iLfzJ&fl&& J - 0' v 4'
J "
ANY PROBLEMS WITH RECEIVING THIS FAX, CALI
(619) 434-2803
1200 Carlsbad Village Drive - Carlsbad, California 92008-1 989 - (61 9) 434-21
g&-[l-g? % 04; ;;22i ??yj :?[&? T,;, ;/ls,
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-
PUBL 1 C NOT I CE
CiTY Of CARLSBAD
NOTICE OF PUBLlC HEARING RE ISSUANCE OF MULTIFAMILY HOUSiNG REVENUE REFUNDING BONDS
NOTICE IS HER3BY GIVEN that, at its regular meeting to held at 6:OO p.m, on May 11, 1993 in the City Councii Chamb
at 1200 Carisbad Village Drive, Carlsbad, California 42068 the City Council of the City of Carlsbad will conduct a pub hearing as required by Section 147(f) of the Internal Reven Code of 1986 at which it will hear and consider information concerning the posslkie issuance by the City of multifamily housing revenQe refunding bonds to refinance a 320-llnit multifamily rental housing project known as La costa Alpartm located at the southeast corner of La Costa Boulevard and Ranchu Santa Fe Road in the City of Carlsbad, Cali5orr.ia {t "Project"). The Project is owned and operated by La Costa Partners, a California general partnership. The refunding bonds (if any are issued) will be in an aggregate amount na exceed $15,920,000 and will refund the City's previously is
$15,920,000 Multifamily Housing Revenue Bands, Series A of (La Casta Apartments Project).
At least 20 percent of the rental units in the Project required to be available for occupancy by low and moderate
of the lnternal Kevenue Code of 1954, as amended.
ALL PERSONS HAVING ANY INFORMATION RELEVANT TO THE PROPOSEr ISSUANCE OF THE REFUNDING BONDS DESCRIBED ABOVE ARE HEREBY INVITED TO APPEAR AT THE TIME AND PLACE WNTIONZD ABOW TO
PRESENT SUCH INFORNATION TO THE CITY COUNCIL.
hcam8 p4rSbns or Families, as defined in Section 103(b)(12
Dated : April 22, 1993 Aletha L.. Rautenkranz, .- ".._ City Clerk
Publish: April 27, 1993
04/13/93
"1.1 I"" 1"
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CITY OF CARLSBAD, CALIFORNIA
TO
FIRST TRUST OF CALIFOKNIA, NATIONAL ASSOCIATION
as Trustee
FIRST SUPPLEMENTAL INDENTURE SECURING
$15,920,000 CITY OF CARLSBAD, CALIFORNIA MULTIFAMILY HOUSING REVENUE BONDS
SERIES A OF 1985 (LA COSTA APARTMENTS PROJECT)
Dated as of May 11, 1993
.
5
THIS FIRST SUPPLE,XENTAL INDENTURE entered into as of
CARLSBAD, CALIFORNIA, a municipal corporation of the State 0:
California (the "City"), and FIRST TRUST OF CALIFORNIA, NATIONAL ASSOCIATION, a national banking association, duly
organized and existing under the laws of the United States o America, as trustee (the "Trustee"), the successor in intere to The Bank of California, N.A. (the "Original Trustee"), constitutes a. supplement to the Indenture of Trust dated as I ;April 1, 1985 (the "Indenture") between the City and the Original Trustee.
May 11, 1993 (this "First Supplement") between the CITY OF
- RECITALS: - - - - - - -
WHEREAS, the City has previously issued its Multifamily Housing Revenue Bonds, Series A of 1985 (La Costa Apartments Project), in the aggregate principal amount of $15,920,000 (. "Bonds") pursuant to the Indenture, the proceeds of which we used to make a mortgage loan (the "Developer Loan") to La Co;
Partners, a California general partnership (the "Developer") provide financing for a 320-unit multifamily residential development in the City of Carlsbad (the "Project"); and
WHEREAS, in connection with the issuance of the Bonds, tl Developer caused to be delivered to the Trustee a certain letter of credit (the "Bank Letter of Credit") issued by Security Pacific National Bank, the predecessor in interest : Bank of America National Trust and Savings Association (the "Bank" ) ;
WHEREAS, the Developer has elected to exercise its optiol under that certain promissory note dated as of April 1, 1985 (the "Developer Note"), to optionally prepay the Developer LC which, in turn, will require the redemption in full of the
Bonds and has requested that the City issue refunding bonds 1 refinance the Project; and
WHERZ'AS, the Indenture requires that the payment of the redemption premium on the Bonds be made from Seasoned Funds 1 defined in the Indenture); and
WHEREAS, tne Sank has agreed to deliver to the Trustee il letter of credit in an amount not to exceed $159,200 (the "Premium Letter of Credit") to cover the premium due on the Bonds on the redemption date selected by the Develcper in connection with the issuance by the City of its $15,920,000 Variable Rate Demand Multifamily Housing Revenue Refunding
Bonds, Series A of 1993 (La Costa Apartments Project) (the "Refunding Bonds" ) ; and
WHEREAS, the Developer has requested the City, the Bank
the Trustee to consent to certain amendments to the Indentur to permit the use of the Premium Letter of Credit and to
otherwise facilitate the redemption of the Bonds and the
issuance of the Refunding Bonds to refinance the Project; an
WHEREAS, Stradling, Yocca, Carlson & Rauth, as Bond Coun
to the City, has delivered its opinion to the City and the Trustee to the effect that the amendments to the Indenture shall not materially adversely affect the interests of the owners of the Bonds;
NOW, THEREFORE, for and in consideration of the mutual agreements hereinafter contained, the parties hereto agree a follows:
Section 1. Unless elsewhere defined in this First Supplement (including the Recitals contained herein), or unll their context or use indicates another or different meaning I content, capitalized terms found herein shall have the meani! assigned to such terms in the Indenture.
Section 2. Section 101 of the Indenture hereby is amendl to add the following definition:
"Premium Letter of Credit" means an irrevocable let.
of credit issued by the Bank for the benefit of the Trus: in an amount not to exceed $159,200.
-
Section 3. Section 602(g) of the Indenture is hereby
amended to read in its entirety as follows:
(g) in whole or in part on December 1, 1990, or on : Interest Payment Date thereafter, from moneys derived frc an optional prepayment of the Developer Note, or from an! other source, at a price equal to the principal amount ol the Bonds so called for redemption, plus the premium (to the extent Seasoned Funds are available or the Premium
Letter of Credit has been delivered to the Trustee at le: three days prior to the date notice of redemption of the Bonds is required to be given pursuant to Section 604 hereof) set forth in the following schedule (expressed a:
percentage of the principal amount of the Bonds so callec for redemption):
Redemption Dates Redemption Premium
December 1, 1990 and June 1, 1991 2.0%
December 1, 1991 and June 1, 1992 1,5%
Dece-der 1, 1992 and Tune 1, 1993 1.0%
December 1, 1993 and thereafter 0 * 0%
5343Q/2062/13 -2-
I
Section 4. The proviso contained in the first sentence Section 604 of the Indenture is hereby amended to read as follows:
provided, however, that the Trustee shall not give notic of redemption as a result of an optional prepayment of t
Developer Note unless and until the Trustee holds Season
Funds or the Premium Letter of Credit has been delivered the Trustee in each case in an amount sufficient to pay
premium, if any, reqclired to be paid with respect to SUC redemption,
Section 5. This First Supplement may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the s instrument.
Section 6. The provisions of this First supplement and amendments made hereby shall take effect as of the date of t First Supplement.
Section 7. Except as specifically set forth in this Fir
Supplement, the terms and provisions of the Indenture are no altered, amended or modified hereby.
5343Q/2062/13 -3-
+
. IN WITNESS WHEREOF, the City has caused this First
Supplement to be signed in its name and on its behalf by it3
Mayor and City Clerk, and, to evidence its acceptance of thE trusts hereby created, the Trustee has caused these presents be signed in its name and on its behalf by a duly authorized officer all as of the date first above written.
CITY OF CARLSBAD
By : Mayor
ATTEST :
City Clerk
FIRST TRUST OF CALIFORNIA,
NATIONAL ASSOCIATION
ATTEST:
By : Authorized Signatory
Authorized Signatory
Consented to:
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
By :
5343Q/2062/13 -4-
b Consented to:
LA COSTA PARTNERS, a California general partnership
By: THE FERMANIAN FAMILY TRUST General Partner
By : George A. Fermanian, Trustee
BY! THE STONE FAMILY TRUE General Partner
By : Rodney F. Stone, Trustee
5343Q/2062/13 -5-
g-+h; 5 it
~~~~ ~~~ ~~
CITY OF CARLSBAD, CALIFORNIA
TO
FIRST TRUST OF CALIFORNIA, NATIONAL ASSOCIATION,
as Trustee
INDENTURE OF TRUST SECURING
$15,920,000
VARIABLE RATE DEMAND
MULTIFAMILY HOUSING REVENUE REFUNDING BONDS
SERIES A OF 1993
(LA COSTA APARTPlENTS PROJECT)
Dated as of May 1, 1993
TABLE OF CONTENTS
- P<
Recitals .................................................. Form of Front of Bond 111111111111111111111111111111~111111 Form of Certificate of Authentication ..................... Form of Back of Bond ...................................... Form of Notice of Demand Purchase Option .................. :
Form of Assignment ........................................ : Granting Clauses .......................................... :
ARTICLE I
DEFINITIONS
SECTION 101. Definitions ................................
ARTICLE I1
THE BONDS
SECTION 201. Authorized Amount of Bonds ................. SECTION 202. Issuance of Bonds .......................... SECTION 203. Registration, Transfer and Exchange ........ SECTION 204. Execution; Limited Obligation ..............
SECTION 205. Authentication ............................. SECTION 206. Form of Bonds .............................. SECTION 207. Mutilated, Destroyed, Lost or Stolen Bonds . SECTION 208. Temporary Bonds ............................ i SECTION 209. Cancellation and Destruction of Surrendered Bonds ...................................... SECTION 210. Delivery of the Bonds ...................... , SECTION 211. Determination of Adjustable Interest Rate.. . SECTION 211A. Conversion to Adjustable Interest Rate ..... SECTION 212. Reset of Interest Rate on the Bonds ........ SECTION 213. Establishment of Fixed Rate ................ SECTION 214. Substitute Credit Facility ................. SECTION 215. Validity of the Bonds ...................... I SECTION 216. Book-Entry System .......................... I
ARTICLE I I I
REVENUES AND FUNDS
SECTION 301. Source of Payment of Bonds ................. SECTION 302. Creation of Funds and Accounts ............. SECTION 303. Initial Deposits ........................... SECTION 304. Cost of Issuance Fund ...... ,.;.. ...........
-i-
- PZ
SECTION 305. SECTION 306. SECTION 307. SECTION 308.
SECTION 309. SECTION 310. SECTION 311. SECTION 312.
SECTION 313.
Revenue Fund Debt Service Fund General Fund ............................... t Purchase Fund .............................. ( Drawings Under the Letter of Credit ........ t Final Balances ............................. t
Security of Funds .......................... ( Non-Presentment of Bonds ................... 1 Moneys to be Held in Trust ................. (
5
C
............................... ..........................
ARTICLE IV
REVENUES AND APPLICATION
SECTION 401. Revenues to be Paid Over to Trustee ........ t SECTION 402. Payments of Principal, Premium and Interest. t SECTION 403. Revenues to be Held for All Registered Owners; Certain Exceptions ................. t
ARTICLE V
INVESTMENT OF MONEYS
SECTION 501. Investment of Moneys ....................... (
SECTION 502. Earnings and Losses ........................ I .SECTION 503. Reserved ................................... I SECTION 504, Rebate Fund lllllllllllllllllllIIIIlollllll [
SECTION 505. Investments; Arbitrage; Special Arbitrage Restriction ................................ I
ARTICLE VI
REDEMPTION OF BONDS BEFORE MATURITY
SECTION 601. Limitation on Redemption ................... SECTION 602. Redemption Dates, Amounts and Prices ....... I SECTION 603. Partial Redemption ......................... I
SECTION 604. Notice of Redemption; Notice of Determination of Taxability; Notice of Substitute Credit Facility ....... SECTION 605. Payment .Upon Redemption ..................... SECTION 606. Effect of Redemption ....................... SECTION 607. Mandatory Tender in Lieu of Redemption .....
-ii-
P -
ART I CLE VI I
PAYMENT; FURTHER ASSURANCES
SECTION 701.
SECTION 702.
SECTION 703. SECTION 704.
SECTION 705. SECTION 706. SECTION 707. SECTION 708. SECTION 709. SECTION 710.
SECTION 711. SECTION 712 I
SECTION 713.
Payment of Purchase Price, Principal of, Premium, If Any, and Interest on Bonds ................................... Power to Issue Bonds and Make Pledge and Assignment ............................. Further Assurances .........................
Immunities and Limitations of Responsibility of Issuer .................................. Additional Instruments ..................... Extension of Payment of Bonds ..............
Accounting Records and Reports ............. Payment of Taxes and Claims ................ Rights Under the Loan Documents ..................................
Federal Tax Covenants ......................
Against Encumbrances .......................
Compliance with Indenture, Contracts, Laws and Regulations .......................
Maintenance of Powers ......................
ARTICLE VI11
DEFAULT PROVISIONS AND REMEDIES OF TRUSTEE AND REGISTERED OWNERS
SECTION 801. SECTION 802. SECTION 803. SECTION 804. SECTION 805.
SECTION 806.
SECTION 807.
SECTION 808. SECTION 809 I SECTION 810.
SECTION 811.
Defaults; Events of Default ................ Acceleration of Maturities ................. Application of Moneys ...................... Trustee to Represent Registered Owners ..... Registered Owners' Direction of Proceedings.
Limitation on Registered Owners' Right to Sue ............................... Limited Obligation of Issuer ............... Termination of Proceedings .................
No Waiver of Default ....................... Waivers of Events of Default ...............
Remedies Not Exclusive .....................
-iii-
PE -
ARTICLE IX
THE TRUSTEE AND THE PAYING AGENT
SECTION 901. Appointment, Duties, Immunities and
SECTION 902. Fees, Charges and Expenses of Trustee Liabilities of Trustee ..................... I
and Paying Agent ........................... I
SECTION 904. Right of Trustee to Rely on Documents ...... I SECTION 905. Intervention by Trustee .................... I
SECTION 906. Designation of and Successor Paying Agent; Agreement with Paying Agent
SECTION 903. Liability of Trustee ....................... t
< ................
ART I CLE x
SUPPLEMENTAL INDENTURES
SECTION 1001. Amendments Requiring Consent of
Registered Owners .......................... 5 SECTION 1002. Amendments Not Requiring Consent of Registered Owners .......................... 5 SECTION 1003. Duties of the Remarketing Agent ............ 5 SECTION 1004. Effect of Supplemental Indenture ........... 5 SECTION 1005. Endorsement of Bonds; Preparation of New Bonds .................................. 5 SECTION 1006. Amendment of Particular Bonds .............. I SECTION 1007. Opinion of Counsel ......................... 5
ARTICLE XI
PURCHASE AND REMARKETING OF BONDS
SECTION 1101. Registered Owners' Obligation to Tender Bonds for Purchase Upon Conversion to an Adjustable Interest Rate, a Reset Rate of a Fixed Rate or Upon Withdrawal of or Reduction in Rating of Bonds ........................... 5 SECTION 1102. Demand Purchase of Bonds .................. 5 SECTION 1103. Remarketing Agent ......................... 5 SECTION 1104. Qualifications of Remarketing Agent ....... 5 SECTION 1105. Remarketing of Bonds ...................... I SECTION 1106. Purchase of Bonds Delivered to Tender Agent ..................................... 5 SECTION 1107. Delivery of Bonds ......................... I SECTION 1108. Delivery of Proceeds of Sale .............. ! SECTION 1109. Pledged Bonds ............................. I
-1V-
P -
SECTION 1110. Exculpatory Provisions ....................
Agreement with Tender Agent ............... SECTION 1111, Designation of Tender Aqent;
ARTICLE XI I
AMENDMENT OF LOAN DOCUMENTS
AND LETTER OF CREDIT
SECTION 1201. Amendments to Loan Documents and Letter of Credit Not Requiring Consent of Registered Owners ....
and Letter of Credit Requiring Consent of Registered Owners .............. SECTION 1203 Required Opinion of Bond Counsel ..........
SECTION 1202. Amendments to Loan Documents
ARTICLE XI11
DEFEASANCE
SECTION 1301. Defeasance ................................
ARTICLE XIV
SECTION 1401. SECTION 1402. SECTION 1403. SECTION 1404. SECTION 1405. SECTION 1406. SECTION 1407. SECTION 1408. SECTION 1409, SECTION 1410. SECTION 1411.
MISCELLANEOUS .
Consents, Etc., of Registered Owners ...... Limitation of Rights ...................... Severability .............................. Notices ................................... Payments Due on Other Than Business Days . . Counterparts .............................. Applicable Law ............................ Captions .................................. Compliance Certificates and Opinions ...... Successors ................................ Modification of Section 504
under Certain Circumstances ...............
SIGNATURE PAGE ...........................................
-V-
THIS INDENTURE OF TRUST is dated as of May 1, 1993, betwee the City of Carlsbad, a municipal corporation of the State of California (the "Issuer"), and First Trust of California, National Association, a national banking association duly
authorized to accept and execute trusts of the character herel set forth, as trustee (the "Trustee") I
RECITALS:
WHEREAS, Chapter 7 of Part 5 of Division 31 (commencing
"""_ -
with Section 52075) of the Health and Safety Code of the Statc of California (herein called the "Act") authorizes the Issuer
to issue revenue bonds for the purpose of financing the construction or development of multifamily rental housing and for the provision of capital improvements in connection with and determined necessary to such multifamily housing; and
WHEREAS, the Issuer has complied with the applicable noti( provisions of Section 8855 of the Government Code of the Statc of California (the "Government Code") and has received the certification required from the State Treasurer pursuant to
Section 8855.7(b) of the Government Code; and
WEREAS, pursuant to the Act the Issuer has heretofore issued its $15,920,000 Multifamily Housing Revenue Bonds, Series A of 1985 (La Costa Apartments Project) (the "Prior Bonds") secured by an Indenture dated as of April 1, 1985 (thc "Prior Bonds Indenture") between the Issuer and The Bank of California, N.A., the predecessor in interest to First Trust ( California, National Association, as trustee for the Prior Bonds (the "Prior Bonds Trustee"), the proceeds of which were used to make a mortgage loan (the "Prior Loan") to La Costa Partners, a California general partnership (the "Owner"), to provide financing for a multifamily residential rental housinc project (the "Project"), located in the City of Carlsbad (the "City''), for occupancy partially (at least 20 percent) by persons of low or moderate income within the meaning of Sectil 103(b)(12)(C) of the Internal Revenue Code of 1954, as amende1
all for the public purpose of assisting persons of low and moderate income within the City and surrounding areas to obta decent, safe and sanitary housing; and
WHEREAS, the Issuer has expressly determined that the issuance of the Bonds for the purpose of refunding the Prior
Bonds will accomplish a valid public purpose of the Issuer by assuring that rental housing continues to be available to low and moderate income persons and families within the meaning o the Act; and
WHEREAS, the Issuer, acting pursuant to Article 11 of
Chapter 3 of Part 1 of Division 2 of Title 5 of the Government Code of the State of California is empowered to issue bonds tc
refund the Prior Bonds (the "Refunding Law"); and
WHEREAS, the Issuer desires to issue, sell and deliver it: Variable Rate Demand Multifamily Housing Revenue Refunding Bonds, Series A of 1993 (La Costa Apartments Project), in the form hereinafter set forth and in the aggregate principal amount hereinafter set forth (the "Bonds") exclusively for thc
purpose of refunding the Prior Bonds all under and in accordance with the Constitution and laws of the State of California; and
WHEREAS, in order to implement the refunding of the Prior
Bonds and the consequent refinancing of the Prior Loan, the
the Owner and the Trustee pursuant to which the Issuer has
agreed to make, and the Owner has agreed to accept and repay, mortgage loan with respect to the Project, and, in connection with such mortgage loan, the Owner has agreed to cause to be delivered to the Trustee for the benefit of the owners of the Bonds an irrevocable direct-pay letter of credit issued by Bai of America National Trust and Savings Association; and
Issuer has simultaneously entered into a loan agreement with
WHEREAS, the execution and delivery of this Indenture and the issuance and sale of the Bonds have been in all respects
adopted by the Issuer; and ' duly and validly authorized by a written resolution duly
WHEREAS, the Bonds, the certificate of authentication and
the form of assignment to be endorsed on the Bonds are to be substantially the following form, with necessary and appropriate variations, omissions and insertions as permitted
or required by this Indenture, to wit:
04/30/93
5338Q/2062/13 -2-
[FORM OF FRONT OF BOND]
No. R- $
UNITED STATES OF AMERICA
STATE OF CALIFORNIA COUNTY OF SAN DIEGO
CITY OF CARLSBAD, CALIFORNIA
VARIABLE RATE DEMAND MULTIFAMILY HOUSING REVENUE REFUNDING BONDS
SERIES A OF 1993 (LA COSTA APARTMENTS PROJECT)
THIS BOND IS SUBJECT TO MANDATORY TENDER UNDER THE CIRCUMSTANCES HEREINAFTER DESCRIBED, AND IT MUST BE SO TENDERED OR IT WILL BE DEEMED TO HAVE BEEN SO TENDERED AND WILL CEASE TO BEAR INTEREST AND WILL NO LONGER BE ENTITLED TO THE BENEFITS OF THE INDENTURE (AS HEREINAFTER DEFINED) AS OF SUCH MANDATORY TENDER DATE.
Interest Rate Maturity Date Issue Date - CUI
. Adjustable June 1, 2011 May 27, 1993
REG1 STERED OWNER :
PRINCIPAL AMOUNT:
The City of Carlsbad (the "Issuer"), a municipal corporation, duly organized and existing under the Constituti and the laws of the State of California, for value received, hereby promises to pay in lawful money of the United States o America (but only out of the sources hereinafter provided) to the registered owner named above (the "Registered Owner"), or registered assigns, upon presentation and surrender hereof, t Principal Amount specified above on the Maturity Date specifi above and to pay in such lawful money (but only out of the sources hereinafter described) interest on the balance of sai Principal Amount from time to time remaining unpaid from the
Interest Payment Date next preceding the date of authenticati
hereof to which interest has been paid or provided for (unles this Bond was authenticated prior to the close of business on the first Record Date (the fifth day next preceding an Intere Payment Date), in which case interest will accrue from the da
04/30/93
5338Q/2062/13 -3-
on which the Bonds were issued) at the Adjustable Interest Rat (as determined in accordance with the provisions of the
Indenture, defined below). Capitalized terms used in this Box and not otherwise defined herein shall have the meanings
ascribed to such terms in the Indenture. While the Bonds bea~ interest at an Adjustable Interest Rate, interest is payable ( the first Business Day of each month, commencing July 1, 1993 The Issuer promises to pay interest on overdue principal at tl rate then in effect on this Bond, except as the provisions
hereinafter set forth with respect to mandatory tender or redemption prior to maturity may become applicable hereto.
The interest payable on any Interest Payment Date will, subject to certain exceptions provided in the Indenture, be paid to the Registered Owner as of the close of business on tl Record Date for such payment. Regularly scheduled interest 01 this Bond is payable by check mailed on the Interest Payment Date by first class mail, postage prepaid, to the address of the Registered Owner of this Bond as it appears on the registration books of First Trust of California, National
Association, or its successor under the Indenture (the
Registered Owner of at least $1,000,000 in principal amount 0:
Bonds received by the Trustee not later than five days prior .
the Record Date for such payment, payment thereof shall be ma( by wire transfer in immediately available funds to an account
designated by such Registered Owner, any such designation to remain in effect until withdrawn. Principal of this Bond (other than for its purchase price) shall be payable only up01 presentation of this Bond at the office of the Trustee, initially in St. Paul, Minnesota.
"Trustee") ; provided that I upon the written request of any
This Bond and the issue of which it forms a part is a limited obligation of the Issuer, giving rise to no pecuniary liability of the Issuer, the State of California or any political subdivision thereof, nor any charge against its general credit, is payable solely from, and a valid claim of the Registered Owner hereof only against the Trust Estate. This Bond does not constitute an indebtedness or a loan of thl
credit of the Issuer or the State of California or any political subdivision thereof within the meaning of any constitutional or statutory provisions. Neither the faith an( credit nor the taxing power of the Issuer or the State of California or any political subdivision thereof is pledged to the payment of the principal of or interest on this Bond.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THI
BOND SET FORTH ON THE BACK HEREOF AND SUCH FURTHER PROVISIONS ARE HEREBY INCORPORATED BY REFERENCE AS IF SET FORTH HERE.
04/30/93
5338Q/2062/13 -4-
IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all act: and conditions required to be performed precedent to and in tl execution and delivery of the Indenture and the issuance of this Bond have been performed in due time, form and manner as required by law; and that the issuance of this Bond and the issue of which it forms a part does not exceed or violate any
constitutional or statutory limitation.
This Bond shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the Indenture unless and until the certificate of authentication hereon shall have been duly executed by the Trustee or the
Tender Agent.
IN WITNESS WHEREOF. the City of Carlsbad has caused this Bond to be executed in its name by the facsimile signature of the Mayor and attested by the facsimile signature of the City Clerk and the facsimile of its seal to be impressed or imprinted hereon, all as of the 27th day of May, 1993.
CITY OF CARLSBAD
By :
Mayor
ATTEST :
City Clerk
i
[FACSIMILE SEAL1
04/30/93
5338~/2062/13 -5-
[FORM OF CERTIFICATE OF AUTHENTICATION]
This Bond is one of the Bonds described in the within- mentioned Indenture.
Date of authentication:
FIRST TRUST OF CALIFORNIA, NATIONAL ASSOCIATION, as Trustee
By : Authorized Signatory
[FORPI OF BACK OF BOND1
This Bond is one of an authorized issue of bonds limited aggregate principal amount to $15,920,000 (the "Bonds") issue(
the City of Carlsbad, California, on May 11, 1993, and an Indenture of Trust (the "Indenture") dated as of May 1, 1993,
between the Issuer and the Trustee. The Bonds are issued in accordance with Article 11 of Chapter 3 of Part 1 of Division of Title 5 of the Government Code of the State of California (herein called the "Refunding Law") and the Constitution and laws of the State of California, and are equally and ratably secured by and entitled to the protection of the Indenture.
pursuant to a resolution duly adopted by the City Council of
The Bonds are issued for the purpose of obtaining funds t provide refinancing to the owner (the "Owner") of a multifami residential rental development (the "Project") and to refund a current basis the Issuer's Multifamily Housing Revenue Bond Series A of 1985 (La Costa Apartments Project) (the "Prior Bonds") in the outstanding principal amount of $15,920,000. The Issuer has agreed to make a mortgage loan (the "Loan") to
the Owner pursuant to a loan agreement among the Issuer, the
Owner and the Trustee (the "Loan Agreement") which Loan will evidenced by a promissory note (the "Note"). The payments on the Note will be secured, upon satisfaction of certain conditions required by Bank of America National Trust and Savings Association (the "Bank"), in part by a first deed of trust and assignment of rents and fixture filing, a first security agreement and a first financing statement from the Owner for the benefit of the Trustee (collectively, the "Firs Deed of Trust"). To secure its obligation to make payments o
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the Note in accordance with its terms, the Owner has delivered
to the Trustee an irrevocable direct-pay letter of credit (the
"Letter of Credit") issued by the Bank. The Owner has also entered into an amended and restated regulatory agreement and declaration of restrictive covenants (the "Regulatory Agreement") with the Issuer and the Trustee setting forth certain provisions relating to the operation and occupancy of the Project. The Loan Agreement, the Note, the First Deed of Trust and the Regulatory Agreement are hereinafter collective1 referred to as the "Loan Documents. 'I
Reference is hereby made to the Indenture and the Loan
Documents, copies of which are on file with the Trustee, for the provisions, among others, with respect to the nature and extent of the rights, duties and obligations of the Issuer, th Trustee, the Tender Agent, the Owner, the Bank and the owners of the Bonds; the terms upon which the Bonds are issued and
secured; the collection and disposition of revenues; a
description of the properties and interests pledged; the modification or amendment of the Indenture and the Loan Documents; and other matters; to all of which the Registered Owner of this Bond assents by the acceptance of this Bond.
The Bonds are secured by an assignment and pledge of (i) the revenues and other amounts received by the Issuer or the Trustee from or in connection with the Loan Agreement, the Loan, the Note and the First Deed of Trust, including any amounts obtained through the exercise of the remedies providec upon an event of default under such documents (except for the Issuer's. rights to certain fees and indemnification thereunder); (ii) the moneys held in the funds and accounts established under the Indenture, together with investment earnings thereon (except amounts on deposit in the Rebate Fund); (iii) the Issuer's or the Trustee's rights and interest in the Loan Agreement, the Note and the First Deed of Trust (except for the Issuer's rights to receive certain fees and
indemnification); and (iv) any amounts drawn under the Letter of Credit. The Bonds are limited obligations of the Issuer
payable solely from the revenues, funds and assets pledged under the Indenture and not from any other revenues, funds or assets of the Issuer.
This Bond is transferable by the Registered Owner hereof i person or by his attorney duly authorized in writing at the Principal Office of the Trustee or the Tender Agent, but only in the manner, subject to the limitations and upon payment of the charges provided in the Indenture, and upon surrender and cancellation of this Bond. The Trustee or the Tender Agent shall not be required to transfer or exchange any Bond after the mailing of notice calling such Bond for redemption has bet given as provided in the Indenture, nor during the period of
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fifteen (15) days next preceding the giving of such notice of redemption, nor during any period that this Bond is required IJ the Indenture to be tendered, but has not been so tendered to the Tender Agent. Upon such transfer, a new registered Bond c Bonds of authorized denomination or denominations and of the same maturity, for the same aggregate principal amount, will k issued to the transferee in exchange for this Bond.
While the Bonds bear interest at an Adjustable Interest
Rate, the Bonds are issuable as registered Bonds without coupons in a minimum denomination of $100,000 ($120,000 in thc
case of one Bond) and any integral multiple thereof, subject t
the limitations and upon payment of the charges provided in tl Indenture, Bonds may be exchanged for a like aggregate principal amount of Bonds of authorized denominations and of the same maturity.
certain restrictions contained in the Indenture, Subject to
For the period commencing on the date of the first delivel of fully executed and authenticated Bonds to and including June 1, 1993, the Adjustable Interest Rate shall be the rate set forth in the Indenture. Thereafter, the Adjustable Interest Rate shall be determined for the period from and including Wednesday of each week through and including the following Tuesday, such days being subject to change as provided in the Indenture (each an "Adjustable Interest Rate Period"); provided that the Adjustable Interest Rate in effecl on the Record Date for any Interest Payment Date shall remain in effect until and including the day before such Interest Payment Date, and any change in the Adjustable Interest Rate
that would otherwise be effective between such Record Date anc such Interest Payment Date shall be effective on such Interesl Payment Date. The Adjustable Interest Rate shall be determinc (on the basis of a 365 or 366 day year, as the case may be) b] Dean Witter Reynolds Inc., as remarketing agent (together wit1 its successors and assigns, the "Remarketing Agent"), on the Business Day preceding each Adjustable Interest Rate Period.
The Adjustable Interest Rate for each such Adjustable Interes- Rate Period shall be the rate necessary in the Remarketing Agent's best judgment to enable it, under prevailing market conditions, to sell the Bonds at a price equal to the principl amount thereof and interest accrued thereon, if any.
If the Remarketing Agent shall fail to determine the Adjustable Interest Rate as described in the preceding paragraph, then the Adjustable Interest Rate shall be the rat1 determined for the immediately preceding Adjustable Interest
Rate Period until the Remarketing Agent aqain makes such
determination.
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Notwithstanding the foregoing, in no event shall the Adjustable Interest Rate exceed the Maximum Permitted Rate.
If the Owner so elects, the interest rate on the Bonds may be converted to a Reset Rate or the Fixed Rate at any time thz
Bonds are outstanding following compliance with certain nrovisions of the Indenture (the "Reset Date" or "Conversion Gate," as applicable). At the end of a Reset Period, at the election of the Owner, the interest rate on the Bonds may be reset to a Reset Rate or converted to an Adjustable Interest Rate or the Fixed Rate.
While the Bonds bear interest at an Adjustable Interest Rate, at the option of the Registered Owner, this Bond shall 1 purchased as provided in the Indenture (the "Demand Purchase Option") on any Business Day, at a purchase price equal to 101 percent of the principal amount hereof plus accrued interest 1 the date of purchase, with such payment to be made by wire transfer or official bank check, upon:
(a) delivery to the Remarketing Agent by 4:OO p.m. , New York time, not less than seven days prior to the date
on which this Bond is to be purchased, of a notice of exercise of option to tender Bonds in substantially the
form set forth below, duly completed and executed by the
Registered Owner of this Bond (said notice to be effectivc and irrevocable upon receipt); and
(b) delivery to the Tender Agent of this Bond in negotiable form by 9:30 a.m., New York time, on the
purchase date specified in the aforesaid notice.
If this Bond is not delivered to the Tender Agent on the relevant purchase date it shall be deemed to have been so delivered for purposes of the Indenture, and, in the case of Bond to be purchased prior to an Interest Payment Date and after the close of business on the Record Date in respect thereof,. a due-bill check, in form satisfactory to the Tender Agent, for interest due on such Interest Payment Date.
The Bonds shall be subject to mandatory and optional redemption at a price equal to 100% of the principal amount o
the Bonds called for redemption (with accrued interest, if an
to the redemption date to be paid to the Registered Owner on the Record Date for such payment if the redemption date is an
Interest Payment Date and to the Registered Owner on the redemption date in all other cases) as follows:
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(a) in whole on the first date for which notice of redemption may be timely given, at a price equal to the
principal amounts of Bonds so called for redemption in the event that the Prior Bonds have not been redeemed in wholc by the date which is sixty (60) days following the Bond Issuance Date;
(b) in whole on the date selected by the Trustee for redemption of the Bonds if, within sixty (60) days after receipt by the Trustee of written notice of the occurrencf of an Act of Bankruptcy of Bank or if at least twenty (20: days prior to the expiration date of the Letter of Credit,
the Owner does not cause to be delivered to the Trustee a Substitute Credit Facility, except that in no event shall such redemptions occur later than five (5) days prior to the expiration date of the Letter of Credit;
(e) in whole on the first date for which notice of
redemption may be timely given if the Bank fails or refusc to honor a drawing under the Letter of Credit or to reinstate the Letter of Credit in accordance with its terr
(d) in whole or in part on the first date for which notice of redemption may be timely given in the event of i involuntary loss or the substantial destruction of the
seizure, requisition, condemnation, change in a federal 12 or an action of a federal agency after the date of issuanc of the Bonds which prevents the Issuer from enforcing the requirements of Section 1.103-8(b) of the Regulations), under the circumstances described in the Indenture;
a Project as a result of unforeseen events (e. g. , fire,
(e) in whole not later than twenty days after the Trustee has received written notice and direction from thc
Bank to redeem Bonds as a result of the occurrence of an event of default under the Reimbursement Agreement;
(f) in whole on the earliest practicable date after receipt by the Trustee of notice from the Issuer of a Determination of Taxability or, subject to the provisions of the Intercreditor Agreement, upon acceleration of the Note following a default by the Oher under the Loan Agreement or the Regulatory Agreement; or
(9) in whole or in part on any date while the Bonds bear interest at an Adjustable Interest Rate in the event and to the extent the Letter of Credit is drawn upon in a1 amount representing the voluntary prepayment of the Note.
The Owner may elect, with the consent of the Bank, to makl any date on which the Bonds may be redeemed pursuant to
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subparagraph (9) above a Mandatory Tender Date for the purpose of remarketing the Bonds and selecting a different interest rate mode. The Bank may elect to make any date on which Bonds may be redeemed pursuant to subparagraph (e) above a Mandatory Tender Date. Notice of either of such elections shall be give to the Trustee, the Tender Agent, the Remarketing Agent and tk Issuer as provided in the Indenture. Any Bond not tendered tc the Tender Agent on or before the Mandatory Tender Date shall
be deemed to have been tendered for purchase on such date for all purposes of the Indenture.
Except as otherwise provided in the Indenture with respect to redemptions described in subparagraphs (e) and (f) above, notice of redemption shall be given by sending such notice, bl first class mail, postage prepaid, not less than fifteen nor more than twenty days prior to the redemption date. All notices of redemption shall be mailed to the Registered Owner of each Bond to be redeemed in whole or in part at the addres:
shown on the registration books maintained by the Trustee. Neither the failure of the Registered Owner of this Bond to receive a notice mailed nor any defect in any notice so mailec shall affect the validity of the proceedings for such redemption. All Bonds or portions thereof so called for
redemption will cease to bear interest on the specified redemption date provided funds for their redemption are on deposit at the place of payment at that time.
If less than all of the Bonds are to be redeemed, the Trustee shall first select for redemption any Pledged Bonds
outstanding, and thereafter shall select Bonds for redemption by lot as provided in the Indenture; provided that, in any event, the principal amount of each Bond redeemed while the Bonds bear interest at an Adjustable Interest Rate shall be a minimum denomination of $100,000 ($120,000 in the case of one Bond) and any integral multiple thereof.
A Substitute Credit Facility may be provided to the Trustc under the terms and conditions set forth in the Indenture, which include the condition that such Substitute Credit Facility be rated by either Moody's Investors Service or Standard & Poor's Corporation. While the Bonds bear interest at an Adjustable'Interest Rate, on a Reset Date and on the Conversion Date, such substitution may cause the rating on th
Bonds to be withdrawn or reduced, but in no event, without th
a rating lower than Aa3IVMIG-1 as a result of the substitutio, if the Bonds are rated by Moody's Investors Service, or AA-/A-1+ if, as a result of the substitution, the Bonds are rated by Standard & Poor's Corporation. The Bonds are subjec to mandatory tender in the event a Substitute Credit Facility is delivered to the Trustee resulting in a reduction or
Issuer's consent t shall the then-existing rating be reduced t
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withdrawal of the then-existing rating on the Bonds as described below. A change in the Letter of Credit does not
create a Substitute Credit Facility.
Upon receipt of a notice from the Trustee that the Owner
has elected to convert the interest rate on the Bonds to a Reset Rate or the Fixed Rate and/or that the Owner has electec to provide a Substitute Credit Facility causing a reduction ir or a withdrawal of the then-existing rating on the Bonds, eacl
Registered Owner of Bonds is required, and the Registered Ownt hereof specifically agrees, to tender his Bonds to the Tender Agent for purchase at a price of 100 percent of the principal amount thereof plus accrued interest thereon, if any, in accordance with the Indenture. Any Bond which is not so tendered shall nonetheless be deemed to have been purchased from the Registered Owner on the Reset Date, the Conversion Date or the date of substitution of the Substitute Credit
Facility at said price plus accrued interest thereon, if any, to such date. Such Bond shall thereafter cease to bear interest and may be cancelled by the Trustee, and the Trustee or the Tender Agent may authenticate and deliver a revised fo. of Bond in substitution thereof,
The Registered Owner of this Bond shall have no right to enforce the provisions of the Indenture or to institute actio: to enforce the covenants therein, or to take any action with respect to any Event of Default under the Indenture, or to institute, appear in or defend any suit or other proceedings with respect thereto, except as provided in the Indenture. I an Event of Default occurs, the principal of all Bonds then outstanding under the Indenture may be declared due and payab upon the conditions and in the manner and with the effect provided in the Indenture.
The Issuer, the Trustee, the Tender Agent, any paying age and any agent of the Issuer or the Trustee may treat the pers in whose name this Bond is registered as the Registered Owner hereof (except as to Pledged Bonds) for the purpose of receiving payment as herein provided and for all other
Issuer, the Trustee, the Tender Agent, any paying agent nor a
such agent shall be affected by notice to the contrary.
purposes, whether or not this Bond be overdue, and neither th
Modifications or alterations of the Indenture, or of any
supplements thereto, may be made only to the extent and in th circumstances permitted by the Indenture.
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[FORM OF NOTICE OF DEW PURCHASE OPTION]
The undersigned is the Registered Owner of Bond(s) R- constituting a portion of the City of Carlsbad, California, Variable Rate Demand Multifamily Housing Revenue Refunding Bonds, Series A of 1993 (La Costa Apartments Project). In accordance with the Demand Purchase Option contained in the
Indenture, the undersigned hereby irrevocably demands that:
1. $ in aggregate principal amount of its Bond( s) R- be purchased in accordance with the Indenture.
2. Such Bonds are to be purchased on the date which is the next Business Day not less than seven days after the date of receipt of this notice by the Remarketing Agent (which date shall not be later than a Reset Dat
or the Conversion Date).
Print Name of Registered Owner:
Dated :
Signature:
Selected means of payment:
Wire transfer to By official bank che account below: made payable to: Bank [addressee] Account No.
Note: The signature to the notice of exercise of option must correspond with the name of the Registered Owner as it appears
alteration, enlargement or any change whatsoever; and such signature must be guaranteed by an eligible guarantor institution.
on the face of the within Bond in every particular, without
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[FOM OF ASSIGNMENT]
FOR VALUE RECEIVED, the undersigned sells, assigns and
transfers unto
(Name, Address and Tax Identification or Social Security Number of Assignee)
the within Bond of the CITY OF CARLSBAD and does hereby irrevocably constitute and appoint
to transfer the said Bond on the books kept for registration thereof with full power of substitution in the premises.
Dated:
Signature guaranteed by
Note: The signature to the assignment must correspond with tl name of the Registered Owner as it appears on the face of the within Bond in every particular, without alteration, enlargement or any change whats,oever; and such signature must be guaranteed by an eligible guarantor institution.
[ END OF BOND FORM]
WHEREAS, the execution and delivery of the Bonds and of t:
Indenture have been duly authorized and all things necessary make the Bonds, when executed by the Issuer and authenticated by the Trustee or the Tender Agent, valid and binding legal obligations of the Issuer and to make this Indenture a valid and binding legal instrument for the security of the Bonds, have been done.
NOW, THEREFORE, THIS INDENTURE OF TRUST WITNESSETH:
That the Issuer, in consideration of the premises, the acceptance by the Trustee of the trusts hereby created, the purchase and acceptance of the Bonds by the purchasers thereo and of other good and valuable consideration, the receipt of which is hereby acknowledged, and in order to secure the payment of the principal of, premium, if any, interest on and
purchase price of all Bonds Outstanding from time to time,
observance and performance by the Issuer of all the covenants expressed or implied herein and in the Bonds, and upon the terms and conditions set forth in the Intercreditor Agreement
according to their tenor and effect, and to secure the
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(as defined herein) to secure the obligations arising under th
Reimbursement Agreement (as defined herein) with respect to th Letter of Credit, does hereby convey, pledge and assign unto the Trustee, and unto its successors and assigns forever and
does hereby grant to it and them a security interest, together with all right, title and interest of the Issuer, in:
GRANTING CLAUSE FIRST
The Loan Agreement (except the Issuer's rights under Sections 5.l(d), 6.8 and 7.4 thereof), the Loan, the Note and the First Deed of Trust, including all extensions and renewals of the terms thereof, if any, together with all right, title and interest of the Issuer therein (except the Issuer's rights to fees and indemnification thereunder) including, but without limiting the generality of the foregoing, the present and continuing right to receive, receipt for, collect or make claj for any of the moneys, income, revenues, issues, profits and other amounts payable or receivable thereunder, whether payabl under the above referenced documents or otherwise, to bring actions and proceedings thereunder or for the enforcement thereof, and to do any and all things which the Issuer or any
other person is or may become entitled to do under said documents ;
GRANTING CLAUSE SECOND
All payments to be received by, or on behalf of, the Issuc from or in connection with the Loan Agreement (except amounts to be received by the Issuer under Sections 5.l(d), 6.8 and 7 thereof), the Loan, the Note and the First Deed of Trust, together with all other Revenues and all moneys and securitie!
held by the Trustee in any Fund or Account (except the Rebate Fund) established pursuant to the terms of this Indenture,
together with investment earnings thereon; and
GRANTING CLAUSE THIRD
Any and all other property of each name and nature from time to time hereafter by delivery or by writing of any kind
pledged or assigned as' and for additional security hereunder, by anyone, to the Trustee, which is hereby authorized to receive any and all such property at any and all times and to hold and apply the-same subject to the terms hereof.
TO HAVE AND TO HOLD all and singular the Trust Estate, whether now owned or hereafter acquired, unto the Trustee and its respective successors in said trusts and assigns forever.
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. IN TRUST NEVERTHELESS, upon the terms and trusts herein SE
forth for the equal and proportionate benefit, security and protection of all present and future owners of the Bonds, fror
time to time issued under and secured by this Indenture with01 privilege, priority or distinction as to the lien or otherwisf of any of the Bonds over any of the other Bonds.
PROVIDED, HOWEVER, that if the principal of the Bonds and
the interest and premium, if any, due or to become due there01 shall be paid or provided for at the times and in the manner mentioned in the Bonds, according to the true intent and meaning thereof, and the payments are made into the Revenue Fund as required hereunder or provided, as permitted by Artic: XI11 hereof, for the payment thereof, and all the covenants a] conditions pursuant to the terms of this Indenture are kept, performed and observed, and the Trustee and all Paying Agents
are paid all sums of money due or to become due to them in accordance with the terms and provisions hereof, then this
Indenture and the rights hereby granted shall cease, determinc and be void, otherwise this Indenture is to be and remain in full force and effect.
The Trustee hereby acknowledges, approves, undertakes, accepts and agrees to the terms, conditions, appointments and agencies of the Loan Agreement and the Regulatory Agreement a: they relate to it and its participation in the transactions contemplated thereby.
THIS INDENTURE OF TRUST FURTHER WITNESSETH, and it is expressly declared, that all Bonds issued and secured hereundc are to be issued, authenticated and delivered and the Revenue; hereby assigned and pledged are to be dealt with and disposed of under, upon and subject to the terms, conditions, stipulations, covenants, agreements, trusts, uses and purpose: as hereinafter expressed, and the Issuer has agreed and covenanted, and does hereby agree and covenant, with the
Trustee and with the respective owners from time to time of t: Bonds, as follows:
ARTICLE I
DEFINITIONS
SECTION 101. DEFINITIONS
(A) For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires :
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(1) This "Indenture" means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicabl provisions hereof.
(2) All references in this Indenture to designated "Articles", "Sections" and other subdivisions are to the
designated Articles, Sections and other subdivisions of this Indenture. The words "herein, I' "hereof, I' "hereto, 'I
"hereby," and "hereunder" and other words of similar imp01 refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision.
(3) The terms defined in this Article have the meanings assigned to them in this Article, and include tht plural as well as the singular.
(4) All accounting terms not otherwise defined here: have the meanings assigned to them in accordance with applicable generally accepted accounting principles as in effect from time to time.
(5) Every "request, I' "order, I' "demand, I' "application," "appointment," "notice," "statement," "certificate, 'I "consent, I' or similar action hereunder by
the Issuer shall, unless the form thereof is specifically provided, be in writing signed by a duly authorized officc or agent of the Issuer with a duly authorized signature.
(6) All other terms used herein which are defined i:
the Loan Documents shall have the same meanings assigned them in such documents unless the context otherwise requires,
(B) For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires:
"Account" means any one or more of the separate trus accounts created,by Article I11 hereof, and shall include any subaccount or subaccounts included in such account.
"Act" means Chapter 7 of Part 5 of Division 31 of th Health and Safety Code of the State as now in effect and as i may from time to time hereafter be amended or supplemented.
"Act of Bankruptcy" means the filing of a petition i
proceeding) by or against the Owner or any qeneral partner Or guarantor of the Owner under any applicable bankruptcy, insolvency or similar law as now or hereafter in effect.
bankruptcy (or other commencement of a bankruptcy or similar
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"Act of Bankruptcy of Bank" means that the Bank has
become insolvent or has failed to pay its debts generally as such debts become due (including its obligations to pay drawings under the Letter of Credit) or has admitted in writin its inability to pay any of its indebtedness or has consented to or has petitioned or applied to any authority for the appointment of a receiver, liquidator, trustee or similar official for itself or for all or any substantial part of its
liquidator or similar official has been appointed or that insolvency, reorganization, arrangement or liquidation proceedings (or similar proceedings) have been instituted by c
against the Bank unless the appropriate regulatory agency has confirmed in writing the effectiveness of the Letter of Credit
"Adjustable Interest Rate" means the rate of interest
properties or assets or that any such trustee, receiver,
determined in accordance with Section 211 hereof.
"Adjustable Interest Rate Conversion Date" means the day immediately following the final day of a Reset Period on which interest on the Bonds is converted from a Reset Rate to
an Adjustable Interest Rate as provided in Section 211A here01 or any Mandatory Tender Date on which interest on the Bonds i! converted to an Adjustable Interest Rate as provided in Sectic
607 hereof.
"Adjustable Interest Rate Period" means (i) the initial period commencing on the Bond Issuance Date and continuing to and including Tuesday, June 1, 1993 and (ii) after June 1, 1993, and after any Adjustable Interest Ra. Conversion Date, the period from and including Wednesday of each week through and including the following Tuesday; provided, however, that the Remarketing Agent may, by written notice to the Issuer, the Trustee, the Bank, the Tender Agent and the Owner, cause the Adjustable Interest Rate Period to commence on Tuesday of each week to end the following Monday, to commence on Thursday of each week to end the following Wednesday, or to commence on Friday of each week to end the following Thursday.
"Administration Agreement" means the administration agreement to be entered into among the Issuer, the Owner and
the Program Administrator dated as of the date hereof, and an amendments thereto.
"Affiliated Party" means (i) a Person whose relationship with the Owner would result in a disallowance of losses under Section 267 or 707(b) of the Code, (ii) a Person who together with the Owner are members of the same controlle group of corporations (as defined in Section 1563(a) of the Code, except that "more than 50 percent" shall be substituted
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for "at least 80 percent" each place it appears therein), (iij a partnership and each of its partners (and their spouses and minor children) whose relationship with the Owner would resull in a disallowance of losses under Section 267 or 707(b) of tht Code and (iv) an S corporation and each of its shareholders
(and their spouses and minor children) whose relationship wit] the Owner would result in a disallowance of losses under Section 267 or 707(b) of the Code.
"Bank" means Bank of America National Trust and Savings Association, and its successors and assigns acting as the issuer of the Letter of Credit, or the issuer of a
Substitute Credit Facility, if one has been delivered as provided herein.
"Beneficial Owners" means the actual purchasers of tl Bonds whose ownership interests are recorded on the books of the DTC Participants.
"Bond" or "Bonds" means any one or more of the bonds
authorized, authenticated and delivered under this Indenture.
"Bond Counsel" means an attorney or a firm of attorneys of nationally recognized standing in matters pertaining to the tax status of interest on bonds issued by states and their political subdivisions, selected by the Issuc and duly admitted to the practice of law before the highest court of any state of the United States of America or the District of Columbia.
"Bond Issuance Date" means the date of first authentication and delivery of the Bonds, being May 27, 1993.
"Bond Year" means the period beginning on June 1,
1993, and ending on May 31, 1994, and each one-year or shorte
period thereafter, beginning on June 1, until there are no longer any Bonds Outstanding.
"Business Day" means any day other than a Saturday, Sunday, or a day on which banks in the city in which the Principal Office of the Trustee or the Tender Agent is locate1 or a day on which banking institutions in the city in which t: office of the Bank is located which is designated for the presentation of drawings under the Letter of Credit are
authorized or obligated by law or executive order to close, o a day on which the New York Stock Exchange is closed.
"Code" means the Internal Revenue Code of 1986, as
amended, and any regulations, rulings, judicial decisions, an notices, announcements, and other releases of the United Stat Treasury Department or Internal Revenue Service interpreting and construing it.
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"Completion Date" means the date of completion of the Project, being September 16, 1986.
"Conversion" means the establishment of the interest rate on the Bonds at the Fixed Rate as provided in Section 21: hereof.
"Conversion Date" means any Interest Payment Date
while the Bonds bear interest at an Adjustable Interest Rate ( the day immediately following the final day of any Reset Period, in either case, on which interest on the Bonds is converted to a Fixed Rate as provided in Section 213 hereof l
"Cost of Issuance Fund" means the Fund by that name
created by Section 302 hereof.
"Costs of Issuance" means all costs incurred in connection with the issuance of the Bonds, including, but not limited to, the Underwriter's fee, the initial Remarketing Agent's fee, attorneys' fees and expenses (including Bond Counsel, Owner's counsel, Trustee's counsel, as well as other specialized counsel fees and expenses incurred in connection with the borrowing), rating agency fees, accountant fees related to the issuance of the Bonds, Trustee's initial and first semi-annual fees and the Trustee's expenses, the initia and first annual fee of the Issuer, Tender Agent's initial fel and expenses, printing costs for the Bonds and any preliminar: and final offering materials and costs of engineering and feasibility studies necessary to the issuance of the Bonds, i
any.
"Counsel" means an attorney at law or a firm of attorneys (who may be an employee of or counsel to the Issuer or the Owner or the Trustee) duly admitted to the practice of law before the highest court of any state of the United State of America or of the District of Columbia.
"Debt Service Fund" means the Fund by that name created by Section 302 hereof.
"Default" or "Event of Default" means an occurrence event specified in and defined by Section 801 hereof.
"Demand Purchase Option" means the option of the Registered Owners to have Bonds Outstanding purchased by the
Tender Agent in accordance with Section 1102 hereof.
"Determination of Taxability" means (1) the failure the Bank or the Owner to consent in writing within forty-five
(45) days to any amendment to the 1ndenture;the Loan Agreeme or the Regulatory Agreement which in the written opinion of Bond Counsel addressed to the Issuer, the Trustee and the Ban
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is necessary to preserve the exclusion from gross income of interest on the Bonds for federal income tax purposes, or
(2) enactment of legislation or a final judgment or order of a court of original jurisdiction, a final order of any other court of competent jurisdiction, or a final ruling or decision of the Internal Revenue Service, in any such case to the effec that the interest on any of the Bonds (other than interest on
any Bond for any period during which such Bond is held by a "substantial user" of any facility financed with the proceeds
Section 103(b)(13) of the Prior Code and except for any
federal income tax purposes from the gross income of the
recipients thereof subject to federal income taxes as a result of action or inaction of the Owner while the Bonds bear
interest at an Adjustable Interest Rate and as a result of anJ action during a Reset Period or after the Conversion Date. With respect to clause (2) above, a judgment or order of a court or a ruling or decision of the Internal Revenue Service shall be considered final only if no appeal or action for judicial review has been filed and the time for filing such appeal or action has expired.
of the Bonds or a "related person," as such terms are used in
alternative minimum or preference tax) is not excludable for
"DTC" means The Depository Trust Company, New York, New York, and its successors and assigns.
"DTC Participants" means securities brokers and
.delaers, banks, trust companies, clearing corporations and
other organizations maintaining accounts with DTC.
"Escrow Agreement" means that certain Agreement Regarding Redemption, Defeasance and Payment of Prior Bonds dated the Bond Issuance Date by and among the Issuer, the Owner, the Trustee, the Prior Bonds Trustee and the Prior Bonc Bank.
"Extraordinary Services" and "Extraordinary Expenses mean all services reasonably required to be rendered and all fees and reasonable expenses incurred by the Trustee, the Tender Agent, the Paying Agent or their counsel under this Indenture, or other agreements referred to herein, other than Ordinary Services and Ordinary Expenses.
"First Deed of Trust" means, collectively, the First Deed of Trust and Assignment of Rents and Fixture Filiny, the
First Security Agreement and the First Financing Statement dated as of the date hereof executed by the Owner to secure t Owner's obligations under the Note.
"Fixed Rate" means the interest rate borne by the Bonds after the Conversion Date and until the maturity date o the Bonds as provided in Section 213 hereof.
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"Fixed Rate Period" means the period during which thE Bonds bear interest at the Fixed Rate.
"Fund" means any one or more of the separate trust funds created by Article I11 and Article V hereof,
"General Fund" means the Fund by that name created b] Section 302 hereof.
"Government Obligations" means noncallable, nonprepayable (i) direct, general obligations of the United States of America, or (ii) any obligations unconditionally
guaranteed as to the full and timely payment of all amounts dl thereunder by the full faith and credit of the United States ( America (including obligations held in book-entry form), but specifically excluding any mutual funds or unit investment trusts invested in such obligations.
"Indenture" means this Indenture of Trust dated as o May 1, 1993, between the Issuer and the Trustee and any
amendments or supplements thereto.
"Information Services" means any of the following services: Financial Information, Inc. 's "Daily Called Bond Service," 30 Montgomery Street, 10th Floor, Jersey City, New Jersey 07302, Attention: Editor; Kenny Information Services "Called Bond Service," 65 Broadway, 16th Floor, New York, New York 10006; Moody's "Municipal and Government," 99 Church Street, 8th Floor, New York, New York 10007, Attention: Municipal News Reports; and Standard and Poor's "Called Bond Record," 25 Broadway, 3rd Floor, New York, New York 10004; or such other services providing information with respect to called bonds as the Issuer may designate in a certificate delivered to the Trustee.
"Insurance Proceeds Account" means the account in th Revenue Fund by that name created by Section 302 hereof.
"Intercreditor Agreement" means the Intercreditor Agreement dated as of May 1, 1993, among the Trustee, the
Issuer and the Bank.
"Interest Account" means the account in the Debt Service Fund by that name created by Section 302 hereof.
"Interest Payment Date" means (i) while the Bonds be
interest at an Adjustable Interest Rate, the first Business C of each month, commencing July 1, 1993 for the first Interest Payment Date, and commencing with the first Business Day of t month following an Adjustable Interest Rate Conversion Date, (ii) during a Reset Period of less than one year, the first
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Business Day following the last day of the Reset Period, (iii)
during a Reset Period of one year or longer, June 1 and December 1 of each year, commencing on the June 1 or December next following the applicable Reset Date and (iv) after the
Conversion Date, June 1 and December 1 of each year, commencir on the June 1 or December 1 next following the Conversion Datc
"Interest Period" means an Adjustable Interest Rate Period, a Reset Period or the Fixed Rate Period.
'I I s suer I' means the City of Carlsbad, California.
"Letter of Credit" means the letter of credit issued
by the Bank or any Substitute Credit Facility substituted in accordance with the provisions of Section 214 hereof.
"Letter of Credit Account" means the Account by that
name in the Revenue Fund created by Section 302 hereof.
"Liquidity Account" means the Account by that name il the Purchase Fund created by Section 302 hereof.
"Loan" means the mortgage loan originated by the Issuer to the Owner in an amount equal to $15,920,000.
"Loan Agreement" means the Loan Agreement dated as 02
May 1, 1993, among the Issuer, the Trustee and the Owner entered into with respect to the Loan, and any amendments thereto.
"Loan Documents" means the Loan Agreement, the Administration Agreement, the Regulatory Agreement, the Note and the First Deed of Trust.
"Mandatory Tender Date" means the date on which the Owner or, under certain circumstances, the Bank, elects to require Registered Owners to tender their Bonds pursuant to Section 607 hereof.
"Maximum Permitted Rate" means ten percent (10%) per year (computed on the basis of a 365/366 day year for the actual number of days elapsed); provided, however, that the Trustee shall designate a rate higher than ten percent (10%) per year as the Maximum Permitted Rate if the Trustee receive (i) evidence satisfactory to the Trustee that the stated amou of the Letter of Credit has been increased by an amount equal to the principal amount of the Bonds Outstanding times the
increase in the interest rate for the number of days of interest coverage then required to be maintained under the Letter of Credit, and (ii) an opinion of Bond Counsel to the effect that the designation of such higher Maximum Permitted
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Rate or the determination that no Maximum Permitted Rate shall be applicable to the Bonds will not violate any provision of any law applicable to the Bonds or the Loan.
"Moody's" means Moody's Investors Service, a corporation organized and existing under the laws of the State
of Delaware, its successors and their assigns, and, if such corporation shall for any reason no longer perform the functic of a securities rating aqency, "Moody's" shall be deemed to
refer to any other nationally recognized rating agency designated by the Issuer with the approval of the Owner and tk
Bank.
"Note" means the promissory note in a principal amour equal to the principal amount of the Loan executed by the Own6 in accordance with the provisions of the Loan Agreement and ar amendments thereto.
"Official Action Resolution" means the action of the Issuer taken on October 2, 1984, pursuant to which, subject tc certain conditions, the Issuer agreed to issue the Prior Bond:
"Ordinary Services" and "Ordinary Expenses" mean tho5 services to be rendered by and those actual and reasonable fec and expenses, including without limitation, actual and reasonable fees and expenses of counsel, to be incurred by thc Trustee, any persons engaged to enable the Trustee to perform its obligations under Article V of this Indenture, any Paying
Agent or the Tender Agent in performing such duties as they mr have under the Indenture, including, but not limited to, the cost of printing any Bond and any services rendered by the Trustee or any expenses incurred in connection with any exchange or transfer of Bonds provided for in Section 203 of this Indenture or under agreements referred to herein, for which the Trustee, any Paying Agent or Tender Agent shall be compensated.
"Outstanding" or "Bonds Outstanding, I' means, as of tl time in question, all Bonds authenticated and delivered under this Indenture, except:
A. Bonds cancelled or required to be cancelled;
B. Bonds paid or deemed to have been paid in accordance with Article XI11 hereof;
C. Bonds in substitution for which other Bonds have bee:
authenticated and delivered pursuant to Article If hereof; an'
D. Any Bonds not tendered for purchase when required under the provisions of this Indenture which are deemed tendered.
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In determining whether the owners of a requisite aggregate principal amount of Outstanding Bonds have concurred in any request, demand, authorization, direction, notice, consent or waiver under the provisions of this Indenture, Bond
which are owned by the Owner, the Issuer or any other obligor
the purpose of this definition an "affiliate" of any specifiec
Person means any other Person directly or indirectly
controlling or controlled by or under direct or indirect commc control with such specified Person) shall be disregarded and deemed not to be Outstanding hereunder for the purpose of any
such determination; provided, however, that the Trustee shall not be deemed to have knowledge that any Bond is owned by any such obligor or affiliate unless the Issuer or the Owner is tl Registered Owner or the Trustee has received written notice that any other Registered Owner is such an obligor or affiliate; provided, further, that Pledged Bonds shall be deemed Outstanding and shall, at the option of the Bank, be voted by the Bank, or, if the Bank declines to vote such Bond: be voted in proportion to the vote of Outstanding Bonds other than Pledged Bonds. For purposes of this definition, "contro: when used with respect to any specified Person means the powei to direct the management and policies of such Person, direct11
or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to tl foregoing. Bonds so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee shall establish to the satisfaction of the Trustee the pledgee's right to vote such Bonds and that the pledgee is not a Person directly or indirectly controlling or controlled by, or under direct or indirect common control with, the Owner, the Issuer or any other obligor on the Bonds. In case of a dispute as tc
such right, any decision by the Trustee taken upon the advice of Counsel shall be full protection to the Trustee. For the purposes of this paragraph, the Bank shall be deemed to be an "obligor on the Bonds" if it has been substituted in lieu of the Owner as obligor under the Loan Agreement and as owner of the Project . "Owner" means La Costa Partners, a California genera
on the Bonds, or any affiliate of any one of said entities (fc
partnership, and its successors and assigns,
"Owner Representative" means the person or persons a. the time designated by the Owner to act on behalf of the Owne
by written certificate furnished to the Issuer and the Trustem containing the specimen signatures of such person or persons and signed by a co-trustee of the Owner. Such certificate ma designate an alternate or alternates,
"Participants" means those broker-dealers, banks and other financial institutions from time to time for which DTC holds Bonds as securities depository.
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"Paying Agent" means the Trustee or any commercial bank with trust powers or a trust company designated pursuant to this Indenture to serve as a successor paying agent or plac
of payment for the Bonds.
"Permitted Investments" mean any of the following which at the time are legal investments for the Issuer under
the laws of the State for the moneys held hereunder then proposed to be invested therein: (i) Government Obligations; (ii) time or demand deposits in any United States bank or tru: company, including the Trustee, having aggregate capital and surplus of at least $50,000,000 and authorized to accept
deposits of public funds (including the banking department of the Trustee and the Bank), which are secured at all times by bonds or other obligations which are authorized by law as security for public deposits; (iii) obligations, participatior or other instruments of, or issued by, Federal National
instrumentality; (iv) evidence of indebtedness of corporation: authorized by the provisions of Section 1364 of the Californii Financial Code, which include an affiliate of the Trustee, provided such indebtedness is rated, or is on a parity with obligations that are rated P-1 or A-1 by a nationally recognized rating agency; (v) repurchase agreements with any banking or financial institution, or with any governmental bo1 dealer recognized as a primary dealer by the Federal Reserve Bank of New York, provided (a) the long-term debt of the provider of any such agreement is rated, at the time of investment, at least "A" or better by two of the four nationally recognized rating agencies, and that the short-terr debt of the provider is rated either "Al" by Standard & Poor'! or "Pl" by Moody's, and (b) (1) any such agreement is collateralized with obligations referred to in (i), (ii) or (iii) above and has a value, determined weekly,
marked-to-market at the current market price plus accrued
interest, equal to at least 102 percent of the principal amou~ invested under such agreement, which collateral shall be held by the Trustee (2) is registered in the name of a third party trustee during the term of such agreement and (3) is not subject to liens or claims of third parties; provided that, a; such agreement shall include a provision to the effect that il the event the long-term debt rating of the provider of such agreement is downgraded below "A" by two out of the four nationally recognized rating agencies, or the short-term debt of the provider is downgraded below "Al" by Standard and Poor or "Pl" by Moody's, the Trustee has the right to withdraw all
investment agreement or other obligation of a bank holding company or other financial institution whose long-term
obligations are rated at least as high as the then rating on the Bonds; (vii) obligations the interest on which is
Mortgage Association, or issued by a United States agency or
'funds invested in such agreement; (vi) a promissory note,
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excludable from gross income for federal income tax purposes under the Code and rated not less than Aaa/P-1 or AAA/A-1, including money market funds composed solely of such obligations; (viii) any taxable money market fund invested solely in Government Obligations (including any money market fund sponsored by the Trustee or its affiliates) with a rating of not less than Aaa/P-1 or AAA/A-l; or (ix) any other investment approved by the Bank.
"Person" means a natural person, firm, partnership,
association, corporation, trust or public body.
"Pledge Agreement" means that certain Bond Pledge ant
Security Agreement dated as of the date hereof among the Tend€ Agent, the Bank and the Owner with respect to the holding of
Pledged Bonds by the Tender Agent, and any amendments thereto.
"Pledged Bond" means a Bond registered in the name of the Owner and in which the Bank has a security interest in accordance with the provisions of the Pledge Agreement as a result of such Bond having been purchased with funds drawn under the Letter of Credit pursuant to Sections 1101 and 1102 hereof.
"Prepayments" mean (a) any payments under the Letter of Credit representing prepayments paid by or on behalf of thc Owner, whether optional or mandatory, of the principal of the .Note together with any accrued interest paid thereon; (b) any prepayment premiums paid by or on behalf of the Owner on the
Trustee or the Issuer through the exercise of the remedies provided in the Loan Documents (excluding amounts payable for fees, expenses or indemnification of the Issuer and the Trustee) upon the occurrence of an event of default by the Owner.
the Debt Service Fund created by Section 302 hereof.
Note; and (c) any proceeds or other amounts obtained by the
"Principal Account" means the Account by that name i~
"Principal Office" means (i) when used with respect * the Trustee, the principal corporate trust office of the Trustee, which as of the Bond Issuance Date is located in San Francisco, California (except with respect to payments on, anc exchanges and surrenders of the Bonds in which case the "Principal Office" shall refer to the office of the Trustee located in St. Paul, Minnesota) and (ii) when used with respel
to any Paying Agent, other than the Tender Agent, means the office of such Paying Agent as designated by notice given by
the Trustee to the Registered Owners and (iii) when used with respect to the Tender Agent appointed pursuant to Section 111 means the office of such Tender Agent as designated in Sectio
1111 or by notice given by the Trustee to the Registered Owners, and (iv) when used with respect to the Remarketing
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Agent, means the office of the Remarketing Agent as designatec by notice given by the Trustee to the Registered Owners.
"Prior Bonds" means the Issuer's $15,920,000 Multifamily Housing Revenue Bonds, Series A of 1985 (La Costa Apartments Project).
"Prior Bonds Bank" means Bank of America National Trust and Savings Association, the successor to Security
Pacific National Bank, as the issuer of the Prior Bonds Lette: of Credit.
"Prior Bonds Letter of Credit" means, the Letter of
Credit issued by the Prior Bonds Bank with respect to the Pril Bonds.
"Prior Bonds Trustee" means First Trust of Californi
National Association, as successor trustee to The Bank of California, N.A., under that certain Indenture of Trust dated as of April 1, 1985, between the Issuer and the Prior Bonds Trustee.
"Prior Code" shall mean the Internal Revenue Code of
1954, as amended, as in effect on the day before the date of
rulings, judicial decisions, and notices, announcements, and other releases of the United States Treasury Department or Internal Revenue Service interpreting or construing it.
enactment of the Tax Reform Act of 1986, and any regulations,
"Program Administrator" means the Issuer or a governmental agency, a financial institution, a certified
public accountant, an apartment management firm, a mortgage insurance company or other business entity performing similar duties or otherwise experienced in the administration of
restrictions on bond financed multifamily housing projects, independent of the Owner and acceptable to the Issuer, who shall enter into the Administration Agreement. "Program Fee" means an amount in immediately availab
funds equal to $ to be paid by the Owner on the Bond Issuance Date for deposit in the Cost of Issuance Fund for th payment of Costs of Issuance.
"Project" means the 320-unit multifamily rental housing project owned and operated by the Owner in accordance with the requirements of the Regulatory Agreement and Section
103(b)(4)(A) of the Prior Code and Section 1.103-8(b)(4) of t Regulations.
"Purchase Date" means any Business Day on which Bond
are subject to purchase pursuant to the tender provisions of Section 1101 hereof or pursuant to the Demand Purchase Optior! set forth in Section 1102 hereof.
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"Purchase Fund'' means the Fund by that name created b Section 302 hereof.
"Purchase Price" means, with respect to any Bond required to be tendered pursuant to Section 1101 hereof or
subject to purchase pursuant to Section 1102 hereof, the
principal amount of such'Bond plus interest accrued thereon tc
the Purchase Date.
"Rating Agency" means Moody's, if Moody's then rates the Bonds, Standard & Poor's, if Standard & Poor's then rates
the Bonds, and any other nationally recognized rating agency agreed to by the Issuer, the Bank and the Owner.
"Rebate Analyst" means the Person selected by the Issuer for the calculation of rebatable arbitrage.
"Rebate Regulations" means the income tax regulations promulgated or proposed from time to time by the United State: Department of the Treasury under Section 148 of the Codel
"Rebate Fund" means the Fund by that name created in
Section 504 hereof.
"Record Date" means, (i) while the Bonds bear interes at an Adjustable Interest Rate and during a Reset Period of less than six months, the fifth day next preceding each Interest Payment Date, and (ii) during a Reset Period of six months or longer and after the Conversion Date, the close of business on the fifteenth day of the calendar month next preceding each Interest Payment Date. With respect to any payment of defaulted interest, a special Record Date shall be established in accordance with the provisions of Section 202 hereof.
"Redemption Account" means the Account by that name i
the Debt Service Fund created by Section 302 hereof.
"Refunding Law'' means Article 11 of Chapter 3 of Part 1 of Division 2 of Title 5, of the Government Code of th( State of California, as now in effect and as it may from time to time hereafter be amended or supplemented.
"Registered Owner" or "owner" means the person or persons in whose name or names a Bond shall be registered on the books of the Trustee kept for that purpose in accordance with the terms of this Indenture.
"Regulations" means the income tax regulations promulgated or proposed from time to time by the United State;
Department of the Treasury with respect to obligations issued pursuant to the Prior Code or the Code.
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"Regulatory Agreement" means the Amended and Restate( Regulatory Agreement and Declaration of Restrictive Covenants dated as of the date hereof with respect to the Project, amon! the Issuer, the Trustee and the Owner and recorded in the official records of the County of San Diego and any amendment! thereto.
"Reimbursement Agreement" means the Reimbursement
Agreement dated as of the date hereof between the Bank and thc
Owner providing for the delivery by the Bank of the Letter of Credit issued by the Bank; or, following the issuance of any Substitute Credit Facility, the Reimbursement Agreement or similar agreement supporting the issuance of the same and any amendments thereto,
"Remarketing Account" means the Account by that name in the Purchase Fund created by Section 302 hereof.
"Remarketing Agent" means the remarketing agent appointed in accordance with the provisions of Section 1103 hereof, initially Dean Witter Reynolds, Inc.
"Remarketing Agreement" means the Remarketing Agreement dated as of the date hereof between the Owner and t: Remarketing Agent, and any amendments thereto.
"Representation Letter" means the representation
letter dated as of the Bond Issuance Date from the Issuer, th Remarketing Agent, the Trustee, the Paying Agent and the Tend Agent to DTC.
"Reset Date" means any Interest Payment Date while t
Bonds bear interest at an Adjustable Interest Rate or the day immediately following the final day of a Reset Period on whic interest on the Bonds is reset to a Reset Rate for the next
any Mandatory Tender Date on which interest on the Bonds is converted to a Reset Rate as provided in Section 607 hereof.
-e succeeding Reset Period as provided in Section 212 hereof, or
"Reset Period" means the period during which the Bon bear interest at a Reset Rate.
"Reset Rate" means the interest rate to be borne by the Bonds during a Reset Period in accordance with the provisions of Section 212 hereof.
"Resolution" means the resolution duly adopted and approved by the Issuer authorizing the issuance and sale of t
Bonds and the execution of this Indenture.
"Revenue Fund" means the Fund by that name created b Section 302 hereof.
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"Revenues" means the amounts pledged hereunder to the payment of principal of, premium, if any, and interest on the Bonds, consisting of the following: (i) all income, revenues, proceeds and other amounts, to which the Issuer is entitled, derived from or in connection with the Project and the Loan Documents, including all scheduled payments of the principal c and interest on the Note and drawings under the Letter of Credit, and all Prepayments, and including all amounts obtainc through the exercise of the remedies provided in the Loan Documents (excluding Issuer fees and expenses and indemnification), subject to limitations on such rights contained therein and in the Intercreditor Agreement, upon the occurrence of an event of default thereunder and all receipts of the Trustee credited under the provisions of this Indenturc against said amounts payable, and (ii) moneys held in the Func and Accounts, together with investment earnings thereon (excey amounts on deposit in the Rebate Fund).
"Seasoned Funds" means any moneys (i) derived from proceeds of the Bonds held by the Trustee in a segregated account from the Bond Issuance Date, or (ii) paid under the
Letter of Credit or any Substitute Credit Facility, or (iii) derived from proceeds from the remarketing of the Bonds to or the purchase of the Bonds by any entity or by any person, othc
of refunding bonds or moneys from any other source so long as the Trustee- receives an opinion from nationally recognized bankruptcy counsel acceptable to the Rating Agency prior to tl giving of notice of redemption of any Bonds to the effect that (a) such moneys do not constitute a loan to or asset of the Owner or the Issuer, and (b) such moneys are not recapturable
as a preferential payment by any trustee in bankruptcy under the United States Bankruptcy Code in the event of an Act of Bankruptcy, or (v) moneys provided by the Owner and held on deposit in the Seasoned Funds Account of the Revenue Fund for at least 366 days, or such shorter period as may be permitted by an opinion of nationally recognized bankruptcy counsel acceptable to the Rating Agency then maintaining the rating 01 the Bonds, prior to the date notice of redemption of the Bond: to be redeemed with such moneys is required to be given durinc which no Act of Bankruptcy shall have occurred; provided that an opinion of nationally recognized bankruptcy counsel
acceptable to the Rating Agency is received by the Trustee to
the effect that such moneys are not recapturable as a preferential payment by a trustee in bankruptcy in the event I an Act of Bankruptcy, or (vi) the investment of any of the moneys above once they constitute Seasoned Funds or (vii) whil constitute any combination of the foregoing.
than the Owner or the Issuer, or (iv) which constitute proceec
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"Securities Depositories" means The Depository Trust Company, 711 Stewart Avenue, Garden City, New York 11530, Fax
the Issuer may designate in a certificate delivered to the
Trustee.
5161227-4039 or 4190, or such other securities depositories a:
"Standard & Poor 's" means Standard & Poor's Corporation, a corporation organized and existing under the laws of the State of Delaware, its successors and their assigns, and, if such corporation shall for any reason no longer perform the function of a securities rating agency, "Standard & Poor's" shall be deemed to refer to any other nationally recognized rating agency designated by the Issuer with the approval of the Owner and the Bank.
"State" means the State of California.
"Substitute Credit Facility" means any credit facili
delivered to the Trustee to secure the Bonds (other than any amendment of the Letter of Credit, the issuance of a new lett
confirming the Letter of Credit or the issuance of any other credit facility in addition to the Letter of Credit that enhances the then-rating on the Bonds) which satisfies the criteria set forth in Section 214 hereof.
of credit by the Bank, the issuance of any letter of credit
"Substitution Date" means the date of delivery of a Substitute Credit Facility causing a reduction in or withdraw of the then-rating on the Bonds.
"Supplemental Indenture" means any agreement hereaft authorized and entered into between the Issuer and the Truste which amends, modifies or supplements and forms a part of thi Indenture.
"Tax Certificate" means that certain Tax Certificate
executed by the Issuer on the Bond Issuance Date in connectio with the issuance of the Bondsl
"Tender Agent" means First Trust of California, National Association, c/o I.B.J. Schroder Bank and Trust Company, 1 State Street, New York, New York 10004, acting in the capacity of Tender Agent under this Indenture, or any successor tender agent appointed in accordance with Section
1111 of this Indenture.
"Trustee" means First Trust of California, National Association, or any successor trustee appointed in accordance with the terms of this Indenture.
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"Trust Estate" means the property conveyed to the
Trustee pursuant to the Granting Clauses hereof.
"Underwriter" means Dean Witter Reynolds Inc.
Such terms as are not defined herein shall have the meanings assigned to them in the Loan Documents.
ARTICLE I1
THE BONDS
SECTION 201. AUTHORIZED AMOUNT OF BONDS. No Bond may be issued under the provisions of this Indenture except in
accordance with this Article. The total principal amount of Bonds that may be issued is hereby expressly limited to
$15,920,000, except as provided in Section 207 hereof.
SECTION 202. ISSUANCE OF BONDS. The Issuer shall issue the Bonds following the execution of this Indenture; and the Trustee shall, at the Issuer's request, authenticate such Bonc and deliver them or make them available for pickup. While thc Bonds bear interest at an Adjustable Interest Rate, the Bonds shall be designated "City of Carlsbad, California, Variable Rate Demand Multifamily Housing Revenue Refunding Bonds, Series A of 1993 (La Costa Apartments Project)." While the .Bonds bear interest at a Reset Rate or the Fixed Rate, the Bonds shall be designated "City of Carlsbad, California, Multifamily Housing Revenue Refunding Bonds, Series A of 1993 (La Costa Apartments Project)." While the Bands bear interes. at an Adjustable Interest Rate and during a Reset Period of less than one year, the Bonds shall be issuable only as fully
registered Bonds without coupons, or in book-entry form, in a minimum denomination of $100,000 ($120,000 in the case of one Bond) or any integral multiple thereof; and, during a Reset Period of one year or more or after the Conversion Date, the Bonds shall be issuable only as fully registered Bonds withou coupons in denominations of $5,000 or any integral multiple thereof. Unless the Issuer shall otherwise direct, the Bonds shall be numbered as determined by the Trustee.
The'Bonds, the designation of the Bonds, the form of Bond the.certificate of authentication to be endorsed on the Bonds and the form of assignment to be endorsed on the Bonds are to
be in substantially the form set forth above in the form of Bonds, as such form may be prepared and approved by Bond Counsel, and hereby made a part of this Indenture, with necessary and appropriate variations, omissions and insertion as permitted or required by this Indenture.
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' Bonds authenticated and delivered prior to the first Reset Date or the Conversion Date shall be dated as of the Bond Issuance Date. Bonds authenticated and delivered on and aftel a Reset Date, an Adjustable Interest Rate Conversion Date or the Conversion Date shall be dated as of the Reset Date, the Adjustable Interest Rate Conversion Date, or the Conversion Date, as applicable, all of which dates shall be Interest
Payment Dates. Regularly scheduled interest on the Bonds sha: be payable on each applicable Interest Payment Date. Each Bo1 will bear interest from the Interest Payment Date next
preceding the date of authentication thereof to which interes has been duly paid or provided for, unless a Bond is authenticated before the close of business on the first Recorc Date, in which case interest will accrue from the Bond Issuanc Date, or unless authenticated during the period from the closl of business on a Record Date to and including the next Intere: Payment Date, in which case it shall bear interest from such Interest Payment Date. The Trustee or the Tender Agent shall insert the date of authentication of each Bond in the place provided for such purpose in the form of certificate of authentication to be printed on each Bond. Each Bond shall bear interest on overdue principal at the rate then in effect on such Bond.
The Bonds shall mature on June 1, 2011, and shall bear
interest at an Adjustable Interest Rate, as the same shall be determined from time to time, unless and until a Reset Rate o the Fixed Rate is established pursuant to Section 212 or
Section 213, respectively. The amount of interest to be paid on any Interest Payment Date on any Bond while the Bonds bear interest at an Adjustable Interest Rate shall be determined b (i) multiplying (A) the principal amount of such Bond by
(B) the Adjustable Interest Rate in effect for each Adjustabl Interest Rate Period since the last Interest Payment Date tim
the actual number of days in each such period from and including the last Interest Payment Date; (ii) dividing the resulting product by 365 (or 366 if the year in which such
computation is being made has 366 days); and (iii) rounding t resulting figure to the nearest cent (half cents being rounde upward); provided that the Adjustable Interest Rate in effect on the Record Date for any Interest Payment Date shall remain in effect until and including the day before such Interest Payment Date, and any change in the Adjustable Interest Rate that would otherwise be effective between such Record Date an such Interest Payment Date shall be effective on such Interes
any liability to any Registered Owner as a result of any err0 in calculation of the Adjustable Interest Rate.
Payment Date, Neither the Issuer nor the Trustee shall have
The amount of interest to be paid on the Bonds during a Reset Period and after the Conversion Date shall be calculate
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at the Reset Rate or the Fixed Rate, as applicable, on the basis of a 360-day year comprised of twelve 30-day months.
The principal of, premium, if any, and interest on the Bonds shall be payable by check in lawful money of the United
States of America which, at the respective dates of payment
thereof, is legal tender for the payment of public and privatc debts. Interest on each Bond shall be paid on each Interest
Payment Date to the Registered Owner of such Bond at the closc of business -on the Record Date with respect to such interest payment and shall be paid by check mailed by first class mail to such Registered Owner at such Registered Owner's address a: it appears on the registration books of the Trustee on the Record Date or, upon the written request of a Registered Owne: of at least $1,000,000 in principal amount of Bonds received 1 the Trustee not later than five days prior to the Record Date for such payment, by wire transfer in immediately available funds to an account designated by such Registered Owner, any such designation to remain in effect until withdrawn, irrespective of the cancellation of such Bond upon any transfl
or exchange thereof subsequent to such Record Date and prior ' such Interest Payment Date, unless the Issuer shall default i:
the payment of interest due on such Interest Payment Date. Payment of principal and premium, if any, due on any Bond sha be paid only upon surrender of such Bond at the Principal Office of the Trustee or its successor in interest. Payment 1 the Purchase Price of any Bond shall be paid only upon surrender of such Bond to the Tender Agent. In the event of any default in the payment of interest, such defaulted intere' shall be payable to the Registered Owner of such Bond on a special Record Date for the payment of such defaulted interes, which date shall be established by the Trustee by notice maill by or on behalf of the Issuer to the Registered Owners of Bonl not less than fifteen (15) days preceding such special Record Date. Notwithstanding any provision herein to the contrary, : interest shall accrue with respect to any Pledged Bond during
the period that it is a Pledged Bond.
No additional interest shall be payable on any Interest Payment Date in respect of any Bond purchased by the Tender Agent on such Interest Payment Date pursuant to Section 1102 redeemed on such'Interest Payment Date to the extent that interest is included in determining the purchase price or
redemption price of such Bond.
SECTION 203. REGISTRATION, TRANSFER AND EXCHANGE. The Trustee shall cause books for the registration of the transfe of the Bonds (the "Bond Register") as provided in this Indenture to be kept at its Principal Office. The Bond
Register shall at all times be open to inspection by a duly'
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authorized employee or agent of the Issuer during normal business hours and upon reasonable notice. The registration o ownership of the Bonds may be transferred only on the Bond Register maintained by the Trustee. Upon surrender for
registration of transfer of any Bond at the Principal Office c
the Trustee, or the Tender Agent with respect to tendered Bonds, duly endorsed for transfer or accompanied by an assignment duly executed by the Registered Owner or his or her attorney duly authorized in writing, the Issuer shall cause tc be executed, and the Trustee or the Tender Agent, as applicable, shall authenticate and deliver or make available for pickup in the name of the transferee or transferees a new Bond or Bonds, of the same type and maturity and for a like aggregate principal amount. Upon surrender for registration c
shall provide to the Trustee all necessary information to affect such registration by the Trustee. The signature to thc assignment or the notice of exercise of option must corresponc with the name of the Registered Owner as it appears on the fac of the Bond in every particular, without alteration, enlargement or any change whatsoever; and such signature must be guaranteed by an eligible guarantor institution.
transfer of any Bond to the Tender Agent, the Tender Ayent
Bonds may be exchanged at the Principal Office of the Trustee or the Tender Agent for a like aggregate principal amount of Bonds of the same type and maturity of other authorized denominations. The Issuer shall cause to be executed and the Trustee or the Tender Agent, as applicable, shall authenticate and deliver, or make available for pickup, Bonds which the Registered Owner making the exchange is
entitled to receive, bearing numbers not then Outstanding. TI execution by the Mayor and the City Clerk of any Bond of any authorized denomination by application of facsimiles of their signatures shall constitute full and due authorization of sucl denomination, and the Trustee shall thereby be authorized to authenticate and deliver such Bond. The Trustee or the Tendel Agent shall not be required to register the transfer of or exchange any Bond after the mailing of notice calling such Bo] for redemption has been given as herein provided, nor during the period of fifteen (15) days next preceding the giving of such notice of redemption; provided, however, that the foregoing shall not apply to the registration or transfer of any Bond which has been tendered pursuant to the Demand
Purchase Option set forth in Section 1102 hereof, and in any such case for purposes of selection for redemption, the Bonds so tendered and the Bonds issued to the transferee thereof pursuant to Section 1107 hereof shall be deemed and treated am the same Bond. If any Bond shall be transferred and deliverel pursuant to Section 1107 hereof after such Bond has been call1 for redemption, the Trustee shall deliver to the transferee a
copy of the apDlicable redemption notice, indicating that the
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Bond delivered to such transferee has been called for redemption. The Trustee shall not register the transfer of a! Pledged Bonds unless the principal amount of the Letter of Credit has been reinstated to an amount equal to the principa amount of all Bonds Outstanding plus days of interest
thereon, calculated at the Maximum Permitted Rate if the Bond bear interest at an Adjustable Interest Rate, or an amount
equal to the principal of all Bonds Outstanding plus interest thereon for the number of days as required by the Rating Agen calculated at the Reset Rate or the Fixed Rate if the Bonds bear interest at a Reset Rate or the Fixed Rate, or a
Substitute Credit Facility meeting the requirements of Sectio
214 hereof has been delivered to the Trustee,
Upon conversion to an Adjustable Interest Rate following
Reset Period, or to a Reset Rate or the Fixed Rate or upon delivery of a Substitute Credit Facility pursuant to Sections
211A, 212, 213 or 214, respectively, of this Indenture, the Owner or the issuer of the Substitute Credit Facility, as appropriate, shall cause new Bonds reflecting the Adjustable Interest Rate, the Reset Rate, the Fixed Rate or the Substitu. Credit Facility to be prepared and approved by Bond Counsel a. the Owner's expense and shall furnish such Bonds to the Trustee. The Issuer shall execute and the Trustee or the Tender Agent shall authenticate and deliver such Bonds as provided in this Section 203 in exchange for Bonds bearing an Adjustable Interest Rate, a Reset Rate or the Fixed Rate, or identifying the Substitute Credit Facility, as the case may bl
including Bonds not delivered to the Trustee or the Tender
Agent and deemed to have been purchased in accordance with Section 1101 hereof.
As to any Bond, the Registered Owner shall be deemed and regarded as the absolute owner thereof for all purposes, exce: that the Bank shall be treated as the absolute owner of Pledgl Bonds. Payment of regularly scheduled interest on any Bond (other than a Pledged Bond on which the Trustee shall not pay interest) shall be made only to or upon the order of the Registered Owner thereof on the Record Date for such payment ( of such Registered Owner's attorney duly authorized in writin? but such registration may be changed as hereinabove provided, As to Pledged Bonds, the Trustee shall make any payments of
principal due to the Owner as the Registered Owner of such Pledged Bonds to the Bank. All such payments made with respec to a Bond or a Pledged Bond shall be valid and effectual to
satisfy and discharge the liability upon such Bond to the
extent of the sum or sums so paid.
The Issuer or the Trustee shall charge Registered Owners their reasonable fees and expenses for any exchange or registration of transfer of Bonds, and in each case the Trustc
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shall require the payment by the Registered Owner requesting exchange or registration of transfer of any tax or other governmental charge required to be paid with respect thereto.
SECTION 204. EXECUTION; LIMITED OBLIGATION. The Bonds shall be executed on behalf of the Issuer with the facsimile signatures of the Mayor and attested with the facsimile
signature of the City Clerk and shall have impressed or prints thereon a facsimile of the seal of the Issuer. Any facsimile signature shall have the same force and effect as if the Mayo
or the City Clerk, as the case may be, had manually signed ea of said Bonds.
In case any officer whose facsimile signature shall appea on the Bonds shall cease to be such officer before the delive of such Bonds, such facsimile signature shall nevertheless be valid and sufficient for all purposes, the same as if such officer had remained in office until delivery.
The Bonds, together with interest thereon, shall be limit
obligations of the Issuer, giving rise to no pecuniary liability of the Issuer, the State of California or any political subdivision thereof, nor any charge against its
general credit, shall be payable solely from and shall be a valid claim of the respective owners thereof only against the Trust Estate. The Bonds shall not constitute an indebtedness or loan of the credit of the Issuer or the State of Californi or any political subdivision thereof within the meaning of an constitutional or statutory provisions. Neither the faith an credit nor the taxing power of the Issuer or the State or any political subdivision thereof is pledged to the payment of th principal of, premium, if any, Purchase Price or interest on the Bonds or any other costs incident thereto.
No recourse shall be had for the payment of the principal
of, or premium, if any, Purchase Price or interest on any of the Bonds or for any claim based thereon or upon any
obligation, covenant or agreement contained herein, against a past, present or future member of the City Council of the Issuer, or any officer, employee or agent of the Issuer, unde
provision or by the enforcement of any assessment or penalty otherwise, and all such liability of any such member of the
City Council of the Issuer, or any officer, employee or agent of the Issuer is hereby expressly waived and released as a condition of and in consideration for the execution of this Indenture and the issuance of the Bonds.
any rule of law or equity, or statutory or constitutional
SECTION 205. AUTHENTICATION. No Bond shall be valid for any purpose until the certificate of authentication on such Bond shall have been duly executed by the Trustee or the Tend
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Agent, and such authentication shall be conclusive proof that
such Bond has been duly authenticated and delivered under thi! Indenture and that the owner thereof is entitled to the benefits of the trust hereby created. The Trustee's or Tendel Agent's certificate of authentication on any Bond shall be
deemed to have been executed by the Trustee or the Tender Age] if (a) signed by an authorized officer, signatory or agent of the Trustee or the Tender Agent, but it shall not be necessar: that the same officer, signatory or agent sign the certificatc of authentication on all of the Bonds issued hereunder, and (b) the date of authentication of the Bond is inserted in the place provided therefor on the certificate of authentication printed on such Bond.
SECTION 206. FORM OF BONDS. The Bonds issued under this Indenture shall be in substantially the form hereinabove set
insertions as are permitted or required by this Indenture. forth with such appropriate variations, omissions and
SECTION 207. MUTILATED, DESTROYED, LOST OR STOLEN BONDS. In the event any Bond or temporary Bond is mutilated, lost, stolen or destroyed, the Issuer may cause to be executed and the Trustee may authenticate a new Bond of like date, maturit: type, interest rate and denomination as that mutilated, lost, stolen or destroyed; provided that, in the case of any mutilated Bond, such mutilated Bond shall first be surrenderec to the Trustee, and in the case of any lost, stolen or .destroyed Bond, there shall be first furnished to the Trustee evidence of such loss, theft or destruction satisfactory to tl Trustee, together with indemnity satisfactory to the Trustee. The Issuer and the Trustee shall charge the owner of such Bonc with their reasonable fees and expenses in connection with thc authentication of a replacement Bond. In the event any such Bond shall have matured, instead of issuing a replacement Bonc
as provided above, the Trustee may pay the same upon receipt (
indemnity satisfactory to the Trustee and the Issuer. The Issuer shall cooperate with the Trustee in connection with thl issue of replacement Bonds, but nothing in this Section 207 shall be construed in derogation of any rights which the ISSUC
or the Trustee may have to receive indemnification against liability, or payment or reimbursement of expenses, in connection with the issue of a replacement Bond.
Every substituted Bond issued pursuant to this Section 20' shall constitute a contractual obligation of the Issuer in fu replacement of the Bond for which substituted, whether or not the Bond alleged to have been mutilated, destroyed, lost or stolen shall continue to exist, and shall be entitled to all
the benefits of this Indenture equally and proportionately wi. any and all other Bonds duly issued hereunder.
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. All Bonds shall be held and owned upon the express condition that the foregoing provisions are, to the extent permitted by law, exclusive with respect to the replacement o
preclude any and all other rights or remedies.
payment of mutilated, destroyed, lost or stolen Bonds, and
SECTION 208. TEMPORARY BONDS. Pending preparation of definitive Bonds, or by agreement with the purchaser of all Bonds, the Issuer may issue and, upon the Issuer's request, t Trustee shall authenticate, in lieu of definitive Bonds, one
denomination and of substantially the tenor recited above. Upon request of the Issuer, the Trustee, without any addition
charge to the owners thereof, shall authenticate and deliver definitive Bonds in exchange for and upon surrender of an equ principal amount of temporary Bonds. Until so exchanged, temporary Bonds shall have the same rights, remedies and security hereunder as definitive Bonds.
more temporary printed or typewritten Bonds in any authorized
SECTION 209. CANCELLATION AND DESTRUCTION OF SURRENDERED BONDS. Whenever any Outstanding Bond shall be delivered to t Trustee for cancellation pursuant to this Indenture, for payment of the principal amount represented thereby, or for replacement pursuant to Section 207 hereof, such Bond shall b promptly cancelled and destroyed by the Trustee and counterparts of a certificate of destruction shall be furnish
by the Trustee to the Issuer.
SECTION 210. DELIVERY OF THE BONDS. Upon the execution and delivery of this Indenture, the Issuer shall execute and deliver to the Trustee, and the Trustee shall authenticate th Bonds and deliver them or make them available for pickup to t
purchasers as directed by the Issuer and as provided' in this Section 210.
Prior to the delivery by the Trustee of any of the Bonds there shall have been filed with the Trustee, in addition to the items required by Section 3.2 of the Loan Agreement:
(1) A copy, duly certified by the City Clerk, of thc Resolution of the Issuer authorizing the issuance of the Bonds and the execution and delivery of this Indenture.
(2) Original executed counterparts of this Indenturc the Loan Agreement, the Note, the First Deed of Trust, thc
Letter of Credit, the Administration Aqreement, the
Remarketing Agreement, the Pledge Agreement, the Escrow
Agreement, the Regulatory Agreement, together with evidenc satisfactory to the Trustee, which may be telephonic notic from the title company, of the recordation of the Regulatory Agreement and the First Deed of Trust in the
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official land records of the County of San Diego and the
filing of a First Financing Statement in Sacramento.
(3) An opinion of Bond Counsel to the effect that t!
issuance of the Bonds and the execution of this Indenture
reqyirements under this Indenture precedent to the delive
of the Bonds have been satisfied and that the Bonds and this Indenture are valid and binding obligations, enforceable against the Issuer in accordance with their terms (subject to any applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting the enforcement of creditors' rights generally and subject also to the application of equitable principl
if equitable remedies are sought).
have been duly and validly authorized, that all
(4) A request and authorization to the Trustee on behalf of the Issuer directing the Trustee as to the amounts required to be deposited into the various Funds a: Accounts.
(5) A request and authorization to the Trustee or t: Tender Agent on behalf of the Issuer to authenticate and deliver the Bonds to the purchaser(s) therein identified
upon payment to the Trustee for the account of the Issuer of a sum specified in such request and authorization. Th proceeds of such payment shall be transferred and depositl pursuant to Article I11 hereof and as indicated in such request and authorization.
(6) An originally executed counterpart of the Tax Certificate.
SECTION 211. DETERMINATION OF ADJUSTABLE INTEREST RATE. The Adjustable Interest Rate to be borne by the Bonds during Adjustable Interest Rate Period shall be determined as providi in this Section:
(a) For the initial Adjustable Interest Rate Period
from the Bond Issuance Date to and including June 2, 1993 the Adjustable Interest Rate shall be percent per annum.
(b) For each subsequent Adjustable Interest Rate Period, the Adjustable Interest Rate shall be determined : the Remarketing Agent on the last Business Day preceding each Adjustable Interest Rate Period or, in the case of a conversion from a Reset Rate to an Adjustable Interest Ra, pursuant to Section 212(B), at least two (2) Business Day prior to the Adjustable Interest Rate Conversion Date. F8 purposes of this Indenture, "Adjustable Interest Rate" I shall mean the minimum interest rate necessary to enable the Remarketing Agent in its best judgment, under
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then-prevailing market conditions, to sell the Bonds at a
price equal to the principal amount thereof and interest
accrued thereon, and such interest rate shall be the Adjustable Interest Rate.
(c) The Remarketing Agent shall give telephonic notice to the Trustee and the Bank of the Adjustable Interest Rate no later than 12:OO noon, New York time, on
the day the Adjustable Interest Rate is calculated, and such notice shall be confirmed in writing by facsimile transmission as soon as possible thereafter.
(d) The Adjustable Interest Rate so determined for Adjustable Interest Rate Period shall become effective as
the interest rate on the Bonds as of the first day of suc: Adjustable Interest Rate Period; provided that the Adjustable Interest Rate in effect on the Record Date for
any Interest Payment Date shall remain in effect until an1 including the day before such Interest Payment Date, and
any change in the Adjustable Interest Rate that would otherwise be effective between such Record Date and such Interest Payment Date shall be effective on such Interest Payment Date.
(e) If the Remarketing Agent shall fail to determinl the Adjustable Interest Rate-as provided in subsection (b above, then the Adjustable Interest Rate shall be the rat1 determined for the immediately preceding Adjustable Interest Rate Period until the Remarketing Agent again
makes such determination.
(f) Notwithstanding subsections (b) or (e) hereof, no event shall the Adjustable Interest Rate exceed the Maximum Permitted Rate.
(9) The determination of the Adjustable Interest Ra by the Remarketing Agent shall be conclusive and binding (in the absence of manifest error) upon the Issuer, the Owner, the Trustee, the Bank, any Paying Agent, the Tende Agent, the Remarketing Agent and the owners of the Bonds.
SECTION 211A. CONVERSION TO ADJUSTABLE INTEREST RATE. T. rate of interest on all Outstanding Bonds may, with the writt consent of the Bank, be converted from a Reset Rate to an Adjustable Interest Rate on any Adjustable Interest Rate Conversion Date and on any Mandatory Tender Date established under Section 607 hereof as follows:
(a) Provided that no Event of Default shall have occurred and be continuing, in order to effect the establishment of an Adjustable Interest Rate, the Owner
must deliver the written consent of the Bank and a writte
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notice to the Issuer, the Trustee, the Tender Agent, the Remarketing Agent and the Bank of such election at least
thirty (30) days prior to the Adjustable Interest Rate
Conversion Date specifying the proposed Adjustable Intere Rate Conversion Date. Such notice shall also be
accompanied by (i) an opinion of Bond Counsel to the effe that the establishment of the Adjustable Interest Rate wi not adversely affect the exclusion from gross income of interest on the Bonds for federal income tax purposes,
(ii) an irrevocable commitment from the provider thereof
Credit meets or is amended to meet the requirements of
Section 214(A)(1) and (2); (iii) if a Substitute Credit
Facility is to be provided, a written statement from the Rating Agency then rating the Bonds to the effect that th rating expected to be assigned to the Bonds effectiv on the proposed Adjustable Interest Rate Conversion Date is in
issue a Substitute Credit Facility unless the Letter of
conformity with the requirements of Section 214(A)(4); (i payment to the Trustee of such amount as the Trustee reasonably determines may be required in connection with the establishment of the Adjustable Interest Rate, including, but not limited to, its own reasonable fees an expenses and the cost of printing new Bonds; and (v) the form of notice to be given by the Trustee to Registered Owners regarding the establishment of the Adjustable Interest Rate.
(b) At least fifteen (15) days prior to the Adjustable Interest Rate Conversion Date, the Trustee sha send a notice to each Registered Owner by first class mai postage prepaid, stating (i) the Adjustable Interest Rate Conversion Date; (ii) that all Outstanding Bonds are subject to mandatory purchase on the Adjustable Interest Rate Conversion Date; (iii) that all Outstanding Bonds no tendered for purchase on or prior to the Adjustable Interest Rate Conversion Date will be deemed to have been so tendered and shall be purchased on the Adjustable Interest Rate Conversion Date from the Registered Owners
a price equal to the principal amount thereof plus accrue interest to the Adjustable Interest Rate Conversion Date; and (iv) that all Bonds must be surrendered to the Tender Agent for purchase not later than 9:30 a.m., New York tirr
on the Adjustable Interest Rate Conversion Date,
(c) The Remarketing Agent shall determine the
Adjustable Interest Rate pursuant to the provisions of Section 211 hereof.
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(d) Prior to the determination of a Reset Rate, the Owner shall cause to be prepared a disclosure document fo: distribution to potential purchasers of the Bonds in a fo.
acceptable to the Issuer and the Remarketing Agent.
(e) The Bank may elect to exercise the Owner's riyh
the Reset Rate to an Adjustable Interest Rate in accordan with this Section 211A.
to convert the interest rate on all Outstanding Bonds fro!
(f) All obligations of the Bank under the Letter of Credit shall terminate as of an Adjustable Interest Rate Conversion Date except for obligations under any then-pending drawings under the Letter of Credit unless t Letter of Credit meets or has been amended to meet the requirements of Section 214(A)(1).
SECTION 212. RESET OF INTEREST RATE ON THE BONDS. (A) T rate of interest on all Outstanding Bonds, with the written
consent of the Bank, may be converted to a Reset Rate on any Reset Date and on any Mandatory Tender Date established under Section 607 hereof as follows:
(a) Provided that no Event of Default shall have
occurred and be continuing, in order to effect the establishment of a Reset Rate, the Owner must deliver the written consent of the Bank and a written notice to t Issuer, the Trustee, the Tender Agent, the Remarketing Agent and the Bank of such election at least thirty (30) days prior to the Reset Date specifying (i) the proposed Reset Date; (ii) the proposed duration of the Reset Perio
which shall be for one or more months and shall terminate on the day immediately prior to the first Business Day of the next succeeding Interest Period; and (iii) the date o which the Reset Rate will be determined by the Remarketin Agent. Such notice shall also be accompanied by (i) an opinion of Bond Counsel to the effect that the establishment of the Reset Rate will not adversely affect the exclusion of interest on the Bonds from gross income for federal income tax purposes, (ii) an irrevocable commitment from the provider thereof to issue a Substitut
amended to meet the requirements of Section 214(B)(l) and
(2); (iii) if a Substitute Credit Facility is to be provided, a written statement from the Rating Agency to t effect that the rating expected to be assigned to the Bon on the proposed Reset Date is in conformity with the requirements of Section 214(B)(4); (iv) payment to the Trustee of such amount as the Trustee reasonably determin may be required in connection with the e.stablishment of t
Credit Facility unless the Letter of Credit meets or is
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Reset Rate, including, but not limited to, its own
reasonable fees and expenses and the cost of printing new
Bonds; and (VI the form of notice to be given by the Trustee to Registered Owners regarding the establishment (
the Reset Rate.
(b) If on any day at least sixteen (16) days before the applicable Reset Date the Trustee receives written notice from the Owner to the effect that it no longer wishes to change the interest rate on the Bonds to the proposed Reset Rate, the Trustee shall promptly cancel SUI
election to establish a Reset Rate, and the Bonds shall bear interest at an Adjustable Interest Rate determined pursuant to the provisions of Section 211; provided, however, that the Trustee shall. have received a Substitutl Credit Facility, conforming to the provisions of Section 214(A) unless the Letter of Credit meets or is amended to meet the requirements of Section 214(A)(1) and
any such cancellation. The Trustee shall also provide written notice of the cancellation to the Bank, the Issue and the Remarketing Agent.
(21, The Trustee shall have no liability as a result of
(c) If the Trustee has not received a notice of cancellation as provided for in subsection (b) hereof by the date specified in said subsection, and any required Substitute Credit Facility described in subsection (a) of this Section 212 has been received by the Trustee, then, least fifteen (15) days prior to the Reset Date, the
Trustee shall send a notice to each Registered Owner by first class mail, postage prepaid, stating (i) the Reset Date; (ii) that all Outstanding Bonds are subject to mandatory purchase on the Reset Date; (iii) that all Outstanding Bonds not tendered for purchase on or prior t the Reset Date will be deemed to have been so tendered an1 shall be purchased on the Reset Date from the Registered
Owners at a price equal to the principal amount thereof plus accrued interest to the Reset Date; and (iv) that a1 Bonds must be surrendered to the Tender Agent for purchasl not later than 9:30 a.m., New York time, on the Reset Date.
(d) From and after each Reset Date,.until the last day of a Reset Period, the Bonds will bear interest on th applicable Interest Payment Date at the applicable Reset Rate, computed on the basis of a 360-day year of twelve 30-day months: The Reset Rate shall be that rate, determined by the Remarketing Agent at least five (5) day prior to the Reset Date, which in the judgment of the
Remarketing Agent, having due regard for prevailing marke conditions, would not exceed the interest rate which woul
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. be required to be borne by the Bonds in order for the market value (disregardiny accrued interest) of the Bonds
on the Reset Date to be 100 percent of the principal amou thereof. Notwithstanding the foregoing, the Reset Rate
shall not exceed the Maximum Permitted Rate.
(e) The determination of a Reset Rate by the Remarketing Agent in accordance with the provisions of th Section 212 shall be conclusive and binding (in the absen of manifest error) upon the owners of the Bonds, the
Issuer, the Bank, the Owner, the Tender Agent and the Trustee.
(f) Prior to the determination of a Reset Rate, the Owner shall cause to be prepared a disclosure document fo distribution to potential purchasers of the Bonds in a fo acceptable to the Issuer and the Remarketing Agent. (g) The Bank may elect to exercise the Owner's righ to convert the interest rate on all Outstanding Bonds to Reset Rate in accordance with this Section 212.
(h) All obligations of the Bank under the Letter of Credit shall terminate as of a Reset Date except for obligations under any then-pending drawings under the Letter of Credit unless the Letter of Credit meets or has been amended to meet the requirements of Section 214(B)(1 and (2).
(B) The Owner shall elect to have the Bonds bear interes from and after the day following the final day of a Reset Period at an Adjustable Interest Rate, a Reset Rate for a new Reset Period or the Fixed Rate pursuant to the provisions of Sections 211A, 212 or 213 hereof, respectively.
SECTION 213. ESTABLISHMENT OF FIXED RATE. The interest rate to be borne on all Outstanding Bonds may be converted wi the written consent of the Bank, to the Fixed Rate on the Conversion Date and on any Mandatory Tender Date established under Section 607 hereof as follows:
(a) Provided that no Event of Default shall have occurred and be continuing, in order to effect the establishment of the Fixed Rate, the Owner must deliver t written consent of the Bank and a written notice at least thirty (30) days prior to the Conversion Date to the
Trustee, the Tender Agent, the Issuer, the Remarketing Agent and the Bank of such election and
specifying; (i) the proposed Conversion Date, which shall be not less than thirty (30) days after the date on which
such notice is received by such parties, and (ii) the dat on which the Fixed Rate will be determined by the
04/30/93 5338Q/2062/13 -4 6-
Remarketinq Agent, which date shall be at least five (5) days before the Conversion Date. Such notice shall also 1
accompanied by (i) an opinion of Bond Counsel to the effec that the Conversion to a Fixed Rate will not adversely affect the exclusion of interest on the Bonds from gross
income for federal income purpqses, (ii) an irrevocable
Credit Facility unless the Letter of Credit meets or is
amended to meet the requirements of Section 214(C)(1) and (2); (iii) if a Substitute Credit Facility is to be provided, a written statement from the Rating Agency to tl effect that the rating expected to be assigned to the Bonc on the proposed Conversion Date is in conformity with the requirements of Section 214(C)(4); (iv) payment to the Trustee of such amount as the Trustee reasonably determinc may be required in connection with the Conversion, including but not limited to its own reasonable fees and expenses and the cost of printing new Bonds, and (v) the form of notice to be given by the Trustee to the owners oj the Bonds with respect to Conversion.
commitment from the provider thereof to issue a Substitutc
(b) If on any day at least sixteen (16) days prior 1 the Conversion Date the Trustee receives written notice
proceed with the Conversion, the Trustee shall promptly
cancel such election of Conversion and the Bonds will bea~ interest at an Adjustable Interest Rate determined pursual to the provisions of Section 211; provided, however, the Trustee shall have received a Substitute Credit Facility conforming to the provisions of Section 214(A) hereof unless the Letter of Credit meets or is amended to meet tl requirements of Section 214(A)(1) and (2). The Trustee shall have no liability as a result of any such cancellation. The Trustee shall also provide written notice of the cancellation to the Bank, the Issuer and tht Remarketing Agent.
from the Owner to the effect that it no longer wishes to
(e) If the Trustee has not received a notice of
cancellation as provided for in subsection (b) hereof by the date specified by said subsection, and any required Substitute Credit Facility commitment described in subsection (a) of this Section 213 has been received by tl Trustee, then, at least fifteen (15) days prior to the Conversion Date, the Trustee shall send a notice to each Registered Owner by first class mail, postage prepaid,
stating (i) the Conversion Date; (ii) that all Outstandinc Bonds are subject to mandatory purchase on the Conversion Date; (iii) that all Outstanding Bonds not tendered for purchase on or prior to the Conversion Date will be deemec to have been so tendered and shall be purchased on the s Conversion Date at a price equal to the principal amount
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thereof plus accrued interest to such date; and (iv) that
purchase not later than 9:30 a,m,, New York time, on the Conversion Date.
all Bonds must be surrendered to the Tender Agent for
(d) From the Conversion Date, the Bonds will bear
interest at the Fixed Rate, payable May 1 and November 1 each year, commencing on the Interest Payment Date next following the Conversion Date, computed on the basis of a 360-day year of twelve 30-day months. The Fixed Rate sha be that rate, determined by the Remarketing Agent at leas five (5) days prior to the Conversion Date, which in the judgment of the Remarketing Agent, having due regard for
prevailing market conditions, would not exceed the intere rate which would be required to be borne by the Bonds in order for the market value (disregarding accrued interest of the Bonds on the Conversion Date to be 100 percent of the principal amount thereof. Notwithstanding the foregoing, the Fixed Rate shall not exceed the Maximum
Permitted Rate.
(e) The determination of the Fixed Rate by the Remarketing Agent in accordance with the provisions of th Section 213 shall be conclusive and binding (in the absen
of manifest error) upon the owners of the Bonds, the Issuer, the Trustee, the Bank and the Owner. The Trustee will notify the purchasers of the Bonds of the Fixed Rate to be in effect on and after the Conversion Date.
(f) Prior to the determination of the Fixed Rate, t Owner shall cause to be prepared a disclosure document fo distribution to potential purchasers of the Bonds in a fo acceptable to the Issuer and the Remarketing Agent.
(9) The Bank may elect to exercise the Owner's righ to convert the interest rate on all Outstanding Bonds to the Fixed Rate in accordance with this Section 213,
(h) All obligations of the Bank under the Letter of Credit shall terminate as of the Conversion Date except f obligations under any then-pending drawings under the Letter of Credit unless the Letter of Credit meets or has been amended to meet the requirements of Section 214(C)(1
SECTION 214. SUBSTITUTE CREDIT FACILITY. The Owner shal be permitted to provide the Trustee with a Substitute Credit Facility upon satisfaction of the requirements of this Sectio and Section 5.l(f) of the Loan Agreement. Except as otherwis provided in subsection (E) hereof, the Trustee shall send written notice to the Issuer, the Remarketing Agent and all Registered Owners not less than ten (10) days in advance of t
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date on which any Substitute Credit Facility shall take effec.
identifying the issuer of the Substitute Credit Facility. Ary Substitute Credit Facility provided to the Trustee as a
replacement for the Letter of Credit while the Bonds bear interest at an Adjustable Interest Rate, or in connection wit a reset to a Reset Rate or Conversion shall meet the requirements set forth in subsections (A), (B) and (C), respectively, below. Any Substitute Credit Facility provided
to the Trustee during a Reset Period or after the Conversion Date shall meet the requirements set forth in subsection (D) below. Any Substitute Credit Facility causing a reduction in or a withdrawal of the then-existing rating on the Bonds shal meet the additional requirements of subsection (E) below.
(A) Any Substitute Credit Facility provided while the Bonds bear interest at an Adjustable Interest Rate to maintai an Adjustable Interest Rate or on an Adjustable Interest Rate Conversion Date shall be irrevocably delivered at least twent
(20) days prior to the then-scheduled expiration date of the Letter of Credit, shall be effective as of its date of delive and shall :
(1) be for a term expiring not earlier than one yea from the date of delivery thereof (or the remaining term the Bonds, if shorter); provided that any Substitute Cred
Facility may provide that it shall terminate prior to its stated expiration date upon receipt by the provider there of a notice from the Trustee that no Bonds remain Outstanding or on the date of issuance and delivery of a Substitute Credit Facility;
(2) be in an amount at any date not less than the s of the aggregate principal amount of the Bonds then Outstanding plus an amount equal to interest on the Bonds
for the number of days as required by the Rating Agency calculated at the Maximum Permitted Rate;
(3) be accompanied by one or more opinions of couns from law firms acceptable to the Trustee and the Remarketing Agent and in a form acceptable to the Rating
Agency, addressed to the Trustee to the effect, singly or together, that the Substitute Credit Facility (1) is a legal, valid and binding obligation of the issuer thereof except (a) as may be limited by bankruptcy, insolvency, reorganization, moratorium and other laws relating to, or affecting generally the enforcement of, creditors' rights and the rights of depositors of financial institutions, a the same may be applied in the event of the bankruptcy, insolvency, reorganization or similar situation of the
and (b) as may be limited by the availability to any pers issuer thereof or a moratorium applicable to such issuer,
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seeking to enforce the Substitute Credit Facility of equitable remedies, including specific performance and
injunctive relief, (2) payments made under the Substitute Credit Facility will not be voidable under Sections 547 a1
5.50 of the Bankruptcy Code and (3) such Substitute Credit Facility is exempt from the registration requirements of
the Securities Act of 1933;
(4) be accompanied by a written statement, signed b! a representative of the Rating Agency, indicating whether
or not the then-existing rating on the Bonds as a result ( the delivery of such Substitute Credit Facility will be reduced or withdrawn and stating the rating expected to bc
in effect after the substitution; provided, however, without the Issuer's consent, the rating on the Bond: after giving effect to the substitution shall not be lowel than the rating of Aa3/VMIG-l, if the Bonds are to be ratc by Moody's, or AA-/A-l+, if the Bonds are to be rated by Standard s( Poor's; and
(5) be accompanied by an opinion of Bond Counsel to the effect that the delivery of the Substitute Credit Facility will not cause interest on the Bonds to be includable in gross income for federal income tax purpose:
(B) Any Substitute Credit Facility provided on a Reset
Date following an Adjustable Interest Rate Period or a Reset
Period to be in effect for a Reset Period shall be irrevocabl: delivered at least twenty (20) days prior to the then-schedulc expiration date of the Letter of Credit, shall be effective from the Reset Date and shall:
(1) be for a term expiring not earlier than at leas- twenty (20) days after the last day of the applicable Res Period; provided that any Substitute Credit Facility may
provide that it shall terminate prior to its stated expiration date upon receipt by the provider thereof of a notice from the Trustee that no Bonds remain Outstanding, or on the date of issuance and delivery of a Substitute Credit Facility;
(2) be in an amount at any date not less than the sum of the aggregate principal amount of the Bonds then Outstanding plus an amount equal to interest on the Bonds for the number of days as required by the Rating Agency calculated at the actual rate of interest on the Bonds;
(3) be accompanied by one or more opinions of couns( of the type as set forth in subsection A(3) of this Section 214;
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(4) be accompanied by a written statement, signed b a representative of the Rating Agency, indicating whether
or not the then-existing rating on the Bonds as a result the delivery of such Substitute Credit Facility will be reduced or withdrawn and stating the rating expected to b in effect after the substitution, provided, however,
without the Issuer's consent, the rating on the Bonds, after giving effect to the substitution, shall not be low than the rating of Aa3, if the Bonds are to be rated by Moody's or AA-, if the Bonds are to be rated by Standard Poor I s ; and
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(5) be accompanied by an opinion of Bond Counsel to the effect that the delivery of the Substitute Credit Facility will not cause interest on the Bonds to become includable in gross income for federal income tax purpose
(C) Any Substitute Credit Facility provided on the Conversion Date shall be irrevocably delivered on the Conversion Date, which shall be at least twenty (20) days pri
shall be effective from the Conversion Date and shall:
to the then scheduled expiration date of the Letter of Credit
(1) be for a term expiring not earlier than twenty
(20) days after the final maturity date of the Bonds; provided that any Substitute Credit Facility may provide
that it shall terminate prior to its stated expiration da upon receipt by the provider thereof of a notice from the .Trustee that no Bonds remain Outstanding or on the date o issuance and delivery of a Substitute Credit Facility;
(2) be in an amount at any date not less than the s of the aggregate principal amount of the Bonds then Outstanding plus an amount equal to interest on the Bonds for the number of days as required by the Rating Agency calculated at the actual rate of interest on the Bonds;
(3) be accompanied by one or more opinions of couns as set forth in subsection A(3) of this Section 214;
(4) be accompanied by a written statement, signed b a representative of the Rating Agency, indicating whether
or not the then-existing rating on the Bonds as a result the delivery of such Substitute Credit Facility will be
in effect after the substitution, provided, however, without the Issuer's consent, the rating on the Bonds, after giving effect to the substitution shall not be lowe than the rating of Aa3, if the Bonds are to be rated by Moody's, or AA-, if the Bonds are to be rated by Standard Poor Is; and
reduced or withdrawn and stating the rating expected to b
(5) be accompanied by an opinion of Bond Counsel to the effect that the delivery of the Substitute Credit Facility will not cause interest on the B'onds to become includable in gross income for federal income tax purpose
(D) Any Substitute Credit Facility provided during a Res Period or after the Conversion Date shall be irrevocably
delivered at least twenty (20) days prior to the scheduled expiration date of the Letter of Credit then in effect, and shall :
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(1) if provided during a Reset Period, be for a terr expiring not earlier than twenty (20) days after the last
Conversion Date, be for a term expiring not earlier than
twenty (20) days after the final maturity date of the Bonds; provided that any Substitute Credit Facility may provide that it shall terminate prior to its stated expiration date upon receipt by the provider thereof of a
on the date of issuance and delivery of a Substitute Cred
Facility;
day of the Reset Period; and, if provided after the
notice from the Trustee that no Bonds remain Outstanding 1
(2) be in an amount at any date not less than the SI of the aggregate principal amount of the Bonds then Outstanding plus an amount equal to interest on the Bonds for the number of days as required by the Rating Agency calculated at the actual rate of interest on the Bonds;
(3) be accompanied by one or more opinions of counse: set forth in subsection A(3) of this Section 214;
(4) be accompanied by a written statement, signed b:
a representative of the Rating Agency, to the effect that the then-existing rating on the Bonds will not be reduced or withdrawn as a result of the delivery of such Substitul Credit Facility; and
(5) be accompanied by an opinion of Bond Counsel to
the effect that the delivery of the Substitute Credit Facility will not cause interest on the Bonds to become includable in gross income for federal income tax purposes
(E) (1) In the event the Owner elects to provide a Substitute Credit Facility resulting in a reduction in or withdrawal of the then-existing rating on the Bonds as evidenced by a written statement to that effect pursuant t subsections (A)(4), (B)(4) or (C)(4) of this Section, ther at least ten (10) days prior to the Substitution Date, the
Trustee shall send a notice to each Registered Owner by first class mail, postage prepaid, stating or identifying (i) the Substitution Date, (ii) the Substitute Credit Facility and the provider thereof, (iii) the rating on the Bonds expected to be in effect on the Substitution Date ar,
that the Moody's rating, if the Bonds are rated by Moody's prior to the Substitution Date, and the Standard & Poor's rating, if the Bonds are rated by Standard b Poor's prior to the Substitution Date, on the Bonds will be reduced or withdrawn on the Substitution Date, (iv) that the Bonds ar subject to mandatory purchase on the Substitution Date, (v that any Bond not delivered to the Tender Agent for
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mandatory purchase by 9:30 a.m., New York time, on the Substitution Date will nevertheless be deemed to have bee
delivered by and purchased from the Registered Owner at such price on the Substitution Date, and from and after t Substitution Date any such Bond so deemed to have been th delivered and purchased will cease to bear interest and (vi) such other information as is deemed necessary by the Trustee, the Remarketing Agent, the Bank or the Owner.
(2) The Letter of Credit may not be released until the owners of the Bonds have been paid in full from a
drawing thereunder unless a drawing has been made under tl Letter of Credit and the proceeds thereof have been set aside for such payment.
(3) Bonds delivered or deemed to have been deliverec to the Tender Agent pursuant to the provisions of subsection (E)(1) hereof shall be purchased and paid for accordance with Article XI hereof, and payment or provisic
for payment having been made, such Bonds shall cease to
bear interest and shall not be deemed to be outstanding fc
Substitution Date.
(F) Within ten (10) Business Days after the delivery of i
the purposes of this Indenture from and after the
Substitute Credit Facility to the Trustee, the Trustee shall notify the new Registered Owners thereof by first class mail, postage prepaid, of the delivery of the Substitute Credit Facility and of the rating on the Bonds.
SECTION 215. VALIDITY OF THE BONDS. The validity of the authorization and issuance of the Bonds is not dependent on ar shall not be affected in any way by any proceedings taken by the Issuer or the Trustee. The recital contained in the Bonds that they are issued in accordance with the Constitution and laws of the State, including the Refunding Law, shall be conclusive evidence of their validity and of compliance with the provisions of law in their issuance.
SECTION 216. BOOK-ENTRY SYSTEM.
(a) All Bonds shall be initially issued in the form
of a separate single certificated fully registered Bond for th maturity date of the Bonds. Upon initial issuance, the ownership of each Bond shall be registered in the Bond Registe in the name of Cede ti Co. , as nominee of DTC. Except as
provided in Section 216(d) hereof, all Outstanding Bonds shall be registered in the Bond Register in the name of cede & Co.,
as nominee of DTC.
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(b) With respect to Bonds registered in the Bond Register in the name of Cede b Co., as nominee of DTC, the Issuer and the Trustee shall have no responsibility or obligation with respect to (i) the accuracy of the records of DTC, Cede b Co. or any Participant with respect to any ownership interest in the Bonds, (ii) the delivery to any Participant or any other person, other than a Registered Owne as shown in the Bond Register, of any notice with respect to the Bonds, including any notice of redemption, or (iii) the payment to any Participant or any other person, other than a Registered Owner, as shown in the Bond Register, of any amoun with respect to principal of, premium, if any, interest on, 0: Purchase Price of the Bonds. The Issuer and the Trustee may
treat and consider the person in whose name each Bond is registered in the Bond Register as the holder and absolute owner of such Bond for the purpose of payment of principal, premium, if any, the Purchase Price and interest with respect
to such Bond, for the purpose of giving notices of redemption and other matters with respect to such Bond, for the purpose registering transfers with respect to such Bond, and for all other purposes whatsoever. The Trustee shall pay all princip of, premium, if any, the Purchase Price and interest on the Bonds only to or upon the order of the respective Registered Owners, as shown in the Bond Register, as provided in Section
203 hereof, or their respective attorneys duly authorized in writing, and all such payments shall be valid and effective t fully satisfy and discharge the.Issuer's obligations with
respect to payment of principal of, premium, if any, the Purchase Price and interest on the Bonds to the extent of the sum or sums so paid. No person other than a Registered Owner as shown in the Bond Register, shall receive a certificated Bond evidencing the obligation of the Issuer to make payments
of principal, premium, if any, the Purchase Price and interes-
pursuant to this Indenture. Upon delivery by DTC to the Trustee of written notice to the effect that DTC has deterrninc to substitute a new nominee in place of Cede s( Co., and subjec to the provisions herein with respect to record dates, the wo: "Cede b Co." in this Indenture shall refer to such new nominec of DTC.
(c) The delivery of the Representation Letter by thc Issuer and the Trustee shall not in any way limit the provisions of Section 216(b) hereof or in any other way imposc upon the Issuer or the Trustee any obligation whatsoever with respect to persons having interests in the Bonds other than tl: Registered Owners, as shown on the Bond Register. The Trustec shall take all action necessary for all representations in thc Representation Letter with respect to the Trustee to at all times be complied with.
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(d) (i) DTC may determine to discontinue providing its services with respect to the Bonds at any time by giving written notice to the Issuer, the Remarketing Agent, the Tend Agent and the Trustee and discharging its responsibilities wi- respect thereto under applicable law.
(ii) The Issuer, in its sole discretion and without the consent of any other person, may terminate the
services of D?IC with respect to the Bonds if the Issuer determines that :
(A) DTC is unable to discharge its
responsibilities with respect to the Bonds, or
(B) a continuation of the requirement that all Outstanding Bonds be registered in the Bond Register in tl name of Cede & Co., or any other nominee of DTC, is not in th6 best interest of the beneficial owners of such Bonds.
(iii) Upon the termination of the services of DT( with respect to the Bonds pursuant to subsection 216(d)(ii)(B: hereof, or upon the discontinuance or termination of the services of DTC with respect to the Bonds pursuant to subsection 216(d)(i) or subsection 216(d)(ii)(A) hereof after which no substitute securities depository willing to undertakE the functions of DTC hereunder can be found which, in the
opinion of the Issuer, is willing and able to undertake such
functions upon reasonable and customary terms, the Issuer is obligated to deliver Bond certificates at the expense of the Owner, as described in this Indenture and the Bonds shall no longer be restricted to being registered in the Bond Register in the name of Cede & Co. as nominee of DTC, but may be registered in whatever name or names Registered Owners transferring or exchanging Bonds shall designate to the Truste in writing, in accordance with the provisions of this Indentur
(e) Notwithstanding any other provisions of this Indenture to the contrary, as long as any Bond is registered i
the name of Cede SC Co., as nominee of DTC, all payments with respect to principal or, premium, if any, the Purchase Price and interest on such Bond and all notices with respect to such Bond shall be made and given, respectively, in the manner
provided in the Representation Letter.
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ARTICLE I I I
REVENUES AND FUNDS
SECTION 301. SOURCE OF PAYMENT OF BONDS. The Bonds and all payments required of the Issuer hereunder are not general obligations of the Issuer but are limited obligations as described in Section 204 hereof. The Trust Estate is conveye pledged and assigned absolutely and as a first lien pledge as security for the equal and ratable benefit of the owners of t Bonds and, as long as the Bank is not in default of its obligations under the Letter of Credit, the Bank, and shall bc used for no other purpose than payment of the principal of,
premium (if any), Purchase Price and interest on the Bonds, except as otherwise may be expressly authorized in this Indenture.
SECTION 302. CREATION OF FUNDS AND ACCOUNTS. The following Funds and Accounts of the Issuer are hereby created and established with the Trustee:
(a) the Cost of Issuance Fund; (b) the Revenue Fund, which shall include the Letter of Credit Account, the Seasoned Funds Account and the Insurance Proceeds Account;
Account, the Principal Account, and the Redemption Account;
(c) the Debt Service Fund, consisting of the Interest
(d) the General Fund;
(e) the Purchase Fund, which shall include a Liquidity
(f) the Rebate Fund. Account and a Remarketing Account; and
Each Fund and Account shall be maintained as needed by the
Trustee as a separate and distinct trust fund or account to bc held, managed, invested, disbursed and administered as providc in this Indenture. All moneys deposited in the Funds and Accounts shall be used solely for the purposes set forth in this Indenture. The Trustee shall keep and maintain adequate records pertaining to each Fund and Account and all disbursements therefrom.
SECTION 303. INITIAL DEPOSITS. On the Bond Issuance Datc
as shall be specified in written instructions of the Issuer, following receipt of evidence satisfactory to the Trustee (which may be telephonic notice from the title company) of the recordation of the Regulatory Agreement and the First Deed of
Trust, the Trustee (i) from the proceeds received from the sal of the Bonds, shall fund the Loan in accordance with the provisions of the Escrow Agreement; and (ii) shall deposit the
Program Fee to the Cost of Issuance Fund.
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SECTION 304. COST OF ISSUANCE FUND. Moneys on deposit i: the Cost of Issuance Fund shall be applied to pay Costs of Issuance. The Trustee shall disburse amounts from the Cost o Issuance Fund upon submission of a written request from a dul: authorized officer or agent of the Issuer to the Trustee stating that the amount indicated thereon is due and owing, h not been the subject of another written request which has bee: paid, and is a proper cost of issuing the Bonds or implementi: the financing for the Project. Interest earnings on amounts deposit in the Cost of Issuance Fund shall remain in such Fund. Any moneys remaining in the Cost of Issuance Fund on t,
180th day following the Bond Issuance Date shall be transferrc to the Owner.
SECTION 305. REVENUE F"D. (A) The Trustee shall deposi- into the Revenue Fund all Revenues and any other amounts bth( than remarketing proceeds) received by the Trustee which are subject to the lien and pledge of this Indenture, to the extel not required to be deposited in other Funds and Accounts in
accordance with the terms of this Indenture. The Trustee sha deposit all proceeds of drawings under the Letter of Credit fc the payment of principal and interest on the Bonds (other thal Purchase Price) in the Letter of Credit Account and in no othc Fund or Account. The Trustee shall apply those moneys on deposit in the.Letter of Credit Account, other than amounts representing the principal portion of Bonds to be redeemed anc accrued interest related thereto, on each Interest Payment ,Date, in the order of priority and for the purposes as followE
(a) First, to the Interest Account of the Debt Service Fund, an amount sufficient to pay the interest becoming due and payable on the Bonds on such date; and
(b) Second, to the Principal Account of the Debt Service Fund, an amount sufficient to pay the principal 01 the Bonds maturing on such date, if any.
(B) The proceeds of drawings under the Letter of Credit deposited into the Letter of Credit Account representing Prepayments and related accrued interest shall be immediately applied as follows:
(a) First, to the Interest Account 'of the Debt Service Fund, the'accrued interest received with such Prepayment; and
(b) Second, to the Redemption Account of the Debt Service Fund, the balance of the Prepayments.
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. Only proceeds from drawings under the Letter of Credit shall be deposited in the Letter of Credit Account. The Trustee shall not commingle amounts on deposit in the Letter t Credit Account with any other Revenues. The Trustee shall ha\ the sole right of withdrawal from the Letter of Credit Account and neither the Issuer nor the Owner shall have any legal, equitable or beneficial right, title or interest therein.
(C) Upon receipt, the Trustee shall deposit into the
Seasoned Funds Account moneys constituting Seasoned Funds and
if16AtSYS deposited by the Owner as moneys to be applied to the payment of premiums related to a redemption of the Bonds
pursuant to Section 602(h) hereof. Each deposit of moneys received by the Trustee shall be held in a separate subaccount in the Seasoned Funds Account until such moneys constitute Seasoned Funds. Moneys on deposit in the Seasoned Funds Account representing Seasoned Funds shall be deposited to thc Redemption Account prior to the date notice of redemption is mailed to the owners of the Bonds to the extent necessary to
pay the premium on the Bonds as the same shall become due and payable on the Redemption Date. Any Seasoned Funds remaining in the Seasoned Funds Account following the redemption of Bonc with respect to which such deposit was made shall be paid to the Bank.
(D) Moneys on deposit in the Revenue Fund representing loan payments deposited by the Owner with the Trustee pursuant to Section 5,1(a> of the Loan Agreement in the event the Bank defaults under the Letter of Credit shall be held by the Trustee in a separate subaccount of the Revenue Fund and be applied to pay principal and interest on the Bonds when due OL to reimburse the Bank for any amounts paid under the Letter of Credit to cure the default.
The Trustee shall deposit into the Insurance Proceeds Account of the Revenue Fund insurance or condemnation proceeds or other compensation received by it in the event of an involuntary loss, condemnation or a substantial destruction of all or any part of the Project. Subject to the provisions of the Loan Agreement, moneys on deposit in the Insurance Proceed Account shall be disbursed to the Owner for the restoration of the Project, subject to the express prior written. consent of the Bank to each such disbursement, and subject to the following additional conditions: (i) within 90 days of the event giving rise to such taking, loss or destruction the Owne
the Project can be restored to a condition permitting the conduct of normal business operations within 18 months, and (ii) within 180 days of the event giving rise to such taking, loss or destruction the Owner commences to reconstruct the
notifies the Trustee, the Bank and the Issuer in writing that
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Project. Immediately upon the receipt of the proceeds of any drawing under the Letter of Credit to redeem Bonds pursuant t Section 602(d) hereof, the Trustee shall pay to the Bank all amounts on deposit in the Insurance Proceeds Account, which amounts shall be credited against the Owner's obligations und the Reimbursement Agreement I
SECTION 306. DEBT SERVICE FUND. The Trustee shall depos into the Interest Account of the Debt Service Fund the amount required by Section 305 of this Indenture. Moneys on deposit in the Interest Account shall be applied solely to pay the interest on the Bonds as the same becomes due and payable# 0 each Interest Payment Date, the Trustee shall remit to the respective Registered Owners of such Bonds as of the Record Date for such interest payment, an amount from the Interest Account sufficient to pay the interest on the Bonds becoming due and payable on such date. Upon presentment of Bonds for
payment in the case of redemption, the Trustee shall remit to the respective Registered Owners an amount from the Interest Account sufficient to pay the interest on the Bonds due on SUI redemption date.
The Trustee shall deposit into the Principal Account of t:
Indenture. Moneys on deposit in the Principal Account shall : applied solely to pay the principal of the Bonds as the same becomes due and payable at maturity. On the principal paymenl date on the Bonds, the Trustee shall set aside and hold in trust, or remit to any Paying Agent to be held in trust, an amount from the Principal Account sufficient to pay the principal of the Bonds becoming due and payable on such date.
Debt Service Fund the amounts required by Section 305 of this
The Trustee shall deposit into the Redemption Account of the Debt Service Fund (i) the amounts required by Section 305 of this Indenture and (ii) Seasoned Funds to pay premiums on the Bonds. Moneys on deposit in the Redemption Account shall be applied solely to pay the principal of and premium, if any, on the Bonds as the same become due and payable by redemption.
On each date fixed for such redemption, the Trustee shall set aside and hold in trust, or shall remit to any Paying Agent tc
sufficient to pay the principal of and premium, if any, on the Bonds becoming due and payable on.such date.
be held in trust f an amount from the Redemption Account
The Trustee shall not commingle amounts on deposit in the Debt Service Fund with any other Revenues. The Trustee shall have the sole right of withdrawal from the Debt Service Fund,
and neither the Issuer nor the Owner shall have any legal, equitable or beneficial right, title or interest therein. Any excess moneys on deposit in the Debt Service Fund following'an
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Interest Payment Date, principal payment date or redemption date shall be wire transferred to the Bank.
SECTION 307. GENERAL FUND. The Trustee shall deposit int the General Fund the amounts required by Section 502 and all moneys deposited by the Owner with the Trustee as payment of the amounts owing under Section 5.l(d) of the Loan Agreement
Tender Agent, the Paying Agent and the Rebate Analyst. The Trustee shall apply moneys on deposit in the General Fund solely for the following purposes, in the following order of priority and in accordance with the following conditions:
for the fees and expenses of the Issuer, the Trustee, the
(a) to the Trustee, the Tender Agent and any Paying Agent for the cost of Ordinary Expenses incurred and Ordinary Services rendered, upon receipt of a written request from any of such parties stating that the amount
the subject of another written request which has been paid indicated thereon is justly due and owing, and has not bee
(b) to the Issuer on each June 1, commencing June 1,
1994, an annual fee equal to ,23 percent of the principal amount of the Bonds on the Bond Issuance Date;
(c) to the Trustee, the Tender Agent, and any Paying Agent for the cost of Extraordinary Expenses incurred and Extraordinary Services rendered;
(d) to the Trustee or the Issuer for fees and expenses incurred in connection with the enforcement of th Regulatory Agreement and for the payment of annual rating agency fees;
(e) to the Rebate Analyst for fees incurred in calculating rebate under Section 504 hereof; and
(f) to the Rebate Fund all amounts required to be deposited pursuant to Section 504 hereof.
Any moneys on deposit in the General Fund which the Trustec determines are not necessary to pay the amounts set forth abovc shall be transferred to the Bank for disbursement in accordancc with the provisions of the Reimbursement Agreement.
SECTION 308. PURCHASE FUND. All moneys drawn by the Trustee under the Letter of Credit in connection with the purchase of Bonds pursuant to Section 1101 or Section 1102 hereof shall be deposited into the Liquidity Account of the Purchase Fund unless the Trustee directs the Bank to deposit 01 wire transfer such proceeds directly to an account held by the
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Tender Agent. All moneys received by the Trustee from the sa of Bonds pursuant to Section 1105 hereof shall be deposited into the Remarketing Account of the Purchase Fund. Moneys on deposit in the Purchase Fund shall be invested by the Trustee in accordance with the provisions of Section 501 hereof, and any proceeds of a drawing transferred to the Tender Agent sha: be invested by the Tender Agent on behalf of the Trustee in accordance with the provisions of Section 501 hereof, Moneys
remaining in the Purchase Fund after payment of the purchase price of Bonds purchased on each Purchase Date shall be paid 1 the Bank,
Funds for the purchase of Bonds at the principal amount thereof plus interest accrued to the Purchase Date, if any, shall be paid from the Purchase Fund or by the Tender Agent ii the order of priority indicated below:
(i) moneys received from the remarketing of Bonds, j immediately available funds, pursuant to Section 1105 hereof; and
(ii) moneys representing proceeds of a drawing by the Trustee under the Letter of Credit.
The Trustee shall have the sole right of withdrawal from the Purchase Fund and neither the Issuer nor the Owner shall have any legal, equitable or beneficial right, title or interest therein.
SECTION 309. DRAWINGS UNDER THE LETTER OF CFLEDIT. The Letter of Credit shall be held by the Trustee and drawn upon i accordance with its terms when needed to pay the purchase pric of and principal and interest on the Bonds (other than Pledged Bonds), whether for scheduled payments of principal and interest, at maturity or upon the earlier redemption of the Bonds, consistent with the provisions of this Indenture and th Loan Agreement. Moneys derived from drawings under the Letter of Credit shall be deposited in the Letter of Credit Account o the Revenue Fund or the Liquidity Account of the Purchase Fund as applicable. The Trustee shall send to the Owner copies of any documents which are presented to the Bank in connection with each drawing under the Letter of Credit concurrently with its submission of those documents to the Bank.
SECTION 310. FINAL BALANCES. Upon the deposit with the Trustee of moneys sufficient to pay all principal of, premium, if any, and interest on the Bonds, and upon satisfaction of a1 claims against the Issuer hereunder, including all fees, charges and expenses of the Trustee, the Issuer, the Program Administrator, the Rebate Analyst, the Tender Agent, and any
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Paying Agent which are properly due and payable hereunder or under the Loan Agreement or the Regulatory Agreement, or upon the making of adequate provisions for the payment of such amounts as permitted hereby, all moneys remaining in all Fund and Accounts, except amounts on deposit in the Rebate Fund an
except moneys necessary to pay principal of, premium, if any,
and interest on the Bonds, which moneys shall be held by the Trustee and paid to the Issuer pursuant to Section 312 hereof
shall be paid to the Bank for disbursement in accordance with the provisions of the Reimbursement Agreement
SECTION 311. SECURITY OF FUNDS. All moneys deposited wi the Trustee or with any agent of the Trustee appointed pursua to Section 1111 of this Indenture shall be held in trust and (except for moneys held by the Trustee, as paying agent, or remitted to any Paying Agent or the Tender Agent for the payment of the Purchase Price or the principal of, premium, i any, and interest on the Bonds) shall, while held by the Trustee, constitute part of the Trust Estate and shall be and remain entitled to the benefit and shall be subject to the security of this Indenture for the equal and proportionate benefit of the owners of all Outstanding Bonds and, as long a: the Bank is not in default of its obligations under the Lette~ of Credit, the Bank.
SECTION 312. NON-PRESENTMENT OF BONDS. In the event any Bond shall not be presented for payment when the principal or purchase price thereof becomes due, either at maturity, on a Purchase Date or otherwise, or at the date fixed for redemptic thereof, if moneys sufficient to pay such Bond shall have bee] deposited in the Debt Service Fund or the Purchase Fund, as applicable, all liability of the Issuer to the owner thereof for the payment of such Bond shall forthwith cease, terminate and be completely discharged, and thereupon it shall be the duty of the Trustee to hold such moneys in trust, uninvested, without liability for interest thereon to any Person, for the benefit of the owner of such Bond who shall thereafter be restricted exclusively to such moneys, for any claim of whatever nature on his or her part under this Indenture or on, or with respect to, said Bond. However, after two (2) years, or as otherwise provided by State law, such moneys shall be paid by the Trustee to the Issuer free from the trusts createc by this Indenture, and thereafter Registered Owners shall be' entitled to look only to the Issuer for payment and then only to the extent of the amount so repaid by the Trustee. The Issuer shall not be liable for any interest on the sums paid t it pursuant to this section and shall not be regarded as a trustee of such money.
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SECTION 313. MONEYS TO BE HELD IN TRUST. All moneys required to be deposited with or paid to the Trustee under an; provisions of this Indenture shall be held by the Trustee in trust and applied for the purposes herein specified.
ARTICLE IV
REVENUES AND APPLICATION
SECTION 401. REVENUES TO BE PAID OVER TO TRUSTEE. The Issuer will cause the Revenues to be paid to the Trustee for deposit when necessary in accordance with the terms of this Indenture to effect payment of the Purchase Price and the principal of, premium, if any, and interest on the Bonds as ti same become due or for reimbursement to the Bank.
SECTION 402. PAYMENTS OF PRINCIPAL, PURCHASE PRICE,
Paying Agent from the Revenues sufficient amounts to pay the
principal of, premium, if any, and interest on, and to the Tender Agent to pay the Purchase Price of the Bonds as the san become due and payable.
PREMIUM AND INTEREST, The Trustee shall make available to thf
SECTION 403. REVENUES TO BE HELD FOR ALL REGISTERED
OWNERS; CERTAIN EXCEPTIONS. The Revenues and the Trust Estate shall, until applied as provided in this Indenture, be held by .the Trustee for the benefit of the owners of all Outstanding
Bonds and the Bank, except that any portion of the Revenues representing principal of, premium, if any, Purchase Price and interest on any Bonds previously called for redemption in accordance with Article VI of this Indenture or tendered (or deemed to have been tendered) for purchase in accordance with the provisions of Article XI hereof, or previously matured
shall be held for the benefit of the owners of such Bonds only without the accrual of interest on such amounts.
ART I CLE V
INVESTMENT OF MONEYS
SECTION 501. INVESTMENT OF MONEYS. Moneys in all Funds and Accounts, except moneys held for nonpresented Bonds pursuant to Section 312, shall be continuously invested and reinvested in Permitted Investments by the Trustee as
follows:(l) amounts drawn under the Letter of Credit, to the extent such amounts are held overnight, and amounts on deposit in the Revenue Fund (including the Seasoned Funds Account but excluding amounts on deposit in the Insurance Proceeds
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Account), the Debt Service Fund and the Purchase Fund shall b invested and reinvested by the Trustee only in Government Obligations (or in any investments permitted by clause (viii) of the definition of Permitted Investments), as specified in writing by the Bank, maturing when needed but not later than thirty (30) days after the date on which they are acquired; a
Revenue Fund shall be invested in any Permitted Investments a specified in writing by the Owner and approved by the Bank,
provided that, with respect to the Insurance Proceeds Account an opinion of Bond Counsel is delivered to the Trustee to the effect that such investment does not adversely affect the exclusion from gross income for federal income tax purposes o
interest on the Bonds. Investments in all Funds and Accounts shall mature or be redeemable at par not later, nor, to the extent reasonably practicable, earlier, than the date such moneys or investment proceeds are required for the purposes o the respective Funds and Accounts; provided, however, that th proceeds of drawings under the Letter of Credit may be invest only with the consent of the Bank and in accordance with clau
(1) above. The Trustee shall have no liability or responsibility for any loss resulting from any investment mad
in accordance with the provisions of this Section 501.
All investments shall constitute a part of the Fund or Account from which the moneys used to acquire such investment have come. The Trustee shall sell and reduce to cash a sufficient amount of investments in a Fund or Account wheneve the cash balance therein is insufficient to pay the amounts required to be paid therefrom in accordance with written directions of an Owner Representative. The Trustee may transfer investments from any Fund or Account to any other Fu:
or Account in lieu of cash when required or permitted by the provisions of this Indenture.
(2) amounts on deposit in the Insurance Proceeds Account of t
In computing the amount in any Fund or Account, Permitted
Investments purchased as an investment of moneys therein shal be valued at the then market price of such obligations, excluding any accrued interest. If the market price of such obligations is not readily available, the Trustee shall determine the value of such obligations at cost. Any other provisions of this Section 501 to the contrary notwithstandinc
for purposes of the arbitrage requirements under Section 148 ( the Code and the applicable Regulations, in computing the amount in any Fund or Account held by the Trustee under the provisions of this Indenture, investments shall be valued at cost, except if any investment is purchased at a discount, an(
if the amount of interest accruing in any period is greater
than the amount of interest in the prior period (thus
reflecting the reinvestment of interest as principal) the amount of such discount or excess interest shall be added to
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the cost of the investment ratably each Year over its term. The Trustee may rely conclusively-upon aid shall be fully protected from all liability if acting in conformity with and in good faith as to any opinion of Bond Counsel obtained by i- and upon any analysis or advice of any independent certified
public accounting firm engaged by it as to the permissibility
of any investment proposed to be msde pursuant to this Sectio!
501.
SECTION 502. EARNINGS AND LOSSES. Earnings resulting frc the investment of moneys in the Letter of Credit Account of tl Revenue Fund, the Remarketing Account and the Liquidity Accoui of the Purchase Fund, the Cost of Issuance Fund and the Rebatt Fund shall remain in such Funds and Accounts. Earnings from the investment of moneys in all other Funds and Accounts shal: be deposited to the General Fund. Any portion of any investment earnings which represents the accrued interest paic
in connection with the purchase of an investment shall be credited to the Fund or Account from which such investment wa! made. Any loss of principal value resulting from the investment of moneys in any Fund or Account and any expenses incurred in making or disposing of the investments shall be charged, when incurred, to the Fund or Account from which sucl investments were made I
SECTION 503. RESERVED.
SECTION 504. REBATE FUND.
(a) Establishment of Rebate Fund. The Trustee has established the Rebate Fund with respect to the Bonds and the Issuer and the Trustee shall comply with the requirements below. All money at any time deposited in the Rebate Fund shal be held by the Trustee in trust, for payment to the United States Treasury. All amounts on deposit in the Rebate Fund shall be governed by this Section 504 and the Tax Certificate, unless the Issuer obtains and delivers to the Trustee an opinion of Bond Counsel to the effect that the exclusion from
gross income for federal income tax purposes of interest on th Bonds will not be adversely affected if such requirements are
not satisfied.
(i) Computation. Within fifty-five (55) day after the end of the fifth Bond Year and each fifth Bond Year thereafter, the Issuer shall calculate or cause to be calculated and furnished to the Trustee the amount of rebatabl arbitrage, in accordance with Section 148(f)(2) of the Code an Section 1.148-2 of the Rebate Regulations (taking into account any applicable exceptions with respect to the computation of the rebatable arbitrage, described, if applicable, in the Tax
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Certificate (e,q,, the temporary investment exception of Section 148(f)(4)(B) of the Code), within the meaning of Section 1.148-8(b) of the Rebate Regulations (the "Rebatable Arbitrage")). In addition, within fifty-five (55) days after the payment of all the Bonds, the Issuer shall calculate or cause to be calculated and furnished to the Trustee the amount
of Rebatable Arbitrage.
(ii) Transfer. Within fifty-five (55) days
after the end of each fifth Bond Year, an amount shall be deposited to the Rebate Fund by the Trustee from any legally available funds received from the Owner, if and to the extent required, so that the balance in the Rebate Fund shall equal the amount of Rebatable Arbitrage so calculated in accordance with (i) above. In addition, within fifty-five (55) days aft€ the payment of all the Bonds an amount shall be deposited to
the Rebate Fund by the Trustee from the Owner, if and to the
equal the amount of Rebatable Arbitrage so calculated in
accordance with (i) above.
extent required, so that the balance in the Rebate Fund shall
(iii) Payment to the Treasury. The Trustee shall, upon receipt of written instructions from the Issuer, pay to the United-States Treasury the amount of Rebatable Arbitrage from amounts on deposit in the Rebate Fund,
(X> Not later than sixty (60) days afte the end of (A) the fifth Bond Year, and (B) each fifth Bond Year thereafter, an amount equal to at least 90% of the Rebatable Arbitrage calculated as of the end of such Bond Year and
(Y> Not later than sixty (60) days afte the payment of all the Bonds, an amount equal to 100% of the
Rebatable Arbitrage calculated as of the end of such Bond Year
and any income attributable to the Rebatable Arbitrage, computed in accordance with Section 148(f) of the Code.
In the event that, prior to the time of any payment required t be made from the Rebate Fund, the amount in the Rebate Fund is
insufficient to make such payment when such payment is due, tht Issuer shall calculate or cause to be calculated the amount of such deficiency and direct the Trustee, in writing, to transfel to the Rebate Fund an amount received from any legally available source of the Issuer or the Owner, equal to such deficiency in the Rebate Fund prior to the time such payment i: due. Each payment required to be made pursuant to this Sectiol shall be made to the Internal Revenue Service Center, Philadelphia, Pennsylvania 19255 on or before the date on whicl such payment is due, and shall be accompanied by Internal
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Revenue Service Form 8038-T provided to the Trustee in a
completed form by the Issuer, or shall be made in such other manner as provided under the Code.
(b) Disposition of Unexpended Funds. Any funds
remaining in the Rebate Fund after redemption and payment of
the Bonds and the payments described in (iii) above, shall be remitted (i) to the Issuer to the extent the Issuer has made any contributions to the Rebate Fund or paid any unreimbursed costs for rebate consultant or calculation services and (ii) the balance shall be paid to the Bank.
(c) Survival of Defeasance. Notwithstanding anythi: in this Section or this Indenture to the contrary, the obligation to comply with the requirements of this Section shall survive the defeasance of the Bonds.
SECTION 505. INVESTMENTS; ARBITRAGE; SPECIAL ARBITRAGE RESTRICTION. The Trustee may make any and all investments permitted by the provisions of Section 501 hereof through its own investment department. As and when any amount invested pursuant to this Article may be needed for disbursement, the Trustee may cause a sufficient amount of such investments to 1 sold and reduced to cash to the credit of such funds. The Trustee covenants that at any time that it has discretion as 1 such investments it will not knowingly use or invest the proceeds of the Bonds in any manner which will cause the Bond:
to become "arbitrage bonds" within the meaning of Section 148 of the Code.
ARTICLE VI
REDEMPTION OF BONDS BEFORE MATURITY
SECTION 601. LIMITATION ON REDEMPTION. The Bonds shall I: subject to redemption prior to maturity only as provided in this Article VI.
SECTION 602. REDEMPTION DATES, AMOUNTS AND PRICES. The Bonds shall be subject to mandatory redemption at a price equz to 100% of the principal amount of the Bonds called for redemption and to optional redemption at the prices set forth below (in each case with accrued interest to the redemption date to be paid to the Registered Owner of each Bond (other than a Pledged Bond) as of the applicable Record Date if the redemption date is an Interest Payment Date or a date between Record Date and an Interest Payment Date and to the Registered Owner in all other cases) as follows:
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Mandatory Redemption:
(a) in whole on the first date for which notice of redemption may be timely given, at a price equal to the principal amounts; of Bonds so called for redemption in thr
event that the Prior Bonds have not been redeemed in who1( by the date which is sixty (60) days following the Bond Issuance Date;
(b) in whole on the date selected by the Trustee fo: the redemption of Bonds if, within sixty (60) days after
receipt by the Trustee of written notice of the occurrencc of an Act of Bankruptcy of Bank, or if at least twenty (2C days prior to the expiration date of the Letter of Credit, the Owner does not cause to be delivered to the Trustee a Substitute Credit Facility, except that in no event shall such redemptions occur later than five (5) days prior to the expiration date of the Letter of Credit;
(c) in whole on the first date for which notice of redemption may be timely given if the Bank fails or refusc to honor a drawing under the Letter of Credit or to reinstate the Letter of Credit in accordance with its tern
(d) in whole or in part on the first date for which notice of redemption may be timely given if and to the extent that the Note is required to be prepaid pursuant tc Section 5.3(d) of the Loan Agreement;
(e) in whole not later than twenty days after the Trustee has received written notice and direction from the Bank to redeem Bonds as a result of the occurrence of an event of default under the Reimbursement Agreement;
(f) in whole on the earliest practicable date after receipt by the Trustee of notice from the Issuer of a Determination of Taxability or, subject to the provisions
of the Intercreditor Agreement, upon acceleration of the Note pursuant to Section 7.3 of the Loan Agreement
following a default by the Owner under the Loan Agreement or the Regulatory Agreement;
Optional Redemption:
(9) in whole or in part, with the consent of the Bank, on any date while the Bonds bear interest at an Adjustable Interest Rate, at a price equal to the principa amount of Bonds so called for redemption, in the event and to the extent the Letter of Credit is drawn upon in an amount representing the voluntary prepayment of the Note;
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i
(h) in whole or in part with the consent of the Ban1
on any Interest Payment Date during a Reset Period or aftc the Conversion Date in the event and to the extent the Letter of Credit is drawn upon in an amount representing
the voluntary prepayment of the Note in accordance with optional redemption schedules determined by the Owner wit1 respect to a Reset Period or in connection with the
conversion of the interest rate on the Bonds to the Fixed Rate pursuant to Sections 212 or 213 hereof.
SECTION 603. PARTIAL REDEMPTION. All or a portion of an: Bond may be redeemed, but only in a principal amount equal to
$100,000 ($120,000 in the case of one Bond) and any integral multiple thereof while the Bonds bear interest at an Adjustab
Interest Rate or during a Reset Period of less than one year c any integral multiple of $5,000 during a Reset Period of one
less than all of the Bonds Outstanding are to be redeemed, thc Trustee shall first select for redemption any Pledged Bonds Outstanding, and thereafter shall select the Bonds to be redeemed by lot. Upon surrender of any Bond in a denominatior greater than such minimum denomination to be redeemed only in part, the Issuer shall execute and the Trustee shall authenticate and deliver to the owner thereof, at the expense of the Owner, a new Bond or Bonds of authorized denominations
of the same type and maturity and in an aggregate principal
surrendered.
year or more and after the Conversion Date, In the event that
,amount equal to the unredeemed portion of the Bond so
SECTION 604. NOTICE OF REDEMPTION; NOTICE OF DETERMINATIC
OF TAXABILITY; NOTICE OF SUBSTITUTE CREDIT FACILITY. The Trustee shall give notice of any redemption pursuant to this Article VI by sending such notice by first class mail, postagc prepaid, not less than fifteen (15) nor more than twenty (20) days prior to the redemption date: provided, however, that wit respect to a redemption pursuant to Section 602(e), the Trust€ shall mail a notice of redemption immediately following receiE of notice from the Bank and, with respect to a redemption pursuant to Section 602(f), immediately upon receipt of notice from the Issuer; and provided further that the Trustee shall mail notice of redemption only when it has on deposit in the Revenue'Fund or the Redemption Account of the Debt Service Fun sufficient amounts to .pay the principal of, premium, if any, and interest on the Bonds so called for redemption unless the Trustee shall determine that it will have available as a resul of a payment pursuant to the Letter of Credit an amount sufficient to pay the principal of, premium, if any, and interest on the Bonds so called for redemption. All notices c
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redemption shall be mailed to the Bank, the Issuer, the Remarketing Agent and to the Registered Owner of each Bond to
be redeemed in whole 01: in part at the address shown on the
Bond registration books as of the date of mailing. Neither tl failure of the owner of any Bond to receive a notice mailed nc any defect in any notice so mailed shall affect the validity c
the proceedings for such redemption. Such notice shall state the redemption date, the redemption price, the amount of accrued interest payable on the redemption date, the place at which the Bonds are to be surrendered for payment, that from the redemption date interest on the Bonds will cease to accruc and, if less than all of the Bonds Outstanding are to be
redeemed, an identification of the Bonds or portions thereof I be redeemed. Any notice mailed as provided in this Section shall be conclusively presumed to have been duly given, whethc or not the Registered Owner receives such notice.
To the extent Bonds called for redemption are not present€ within 15 days of the redemption date, the Trustee shall mail second notice of redemption in the manner set forth above.
SECTION 605. PAYMENT UPON REDEMPTION. Prior to each
redemption date, the Trustee shall make provision for the payment of the Bonds to be redeemed on such date by setting aside and holding in trust, or depositing in trust with any Paying Agent, an amount from the Revenue Fund an amount sufficient to pay the principal of, premium, if any, and interest on such Bonds. Upon presentation and surrender of ar such Bond at the Principal Office of the Trustee or any Paying
redemption, the Trustee or any Paying Agent shall pay the
principal of, interest on and premium, if any, on such Bond from the moneys set aside for such purpose. Interest on any Bond called for redemption maturing on the date fixed for redemption shall be mailed or wire transferred to the Registered Owner of such Bond as provided in Section 306.
Agent, as the case may be, on or after the date fixed for
SECTION 606. EFFECT OF REDEMPTION. Notice of redemption having been given as provided in Section 604 hereof, the Bonds or portions thereof designated for redemption shall become due and payable on the date fixed for redemption and, unless the Issuer defaults in the payment of the principal thereof and premium, if any, thereon, such Bonds or portions thereof shall cease to bear interest from and after the date fixed for
redemption whether or not such Bonds are presented and surrendered for payment on such date. If, during the period that moneys are on deposit with the Trustee for payment of the
for redemption is not so paid upon presentation and surrender thereof for redemption, such Bond or portion thereof shall
redemption price of Bonds, any Bond or portion thereof called
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continue to bear interest at the rate set forth thereon until paid or until due provision is made for the payment of same.
SECTION 607. MANDATORY TENDER IN LIEU OF REDEMPTION. (A) The Owner may elect, with the consent of the Bank, to makc
any date on which the- Bonds may be redeemed pursuant to Sectic
602(g) or (h) hereof a Mandatory Tender Date for the purpose (
remarketing the Bonds and selecting a different interest rate mode in accordance with Section 211A, 212 or 213 hereof, as applicable. Notice of such election shall be given to the Trustee, the Tender Agent, the Remarketing Agent and the Issuc in the same manner as provided in Sections 211A, 212 and 213, as applicable. A premium shall be paid upon the mandatory tender of the Bonds in accordance with Section 602(h). Any Bond not tendered to the Tender Agent on or before the Mandatory Tender Date shall be deemed to have been tendered fc purchase on such date for all purposes of this Indenture.
(B) The Bank may elect to make any date on which Bonds m;
be redeemed pursuant to Section 602(e) hereof a Mandatory Tender Date for the purpose, among other things, of remarketir
the Bonds and selecting a different interest rate made in accordance with Section 211A, 212 or 213 hereof, as applicable. Notice of such election shall be yiven to the
Trustee, the Tender Agent, the Remarketing Agent and the ISSUE in the same manner as provided in Section 214(E) for the delivery of a Substitute Credit Facility resulting in a reduction in or withdrawal of the rating on the Bonds. Any Bond not tendered to the Tender Agent on or before the Mandatory Tender Date shall be deemed to have been tendered fc purchase on such date for all purposes of this Indenture.
ARTICLE VI1
PAYMENT; FURTHER ASSURANCES
SECTION 701. PAYMENT OF PURCHASE PRICE, PRINCIPAL OF, PREMIUM, IF ANY, AND INTEREST ON BONDS. The Issuer shall promptly pay or cause the Trustee to pay the Purchase Price, the principal of, premium, if any, and the interest on, every
be required to make such payment or cause such payment to be
made only from the Revenues.
Bond issued hereunder according to the terms thereof, but shal
SECTION 702. POWER TO ISSUE BONDS AND MAKE PLEDGE AND ASSIGNMENT. The Issuer is duly authorized pursuant to law to issue the Bonds and to enter into this Indenture and to pledge and assign the Revenues and other assets pledged and assigned under this Indenture in the manner and to the extent provided
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in this Indenture# The Bonds and the provisions of this
Indenture are and will be legal, valid and binding limited
obligations of the Issuer in accordance with their terms, and the Issuer and Trustee shall at all times, to the extent permitted by law, defend, preserve and protect said pledge an( assignment of Revenues and other assets and all the rights of the owners of the Bonds under this Indenture against all clair and demands of all Persons relating to the Bonds and will takt all reasonable actions contemplated under the Loan Documents 1
preserve the exclusion of interest on the Bonds from gross income for federal income tax purposes.
SECTION 703. FURTHER ASSURANCES. Except to the extent otherwise provided in this Indenture, the Issuer shall not enter into any contract or take any action by which the right; of the Trustee, the Bank or the Registered Owners may be impaired and shall, from time to time, execute and deliver su(
reasonably necessary or proper to carry out the purposes of
this Indenture.
further instruments and take such further action as may be
SECTION 704. IMMUNITIES AND LIMITATIONS OF RFSPONSIBILITJ
OF ISSUER. The Issuer shall be entitled to the advice of Counsel (who, except as otherwise provided, may be counsel fo~ any Registered Owner), and the Issuer shall be wholly protectt as to action taken or omitted in good faith in reliance on SUC
advice. The Issuer may rely conclusively on any communicatior or other document furnished to it hereunder and reasonably
believed by it to be genuine. The Issuer shall not be liable for any action (a) taken by it in good faith and reasonably believed by it to be within its discretion or powers hereunder or (b) in good faith omitted to be taken by it because such action was reasonably believed to be beyond its discretion or powers hereunder, or (c) taken by it pursuant to any directior
or instruction by which it is governed hereunder, or (d)
omitted to be taken by it by reason of the lack of any
direction or instruction required hereby for such action; nor shall it be responsible for the consequences of any error of judgment reasonably made by it. The Issuer shall in no event be liable for the application or misapplication of funds or fc other acts or defaults by any person, except its own officers and employees. When any payment or consent or other action bl it is called for hereby, it may defer such action pending receipt of such evidence (if any) as it may require in support thereof. The Issuer shall not be required to take any remedi: action (other than the giving of notice) unless indemnity in E form acceptable to the Issuer is furnished for any expense or liability to be incurred in connection with such remedial action, other than liability for failure to meet the standard: set forth in this Section. The Issuer shall be entitled to
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reimbursement for its expenses reasonably incurred or advance:
in the enforcement of its rights or remedies hereunder, to the extent that it acts without previously obtaining indemnity, 1 permissive right or power to act which the Issuer may have
shall be construed as a requirement to act; and no delay in tl exercise of a right or power shall affect its subsequent exercise of the right or power.
reasonably made, with interest at the Maximum Permitted Rate,
SECTION 705. ADDITIONAL INSTRUMENTS. The Issuer shall execute or cause to be executed any and all further instrumenl
as may be required by law or as shall reasonably be requested by the Trustee for protection of the interests of the Trustee and the Registered Owners, and shall furnish satisfactory evidence to the Trustee of filing and refiling of .such instrument and of every additional instrument which shall be necessary to preserve the lien of this Indenture upon the Trus Estate or any part thereof until the principal of, premium, if any, Purchase Price of and interest on the Bonds issued hereunder shall have been paid. The Trustee shall execute or join in the execution of any such further or additional instruments and file or join in the filing thereof at such tin or times and in such place or places as it may be advised by E opinion of Counsel selected by the Trustee will preserve the lien of this Indenture upon the Trust Estate or any part thereof until the aforesaid principal, premium, if any, Purchase Price of and interest shall have been paid.
SECTION 706, EXTENSION OF PAYMENT OF BONDS, The Issuer
shall not directly or indirectly extend or assent to the extension of the maturity of any of the Bonds or the time of payment of any of the claims for interest by the purchase or
funding of such Bonds or claims for interest or by any other arrangement, and in case the maturity of any of the Bonds or the time of payment of any such claims for interest shall be extended, such Bonds or claims for interest shall not be entitled, in case of any default hereunder, to the benefits of
this Indenture, except subject to the prior payment in full of the principal of all of the Bonds then Outstanding and of all claims for interest thereon which shall not have been so
extended. Nothing in this Section shall be deemed to limit th right of the Issuer to issue bonds for the purpose of refundin any Outstanding Bonds, and such issuance shall not be deemed t constitute an extension of maturity of the Bonds.
SECTION 707. AGAINST ENCUMBRANCES. The Issuer shall not,
nor shall the Issuer permit any party over which it has contro
to, create, or permit the creation of, any pledge, lien,
charge or other encumbrance upon the Trust Estate while any of the Bonds are Outstanding, except for the pledge and assignmen
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created by this Indenture and except for any pledge, lien, change or other encumbrance required under the Reimbursement Agreement. Subject to this limitation, the Issuer expressly
reserves the right to enter into one or more other indentures for any of its corporate purposes, including the financing of multifamily residential developments other than the Project ar
obligations for such purposes. for refunding the Bonds, and reserves the right to issue other
SECTION 708. ACCOUNTING RECORDS AND REPORTS. The Trustec shall at all times keep proper books of record and account in
which complete and accurate.entries shall be made of all transactions made by it relating to the proceeds of Bonds, the Revenues, the Trust Estate and all Funds and Accounts established pursuant to this Indenture. Such books of record and account shall be available for inspection by the Issuer, the Bank, the Owner, by any Registered Owner or agent or representative thereof duly authorized in writing, between the hours of 9:00 a.m. and 5:OO p.m., upon written notice given at least 24 hours prior to such inspection. Not later than forty-five (45) Business Days following each scheduled Interes Payment Date, the Trustee shall prepare and file with the Finance Director of the Issuer, the Bank and the Owner a repor
setting forth: (i) amounts withdrawn from and deposited in each Fund and Account: (ii) the balance an deposit in each Fun and Account as of the Interest Payment Date for which such report is prepared, (iii) a brief description of all obligations held as investments in each Fund and Account; and (iv) the amount applied to the payment or redemption of Bonds. Copies of such reports may be mailed or delivered to any owner of any Bond upon request at a cost to such owner not to exceed the Trustee's actual costs of duplication and mailing or delivery.
SECTION 709. PAYMENT OF TAXES AND CLAIPIS. The Issuer shall pay, from time to time, or cause the Trustee to pay, but only out of funds, if any, made available by' the Owner expressly for such purposes, any property taxes, assessments o other governmental charges that may be lawfully imposed upon the Trust Estate, when the same shall become due if not paid b the Owner, as well as any lawful claim which, if unpaid, might
by law become a lien or charge upon the Trust Estate or which might impair the security of the Bonds.
SECTION 710. RIGHTS UNDER THE LOAN DOCUMT3NTS. The Loan Documents set forth certain covenants and obligations of the Issuer, the Trustee and the Owner and reference is hereby made to such documents for a detailed statement of such covenants and obligations. So long as any of the Bonds remain Outstanding, the Issuer and the Trustee shall, subject to the
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provisions of this Indenture and the Intercreditor Agreement, faithfully and punctually perform and observe all obligations
and undertakings on their part to be performed and observed under the Loan Documents.
Except as expressly permitted by this Indenture and the Loan Documents, the Issuer and the Trustee covenant not to knowingly take any action, knowingly permit any action to be taken by others within their control and shall not knowingly omit to take any action within their control, which action or omission might release the Owner from its liabilities or obligations under the Loan Documents or result in the
surrender, termination, amendment or modification of, or impai the validity of, such documents.
The Issuer covenants to enforce diligently all covenants, undertakings and obligations of the Owner under the Loan Documents and hereby authorizes and directs the Trustee
(subject in all cases to the provisions of Article IX hereof)
on behalf of the Issuer and the owners of the Bonds subject tc
limitations on such rights contained in the Intercreditor Agreement. The Trustee shall not be responsible for monitorir or verifying compliance by the Owner with the terms of the Lo: Documents other than the failure to receive any payment when due.
to enforce any and all of its rights under the Loan Documents
The Trustee shall retain possession of one set of the executed originals of the Loan Documents and shall release san only in accordance with the provisions thereof. The Loan Documents shall be available for inspection at reasonable times, under reasonable conditions, and with reasonable prior notice, by the Issuer, the Bank, the Remarketing Agent, the Owner and any owner of any Bond.
SECTION 711. FEDERAL TAX COVENANTS. Notwithstanding any other provision of this Indenture, absent an opinion of Bond Counsel that the exclusion from gross income of interest on tl Bonds or the Prior Bonds will not be adversely affected for federal income tax purposes, the Issuer covenants to comply with all applicable requirements of the Code and the Prior COC necessary to preserve such exclusion from gro,ss income and specifically covenants, without limiting the generality of thc foregoing, as follows:
(a) Arbitrage. The Issuer will not make any use of the proceeds of the Bonds or the Prior Bonds or of any other amounts or property, regardless of the source, or take or omil to take any action which will cause the Bonds to be "arbitrag<
bonds" within the meaning of Section 148 of the Code;
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(b) Federal Guarantee. The Issuer will not make an1 use of the proceeds of the Bonds or the Prior Bonds or take 01 omit to take any action that would cause the Bonds or the Pric Bonds to be "federally guaranteed" within the meaning of Section 103(h) of the Prior Code;
(c) Information Reportinq. The Issuer will take or
cause to be taken all necessary action to comply with the informational reporting requirement of Section 149(e) of the Code; and.
(d) Miscellaneous. The Issuer will not take any action inconsistent with its expectations stated in that
certain Tax Certificate executed on the Bond Issuance Date by
will comply with the covenants and requirements stated thereir and incorporated by reference herein.
the Issuer in connection with the issuance of the Bonds and
SECTION 712. COMPLIANCE WITH INDENTURE, CONTRACTS, LAWS AND REGULATIONS. The Issuer shall faithfully observe and. perform all the covenants, conditions and requirements of this Indenture, shall not issue any Bonds in any manner other than in accordance with this Indenture, and shall not exercise its discretion in any way that might materially weaken, diminish o impair the security intended to be given pursuant to this Indenture. Subject to the limitations and consistent with the covenants, conditions and requirements contained in this Indenture, the Issuer shall comply with the terms, covenants and provisions of all contracts concerning or affecting the application of proceeds of the Bonds or the Revenues. The Issuer and the Trustee shall comply promptly, fully and
order, rule or regulation, judgment, decree or requirement nok in force or hereafter enacted, adopted, prescribed, imposed or entered by any competent governmental authority or agency applicable to or affecting the Project of which they have received written notice.
faithfully with and abide by any statute, law, ordinance,
SECTION 713. MAINTENANCE OF POWERS. As long as any of th Bonds are Outstanding, the Issuer shall preserve its existence as a legal subdivision and body corporate and politic of the State, and will not be dissolved or lose its right to exist as such or lose any rights necessary to enable it to function and to maintain the Revenues. The Issuer shall at all times use its best efforts to maintain the powers, functions, duties and
obligations now reposed in it pursuant to law, or assure the assumption of its obligations under the Loan Agreement, the
Regulatory Agreement and this Indenture by any municipal corporation or other entity succeeding to its powers, and will not at any time voluntarily do, suffer or permit any act or
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thing the effect of which would be to hinder, delay or imperil either the payment of the indebtedness evidenced by any of the
contained.
Bonds or the observance of any of the covenants herein
ARTICLE VI11
DEFAULT PROVISIONS AND REMEDIES OF TRUSTEE AND REGISTERED OWNERS
SECTION 801. DEFAULTS; EVENTS OF DEFAULT. If any of the following events occurs, it is hereby defined as and declared to be and to constitute a Default and an Event of Default:
(a) Failure to make due and punctual payment of any installment of interest upon any Bond when the same shall have become due and payable;
(b) Failure to make due and punctual payment of the principal of or premium, if any, on any Bond, whether at the stated maturity thereof, or upon proceedings for redemption thereof or upon the maturity thereof by declaration;
(e) Any representation or warranty made by the Issuf
in this Indenture or the Bonds shall be reasonably determined by the Trustee to have been untrue in any material respect when made or any failure by the Issuer tc observe and perform any covenant, condition or agreement c its part to be observed and performed under the Indenture or the Bonds, other than as referred to in subsections (a) or (b) of this Section, for a period of sixty (60) days after written notice specifying such breach or failure ant requesting that it be remedied, given to the Issuer and tt. Registered Owners by the Trustee or to the Issuer and the Trustee by the owners of not less than twenty-five (25) percent in aggregate principal amount of the Bonds then
Outstanding, unless (i) the Trustee shall agree in writin: to an extension of such time prior to its expiration or (ii) if the breach or failure be such that it cannot be corrected within the applicable period, corrective action is instituted by the Issuer within the applicable period
and is being diligently pursued; and
(dl Failure to pay the Purchase Price for the Bonds delivered pursuant to Article XI hereof.
SECTION 802. ACCELERATION OF MATURITIES. Subject to thc provisions of the Intercreditor Agreement, upon the occurrence
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of an Event of Default (other than an Event of Default described in subsection (c) of Section 801 hereof), the Trust6
shall, or in the case of an Event of Default described in subsection (c) of Section 801 hereof, the Trustee may, declarc the principal of all of the Bonds-then Outstanding, and the interest accrued to the date of acceleration, to be due and payable immediately, and upon any such declaration the same shall become and shall be immediately due and payable, anythi1 contained in this Indenture or in the Bonds to the contrary notwithstanding.
Upon such acceleration, the Trustee shall provide the
acceleration, and the Trustee (i) shall draw on the Letter of Credit as provided below, and (ii) immediately after the Bank honors the Trustee's request to draw upon the Letter of Credi. shall transfer all funds held by the Trustee to the Bank (except any amounts drawn under the Letter of Credit and any Seasoned Funds to be applied to pay the Bonds or other funds
and (iii) shall take such action as is necessary to pay the
Bonds out of such moneys at the earliest possible date after providing the Registered Owners with a notice of default and acceleration as provided in Section 803 hereof. The amount drawn under the Letter of Credit shall equal the aggregate unpaid principal and interest on the Outstanding Bonds to the payment date fixed by the Trustee. The Trustee also shall ta whatever additional action at law or in equity may appear necessary or desirable to the Trustee to collect the moneys necessary to pay the principal of and accrued interest on the Bonds to the accelerated payment date.
Registered Owners with an appropriate notice of default and
required to make the payments set forth in Section 803 hereof
Nothing contained in this Section, however, shall be construed to allow the Trustee to permit its rights on behalf of the Registered Owners under the Letter of Credit to be
reduced, to lapse or otherwise be extinguished.
SECTION 803. APPLICATION OF MONEYS. All moneys received by the Trustee pursuant to any right given or action taken under the provisions of this Article shall, after payment of the reasonable costs and expenses of the proceedings resultin in the collection of such moneys and of the reasonable expenses, liabilities and advances incurred or made by the Trustee and its Counsel and of all other amounts then owing f any Ordinary Services, Ordinary Expenses, Extraordinary Services and Extraordinary Expenses, be deposited in the Revenue Fund and all such moneys in the Revenue Fund shall be
applied to the payment of the principal and interest then due and unpaid upon the Outstanding Bonds (other than Pledged Bonds), without preference or priority of any kind, ratably,
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according to the amounts due and payable on such Bonds for principal, Purchase Price and interest, respectively, to the persons entitled thereto without any discrimination or
privilege; provided, however, that Seasoned Funds, funds dram under the Letter of Credit and amounts on deposit in the Debt Service Fund and the Purchase Fund shall be used solely to pal the Purchase- Price, principal of, premium, if any, and interes on the Bonds or to reimburse the Bank for excess drawings undc the Letter of Credit to pay the foregoing and shall not be applied to pay any other expenses a
Whenever moneys are to be applied pursuant to the provisions of this Section, such moneys shall be applied at such times, and from time to time, as the Trustee shall
determine. Whenever the Trustee shall apply such moneys, it shall fix the date in accordance with Section 802 upon which such application is to be made and upon such date interest on the amount of principal to be paid on such date shall cease tc accrue. The Trustee shall give such notice as it may deem appropriate of the deposit with it of any such moneys and of the fixing of any such date.
Whenever all principal of, premium, if any, and interest ( all Bonds (other than Pledged Bonds) have been paid under the provisions of this Section and all expenses and charges of thl Trustee have been paid, any balance remaining in all Funds ani Accounts, except amounts on deposit in the Rebate Fund, shall
be paid to the Bank as provided in Section 310 hereof.
SECTION 804. TRUSTEE TO REPRESENT REGISTERED OWNERS. Th Trustee is hereby irrevocably appointed (and the successive
shall be conclusively deemed to have so appointed the Trustee as trustee and true and lawful attorney-in-fact of the
Registered Owners for the purpose of exercising and prosecuti on their behalf such rights and remedies as may be available such Registered Owners under the provisions of the Bonds and this Indenture, as well as under the applicable provisions of
any law. Subject to the provisions of the Intercreditor Agreement (as long as the Letter of Credit is outstanding and the Bank is not in default of its obligations thereunder) up0
the occurrence and continuance of any Event of Default or 0th occasion giving rise to a right in the Trustee to represent t Registered Owners, the Trustee in its discretion may, and up0 the written request of the Bank or the Registered Owners of n less than 25 percent in aggregate principal amount of the Bon then Outstanding, and upon being indemnified to its satisfaction therefor, shall proceed to protect or enforce it rights or the rights of the Registered Owners by such
appropriate suit, action, mandamus or other proceedings as it
respective Registered Owners, by taking and holding the Bonds
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shall deem most effectual to protect and enforce any such right, at law or in equity, either for the specific performanc of any covenant or agreement contained herein, or in aid of th execution of any power herein granted, or for the enforcement of any other appropriate legal or equitable right or remedy vested in the Trustee or in the Registered Owners under this Indenture, the Bonds or any law; and upon instituting such
right, to the appointment of a receiver of the Revenues and
other assets pledged under this Indenture, pending such
proceeding, the Trustee shall be entitled, as a matter of
proceedings.
All rights of action under this Indenture or the Bonds or otherwise may be prosecuted and enforced by the Trustee with01 the possession of any of the Bonds or the production thereof i any proceedings relating thereto, and any such suit, action 01 proceeding instituted by the Trustee shall be brought in the
name of the Trustee for the benefit and protection of all the Registered Owners, subject to the provisions of this Indenturt
In addition, subject to the provisions of the Intercreditc Agreement, the Trustee may, without the consent of the Issuer or the Owner, after giving them at least five days' written notice of any intended action, exercise any and all remedies afforded the Issuer under the Loan Documents in its name or tl
name of the Issuer.
SECTION 805. REGISTERED OWNERS' DIRECTION OF PROCEEDINGS Anything in this Indenture to the contrary notwithstanding an( subject to the terms of the Intercreditor Agreement (as long i the Letter. of Credit is outstanding and the Bank is not in default of its obligations thereunder) the Registered Owners ( at least a majority in aggregate principal amount of the Bond; then Outstanding shall have the right, by an instrument or concurrent instruments in writing executed and delivered to tl Trustee and upon tendering to the Trustee indemnification satisfactory to it, to direct the method of conducting all remedial proceedings taken by the Trustee hereunder, provided that such direction shall not be otherwise than in accordance with law and the provisions of this Indenture and the Intercreditor Agreement, and that the Trustee shall have the right to decline to follow any such direction which in the
opinion of the Trustee would be unjustly prejudicial to
Registered Owners not parties to such direction. In forming such opinion, the Trustee may rely on the opinion of Counsel selected by the Trustee.
SECTION 806. LIMITATION ON REGISTERED OWNERS' RIGHT TO
SUE. No Registered Owner shall have the right to institute a. suit, action or proceeding at law or in equity, for the
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protection or enforcement of any right or remedy under this
unless (A) such Registered Owner shall have given to the Trustee and the Bank written notice of the occurrence of an Event of Default; (B) the Registered Owners of not less than 2 percent in aggregate principal amount of the Bonds then Outstanding shall have made written request upon the Trustee t exercise the powers hereinbefore granted or to institute such suit, action or proceeding in its own name; (C) such Register€
against the costs, expenses and liabilities to be incurred in
compliance with such request; and (D) the Trustee shall have refused or omitted to comply with such request for a period oj
60 days after such written request shall have been received bl and said tender of indemnity shall have been made to, the Trustee.
Indenture or any applicable law with respect to any Bond,
Owners shall have tendered to the Trustee reasonable indemnit)
Such notification, request, tender of indemnity and refus;
conditions precedent to the exercise by any Registered Owner ( any remedy hereunder or under law; it being understood and intended that no one or more Registered Owners shall have any right in any manner whatever by his or their action to affect, disturb or prejudice the security of this Indenture or the rights of any other Registered Owners, or to enforce any righl under this Indenture, or other applicable law with respect to the Bonds, except in the manner herein provided, and that all .proceedings at law or in equity to enforce any such right sha: be instituted, had and maintained in the manner herein provid( and for the benefit and protection of all owners of Outstandi~ Bonds, subject to the provisions of this Indenture. Nothing : this Indenture, however, affects or impairs the right of any Registered Owner to enforce the payment of the principal of,
premium, if any, Purchase Price and interest on any Bond at 01 after the due dates thereof, or the obligation of the Issuer . cause to be paid the principal of, premium, if any, and
interest on each of the Bonds issued under the Indenture to tl
respective owners thereof at the time and place, from the sources and in the manner expressed in the Bonds and in this Indenture.
or omission are hereby declared, in every case, to be
SECTION 807. LIMITED OBLIGATION OF ISSUER. Nothing contained in Section 8.06 or in any other provision of this Indenture, or in the Bonds, shall affect or impair the obligation of the Issuer, which is absolute and unconditional to pay the Purchase Price, the principal or redemption price and interest on the Bonds to the respective Registered Owners of the Bonds at their date of maturity, or upon call for redemption, as herein provided, but only from the Trust Estat pledged therefor, or affect or impair the right of such
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Registered Owners, which is also absolute and unconditional, t enforce such payment by virtue of the contract embodied in the Bonds.
SECTION 808. TERMINATION OF PROCEEDINGS. In case any proceedings taken by the Trustee or any one or more Registered
discontinued or abandoned for any reason or shall have been
determined adversely to the Trustee or the Registered Owners, then in every such case the Issuer, the Trustee, the Bank, the Owner and the Registered Owners, subject to any determination
in such proceedings, shall be restored to their former positions and rights hereunder, severally and respectively, ar
Trustee, the Bank, the Owner and the Registered Owners shall continue as though no such proceedings had been taken.
Owners on account of any Event of Default shall have been
all rights, remedies, powers and duties of the Issuer, the
SECTION 809. REMEDIES NOT EXCLUSIVE. No remedy herein conferred upon or reserved to the Trustee or to the Registerec Owners is intended to be exclusive of any other remedy or remedies, and each and every such remedy, to the extent permitted by law, shall be cumulative and in addition to any other remedy given hereunder or now or hereafter existing at law or in equity or otherwise.
SECTION 810. NO WAIVER OF DEFAULT. No delay or omission of the Trustee or of any Registered Owner to exercise any rig1 or power arising upon the occurrence of any Event of Default shall impair any such right or power or shall be construed to be,a waiver of any such default or an acquiescence therein; ar every power and remedy given by this Indenture to the Trustee or to the Registered Owners may be exercised from time to timG and as often as may be deemed expedient.
SECTION 811. WAIVERS OF EVENTS OF DEFAULT. Provided that all payments of interest, principal and Purchase Price due anc owing on the Bonds have been paid and provided further that tl Letter of Credit is then in full force and effect and has bee1 reinstated to its full face amount (less the aggregate principal amount of any Pledged Bonds) and the Bank is not in default of its payment obligations thereunder, the Trustee in its discretion may or, upon the written demand of the Bank or the owners of not less than a majority in aggregate principal amount of all Bonds Outstanding shall, waive any Event of Default hereunder and rescind its consequences; provided,
however, that the Trustee may not waive any Events of Default which constitute a breach of a covenant set forth in Section
504 or 711 hereof or any other covenant with respect to the exclusion from gross income for federal income tax purposes 0: interest on the Bonds unless there has been delivered to the
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Trustee an opinion of Bond Counsel to the effect that such waiver will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds. In the case of any such waiver and rescission, the
Issuer, the Trustee, the Bank and the Owner and the Registered Owners shall be restored to their former positions and rights
shall extend to any subsequent or other default, or impair an5
shall be in writing and a copy thereof shall be delivered to the Issuer, the Bank, the Remarketing Agent and to the Owner.
hereunder, respectively, but no such waiver and rescission
r.ight consequent thereon. All waivers under this Indenture
ARTICLE IX
THE TRUSTEE AND THE PAYING AGENT
SECTION 901. APPOINTMENT, DUTIES, IMMUNITIES AND LIABILITIES OF TRUSTEE.
(a) The Issuer hereby appoints First Trust of California, National Association, as Trustee and principal Paying Agent ar designates the Principal Office of the Trustee as the princip? place of payment for the Bonds, such appointment and
designation to remain in effect until notice of change is file with the Trustee. The Trustee shall, prior to an Event of Default, and after the curing of all Events of Default which may have occurred, perform such duties and only such duties a2 are specifically set forth in this Indenture, the Loan Agreement, the Intercreditor Agreement and the Regulatory Agreement. The Trustee shall, during the existence of any Event of Default (which has not been cured), exercise such of the rights and powers expressly vested in it by this Indenturc the Loan Agreement, the Intercreditor Agreement and the Regulatory Agreement and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person's affairs. All references to the Trustee in this Article IX include references to the Trustee when it is acting as Paying Agent and Bond Registrar.
(b) The Issuer may remove the Trustee at any time following consultation with the Bank unless an Event of Defau:
shall have occurred and then be continuing, and shall remove the Trustee if (i) at any time requested to do so by an instrument or concurrent instruments in writing signed by the Registered Owners of not less than a majority in aggregate principal amount of the Bonds then Outstanding (or their attorneys duly authorized in writing) or (ii) if at any time
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the Trustee shall cease to be eligible in accordance with subsection (e) of this Section, or shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or its property shall be appointed, 01 any public officer shall take control or charge of the Trustet
or of its property or affairs for the purpose of rehabilitation, conservation or liquidation; in each case by giving written notice of such removal to the Trustee, the Ban1 the Remarketing Agent and the Owner, and thereupon shall appoint a successor Trustee by an instrument in writing.
(c) The Trustee may resign at any time by giving written notice of such resignation to the Issuer, the Owner and the
Bank by registered or certified mail, and to the Registered Owners by first-class mail. Upon receiving such notice of resignation, the Issuer shall promptly appoint a successor Trustee following consultation with the Bank by an instrument in writing pursuant to the procedure set forth in subparagrapl
( b) above.
(dl Any removal or resignation of the Trustee and appointment of a successor Trustee shall become effective upo: acceptance of appointment by the successor Trustee and upon transfer of the Letter of Credit to the successor Trustee in accordance with the terms of the Letter of Credit. Promptly upon such acceptance, the Issuer shall notify the Registered Owners, the Owner, the Remarketing Agent and the Bank in writing. If no successor Trustee shall have been appointed ai have accepted appointment within forty-five (45) days of givi! notice of removal or notice of resignation as aforesaid, the resigning Trustee or any Registered Owner (on behalf of such Registered Owner and all other Registered Owners) may petitio: any court of competent jurisdiction for the appointment of a successor Trustee, and such court may thereupon, after such notice (if any) as it may deem proper, appoint such successor
Trustee. Any successor Trustee appointed under this Indenturl shall signify its acceptance of such appointment by executing and delivering to the Issuer and to its predecessor Trustee a
written acceptance thereof, and thereupon such successor Trustee, without any further act, deed or conveyance, shall become vested with all the moneys, estates, properties, right powers, trusts, duties and obligations of such predecessor Trustee, with like effect as if originally named Trustee
herein; but, nevertheless at the request of the Issuer or the request of the successor Trustee, such predecessor Trustee shall execute and deliver any and all instruments of conveyan
or further assurance and do such other things as may reasonab be required for more fully and certainly vesting in and confirming to such successor Trustee all the right, title and interest of such predecessor Trustee in and to any property
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held by it under this Indenture and shall pay over, transfer, assign and deliver to the successor Trustee any money or other property subject to the trusts and conditions herein set forth. Upon request of the successor Trustee, the Issuer shal
reasonably required for more fully and certainly vesting in a1 confirming to such successor Trustee all such moneys, estates, properties, rights, powers, trusts, duties and obligations.
The Trustee's .rights to indemnification hereunder and to payment of its fees and expenses shall survive its resignatiol or removal and the final payment or defeasance of the Bonds.
execute and deliver any and all instruments as may be
(e) Any Trustee appointed under the provisions of this
company or commercial bank having trust powers and having a corporate trust office located within the State, having a combined capital and surplus of at least fifty million dollar!
($50,000,000), and subject to supervision or examination by federal or state authority, and (2) as long as the Letter of Credit is in effect shall execute or assume all of the Trustee's obligations under the Intercreditor Agreement as a condition to appointment hereunder. If such bank or trust company publishes a report of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority above referred to, then for the purpose 0: this Section the combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition sc published. In case at any time the Trustee shall cease to be eligible in accordance with the provisions of this subsection (e), the Trustee shall resign immediately in the manner and
Indenture in succession to the Trustee shall (1) be a trust
with the effect specified in this Section.
(f) Any company into which the Trustee may be merged or converted or with which it may be consolidated or any company resulting from any merger, conversion or consolidation to whil
it shall be a party or any company to which the Trustee may sell or transfer all or substantially all of its corporate trust business, provided such company shall be eligible under subsection (e) of this Section, shall be the successor to sucl Trustee without the execution or filing of any paper or any further act, anything herein to the contrary notwithstanding,
except that the Trustee shall promptly notify the Issuer in writing of any such proposed merger, conversion or consolidation.
(9) The permissive right of the Trustee to do things
enumerated or contemplated by this Indenture or by the Regulatory Agreement or the Loan Agreement shall not be construed as a duty and the Trustee shall not be liable in th
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performance of its obligations hereunder or under the Regulatory Agreement or the Loan Agreement except to the exten (a) such liability is due to its negligence or willful misconduct or (b) the Trustee is otherwise liable as provided
in Section 903 hereof.
(h) The Trustee shall not be required to take notice or k
deemed to have notice of any Event of Default (other than a default under Section 801(a), (b) or (a)), or breach of covenant hereunder, under the Regulatory Agreement, the Loan Agreement or any other agreement to which the Trustee is a
party, except the failure of the Issuer to cause to be made an of the payments to the Bond owners required to be made by Article I11 or XI hereof, unless and until the Trustee shall I: specifically notified in writing of such Event of Default by
the Issuer, by the Registered Owners of at least twenty-five percent (25%) in aggregate principal amount of all Bonds then Outstanding or by the Bank.
(i) The Trustee shall not be required to give any bonds c surety in respect of the execution of its trusts and powers hereunder.
(j) Except for the actions required to be taken by the Trustee pursuant to Sections 309 and 802 hereof as to drawinyE
under the Letter of Credit, before takiny any action under
Article VI11 hereof or this Section at the request or directic of the Bank, the Registered Owners or the Owner, the Trustee may require that an indemnity bond satisfactory to the Trustee in its sole discretion be furnished by the Bank, the Registere Owners or the Owner, as the case may be, for the reimbursement of all expenses which it may incur and to protect it against all liability, except to the extent (a) liability is adjudicated to have resulted from its negligence or willful misconduct in connection with any action so taken, or (b) the Trustee is otherwise liable as provided in Section 903 hereof. Notwithstanding anything to the contrary herein contained, the Trustee shall not be entitled to seek indemnity as a conditior precedent to drawing under the Letter of Credit, paying owners of Bonds from funds drawn under the Letter of Credit or effecting mandatory purchases or redemptions of Bonds.
(k) All moneys received by the Trustee or any Paying Ager
shall, until used or applied or invested as herein provided, 1 held in trust for the purposes for which they were received ar shall not be commingled with the general funds of the Trustee or any Paying Agent, but need not be segregated from other funds except to the extent required by law; provided, however, that pursuant to Sections 305 and 308 hereof, amounts on deposit in the Letter of Credit Account, the Purchase Fund, tl
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Seasoned Funds Account and the Insurance Proceeds Account may
not be commingled with any other funds or accounts.
(1) No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur an] financial liability in the performance of any of its duties
hereunder or under the Regulatory Agreement or the Loan Agreement, or in the exercise of any of its rights or powers, if it shall believe that repayment of such funds or adequate indemnity against such risk or liability is not assured to itt
(m) The Trustee will not be responsible for the recordin?
re-recording, filing of financing statements, continuation statements, and other documents with respect to the Indenture and Loan Documents.
(n) Whether or not herein or therein expressly provided, every provision of this Indenture and the Loan Documents relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the
provisions of this Article IX.
SECTION 902. FEES, CHARGES AND EXPENSES OF TRUSTEE AND
PAYING AGENT. Under Section 5.l(d) of the Loan Agreement, the Owner agrees to pay to the Trustee all. reasonable fees for it: Ordinary Services rendered hereunder or under the Regulatory Agreement or the Loan Agreement and all advances, Counsel fee: .and expenses and other Ordinary Expenses reasonably made or incurred by the Trustee and any Paying Agent, in connection with such Ordinary Services. In addition, in the event that the Trustee or any Paying Agent performs Extraordinary Services, the Owner agrees to pay to the Trustee reasonable extra compensation for Extraordinary Expenses in connection therewith except to the extent (a) Extraordinary Services or Extraordinary Expenses are occasioned by the negligence or willful misconduct of the Trustee or any Paying Agent, or (b) the Trustee or any Paying Agent is otherwise liable as providc in Section 903 hereof,
The Trustee agrees to look solely to the Owner for the payment of its fees and expenses; provided that upon the occurrence of an Event of Default (which has not been cured 01 waived), the Trustee s-hall have a lien against the Trust Estai which lien (exclusive of the proceeds of the Letter of Credit Seasoned Funds or moneys on deposit in the Purchase Fund) sha: be prior to the lien of the Registered Owners.
SECTION 903. LIABILITY OF TRUSTEE. The recitals of fact: herein and in the Bonds, the Loan Agreement and the Regulator]
Agreement contained shall be taken as statements of the Issue:
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and the Trustee assumes no responsibility or liability whatsoever for the correctness of the same, and makes no representation as to the validity or sufficiency of this
the Bonds or as to the value or condition of the Trust Estate or as to the title of the Issuer thereto or as to the securitl
afforded thereby or as to the financial ability of the Project and shall incur no responsibility or liability whatsoever in respect thereof, other than in connection with the express duties or obligations herein, in the Loan Agreement, the Regulatory Agreement or in the Bonds assigned to or imposed upon it, The Trustee shall, however, be responsible for its representations contained in its certificate of authenticatior on the Bonds. The Trustee is not responsible and shall have r
warranty concerning the sufficiency, validity or priority of this Indenture, the Loan Documents, the Bonds, the Letter of Credit or the transfer of the Revenues and other assets of thc Trust Estate to the Trustee hereunder. The Trustee and the Issuer make no representation or warranty concerning and have made no independent investigation as to the financial or technical feasibility of the Project, the creditworthiness of
the Owner or the Bank, or the validity or adequacy of the Letter of Credit. The Trustee shall not be responsible and shall have no liability whatsoever for the application of any moneys disbursed upon requisition to or at the order of the Issuer in accordance with the terms and conditions hereof but shall be responsible for the application of moneys received under the Letter of Credit in accordance with the provisions c this Indenture.
Indenture, the Loan Agreement, the Regulatory Agreement or of
liability whatsoever for and makes no representation or
The Trustee may become the owner of Bonds with the same rights it would have if it were not Trustee, and, to the exter permitted by law, may act as depositary for and permit any of its officers or directors to act as a member of, or in any other capacity with respect to, any committee formed to protec the rights of Registered Owners, whether or not such committee shall represent the Registered Owners of a majority in
principal amount of the Bonds then Outstanding.
SECTION 904. RIGHT OF TRUSTEE TO RELY ON DOCUMENTS. The Trustee shall be protected hereunder or under the Regulatory Agreement or the Loan Agreement in acting upon any notice, resolution, request, consent, order, certificate, report, opinion, bond or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties, including, without limitation, all funding and disbursement requisitions and notices. The Trustee shall not be bound to make any investigation into facts or matters
stated in any such notice, resolution, request, consent, order
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certificate, report, opinion, bond or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit. The Trustee may consult with Counsel selected by thc Trustee, with regard to legal questions, and the advice or opinion of such Counsel shall be full and complete authorization and protection in respect of any action taken 01
suffered by the Trustee with respect to such legal questions i good faith and in accordance therewith.
it by this Indenture or pursuant to the Regulatory Agreement c the Loan Agreement the Trustee shall deem it necessary or
desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a certificate of the Issuer, and such certificate shall be full warranty to the Trustee for any action taken or suffered in good faith under the provisions of this Indenture in reliance upon such certificate, but in its discretion the Trustee may, in lieu thereof, accept other evidence of such matter or may require such additional evidenc as it deems appropriate.
Whenever in the administration of the trusts imposed upon
SECTION 905, INTERVENTION BY TRUSTEE, In any judicial
proceedings to which the Issuer is a party and which in the
opinion of the Trustee and its Counsel have a substantial bearing on the interests of the owner of the Bonds, the Truste may in its discretion intervene on behalf of the Registered Owners and, upon being indemnified to its satisfaction therefor, shall do so if requested in writing by the owners of a majority in aggregate principal amount of all Bonds then Outstanding.
SECTION 906. DESIGNATION OF AND SUCCESSOR PAYING AGENT; AGREEMENT WITH PAYING AGENT. The Trustee shall be a Paying Agent for the Bonds, and the Trustee is hereby authorized to appoint one or more other Paying Agents, which Paying Agents may receive such fees as are approved by the Issuer and the Owner, which fees shall be at a reasonable market rate. Any Paying Agent appointed under the provisions of this Section
shall be a commercial bank or trust company. The Trustee may remove or replace any Paying Agent by written instrument, whic: removal or replacement shall not require any consents or approvals. The Trustee shall notify all Registered Owners, th. Issuer and the Bank by mail of any appointment, removal or
replacement of the Paying Agent, such notice to include the name and address of the then appointed Paying Agent, if any.
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Any commercial bank or trust company with or into which ar Paying Agent may be merged or consolidated, or to which the assets and business of such Paying Agent may be sold, shall bc
deemed the successor of such Paying Agent for the purposes of this Indenture. If the position of Paying Agent shall become vacant for any reason, the Issuer may appoint a commercial ba1
or trust company located in the same city as such Paying Agenl to fill such vacancy. The Paying Agent shall enjoy the same
protective provisions in the performance of its duties hereunder as are specified in Sections 901, 902, 903 and 904 hereof with respect to the Trustee insofar as such provisions may be applicable.
ARTICLE X
SUPPLEMENTAL INDENTURES
SECTION 1001. AMENDMENTS REQUIRING CONSENT OF REGISTERED OWNERS. This Indenture and the rights and obligations of the Issuer, the Registered Owners and the Trustee may be modified or amended at any time by a Supplemental Indenture which shall become effective upon receipt of the consent of the Bank, the Owner and when the written consents of the owners of more thar
50 percent in aggregate principal amount of the Bonds then Outstanding shall have been filed with the Trustee. No such modification or amendment shall (1) extend the stated maturitl of any Bond, or reduce the amount of principal thereof, or reduce the rate of interest thereon, or alter the method for determining the applicable interest rate (except as expressly provided in this Indenture), or extend the time of payment of interest thereon, or reduce any premium payable upon the redemption thereof, or (2) reduce the aforesaid percentage of Bonds the consent of the owners of which is required to effect
any such modification or amendment, or (3) permit the creatior of any lien on the Trust Estate prior to or on a parity with
the lien created by this Indenture, or deprive the Registered
Owners of the lien created by this Indenture upon the Trust Estate (except as expressly provided in this Indenture),
without in each case the consent of the Registered Owners of
100% of Outstanding Bonds which are affected by the modification or amendment. So long as the Bank is not the obligor on the Bonds, the Bank shall be deemed the Registered Owner of the Pledged Bonds.
If at any time the Issuer shall request the Trustee to enter into any such Supplemental Indenture for any of the
purposes allowed by this Section, the Trustee shall, at the request of the Issuer, and upon being satisfactorily indemnified with respect to expenses, cause notice of the
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proposed execution of such Supplemental Indenture to be given in substantially the manner provided in Section 604 hereof wit respect to redemption of Bonds. The record date for such consent shall be the close of business on the fifth Business Day following the mailing of the notice (the "Consent Record Date"). Such notice shall briefly set forth the nature of the proposed Supplemental Indenture and shall state that copies thereof are on file at the Principal Office of the Trustee for inspection by .all Registered Owners. If, within sixty (60) days or such longer period as shall be prescribed by the Issue
percent (unless 100% of the Bonds affected by such notice is
required as provided above) in aggregate principal amount of
consented to and approved the execution thereof as herein provided, no owner of any Bond shall have any right to object to any of the terms and provisions contained therein, or the
operation thereof, or in any manner to question the propriety of the execution thereof, or to enjoin or restrain the Trustee or the Issuer from executing the same or from taking any actio pursuant to the provisions thereof. The Issuer shall have the right to extend from time to time the period within which such consent and approval may be obtained from Registered Owners as of the Consent Record Date.
following the Consent Record Date, the owners of more than 50
the Bonds Outstanding on the Consent Record Date shall have
SECTION 1002. AMEJ'NDFENTS NOT REQUIRING CONSENT OF FLEGISTERED OWNERS. This Indenture and the rights and obligations of the Issuer, the Registered Owners and the Trustee and Paying Agent may also be modified or amended at an time by a Supplemental Indenture, without the consent of any Registered Owners, upon receipt of the consent of the Bank and the Owner, which amendment shall became effective upon execution (or such later date as may be specified in such Supplemental Indenture), but only to the extent permitted by law and only for any one or more of the following purposes:
(1) to add to the covenants and agreements of the Issuer contained in this Indenture other covenants and agreements thereafter to be observed, to pledge or assign additional security for the Bonds, or to surrender any right or power herein reserved to or conferred upon the Issuer, provided, that no such covenant, agreement, pledge assignment or surrender shall materially adversely affect the interests of the Registered Owners;
(2) to make such provisions for the purpose of curin
any ambiguity, inconsistency or omission, or of curing or correcting any defective provision, contained in this
Indenture, or in regard to matters or questions arising
under this Indenture, as the Issuer may deem necessary or
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desirable and not inconsistent with this Indenture, and which shall not materially adversely affect the interests of the Registered Owners;
(3) to modify, amend or supplement this Indenture ir such manner as to permit the qualification hereof under tk Trust Indenture Act of 1939, as amended, or any similar
terms, conditions and provisions as may be permitted by said act or similar federal statute, and'which shall not materially adversely affect the interests of the Registere Owners ;
federal statute hereafter in effect, and to add such other
(4) to modify, amend or supplement this Indenture ir any manner which, in the reasonable judgment of the Trustee, does not materially adversely affect the interest
of the Registered Owners of Bonds Outstanding, and in making such determination, the Trustee may conclusively rely on the advice of Counsel selected by the Trustee and not be liable therefor;
(5) to change any provisions of this Indenture as of a Substitution Date, an Adjustable Interest Rate Conversic Date, a Reset Date or the Conversion Date; or
(6) to provide for the substitution of a Substitute Credit Facility.
No such Supplemental Indenture shall be executed which, in the judgment of the Trustee, materially adversely affects the interests of the owners of the Bonds. In making such determination, the Trustee may conclusively rely on the advice of Counsel. Before the Issuer shall execute any Supplemental Indenture, there shall have been filed with the Trustee an opinion of Bond Counsel stating that such Supplemental Indenture: (i) is authorized or permitted by this Indenture and complies with its terms; (ii) will be valid and binding upon the Issuer in accordance with its terms after its execution by the Issuer and the Trustee; and (iii) will comply with the Refunding Law and will not impair the exclusion from gross income for federal income tax purposes of interest on th Bonds.
SECTION 1003. DUTIES OF THE REMARKETING AGENT AND THE TENDER AGENT. The rights, duties and obligations of the Remarketing Agent and the Tender Agent under this Indenture
shall not be modified or amended in any manner without their respective written consent.
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SECTION 1004. EFFECT OF SUPPLEMENTAL INDENTURE. From anc after the date any Supplemental Indenture becomes effective
pursuant to this Article, this Indenture shall be deemed to bc modified and amended in accordance therewith, and the respective rights, duties and obligations under this Indenturc of the Issuer, the Trustee and all owners of Bonds Outstandinc shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modification and amendment, and all the terms and conditions of any such Supplemental Indenture shall be deemed to be part of the term: and conditions of this Indenture for any and all purposes.
SECTION 1005. ENDORSEMENT OF BONDS; PREPARATION OF NEW BONDS. Bonds delivered after any Supplemental Indenture becomes effective pursuant to this Article may, and if the Trustee so determines shall, bear a notation by endorsement 01 otherwise in form approved by the Issuer and the Trustee as tc any modification or amendment provided for in such Supplement;
Indenture, and, in that case, upon demand of the owner of any Bond Outstanding at such effective date and presentation of hi Bond for such purpose at the Principal Office of the Trustee, or at such additional offices as the Trustee may select and designate for that purpose, a suitable notation shall be made on such Bond. If the Issuer or the Trustee shall so determine new Bonds modified so as to conform, in the opinion of the Issuer and the Trustee, to any modification or amendment contained in such Supplemental Indenture, shall be prepared ar
upon demand of the owner of any Bond then Outstanding shall be exchanged at the Principal Office of the Trustee, without cost to any Registered Owner, for Bonds then Outst.anding, upon surrender for cancellation of such Bonds in equal aggregate principal amounts of the same maturity.
.executed by the Issuer and authenticated by the Trustee, and
SECTION 1006. APIZENDMENT OF PARTICULAR BONDS. The
provisions of this Article shall not prevent any Registered Owner from accepting any amendment as to the particular Bands held by him, provided that due notation thereof is made on SUC Bonds a
SECTION 1007. OPINION OF COUNSEL. The Issuer and the Trustee may rely upon an opinion of Bond Counsel to the effect that any proposed Supplemental Indenture will comply with the provisions of this Article X.
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ARTICLE XI
PURCHASE AND RENARKETING OF BONDS
SECTION 1101. REGISTERED OWNERS' OBLIGATION TO TENDER
BONDS FOR PURCHASE UPON CONVERSION TO AN ADJUSTABLE INTEREST RATE, A RESET RATE OR FIXED RATE OR UPON WITHDRAWAL OF OR REDUCTION IN THE RATING OF THE BONDS OR ON A MANDATORY TENDER DATE. Upon receipt of a notice of conversion of the interest on the Bonds to an Adjustable Interest Rate pursuant to Sectic 211A hereof, a Reset Rate pursuant to Section 212 hereof or tk
Fixed Rate pursuant to Section 213 hereof, or a withdrawal of or a reduction in the existing rating on the Bonds due to the delivery of a Substitute Credit Facility pursuant to Section
214 hereof, or upon receipt of notice of a Mandatory Tender Date pursuant to Section 607 hereof, each Registered Owner, other than the Issuer or the Owner, shall tender its Bonds for purchase. All Bonds which are not tendered for purchase prior to an Adjustable Interest Rate Conversion Date, a Reset Date, the Conversion Date, a Substitution Date or a Mandatory Tender Date, as applicable, shall be deemed purchased on the Adjustable Interest Rate Conversion Date, the Reset Date, the Conversion Date, the Substitution Date or the Mandatory Tender Date, as applicable, at a price of 100 percent of the principa amount thereof plus accrued interest to the Adjustable Interes Rate Conversion Date, the Reset Date, the Conversion Date, the Substitution Date or the Mandatory Tender Date, as applicable.
On or prior to the first Business Day after the seventh da immediately preceding a Purchase Date, the Remarketing Agent
the Bond numbers and the principal amount of Bonds to be
purchased on a Purchase Date. Failure of the Remarketing Agen to give such notice shall not affect the obligation of the Tender Agent to purchase Bonds or any of the obligations of th Owner, the Bank or the Trustee in relation thereto.
shall give written notice to the Remarketing Agent specifying
In the event that as of the date on which a Substitute Credit Facility is provided to the Trustee there are Pledged Bonds which are Outstanding hereunder, the drawing made under the existing Letter of Credit to provide for the Purchase Pric
of tendered Bonds, if any, shall be reimbursed to the Bank on the date on which the Substitute Credit Facility is provided from either (i) cash provided by the Owner directly to the Ban or (ii) a payment under the Substitute Credit Facility (or an
advance made by the substitute Bank under its Reimbursement Agreement) in the full amount of such drawing. In the event that Pledged Bonds are not purchased with either of the source: listed above, the former Bank shall have the right, immediatel: following the date on which the Substitute Credit Facility is
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provided, to tender its Pledged Bonds for purchase.
SECTION 1102. DEMAND PURCHASE OF BONDS. Any Bond (other than Pledged Bonds) shall be purchased by the Tender Agent, at
the option of the owner thereof, on any Business Day while the Bonds bear interest at an Adjustable Interest Rate, at a purchase price equal to 100 percent of the principal amount
thereof plus accrued interest? if any? tu the date of purchase
upon : with such payment to be made in immediately available funds,
(a) delivery to the Remarketing Agent by 4:OO p.m.,
New York time, not less than seven days prior to the applicable Purchase Date of a notice of exercise of right to tender Bonds in substantially the form set forth on the
Bonds, duly completed and executed by the Registered Owner of the Bond or Bonds to be purchased (which notice shall IC effective and irrevocable upon receipt); and
(b) delivery to the Tender Agent of the Bonds to be
purchased, such Bonds to be in negotiable form by
9:30 a.m., New York time, on the Purchase Date specified i the notice, and, in the case of a Bond to be purchased prior to an Interest Payment Date and after the Record Dat in respect thereof, a due-bill check, in form satisfactory
Payment Date.
Bonds not delivered to the Tender Agent on the specified
to the Tender Agent, for interest due on such Interest
Purchase Date shall be deemed to have been so delivered for a1 purposes hereof.
SECTION 1103. REMARKETING AGENT. The Owner, with the written consent of the Issuer (execution of this Indenture by the Issuer shall constitute written consent by the Issuer to the appointment of Dean Witter Reynolds Inc. as the initial Remarketing Agent) and the Bank, shall appoint the Remarketing Agent for the Bonds and, with the consent of the Issuer and tt Bank, may remove the Remarketing Agent and appoint a successor Remarketing Agent with the approval of the Issuer and the Bank all in accordance with the provisions of the Remarketing
Agreement and subject to the conditions set forth in Section
1104 hereof. The Remarketing Agent shall designate to the Trustee and the Tender Agent its principal office and signify its.acceptance of the duties and obligations imposed on it hereunder by a written instrument of acceptance delivered to the Issuer, the Trustee, the Bank, the Owner and the Tender Agent and satisfactory in form and substance to the Issuer, th
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Trustee and the Tender Agent under which the Remarketing Agent will agree to perform the obligations of the Remarketing Agent set forth in Section 1105 hereof I Execution and delivery of the Remarketing Agreement shall constitute delivery of such
instrument of acceptance.
The Issuer shall cooperate with the Trustee, the Tender
Agent and the Owner to cause the necessary arrangements to be made and to be thereafter continued whereby funds from the sources specified herein will be made available for the purchase of Bonds and whereby Bonds executed by the Issuer anc
authenticated by the Tender Agent shall be made available to the Remarketing Agent to the extent necessary for delivery pursuant to Section 1107 hereof.
The Remarketing Agent shall keep such books and records a$ shall be consistent with prudent industry practice and to makc
such books and records available for inspection by the Bank,- any Paying Agent, the Tender Agent, the Issuer, the Trustee ar the Owner at all reasonable times and upon reasonable notice.
SECTION 1104. QUALIFICATIONS OF REMARKETING AGENT. The Remarketing Agent shall be a member of the National Associatic of Securities Dealers, Inc., or a banking institution, in eack case authorized by law to perform all the duties imposed upon it by this Indenture and the Remarketing Agreement. The Remarketing Agent may be removed from, and may at any time resign and be discharged of, the duties and obligations creatE by this Indenture, under the circumstances and in the manner described in the Remarketing Agreement.
SECTION 1105. REMARKETING OF -BONDS.
(a) Upon receipt of a notice resulting in a tender c
Bonds under Section 1101 hereof or a notice given under Section 1102 hereof, the Remarketing Agent shall immediately provide telephonic notice thereof to the Trustee and the Trustee shall give the Tender Agent, the Bank and the Owner telephonic, facsimile or telegraphic notice of such receipt (if such notice is given telephonically, it shall be promptly confirmed in writing by the Trustee). Upon receipt of a notice resulting in a tender of Bonds under Section 1101 hereof or a notice give
under Section 1102 hereof, the Remarketing Agent shall USE its best efforts to remarket all Bonds subject to purchase pursuant to Sections 1101 and 1102. Any such remarketing shall be made at a price equal to the principal amount of the Bonds remarketed, plus interest accrued to the Purchas
Date. In no event shall the Remarketing Agent remarket ar Bonds to the Owner or to the Issuer.
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(b) By 1O:OO a.m., Los Angeles time, on the Business
Day prior to each Purchase Date, the Remarketing Agent shall give facsimile, telegraphic or telephonic notice, promptly confirmed by a written notice, to the Tender Agent, the Trustee, the Bank and the Owner (A) directing the Tender Agent to make available to the Remarketing Ager in New York, New York, any Bonds which the Remarketing
Agent has remarketed pursuant to this Section 1105 for delivery to the new purchasers thereof or their agents, a: identified by the Remarketing Agent, against payment therefor on such Purchase Date, (B) stating the principal amount of Bonds remarketed pursuant to subsection (a) of this Section 1105, and (C) indicating whether or not
will be sufficient to purchase all tendered Bonds by 9:30 a.m., New York time, on the Purchase Date. The Remarketi~ Agent shall deliver to the Tender Agent by 11:OO a.m., Ne\ York time on the Purchase Date the principal of and interest accrued to the Purchase Date of the Bonds which have been remarketed. To the extent remarketing proceeds are insufficient to purchase tendered Bonds or if the Trustee has not received the notice from the Remarketing Agent by 1O:OO a.m., Los Angeles time, on the Business Da; prior to the Purchase Date, the Trustee shall draw on the Letter of Credit by 11:OO a.m., Los Angeles time, on the Business Day prior to the Purchase Date, in an amount which, together with any remarketing proceeds on deposit with the Remarketing Agent, shall be sufficient to make payment on the Purchase Date of the Purchase Price of the Bonds tendered pursuant to Section 1101 or Section 1102 hereof and shall cause the Bank to wire transfer such
proceeds to the Tender Agent for deposit with the Tender
Agent on the Purchase Date. The Tender Agent hereby agre to deposit with the Trustee as soon as practicable but in no event later than 2:OO p.m., New York time, on the Business Day after receipt, any moneys received by the Tender Agent in excess of the amount required to pay the Purchase Price of Bonds on the Purchase Date.
remarketing proceeds, if received by the Remarketing Agenl
(c) In the event the Remarketing Agent resigns or i removed as Remarketing Agent or is otherwise unable to carry out the duties of Remarketing Agent and a successor Remarketing Agent is not appointed, proceeds from the remarketing of Bonds shall be delivered to the Trustee.
(d) Notwithstanding anything to the contrary herein the Remarketing Agent shall incur no liability hereunder a result of having remarketed Bonds to the Owner or the
Issuer unless the Remarketing Agent shall have had actual
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knowledge that the persons to whom such Bonds were remarketed were the Owner or the Issuer, as appropriate.
SECTION 1106. PURCHASE OF BONDS DELIVERED TO TENDER AGEN
(a) There shall be deposited into the Liquidity Account of the Purchase Fund all moneys drawn by the Trustee under the Letter of Credit in connection with the purchase of Bonds pursuant to Section 11.01 or Section 110
hereof, and into the Remarketing Account all moneys received from the sale of Bonds pursuant to Section 1105
hereof. Moneys remaining in the Purchase Fund after payment of the Purchase Price of Bonds purchased on each Purchase Date shall be paid to the Bank.
(b) Funds for the purchase of Bonds at the principa
amount thereof plus interest accrued, if any, to the Purchase Date shall be paid from the Purchase Fund in the order of priority indicated below:
(i) moneys received from the sale of Bonds, i immediately available funds, pursuant to Section 110 hereof; and
(ii) moneys representing proceeds of a drawing
by the Trustee under the Letter of Credit.
(c) The Tender Agent shall hold all Bonds and money
delivered to it pursuant to Sections 1101, 1102 and 1105 hereof in trust for the benefit of the respective owners which shall have so delivered such Bonds until moneys representing the purchase price of such Bonds shall have been delivered to or for the account of or to the order o such owners.
(d) The Tender Agent shall hold all Bonds remarkete pursuant to this Article XI in trust for the benefit of t respective purchasers until such Bonds can be delivered t
such purchasers. The Tender Agent shall notify the purchasers of any undelivered Bonds held by the Tender Agent at least ten (10) days.
SECTION 1107. DELIVERY OF BONDS.
(a) Bonds purchased with funds in subsection (b)(i)
of Section 1106 hereof shall be authenticated by the Tend Agent and delivered by the Tender Agent in the manner requested by the Remarketing Agent or the purchaser there
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(b) Bonds purchased by the Tender Agent with moneys described in subsection (b)(ii) of Section 1106 shall be registered by the Tender Agent in the name of the Owner ar held by the Tender Agent in accordance with Section 1109
hereof.
SECTION 1108. DELIVERY OF PROCEEDS OF SALE. The proceed: of the sale of Bonds by the Remarketing Agent in conjunction with a demand for purchase pursuant to Section 1102 hereof shall be deposited in the Remarketing Account of the Purchase
Fund and used as provided in Section 1106. The proceeds of tl. sale of any Pledged Bonds by the Remarketing Agent shall be
delivered in accordance with the Pledge Agreement. If any Pledged Bonds are subsequently remarketed, upon release by thc Bank of the security interest in and to the Pledged Bonds in the manner required by Section 1109 and the principal amount ( the Letter of Credit has been reinstated to an amount equal tc the principal amount of all Bonds Outstanding plus thirty-ninc (39) days' interest thereon calculated at the Maximum Permittt Rate, or a Substitute Credit Facility meeting the requirement2 of Section 214 hereof, has been delivered to the Trustee, the
Trustee shall thereupon register such Pledged Bonds in such
specified to the Trustee by the Remarketing Agent. names and deliver them to such new owners as shall have been
SECTION 1109. PLEDGED BONDS. Bonds that are from time tc time purchased by the Tender Agent for the account of the Ownc .pursuant to Section 1101 or Section 1102 hereof with the fund: described in Section 1106(b)(ii) hereof shall be registered ir the name of the Owner and held by the Tender Agent under the provisions of the Pledge Agreement. The Remarketing Agent shall remarket such Pledged Bonds in accordance with the provisions of Section 1105(a) hereof, except that Pledged Bonc will not be deemed to accrue interest. Upon remarketing of a1 Pledged Bonds, the Remarketing Agent shall immediately give telegraphic or telephonic notice, promptly confirmed by a written notice, to the Trustee, the Tender Agent, the Owner a] the Bank (A) directing the Tender Agent to deliver in New Yorl New York, any Pledged Bonds which the Remarketing Agent has remarketed pursuant to this Section 1109 hereof to the new
purchaser thereof or their agents against payment therefor on the date specified by the Remarketing Agent, (B) stating the principal amount of Pledged Bonds remarketed pursuant to this Section 1109, and (C) directing the Trustee to pay to the Ban1 the proceeds received from the purchaser of such Pledged Bond; provided, however, that, notwithstanding the foregoing, the
Trustee or the Tender Agent shall not release such Pledged Bonds or transfer such Pledged Bonds on its bond registration books and the Remarketing Agent shall not transfer remarketinc proceeds to the Trustee unless the Trustee has received writtc
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notice from the Bank that the security interest of the Bank il and to the Pledged Bonds has been released and the principal amount of the Letter of Credit has been reinstated to an amou! equal to the principal amount of all Bonds Outstanding (including such Pledged Bonds) plus thirty-nine (39) days' interest thereon calculated at the Maximum Permitted Rate, or Substitute Credit Facility has been delivered to the Trustee meeting the requirements of Section 214 hereof.
As long as Pledged Bonds are registered in the name of th Owner, the Demand Purchase Option set forth in Section 1102
hereof shall not be available with respect to such Bonds' and the Bank, at its option, shall be entitled to vote such Bonds
SECTION 1110. DTC SYSTEM. As long as Bonds are register under the DTC system, any notice.of exercise of right to tend
Bonds may be provided by the Beneficial Owner through a DTC
may be made through the DTC system pursuant to the Representation Letter.
Participant, and tenders of Bonds under Sections 1101 or 1102
SECTION 1111. EXCULPATORY PROVISIONS. Neither the Trust nor any of its officers, directors, employees, agents, attorneys-in-fact or affiliates shall be liable for any actio lawfully taken or omitted to be taken by it or any such perso hereunder or in connection with the Pledged Bonds (except to the extent (a) such liability is due to its or any such person's own negligence or willful misconduct, or (b) the Trustee is otherwise liable as provided in Section 903 hereof
SECTION 1112. DESIGNATION OF TENDER AGENT; AGREEMENT WIT
TENDER AGENT. The Issuer hereby appoints First Trust of California, National Association, c/o I.B.J. Schroder Bank an Trust Company, 1 State Street, New York 10004, Attention: Securities Transfer Department, as Tender Agent, The Tender
Agent may at any time resiyn by qiviny thirty (30) days' noti
to the Trustee. The Tender Agent may be removed at any time an instrument in writing delivered by the Trustee to the Tend Agent. In no event, however, shall the Tender Agent resign o be removed until a successor Tender Agent shall have been appointed and has accepted such appointment.
In case the Tender Agent shall resign or be removed, or b dissolved, or shall be in the course of dissolution or liquidation, or otherwise become incapable of acting as Tende
Agent, or in case it shall be taken under the control of any public officer or officers, or of a receiver appointed by a court, a successor shall be appointed by the Trustee in accordance with this Section. The Issuer shall notify the Trustee, the Remarketing Agent, the Bank and the Owner in
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writing of the resignation or removal of the Tender Agent and the Tender Agent to be appointed as successor Tender Agent by the Issuer. Unless the Bank or the Owner objects in writing t the appointment of the successor Tender Agent within ten (10) days of notice thereof, such Tender Agent shall be appointed 1: the Trustee. Every successor Tender Agent appointed pursuant to the provisions of this Section shall be, if there be such a institution willing, qualified and able to accept the duties c
the Tender Agent upon customary terms, a commercial bank with
good standing and havinq reported capital and surplus of not
less than $50,000,000. Any such successor shall be acceptable
to the Trustee. Written notice of such appointment shall immediately be given by the Trustee to the Owner, the Remarketing Agent, the Bank and the Issuer, and at the Owner's expense from moneys in the General Fund the Trustee shall caus
written notice of such appointment to be given to the owners c the Bonds. Any successor Tender Agent shall execute and deliver an instrument accepting such appointment, and thereupc such successor, without any further act, deed or conveyance, shall become fully vested with all rights, powers, duties and obligations of its predecessor, with like effect as if originally named as Tender Agent, but such predecessor shall
nevertheless, on the written request of the Trustee or the Issuer, or of the successor Tender Agent, execute and deliver such instruments and do such other things as may reasonably be required to more fully and certainly vest and confirm in such successor all rights, powers, duties and obligations of such
predecessor.
trust powers or a trust company within or without the State, i
Any corporation or association into which the Tender Agent may be converted or merged, or with which it may be consolidated, or to which it may sell or transfer its trust business and assets as a whole or substantially as a whole, 01 any corporation or association resulting from any such conversion, sale, merger, consolidation or transfer to which i is a party, shall be and become the successor Tender Agent hereunder, without the execution or filing of any instrument ( any further act, deed or conveyance on the part of any of the parties hereto, anything herein to the contrary notwithstanding. , The Tender Agent shall enjoy the same protective provisions in the performance of its duties hereunder as are specified in Article IX or Section 1110 herec with respect to the Trustee insofar as such provisions may be applicable.
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ARTICLE XI I
AMENDMENT OF LOAN DOCUMENTS AND LETTER OF CREDIT
SECTION 1201, AMENDMENTS TO LOAN DOCUMENTS AND LETTER OF
CREDIT NOT REQUIRING CONSENT OF REGISTERED OWNERS. The Issue1 the Trustee and the Owner may, subject to the provisions of
Section 1203 hereof and with the written consent of the Bank and the Trustee, but without the consent of or notice to any (
modification of the Loan Documents and the Letter of Credit a! may be required (a) by the provisions of the Loan Documents, the Letter of Credit or this Indenture, (b) to extend the expiration date of the Letter of Credit, (c) for the purpose ( curing any ambiguity or formal defect or omission, (d) so as 1 add additional rights acquired in accordance with the provisions of the Loan Documents and the Letter of Credit, (e to facilitate the provision of a Substitute Credit Facility, (f) to change any provisions of the Loan Documents as of a Substitution Date, an Adjustable Interest Rate Conversion Datc a Reset Date or the Conversion Date, or (9) in connection wit1 any other change therein which, in the reasonable judgment of the Trustee, is not to the prejudice of the Trust Estate or tl owners of the Bonds, but only if the Issuer and the Trustee receive an opinion of Bond Counsel acceptable to the Issuer ai
the Trustee to the effect that such amendment, change or modification is authorized or permitted by this Indenture, wi: comply with this Indenture and the Act, and will not impair tl
exclusion from gross income for federal income tax purposes 0: interest on the Bonds; provided, however, that as long as the Letter of Credit is in effect and the Bonds are not in defaul- the consent of the Trustee and the Issuer shall not be requirc to any amendment to the First Deed of Trust which does not materially impair the security interests of the Trustee and tl Issuer contained in the First Deed of Trust. In making a determination under (9) above, the Trustee may conclusively rely on an opinion of Counsel. The Issuer and the Owner shal without the consent of or notice to any of the Registered Owners but after notice to the Bank and the Trustee and with
the prior written consent of the Bank (which consent'shall no
be unreasonably withheld), enter into any amendment, change o modification of the Loan Documents or the Letter of Credit as
may be necessary, in the opinion of Bond Counsel to comply fully with all applicable rules, rulings, policies, procedure regulations or other official statements promulgated or proposed by the Department of the Treasury or the Internal Revenue Service pertaining to obligations issued under Sectio
103(b)(4)(A) of the Prior Code. Notwithstanding anything herein to the contrary, the Reimbursement Agreement and all
the Registered Owners, enter into any amendment I change or
04/30/93
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security instruments for the benefit of the Bank may be
Registered Owners, the Issuer or the Trustee as long as such
modification or amendment does not adversely affect the exclusion from gross income for federal income tax purposes oj
interest on the Bonds.
modified or amended without notice to or the consent of the
SECTION 1202. AMENDMENTS TO LOAN DOCUMENTS AND LETTER OF CREDIT REQUIRING CONSENT OF REGISTERED OWNERS. Except for thc
1201 hereof and subject to the provisions of Section 1203 hereof, neither the Issuer, the Trustee nor the Owner shall enter into any other amendment, change or modification of the
Loan Documents or the Letter of Credit without the written consent of the Bank, and without mailing of notice and the written approval or consent of the owners of more than 50 percent in aggregate principal amount of the Bonds at the timc Outstanding given and procured as provided in this Section;
provided, however, that nothing in this Section or Section 121
extension of the time of the payment of any amounts payable under the Note or the Letter of Credit, or (b) a reduction in the amount of any payment or in the total amount due under thl Note or the Letter of Credit without the consent of the owner; of all Bonds then Outstanding. If at any time the Issuer and the Owner shall request the consent of the Trustee to any suc: proposed amendment, change or modification of the Loan Documents or the Letter of Credit, the Trustee shall, at the request of the Issuer and upon being satisfactorily indemnific with respect to expenses, cause notice of such proposed amendment, change or modification to be given in the same manner as provided by Section 604 hereof with respect to redemption of Bonds. The record date for such consent shall j the Consent Record Date established in Section 1001 hereof. Such notice shall briefly set forth the nature of such propost amendment, change or modification and shall state that copies of the instruments modifying the same are on file with the Trustee for inspection by all Registered Owners. If, within sixty (60) days, or such longer period as shall be prescribed by the Issuer, following the Consent Record Date, the owners more than 50 percent in aggregate principal amount of the Bonl Outstanding as of the Consent Record Date shall have consentel to and approved the execution of any such amendment, change o modification as herein provided, no owner of any Bond shall have any right to object to any of the terms and provisions contained therein, or the operation thereof, or in any manner to question the propriety of the execution thereof, or to
enjoin or restrain the Owner or the Issuer from executing the same or from taking any action pursuant to the provisions
thereof, or the Trustee from consenting thereto. The Issuer shall have the right to extend from time to time the period
amendments, changes or modifications as provided in Section
hereof shall permit or be construed as permitting (a) an
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within which such consent and approval may be obtained from Registered Owners as of the Consent Record Date. Upon the execution of any such amendment, change or modification as in this Section permitted and provided, the Loan Documents or tht Letter of Credit, as the case may be, shall be and be deemed 1 be modified, changed and amended in accordance therewith.
SECTION 1203. REQUIRED OPINION OF BOND COUNSEL. The Issuer and the Trustee shall not enter into or consent to any
amendment, change or modification to any one or more of the Loan Documents unless the Issuer and the Trustee shall have
received an opinion of Bond Counsel to the effect that such amendment will not impair the exclusion from gross income for federal income tax purposes of the interest on the Bonds. Thr Issuer and the Trustee may rely upon an opinion of Bond Counsc to the effect that any such proposed amendment, change or modification will comply with the provisions of this Article XII.
ARTICLE XI11
DEFEASANCE
SECTION 1301. DEFEASANCE. If there shall be paid or provision for payment shall be made to or for the benefit of the owners of the Bonds, the principal, premium, if any, and interest due or to become due thereon at the time and in the manner stipulated in the Bonds, and if the Issuer shall keep, perform and observe all covenants and promises in the Bonds a]
observed by it or on its part, and there shall be paid to the Trustee, the Tender Agent, the Remarketing Agent and any Payi; Agent all sums of money due or to become due according to the provisions hereof, then this Indenture and the lien, rights a! interests created hereby shall cease, terminate and become nu and void (except as to any surviving rights of registration, transfer or exchange of Bonds herein provided for and except for any rebate obligations under Section 504 hereof), whereup1 the Trustee shall cancel and discharge this Indenture, and execute and deliver to the Issuer and the Owner such
instruments in writing as shall be requested by the Issuer or. the Owner and requisite to discharge this Indenture, and release, assign and deliver unto the Issuer any and all the
estate, right, title and interest in and to any and all right assigned or pledged to the Trustee or otherwise subject to th Indenture, except moneys or securities held by the Trustee fo the payment of the Purchase Price and the principal of,
premium, if any, and interest on the Bonds: provided, however while the Bonds bear interest at an Adjustable Interest Rate,
the Bonds may not be defeased.
in this Indenture expressed as to be kept, performed and
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Any Bond or portion thereof in principal amounts of $5,00( or any integral multiple thereof shall, prior to the maturity or redemption date thereof, be deemed to be paid and defeased within the meaning of this Indenture when payment of the principal of and the applicable redemption premium, if any, 01 such Bond or portion thereof, plus interest thereon to the duc date thereof (whether such due date be by reason of maturity c
either: upon redemption as provided in this Indenture, or otherwise) r
(i) shall have been made or caused to be made in
accordance with the terms thereof, but only from proceeds of the Letter of Credit to the extent the Letter of Credi or any Substitute Credit Facility so provides, or
(ii) shall have been provided for by irrevocably depositing with the Trustee, in trust and irrevocably setting aside exclusively for such payment:
(A) Seasoned Funds which shall be sufficient to mak
such payment when due, or
(B) Seasoned Funds invested in Government Obligatio maturing as to principal and interest in such amounts and at such times as to insure the availability of sufficient
moneys, as verified by an independent certified public
accountant acceptable to the Issuer, to make such payment and all necessary and proper fees, compensation and expenses of the Trustee and any Paying Agent pertaining t the Bonds with respect to which such deposit is made shal have been paid or the payment thereof provided for to the satisfaction of the Trustee and any Paying Agent.
Notwithstanding the foregoing, no deposit under clause (i of the second preceding paragraph shall be deemed a payment o such Bonds or portions thereof as aforesaid.unti.1 (a) proper notice of redemption of such Bonds or portions thereof shall have been previously given in accordance with Article VI here to the owners of the Bonds or portions thereof, or in the eve that such Bonds are not by their terms subject to redemption such time, there shall have been given to the Trustee, in a
form satisfactory to the Trustee, irrevocable, instructions to
above has been made with the Trustee and that said Bonds or portions thereof are deemed to have been paid and stating SUC maturity or redemption date (which redemption date must be before the next Purchase Date) or dates upon which moneys are to be available for the payment of the principal or redemptio price, if applicable, on said Bonds, or (b) the maturity of such Bonds has occurred.
mail a notice to such .owners that the deposit required by (ii
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. At such time as the Bonds or portions thereof shall be
deemed to be paid hereunder, as aforesaid, they shall no long
be secured by or entitled to the benefits of this Indenture,
except for the purposes of Sections 203 and 207 hereof and
except for any such payment from such moneys or Government
Obligations.
Notwithstanding any provisions of any other Article of th
Indenture which may be contrary to the provisions of this
Article, all such moneys or Government Obligations set aside and held in trust pursuant to the provisions of this Article
and for the payment of Bonds (including interest and premium thereon, if any) shall be applied to and used solely for-the payment of the particular Bonds (including interest and premi thereon, if any) with respect to which such moneys and Government Obligations have been so set aside in trust.
Anything in Article X hereof to the contrary notwithstanding, if such moneys or Government Obligations hav
been deposited or set aside with the Trustee pursuant to this
Article for the payment of Bonds and interest and premium thereon, if any, and such Bonds shall not have in fact been actually paid in full, no amendment to the provisions of this Article XI11 shall be made without the consent of the owner o each Bond affected thereby.
ART I CLE XIV
MISCELLANEOUS
SECTION 1401. CONSENTS, ETC., OF REGISTERED OWNERS. Any consent, approval, direction or other instrument required by this Indenture to be signed and executed by the Registered Owners may be in any number of concurrent writings of similar tenor and may be signed or executed by such Registered Owners in person or by agent appointed in writing. Proof of the execution of any such consent, approval, direction or other
instrument or of the writing appointing any such agent, if ma
in the following manner, shall be sufficient for any of the purposes of this Indenture, and shall be conclusive in favor the Trustee with regard to any action taken under such reques or other instrument, namely:
(a) The fact and date of the execution by any Persc of any such instrument or writing may be proved by the certificate of any officer in any jurisdiction who by law has power to take acknowledgments within such jurisdiction that t Person signing such instrument or writing acknowledged before him the execution thereof, or by affidavit of any witness to such execution;
04/30/93
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(b) The fact of ownership of Bonds and the amount OK
amounts, numbers and other identification of such Bonds, and the date of holding the same shall be proved by the registration books maintained by the Trustee pursuant to Section 203 hereof.
(c) Any request , consent, or other instrument or writing of the Registered Owner of any Bond shall bind every
future Reyistered Owner of the same Bond and the Registered
Owner of every Bond issued in exchange therefor or in lieu thereof, in respect of anything done or suffered to be done bl the Trustee or the Issuer in accordance therewith or reliance thereon.
SECTION 1402, LIMITATION OF RIGHTS, With the exception ( rights herein expressly conferred, nothing expressed or mentioned in or to be implied from this Indenture or the Bond: is intended or shall be construed to give to any Person other than the parties hereto, the Bank and the owners of the Bonds any legal or equitable right, remedy or claim under or in
respect to this Indenture. This Indenture and all of the covenants, conditions and provisions hereof are intended to bc and are for the sole and exclusive benefit of the parties hereto, the owners of the Bonds and the Bank as herein providt
SECTION 1403. SEVERABILITY. If any provision of this
Indenture shall be invalid, inoperative or unenforceable as applied in any particular case in any jurisdiction or jurisdictions or in all jurisdictions, or in all cases becaust it conflicts with any other provision or provisions hereof or any constitution or statute or rule of public policy, or for any other reason, such circumstances shall not have the effecl
unenforceable in any other case or circumstance, or of rendering any other provision or provisions herein contained
invalid, inoperative, or unenforceable to any extent whatever
The invalidity of any one or more phrases, sentences, clauses or Sections in this Indenture contained, shall not affect the remaining portions of this Indenture, or any part thereof.
of renderinq the provision in question inoperative or
SECTION 1404. NOTICES. Except as otherwise provided in this Indenture, all notices, certificates or other communications shall be sufficiently given and shall be deemec given on the earlier of (i) the date of actual receipt or (ii the second day following the date on which the same have been
mailed by certified mail, return receipt requested, postage prepaid, addressed as follows; If to the Issuer to City of Carlsbad, 1200 Carlsbad Village Drive, Carlsbad, California’
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92008, Attention: Finance Director; if to the Program Administrator, to I Attention: ; if to the Owner, to La Costa Partner!
a California general partnership, c/o SoCal Development, Inc.
915 Camino del Mar, Suite 200, Del Mar, California 92014 Attention: Rod L. Stone; if to the Trustee, to First Trust of California, National Association, 101 California Street, Suitc
1150, San Francisco, California 94111, Attention: Multifami: Housing; if to the Bank, to Bank of America National Trust an(
California 92101, Attention: Mark Scherrer; if to the Tender Agent, to First Trust of California, National Association c/o I.B.J. Schroder Bank and Trust Company, 1 State Street, New York, New York 10004 Attention: Securities Transfer Department; and if to the Remarketing Agent, to Dean Witter Reynolds Inc., 2 World Trade Center, 59th Floor, New York, Ne York 10048, Attention: Municipal Bond Department - Institutional Trading. A duplicate copy of each notice, certificate or other communication given hereunder shall also be given to each of the above. All other documents required be submitted to any of the foregoing parties shall also be submitted to such party at its address set forth above. Any the foregoing parties may, by notice given hereunder, designa any further or different addresses to which subsequent notice certificates, documents or other communications shall be sent
Savings Association, 450 B Street, Suite 950, San Diego,
In addition to all other notices required by this
Indenture, the Trustee shall provide (with a copy to the
Issuer) to Moody's Investors Service at 99 Church Street, New York, New York 10007, Attention: Public Finance Department, Structured Finance Group, if Moody's then rates Bonds, and to Standard SI Poor's Corporation, 25 Broadway, New York, New York 10007, if Standard SI Poor's then rates the Bonds, notic of the following events: (1) any change in the Trustee, (2) provision of a Substitute Credit Facility by the Owner, (3) a amendment to this Indenture, the Letter of Credit or the Loan Documents, (4) any redemption of Bonds pursuant to Section 60
(5) any extension, termination or expiration of the Letter of
Credit, (6) any change in the mode of determining the interes rate on the Bonds, (7) any change in the Remarketing Agent, (
any changes in the Reimbursement Agreement of which the Trust has actual notice, or (9) the defeasance of all the Bonds.
SECTION 1405. PAYMENTS DUE ON OTHER THAN BUSINESS DAYS. In any case where the date of maturity of interest on or principal of the Bonds or the date fixed for redemption of an Bonds shall be, in the location of the Principal Office of th Trustee, a day other than a Business Day, then payment of
04/30/93
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interest or principal (and premium, if any) need not be made c such date but shall be made on the next succeeding Business Day, and no additional interest shall be due and owing as a
result of the payment on the next succeeding Business Day.
In any case where the date upon which the Tender Agent is
to pay the Purchase Price of the Bonds under the terms of this Indenture shall be, in the location of the Principal Office of the Trustee, a day other than a Business Day, then payment of such Purchase Price need not be made on such date but shall bc made on the next succeeding Business Day.
SECTION 1406. COUNTERPARTS. This Indenture may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the san instrument.
SECTION 1407. APPLICABLE LAW. This Indenture shall be governed by and construed in accordance with the laws of the State of California. The rights, duties and obligations of tl Tender Agent shall be governed and construed in accordance wit
the laws of the State of New York.
SECTION 1408. CAPTIONS. The captions or headings in thiz Indenture are for convenience only and in no way define, limil or describe the scope or intent of any provisions or sections of this Indenture.
SECTION 1409. COMPLIANCE CERTIFICATES AND OPINIONS. Eve] certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include :
(a) a statement that the Person or Persons making such certificate or opinion have read such covenant or condition and the definitions herein relating thereto;
(b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;
(e) a statement that, in the opinion of the signers they have made or caused to be made such examination or
investigation as is necessary to enable them to express an informed opinion as to whether or not such covenant or condition has been complied with; and
(d) a statement as to whether or not, in the opinio: of the signers, such condition or covenant has been complied with.
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SECTION 1410. SUCCESSORS. Whenever in this Indenture either the Issuer or the Trustee is named or referred to, sucl
reference shall be deemed to include the successors or assign2 thereof, and all the covenants and agreements in this Indentul contained by or on behalf of the Issuer or the Trustee shall bind and inure to the benefit of the respective successors an( assigns thereof whether so expressed or not.
SECTION 1411. MODIFICATION OF SECTION 504 UNDER CERTAIN
CIRCUMSTANCES. Notwithstanding any provision of this Indenture, if the Issuer shall provide to the Trustee an opinion of Bond Counsel that any action required by Section 5r hereof is no longer required, or that some further action is
required to maintain the exclusion from gross income for federal income tax purposes of interest on the Bonds, the Trustee and the Issuer may rely conclusively on such opinion complying with the requirements of Section 504 hereof, and thc
covenants contained therein shall be deemed to be modified to
that extent.
IN WITNESS WHEREOF, the City of Carlsbad, California has caused these presents to be signed in its name and on its behalf by the Mayor and City Clerk, and, to evidence its acceptance of the trusts hereby created, the Trustee has causl these presents to be signed and attested in its name and on i. behalf by duly authorized signers all as of the date first above written.
CITY OF CARLSBAD
By :
Mayor
ATTEST :
City Clerk
FIRST TRUST OF CALIFORNIA, NATIONAL ASSOCIATION, as Trust
By :
Authorized Signatory
ATTEST :
Authorized Signatory
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j 4
z9+b& i t 1
4
LOAN AGREEMEKT
AMO1U’G
CITY OF CB2LSEACI, CALIFORNIA
ANC
I.,-:A CC)STX PARTNERS, a Califor::ia cjel~el-.-=.l partnership, Owner
AND
I”1C” - 1 F,~ - TF,,rjST OF c>ALI FO”‘.T- ’. SL,LP-, NATIONAL ASSCCIATIOP:,
as Trustee
Dated as, r~f 11Tay 1, 1993
The intel-est of th~ ~itv of Carlsbad in this Loan kgreemeni
(except the interest of the City of Carlsbaa under Sections
5. ~(d), 6.8 alld 7.4 hereof) has been assigned to First Trust 0:
I;Id-,ntur-e of T~--LIs~, dazed as of the date hereof, from the City
of Car-lsbac.
-
California, National Association, as Trustee under the
1 LOAN AGREENENT
TABLE OF CONTENTS
(This Table or' Contents is not a part of the Loan Agreement
ana is only for convenience of reference. )
I? -
PARTIES ....................................................
ARTICLE I
DE?INITIONS. AND INTERPRETATION
SECTIOp.; 1.1. T\-fi q+ +- ' J"""i01?5 .................................
SECTION 1.2. Interpretation ..............................
SECTION 1.3. Recital s, Titles and Headings ...............
ART I CLE I I I
7"n" MLY~L SEi\;T.'.T I OMS AND WARRANT I E S
SECT I ON 2 . 2 . kepresentEtions and Warranties of
the Issuer ..................................
-
SECTiON 2.2. >epresenrations, Warranties an.j, Covenants
0: Tile C'WnE- " ................................
2Fmi:zLE 7 1 I _A ,-
I SS'J'.:-;.]z.E OF TAE BONDS
SECTION 3 - 1. kgreexent to Issue Bonds ....................
SECTION 3.2. Delivery of the Bonds and Closing of
the icla:. ....................................
SECTIOX 3.3. CommiEment to Zxecute the
Mote ........................................
SECTION 3.4. Limited Liability ...........................
SECTION 3.5. The Trustee .................................
i
\ F -
ARTICLE IV
THE LOAN
SECTION 4.1. Anouct and Source of tile Loan ................
SECTION 4.2. Funding of the Loan .........................
ARTICLE V
REPAYMENT OF THE LOAN
SECTION 5.1. Loan Repayment ..............................
SECTION 5.2. Nature of rhe Owner’s Obligations ...........
SECTI3K 5.3. Mandatory Prepaymenl?; of the Note ............
SECTIOE 5.4. Optional Prepayment of the Note .............
SECTION 5.5. Past Clue Payments ...........................
SEC?’IO?J 5.6. Conversion of Interest Rate on the Bonds - - . .
ARTICLE VI
FURTEE2 AGREEMENTS
SECTION 6.1. Successor zc the Issuer .....................
SECTION 6.2. Owner not to Dispose of Assets;
3
Conditions Under Which Exceptions
Permitted ...................................
SECTION 6.3. Cooperation in Enforcement of Regulatory
AgreeIxent ...................................
SECTION 6.4. Tax Status of Bonds .........................
SECTION 6.5. Additional instruments ......................
SECTION 6.6. Books and Records ...........................
SECTION 6.7. Notice of Certain Events ....................
SECTION 6.8. indemnification of the Issuer and
the Trustee .................................
ii
s
SECTION 6.9 -
SECTION 6. LC.
SECTION 6.11.
SECTION 6.12.
SECTION 6. 13.
SECTION 6.14.
SECTION 6.15.
E
Consent to Assignment .......................
Compliance Wi til Usury Laws ..................
i;tle to the Project ........................
Design of the rrojec:t .......................
Payment of Taxes ............................
No Untrue Statements ........................
m.
-
Useful Life .................................
ART I CLE 17 I I
E7ENTS OF DEFAULT AND REMEDIES
SECTION 7.1. E:rer,ts 05 3efault ...........................
SECTION 7.2. Notice of Default; Opportunity to Cure ......
SECTIOF! 7.3. Remedies ....................................
SECTION 7.4. Attorne.Ts ' Fees and Expenses ................
SECTION 7.5. Nc Renedy 5;xciusive .........................
SECTION 7.6. 140 Additional vqaiver- Implied by One ._
\~:al-e~- .. ......................................
ARTICLE VI I I
T.7- "T" . __ ~~LLLANEOUS
SECTION 8.1. Eatire kgreemellt ............................
SECTION 8.2. Notices .....................................
SECTION 8.3. Assignments ..................................
SECTION 8.4. Severability ................................
SECTION 8.5. Execution of Counterparts ...................
SECTION 8.6. kmen~ments, Changes and Modifications .......
SECTION 8.7. Governinc; Law ...............................
iii
* P -
SECTION 8.8. Term of Agreement ... ... .. ... .". .... .... ....
SECTION 8.9. Sun7ival of Agreement .......................
SECTION 8.10. Surv1vai of Rights .. ..........................
SECTION 8.1:. heccrdation .................................
SECTION 8.12. Paymeats Due OR Other Than
Business Days ................................
TESTIMONIUM, SIGNATURES AND SEALS ..........................
EXHIEIT p- - ~"i31-m of Ocinior? of ~i.;ne:-'s Counsei
Lcm ~f +inlor cf sank' s Counsel E>;SIEIT -:--I -
-77 LAHIEIT E Note
EXHIEIT C Adminiszration Agreemeqt
J
iv
c LOAN AGREEMENT
THIS L0.W AGREEMENT dated as of Nay 1, 1993, is among the
CITY OF CARLSBAD, 2 municiT.al corporation oi the State of
Caiifornia (together with aily SucCessor to its rights, duties
ana obligations, the "Issuer"), LA COSTA PARTNERS, a California
general partnership (the "Cwner" ) and FIRST TRUST OF
CALIFORNIA, NXTIONAS ASSSCIATION, a national banking association, as Trustee (the "Trustee" ),
For and in consideration of the mutual agreements
hereinafter contained, the parties hereto agree as follows:
PAT I CLE I
DEFINITIONS AND INTERPRETATION
Sectior, 1.1. Definitions. The fol1ot;ing words and terms
as used ir. this Acjreement shall have the foliowing meanings
unless the context or use otilerwise reauires:
"Agreement" means this Loan Agreement, as amended and
suppiemented fron t~n?s to time.
"City" means the City cf Carlsbad, California.
"Indenture" means the indenture of Trust dated as of the
date hereof becweer-, the issuer and the Trustee pursuant to
which tile Bollds have been issued, as amended or suppiemented
from time tc time.
"Inducement Date'! means October 2, 1984.
"Purchase Agreemen:" means the Bond .Furchase Agreement by
an5 amonq the issuer, the Owner and the Underwriter relating tc
the sale of the Eonds.
"Regulatory Agreement" means the Amended and Restated
Regulatory kyreement and Declaration of Restrictive Covenants
dated as of the dkte hereof with respect to the Project,
executed by the Issuer, the Owner and the Trustee and recorded
in the Official Records of the County of San Diego.
"Third Deed of Trust" means the Third Deed of Trust and
Assignment of Rents and Fixture Filing, the Second Security
Agreement and the Second Financing Statement dated as of the
date hereof executed by tile Owner for the benefit of the Bank.
* Such terms as are not defined herein shall have the
meanings assigned to them in Section 101 of the Indenture and
in Section 1 of the Regulatory Agreement.
Section 1.2. Incerpretation. Unless the context clearly
requires otherwise, words of masculine gender shall be
neUte1- gellael-S 2nd \?ice versa, and words of the singular numbe
shall be collstrued to include corl-elative words of the plural
number and vice versa. This Agreement and all the terms and
provisions hereof shall be construed to effectuate the purpose
Set forth herein and tc sustaix the validity hereof.
construed to inciude ccrrelative words of the feminine 2nd
c
Section 1.3. Recitals, Titles and Headings. The terms
and phrases xsed in che recitals of this Agreement have been
included for convenience of reference only, and the meaning,
COIIS~I-UC~~OII ant! 1’ Interprztatlon of all such terms and phrases
fsr purposes of this Agr-eerwnr shall be deLerminec by references TO Section 1.1 hereof. The tities and headings of
the a-zicles and secxions of this Agreement have been inserted
for convenience of reference only ana are not to be considered
a par: hereof, and shall not in ally way modify or restrict any
of t!le terms OL- p~-ovisions hereof and shall never be considere
or given any effect in construing this Agreement or any
proyision hereof or 12 ascertaining intent, if any question of
intent should arise .
, ,.
ART I CLE I I
“-7” ~~~~~~~ENT-~-T:ONS AND WARRANTIES
””
Section 2.1. ReDresentstions and Warranties of the issuer The issuer makes the foliowilly representations and
warranties:
(a) The Issuer is a municipal corporation, duly organized
and ezistlng under the constitution and laws of the State.
(b) The issuer has full iegal right, power and authority
under the iaws of the State and has taken ail official actions
necessary (ij to enTe1- into this Agreement, the Regulatory
Agreement, the Intercreditor Agreement, the Escrow Agreement,
the Administration Agreement ana the Indenture, (ii) to issue,
execute and deliver the Eonds, (iii) to perform its obligation
hereunder and thereunder, and (iv) to consummate all other
transactions conxemplated by this Agreement and such other
documents, including, without limitation, the loaning of the
proceeds 05 the Lonas to the Owner.
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534OQ/2062/i3 ’L- *.
9 (c) This Agreement has been duly executed and delivered b:
the Issuer and constitutes a valid and binding obligation of
the Issuer, enforceable against the Issuer in accordance with
its terms, except as limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting thc
rights of creditors generally. Upori the execution and deliver:
thereof, the Regulatory Agreement, the Intercreditor AcJreement,
the Administration Ayreenen'i and the Indenture wil? constitute
valid and binding limited obligations of the issuer,
enforceable in -accoraance with their respective terms, except
as limited by bankruptcy, insolvency, reorganization, moratoriun! and other sirrAla1- laws or judicial decisions
affecting creditors' rights generally 2nd by judicial
discretion in the exercise of equitable remedies.
(d) The execution and delivery of this Agreement, the
Regulatory Agreement, the Intercreditor Agreement, tile
Administration Agreement and the indenture, the performance by
the Issuer of its obligations hereunder and thereunder and tne
consummation or' the transactions on its part contemplated
hereby and thereby, cic not violate any law, rule, regulation 0:
ordlnance or any order, judgment or decree of any federal,
state 3:- locai courx, and do not conflict with, or collstitute ,
breach of, or a default under the terms and conditions of any
agreement, insr~-ume~t or commitment to which the issuer is a
party 01- by which the Issuer 01- any of its property is bound.
(e) There is no action, sxit, proceeding, incruiry or
investigation pendin? or, LC che knowledge of the Issuer,
tiweateneci agzinst the Issuer, by or before ally court,
yovernmental aGency or p-blic board or body which (i) affects
or questions the existencs cr the terrixorial jurisdiction of
the issuer SI- the title to office of any officer of the Issuer
(ii) affects 01- seeks tc prohibit, restrain or enjoin the
execution and cieilT.7eL-y c.f this k,greement, the Regulatory
Agreenent, zhe Inzercredizo- Agreement, the Administration
Agreement or the indenture, the issuance, execution or deliver,
of the Eoncis 01- tne ioaning of the pro'ceeds or' the EOII~S to thl
Oxner; (iii) affecrs or questions the validity or
enforceability of this Agreement, the Regulatory Agreement, thl
Intercreditor Aqreement, the Administration Agreement, the
Indenture, or tj>e Bonds; (iv) questions the exclusion from
gross income for federal income tax purposes of interest on th,
Bonds; or (,v) questions the power or authority of the Issuer t'
carry out the transactions contemplated by this Agreement, the
Indenture, the Regulatory Agreement, the intercreditor
Agreement, the Administration Agreement or the Bonds.
(f) The Issuer has determined that the issuance of the
Bonds wili serve the public interest and will further the purposes of the Act, including, among other purposes,
00/30/93
5340Q/2062/13 -3-
* preserving the opportunity for multifamily residential rental
housing for occupancy by persons and families of low and moderate income.
Section 2.2. Representations, Warranties and Covenants of
the Owner. The Owner as of the date hereof, represents,
warrants and covenants that:
(a) The Owner is a general partnership in good standing
under the laws. of and qualified to transact b.usiness in the
State an5 is responsibie for the ownership ana operation of the
Project. The partnership agreement is a valid and binding
obligation of the Owner and its partners.
(b) The Owner and each of its partners have full legal
right, power and authority under the laws of the United States
and the STate ( i } to enter into this Agreement, the Remarketinc
Agreemezt, tile Reimbursement Agreement, the First Deed of
Trust, the Fledge Agreement and the other Loan Documents, (ii)
to be bound by the terms of the indenture to the extent that
they apply to the Loan, jiii) to perform its obligations
hereunder and thereunder and (ivj to consummate the
transactions contem>lated by this Agreement, the Remarketing
Piegge Agreemen+, the First Deed of Trusc, and the other Loan
Documents. Tile execution, delivery and performance of the Loa]
Documents by the Owner are within the Owner's power and have
been duly authorized by all action on the part of the Owner.
Agreement, the keimbursernent Agreement, the Indenture, the
(cj This .Lqreemen: has been duly executed and delivered b;
the Owner anc constitutes a valid and binding obligation of tht
Owner and each of izs pa-cners, enforceable in accordance with
its terms, except 2s limi~ed by bankruptcy, insolvenry,
reorganization, mor-atoriurc or other similar laws or judicial
decisions afiecting the rights of creditors generally and by
judicial ciscl-ezior, in the exercise of equitable remedies.
Upon the execution anu delivery thereof, each of the Loan
Docurner,ts, the Piedge Agreement, the Remarketing Agreement and
the Reimbursement Argresment will constitute valid and binding
obligations oi the Owner, enforceable in accordance with their termz, except as limited by bankruptcy, insoivency,
reorganization, moratorium 01- other similar laws or judicial
decisions affectincj creditors' rights generally anc! by judicia
discretion in che exercise of equitable remedies.
(d) The execution ar?a delivery of this Agreement, the
Reimbursement Agreement, the Remarketing Agreement, the Pledge
Agreement, and the other Loan Documents, the performance by th
Owner of its obiigations hereunder and thereunder and the consummation of the transactions contemplated hereby and
thereby will Rot violate, conflict with, or constitute a breac
04/30/93
5340Q,/2062/13 -4-
(I of or default under the Owner's partnership agreement or the
trust agreements of each of tile Owner's general partners, nor
will the performance by the Owner- of its obligations hereunder
and thereunder and the consummation of the transactions
contemplated hereby and thereby -,?iolate any law, regulation,
r-ule or ordinance or any order, judgnent or decree of any
federal., state or local court and will not conflict with, or
ar,y other document, insIr-ument or commitment to which the Owner
c1- eiciler of its par-zners is a party or by which the Owner, its
partners 01- any of its property is bound.
consLjzute a mazerial 5reaz2; of, 01- a material deiault under,
(e) Tc the knowiedge of the Owner there is no action, suit, proceeding, ixn~iry or investigation by or before any
court, governmental acjency or public board or body pending or,
tc the kno;:iPdqe cf tile Ownel-, threatened against the Owner or
either cz IZS partners which (i j affects or seeks to prohibit,
or the loaning of the proceeds of The Bonds to the Owner or the
execction and cieli~7.e~-y of this Agreement, the Indenture , the
Lette- of Credit, the Kegulator.,: Agreement, the Reimbursement
Agreement, the Plecige Agreemexc, the Remarketing Agreement , the
Note or tile First Deeci si Trust, (ii j affects OI- questions the
validity or enforceabilltv - 05 this Agreement, the Eonds, the
indenture ~ the Re9ulazc1-y Agreement, the Reimbursement
Agreement, the Rema:-keti:1? Acjreernent or the First 3eed ~f
fedel-2: incor.?e tz:,: pl~rpcs"c CI Intlr-est OR the Bonds, (iv)
questions the pover GI- authsrizy cf tne Owner to carry out the
transactioris contenplated by; or to perform its obiigacions
under, this -%~L-PPR:E:IY, ti,= i--- CD?, d,-,a~ ~ i the Regulatory kgreemenz, the
Reimbursement Aqr-eexen:, the indenture, the Letter of Credir:,
the Fieage ligreercenz, tl1e Zemarketing Agreement, the Note or
the firs^ Deed of Trxs-,,, or the powers of the Owner to own and
oFerate the ~roj,ec: SY- (~-.-) c;cller-wise affects tile owner' s
abiiic:u7 to saxisfy its obligations under the Loan Documents.
-.
restralL or enjoi~! the Issuance, sale or delivery of the Bonds,
Agreement, the T,ett:PI- of ->-=A+ L- -LA + L, the Note, the Pledge
Trust, (iij 1 ' qusst,ions tile exciusion from qross income for
-.
(f) To the best of ,heir knowledge, the Owner and each of
its partners are no: in default under any document, instrument
01- commitment to wkich the Owner or either of its partners is ;
party or to which it or any of its property is subject which
default wouic materially ad:rerseiy affect the ability of the
Owner tc. 'carry cut its obligzticns under this 'Agreement, the
Regularcry kgreenent, the Adninistration Agreement, the
Reimbursement ?A:;.,cireement, the Fledge Agreement, the First Deed
of Trust, the Remarkezing Agreement or the Note.
(y) Any certificate signed by the Owner or an Owner
Representacive ana deli\:ered pursuant to this Agreement, the
Reguiaxory I;greementi the keimbursement Agreement or the
04/30,,/93
5340CI/2052.;/i3 -5-
k Indenture shall be deemed a representation and warranty by the
Owner- as to the statements made therein.
(11) Concurrently with the execution of this Agreement, the
Gwner xi11 cause ts be delivered to the Trustee, on behalf of
the Issuer-, the Letter of Credit and such Letter of Credit
performance of the Uwner' s obiigations under the Note (other
than for the payment of any premium due thereunder upon
optional prepayment or' the ioanj in accordance with its terms.
shall be in full force and effect anci shall secure the
(i) The Ownc- f i 1 I!ltends to hold the Project for its own
account, (ii) i;as no current pians to sell the Project (iii)
has llot enierec into any agreeYnenz or otherwise binding
commitment to seli the Project, (iv) recognizes that the
refunding of the Prior Bonds may have independent significance
apart from any furure sale of the Project because of the net
anyicipatea reduction ir, Total debt service costs for the
Project anci (v) does not intend that the issuance of the Bonds
and the refundinq 05 the Prior Bonds constitute a formaily
separate ste? in a single prearranged transaction to reach the
end result of tile sale of the Project.
(j) The Indenture has been submitted to the Owner for its
examination; and the Owner- acknowledges, by execution of this
Agreement, tha: it has approved tile indenture and agrees that
it will be bound by the terms thereof and, in particular:
agrees tc; COX~~:J with the requirements of Section 504 of the
Indenture: as amended 51-0~ time to ti~e.
fkj The 0;me:- has canracted al; "related persons" thereof
(;,;itliln :he neani:lq 35 Secr~c.:; l47ja) (2) of the Code) ; ana
neither the Ow~er- nsr any reiated person to the Owner shall, at
any tir.e, pursuant to an:; arrangement, formal or informal,
acquire any Eons, except as provided by the Pledqe Agreement.
(1 j Not less than 99:o cf the proceeds of the Prior Bonds
(withi:-: the meazinc,. 35 Section 103(b) (4.) (A) of tile Prior Code
ana applicable Regclazions:! were expended by the Owner for
Project CGsts which consti-,ute Qualified Project Costs.
ARTICLE I11
ISSUANCE OF THE BONDS
Section 3.1. " ;greement to Issue Bonds. In order to
provide funds for the pul--pose of making the Loan, the Issuer
has sold the Bonds and caused them to be delivered to the
initial purchasnrs thereof and deposited the proceeds thereof
with the Trcscee for aspizcation in accordance with Section 30:
of the Indenture.
_.
04./'30,/33
53400_./'2062/'13 -6-
Section 3.2. Delivery of the Bonds and Closing of the
Loan. The delivery of the Bonds and the closing of the Loan
shall not occur until the following conditions, in addition to
those set forth in Section 210 of the Indenture, are met:
( a) The Trustee shall have received an original
executed counterpart of this Agreement, the Letter of
evidence satisfactory to the Trustee, vhich may be
telephonic notice fl-or, the title company, of the
recordation cf tile Regulatory Agreement (in first position:
ana the First Deed of Trast in the official land records o!
San Diego Coxnry, and the Trustee shall have executed a
receipt for tile proceeds of the Bonds;
Credit, the Note ,. the Legulatory Agreement, together with
(bj The Trustee silall have received an opinion of
counsel tc the Owner ir, substantially the form referenced
in Exhibit A attached hereto, ana an opinion of counsel to
the Bank in substantially the form referenced in Exhibit
k- 1 attached hereto;
(c) Tile Trustee shall have received a certificate
fron the Bank stazinq that the proceeds of the Bonds
Bank for payment of the principal portion of the redemptio~
price of the Prior Eonds;
deposited with the Sank will be sufficient to reimburse thc
(dl nic Event of Default nor any event which vith the
passage of tine and;/'ox- the qiving of notice would
constitl-lr,e a:-: bvent of Default uncier the Loan Documents
3 -p LaAi - 1 7 have occurr-eo, as evidenced by a certificate receivec
fron tne Owner:
r
(e) The Trustee shall have received the Program Fee;
and
(f) All legal matrers incident to the transactions
contemplated by this Agreement shall be conciuded to the
reasonable satisfaction of Bond Counsel as evidenced by th
delivery of Bead Counselts legal opinion.
Section 3.3. Commitment to Eyecute the Note. The Owner agrees to execute' and deliver the Note simultaneously with the
execution of this Agreement. The Owner acknowledges that the
Progran: Fee shall be deposited by the Trustee in the Cost of
Issuance Fund to pay Costs of Issuance.
Section 3.4. Limited Liability. All obligations of the
Issuer incurred hereunder shall be special obliqations of the Issuer, payable solely an2 only from the Trust Estate. The
Bonds, and thc inxerest thereo:l, do not constitute a debt, I
04/'30./93
5340Q,,.'%062,,'13 -7-
liability, general or moral obligation or pledge of the faith
or loan of the credit of the Issuer, the State or any other
political subdivision of the State, within the meaning of any
constitutional or statutory limitation or provisions. Neither
the faith and credit nor the taxing power of the Issuer, the
State or any other political subdivision of the State is
pledged to the payment of the principal of, premium, if any, or
iIlxerest on the Bonds or any Other costs incideat thereto.
Section 3.5. rhe Trcsree. The Trustee acts hereunder r-
solely as Trustee fol- the benefit of the Registered Owners, anc
not in its individuai capacity. The Trustee shall act as
specificaily provided herein, in the Indenture and in the
Intercreditor Agreement and may exercise such additional power:
as are reasonably incidental hereto and thereto; provided,
however, thaz the Trustee shall not do anything with respect tc
this Agreement, the Eon5s or the Replatory Agreement which is
not permitxed i>y tile indencure. The Trustee shali act as the
agent or' and on behalf sf the Issuer and any act required to bc
performed by the issuer as herein provided shall be deemed
taken if such acx is performed by the Truszee. Neither the
Trustee 1101- any of irs officers, directors or employees shall
be liable for any actior, taken or omitted to be taken by it
hereunder 01- 1x1 connection herewith except to the extent (a)
SUC~ liability is ci3-1~ tc its or their own negliqence or willfu:
misconduct, or (b) the Trxstee is otherwise liable as provided
in Sectioll 993 of the Indenture. The Trustee may consult with
legal counsel seiected by i~ (the reasonable fees of which
counsel shall be paid 5y the Owner) and any action taken or
suffered by it reasonably an= :n uood faith in accordance with
the opinion of such cou:~s~;I shall be full justification and
prozectis:: tc it. _j__ L L\,-~-S of the Trcstee to relv 01:
documents, the manner :r, wxch it may prove or establish a
matcer and tne scope sf its obligations, liabilities ana
Indenture.
-.
.. T".c v" -<,7 t
-.
protections SR2lll be as Set forth in Articie IX of the . 1-
I ZR-TCLE ._LA - 1~7
THE LOAN
Section 4.1. Amount and Source of the Loan. Upon the
issuance cf the Sonas, the issuer will make to the Owner and
fund, and the Owner hereby accepts from the Issuer, upon the
terms and ccndizions set forth herein, in the Regulatory
kgreem.enz, and in the Indenture, the Loan and agrees to have
the proceeds of the Loar, applied and disbursed in accordance
with the provisions of this Agreement, the Regulatory Agreemen
and the Indenture to reimburse the Prior Bonds Bank, for the
payment nade under- the Prior Bonds Letter of Credit. The Loan
shali be deemed made when zhe Trustee acknowiedges receipt of
04/30/93
5340Qj2062/13 -8-
the proceeds of the Bonds and satisfaction of the conditions
specified in Section 3.2 hereof and in Section 210 of the
Indenture.
Section 4.;. Fu!:ciing of tile Loan. The Oxner agrees that, -,
in acccrda:ice KLZS SecLion 3C2 of the Indenture, the Trustee . ..
will fund the Loan in the amount of $15,920,009 from the
proceeds of the saie ci the Bonds, in immediately available
fvmds, on the Eonc L sslLlal>ce Eate to tile Prior Bonds Bank to l-eimbu;-.-se it fol- ->-. ~l,e paynent made under the Prior Bonds Letter
of Credit .
"
LTTICLE 1:
RETI._'r"ENT OF THE LOAN
- "
SECtiO1' 3. -. Loan Repa:mer,t. The Loan shall be evidenced
by the Note whicll sh=.li be executed by the Oxner in subs ran ti all:^ the for?. attached hereto as Exhibit E. The Owner
agrees to pay to zhc Trustee the principal of, pr-emiun; (if any)
and interesx or, tne Lcan a'~ the times, in the manner, in the
amount and at tile 1-2:~ or ~nterest provided in the Note and
this Agreement. P- LC secure its obligations to repay the Loan
an", to cause fur;dc z.7 ~- ix a;:a:-as;e for the purchase of Bonds,
the Obmer has deli-:erec 'cc' ci?e Trustee the Letter of Credit anc
wli: qran-, the Tn~stee a sec:.:rity interest in the Project
pursuant to th5 :ems cf the First Deed of Trust and will take all ~c~cjg;l~ !~er~~ss~~--~,- t,;: zey.-fec; suck security interest. The
issuer will asslcrr-2 all cf icz r-icjhcs and intereszs under the
Note tc: ths T~.USX?E axe zke Eani:. The Owner hereby agrees to
su,zh assignmeliz ky tj?~ Iss;Ic.:-. The Owner hereby agrees to the
First Deed 05 TL-USC upon xhe occurrence of an Event of Default
hereuncer 01- the.-~-~:ncie-, subject TG the provisions of the
"
-.
.-
..7
m Lr~:stes! s exercislc7 2:- " of :xs rights axd remedies under- the
-. Ince-c:-edico- -\q:-ee:T.?::X.
(a) The 0-me- agrees :a pay, as and for repayn?ent of the
Loan, 1.3 the TI-LIS_LEIC- 23:- the account of the Issuer until the
principal of and interest (bxt not premium, if anyj on the
Eonds sna~i aa-..'e heen paic DL- provision for paymenc shall have
been made in accordance with the Indenture, in federal or othel
immediateiy available funds current at the corporate trust
office designate5 by tile Trustee, OII each date upon which a
payment is due 01: the BonSs an amount equal to (i) the interest
on the Boncis which will becone due on such date and (ii) the
principai on tile Eonas ~hich oil1 become due (whether at
maturity, by p~"io- reaem~tion, or otherwise) on such date. In
addition, the Owner agrees to repay the principal of tne Loan,
plus interest accrued thereon until the date fixed for
redemption c;f rhe Sands 70 be redeemed with such repayment, in
~ -. -
0 4 ;'3 0 ;'a 3
53400,'2062 ..*'I3 -9-
the amounts and at the times specified in Sections 5.3 and 5.4
hereof.
Each loan payment under this Section 5.1 shall at all time
be suificienE to pay the total amount of interest, principal
and premium, if any, payable on the Bonds on the applicable
date estabiished under the Indenture. If on any Interest
Payment Date or any date or! which the principal of the Bonds
shall become due, whethsr at maturity or by redemption,
acceleration or otherwise, the amounts held by the Trustee in
the Interest Account, the Principal Account, the Seasoned Fund
Account, if applicable, and the Redemption Account in the Debt
Service Fund createc pursuant to the Indenture are insufficien
to make the reqclred payments cf interest, principal, and
premiu?.?., if any, 01; the Bonds on such date as reguired by the
terms of the Indenrure, the Owner shall forthwith pay such
deficiexcy zo the Truszee for deposit in the Debt Service Fund
Interest Payment Date, redemption date, 01- principal payment
7- ifie Owner hereby authorizes and directs the Trustee to dra
moneys under the Letter of Credit ir, accordance v:ith the terms
thereof, tns provisions of the Indenture and this Agreement to
the extenz necessary ts pa17 the interest OR and principal (but
not premium) of the Eonds when due. It is the intention of th
for paymenxs made ur:der the Letter of Credic in accordance wit
the pl-ovi si ons 05 thc Reimbursement Agreement. The obligation
of the Owner ilex-euncier- tc. pay principal of, premium (if any)
and interesy on the LGan shall be deemed satisfied and
discharged at such tim~ and to the exrent that: ( i ) such
amounts are paid from proceeds of drawings under the Letter of
P,- bAect~:, .' ( ii ; Seasonee Funds are applied by the Truszee to the
obligation to pay redemption premlums on the Bonds pursuant tc
the Indenture and (iii) ths Eank is reimbursed for payments
made by the Eank under the Letter cf Credit.
Issuer and th2 Ownex xhat the Owner shaii reimbul-se the Bank
The Ownex- hersby authorizes and directs the Trustee, and
the Trustee agrees, ts reixburse the Bank immediately for drawings ul>=ier tile Letter of Credit (except with respect to
drawings made tc purchase Bonds pursuant to Article XI of the
Indencure for whicii reimbursement shall be made pursuant to ti-
Reimbursemenc Agreenentj from any moneys on deposit in the
Revenue Funs, ths Purchase Fund and from remarketing proceeds
related to Pledged Boxis, including investment earnings therec
to the extenr, such earnings are not rebatable to the United States Treasury Depar~ment, under the circumstances and to the
extent provided for in the Indenture.
(b) The Owner furrher agrees to pay ail taxes and
assessments, general or special , including, without limitatior
ai; ad vaicrert? taxes, co:lcerning or in any wa.y reiatec to the "
O4/3 0,133
5340Q/2062/13 -10-
Project, or any part thereof, and any other governmental charges and impositions whatsoever, foreseexl or unforeseen, and
all utility and other charges and assessmenCs; provided,
however, that the Owner reserves the right to contest in good
faith the iega1;ty of any tax or governmental .charge concerning
or in any Fay related TO the Project .
-.
(c) The 6v;ne-r- furthe:- agrees tc pay to the Trustee on or
before ~lle Bond Issuance 3aze the Proqram Fee fcr deposit to
the Cost of iss:lanc? Func to be applied to the payment of Costs
of issuance as set forth in inscructions provided to the
Trustee by the Issue: GI; -' Lh+ = Bond Issuance Date. The Owner-
ais0 agrees to pay any additional Costs of Issuance in excess
of the amount on deposiz ir zhe Cost of Issuance Fund as may be
approved by the Issuer.
(d) The Owner f:L1z-tiler aqrees to pay, until the principal of an6 Il~teres'l OG all Ouxsxanciing Eonds shali have been fuliy
paid, t~ tile Tr-ustee such anounts as the Trustee may from time
to time reauest for C)~di~~~>--~~ Services and Ordinary Expenses 2nd
Extraordinary Ser-vices an2 cxcracrdinary Expenses, and, during
the term of the Reqruiaxory Agreement, the annu21 fees of the
Issuer; and to pay on the denand of the Trustee or the issuer
any fees anc expenses incurred in connection with the enforcement of tile Iieq7Jlatoz-y 'kcjreement and for the payment of
annual Ratlnq Agency Fees and all amounts as and when required
tc. be depositec in th; kebarz FUEi under the Indenture or to be remizted to the United Staces pursuant to the Indenture, in
eac?: case zc rj?? p_:<ze;l~ cf a:~.v~ deiiciencT,r - tnerefo?; -1.1 the
General Fund arA to Fay TC the Trustee or the Issuer the actual and reas.311zaLe cost ~f ar.: ~ctol-ney,, accounxant cr consultant
the Issue" s o3ligszions un2e:- Section 594 of the indenture,
inclucl~:~ -,ne oblicjazicn cc ,calculate tne amounz to be rebated
tc the ~.!n~ceci Stat~.s TI-easur-:, if any, or to enforce any
and expensss Incurr-ec; 11: csnnection with the coriversion of tne
inTe:-esT. rate SI-; the Bcn5s 0:- in connection with the delivery
of a Subsyixute Credit zaz~ilt'.,: 02- the manciatory tender of
3onds anaer Sectior, 6C7 of zhc indenture. The Owner agrees to
reimburse tne Issuer- for zhe issuer's expenses reasonably
incurred or advances reasonably made, with interest at the
I\'aximurn Permitted kate, to CO:.'P?I' expenses, in tile enforcement
of its rights 01- remedies under tnis Agreement', the Indenture
or the Regulatory Agr-eiment -LC: the extent that it acts without
previously obtainirlg indemnity.
-
"
.. aurl;cl-izec: 217 SF.C~;C:~ 52: c.: =;:E i:>~~ellt~l-~ ii> conl:ection with- " -~
-1 .
~Y'c~s:o:' of iillc .&zc,mex. The Owner acg-e?s to pay all fees .. +-,, 4 - ..
- ._.
-
.-
(e) The Owner further- agrees that, in the event moneys fo:
the purchase of 2 Bond tendered for purchase pursuant to the
proITisions of Article XI of the Indenture are not available fo:
such purpose through che successful remarketing of such Bond
94/30,/93
534OQ; 2062,,/'13 -11-
prior to the date specified for its purchase, the Owner will
cause such moneys to be made available for such purpose on said
date. To satisfy the Owner's obligation under this subsection
(e), the Owner hereby authorizes and directs the Trustee to
dral*- moneys under the Letter of Credit in accordance with the
provisions of the Indenture, this Agreement and the Letter of
Credit to pay the purchase price of tendered Bonds which have
not been remarketed. The Owner's obligation to repay the Loan
shall 'u? deemed satisfied and discharged to the extent Bonds sc
purchased are subsequently cancelled as a result of tile Owner':
reimbursement to the Lank for any such drawing. Nothing hereir
shall prevenr, Eonds. frm becoming Pledged Ijonds in accordance
with the Indenture, the Fiedge Agreement and the Reimbursement Agreement and remaining gutstanding thereafter.
(f) At its option and at the times permitted by Section
214 cf tile indencure: the Owner may deliver to the Trustee a
Substitute Credit Facility, and the Trustee shail accept the
Substitute Credit Facility in place of the Letter of Credit an(
return tile Letcer of Credit. to the Bank for cancellation if,
but only if, the reievan-, conditions set forth ir, Section 214
of the Indenrure have been met. Unless waive2 by the Trustee
and the Issuer, the Oxner shall provide written notice to the
Trustee, the Issuer and the Bank of its intention to deliver a
Substitute Credit Facl~~ty at least 40 days prio.; to the
expected date of substitution (which date shall be at least
2C days prior to the expiration date of the Letter of Credit)
and snail cause the Rating Agency tnen rating the Bonds to
provide the Truste? a: least 20 days prior to the expected dat,
cf substitution ~itL a written statenent as t~ the rating
.. .
expected 10 be applicable ts che Bonc?s on ana afcer such date
Of SEbSTiZutiOIl.
Section 3.:. p; icL~re - -1 of the Owner's Obligations.' The
Owner shali :-e)32y tile Loa:: ?::rsuant to the terms of the Note
and .=hail cause rnonsys fcr- the purchase of Ejonds to be provide
as sec fcrtii in Sectior, j.l(e) nereof irrespective of any
rights of set-or':, recou-,rr,ent cr counterciaim the Owner might
ctilemise have against the Issuer, the Trustee, tne Bank or an
ctner person. The Owner will not suspend, discontinue or
reduce any such payment or (except as expressly provided
herein) terninate this Agreement for any cause, including,
without limiting tile generality of the foregoing, (i) any dela
or interruption in tile operation of the Project; (ii) the
failure to obtain ar,y permit, order or action of any kind from
any governmental agency relating to the Loan or the Project;
(iii) any event constitucing force majeure; (iv) any acts or
purpose; (v) the termination of this Agreement; (vi) any than?
politicai subdivlsicn cnereof; or (viij any failure of the
-
-7
circumstances that mav constitute commercial frustration of
- in the laws Of the 'JnitP-6 States cf America, the State or any
04/'30,/93
5340Q//2062,/13 -12-
Issuer to perform or observe any covenant whether expyessed or
implied, or to discharge any duty, liability or obligation
arising out of or connected with the Note; it being the
intention of the parties that, as long as the Note or any
portion thereof remains outstanding and unpaid, the obligation
of the Owner to repay rhe Loar! and provide such moneys shall
continue in all events. This Section 5.2 shall not be construed to release tile issuer from any of its obligations
hereunder, the Trustee fron any of its obligations under the
Incientur-e, or, except as provided in this Section 5.2, to
prevent or restrict the Owner from asserting any rights which
it may have against tile Issuer or the Trustee under the Note 01
the Indenture or under any provision of iaw or to prevent or
restrict the Owner, at its OWE cost and expense, from
prosemtiny or defending any action or proceeding by OL- agains-
the Issuer or the Trustee or from taking any other action to
protect or secure its rights.
Section 5.3. Mandatory,. Prepavment of the Note. The Note
is subject to mar;daco;-y prepayment in whole or in part, at a
pries esual tn tile p-inclpal amounz thereof to be prepaid,
together with acsrued int2res1 to the date fixed for redemptio:
~i the Bonds t~ be r-edeem-6 ~ith such prepayment:
(a:) Ox tile day seleceed by the Trustee for redemptio:
of tne Bonds in the e-,rer?_t that the Prior Eonds have not
been redeemed in whcle 31: the date which is 60 days
folio-ding the Bond Issuance Date;
(b; On the eaylr sele~ted Uy the Trustee for reaemptio,
of the Bo:lcis where tke LWR~L- nas failed to deliver to the
cri-ceyia sc, iol-t> ir, Sec-,ion 214 of the IndenI--lre within
- 60 days of written notice 'io the Trustee of the occurrence
of an Act rjf Eankrucmy ~f Sa>&: or at least 20 days prior
to tile e>:?;rat;s:: dzxe sf tilo Letter or' CrediL, except tha
ir, no evenL shsll such redemptions occur Later than 5 days
TL^USl"P E ~y'~-:~~~~~ Zr".<,- _-_ - r--<. ,o,i~lt~~ ' satisfyinq the
cl-iol- t- the p::~i:--i c."o~ date of the Letter of Credit;
(c) On the day selected by the Trustee for redemptio
of the Bonds af~e:- tile Bank fails or refuses to honor a
drawing under the Letter of Credit or to reinstate the
Letter of Crecit in accordance with its terms;
(d) On tile day select& by the Trustee for redemptio
of the Bonds, ic the evect of an involunrary loss or the
substantial destruction cf the Project as a result of
unforeseen events (e.c;. , fire, seizure, requisition, chang
in a federal iaw or an action of a federal agency after th
date of issuance of tne Bonds which prevents the Issuer
from el:fc;r-cinc,r the rsqxirements of Section 1.103-8(b) of.
04/30/93
53400_;i2062i~'13 -13-
the Regulations, or condemnation), promptly upon receipt of
insurance 01- other compensation or, if there are to be no
such payments, promptly after the event giving rise to the
involuntary loss or substantial destruction of the Project,
in an amount equal to the then unpaid principal amount of
the Note. FJotwithstanding the foregoing, the Note will not
have to be prepaid in whoie in such circumstances if
(i) within 90 days of the evexit giving rise to the loss or
desyructioc; the Obmer notifies the Trustee, the issuer- an(
Lne Bank, in writinc, that the Project can be restored
within 18 months to a condition permitting the conduct of
normal business operzrions; (ii) t;i-,hin 180 days of the
event giving rise tc; such taking, lcss or destruction, the
Owner comrnellces tc use such amounts to reconstruct the
Froject pursumt to the terms of this Agreement and the
Indenture; and (iii) such amounts are disbursed for the
restoraticJn cf the Project within 18 months after the date
of the notice from tile Owner referred to in clause
part, to the exre117 of unciisbursed funds on deposit in the
Insurance Proceeds kccount created pursuant to the
Indenture at the expirzition of the period described in
(iii j abo-\..re u~less su.ck period is extended with the consen
of the issuer and the Eank and an opinion of Bond Counsei
is deli7iered tc the Trustee; tile issuer and the Bank to th
effect that an extension of such period will not result in
Inter-esx on the boxis becominy includable in tile gross
income of the rec;?ients thereof for federal income tax
purposes; provided, however, that prepayment in whole shal
be immeaiarely due and payabie if in the written opinion o
Bond Counsel deiiveree tc r,he Trustee, the Issuer and the
Lallk a I a>i\il-e t~ x;;ake sucn prepayment will cause interest
OK the 5oncis to be iszludable in gross income for federal
izlcorne tax pur-poses;
.L-
..
(i) hereof, b-~z, rather, the Note shall be prepaid, in
-
,-. .-
(e) On the ciav seiected bv the Trustee for reaemptio I.
of Bonds after- the Tryczszee has received wriccen notice and
direztlor fro% the sank to redeem Bonds as a result of the
occurrencs of a]-: e~~ent of default under- the Reimbursement
Agreement in al2 amaunt equal tc the then-unpaid principal
amount of the NQ+Q. _-I
(f) On the day selected by the Trustee for redemptic
of the Bonds after receipt by tile Trustee of notice from
the issuer of a Determinazion of Taxability, or, subject t
the provisions sf the incercreditor Agreement, upon
acceieration or' the Note pursuant to Section 7.3 of this
Agreement following a default by the Owner under this
Agreement or the Regulatory Agreement, in an amount equal
to the then-unpaid principal amount of the Note; and
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53400_/*'2062/'13 -1.1"
(g) On any Reset Date, any Adjustable Interest Rate
Conversion Date, the Conversion Date or any Substitution
Date (as defined in Section 214(E) of the Indenture) in the
Eonds on any of sac11 dates, as set forth in Section 1105 oj
~112 indenture, haT;e not been satisfied.
The Trustee shall deposit and use the proceeds of a drawin5
under the Letter of Credit representing prepayments of the Note
pursuant tc this Section ar?d Section 5.4 in accordance with thc
Illdenture .
event the conditions precedent to a remarketing of the
.L-
In the event of a parrial prepayment of the Note, pursuant to this Section CY Sectic~ 5.4, the principal arriount of the Tfi
Otme:" s. o5iigatio:i -mcier <he Note shall be reducec? by the
principal amoun-t of Boncz reaeemed with the proceeds of such
prepayment.
Section 5.4. Optional ?repayment of the Note.
The Owner; at ics option and with the prior written consen.
of tile Eank, may prepay rile Note, in whole or in part, on any
date that Sonds are pemitred tc be optionally redeemed
pursuant to Secticn 602 or' the Indenture, following written
notice of the Cmner's in~en-l~on tc cic so as provided
hereinbelow, il: an\: inregr-21 nultiple of $103,000 ($120, 000 in
the case of c)ne s'ondj t::cif tile BGIICS bear interest at an
Adjustable Interest Rate and during a Reset Feriod of less tha:
one year- 01- SC;, 032 durincj. any Fceset Period of one year or more
01- aftc- 5-1~ C?:?-.re-sion Ca~-c, at the princiszl. arnoxn5c',
together with accrued lnterest to the date OR which Bonds will
be redeemk \.;it!> SuCi-i gzy~ent, plus my applicabie premium.
.-
- - ._
An,- prer.?~~, ~aya3-e in connection with a prepayment of the
45 days wrirten :?otic5 tc the Issuer, the Eank and the Trustee
of tile principal amoxlt ts be optionally prepaid and tile amoun
.-
_- .- - Ncce sllaii D4 pala zrcx Seasonec Funds. The Owner shail give
of pl-epayrcent premium, 11 any. .r
If the regxi rea princlpal amount of any prepayment in part
pursuant to Section 5.3 cr this Section 5.4 shall not be an
integral multiple of SICC),, 003 ($120,000 in the case of one
Bond) while the Bonds bear interest at an Adjustable Interest
Rate and during any Reset Period of less than one year or
$5,000 during any keset Eericd of one year or more or after th
Conversion Care, the11 the required principal amount of such
prepayment shali be deepbed to be the next greater integral
multiple of $100,000 (Sl20,OOO in the case of one Bond) or
$5,000, 2s applicable, an6 any interest due with such
prepaymeni shall be calc-~lated using such higher amount.
04./'30,/93
5340Q,/f2062 ..,I13 -1s-
Section 5.5. Past Due Pairments. In the event the Owner
shall fail to pay any amounts required to be paid under Section
5.1 hereof I any such past due amount shall bear interest at the
"prime rate" as announced from time to time by the Bank until
finally paid.
Section 5.6. Conversion of Interest Rate on Bonds. The
Owner mav, with the prior written consent of the Bank, elect tc -
con7.7ert the inte:-est rate applicable to the Loan as provided for and subject tc the requirements contained in Sections 21iA, 212 2nd 213 I respectivel-r i, of tile Indenture. . The Owner shall
have the riqhx to request the mandatory tender of the Eonds
under the circurnszances ani as pro~7ided in Section 607 of the
Indenture.
Section 5.7. Limitation on Owner's Liability. The Owner
is a general partnership estabiished as a separate entity unde!
the iaws cf the Sxaxe of California. Without an agreement to
the contrary, the general partllers of such generai partnership
couic be fully liable for the debts of the partnership in the
event the assets cf the general partnership were insufficient
to satisfy such debts. However, it is the intention and
agreement cf the parries hereto tc limlt such liability of the
generai pal-zners as hereinafter set forth.
7.
In connPczion xith th2 Transaction pursuant to which this
A<qreSine=r. is esecutec, =ne I SSLI~L-, the Trus-,ee and/or the Gwne: . ,.
will enter into various other agreements between two or more 0. them, includir,c,., without limitation, this Agreement, the
Admini stratio;; .ki,greement, the IndPnture, any Supplemental
Indenture, tile Regu1ator:T Agreement, the Note, the First Deed
of Trust ani the Purchase Agreement. Such agreements, togethe
xitii any sf xne foregsinr;; including, without limitation, any
and all supplements, modifications and amendments to any of th'
forgcinc; shali be referred ta herein as the 'I issuer Documents"
The lssuer, tile T;-.~stee and the Owner hereby expressly
undersTand and aqree CLI~T, notwithstanding anything to the
conxrary con~ained in tlle Issuer Documents, and notwithstandin
any other relations among the Issuer, the Trustee and the Owne
relatinq tc the Project, the liability of the Owner at all
times and ill all e?;ents shall be irrevocably and
unconditionally llmiteci tc: the Project, the Funds and Accounts unaer the Inaennx-e and the other assets, if any, of the Owner
ix? its capzcity as a qeneral partnership. No liability of the
Owner shall, in any eT.rent whatsoever, extend beyond the Owner
to include any of the personal assets of the constituent
partners of the Owner, 0:- their heirs, successors or assigns, and such limitatioR of liability shall apply whether arising
fcr any reason whatsoeve;;.
.- .
04,,'30,/93
5340Q,,'2062,i'l3 -16-
Without in any way limiting the generality of the
foregoing, the foregoing limitation on liability shall apply to (i) ali of Owner's obligations under the Issuer Documents to
pay expenses, (ii) all of the Owner's obligations under any
indemnities contained within or otherwise referenced in any of
the Issuer Documen-cs, including, xithout limitation, the
indemnification of the Issuer and the Trustee under Section 6.8
hereof or Section ! 0; the Regulatory Agreement, and (iii) all
of the Owner-!c obligations to make any payment to the Issuer or
the Trustee required ts be paid pursuant to the provisions of
Sections S.l(dj and 7.4 of this Agreement or pursuant to
Section 18 cf the Reqdiatcry Agreement.
"
-%ART I CLE v I
FURTEER AGREEMENTS
Section 6.1. Successor to the Issuer. The Issuer will at
a:: times use its besx efforts to maintain the powers,
law or assure the assumptions of its obligations hereunder by any public: zrus*~ or polizlcal subdivision succeedinq to its
powers.
functio:ls, duties axd obligations now reposed in it pursuant tc
Section 6.2. " Owner " - >ICY tc DisDose of Assets;
Cc:1ciicions uncel- f;7;hzcz ~xcecc1o;~s Permitted. The Owner agrees
that during the term of rhis Agreement it will not dispose of all 01- substanziallv all of its assets nor consolidate with no:
the Trustee an opinicE ci Bond Counsel to the effect that such
alsposai cf assets, consciidation 0:- merger will not cause the
incerest 011 the Eoncis. t~ become inciudabie in gross income for
federai. 1ncomc. ZZ>: purposes; (ii) the acquirer of the assets 0'
the entizy with which it snail consolidate or into which it
shall merge shall be ar, inci-.ridual or a corporation,
partnership or other iecjal entity organized and existing under
of the LJniT2d Sxates of krr.erica and shall be qualified 2nd
admitteu to dc business in the State; (iii) such acquiring or
remaining entixy shall assume in writing all of the obligation
of the Owner under this Agreement, the Regulatory Agreement,
the Note, the kdministracion Agreement and the First Deed of
Trust; and (ixTj such dispcsal of assets, consolidation or
merger shall be approved by the Issuer in accordance with
Section 11 of the Regulatory Agreement and by the Bank.
" . "
merge i~lt~ any- en+< cAL.4 -7- unless (5) it shall have first filed wit1
_.
-.
the laws of the Unltecl States of America or one of tine states
Section 6.3. Cooperation in Enforcement of Regulatory
Agreems. The Owner hereby covenants and agrees as follows:
(a) to comply witn all provisions of the Regulatory
Agreement;
O4/30/9S
5240Q,,'2062/13 -i7-
(b) to advise the Issuer, the Trustee, the Program
. Administrator and the Eank in writing promptly upon
learning of any default with respect to the covenants,
obligations and agreements of the Owner set forth in the
Regulatory Agreement;
(c) upon w-itten cireczion by the Issuer, the Program
kdministrator or the T:-ssme, to cooperate fully and
p~m?tly with the Iss~e: and the Tmstee ir, enforcing the - -erns and provisions cf th=. Regulatory Agreement;
jd) tc file ~n accordance with the tine limits
established by the Regularory Agreement all reports and
certificates required thereunder, including the required cc,-4.: __ ,-~~.c~TsE of Continuinq Program Compliance and Income
Cerrificatlons attached tc the Regulatory Iigeement as
l-. ~xhibit,s E and C, r~~pecti~.~rel~:. 1, anci
(e) to erLte- inzc the kcministration Agreement and
compiy vritl- all of its pro:.-isio::~.
ne iss:L1e:- snali i;a:.; 110 obligatio:l to monitor tile Owner's
perforrcaxce 1:n~er the l?eg~~l&~sr:~ kqreement, which duties shall
be assumed by the Prograrr, Administrator. Neither the Trustee
1201- tile Issue- silall 1;1~:~:- SF-.- liability j.n tile evenr, of any
breach or T.;iclation s.5 th? 3,egsiazory Agreement by the Owner,
an^ tile g>:ne:- agreez xc 1:xier::mry and hoia 5armiese the Issuer
and tile Trustee from any clain 01- liability, joint or several,
for such b:-each pi:-sua~r rs Sestion 6. 8 hereof.
m-
._
Section 0. L. -I ya>: Star-. ,.,s of Eonds. The Owner hereby
COT;^^^^^:^, :-ep:.esenrz :i:C ag1-3e7 as foilows: (2) :hat The
1&~i2-- will ;JOT ;,:~1=:,;1~:c;i-.: - -.ai:e 01- pe:-miz any action LO be taken
that woulC;, aaverseiy- affec-, tile exciusio~ from gross income fol
fedeza, 1ncon~ ta,: p:~:-posss 05 the in~erest OR the Eonds and,
11 1: silculu -,ak=_F; 3:- perzL:: an;:' such action to be taken, the
Owner ma-: cake all la;;rui aztiolls that it can take to rescinc
such actin? grox~zil, up!; ilz~.ri:~q knowledge thereof; and (b)
that tile iiwner \:iLL za:c:e such actior, or ac'i LLons, including
amen.j,:ncj tils Lcan and the Xotc-, as determined reasonably
necessary in tne spinion of Bczd Counsei to comply fully with
all appiicable rules, ruiznge, policies, procedures,
regulations or O-'~Q-- orricial statements promuigated or
r;roposea by the U1:iced Syazes Deparcment of the Treasury or thj
Internal Rsvenue Se~-;;i~ce under- Section 103 (b) (4) (A) of the
Prior Code 01- Sectior: 1313ja) of the Tax Reform Act of 1986.
The Owner fur~he:- ccvenancs and agrees that it has not taken o
permitxed zo be taken and will not knowingiy take or permit to
be taken any action which will cause interest on the Bonds or
he Prior Eonds to beconw includable in gross income for federal :ncome tax gurpcses and ;ill direct all investments in
-.
.r . -1
- 7- "
_.
"
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+
0 4 ,//, 3 0 .i' 9 3
5300Q/2062,.':3 -18-
compliance with the Code and the Prior Code. The Trustee, the
Owner and the Issuer covenant and agree to act in accordance
with Section 504 of the Indenture. The Trustee and the Issuer
covenant that they will not knowingly take or permit to be
taken any action which will cause interest on the Bonds or the
3rior Ejonds TO become includable In gross income for federal
income tax purpcses. Neither the Owner, the Trustee nor the
Issuer shall have violaced these covenants if intersst on any
of the Bonds or the Prior Sonds becomes includable in the gross
income of a person solely because such person is a "substantial user'! of tile Project 01- a "related person'' within the meaning of Section l<?( a), of the Code. None of these covenants and
agreements shall require the Owner, the Trustee or the Issuer
to enter- an appearance or intervene in any administrative,
legislative or judicial proceeding in connection with any
changes in applicable laws, ruies or regulations 0:- in
connection with any decisions of any court or administrative
agency cr other gox~ernmezxal body zffecting the exclusion from
gross income for federal Income tax purposes of interest on the
E,onCs or tne Prior Bonds; and the Trustee's or the Issuer's
responsibilitv under this paragraph shall be limited tc action:
within izs conr,rol and ro only such actions as are permitted 01
recpi-ed to be underxskez uncier the terms of the indenture,
this Agreement or the RegulaIory Agreement.
Tile 0w1er- hereby ~arrzn~s and covenants that the Project consxltutes anc :f;iii COYistiLuLe a "qualified residential rental
project", as aefinec: i?? Section 103(b) (4) (A) of the Prior- Code
and the Reyulazlcns, xilich wili be rented or available for
rental on z: ,~c;:>~i:ll~a1 besis 70 members of the general public ac
pro7rided by the pro~,~:~;ons of the Regulatory Agreement. The
E'roject conciszc sf one sz n:ore prczimate buildings or
struczures containinq o:>e CY m~re similariy constructed
accommodations containing separate and complete facilities for
li-Jing, sleep in^, eztinc,., coo:-zing and sanitation which are to
be used on other than E zransient basis and facilities which
are fu1Ictio;;allY rela7ecl ane subordinate to such
accommodations. Nc; actio1-s ill be taken by the Owner which
will in any way affecz E-=. use cf the Project therefor and not
less than 20:; of the units 01 Lns Project shall be rented or
a7;aiiabie for l-encai ai- as provided by Section 4 of the
Regulatory Agreemerl:.
..
r A.
, -.
Sectlon 6.5. Additional instruments. The Owner hereby covenants to execute and cellver such additional instruments
and to perform such additional acts as may be necessary, in th
opinion of the Issuer, the Eank or the Trustee, to carry out
the intent of the Loan ar,d the Note or to perfect or give
furthsr assurances of any of the rights granted or provided fo
in the Loan and the Note.
04/30/93
5340Cl,/206%,/13 -19-
Section 6.6. Books and Records. The Owner hereby
covenants to permit tile Issuer and the Trustee or their duly
authorized representatives access during normal business hours
to the books and records of the Owner pertaining to the Loan
and the Prcject, and to make such books and records available for audit and inspectioc, ax reasonable times and under
reasonable conditions tc, the Issuer, the Trustee and their duly
authorized representatlves.
Section 5.7. Notice si Certain Events. The Owner hereby
covenan-cs to advise the Issuer, the Bank and the Trustee
promptly in wr-itinc; of tie occurrence of any Event of Default
hereunder or any eTTe:1z which, with the passage of time or
service of notice, 01- both; would constitute an Event of
Default hereuncier or unczr the Regulatory Agreement, specifying
the nature anc period of existence of such event and the
actions Seiaq take:? or proposed to be taken i.;.ith respect
fnereto. in additlor?, the Owner hereby covenants to advise the
Issuer, the Bank and the Trustee promptly in writing of the
occurrence of any default under the Loa; or of the occurrence
of an Act of Eankruptcy.
-7 LI"~ 'I'rdstee c0~~7~ena~1~5 TZ ;~otir'v the Owner cf any amoGnts
owing pursuant tc Sectlo~ 5.1 ten days in advance of the date
sucil amaucts 21-2 due. 'Tile TrusTee agrees to mail to the Owner
a copy of any a~,cuments tc be presented by the Trusree to the
Ba~k fcr the p~r-pose or makinq a di-aw on the Letter of Credit
concurrently with their presentation to the Bank.
Section 6.2. Indemnification of the Issuer, the Eank and
the Trustee. ~- The Gw:~er hereby ceve:lan';s and agreez tc
inaemr,:zy, held ha-r..1?ss a:ld defend the I ssunr , the Bank, the
Trustee and ti~slr respecti-.;e officers, members, directors,
officials anci employees ana each cf them (each an "indemnified
party") from an6 againsx (i \ any and all claims, joint or
severz-, bv 01- on ~1ena2.f of any person arising from any cause
whatsoever in conneztlor. vit1-L Ihe provision of tax-exempt
financinc; for the Prcject or the making of the Loan; (ii) any
an6 all cialms, jc~~xz or several, arising from any act or
or licensees, iil connection with the Loan or the Project; (iii
all reasonable costs, attorney fees of counsel selected by the
indemnified party, expenses or liabilities incurred in
connection with an?; such claim or proceeding brought thereon;
provided, howe~.~el-, that this provision shall not require the
Owner to inaern?-,ify the Trustee for any claims, costs, fees,
expenses or liabilities arising from the negligence or willful
misconduct of the Trustee. In the event that any action or
proceeding is brought against any indemnified party the Owner,
upon written notice from tne indemnified party, shall assume
the investigation and defense thereof, including the empioymen
.-
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omissioa of The 0wne~- 01- anv of its agents, servants, employee:
C4//30,'9:!
53400;'2062;/13 -20-
of counsel and the payment of all expenses related thereto,
with full power to litigate, compromise or settle the same in
its sole discretion; provided that the Issuer and the Trustee
shall have the right to review and approve or disapprove any
such compromise or settiement. The indemnified party shall
nave the right to en?pioy se-,arate counsel in any such action or
proceeding and to participate in the defense thereof; but
unless such separate couxsel is employed with the approval and
consent of the Owner, or pursuant to a court order, the Owner
siiall not be requirec to pay the fees and expenses of such
separate counsel. Notvithstanding any transfer of the Project
to another owner in accordance xith the provisions of the
Regulatory Agreement, for the full term of this Agreement, the
Owner snail renain obiigated to indemnify the indemnified
parties pursua?: to ti-lic Section 6.8 with respect to any claim arisinq out of events occurring prior to the Owner's transfer
of tile Project.
section 6.9. Consent to Assignment. The Issuer has made
an assignment tc the Trus-cee under the indenture for the
benefit of the owners of the Bonds of all rights and interest
of tile Issuer in and t~ this Agreement (except its rights unde:
Sections 6.2 and 7.4 hereof and its right under Section 5.l(dj
to be paid its expenses). The Issuer has also made an
assignment tc, tho Trustee under tne Indenture for the benefit
of the owners of the Bonds of all rights and interests of the
Issue- in and tc the EC~L-SX Deed of Trust and the Letter of
Credit, and has assignec! tc the Trustee and the Bank all of it'
rights and inrerests ir. the Note. The Owner hereby consents tl
all such acsiynmenze.
r.
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SeCtioll E. 12. ~~y~-~~:l~~ ~,.;itj-~ Zs-al-7,: Laws. pJoc*dithstana- -.
inq any other p:-ov:sion ci this Agreement, it is agreed and
to the Nore 5:- other instrument of indebtedness, be construed
as requiring -~hc Owner or any other person to pay interest and
other costs or consideraxions tha-c constitute interest under
any applicable law wnich zre conrracted for, charged or
received pursuant to this Agreement in an amount in excess of
the maxinum amount of in-cerest aliowed under any applicable la
In the event or' any acceleration of the payment of the
principai amount of the Note or other evidence of indebtedness
that portion of any interest payment in excess the maximum
legal rare of interest, 11 any, provided for in this Agreement
or related documents shali be cancelled automatically as of th
date of suck: acceleration, or if theretofore paid, credited tc
the principal arriount.
understood thzt ir; :IO event shall this Agreement, with respect
.-
Tile provisions of this Section prevail over any other
provision 05 this Aqreement.
04,/30/93
5340Q/2062/'13 -21-
I
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Section 6.li. Title to the Project. The Owner has fee
simple title to the Project free and clear of any lqen or
encumbrance except for (i) liens for nondelinquent dssessments
and taxes not yet due or which are being contested dn good
Agreement, (iii) the First Geed of Trust, the Third Deed of
Trust and other security instruments in favor of the "bank; (iv)
any other encumbrances 1x1 favor of the Bank; and (v) any other
encumbrances approved by the Bank and the Issuer. Concurrently
with the closing of The Lcan, the Owner shall cause to be
delivered to the Trustee and the Bank one or more ALTA title
policies, naming the Eank an6 the Trustee as the insureds, as their respective interests may appear.
fzith by appropriate proceeaings; (11) the Requlatody
Section 6.12. Design of Project. To the best of the
Owner's knowledge, (i ) tile operation of the Project as
described herein does not and will not conflict with any
zoning, waxer or all- pollutiorz or other ordinance, order, iaw
or regulation applicable thereto; (ii j the Project has' been
designed and constructed in accordance with all applicable
federal, state and local laws or ordinances (including rules
and reguiatlons) reiatincr to zoning, buildin.;, safety, and
en\.-ironmental quality; (iii) the Ovner has not failed to obtair
and maintain in effect any licenses, permits, franchises or
other- governrnenxal authorizations necessary for the operation
and conduct of the Prcjecx to date, and (iv, all zoninr;
approvals required to oi..rn and operate the Project and all
obcaincd.
planninq approvals remiring approval by the Issuer have been
Sectlor, 6.15. Pavm~xt of Taxes. Tie O-vJner has filed or
caused xc be ?Fled all fcd~rai, sxaxe and local tax returns or
information returns w.Cicr; are required to be filed with respec-
to the Project and sf which Ovner has knowledge, and has paid
or caused to be paic all taxes as shown on said returns or on
any assessment received by it, to the extent that such taxes
have become due and payabie other than those payable without
penalty 31- interest.
"-
.. -
Section 6.14. No - Untrue Statements. Neither this
kcjreernenz nor any other documenz, certificate or statement,
furnished to tne Trustee, the Bank or the Issuer by or on
behalf of the Ownel- coneains, to the best of its knowledge, an'
untrue staxement of a material fact or omits to state a
material fact necessary in order to make the statement
the daxe nereof ana as of the 3ond Issuance Date. It is
specifically understood by Owner that all such statements,
represenrations and warranties shall be deemed to have been
relied upon by the Issuer as an inducement to make the Loan an
that if any such statements, representations .and warranties
colltained herein and therein not misleading or incomplete as o
04/30/93
53400/2062/13 -22-
were materially incorrect at the time they were made or as of
the Bond Issuance Date, the Issuer may consider any such
misrepresentation or breach an Event of Default.
Section 6.15. Useful Life. Within the meaning of Section i4?(S) sf tile Code, the Owner represents that the average maturity of the Bonds does not: exceed 12C percent of the
avera~e r-eascnably ex~ectec remaining economic life of the
P-oiect.
-&?,T 1532 VI I
EVENTS OF DET'.L.TJLT ANT! REMz:DIzS
Sectloc :. 1. Events of Default. Each of the following " ~~- s]lall be a;-: "~-17.311t of ~~fault'' :
( a '! The Owner shall fail to pay when due the amounts
required LC be paic Lnder this Agreement, or the Note when
the sarr.e sllali become due an5 payable in accordance with
the terms of this .&c:reement CY the Note, including a
failure :C L-EES-.? anl, ap~=ul-~t,s w]lich j-la\re beer? pl-e\Tiously
paid but are recovered, zttacile& or enjoined pursuant to an-.: 1~1~~~~.irc??~-- _."_. , ;-ecei-:e:-si:;;, liquidation or sip.ilar
procee5ixqs; 01-
._ ._
.. - ii
(b'j An eT.renr or' default shall have occurred under the
EIei:~~~~.lr~.tm..en~ %qreerr.en~ al-~c: tile Sank shall have notified
~he Trustee a~c ;:le 1ssse:- ci such defaulz and shall nave
requesred the T:--L:s~e~ cc. zssue a notice of default uncer
..
4" - .-
c Se,~tiol: , . 2 i, 2 ;i ; 2:-
(r;) Tile Oxnsr- s:;aii rall to perform or observe any of
the i?egxisxs:;- -i-yreeice:;:, ,;le Aax~nl stratlon Agreement, the
Not? cr the Firs: ueed cz -rust, oxher than as specified ir
r;a:-ag:-apl: (,a i abc-.?e, and such failure shall ccntinue durinc
. " -.
.L i + CL = co;.'ei~anc~ CY aqreen..eiits contained in this Agreement , .. . +; - ." 7.
a:1c afr~:- tjle psr-lsd snecified i~ Sectioll 7 -2.
-r Secticn , . -. f.;otice cf Defaxlt; OpDortunity to Cure. No
" defauiz undez SEctioll 7 ~ l(c) hereof shail constitute an Event of Default un+G " L 'I . .
(a) ~lle T'rustee GI- the Issuer, by registered or
certified r?ail, shall qiT..Te notice to the Owner and the Ban1
of such default s>ec:zyln~ the same and stating that such
*-
._ .
notice is 2 'lf.J~~~,~f: cf Default" ; and
04,/'30,'93
53400_/2062,;.'13 "Ls- ".
(b) The Owner shall have 60 days (30 days with
. respect to a Regulatory Agreement default) after receipt of
such notice to correct the default and shall not have
corrected it; provided, however, that if the default stated in the notice is of such a narure that it cannot be
corrected within 60 days (or 30 days Kith respect to a
Regulatory Agreement default), such default shall not
constitute an Event ~f Default hereunder so long as (i) the
Owner institutes czrrective action within said 60 days (or
3C days, as applicable) and diligently pursues such action
~~ntil the default is corrected, and (ii) an opinion of Bond
Counsel is obtained to the effect that the failure to cure
said default within 50 days (or 30 days, as applicable)
will not adverseiy affect the exclusion from gross income
fcr federal incone Lax purposes of interest on the Bonds.
The Lank may, but shall not be required to, correct any
default on behalf of the Owner.
Sec-ctio1-: 7.3. - Remedies. Subject to the provisions of the
InEerc-edizol- Agreement, whenever any Event of DeEault under
Section 7.1 hereof shall llal.re happened and be continuing, the
foliowinq remedial steps shall be taken:
. ” ~
(a) immediately upon tile occurrence of any Event of
Default under Sectioz ,.I the Trustee shall notify the Bank
ant, at the writtec request or’ the Issuer, declare all
amounts ciue unciez zhis .i.cjreeme:lt and the Note to be
immediately due and payable; provided, however, that in the
case of an ET~~II~L of Delzult described in (cl of Section 7.1
hereof; the ancunts due sxae1- this Agreement and the Note
shall not be acceleraIed where (i) the Trustee has receivec
an O?iniOi> 05 EcnS Counse- rnat tile failure to acceierate
tile LO~ under- s~ch cxrzumsLances will not adversely affecT
tile exciusior? frorr. gross income for federal income tax
purposes of interest on the Eonas, and (ii) the Bank has
-7-
- ,-
directed the Trustee :>ct to so declare such amounts; and
(b) If the Bank directs the Trustee to redeem the
Bonds, tile Trustee shall, for and on behalf of the Issuer
and the owners of the %r,ds, draw under the Letter of
Credit in an amount sufficient to pay amounts due or tc
become cue with respect to the Bonds as provided in the
Indenture ; and
(c) Subject to the provisions of the Indenture
(including Article 12: thereof) and Section 5.2 hereof, the
Trustee and the Issuer, at the written request or with the
consent of tile Trustee, shall take whatever action at law
or in equity whicn nay appear necessary or desirable to
collect the payments required to be made by the Owner unde‘
this Agreement (including commencing foreclosure
04/30/93
53402_/’2062 ./’I2 -24-
proceedings under the power of sale contained in the First
any obligation or agreement of the Owner under this
Agreement, the Note, the First Deed of Trust or the
Regulatory Agreement, but in no event shall the Trustee be
obligated to take any such action which in its opinion will
or might cause it to expend time or money or otherwise
incur liability uniess and until satisfactory indemnity has
Seen furnished to it.
Any amounts collected as pairments made on the Note and
pursuant to Article T7 hereof, or applicable to such payments,
and any other amounts which woald be applicable to payment of
principal or', premium, :z any, and interest on tne Bonds
coliected pursuant to action taken under this Section shall be
applied in accordance with the provisions of the Indenture or,
with the provisions of the Indenture, shall be paid as providec
ir, Section 310 of the IndenIure. Upon payment in full of all
amounts owing uxder tile Indenture, including all fees and
expenses of the Trustee, the Tender Agent and the Issuer, the
Issuel- and the Trzstee shall transfer any remaining right,
tirie 2:- interest that each has in the indenture, this
Agreement, the Noxe and the First Deed of Trust to the Bank
except any rights to recei-:~ paynent 05 fees and expenses and
tc De indemnified, as proT,7idsc for herein and therein.
Deed of Trust), or to enforce performance and observance of
. .-
if " ,ne outstanding Bonds have been deemed paid in accordance
Notwithsranding aEy ~roT,7ision in this Agreement to the
contrary, the Trustee 01- ti;? Issuer may, foilowing 5 Business Days' wr-izten EOZLCE, r~ zi~e Owner, exercise any renedies
provided hereunder in E sim;-ter period of Time than specified
in Secsic:: . L b-pt ,-,-, 1 -. -i = C,.? r d-L.LL __ ._,.. luil exercise is aexerminec? by Bond
Counsel to be reasonsbly necessary to preserve the security f01
the Bonds or the exc;usion from gross income for federal income
tax purposes or the exemption from State personal income taxes
of interest CE :lie Esnes 01- +" ,ne Prior Bonds.
"
Section 7 ~ 4. " rttorneys' Fees and Expenses. If an Event
of Default occurs, and :r the issuer or the Trustee should
empioy attorneys or incur expenses for the enforcement of any
obligation or agreemei1x r,f tne Owner contained herein, the
Owner on demand will pay to the Issuer or the Trustee the
reasonable fees oT such atxorneys and the reasonable expenses
so incurred, inciudinq in connection with court appeals.
.-
Section 7.5 No Remedy Exclusive. No remedy herein
conferred upon or reserved to the Issuer or the Trustee is intended to be exclusive of any other available remedy or
remedies, but each and every such remedy shall be cumulative
and shall be in addition to every other remedy given under thi
kgreement or now or hereafrer existing at law or in equity 0.r
04/30/93
5340Q/2062,/13 -25-
by statute. No delay or omission to exercise any right or
power accruing upon any default 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 either
of them in this Article Y?IZ, it shall not be xecessary to give
any notice, other tila: such notice as may be herein expressly
.;eqlL1ire$. Such rights and remedies as are givex the Issuer
hereunder shali also extend to the owners of the Bonds, and the
owners of the Bonds shall be deemed third party beneficiaries
cf all covenants and agreenents herein contained.
Section 7.6 NG Additionai Waiver ImDlied by One Waiver.
In the event any agreemen-c or covenant contained in this
Agreement should be breached by the Owner and thereafter waivec
by the Issuer cr tile Trustee, suck waiver shall be limited to
me pa-:Lcuiar breach so waived and shall not be deemed tc
waive any other breach hereunder including any other breach of
tne same agreement or covenant.
I- ..
A;.:-? I CLE TJI I I
9:: SCELLAMEOUS
Sectlor, 8.1. Ent5rs Lqreement. 11~s Agreement , the Note, n- '
the Indenture, tne Regclatory kg:-eemenx, the Administration
Agreement arci the ?:>-st T',ed of Trust constitu-ce the entire
a:Jreerr.enz ane ZuPersede a-~ prior agreements and
understandings, Loci; wriyfen and cral, .between the issuer and
~ile O-dner xith respect t=. tSe subject matter hereof and thereo:
"
C'
Section 8.2.. Notices. All Rotices and other
communications to be made or permitted to be made hereunder to
any party hereto shall be in t;ritinq and shall be deli-iered to
the adciresses set forth belob.- or tc such other addresses as thl
parties may provide to OP,C another in accordance with this
Section. Such notices and other communications shall be given
by any of the following means: (a) personal service; (b) by
prepaid telegram; (c) by na-tional express air courier provided
such courier maintains written verification of actual dQlivery
and (d) by facsimile provided such facsimile transmission is
confirmed by sending a written copy by nationai express air
courier. Any notice or other communication given by subsectio:
(a) or (c) above snali be deemed effective upon the date of
receipt or of refusal to accept delivery by the party to whom
such notice or other communication has been sent. Any notice
or other communicaxion given by subsection (b) or (d) shall be
deemed effecrive on the Business Day immediately followinq the
date on which the teiegraphic or facsimile transmission, as
applicable, occurs.
04/30/93
5340Q/'2062;,'13 -26-
To the Eank:
To the Owner :
Tc the Iss?-:el.:
Bank of America National Trust and
450 B Street, Suite 950
San Diego, California 92101
Facsimile No.: (619) 230-5358
La Costa Partners, a California
general partnership
c .o SoCal Development, Inc.
915 Camin0 del Mar, Suite 200
Del Mar, California 92014
Attention: Rocinel7 F. Stone
Facsimile No.: (619) 481-7343
Citv of Carlsbad
1203 Carisbad Village Drive
Carisbad, California 9200E
&; - ,,entior,: + Finance Director
Facslncle Nc.: (619) 720-9461
Savings Association
..
To the TrLlsYes: - ?.irst Trust of California, National
Association
IC: California Strest, Suite 1150
Sari Francisco, California 94111 &::=~;tio;~: rvFGLti<aXi iy HoyLlsin~
~.Z~SL~II.L~ Ne.: (415) 274-2577 - ._
Sectio:-: 5,. 2 . P-ss:gn~,?::z~. m- ~:ns . Agreement may not be
"" - "" assigned by a::; party ;3LtLlC-Lit the 9rior written consent of the
other partlss ilereco a~cl -,::e E,ank; which consent shall nct be
the Tr.-usze-c ixz L-L~~EZ x:>Se;- -his kgi-eement and to the Tr-usree
and the Ban31 its riqhcE unuer the Note as more particuiarly
d~scribec in Se,ction 6.2 2nd may assign its riqhcs under this
hgr-eene~-,z ana t~le Note as proTviaed in Section 7.3, and except
under thi 5 AG,Greeme:lz as ?rs-\-16eG Sy Section 6.2.
..~. " unreasonab;y \~;:~-ple~~~, e-:z-=x t:lat tile I SS:J~:- sjlall assign tc
. ..
2.i~ :hat the OW:?^: my asslgn LC any transferee its rights
Seztlol; 8. 4.
~ " - Seve-aSilitv. If any provision of this Ayreemenx ~112~~ be jlt1 -LU r; 01- cieernec? to be or shall, in fact, be
illegal, inoperative or unenforceable, the same shall not
affect any other provision cr provisions herein contained or
renaer tile same ~:~;ialid, i:mperative, or unenforceable to any
extent wha-ce.:er.
Section 9.5. Execution of Counterparts. This Agreement
may be execuTed in severz.1 counterparts, each of which shall bc
an original and ail of which shall constitute but one and the
same instrument.
04;'30;'93
53400_,.:;2052 113 -27-
-
Section 8,6, Amendments, Changes and Modifications,
Except as otherwise-provided in this Agreement or in the
Indenture, subsequent to the issuance of Bonds and prior to
their payment in full (or provision for payment thereof having
been made ir, accordance witl-; the provisions of the Indenture),
this Agreement may not be effectively amended, changed,
modified, altered or terrr,inated without the written consent of
all parties hereto and the Bank.
Seccion 8.7 ~ GolTex-xinT Lab;. This Agreement shall be
governed exclusively by ax5 construed in accordance with the
applicable laws of tile STate.
Section 6.E. Term of Aureement. This Agreement shall be
in full force and er'fec-, fron the date hereof until such time
as all the Soncs sh2:ll havz been fully paid or provision made for such payment pursuant ts tile Indenture, whichever shall be
earlie-. Tine is of tile essence in this Agreement.
Section 8.9. S1.~rvi~.7al of Agreement. All agreements,
represenzations and wazrancies made hereill shall survive the
making of the Loall.
Section 8. IC. Sur.-;.ival of Rights. The Trustee's rights tc
indemnification and tc the paymen-, of ir;s fees and expel-ises shall sui-\7i7>;'E: its resignation cr removal and final payment or
defeasanz2 of the bonds. Tile Issuer' s rights to
indemnification and tc the payment of its fees and expenses
shall survive the rlnal l;aynenz or defeasance of the Bonds.
"
r.
Sectix: 1.11. .~". E.ecord?Iion - and Filings. The Owner co;??1>ants tjiat ir iJ' ___ : -. --'.C- ruai~ tile Regulatory Agreement, the
Fir-sx UeeS of .Trcsc and ax? financinq statements and all
supplements tileretc and any other such instruments as may from
Lime to " me be required to be kept, recorded and filed in suc!
2 manner and in EUC~ places as may be required by law in order
to full? preserve and ~rotect the security of the owners of tht
Bonds and the rights of the Issuer and the Trustee under this
Agreement, the Ind~nr_i?~-e, the Note, the First Deed of Trust,
the Letter of Credit an.i, the Regulatory Agreement.
I' ..
Section b. 12. Pa-ments Due on Other than Susiness Days. " In any case in which tile date fixed for a payment hereunder is
not a Easiness Cay, said payment need not be made on such day' but may be macie on tile next succeeding Business Day.
04/'30/93
5340Q.,'2062,"13 -28-
IN WITNESS KHEREOF, the parties hereto have executed this
Agreement, all as of the date first above written.
CITY OF CARLSBAD
h 5 i' :
Mayor
ATTEST:
City Cierk
nTnr.c-7 2~x2~ TRUST OF CALIFORNIA, NATIONAL
AzSSXIATiOM, as Trustee
- E". >.
L. "u-Lncr.-lzed Signatory
ATTEST :
- - ti TI : ._ __ - " - - " " ." - " &dj-j?c,yize- Siy>aL,:,-.,- -
" L--- C3Sy-i1 P.E-F,TT.IERS, a CaLlfcL-nia gellex-al ..
paI-XXeL-sAlp ..
7 b-,: : TXE FERMkNI AN FAMI LY TRUST
General Partner
By:
George A. Fermanian,
Trustee
By : TEE STONE F.4D'iI Ll- TRUST
General Partner .
By :
Rodney F. Stone, Trustee
04/'3 C,/9 3
53400_,,~'2062/i3 -29-
EXHIBIT A
(Form of Opinion of Owner's Counsel)
The opinion of counsel to the Owner shall be in
substantialiy the forn? set forth ic rhe Bond Purchase Agreement
dated as of May 25, 1993, by ana among the Issuer, the Owner
an6 the Purchaser named therein, with such changes thereto as
may be approved by Eond CouIlsel.
5340(3/2052/13
EXHIBIT A-1
(Form of Opinion of Bank’s Counsel)
The opinion of counsel tc the Bank shall be in
substantially the forn set r’orth in the Eond Purchase Agreement
dace6 as of Nay 25, 1993, by and among the issuer, the Owner
and the Purchaser naxed therein,. with such changes thereto as
may be approved by 50115 Counsel.
5340Q/2062/13
EXXIEIT E
NOTE
$15,920,000 May 1, 1993
LA% COSTA P-WTNERS, 2 California qeneral partnership (the
"Owner") hereby PROMISES TO PAY TO THE ORDER OF CITY OF
CARLSBAD (the !I I ssuerl! ) , a municipal corporation duly organized
ani existing under the laws of the State of California, the
principal sum of Fifteex Kiiliox Nine Hundred Twenty Thousand
Dollars ($15;92O,GOO), together with interest from the Bond
Issuarice Date on tlie unpalc principal baiance owing hereunder
at the Adjustable Interest Rate, the Reset Sate or tile Fixed
Rate, as the cas? rrtaq' b-, as provided for ir. Sections 2ii, 212
and 212, respecrlvely, of tile Indenture (uefined below). This
Note is issued, executed ana delivered pursuant to that certair
Loan Agreement dated as of blay 1, 1993 (the "Loan kgreement" )
by and among the Owner, the Issuer and First Trust of
California, National Association (the "Trustee"). All
capitalized terms used herein ana not otherwise defined herein
shall have the respeczive meanings set forth in the Loan
Agreement or in tlie Incienzure of Trust da-ted as of May 1, 1993
between the ISSLIQY ad the lrxsteg (tile "Indenture" 1 .
..
i-
Principai anC interest shall be payable as follows:
(a) 1:lteresr I::: %l>e ?ri~;cipal amount hereof shall be
payable in arrears 011 ch? Inrerest layment Dates applicable
to the Boncs, coxne:>cinc July 1, 1953, in the respective
amounts deternine.5 pursuant 'tc tils Indenxure which at all
times shall be sufficient to pay the interest due on the
Bonds; and
(bj On June 1, 2C11, the entire unpaid principal
b&lance, togethe- with all accrued but unpaid interest,
shall be cue an3 payabie.
The Owner has caused paymexts to be made by the Bank, in
amounts and at times due hereunder- pursuant to the Letter of Credit. All payments on this Note not made from a drawing
under the Letter of Cr-edlc or Seasoned Funds, with respect to
prepayment premiums, shall be made in iawful money of the
United States of America at the principal corporate trust
office of the Trustee. All sums paid hereon shall be applied
first to the satisfaction of interest due and the balance to
the unpaid principal owing hereunder.
5340Q/2062/'13 B- 1
This Note is subject to mandatory prepayment in whole or in
part at a price equal to the principal amount thereof to be
prepaid, plus interest accrued to the date fixed by the Trustee
for redemption of the Bonds to be redeemed with such prepayment
(a) O:I the day selected by the Trustee icr redenption
of the Bonds ir, the event that the Prior Eonas have not
been redeemed in wnoie by the date which is 60 days
followinq the 5ond Issuance Date;
(b) On the day seiected by tile Trustee for redemption
of the Bonds ~h?~-e the Owner has failed to deliver CO the
Trustee a Substitute Credir, Facility satisfyins the
criceria set forth in Section 214 of the Indenture within
60 days -05 written 1lccice LC the Trustee of the occurrence
of an Act of Bankruptcy of Bank or at least 20 days prior
co the expi1-sTiol-i date of the Letter of Credit, except that
ir, no event shall such redem7xions occur later than 5 days
prior to the expiration date of the Letter of Credit;
i c :I On the cky selec~ed by the Trustee for redemptior
of the Eon.j,s afte- zile Sank faiis or refuses tc honor a
drawinq unaer- ths ~ezcel- of Credit or to reinstate the
Letxer of Credit in accordance with its terms;
-.
(d) Cn the day selocted by the Trustee for redemptior of the Eon,+.. uu, i-; - .- - 212 evelxt of an involuntary loss or tile
substantial destructio? of the Project as a result of
unfor2seer: el.-e~:cs (5. :. _. fire; seizure; requisition, change
1:: z fede1-2~ -ab: ZL- a: action of a federal agency after the
daLe of issuance of the Soncis which prevents the Issuer from e~foi-~ii~~ xhs reglLirenents of Section 1. 102-8(b j cf
r,he Regulations, CL- condemnation j , promptly upon receipt oi
insurance GL- other compensation or, if there are to be no
such payments, prorr,Ftly after the event giving rise to the
involuntary loss or subsrantial destruction of the Project,
in an amount e,zxzi ZG chf: then unaaid principal amount of
th: 5 Note. ~.lot;.;~~ths-,alluillcr tile foreqoing, this Note wi 11
not have tc: 3s >r-ep;ie ir, whole in such circumstances if
(i) within 90 days of tile event qiving rise to the ioss or
desyrucclon, tile Ow~er notifies the Trustee, the Issuer an(
the Bank, in writing, that the Project can be restored
withi:?_ 18 months cc a condition permitting the conduct of
normal busixess operations; (ii) within 180 days of the
event yiviny rise to such taking, ioss or destruction, the Owner ccmmences to use such amounts to reconstruct the
Project pursuant to the terms of the Loan Agreement and thl Indenture; and (iii) such amounts are disbursed for the
restoration of the Project within 18 months after the date of the notice from the Owner referred to in clause (i)
hereof, but, rathe-, the Note shall be prepaid, in part, ts
~.
-.
5340Q/2062,/13 6-2
the extent of undisbursed funds on deposit in the Insurance
Proceeds Account created pursuant to the Indenture at the
expiration of the period described in (iii) above unless
such period is extended with the consent of the Issuer and
the Bank ana ar, opinion of Sond Counsel is delivered to the
irustee, the Issuer- and the Bank t~ the effect that an
extension of sucl.1 period will not result in interest on the
Bc~nas becoming includable in the gross income of the
recipients thereof for federal income tax purposes;
provided, however, that such prepayment in whole shall be
immediately due ani payable if in the written opinion of
Eond Counsel delivered to the Issuer, the Bank and the
Trustee a failure LO make such prepayment will cause
interest 02 the Bonds to be included in gross income for
federal income tax purposes:
m
(e) On the day selected by the Trustee for redemptior
of Ijonds aftsr the Irusree has received written notice and
direction fron: the Bank to redeem Bonds as a result of the
occurrence of a12 e~7ent of default under the Reimbursement
Agreement in an amaunc equal tc tile then-unpaid principal
amount of the Note;
(f) On the day selected by the Trustee for redemptio~
or’ Bonds affer reccipt by the Trustee of notice from the
Issuer of a Dererrnination of Taxability, or, subject to tht
pr-o.;ri sions cr’ the Intercreditor Agreement, upon
acceieration of this Mote following default by the Owner
under the Loa:] Agreemeny or the Reguiacory Agreement in an
I\joLe; and
~p,-,~~~;~y e~~lal ~2 the Tna*-,-l;,>-=-m -ILL-, L-AAL-..-s principal amount of the ..
(9) On any keset 3aTe, any Adjustable Interest. Raxe
Conversion Date, the Conversion Date cr Substitution Date
(as ciefinsd in Section 214(E) of the indenture) in the
event the conditions precedeat to a remarketing of the
Bonds on any of such dates, as set forth in Section i105 o
tile indenture, have not been satisfied.
If the required principal amount of any prepayment in part
pursuant to Sectior, 5.2 anr-! Section 5.4 of the Loan Agreement
shail not be an integral nultiple of $100,000 ($120,000 in the
case of one Eond) while the Bonds bzar interest at an
Adjustable Interest Race or during any Reset Period of less
than one year or $5,039 during any Reset Period of one year or
more and after the Cons.ersion Date, then the required principa
amount of such prepayment snall be deemed to be the next
greater integral multiple of $100,000 ($120,000 in the case of
one Bond) or $5,000, as applicabie, and any interest due with
such prepayment shall be caiculated using such higher amount.
534QQ/’2062,/13 E-3
The Trustee shall deposit and use the proceeds of a drawing
under the Letter of Credit representing prepayments of this
Note pursuant to Section 5.3 and Section 5.4 of the Loan
Agreement in accordance with the Indenture ._
In tile e?rent of a partial prepayment of this Note, pursuant .. -
to Section 5. s =r Secz~on 5.4 of the Loan Agreement, the - ,.
principal amount of ~ht3 Owe:" s obligation under tnis Note i
shall be reduced by SI? criiicipal amoun'; of Bonds actually
redeemed xith r,he ~roceecs of such prepayment ~
The Owner, at its cpzio;: ana with the prior written consent
of tile Bank, may prepay the Note, in whole or in pa-rt, on any
date that Bonds are pern?.itted to be optionally redeemed
pursuant tc Section 6G2 of the indenture, following written
notice of the Owner! s intelltion to do so as provided
herein be lo^;, in any inteqral muitipie of $100,000 ($120,000 in
the case of on2 Bond:, while the Bonds bear incerest at an
Adjustable Inrerest Rats or during any Reset Period of less
thal? one year or .SS,OClrj C~ring any Reset Period of one year or
mcre or aftel- the Conversion 3ate, at the principal amounts,
together with accruec Interest to the date on which Bonds will
be redeeme6 WLZD suck pa:Jmen-,, plus any applicable prerniurr,.
~he Ownel- sh~,l: sz-.;e tile riqht ts request the mancistory
tsncier c? tile boncc 11: lien or' cpfilollal prepayment of this Not6
under the circumstances an& as provide2 in Section 607 of the inaenzure .
~.
..
rn - " -. - 1'
kn-: ~I-~P.LUT .sa-,anis In zznnecticn with a prepayment of the :, -~ Nore shall be paid from ~easoned Funds. The Owner shall give
of zhe principai an?.o:jzt x be opxionally prepaid and the amounl
of prepayment premiur;., if sny.
-
45 davs i.Jritxell :1c.=; =E TC\ the z ssrLe:-, ';he Bani; and the Trustee
..e 11 default is made ir. the paynent of the principal of or
any ins:aliment GI ~nzsr-~st on this Note and the same is placec
in the ka;;ds of 21; ~t~~~~:e;~ for collection, 01- 1: suiy is file(
hereox, or proceedings are haC in bankruptcy, probate,
receivership, reorganizaczoa, arrangement or other judicial
proceedings for zile establishment ox- collection of ally amount
called for hereunder, or ar,y amount payable or to be payable
hereunder- is collected throucjh any such proceedings, the Owner
agrees td pay to ths hclde~ hereof all reasonable costs of
collection, inciuding attorneys fees. All past-due
installments of the principal of or interest on this Note shal
bear interest at the 14aximum Permitted Rate from and after
maturity unti 1 paid.
7.
.e
..
The Owner expressly xaives demand and presentment for
payn-ient, notic? cf nonpeynent, protest, notice of protest,
5340Q,;'2062 ./13 E-4
notice of dishonor, bringing of suit, and diligence in taking
any action to collect any amounts called for hereunder and in
existing in connection herewith.
the handlinq of properties, rights or collateral at any time
This Note has been issued pursuant to the Loan Agreement
and is entitled to the benefit and security thereof. Reference
is hereby made to tile Loan Agreement for provisions relating to
the acceleration of the indebtedness evidenced hereby upon the
relevant purposes.
occuxence of certain events stated therein, ana for all other
This Note has been issued, executed and delivered in the
State of California and shall be governed by and construed in
accordance with the laws of the State of California, except to
the extent that the laws of the United States of America may
prevai 1.
The provisions cf Section 5.2 of the Loan Agreement are incorporated hereill by reference as if specifically stated
herein.
LA COSTA PARTNERS, a California general
parcnership
Ey: THE FERMANIAN FAMILY TRUST
General Partner
Ey :
Gecrge A. Fermani an,
Trustee
BIT: TElE STONE FAMILY TRUST
Genera: Partner
By :
Rodney F. Stone, Trustee
5340Q,/2062/13 E-5
ENDORSEMENT TO NOTE, dated as of May 1, 1993, in the
principal amount of $15,920,000, made by LA COSTA PARTNERS, a
California general partnership, payable to the order of the CITY OF CARLSBAD.
F"7-iL- TO THE ORDER OF FIRST TRUST OF CALIFORNIA, NATIONAL ASSOCIATION, as Trustee, AN3 EANL OF AMERICA NATIONAL TRUST AND SAVINGS. ASSOCIATION.
CITY OF CARLSBAD
"sy :
Mayor
ATTEST :
CiEy Clerk
5340Q/2062/i3 E-6
~ ~~~~~~~
ADP: I N I STRAT 1 ON AGREEMENT
5y and Among
ZIT< O? CkRI,SB.;?D, CALIFORNIA
Issuer
anc
-
Pl-~gram -Qamini strator
2 ne
7 1 *P^" ,-.-
d--. .. . - -.-. : ---?.Ti.!ERS ,
a Callforn~a c;er:eral partnership, Owner
Reiatinc; to :
s:5,293,000
Li T-1' :3F' CARLSBAD
,;fi*r,;-Z-3-L3 ".k-TE ~EM*2.JqD
SERIES A OF 1993
.- -7 __ - ~ -
MULTIF-L-[bjILV g3vsIE,s REVENUE REFUNDING BONDS
( LP- CGSTA xmTrmm PROJECT)
Gated as of Nay i, 1993
53400_,,'2062/13 C-l
ADM I N I STRAT I ON AGREEMENT
THIS kDMINISTRATION AGRETMENT (I'kdministration kgl-eernent" 1
is made sild entered ixto as of May I, 1993, by and among the
City of Carlsbad, a muEicipal corporation of the State of
Califorllia (th~ "Iss~~er"), Llk COSTA FARTKERS, a California
gencrai parulership (, the Ownel"' ) , and If
(the "Program Admini strazor" ) .
I - - - - - - - RECiThLS
WHEREAS, the Issuer has heretofcre issued its Multifamily
Hcusinq Revenue Bonds, Series A of 1985 (La Costa Aparcments
Project) (the "Prior bonds"), in order to provide financing fol
a 320-unir mcltifamilu rental project known as La Costa
Apartments ( tile "P'L-o j ect'! )I and has issued its Variable Rate
3emand PluItifanily Iio-~sinq Revenue Refunding Bonds, Series li oj
1993 (La Costa Aparrmenzs Project) to refund the Prior Bonds
pursuant tc an Inaen-cure of Trust, dated as of May 1, 1993 (the
"Indenture") betwem tilc Issuer and First Trust of California, $~~~~o~~~l hqssGciation, 2s tTL?SL?E: (the "TrUStee") ; and
W'IEREAS, the Issxer has entered intc an Amended and
Restated Reguiatory ..igreeme!lt and Declaration of Restrictive
Ccvenants dazed as of Pia? 1, 1995 (the "Regulatory Agreement" )
witk the Trustee and the Cwner, which agreement, amonq other
j_ .__ _____..__ .- :-GY:LE~. -.:x.::: z;::z::ced, krhich restrictions ZL-~
inteaded xc assure complzance xith the provisions of the
Internal !&eTTenuc ~orie DL ~954, as amended (the "~ode'~ 1 ; and
things, sets 3101-i- d; cerzzin restrictions applicable to the _... -.. _^,.__ ,.. ~ .- ._ -.
"
WHEREAS, the Trogralr: Administraror represents that it has
L" dle necessary experience anC expertise required to evaluate
whether the Owne:" s operation of tl~e Project conlpiies with the
restrictions conta~ned in the Regulatory Agreement; ..
l.JOW, THEREFORE, in consideration of the prexises and
respective representations and covenanzs herein contained, the parties hereto agree as foliows:
ART I CLE I
DEFINITIONS AND INTERPRETATION
1.1 Definitions of Terms. All capitalized terms used in
this Administration Agreement and not otherwise defined herein
shall have the respecciyre meanings given to them in the
Indenture and!,or the Reg~iazory Agreement.
5340Q,/2062;'13 C-2
1.2 Article and Section Headings. The heading or titles
of the several articles and sections hereof shall be solely for
the convenience of reference and shall not affect the meaning,
construction or effect of the provisions hereof.
1.3 Interpretation. The singular forn? of any word used
herein, includinc; r,e.---ns defined in the Indenture and,'or the
Reguiator-y Agreement, shall include the plural and vice versa,
if applicable. The use of a word of any gender shall include
all genders, 1: applicable. .^
ARTICLE I I
REPESENTRT IONS AND WARRANT I E S
-; 7 &. A ReDresPnTaticnz and hsrranties of the Issuer. The
Issuer makes the f3iiowi;;g represenxatlons and warranties:
L A. f It is a municipal corporation, duly organized ani
existinc; under xhe Constitution and laws of xhe State. - 2. It has the power- to enter into the transactions
contemplated by this Administration Agreement and to carry out its cbligzc:o;:s !leremlder and tc! consummate all other
t-ansactions ccncemplaze5 herein; and it has duly
Admini stration .\q.-eeme:lz -
c,. ~,e~:-~~~.~~~-~~.~~~~~~ - .... -. I -..-..-..--; 3c'
..
autjlg:-iz,eci tllp ex5cl~eiol: and deii\7e~-~. il of this
-.i __". . I ;; - - C;L- " - - "- "" "_~____" c f :he .C)wn?:- . The -~" .- Owner makes 'tile io1Iow1:~c: representatlons ana warranties:
i- ~ It has the power and authority tc OWE its
prcperties and carry on its, business as now being
conducted, and is du1y qualified to do such business
whe~-e~;e:- such qualiiicazion is required, including the
State of Californiz.
r d. It ha: the power to execute and deliver this
Administratio;? Agreement and to carry out its obligations
as set forth herein; and it has duly authorized the
execution, delivery and performance of this Administration
Agreen, Dr-1.
C. The Irogram Administrator is independent from an
no: under tile dom~natio~ cf the Owner, does not have any
substantial interest, direct or indirect, in the Owner, ar
is not an officer or empioyee of the Owner.
2.3 Representtitions and Warranties ~f the Program
Adrcini strazcol-. iLIe Pi-oqram Aazni szra~o~- makes the foilowing
represenxations ami xar:-a:ities:
"
5340Q/2062/13 c-3
A. It is a duly
organized and validly existing under the laws of the State.
B. It has the power to execute and deliver this
kdministratisn Agreement and to carry out the transactions
contemplated hereby; and it has duly authorized the
-~-greement.
execution, delivery and. performance of this Administration
c. It i c xncependent f >-om and not under the ,.
domination of tho Owner-, does not have any substantial interest, direct or indirect, in the Owner, and is not an
officer or empioyee of the Owner.
L . It has, receivec copies of the Indenture, the Loan
kgreemer,t 2nd tne Regclatory Agreement, and it is fami liar
*lth the terms anc conditions thereof 2s the same relate to
the Code, L~I~ iiec an-, issxer pclicy.
, -7
L -, "
- L?\TI.?LE " I I y
DUTIES .hN3 C3MPENSA&TION 07 THE
PROGF,AD'I ADM I N I STRATOR
3.1 Cuxies. 291- and or.; behalf of the Issuer, the Program Adr, 1 -.+-,-" li~i~~~~L~~ ,,< yrLii - - pe:-forc the r'oiiowing dutles i~ a reasonablj
-
- """
carefui and zimely manner-:
." .. . ". - - .. - __ - .. - i ___._ ":.e ,. - _i_ 8??2 'i,-L~A glve WI-:ZZ?X - . .. ,- ~ - -,.. - -. - ,. . .- - ,_ . ,. . '71
norice cc! Til? Iss:~e~-, tne Trusxee and the Owner within five ciavs 05 zr,;; ehanqr ill:
&. The Meciar. Income for the Area as determinec
bv the Secretary of the Treasury of the United States;
L. The maxinurc income at which househoids c
consiszi:>g cf ~a-ious numbers of persons may be
determined tc. SE: Lot;er income Tenants 01- Very Low
Income Tenants uxier the terms of the Regulatory
Agreement ; and
3. Th? nonthly rent which is determined to be
.tjle "-E-ffordable Rent" under the terms of the
Fteguiatory ksreement.
E. Promptly following its receipt thereof, it will
review the Income Certifications, Certificates of
Continuing Frogran Compliance, and all other reports and
certificates furnished to it pursuant to the Regulatory
kgreemer,t in order to derermine that each such document is
5 5 4 0 O_ ,,I2 0 5 2 ,.,' 1 3 c-4
complete and to verify the internal accuracy of the
calculations, set forth therein, including the conclusion
that at least 20:; of the units in the Project are being
occupied by or being held vacant and available for
occupancy by Lower-Income Tenants a5 specified by the terms
documents on file and open to the inspection by the Issuer,
the Trustee, the Balk and the Owner during the term of the
Regulatory Agreement. Each month during the Qaulified
Project Period, the Prograrr. Administrator shall file with
the Issuer, the Sank, tile Owner and the Trustee a report in
the form attached ilerotc as. Exhibit A.
, calculations, ana conclusions with respect to such
of the Regulatcry .~.q-eenent; and it will maintain such
C. Promptly upon dezermining that any report or
certificate or other document submitted to it pursuant to
the Requiatorl.7 Aqr-eerr?.eEt demonstrates that the Project is
n~t in compiiance xith the Code or the Act, or is
inaccurate 01- inconpiete the Program Administrator shall:
__ ~?'?e coxrent of the reporr; or inaccuracy i. - .^ &- I-
or lac37 of conFiereness does not cause the Project to
3 and 4 of che Ftegulatory kqreement, give notice of
such ncncomTliancs, inaccz~acy or lack ~i completenesc
tc: the &mer 2nE direct the Oxner to csrrect or
compiexe th=. same, as the case may be, within a
reasonable period of rime thereafter.
ceasn t~ meet the quzlifications set forth in Sectiors
-. r. Ii -,he content of the report c:- the
inacruracv c:- lack of compieteness does cause the
Froject rc cezse LS r?.eez tile qualifications set forth
in Seczloris 3 a:>c y of tile Regulatory Agreement,
immediareiy give written notice of said fact to the
Issuer, the Trustee, tile Sank and the Owner.
E. 1:: tile e;.renz tnzz the Owner- fails to file with
..
-.
+- .. ine Erocjram Ac~~.n:scrazor any report, certification or
othe;- daru~.ex~ :-e?~:i~--eQ pursuant to the Regulatory
.r?qreement \:izhii> zhe 'Lime set forth in the Regulatory
written notice of chat fact to the Issuer, the Trustee, the
Eailk and the Owner.
3.2 Compensation. For all services rendered pursuant
Agreement, tile F'rocjram Administrator shall immediately give
hereto and all costs and expenses incurred hereunder the
Frogram Administrator shall be paid an annual fee of
be paid by the Issuer withir, 30 days of receipt by the Issuer
of an invoice fron the Program Administrator.
$ . The fee of the Program Administrator shall
5340Q/"2062,,/13 c-5
ARTICLE IV
TERM
9.2 Term of hgreement. Unless sooner terminated pursuant
to the provisions of Section 4.2 and 4.3 hereof, this
Aaminisrration Agreemerit shall remain in full force and effect
for the term of the F,equlatory Agreement.
4.2 Term;nation. In its sole discretion, the Issuer, or
the C'wner with the coxsent of the Issuer, may terminate this
kdmini stration Agreement upon giving the Program Admini strator
thirty days' written notice of its intention to do so.
4.3 Resignation of Program Administrator. The Program
Administrator may l-esigr, from izs position and terminate this
thirry days' written notice of its intention to do so, if the
Owner shall faii ZG pay the '3rograx Administrator the
compensation due the Program Administrator hereunder within the
time p~-.-o\-i?e.j, for- hereiri and if such failure shall continue for
said thirty day period.
Administration Agreeme:~z upon giving the issusr and the Owner
ART I ZLZ v
MI SCELLP-NEOUS PRO171 SI ONS
7- -.- -. 1 "_ E>-:e~-~:r: 2;: il- Co:inte~-~a-ts. Tjli s, -4dmin-j. stratior,
Agreement may be execured in any number- of counterparts, each
of vhich shall be aeemec: to he an originall and such
counterparEs shall constizuEe but one and the same instrument.
5.2 business Daw. Li anv action is required to be taken -r
hereunder 01: a date which falls on other than a B7usiness Day,
such action shall be taken c)fi the nexc succeeding Business Day.
r:- -. . 3 Go:;e:-:%acj Law. This Administration Agreement shall be ~__"__ construed in accorciance with zhe laws cf the State of
California and the obligations, rights and remedies of the
parties hereunder shali be determined in accordance with such
1 aw s .
5.4 Notices. All. notices, certificates or other
communicationc hereunder shall be sufficiently given and shall
be deemed given when delivered or mailed by certified mail,
postage prepaid, addressed tc. the appropriate Notice Address
set forth in the Regulatory Agreement.
The Notice kcidress of the Program Administrator is:
534OQj2062/13 C-6
IN WITNESS WHEREOF, the parties hereto have caused this
Administration Agreement to be executed on their behalf by
their duly authorized representatives, all as of the date
hereinabove written.
CITY OF CARLSBAD
5y :
Mayor
ATTEST :
Cit.l; Clerk
[PROGRAM ADMINISTR-%TOR]
5y :
LA CQSTA PARTNERS, a California
yel1eral partnership
By - : THE FERMANIF..N FAMIL'i TKJST
General Far~~~er
By :
George A. Fermanian,
Trustee
By : THE STONE FAMILY TRUST
General Partner
By :
Rodney F. Stone, Trustee
53400_/2062/.'13 c-7
1
EXHIBIT A
i
MONTHLY REPORT OF PROGRAM ADMINISTRATOR
The undersigned is ser-vinq as the Program Administrator for
La Cosea ApartmenLs (the "Project") and hereby certifies as
foliovs :
1. As Program Administrator, we have reviewed all Income
Certifications r-eceivec from the Owner with respect to the
Project during the pas1 month and have determined that: (a) tnt
Owner has verified the income of each Lower-Income Tenant as
require6 by Sectlon 4(c) of the Regulatory Agreement; and (b)
based upon the information set forth in the income
Certifications, at least 20;; of the units in the Project are
currently occupieci by Lower-Income Tenants, including Very-Low
income Tenants, DL- ar3 ccrrently vacant and were last occupied 3
Lowel-- Income Tenants, including Very-Low Income Tenants.
L. The C)wne:- has rliee with us all reports and c. -. 7
certifications r-eqdiyed tG be fiied pursuant to the Regulatory Agreement withi11 ehe time limits set forth therein. - J. Nothing haz ccme r_s our attention which leads us to believe r',i;at 1.' :I= - (,.:ma-. ,v.ri-.L is - n=;t, as of the dace of this
Certificate, ii: COP;?P~L~.;ICP with all of the requirements of the
Regu1atoL--; .hayl-eepel-L:.
Gazed:
-.
534OQ/2062/13 C-8
I
&l&it-
RECORDING REQUESTED BS AND
WHEN RECORDED RETURN TO:
KAREN A. ELLIS, ESO.
STRADLING, EIOCCA, CARLSON 5( RAUTH
66C Newport Center- Drive, Suite 1600
Newport Beach, Califcrriia 92660
AD'IENDED AND RE STATED
RECULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE COVENANTS
By 2nd krnonq
CI T'i OF CARLSEAT)
and.
C9SZ
FIRST TRUST GF Z-%LIFORNIX, XkTIONAi -%SSOCIATION,
as. Trustee
and
LA C9STLL- PJIRT'!ERS
FIRST TRUST GF Z-%LIFORNIX, XkTIONAi -%SSOCIATION,
as. Trustee
and
" LA PARTNERS
DATED AS OF MAY 1, 1993
Relating to
$15,920,000
CITY OF CARLSBAD, CALIFORNIA
VkRIkELE RATE DEMAND
MULTIFAMILY HOUSING REVENUE REFUNDING BONDS SEEIES E, OF I993
(LA SGSTA AFARTMENTS PROJECT)
I
Section 1
Section 2
Section 3
Section 4
Section 5
Sectiol? 6
Section 7
Section 8
Section 9
Section 10
Section 11
Section 1;.
Section 13
Section 14
Section 15
Section 16
Section 17
Section 18
Sectioll 19
Section 20
Section 2 1
Section 23
Section 24
Exhibit F-
Exhibit E
Exhibit C
TABLE OF CONTENTS
. Pa
Gefiniricns ana Interpretation ......
Acquisition. Construction, Equipping
and Com-pletior, of the Project ......
Fiesidential Rental Property .......
Lower- Incone Tenants ...........
Tax Exempt Status of the Bonds ......
Indemnification .............
Consideration ..............
Reliance .................
Project in the City ...........
Sale el- Transfer of the Project .....
Term ...................
Covenants to Run with the Land ......
Eurden and Benefit ..... : ......
Enforcement ...............
Recording and Filing ...........
Payment of Fees .............
Governing Law ..............
Amendments ................
Notice ..................
Severability ...............
Multiple Ccunterpartc ..........
Modification of Special Tax Covenants . .
Ulli f 0 rm j. tv I, . Commor! Plan .........
3
6
7
3
11
12
13
1.3
14
15
15
15
1E
1;
17
17
1E
1E
15
15
15
2c
2c
LEGAL DESCRIFTIQK
CERTIFICL5iTE OF CObiTINUING PROGRAM COMPLIANCE
INCOM5 COMPUTATION AND CERTIFICATION
* AMENDED AND RESTATED
REGULATORY AGREEMENT AND
DECLARATION OF RESTRICTIVE COVENANTS
THIS .%MENDED ANE RESTATED REGULATORY AGREEMENT AND
DECLARATICN OF RESTRICTIVE COVENANTS (the "Regulatory
Agreement'! ) is made and entered into as of May 1, 1993, by and
among CITY @I? CARLSE-CC, a mJmicipal corporation organized and
existing under the Constituticn and laws of the State of
California (together Kith any successor to its rights, duties
and obligations, the 'Ir' L-L~ -77" ), FIRST TRUST OF CALIFORNIA,
NATIONAL ASSOZIATIOK, a xational banking association organized
and existinq under- the laws of the United States authorized to
accept and execute trusts~ of the type contemplated by the
Indenture (as hereinafze- defined) , with its principal
corporate trusz office ill Sa12 Francisco, California, as Trustee
(the "Trustee" ) , and Lk C9S.T.k PLRTNERS, a Caiifornia general
partnership (the "Owner" } ~
kiI'7NESSETH:
"""""
WHEREAS, the City has adopted a program to finance the
! 05 Part 5 of Division 31 of the Health and Safety Code of the
State of California ( the '';.,-i'' A-,. ); and
construction - of multifarEly rental housing pursuant to Chapter
WHEREAS, the Cizy is a politizal subdivision (within
the meanin9 of thaz rerr. in the Regulztions of the Department
of Treasury and the ruil:lgt of the Internal Revenue Service
prescribed anci promulgated pur-suant to the internal Revenue
Code of 1986, as anended (the "Code" ) ; and
?.
WHEREAS, on Narch 19, 1985, the City Council of the
City adopted a resolutioE (tile "Resolution") authorizing the
issuance of revenue bonds in connection with the multifamily
rental housing project of the Owner; and
\WHEREAS, in furtherance of the purposes of the Act anc
the Resolution ana as a part of the City's plan of financing
residential rental housing, the City issued $15,920,000
aggregate principal arnou;;t of its revenue bonds designated
"City of Carlsbaci, California, Multifamiiy Housing Revenue
Bonds, Series h of 1985 (La Costa Apartments Project)" (the
"Prior Bonds"), secured by an Indenture of Trust dated as of
April 1, 1985, betweex the City and The Bank of California,
N.A., the prececessor in interest to First Trust of California
National Association, as trustee for the Prior Bonds (the
"Prior Bonds TI-ustee") tG finance the cost of a 320-unit
n-mltifamily residential rental development (the "Project" ) for
._ .
3 the public purpose of providing decent, safe and sanitary
housitlq the pipoceeds sf wlnieln were loaned to the Owner (the "Prior Loan" ) ; and
WEI;EREAS, the Developer has prepaid the Prior Loan, and
the City has issued refunding bonds (the "Eonds") to refund the
Prior Bonds and make a mortgage loan (the "Loan") to the
Developer to refinance the Froject; and
WHEREAS, the City has determined that the issuance of
the Eonds and the consequent refinancing of the Prior Loan will
acomplish a TJalid public: purpose of the City by assuring that
houslng continues to be available to iower income persons and
families within the meaninc. of the Act; and
WHEREAS, the City has determine2 that, in order to
ensure continued availability to lower income persons of at
least 207; of the units in the Project, it is necessary to enter
illto this Reuulakcry kgreement which amends and restates in its entirety (except fcr SectiGn ; thereof, which hereby is
concinued) that certain Regulatory Agreement and Deciaration of
City, the Prior EjDnds Trustee and the Developer recorded on
April 29, 1985, as instrument No. 85-146610 in the Official
Records cf Sal? Lliegc ~ounzy, czlifornia (the "Prior Eegulatory
Agreement" j ; and
-l
Res->- L-lL ' -+i i" T re Covenants cia-lec as of April 1, 1985, among the
.-, WHEREAS, all things necessary to make the Bonds the
valid, binding, and legal special obligations of the City
accordin.; to the import thereof, and to constitute the
Indenture as a valid assig-me:lt of the amounts pledged to the
payment of the pri~cipal of, pr-emiurr., 11 any, and interest on
the Bonds have bees dou~ xi5 pzrformed, and the creation,
execution, and deiivery of xhe Indenture and the execution and
issuance of the Boncis, subject to the terms thereof, in all
respects have been auiy authorized; and
.r
-.-
WHEREAS, the Code and the internal Revenue Code of
1954, as amended (the ''F'rior Code") and the regulations and
rulings promuigatea with respect thereto and the Act prescribe
that the use and opsration of the Project be restricted in
certain respects and in order to ensure that the Project will
continue to be owned anc operated in accordance with the Code,
the Prior Code and the Act, the City, the Trustee and the Owner
have determined to enter into this Regulatory Agreement in
order to snt forth certzin terms and conditions relating to thc
operation of the Froject.
NOW, THEREFORE, in consideration of the mutual
covenants and undertakings set forth herein, and other good anc
vaiuabie consideration, the receipt and sufficiency of which
04/30/93
5:>02Q/2062,..'13 -2-
hereby are acknowledged, the City, the Trustee and the Owner
hereby agree as follows:
Section 1 - Definitions and Interpretation. The
following zerms shall have the respective meanings assigned to
them in this Section 1 unless the context in which they are
used clearly requires otherwise:
"Adjusted Income" - The adjusted income of a person
(toqether with the adjusted income of all persons of the age of
18 years or older who intend to reside with such person in one
residential unit) as calculated ic the manner- prescribed in Regulatior-i Sectior?; 1.167(k)-3(b)(3) in effect as of the Bond
I ssEance Date.
"Affordable Rent'! - A monthly rent which does not
exceed 30 percent of one-twelth of the maximum adjusted annual
income if the household is deemed to be a "iower income" famil!
in the County of San Diego for purposes of the leased housing
program. esxabiished under Section 8 of the United States
Housing Act of 1937, as amended, based upon r;he following
appropriate household sizes fclr -viarious types of resldential
units in the P-ojecz and assuning 80 percent as of the
percentage of median gross income which qualifies as "lower
income: I'
Residential Unit Number of Persons in Family
One Bedroom
Twc Eed~-oom
2 a
Such arnounyc shall Se f'Llrther reduced by a red-dction for
tenant-paid utilities base& 01: the "Utility Rate Schedule"
established for the Carisbad Hoasing Authority's Section 8
Rental PAssistancc Progran:. iE no event shall the monthly rent
exceed 90:; of rents charged for units in the Project other thal
Low and Moderaxe UxIi t s .
r! 7, r.;-ea" - The Sac Dieyo, California Metropolitan
Statistical Area.
"Certificate of Continuing Program. Compliance" - The
Certificate to be filed by the Owner with the City, the Frograi
Administrator and the Trustee which shall be substantially in
the form atcached herem as Exhibit C.
"City" - The City of Carlsbad, California.
"Incone Certification" - The Income Computation and
Certification attached hereto as Exhibit C.
04,'3 0/93
5302Q/2062/1:; -3-
i "Lower Income Units" - The dwelling units in the
Project designated for occupancy by Lower-Income Tenants
pursuant to Section 4(a) of this Regulatory Agreement.
"Lower-Income Tenants'! - Persons or families with an
Adjusted income which does not exceed 80 percent of the Median
Income for the Area. In no event will the occupants of a
dwelling unit be considered to be Lower-Income Tenants if. all
of such occupar,ts are szadents (as defined in Section 151(e)(4) of tile Code), no cne of whom is entitied tc file a joint return
under Section 6013 of the Code.
"Median Income for the Area" - The median income for
the Area as most recently deterninec! by the Secretary of
Housing ana Urban Deveiopment under Section 8 of the United
States Housing Act of 1937, as amended, or, if programs under
Section €3 are terminated, median income for the Area determined
under the method used by :he Secretary prior to such
termination.
"Owner's Use of Proceeds Certificate" - The
Certificate of che Owner, dated as of the Eond Issuance Date,
with respect to certain Project Costs delivered to the City by
the Owner.
11 Froiect Costs 1' - To the extent authorized by the Prior Code, the Reguiations and tile Act, any an6 all costs
incurred by tile Cixy 01- tile Owner with respect to the
acquisition of lanc and tile construction and equipping, as the
case may be, of the EI-c~~cz, includlnq, without limitation,
costs for site preparaxio::, the pianning of housing and
insrovemenzs, the acquislLion 0 property, the removal or
demoliticn 05 existing structures, the construction and
purchase of ilousinc;, reiated facilities and improvements, and
all other work in connection therewith, and all costs of
financing, including, without limitation, the cost of
consultant, accosntinq anc legal services, other expenses
necessary or incident to aexerrnining the feasibility of the
Project, ccn'ractors' and developers' overhead and supervisory
fees and costs directly allocable to the Project,
administrative and other expenses necessary or incident to the
Project and the financing thereof (including reimbursement to
any municipaliry, county or entity for expenditures made, with
the approvai of the City, for the Project), interest allocable to the financing of the Froject paid or incurred prior to the Completion Date and all other ccsts approved by Bond Counsel.
"Project Facilities" - The buildings, structures and other improvements to be constructed on the Project Site, and
ail fixtures and otner property owned, leased or licensed by
the Owner 2nd iocated on, CT used in connection with, such
buildings, structures and other improvements.
04/30/93
5302Q/'2062/13 -4-
4 "Prbjett Site" - The parcel or parcels of real
property described in Exhibit "A", which is attached hereto and
by this reference incorporated herein, and all rights and
appurtenances thereunto appertaining.
"Qualified Projezt Costs" - The Project Costs (i)
incurred after October 2, 1984, the date of the first official
action by the City declaring its intent to issue Bonds for the
Preject, (ii) which are chargeable to a capital account with
respect to the Project for federal income tax and financial
accounting purposes, or wouid be so chargeable either with a
proper- eiection by the Oxner or but for the proper eiection by
the Owner- to deduct those amounts; provided, however, that only
sucli portion of the interest accrued prior to the Completion
Date shall constitute a Qualified Froject Cost as bears the
same ratio to all such interest as the Qualified Project Costs
bear tcl all Project Costs: and, provided further, that such
interest shall cease to be a Qualified Project Cost on the
Completioll Date; and, provided further, that if any portion of
(vhether as. G general contractor- or a subcontractor),
"Qualified Project Costs" shall include only the actual
out-of-pocket ccsts incu-red by such Affiliated Party in
consEructing the Project (or any portion thereof).
the Project has bee12 constructed by an Affiliated Party
"Qualified Project Period" - Tne period beginning on
January 15, 1987, anu ending on the latest of (a) the date
which is 10 years after the date on which at least 50 percent
of the dwelling units. in the Project were first occupied (June
3, I997'j, (b) the date which is a Qualified Number of Days
after the date on whici: any of tne dwelling units in the
Project was f-rst cccupied (December 20: 1999), (c) the date or
which any assistance provided with respect to the Project under
Section 8 of the Uniced States Housing Act of 1937 terminates
or (d) the date on which no Bonds remain Outstanding. For
purposes of clause (b), the term "Gualified Number of Days"
means, 5C percent of the number of days comprising the term
from the date of issuance of the Prior Bonds (kprii 26, 1985)
until the final maturity of the Eonds (inciuding any refunding
bonds) .
"Regulatory Agreement" - This Amended and Restated
Reqllatory Agreement and Declaration of Restrictive Covenants,
together with any amendments or supplements hereof.
"Very Low Income Tenants" - Lower-Income Tenants whose
Adjusted Income does not exceed 50 percent of Median Income fo~
the Area.
Unless the context clearly requires otherwise, as use(
in this Regulatory Agreement, words of the masculine, feminine
04/3 C/93
53023/2062,/13 -6- ./
J,
or neuter gender shall be construed to include each other
gender when appropriate and words of the singular number shall
be construed to include the plural number, and vice versa, when
appropriate. This Requiatory Agreement and all the terms and
provisions hereof shall be construed to effectuate the purposes
set forth herein and tc sustain the validity hereof.
The defined terms Esed in the preamble and recitals of
this "negulatory Aqreemen: have been ixcluded for convenience of
reference only, and the meaninc;, construcxion and interpretatio
of all defined terms shall be determined by reference to this
Sectlon I notxithstan~inq any contrary defir,ition in the
preamble or recitals hereof. The tikles and headings of the
sections of this Regulatory Agreement have been inserted for
convenience of reference only, and are not to be considered a
part hereof and shall not in any way modify or restrict any of
the terms or provisions hereof or be considered or given any
effec1 ir, construinq this Regulatory Agreement or any
provisions hereof or ir, ascertaining intent, if any question of
intent shall arise.
Capitalized eerms LIS& herein and not otherwise
defined shall have the meanings assigned to such terms in
Section iOi of the Indenzure.
Sectlor! 2. Acauisition, - Construction, Equipping
and Compietion of the Froject. The Owner hereby represents as
of the date her-ecf, covenants and agrees as follows:
(a) Kithin six mon~ns of the date sf issuance of the
Prior Bonds, the C~I?~L- incurred a subscantial binding
obligaticr, to commence the construction of the Project,
pursuant to wnich the Owner- was obiiga-ced to expend at least
the lesser of (ii 2-1/'2:; of the principal amount of the Prior
Bonds or (ii; $1OC,Oc)~?.
(b) The statement,s made in the Owner' s Use of
Proceeds CertificaEe are true and correct.
(c) At a17 times since the issuance of the Prior
Bonds, the Owner has been in conpliance with the provisions of
the Prior Regulatory Agreement.
-
(d! Money on deposit in any fund or account in connection with the Prior Bonds, whether or not such money was
derived from other sources, shall not be used by or under the
direction of the Owner, in a manner which would cause the Prio,
Bonds or the Bonds to be "arbitrage bonds" within the meaning
of SectioR 148 of the Code, and the Owner specifically agrees
that the investment of money in any such fund shall be
restricted as>may be necessary to prevent the Prior Bonds or.
the Bonds from being "arbitrage bonds" under the Code.
04/3 0/'9 3
5302Q,/'2062/13 -6-
(e) The Owner (and any person related to it within
the meaning of Section 147(a) of the Code) will not take or
omit to take, as is applicable, any action if such action or
omission would in any way cause the proceeds from the sale of
the Sonds to be applied in a manr,er contrary to the
requirenents of the Indenxure, tile Loan Agreement or this Regulatory Agreement.
Sectiol; 3 . Residential Rental Propertv. The Owner
hereby acknowledges and agrees tnat the Project is currently
and wili continue to be owned, managed and operated as a
project for "residential rental property" (within the meaning
of Section 103(S)(4)(-%) of the Prior Code) for a term equal to
the Oualified Project Period determined with respect to the
Proj ecz. To that end, and for tile term of this Regulatory
Aareement, the Cwner hereby represents, covenants , warrants ant
agrees as ~O~~GWS:
(a) The Project has been constructed for the purpose
of providing multifamily residential rental property, and the
Owner shall OWE, manage ana operate the Project as a project tc
provide multifamily residential rental property comprised of a
building or srructure or several interrelated buildings or
structures, together Kith any functionally related and
with Section 103(S)(4)(A) of the Prior Code and Section
1.103-8(bj of the Regulations, and the Act, and in accordance
with such requirements as may be imposed thereby on the Projec.
fron time tc time.
subordinate Iacl-ALxL, and ne other facilities, in accordance r '?:,A.
(b) ALL 05 the dweiling units ir, the Project are and
will remain similarly ccnszructed units, and each dveliing uni
in the Project will cor,tain complete separate and distinct
facilities for living, sleeping, eating, cooking and sanitatio,
for a single person or 2 fanily, including a sleeping area,
bathing and sanixaxion facilities and cooking facilities
equipped with a cooking range, refrigerator and sink.
".
(c) 3lcne of the dwelling units in the Project will a
any time be utilized 31'1 a transient basis, or will ever be use
as a hotel, motel, dormitory, fraternity house, sorority house
rooming house, nursing nome, hospital, sanitarium, rest home o trailer court or park.
(d) No part of the Project will at any time be owned
or used as a cooperative housing corporation or a community
apartment project or a stock cooperative. Other than obtainin
and recording a condominium plan and map on the Project, and
obtaining a white report from the California Department of Rea
Estate, the Owner shall nct take any steps in connection with
conversion tc such ownership or uses except with the prior
04/'3 O/93
5332Cl,/2062.,'13 -7-
written approving opinion of Bond Counsel acceptable to the
City and the Trustee, that the interest on the Bonds will not
become taxable thereby. The final subdivision map to be recorded for the Project shall state the restriction against
transferring individual condominium ownership interests in the
Fro ject during the tern of the Regulatory Agreement.
(e) All of the ciwelling units ir the Project have
been axd xi11 be availanle for rental on a continuous basis to
members of the qeneral public. The Owner shall not discTiminate on tile basis of race, creed, color, sex, age or
national oriqiE in the lease, use or occupancy of the Project
or in conneczion with tiie employment or the application for
enployment of persons for the operation and management of the
Project. The Owner will not give preference to any particular
class or group in renting the dwelling units in the Project,
except to the extent that dwellinq units are required to be
leased or rented tc Lower-income Tenants or to be available for
occupancy on a priority basis by Very Low Income Tenants as set
>-
fwth ir, Section 4 belo\.:.
(fj The Lower. Income Units wili be intermingied with
all other dweliing units in the Project and shall be of
comparable quality and offel- a range of sizes and number of bedrooms comparable to zhe otner units in the Project. Tenants
in the Lower Income i':;its ;.-ill have equal access and enjoyment
to all common facilities of the Project.
(gj The Fr~jecz Site ccnsists of a parcel or parcels that are conzlg=ous except for the interposition of a road,
street or strear:;, anz aii of the Project Facilities comprise a
single geographically sne functionally integrated project for
residenTlal rental T;roFe:-cy, as eviuenced by tne ownership,
managemenz, accounting an.5 opex-zzion of the Project.
. "
(h) No uniz ir: any building cr structure in the
Project whiC11 contains fewer- than 5 units shall be occupied by
the Owner cr any perso:? rslated to or affiliated with the
Owner, such as a residen: manager or maintenance personnel.
(i) The Project was completed on September 16, 1986.
The date on which any cf the units in the Project was first
occupied was December- 1, 1986. The date OR which 10 percent of
the units in the Project was first occupied was January 15,
1987. The date on which 50 percent of the units in the Project
was first occupied was June 3, 1987.
Section 4. Lower-Income Tenants. Pursuant to the
requirements of Section 103(b)(4)(k) of the Prior Code and
Section 52080 of the Act, the Owner hereby represents, warrant:
and covenants tha: throuc;nout the Quaiified Project Period:
04/30/93
5302Q,/2062,/13 -8-
(a) Not less than twenty percent (20%) of the units
in the Project shall be continuously occupied by or held
available for occupancy by Lower Income Tenants at an
Affordable Rent. For this purpose, a unit occupied by a
Lower-income Tenant who at the commencement of the occupancy is
a Lower-income Tellant shall be treated as occupied by such
individual or family during their tenancy in such unit, even
though they subsequently cease to be a Lower-Income Tenant.
Moreover, a unit previously occupied by a Lower-income Tenant
Tenant until reoccupied, other than for a temporary period, at
which time the character of the unit shall be redetermined. Ir
no event shaii such remporzry period exceed thirty-one (31)
and then vacated shai! be Gonsidered occupied by a Lower-Income
days.
(bj Upon the commencement of the Qualified Project
Period, and OD the first. day of each month thereafter during
the term of this iiegula-cory Agreement, the Owner shall advise
the City, the Trustee, the Bank and the Program Administrator
of the status of the occupancy 05 the Project by delivering to
such parties a Certificate of Continuing Program Compliance.
(c) The hner WLLL obtaill and maintain on fiie an .-_
Income Certification from each Lower-Income Tenant, dated
immediateiy prior to the initial occupancy of such Lower-income
Tenant in the Project. The Owner- agrees to provide such
additional informazlon as may be required in the future by the
State of California, the Ciry, the Program Administrator and bl
Section lC3(S)(.%)(A) cr^ the Prior Code and the Regulations, as
the same may be aneniec! 5ro~. ~ime to time, or in such other
forrc and manner as may be required by applicable rules,
rulings, policies, ~roced~r-es or other- official statenlents now
or hereafter- prornulgaxed, proposed or made by the Department oi
the Treasury or the internal Revenue Service xith respect to
obligations transitioned under Section 1313(a) of the Tax
Reform Act or' 1986. A copy of each such Income Certification
will be attached to the monthly Certificate of Continuing
Program Compliant? filed with the Program Administrator
pursuant to subsection (iq. The Owner shall make a good faith
effort to verify thax the income provided by an applicant in ar
income Certification is accurate by taking one or more of the following steps as a part or' the verification process: (i)
obtaining a copy of a Lower-Income Tenant's federal income tax
return for the Lax year immediately prior to the commencement
of such Lower-Income Terrant's occupancy, (ii) obtaining an
employer's verificarion of such Lower-income Tenant's current
income, or, (iii) if the Lower-income Tenant is unemployed or
if the tax return is unavaiiable, obtaining other satisfactory
..
evidence of income for such year.
04,/30/93
5302Q,/2062,/13 -9-
(d) The Owner will: (a) maintain a list of persons
who have notified the Owner of their desire to rent a unit in
the Project and who have Adjusted incomes which would qualify
them as Very Low Income- Tenants, 2nd (b) offer to rent at least
half of the Lower-income Units (subject to the availability
thereof at any tine) on a priority basis to the persons on such
list prior to offering to rent such units to any other persons
and in ciloosing such Very Low Income Tenants shall use selection criteria IIC more burdensome than shall be applied to
other prospective tenanzs. To fulfill its obligation under
this subparagraph (d) , upon receiving notice from a
Lower-income Tenalit 01- 2 Very Low income Tenant of such
tenant's inzent tc vacate a Lower Income Unit, the Owner shall
immediately xall 2 notice tc the City Housing Autnority statinq
the date on which such unit will be available for occupancy anc
the rent for such unit,. and shall mail notice to at ieast 5
persons on the llst for each unit coming vacant. The Owner
agrees to make the units ccr.i:lg vacant available, on a prioritk
basis, first tc any Very Low Income Tenants who are Section 8
certificate hoiders 01- the recipients of another rent subsidy
in this Sectlon shsll reqaire tile Owner to offer to rent such
units to such persons. on terms anc conditions which are more
favorable thar. the cerms and conditions on which such units will be offered to Lower hcome Tenants generally. Provided that the Owner has compiied with the foregoing to attract Very
Low Income Tenanzs LO the Project, nothing nerei12 shall bs
construed as requir-inq the @\;ne:- to keep units vacant for
occupancy by Very Low Illcome Tenants where no Very Low Income
Tenants have a~plied fcr- occupancy.
2nd second to othe:. " very Low income Tenants. Nothing contained
(e 1 The Gwnex :,..-ill main-lair, complete. and accurate
records pertaining to xhe Lower Income Units, and wiii permit
any duly authorizec; representative or' the City, the Program
kdministratcr, the Truster, the Bank, the Department of the
Treasury or che Inzernai Ftevenue Service to inspect the books
ana records of the Owner pertaining to the Project, including
those recor6s pe1"tail:ing tc the occupancy of the Lover Income
Units.
(5) The Qwner shall accept as tenants on the same
basis as all other prospective tenants, persons who are
recipients of federal certificates for rent subsidies pursuant
t~ the exisyinc. prcgram uncel- Section 8 of the United States
Housing Act of 1937, of its successor. The Owner shall not
apply selectior, cr-iceria to Section 8 certificate holders whick
are more burdensome than criteria applied to any other
prospective tenants -
(g) The form of lease to be utilized by the Owner in renting any anics in xile Project to any person other than a
OfL,!3 0/9 3
5302Q,/2002,/13 -10-
Section 8 tenant who is intended to qualify as a Lower-Income
Tenant shall provide for tel-mination of the lease and consent
by such person to immediate eviction for failure to qualify as
a Lower-Income Tenant as a result of any material
misrepresentation made by such person with respect to the
Incorre Certification.
Sectic:; 5. lax Exempt Status of the Bonds. The rr
Owler and thc Citv eacil ller-&y represents, warranKs and agrees.
that:
9-
(a) it will not knowinqly take or permit, or omit to
take or taus? to be taken, as is appropriate, any action that
would adversely affect tne exclusion from gross incorr,e for
federal income tax purposes or the exemption from California
personal income taxes cf interest on the Prior Bonds or the
Eonds and, if it should take or permit, or omit to take or
cause to be taken, any such action, it will take all iawfui
actions necessary to r-escind or correct such actions or omissions promptly upon obteining knowledge thereof;
(b) it will take such action or actions as may be
necessary, in the writter, opinion of Eiond Counsel filed with
the City and the Trustee, (i) to comply fully with all
applicable rules, ruiinys, policies, procedures, Regulations 01
other official statements promulgated, proposed or made by the
Department of the Treasury 0:- the Internal Revenue Service
pertaininc to obligations issued under Section 103(b)(4)(A) of
the Prior Code an< zransitioned under Section 1313(a) of the
Tax Reform Act of 1.86, and (ii) EO compiy witn the Act; and
(c ) it will file snd./or record such documents and
take such othez stess as are necessary, in the written opinion
of Bond Counsel filed with tile City and the Trustee, in order
to insure that the requirerents and restrictions of this Regulatory Acp-eemenx will be binding won all owners of the
Project, including, but not limited to, tile execution and
recordation 05 this Reczlatcs-y Agreernenz In the real property
recorcs of tile County of San Dieqc.
The Owner hereby covenants to include the requirements and
restrictions contained in this Regulatory Agreement in any
documents transferring any interest [other than a leasehold
interest) in the Project co another person to the end that suc:
transferee has notice of, and is bound by, such restrictions,
and to obtain the agreement from any transferee to abide by al
requirements and restricticns of this Regulatory Agreement.
Section 6. Modification of Special Tax Covenants.
The Owner, the Trustee and the City hereby agree as foliows:
04/'30/'93
5302Q,,'206% ,'I3 -11-
(a) To the extent any amendments to the Act, the
Regulations, the Prior Code or the Code shall, in the written
opinion of Eond Counsel filed with the City, the Trustee and
the Owner, impose requirements upon the ownership or operation
of the Project more restrictive than those imposed by this
Regulatory Agreement which must be complied with in order to
maintain tile exclusion from gross income for federal income tax
shall be deemed tc be autor,aticaliy amended tc impose such
additional 01- more reszrictive requirements.
purposes of interest. 02 the Bonds, this Regulatory hgreement
(S) To the extent any amendments to the Act, the
Regulations, the Prior Code CY the Code shall, in the written
opinion of Bond Counsel filed with the City, the Trustee and the Owner., impose requirements upon the ownership or operation
of the Prcject less restrictive than imposed by this Regulatory
Agreement, this Regulatory Agreement may be amended or modified
to provide such less res~rictlve requirements should the City,
in its sole discreIion, decide that such requirements should be
made applicable ts the Project.
(c) The Owner, tile City and, if applicable, the
Trustee, upon the written ar-ection of the Attorney, shall
execute, deliver and, ir' applicable, file of record any and all
documents anc Inscrurents, necessary to effectuate the intent
of this Section 6, anc each of the Owner and the City hereby
appoints the Trustee as ics True anci lawful attorney-in-fact tc
execute, deliver and, if apslicabie, file of record on behalf
of the Owner or the Ciry, as is applicable, any such document
or instrume11t i in such fcrm as may be approved in writing by
Bond Ccu~lsel j 11 eithel- thr-. Owner cr- the City defaults in the
performance of ics cbligazions under tnis subsection (c);
provided, ho.v~ever, thaz the Trustee shall take no action under
City, or each of then, as is appiicable, unless directed in
the Owner cr the City, or each of them, as is applicable, an
opporxunity ts comply with tnc requirements of this Section 6.
..
'r- 8
th' L IS subsection (c) xithcut first notifying the Owner or the
wl-iting b~.: the City. r 01- xhe Owner, and without first providing
Section /I. ~ncemnification. The Owner hereby - "
covenants an2 agrees that iz shall indemnify and hold harmless
the City, the Bank, the Trustee and their respective officers,
counciimembers, and empioyees from and against (i) any and all
claims by or on behalf of any person arising from any cause
whatsoever in connection with the provision of tax-exempt
financing for the rrcjezt or the making of the Loan; (ii) any
and aii clairrs arising from any act or omission of the Owner 01
any of its agents, servants, employees or licensees, in
connection with the Loan or the Project; (iii) all reasonable
costs, attorneys' fees of counsel selected by the indemnified
party, exper,ses or liabilities incurred in connection with any
-
04/30,/93
5302Q/2062,/13 -12-
such claim or proceeding brought thereon; provided, however,
that this provision shall not require the Owner to indemnify
the Trustee from any claims, costs, fees, expenses or
liabilities arising from the negligence or willful misconduct
of the Trustee. Upon the sale or transfer of the Project, the
acquiring person or encity shall indemnify and hold harmless
the City, the Bank, the Trustee and their respective officers,
Councilmembers and employees as provided herein, and upon such
indemnification, and only xpor, such indemnification, by the
acquiring party, the Owner shall thereafter have no further
liability hereunder except for claims arising from any act or
omission of the Owner occurring tjhiie the Project was owned by
the OLner. In the event that any acticr, 3r proceeding is
brought against the City, the Bank or the Trustee or any of
their officers or employees, vith respect to which indemnity
may be sought hereunder, the Owner, upon written notice from
the indemnified party, shall assume the investigatioc and
defense tilereof, including the employment of counsel and the
paymenz of all expenses. The indemnified party shall have the
right tc employ separate counsel in any such action or
proceeding and tc participate in the defense thereof; but
unless such separaze coul2sel is employed with the approval and
conselit of the Owner, or pu~-suant tc, a court order, the Owner
shall not be reqirec to pay the fees and expenses of such
separate counsel.
The Owner- also shall pay and discharge and shall
indemnify and hold harmless the City and the Trustee from (x)
any lien or charge upon payments by Cne Owner to the City and
the Trustee nereun~el- a~ci (y~ any taxes (including, without
limitation, all ad valoren. taxes and sales taxes), assessments,
impositions and other cnarqes In respect of any portion of the
Project. If any such c~aim is assexed, or any such lien or
charge upon payments, ai- any such taxes, assessments,
impositions or other charges, are sought to be imposed, the
City or the Trustee shall give prompt notice tc the Owner and
tile Owner shall have tne sole right and duty to assume,. and
will assume, the defense tilereof, with full power to litigate,
compromise or settle the same in its sole discretion.
-.
In addicion thereto, the Owner will pay upon demand
all of the fees and expenses paid or incurred by the Trustee
and,,d'or the City in enforcing the provisions hereof.
This Section 7 constitutes a continuation of the
Owner's obligations under the Prior Regulatory Agreement and
the Owner's obiigations to indemnify shall relate to all acts
or omissions of the Type described above from and after the
date of issuance of the Prior Bonds. This Section 7 shall
survive termination of this Regulatory Agreement.
04,/'30,/93
5302Q/2062/13 -13-
Section 8. Consideration. The City has issued the
Eonds to provide funds to make the Loan to refund the Prior
Bonds, the proceeds of which Prior Bonds have been used to
construct and eauip the Project. The Trustee has entered into
the Indenture and assumed duties and obligations thereunder
which facilitate the issuance of the Bonds. In consideration
of the issuance of the Eonds by the City and the execution of
the indenture by the Trustee, the Owner nas entered into this
Rec;ulator-y Acreemel:% and has agreed to continue to restrict the
uses LO which chis Project can be put as originally restricted
by the Prior Regulatory Agreement and or, the terms ana
conditions set forth herein.
_______ Section 9. Reliance. The City, the Trustee and
the Owner hereby recognize and agree thar the representations
by the Cicy ar,d the Owner- and the covenants of the City,
Trustee, ana Owner set forth herein may be relied upon by all
and in the exclusion from qross incone for federal income Lax
purposes and the exemptior from State of California personal
income taxes of inte-sst os the Eonds and the Prior Bonds. In
performing tneir- duties and obligations hereunder, the City and
the Trustee may reiy upor. statements ana certificates, or the
absence thereof, of the Owner, Lower-Income Tenants and Very
Low, income Tenants and the Frogram Administrator, and upon
audits of the books an5 rezoras of the, Owner pertaining to the
Project. In adaitiol:, the City and the Trustee may consult
with counsel, and the opinion of such counsel shall be full anc
corcpiete auti-qT-- ,L-iLG-is~ - -+ and pl-otection in respect of any action
taken or suffered bgT ?he CitLT or the Trustee hereunder in good
faith and in confo-L-r;izy vith such opinlon. in decermining
whether any default or lack of compliance by the Otmer exists
under- this Regulatory kcjreement, the Trustee shall not be
required to ccnauct any investigation into or review of the
operations or records of the Owner and may rely solely on any
the Program haminiszrato:- GL- tile City with respect to the
occurrence or absence of a default unless it actually knows, 01
in the exercise of reasonable care sho-Jld have known from the
face of such x~tice or certificate , that the notice or
certificate is erroneozs or misleading.
persons interested in tile legality and validity of tile Eoncis,
nDtice 31- certliic6te deliver-eG to the Trarstee bv the Owner,
In accepting lzs obligations hereunder, the Trustee
acts soley as trustee for the benefit of the Bondholders and
not in its individual capacity, and all persons, including,
without limitation, the City and the Owner, seeking paymext
from the Trustee lor any liability arising by reason of the
transactions contemplated hereby shall look only to such Trust
Estaxe for payment; except where such liability arises from the
negligence or willfull misconduct of the Trustee.
04/'30/93
5302Q,/2062/13 -14-
Section 10 - Project in the City. The Owner hereby
represents and warrants that the Project is located entirely
within the territorial boundaries of the City.
Section li - Sale or Transfer of the Project. The
Owner hereby coITenants and agrees not to seli, transfer or
otherwise dispcse of the Project, or any portion thereof (other
than for individual zenant use as contemplated hereunder),
without obtailling the prior i;ritten consent of the Cit17, the
Bank and the Trustee, wkricil consent shall be deemed giveR upon
receipt by the City, the Bank and the Trustee. of (i) evidence
reasonably satisfactory to the Zity, the Bank and the Trustee
that the Owner's pmzhaser 3r transferee has assumed in writin:
the Owner's dutles and obligaticns under this Regulatory
Agreement; (ii) ;is opinioll of zcunse? of the transferee that
the transferee has dilly assumed the obligations of the Owner
under this 3egulatol-y kc:-eement and that such obligations and
this Regulatory kqreement are binding on the transferee; and
(iii) an opir,ion of Bo~d Counsel that such transfer will not adverseiy affec-, the exclusion from gross income for federal
income tax purposes of ineierest on the Bonds or the Prior bonds. IT is hereby expressiy stipulated ana agreed that any
voluntary sale, transfer 01- other disposition of the Project ir
violation of this Section 11 shall be null, void and without
effecE, shall cause a reTL'ersioT! of title tc the Owner, and
shall be ineffective to relieve the Owner or' its obligations
Section II shall affect any provision of any other document or
instrument between the O;.:ne:- and the Eank which requires the
Gwner to ob~aln the consent c.f the Bank as a precondition to
Project.
under- this KegulatoL-y kgreen?exc. Nothing contained in this
the voiurltary sale, transfer ~r cither disposition of the
- sectior-i 12. - " Term. This Regulatory Agreemen-c and all ana several 92 the cerxs hereof shall become effective upor
its executioz and deliver:, ar?d shall remain in full force and
effect for the Qualified Project Period, it being expressly
agreed and under-s-cocd that :he provisions hereof are intended
to survive the retirement 05 the Bonds and expiration of the
Indenture, the Loan kgreernenz, the Loan, the First Deed of
Trust and the Nct-c. Nocwithsxanding any other provisions of
this Requlatory Agreement, this entire Regulatory Agreement, 01
any of the provisions or sections hereof, may be terminated
upon agreemen1 by the City, the Trustee, the Bank and the Owne:
if there shall have been received an opinion of Bond Counsel
that such termination will not adversely affect the exciusion
fron: gross income for federal income tax purposes or the
exemption from State of California personal income taxes of
Frovide notice of any terxination of this Regulatory Agreement
tc the Bank.
interesz on the Bonds or the Prior Bonds, The Owner shall
04/3 0/93
5302Q/'2062/13 -15-
The terms of this Regulatory Agreement to the contrary
notwithstanding, this Regulatory Agreement, and all and several
of the terms hereof, shall terninate and be of no further force
and effect in the event of (i) a foreclosure or delivery of a
deed in lieu of foreclosure whereby a third party shall take
possession of the Prcject or involuntary non-compliance with
the pro17isions of this Regulatory Agreement caused by fire,
seizure, requisition, change in a federal lab; or an action of a
iederzl agency after the date of execution hereof t:hlcn prevenrcs the City anc! the Trxstee from enforcing the provisions hereof or conaemnarioc or a similar event and (ii) the payment in full an=! retir-en-nz of the Bonds within a reasonable period
thereafter; prcvided, howeve1-, that the preceding provisions of
this sentence shall cease to apply and the restrictions
contained i>cr?in shall be rei:lstated if, at any time subsequent
to the terrination of such provisions as the result of an event
described ill (i ) above, tile awnel- or any related person to it
(withir, the meaning of Section 1.103-10(e) of the Regulationsj
obtains an ownership incerest in the Project for federal income
tax purpcses. Upo~ the termination of the terms of this
Regulatory AqreernenL, tile parries hereto agree to execute,
deliver and record appropr-iare instruments of release and
discharye of tile terms hereof ; pro-,rided, however, that the
executior! and delivery cf such instruments shali not be
necessary or a prerequisixe to the Termination of this
87
Iieguiarory Pq-eemen's ill accoxiance with its terms.
Sectior;_s. Cevenants to Run With the Land. The
Ow~el- hereby sul=jeczs The E~-~jecr ( including the Project Site)
tc tns cc-.-enan~z, ~-ese-:..~~:;sns and restrictions set forth in
tilie Fceguiatory Agreemen-,. r- LLI~ Cicy, the Trustee and the Owner
nereby cieclal-e their exprlss intent that the covenanrs,
reservaticns ana restrictions set forth herein shall be deemed
covenants running xiti= the ;and and shail pass to and be
birding upon the Owner's successzrs in titie to the Project;
provided, howe~~e1-, that on Tile z3rmination of this Regulatory
Agreement said covenants, reservations and restrictions shall
expire. Zaci- anc every cszxact, deed or other instrument
hereafter- executed covering or conveyins the Project or any
portion tilereof shali conclusively be held to have been
executed, uslivered and accepted subject to such covenants,
reservations and resrrictions, regardless of whether such
covenants, reservations and restrictions are set forth in such
..
contract, deed or other instruments.
Section 14. Burden and Benefit. The City, the
Trustee and the Owner hereby declare their understanding and
intent that the burden of the covenants set forth herein touch
and concerr?. the land in thaz the Owner's legal interest in the
Project is rendered iess valuabie thereby. The City, the
Trusree and the Owner hereby further declare their
04/3 0/9 3
5302Q/2052/13 -16-
understanding and intent that the benefit of such covenants
touch and concern the land by enhancing and increasing the
enjoyment ar,d use of the Project by Lower-Income Tenants, and
by furthering the public purposes for which the Bonds were
i s sued.
- Section 15. Uniformity; Common Plan. The
covenants, reservarions and restrictions hereof shall apply
uniforn-,ly to the elitire 11-3 ject in order to establish and carr]
out a commor, plan for the use, development and improvement of
the Project Site.
-
Section 115. Enforcement. Subject to the provision!
of tile Intercredizor Agreement, if the Owner defaults in the
performance or observance of any covenant, agreement or
obligation of the Owner set forth in this Regulatory Agreement,
and if such default remains uncured for a period of thirty day:
after notice rhereor' sh&ll have been given by the City or the
Trustee to the Oxner and the Bank (provided that said period
may be extended if the Owner has commenced to cure such defaul'
and is dlilgnntly pur-suing such cure znd delivers to the City
ami the Trustee an opinion of Eond Counsel to the effect that such extension Kill not adversely affect the exclusion from
gross income for federal income tax purposes of interest on tht
bonds), ther, the CitlJ or the Trustee, acting on its own behalf
or on behalf of the City, shall deciare an "Event of Default"
to have occurred hereunder, and, at its option, subject to the
terms and conditions or' the Intercreditor Agreement dated as o:
May i, 1993 amonq :he City, the Trustee and the Bank, nay take
an;' one CY more of the foiiowinq steps:
..I 1
(i) by nandamus or other suit, action or
proceedinc; at iav or in equity, require the Owner to
perforrr: its obligations and covenants hereunder or
enjoin any acts or things which may be unlawful. or in
violatlon of the rig5xs of the City or the Trustee
hereunder;
(li) ha\'-, access to and inspect, examine and makl
copies of all of zhe books and records of the Owner
pertaining rc the Project;
(iii) take such other action at law or in equity
as may appear necessary or desirable to enforce the
obiigations, covenants and agreements of the Owner
hereunuer; or
(iv) require the City to declare a default under
the Loan and acceierate the indebtedness evidenced by the Note, and thereafter exercise all other rights an
remedies under :ne Loan Agreement and proce5d to
reaeem Eonds in accordance with the Indenxure.
.-
04/3 0 ,'9 3
5302Q,/2062,"3 -17-
The Trustee shall have tile right, in accordance with this
Section 16 and the provisions of the Indenture, without the
consent, approval or knowledge of the City, to exercise any or
all of the rights or remedies of the City hereunder; provided
that prior tc takinq ar,y such act the Trustee shall give the
City reasonable written notice, which shall not be less than 11
days ir, advance of its intended action. All fees, costs and
expenses of tile Trustee incurred in taking any action pursuant
to this Seczion 16 shell be the sole responsiblity of the Owne
After the indenture has beer! discharged, the City may
act or: its own behalf to declare an "Event of Default"
hereunder and to exercise any or' the enforcement remedies set
taken by the Trustee. forth above to the same extent and with the same effect as if
NO-(-\ :~t ' ' h".. aLandincj any provision in this Regulatory
Agl-eernent, the liability GE the Owner under this Regulatory
Agreement is 1imiTea as provided in Section 5.7 of the Loan
Agreement.
Sectic;-i 17. Recording and Filing. The Owner shall
cause this, Regulatory Aqreement an6 all amencments and
suppiements hereto and thereto, to be recorded and filed in th
rea; property records or' the County of San Diegc and ir, such
other piaces as tile .City 01- the Trustee may reasonably
request. Tile Owner silal; pay all fees and charges incurred in
connection vi th any such r-ecordixg.
___
Section :E,. -~ " Fairment of Fees. In the event that a pzrr;y tz, tins F,~:~j:llacr;~; .ti .L..creemnt brincjs an action against an
@t]lc: 7; psl-xy L.2 t-pi 5 R-." ."~u~sxory 7 Aqreement by reason of the
breach of any condition or covenant, representation or warrant
in this Regulaxory Agreement, or otherwise arising out of this
Regulatory Aqreemect, the prevailing party in such action shal
be entitled x';.3 recoT:er- f7-OX the other reasonable attorneys'
fees t~; be fixed by the court which shall render a judgment, a
well as the costs of suit.
Nctwithstandinq any prepayment of the Loan and
norwithstandinq a discharge of the Indenture, throughout the
term of thic Regulatory Agreement, the Owner shall pay the
Issuer's fee cE -23 percent 05 the principal amount of the
Bonds on the Bond Issuance date on June 1 of each year and
shall also reimburse the City and the Trustee for all expenses
reasonably incc:-red by them in connection with enforcement of
their rights and remedies hereunder.
Section 1% Governing Law. This Regulatory
Agreement shall Se qovezned by the laws of the State of
California. The Trustee'r rights, duties and obligations 3
04 /'3 0./'9 3
53029,/2062/'13 -18-
hereunder are governed in their entirety by the terms and
provisions of the Indenture.
Section 20. Amendments. Except as provided in
Section 6raj hereof , this Regulatory Agreement shall be amendec
only by a written instrument exemxed by the parties hereto or
their successors in +'+' L1 ,le, and duly recorded in the real propel-tv records of the Counq of Sari Diego. The parties
herezo acknowledge that, for so iong as the Bonds are
outstanding, the Bank is 2, third party beneficiary to this
Regulatcry Agreement, and that, except as provided in Section
6(a) hereof, no amendment affecting tile rights of the Bank may
occur withoxt the prior- written consent of the Bank.
The parties hereto agree that the Prior Regulatory
Agreenent shall Terminate and be of no further force and effec.
as of the date of reaemptior, of the Prior Bonds (except for th
provisions of Secrion ; rilereof which have been preserved
hereby) and agree thzt the recordation cf this Regulatory
Agreement shall operate as evidence of such termination of the
Prior Requlacol-y Agreement.
,..
Secticz2 22. Notice. Any notice required to be
giver, hereunder shali be made in writing and shall be given by
personal delivery, certified or registered mail, postage
beiow, or at such other addresses as may be specified in
writinq by the parties hereto:
prepaid, return receipt requested, at the addresses specified
Ci tT,i :
Bank :
TrusTee:
Owner :
City - of Carisbad
1200 Carisbaa Viliage Drive
Zarlsbad, California 92008
Aztn: Finance Cirector
Bank of America National Trust and
Savings Association
450 E Street, Suite 050
San Dieqo, California 92101
Rttc: Nark Scnerrer-
First Trust of California, National
Association
io1 California Street, Suite 1150
Attn: Muitifamiiy Housing
San Francisco, California 94.111
La Costa Partners, a California genera
partnership 4C SoCal Development, Inc.
915 Camino del Mar, Suite 200
De1 !\'Tar, California 92014
kttn: Rodney F. Stone
04//3 Oi'9 3
5302Q/2062,/13 -19-
Program
Administrator:
Notice shall be deemed given three business days after
the date of TLaiLLng, by certified mail, postage prepaid, return
receipt recpested; or, if personally delivered, when received.
._
Section LL ~ SelTerability. If any provision of this
Reguiatory Aqreement shall be inTzalid, illegal or
unenforceable, the valicit 17, legality and enforceability of the
remaining portions hereof shall not in any way be affected or
impai ree thereby;.
riT,
Sectio:1 " 23. " M-altiule Counterparts. This Regulatory
Agreement may be sirnulLaneousiy executed in multiple
counterparts, all of which shall constitute one and the same
Instrument, and each oIr which shall be deemed to be an oriqinal
04,/30;/93
S302~,/'2052,,"13 -20-
IN WITNESS WXEREOF, the City, the Trustee and the
Owner have executed this Regulatory Agreement by duly authorized representatives, all on the Bond Issuance Date.
PTm- -&LY OF CARLSBAD
By :
Mayor
ATTEST :
City Clerk
FIRST TRVST OF CALIFORNIA; NATIONAI
ASSOCIATION, as Trustee
ATTEST:
By :
Authorized Signatory
Au" dlcrized S,ignatory
" L-L~ c0ST-E- pAP,TL\!EF,S, 2 califor-nia
general partnership
By: THE FERI\IANI.AN FAMILY T2UST General Partner
E17 :
George A. Fermanlan,
Trustee
By: THE STONE FAMILY TRUST
General Partner
By :
Rodney F. Stone, Trustee
04/30,/'93
5302Q/2062 /13 -21-
STATE OF CALIFORNIA
COUNTY OF SAN DIEGO
1
)
)
On I before me,
I personzlly apFeared and
I
pE?l-SQllally hGW2 tG I33 -- OF. --
"
proved to me on the basis of satisfactory evidence
to be the persons wnose names are subscribed to the within
instrument and acknowledged to me that they executed the same
in their authorized capacities, and that by their signatures or
the instrurnect tne persons, or the entity upon behalf of which
the P~L-SOIIE acted, execxred tile instrument.
klizxess 111.1' hand zxd officiai seal.
(Signature of Notary-)
Cj5,Pr-C I TY CL-& I ?VIED EL- 3 I ~-~~~~~~ :
Indiviciual __ Corpol-ate Cfr'icpr-( 3.) : __ " Title(sj
Parxner ( E. j : Limited -. ___ __ General
__ (si
.&t~or-ney-in-Fac=
- Gu~~-dian/Conse~--~-a~~~-
1,: 0th-c 1- : " ~iaxor and City Clerk
" "~-usT;ee IL
"
SIGNg:R IS "T7Dn""'" h,,Kz,sLp;-ING: The City of Carlsbad
ATTEXTION NCZX'~: Although the information requested bel01 is OPTIONAL, iz zoul.j, prevent fraudulent attachment of this
certificate tc another- documenz.
____
THIS CEn"-TmmLTF r..I I" Ab-i"
rljusy p,~ :;TT~~CEED ______
TO THE DOCUMENT
DZSCRIBEG I;T RI,ZE;T:
Title 01- Type of Document
l\jumber of Pages
Daze of Document Signer(s) Other Than Named Above:
STATE OF CALIFORNIA )
COUNTY OF SAN FRANCISCO ) 1
On , before me,
, personally appeared and
I
- personally :L;novn tc me -- OR --
proved to me on the basis of satisfactory evidence
to be the person wh-,se name is subscribed to the withir,
instrument and acknowlecqeC tc me that he executed the same in
his authorized capacity, and that by his signature on the
instrument the pe:-soc, or the entity upon behalf of which the
person acted, execuxed the instrument.
Witness n?y hand and official seal.
(Signztur-e of Notary)
CApI;C 1 Ty CL>- I ~~~~~ Ey S I GME;: : ___-
- Individual
__ Cc-porace Cffl,,L ,-.a,-( s) :
Title(sj
~ Fart:ler ( si : LiIrtited General
~ kttorney-il:-Fac:
- GuardianiConservatoL-
~ X Other : Authorized Signatories
SIGNER IS ZEPi?ESZNTINS: ;L:-s~ Trust of California, National
Association
-
Tr-ustee ( s ) -
-.
ATTENTION NOTARL”: -. Although the information requested belo
is OPTIONAL, it could prevent fraudulenr attachment of this
certificate EO ansther cocurnent.
THIS CERm7’‘P’’ A - - i -r;T~1. - - -___ Title or Type of Document MUST BE ATTA\CE-IED
TO THE DOCUMENT Number- cf Pages
DESCRIEEQ Date of Document
AT RIGHT: Sic.ner(s) Other Than ru’amed Above:
STATE OF CL-LIFORNIL
COUNTY OF SAN DIEGG
)
)
)
0 n , before me,
, personally appeared ,
personally known tc me -- 02 --
proved to me 0:: tile basis. of satisfactory evidence -
-
to be tile pel-son whcse name is subscribed to the within
instrument and acknowledged to me that he executed the same in
his authorized capacity; ana that by his signature OR the
instrument tile persox, OL- the entity upon behalf of which the
person acted, execured the insrrument.
Witness my hand and ocficiai seal.
(Signature of Notary)
CAPAC I y< CL>- IpqEC 57: S I Gp<Eg : : -______
Indi.,7id.da; -
__ Corporate Officer ( s j :
~ ____ Llmlted General Attorney-:n-r act
- >I Trustee ( s)
- Guardian./Conserva~c~-
Other:
m'; 1lLle( s) '.'a.;.:rLel- ( s ) : _. . - -
-
SIGNER IS REPRESENTING: La Costa Partners -~
~."~-~ ATTEP3IOI; N0TE.F.':: &-:though the information requestec? belo.
is OPTIGNPL, it coulc preT..rent fraudulent attachment of this
certificzte to another documeRt.
THIS CERTIFIC-;"X
DlTJST BE >-TTAr,'iEil;
DESCRIESC
AT RIGHT:
.~____
To THE DCCUFENT-
Ti --L~~ cy 02- Type of Document
l\lurr.be:- of Fages
Date of Document
Signer( s) Other Than Named Above:
STATE OF CALIFORNIA
COUNTY OF SAN DIEGO
1
)
)
On / before me, -
I personally appeared I
__ person all^ ~IIGWP, xa me -- OR --
" p roved LC' me 02 the basis 32 satisfactory evidence
to be the pel-son whose name Is subscribed to the within
instrumenc and acknoxieaged to me that he executed the same in
his authorized casaciyy, and that hy his signature on the
instrxment the person, 31- the entity upon behalf of which the
person acted, executed the instrument.
Witness my hand ~nc crficial seal. ~-
(, Signature of Nocary)
C-7+ppAC 1 T-f CL-5;I rv;Ea E-: s 1 GNZF: :
Iildiyidual __ - Corpcrate '3fficer(, s j :
~ Partner ( s \ : __ Limi-,eZ General
__ 2- TI-uszee i s :)
Other :
Titie( s)
- jyttol-gey-i:l-Fazt -_
Guaraian,'Conser;-atcl- -.
__
SIGNER IS REPRESEPTING: La Ccsta Partners
,JLTTEI\JT I cp: i\:~~.zL?,~< : Althoucjh the information requested belo1
is OFTIGXAL, ir. could ?:-evext fraudulent attachment of this
cerEificace EO ancther d~cuxent.
"___
TE 1 S CERT I F 2 CA2-TE
EST BE 2ATTACHED - .__
TO THE D3CUDIEMT DESCRIBEC
AT RIGIIT;
r" ilx~e - or Type of Oocument
I<urnb~,: of Paces
Signer( s) Other Than Named Rbove: Date cf Document
EXHIBIT A
LEGAL DESCRIPTION
All that certain rezi property situated in the City of
Carlsbad, County of Sail Diego, State of California, described
as follows:
Parcel 2 of Parcel Kap 13524, in the City of Carlsbad,
County of San Diego, State of Caiifornia, filed in the Office
of the County Recorder of San Diego County, October 25, 1984,
as File No. 84-403293 of Offical Records.
Exceptinq ther-efrox, all minerals., mineral rights, oil, oil
rights, natural gas, natural gas rights, petroleurn, petroleum
rights, other hydrocarbon substances, geothermal steam, all
underground water, and ail products derived from any of the
foregoing, in 01- under or which may be produced from the
property which underlies a plane paraiiel to and 500 feet beiot
tile Dreser,t surface of the property toyether with the perpetual
storing in and removinq the same from the property or any othe~
land, inciudincj the right to whipstock or directionally drill
and mine fror lands. other than the property, oil, water, or ga!
wells, tunneis ana shafts inLo, through or across the
subsurface of the property, and to bottom such whipstocked or
directionally driiied wells, tunnels and shafts under the
beneath or beyond thc exterior limits thereof, and to redriii,
retunnel< equip, maintail;, repair, deepen, and operate any sucl
weiis or mines, without; however, the right to drill, mine,
store, expiore, and operaze Through the surface or the upper
five hundred (SOCj feet of the subsurface of the property; as
reserved to Daor Corporation in Grant Deed recorded October 29
1984, Official Kecorciz, File,/Fage No. 84-407544.
right of drilliag, rnix>ing, explor-in? and operating therefor anc
53020,/2062 /"I3 A- 1
EXHIBIT E3
CERTIFICATZ OF COMTIMUING PROGRAM COMPLIANCE
The undersigned, , being duly
authorized to execute this certificate on behalf of La Costa
Tar-cners, a Califor-:-iia general partnership (the "Owner" ) ,
hereby represents and varranzs that:
1. Ee has read and is thoroughly familiar with the
provisions of thf ~'a~-icus Loan Documents associated with tile
Owner's participation In the City of Carisbad's (the "City")
Variable Rate Demand MuiTifamily Housing Revenue Refunding
Bonds, Series L of 1993 (La Costa k,partmentc Project), such
documents inc iudir,c,r :
\i ( 2) thc I.Lmenaea 2nd Restated Regulatory Agreement an( Declaration of Restrictive Coy.Tenants dated as of May 1,
1992 (,the "Regulazary Agreement' ) amonq the Owner, the Cit:
and Firs:. Trust of Czli?~:-~i~, National AssociatiOK, (the
"T~US~~E'' j ;
(b) the Loax Agreement dated as of May 1, 1993 among
the owner, the Cizii - anB tile Trustee; and
"+ sl,y representing -,he Ovner's obligation to repay the Loan (c) the Noxe daled N2-y 1, 1993 from the Owner to the
1.
c, r- -3.s 3, x125 ~sce (3: rills ce1-t~ficat~; the foliowino - -.
percentaqes 05 corr~iete~ residential anits in the Project (i)
are occupied ky icy+;e~-Incoxs Texants (2s sljch tern: is defined
in tile iiecrulalcr-,. kqreeme1:t) or (ii) are currentiy ;;scant and
being heia ava;-aEle for SLiCh occupancy and have been so held
Ulli t ; a E: L :>dl c =Xed :
._ .
,. co::T:1lluous1'"' SlllCe the date a iow?r-income Tenant vacated such
(~ccupied b.1 L~;.J~T--;I~~C~S " " _.__
Tenants ( Lncluciing ver's'
Low incone Te:ia1:ts j :
"
o, "
/c; uni~ Nos.
Occupied by :.?ery LC:,,? ixcome
i enant s : ?: 'Jnit Nos. m
-. Heid vacant for occupancy
continuoL:sly s~lxs izst
occupied b:J Lower-Income
Tenant: -/c 4' Unit Nos .
5302Q,/'2052..'13 E-i
3. To the best knowledge of the Owner, (i) the Owner is
not in default under the terms of the Regulatory Agreement and
(ii), no Determination of Taxability has occurred with respect
to the Bonds.
LA COSTA PARTNERS, a California
general partnership
sy :
Its:
5302Q/’2062,/13 E-2
-
EXHIEIT C
INCOME COMPUTATION AND CERT I F I CAT I ON
NCTE TO AP.\RTNEYT OWNER: This form is designed to assist you
in computing Annual Income in accordance with the method set
forth in the Capartment of Housing and Urban Development
(f'EUDf') Regulations (24 CFK 813). You should make certain thai
this form is at all times up to date with the HUD Regulations.
All capitalized term.s used herein shall have the meaning set
forth in tho Regulator-y Agreement.
Re: [Address of Apartment Buildingj
I,hIe, the undersigned state that I/we have read and
answered fully, f-ankly and personally eacn of the following
questions for all persons who are to occupy the unit being
applied for in the above apa-zment project. Listed below are
the names of all persons who intend to reside in the unit:
1. L. ? 3. 4- Name of Nernbel-s Relationship
of the to Eead cf Social Security P 1 ac'
Household H9usehcld Age Number EmD 1 __ -
-~ HZ -L-p -
SPOUSE -
__
-
-
-
Incon:? ComDutation
6. The total anticipated income, calculated in accordance wit
this paragraph 6, G: all persons over the age of 18 years
listed above fcr the 12-month period beginning the date
that I,,;we plan to move into a unit is $
Included in the total anticipated income listed above are:
(a) all wages and salaries, overtime pay, commissions,
fees, tips and bcnuses and other compensation for
personal services, before payroll deductions;
5302Q/2062/13 c-1
(b) the net income from the operation of a business or
profession or from the rental of real or personal property (without deducting expenditures for business
expansion or amortization of’ capital indebtedness or
any allowances for depreciation of capital assets);
(c) interest and dividends (including income from assets
excluded below);
(d) the fuli amount of periodic payments received frorn
social security, annuities, insurance policies, re-
tirement funds, pensions, disability or death benefit:
and other similar tiypos or’ periodic receipts,
including any lunp sum payment fcr the delayed start
of a periodic payment;
(e) payments in lieu of earrxings, such as unemployment anc
disabiiitl! compecsation, workmen s compensation and
severance pay;
I
(f) the maximum amount of public assistance availabie to
the above persons other thar, the amount of any
assistance specifically designated for shelter and
utilities;
(gj periodic and determinable allowances, such as alimony
and chiid supporx payments and regular contributions
and qifts received from persons not residing in the
&<,re 11 ing ;
(11) all regula.; pay, special pzy and aiiowances of a - ,- rr.em5er or ~ne .k”ed Forces (whether or not living in
ti12 ciweliing) whc: is xhe head of the household or
spouse; and
(1) any named incorn~. tax credit to the extent that it
exceeds income tax liability.
Excluded fl-orr; such a:izicipaced income are:
(. a i casaal, sporadic 01 irregular gifts;
(b) amoulis i~hlch are specifically for or in reimbursemen
of medical expenses;
(c) lump sum additions to family assets, such as
inheritances, insurance payments (including payments
under health anc accident insurance and workmen’s
compensation), capital gains ana settlement for
personai or property losses;
5302Q/2062/13 c-2
(d) amounts of educational scholarships paid directly to
the student or tile educational institution, and -
amounts paid by the government to a veteran for use in
meeting the costs of tuition, fees, books and
equipment. Any amounts of such scholarships or
payments to ~;e,te:-a~s not used for the above purposes
are to be included in income;
(e) hazardous duty pay tc a household member who is away
from home ana exposed to hostile fire;
(f) relocatior; payme~ts under Title I1 of the Uniform
Relocation -%ssistance and Real Property Acquisition
Policies Act of 1970;
(g) foster child care payments;
(hi the value of coupon lllotments for the purchase of
food pul-suar;t to the Food Stamp Act of 1977;
(i) payments to ?roiunteers under the Domestic Volunteer SeL-,-vic$ -2-cc of 1973;
(j ) payments, rezeiTTec under the Alaska Native Claims
Settlement Act;
(kj income derived fron~ certain submarginal iand of the
United States that is held in trust for certain Indiar
i L>-ibac. --,
( 1) P~~I~IPX~S cr a1lot;ances made under the Department of
fiezLt?i 2nd i~_un.z~. SP~Y~C~S ’ Low- incone Home Energy
Ass1 sz2nce ?rogr22-. :
(mf payments receive6 from the Job Training Partnership
-6 .z t ;
(n) incorn? cerlvec! from the disposition of funds of the
Grand F~ivel- 5an2 of Ottawa IndiaRs; and
(0) the first $2,OOC.OC 05 per capita shares received fro1
judgment funds awarded by the Indian Claims Commissiol
or the Court cf Claims.
7. Do the persons whose income CL- contributions are included
in iten. 6 above
(a) have savings, stlocks, bor,as, equity in real property
01- othel- form ~f capital investment (excluding the
values of necessary- items of personal property such a
furniture and automobiies and interests in Indian
trust land) ” Yes NO; or
53020,/2OG%,/’13 C-3
(b) have they disposed of any assets (other than at a
foreclosure or bankruptcy sale) during the last two
years at less than fair market value?
Yes No.
(c) If the answer to (a) or (b) above is yes, does the
combined totai value of all such assets owned or disposed of by all such persons toIal more than
$5, OOO?
i
1-e s No
(d) If the answer to (c j above is yes, state:
(1) the amDunt of income expected to be derived from
such assets ix the 12-month period beginning on
the da7;e of iaitial occupancy in the unit that
?ox propose to rent : $ , and
(2 ) the amount of scch income, if any, that was
included in iten 6 above: S
8. (a j Are all or' the indi1Tiduals who propose to reside in
the unit full-time students"? Yes No
-r. full-time student is an individual enrolled as a
full-time stucelix aurin? each of 5 calendar months
-I.,
during zhe czier.c;ar- -dear in which occupancy of the
unit beqins at an educational organization which
normally maintains a regular faculty and curriculum
and nor~,zlLy i;as a reguiarly enroiied body of student,
ic atten5ance and 1s not an individual pursuing a
full-tlme c0~11-s~ zr' institutional OR farm training
ur,der zhe su~er.-ision of an accrediTed agent of such
an educationzi orqanization or of E state or politica
subdivision therecf ~
(b;; If tile answel- TG 8(,aj is yes, is at least 1 of the
proposed occupants of the unit a husband and wife
entitled ti: file a joint federal incorne tax return?
yes N c "
5. Neither myself nor any other occupant of the unit Ijwe
propose to rent is the owner of the rental housing project
any fanily relationship LC the Owner; or owns directly or
indirectly any interesx in the Owner. For purposes of thi
paragraph, indirect ownership by an individual shall mean
ownership by a family member, ownership by a corporation,
partnership, estate or trust in proportion to the ownershi
or beneficial interest in such corporation, partnership,
estate ar trustee held by the individual or a family
member; ami ownership, direct or indirect, by a partner of
the individual.
in which tha umt 1s located (hereinafter the Owner"), ha .. . I!
5302Q,/2062/13 c-4
10. This certificate is made with the knowledge that it will be
eligibility to occupy the unit; and I/we declare that all
information set forth herein is true., correct and complete
and based upon infornation I/we deem reliabie and that the
starement of total anticipated income contained in
paragraph 6 is reasonable and based upon such investigatior
as the undersigned deemed necessary.
relied upon by the Owner to determine maximum income for
11. I/we will assist the Owner in obtaining an)' information or
documents required to verify the statements made herein,--
inciuding either ar: ir,come verification from my,,'our present
immediately preceding calendar year.
employer( s) 01- copies of federal t Lax returns for tine
12. I/we acknowledge that i/we have been advised that the
making of any misrepresentation or misstatement in this
declaration xill coxsziru-ce a material breach of my,/our
tne Owner to prevent or terminate my/our occupancy of the
unit by inscitution of an actioE for ejection or other
appropriate proceedings.
I/we deciare under penaiIy of perjury that the foregoing i;
agreement with the Owner to iease the unit and will entitit
true anci correct.
Executed this day of in the City
Of , Californiz.
Applicant
Applicant
!Signature of all persons over the
age of i8 years lisred in number 2
above required ]
5302Q/2062/13 c-5
FOR COMPLET I ON EI; APXRTNEENT OWNER ONLY :
1. Calculation of eligible income:
a. Enter amount entered for entire
household I:? 6 above: $
b. (1) If the ans:,,:t;- to 7 ( L‘ )
abolye is yes ,. eliter
tne total amount entered in 7Id) (I), subtract from that figure
the amount entered ir 7( d) (2 ) and
enxer the rensi~ing balance ($ );
(2) Maltipiy the amount entered in
7 (c ‘j times the cur-rent passbook
savings rzte as determined by XUD
to de-cermine what the total annual
ea-nixqs el-; the amount iz 7 (c j
~ould St if in=.estec ic passbook sa;-ir;gc ( S )/ subtract from
7 (d) (2 ) an6 enter the remaininq
balance (S );
-. ihaz riL7u-e -. the amount enzered in
(3 ;J Enter at l-i~jilt the greslter of the
amount calzulated under (1) or (2)
abc,\7e : .$
c. TCT-L z’, I G 1 sLT I :.]CO!.IF
(Line 1. z plus line 1 .b( 3) j : $
2 . rr- L~~e amorLnt e,??te:-.‘ec 1’: - . c : .. -
Qgalifiec zile apn;;cant( s) as a Lower-Income
Tenant! E ’j .
uoes not qaslify :he applicant(s) as a Lower-Income
Tenant ( 5 ) .
Gualifies the appiicant(sj as a Very Low Income
ienar;”l.
-.
-
7
3. Number of apartment unit assigned:
Bedroon-. Size: Rent: $
5302Q,’2062.ii3 C-6
4. This apartment unit [wasiwas not] last occupied for a peric . of 31 consecutive days by persons whose aggregate antici-
pated annual income as certified in the above manner upon
their initial occupancy of the apartment unit qualified
then; as Lower- Income Tenants.
5. Merhod used to verify applicant( s) income:
Employer income verification.
Copies of tax returns.
Other ( 1
Mar>aqer
5302Q,/2052/13 C-7
1 INCOME VERIFICATION
(for emploved persons)
The undersigned employee has applied for a rental unit located ir, a project financed under The City of Carlsbad Multifamily
Housing Program for persons of Lower income. Every income
stacement of a prospective tenant must be stringently
verified. Please indicate beiow the employee's current annual
income from wac7es, ovp,rtime, bonuses, commissions or any other
form of compensation received on a reguiar basis.
knnu a 1 w age E.
O7:ertlme
Eomises
Comnissions
To- Lcli - - curr-ellr, i:1ccme
I hereby cerz:ry that til^ scacements above are true and
complete tcl the best of my knowledge.
. .-
- Sicjnature __-~ Date Titie
1 her-eby cj:-ant YOU pe:-xissio~; 10 disclose my income to
cietpl-n:il1c p.7 Inccm? p~;~:;~~~~:;,~ - iuL -7- rental of an apartment
located jn ZhEiY ?l-GJecl ;.;h:ci? iils, beell financed under The CitJ of CaL-.-issac: ~.~;~~t~~~~;--; ~~~~~~~~:: Pr-ograrli.
il: oruer that they may
..
- .- " -
SicfIlatU1-e """". Date
Piease send 'tc:
5302Cl/2062,,'13 C-8
7 INCOME VERIFICATION
(for self-employed persons)
I hereby attach copies or' my individual federal and state
income tax returns for the immediately preceding calendar year
and certify that the information shown in such insome tax
returns is true and complete to rhe best of my knowledge.
SiGnatul-e Date
5302@'2062/13 c-9
. 1 2 gL5I
I 1 1 *
AGREEMENT REGARDING REDEMPTION, DEFEASANCE AND PAYMENT OF PRIOR BONDS
among
FIRST TRUST OF CALIFORNIA, NATIONAL ASSOCIATION
as Prior Bonds Trustee and as Trustee
CITY OF CARLSBAD
LA COSTA PARTNERS, a California general partnership
and
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
as the Letter of Credit Provider
with respect to the Prior Bonds
May 27, 1993
v AGREEMENT REGARDING
REDEMPTION, DEFEASANCE AND PAYMENT OF PRIOR BONDS
THIS AGREEMENT REGARDING REDEMPTION, DEFEASANCE AND PAYMEN
OF PRIOR BONDS, dated as of May 27, 1993 (this "Agreement"), among the City of Carlsba
(the "City"), First Trust of California, National Association, the successor in interest to The
America National Trust and Savings Association, the successor in interest to Security Pacific
National Bank (the "Prior Bonds Bank") and La Costa Partners, a California general partnershi
(the "Owner");
Bank of California, N.A., as Prior Bonds Trustee and as Trustee (defined below), Bank of
- WITNESSETH: - - - - - - - -
WHEREAS, the City has previously issued its $15,920,000 Multifamily Housing Rever
Bonds, Series A of 1985 (La Costa Apartments Project) (the "Prior Bonds") pursuant to an
Indenture of Trust dated as of April 1, 1985, between the City of Carlsbad (the "City") and tht
1993 (the "Prior Bonds Indenture") between the City and the Prior Bonds Trustee; and
Prior Bonds Trustee, as supplemented by a First Supplemental Indenture dated as of May 11,
WHEREAS, simultaneously with the execution of this Agreement, the City is issuing it
Variable Rate Demand Multifamily Housing Revenue Refunding Bonds, Series A of 1993 (La
Costa Apartments Project) (the "Bonds"), in the aggregate principal amount of $15,290,000
pursuant to an Indenture of Trust dated as of May 1, 1993 (the "Indenture"), by and between t
City and First Trust of California, National Association as Trustee (the "Trustee"); and
WHEREAS, the Owner has elected to exercise its option to optionally prepay the
Developer Loan (as defined in the Prior Bonds Indenture), which, in turn, will cause the
redemption of the Prior Bonds; and
WHEREAS, the Owner has caused to be delivered to the Prior Bonds Trustee a letter c
credit in the amount of $159,200 (the "Premium Letter of Credit") to be applied to pay the
premium due on the date of redemption of the Prior Bonds; and
WHEREAS, in accordance with Section 309 of the Prior Bonds Indenture, on May 26,
1993, the Prior Bonds Trustee presented a draw request to the Prior Bonds Bank under the Bar
Letter of Credit (as defined in the Prior Bonds Indenture) in the principal amount of $15,920,0
to pay the principal portion of the Prior Bonds to be redeemed on June 1, 1993 (the "Redempt:
Date"); and
WHEREAS, in accordance with the provisions of the Premium Letter of Credit, on
,1993, the Prior Bonds Trustee presented a draw request to the Prior Bonds Bank in th
amount of $159,200 to pay the premium due on the Prior Bonds on the Redemption Date; and
WHEREAS, the parties hereto are desirous of specifying the means by which the
$15,920,000 in principal, the $706,450 in interest and the $159,200 in premium due on the Pr
Bonds as of the Redemption Date, shall be paid; and
WHEREAS, the parties hereto are desirous of undertaking the actions required by Artic
XI1 of the Prior Bonds Indenture in order to discharge the lien of the Prior Bonds Indenture an(
release all of the Prior Bonds Trustee's right, title and interest in and to the rights and property
assigned and pledged to the Prior Bonds Trustee under the terms of the Prior Bonds Indenture
except for the Prior Bonds Trustee's right to the moneys and securities to be applied to the
payment of the principal, premium and interest due on the Prior Bonds on the Redemption Datt
NOW, THEREFORE, in consideration of the premises and in order to provide for the
coordination of the aforesaid arrangements, the parties hereby agree as follows:
Section 1. The following actions are being taken simultaneously with or prior to the
issuance of the Bonds:
(a) The Trustee has received the $15,920,000 purchase price of the Bonds
from Dean Witter Reynolds Inc., in the form of a federal funds wire (the "Bond
Proceeds").
(b) The Prior Bonds Bank has wire transferred to the Prior Bonds Trustee 01
May 27, 1993, federal funds in the amount of $16,785,650. The Prior Bonds Trustee k
deposited $16,079,200 of such amount in the Redemption Account of the Debt Service
Fund for the Prior Bonds and $706,450 of such amount in the Interest Account of the
Debt Service Fund for the Prior Bonds to be applied to pay the principal, premium and
interest due on the Redemption Date as required by Section 602(g) of the Prior Bonds
Indenture.
(c) The Prior Bonds Trustee has established the Redemption Date as the dat
on which the amount specified in subsection (b) above will be applied to the redemption
of the Prior Bonds in accordance with Section 602(g) of the Prior Bonds Indenture.
(d) Upon telephonic confirmation from the Prior Bonds Trustee of receipt of
the payment referred to in subsection (b) above, and upon telephonic confirmation from
the title company of the recordation of the Amended and Restated Regulatory Agreemen
and Declaration of Restrictive Covenants dated as of May 1, 1993, among the City, the
Owner and the Trustee, and the First Deed of Trust and Assignment of Rents and Fixtu
Filing dated as of May 1, 1993, from the Owner for the benefit of the Trustee, the
Trustee shall transfer the Bond Proceeds to the Prior Bonds Bank. The Prior Bonds
Trustee has mailed on May 21, 1993, by first class mail, postage prepaid, a notice of
redemption in the form attached hereto as Exhibit A to the owners of the Prior Bonds a!
required by Section 604 of the Prior Bonds Indenture.
(e) On the Redemption Date, the amounts specified in subsection (b) above
shall be used to pay the principal of, premium and interest on the Prior Bonds, and any
amounts remaining on deposit in any Fund shall be transferred by the Prior Bonds Trust
to the Prior Bonds Bank. The City hereby irrevocably instructs the Prior Bonds Trustef
Bonds to redeem the Prior Bonds on the Redemption Date.
With respect to the transfers set forth in paragraphs (a) and (d) above:
to apply the amounts in the Redemption Account of the Debt Service Fund for the Prior
PUBL:92-1 I 1 j91TBD.TBD 2
(1) The Trustee acknowledges that its receipt of the federal funds wire from
Dean Witter Reynolds Inc. shall constitute the receipt of the Bond Proceeds.
(2) The Owner acknowledges that the Trustee’s payment of the Bond Procet
to the Prior Bonds Bank constitutes (i) a full funding of the Loan discharging all
obligations of the Trustee and the City under the Indenture and the Loan Agreement in
regard to the funding of the Loan and (ii) a reimbursement to the Prior Bonds Bank of
$15,920,000 under the terms of the Reimbursement Agreement dated as of April 1, 191
between the Prior Bonds Bank and the Owner (the “Prior Reimbursement Agreement”).
(3) The Prior Bonds Trustee acknowledges that its receipt of $15,920,000
represents payment in full of the amount due from the Prior Bonds Bank under its requl
for payment under the Bank Letter of Credit.
Section 2. The Prior Bonds Trustee acknowledges that, upon receipt of $16,079,20
the Prior Bonds Trustee shall be in possession of moneys which are sufficient to defease all
outstanding Prior Bonds and discharge the Prior Bonds Indenture in accordance with the
requirements of Section 1201 of the Prior Bonds Indenture. The Prior Bonds Trustee
acknowledges that it has received payment in full for all fees and expenses of the Prior Bonds
Trustee under the Prior Bonds Indenture and hereby agrees that none of the funds payable unde
the Bank Letter of Credit shall be applied for any purpose other than payments of principal and
interest on the Prior Bonds. Accordingly, the Prior Bonds Trustee shall take such actions and
execute such documents as are necessary to relinquish and release the Prior Bonds Trustee’s
rights in the real and personal property constituting a part of the Trust Estate (as defined in the
Prior Bonds Indenture); and to evidence the defeasance of the Prior Bonds and the discharge o
the lien of the Prior Bonds Indenture, the Prior Bonds Trustee shall execute the Certification 01
Defeasance of Bonds and Discharge of Prior Bonds Indenture in the form attached hereto as
Exhibit B, all as.contemplated by Section 1201 of the Prior Bonds Indenture. The Prior Bonds
Trustee shall execute and deliver such other documents, and take such further actions, reasonat
required by the City or the Prior Bonds Bank to carry out the purposes of this paragraph. The
Owner shall pay all fees and expenses (including attorneys fees) incurred by the Prior Bonds
Trustee in connection with the execution of such documents or the undertaking of such actions,
and the Prior Bonds Trustee shall not be obligated to expend any of its own funds in connectior
with the execution of such documents or the undertaking of such actions.
Section 3. The Prior Bonds Trustee shall have no responsibility or liability in respec
of the validity or sufficiency of this Agreement. The Prior Bonds Trustee shall not be liable or
responsible because of the failure of any of the other parties to this Agreement to perform any.;
required of each of them hereunder or because of the loss of any moneys arising through the
moneys shall have been deposited. The obligation of the Prior Bonds Trustee hereunder to mal
payments due and payable with respect to the Prior Bonds as provided herein is limited to the
availability of amounts on deposit in the Debt Service Fund for the Prior Bonds. The Prior
Bonds Trustee is entering into this agreement solely in its capacity as Prior Bonds Trustee and
shall be entitled to the protections, immunities, indemnities and limitations from liability affordc
it under the Prior Bonds Indenture, which are incorporated herein by reference.
insolvency or the act or default or omission of any depository, other than itself, in which such
PUBL:92-1 I 109 I TBD.TBD 3
, Section 4. Upon payment in full of the principal, premium and interest on the Prior
Bonds, all obligations of the Prior Bonds Trustee under this Agreement shall cease and termina
except for (i) the obligation of the Prior Bonds Trustee to pay or cause to be paid to the owner:
of the Prior Bonds not presented for payment all sums due thereon in accordance with Section
312 of the Prior Bonds Indenture, and (ii) the obligations of the Prior Bonds Trustee under
Section 2 hereof.
Section 5. This Agreement may be executed in any number of counterparts, each o
which shall constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement Regarding
Redemption, Defeasance and Payment of Prior Bonds to be duly executed and delivered by the:
respective officers thereunto duly authorized as of the date hereof.
CITY OF CARLSBAD
By: Mayor
ATTEST:
City Clerk
LA COSTA PARTNERS, a California general
partnership
By: THE FERMANIAN FAMILY TRUST
General Partner
PUBL:92-1 II091TBD.TBD
By:
George A. Fermanian,
Trustee
By THE STONE FAMILY TRUST
General Partner
By:
Rodney F. Stone, Trustee
4
L BANK OF AMERICA NATIONAL TRUST ANI
SAVINGS ASSOCIATION, as the Prior Bonds
Bank
By:
FIRST TRUST OF CALIFORNIA, NATIONAL
ASSOCIATION, as Prior Bonds Trustee and as
Trustee
By :
Authorized Signatory
ATTEST:
Authorized Signatory
PUBL:92-1 I 1091TBD.TBD 5
EXHIBIT A
NOTICE OF FULL REDEMPTION
CITY OF CARLSBAD, CALIFORNIA
MULTIFAMILY HOUSING REVENUE BONDS
SERIES A OF 1985
(LA COSTA APARTMENTS PROJECT)
Rate Maturity Bond Nos. CUSIP
8.875 % December 1, 1995 142585 AZ 1
NOTICE IS HEREBY GIVEN pursuant to Section 604 of the Indenture of Trust dated :
of April 1, 1985, that ALL of the above referenced bonds (the "Bonds") are called for
redemption on June 1, 1993 (the "Redemption Date"). The Bonds will be redeemed at a
Redemption Price equal to 101 % of the principal amount thereof plus interest accrued to the
Redemption Date.
On said Redemption Date, there shall become due and payable upon each Bond called fc
redemption the full principal amount thereof, plus interest accrued from December 1, 1992, to
the Redemption Date. FROM AND AFTER THE REDEMPTION DATE, INTEREST ON AL
BONDS WILL CEASE TO ACCRUE AND BE PAYABLE.
The Bonds to be redeemed as provided in this Notice must be presented and surrenderec for redemption and payment to:
Bv Hand BY Mail
To avoid a 31 % backup withholding tax required by the Interest and Dividend Tax
Compliance Act of 1983, Bondholders must submit with their Bonds a completed IRS Form W-'
The CUSIP number has been assigned to this issue by Standard & Poor's Corporation a~
is included solely for the convenience of the Bondholders. Neither the City of Carlsbad nor the
Trustee shall be responsible for the selection or use of the CUSIP number, nor is any
representation made as to its correctness on the Bonds or as indicated in any redemption notice.
Dated ; May 21, 1993 CITY OF CARLSBAD
BY: First Trust of California, National
Association, as Trustee
PUBL:92-1 II091TBD.TBD 6
a
EXHIBIT B
CERTIFICATION OF DEFEASANCE OF BONDS AND
DISCHARGE OF PRIOR BONDS INDENTURE
First Trust of California, National Association, the successor in interest to The Bank of
California, N.A., as Trustee (the "Prior Bonds Trustee") under that certain Indenture of Trust,
dated as of April 1, 1985, as supplemented as of May 11 , 1993 (the "Prior Bonds Indenture"),
by and between the City of Carlsbad, California (the "City") and the Prior Bonds Trustee,
pursuant to which the City's $15,920,000 Multifamily Housing Revenue Bonds, Series A of 198
(La Costa Apartments Project) (the "Prior Bonds") were issued, hereby certifies that it has on
deposit an amount that is fully sufficient to pay and discharge the principal of, premium and
interest on all outstanding Prior Bonds on the redemption date of June 1, 1993, and that the Citl
has also caused to be paid all other sums payable under the Prior Bonds Indenture. Said
redemption date has been established pursuant to Section 602(g) of the Prior Bonds Indenture a]
notice of redemption has been given to the holders of the Prior Bonds by the Prior Bonds Trust
in accordance with Section 604 of the Prior Bonds Indenture. On the basis of the foregoing anc
in accordance with Section 1201 of the Prior Bonds Indenture, the Prior Bonds have been
defeased and the Prior Bonds Indenture has been discharged (except for any surviving rights as
indemnification described thereunder).
Dated: May 27, 1993 FIRST TRUST OF CALIFORNIA, NATIONAL
ASSOCIATION, as Prior Bonds Trustee
By :
Title: Authorized Signatory
PUBL:92-1] 1091 TBD.TBD 7
QwB,
DRAFT - FOR DISCUSSION PURPOSES ON1
Recording Requested by:
Commonwealth Land Title Company
Order No. 6001485
When Recorded Mail to:
O'MELVENY & MYERS
400 South Hope Street
Los Angeles, California 90071 Attention: Dean E. Miller, Esq. (File No. 019,368-488)
MEMORANDUM OB ASSIGNMENT OF FIRST DEED OF TRUST
AND ASSIGNMENT OF RENTS AND FIXTURE FILING
THIS MEMORANDUM OF ASSIGNMENT OF FIRST DEED OF
TRUST (this "Assignmentf1) , dated as of May 1, 1993 , for
reference purposes only, is made by the CITY OF CARLSBAD, E legal subdivision and body corporate and politic of the State of California (llIssuerlt) I to FIRST TRUST OF
CALIFORNIA8 NATIONAL ASSOCIATION, a national banking association ("Bond Trusteev1), as Trustee under that certair Indenture of Trust of even date herewith (the llIndenturell)
by and between Issuer and Bond Trustee, for the benefit of the holders of the bonds issued pursuant to the Indenture
(lIBonds9l) and BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, a national banking association (ttBankll).
FOR VALUE RECEIVED, Issuer hereby grants, assign5
Indenture and as collateral agent for Bank, all of Issuer's
rights, titles and interests in all of the obligations and
indebtedness owed to the Issuer by LA COSTA PARTNERS, a
California general partnership (llDevelopervl), that are
secured by that certain First Deed of Trust and Assignment
of Rents and Fixture Filing of even date herewith (the
"First Deed of Trust"), executed by Developer, as Trustor,
to Commonwealth Land Title Company, a California
corporation, as Trustee, for the benefit of Issuer, as Beneficiary, relating to that certain real property locatec in San Diego County, California, and described in Exhibit 2 attached hereto (the flLandll), and recorded concurrently
herewith in the Official Records of said County, together with all of Issuer's rights, titles and interest as
Beneficiary under the First Deed of Trust, to secure (i) tk payment of principal of, premium, if any, interest on and the purchase price of all Bonds from time to time
outstanding under the Indenture, according to their tenor
and transfers to Bond Trustee, as Trustee under the
LA1-283286.V3 1 04/29]
and effect, (ii) the observance and performance by the
Issuer of all covenants expressed or implied in, the Indenture or the Bonds and (iii) the payment of all amount2 due under, and the performance of all covenants expressed c implied in the Reimbursement Agreement of even date herewit between La Costa Partners, a California general partnershir and Bank (IIReimbursement Agreement"), in each case subject to the terms and provisions set forth in said Indenture,
Bonds and Reimbursement Agreement, which terms and
provisions are incorporated herein by this reference.
By acceptance of this Assignment, as evidenced bj
their respective signatures subscribed hereon, Issuer, BonC Trustee and Bank, each for itself, agrees, represents and
warrants as follows:
1. Initially-capitalized terms used in this
Assignment without definition shall have the same meanings
given to such terms in the First Deed of Trust.
2. Without limiting the generality of the
provisions set forth in Section 3.09 of the First Deed of Trust, each of Issuer and Bond Trustee hereby confirms that Bank may, and hereby authorizes Bank to, upon the terms and subject to the provisions set forth in Section 3.09 and
acting alone through any of its officers, enforce the
rights, remedies and obligations referenced in Section 3.05 together with such powers as are reasonably incidental
thereto. Each of Issuer and Bond Trustee further confirms
Trustee and all third parties to, rely upon the written certification described in Section 3.09 for the purposes referenced in Section 3.09. If a foreclosure of the lien c
the First Deed of Trust should occur, judicially or by trustee's sale, pursuant to a request by Bank and the Bonds remain outstanding thereafter, then Bank shall cause the successful purchaser at such foreclosure sale to execute ar deliver a deed of trust to Issuer encumbering the property conveyed to the purchaser by the trustee's deed, for assignment to Bond Trustee, to secure the purchaser's
obligation to maintain, at all times that the Bonds remain outstanding, a Letter of Credit (as defined in the Indenture) and execute a subordination agreement so that tk lien and charge of such deed of trust will be, at all times during which Bank is the issuer of the Letter of Credit,
superior to the lien and charge of the Second Deed of Trust
the Third Deed of Trust or any Fourth Deed of Trust (as
defined in the Reimbursement Agreement),
that Trustee and any third party may, and hereby authorize:
3. The parties hereto agree that at all times
during which Bank is entitled to exercise the rights and remedies and enforce the obligations referenced in Section 3.09, Trustee and any third party are authorized tc
LA1-283286.V3 2 04/29/
rely unconditionally and conclusively upon the written instruction of Bank with respect to all matters for which instruction from Beneficiary are required under the First
Deed of Trust. Neither Issuer nor Bond Trustee shall be required to join in such written instruction and any actior
taken or refrained from being taken in compliance with suck:
written instruction shall be bindiny upon and enforceable
against Issuer, Bond Trustee, Bank and Trustor. Notwithstanding the foregoing, each of the Issuer and the Bond Trustee agrees to do or cause to be done such further acts and things, and to execute and deliver such or to caus
to be executed and delivered such additional agreements, documents, powers and instruments, all as Bank may request to carry into effect the purposes of this Assignment.
4. In furtherance of the authority vested in
Bank pursuant to Section 3.09, Bond Trustee hereby makes, constitutes and appoints Bank, acting through any of its officers, at all times during which Bank is entitled to exercise the rights and remedies and to enforce the obligations referenced in Section 3.09, as its true and lawful attorney for and in the name, place and stead of Bor
Trustee, in its capacity as Beneficiary under the First De6
of Trust, to exercise all of the powers and rights which tk
in connection with the First Deed of Trust. Bank is
authorized and empowered hereby to determine in its sole
discretion the time when, purpose for and manner in which
any power conferred hereby or pursuant to Section 3.09 of
the First Deed of Trust shall be exercised. The appointmer of Bank as attorney for Bond Trustee shall expire on the
earliest to occur of (i) the acceptance of appointment by E successor trustee of the duties of Bond Trustee under the Indenture, (ii) the recordation of the trustee's deed in tk Official Records of the County pursuant to a non-judicial foreclosure under the First Deed of Trust, (iii) the
delivery of the certificate of sale to Bank pursuant to a judicial foreclosure under the First Deed of Trust or
(iv) the recordation of the deed of sale in the Official
Records of the County pursuant to a judicial foreclosure
under the First Deed of Trust.
Beneficiary is empowered or authorized to exercise under 01
5. Nothing contained in Section 3.09 of the
First Deed of Trust, in this Assignment or in the
Intercreditor Agreement shall impose or be deemed to impose
upon Bank a fiduciary relationship with Issuer, Bond
Trustee, the holder of any Bonds or any of them.
6. Each of the parties to this Assignment has the full legal right, power and authority and has taken all requisite action necessary to execute, deliver and perform its obligations under this Assignment. All filings,
consents or approvals required of any party hereto by any
LA1-283286.V3 3 04/29/
federal, state or other governmental authority or regulator
performance of this Assignment have been obtained by such
party. This Assignment has been duly executed and deliver€ by each of the parties and constitutes its valid and bindir obligations, enforceable against it in accordance with its
body in connection with the execution, delivery and
terms o
EXECUTED by Issuer, Bond Trustee and Bank as of
the date first above written.
Issuer:
CITY OF CARLSBAD
By :
Mayor
ATTEST:
By : City Clerk
Bond Trustee:
FIRST TRUST OF CALIFORNIA,
NATIONAL ASSOCIATION,
a national banking associatic
By :
Its:
ATTEST :
By :
LA1-283286.V3 4 04/29,
LA1-283286.V3
Bank:
BANK OF AMERICA NATIONAL TRUS
AND SAVINGS ASSOCIATION, a national banking associatic
By : Its:
5 04/29,
*
STATE OF CALIFORNIA )
COUNTY OF ORANGE 1 ) ss.
On , 1993, before me, , a Notary Public in and for said State, personally appeared t
evidence) to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me
that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the persons(s), or the entit upon behalf of which the person(s) acted, executed the instrument.
known to me (or proved to me on the basis of satisfactory
WITNESS my hand and official seal.
Notary Public
LA1-283286.V3 6 04/29/9
9
STATE OF CALIFORNIA 1
COUNTY OF ORANGE 1 ) ss.
On , 1993, before me, , a Notary Public in and foi
said State, personally appeared I known to me (or proved to me on the basis of satisfactory
evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the instrument the persons(s), or the entii upon behalf of which the person(s) acted, executed the
instrument.
WITNESS my hand and official seal.
Notary Public
LA1-283286.V3 7 04/29/
.
STATE OF CALIFORNIA )
COUNTY OF ORANGE 1 ) ss.
On , 1993, before me, , a Notary Public in and for
said State, personally appeared I known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name (s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the persons(s), or the entit
instrument.
upon behalf of which the person(s) acted, executed the
WITNESS my hand and official seal.
Notary’s Signature
~~l-za32a6.m 8 04/29/9.
'. ,*
EXHIBIT A
DESCRIPTION OF LAND
Lots 1 through 4 inclusive of Carlsbad Tract No.
84-7, in the City of Carlsbad, County of San Diego, State c
California, according to map thereof No. 11391, filed in tk
Office of the County Recorder of San Diego County, December
17, 1985.
Excepting therefrom, all minerals, mineral rights oil, oil rights, natural gas, natural gas rights, petroleun petroleum rights, other hydrocarbon substances, geothermal steam, all underground water, and all products derived fron
any of the foregoing, in or under or which may be produced
from the property which underlies a plane parallel to and
500 feet below the present surface of the property together
with the perpetual right of drilling, mining, exploring and
operating therefor and storing in and removing the same fro the property or any other land, including the right to whipstock or directionally drill and mine from lands other than the property, oil, water or gas wells, tunnels and shafts into, through or across the subsurface of the property, and to bottom such whipstocked or directionally drilled wells, tunnels, and shafts under the beneath or beyond the exterior limits thereof, and to redrill,
retunnel, equip, maintain, repair, deepen, and operate any
mine, store, explore, and operate through the surface or th upper five hundred (500) feet of the subsurface of the
property; as reserved to Daon Corporation in Grant Deed
recorded October 29, 1984, Official Records, File/Page No.
such wells or mines, without, however, the right to drill,
84-407544.
LA1-283286.V3 A- 1 04/29/!
I , akk%3/
DRAFT - FOR DISCUSSION PURPOSES C Recarding requested by:
Commonwealth Land Title Company
Order No. 6001485
And when recorded mail to:
400 S. Hope Street
Los Angeles, CA 90071
Attn: Dean E. Miller, Esq. (File No. 019,368-488)
O'MePveny & Myers
SUBORDINATION, NONDISTURBANCE
AND ATTORNMENT AGREEMENT
NOTICE: THIS SUBORDINATION, NONDISTURBANCE AND ATTORNM
AGREEMENT RESULTS IN YOUR LEASEHOLD ESTATE BECOMING SUBJECT
AND OF LOWER PRIORITY THAN THE LIEN OF SOME OTHER OR LATER
SECURITY INSTRUMENT.
This Subordination, Nondisturbance and Attornment
day of May, 1993 by and among CALIFORNIA METER SERVICE, a
[California] corporation (IRTenantlg) , LA COSTA PARTNERS, a
California general partnership (ngownergn) , CITY OF CARLSBAD, municipal corporation (WITYII), and BANK OF AMERICA NATIONA
TRUST AND SAVINGS ASSOCIATION, a national banking associati
( m@Bankmm) e
Agreement (this "Agreement'') is entered into as of the
Factual Backqround
A. Owner is the owner of certain real property located
the City of Carlsbad, County of San Diego, State of
California, commonly known as the Park La Costa Apartments,
and more particularly described in the attached Exhibit A. used here, the term lRPropertymR means that real property, together with all improvements (the gvImprovements") located
it.
B. Pursuant to that certain Indenture of Trust of even
date herewith (the "Indenture") by and between City, and Fii
Trust of California, National Association, a national bankil
association (lwTrusteemg), and that certain Loan Agreement of
even date herewith (the "Loan Agreement") by and among City
Trustee and Owner, City has agreed (i) to refund those certi City of Carlsbad, Multifamily Housing Revenue Bonds, Series of 1985 (La Costa Apartments Project) issued by City, (ii) . issue those certain City of Carlsbad, Variable Rate Demand Multifamily Housing Revenue Refunding Bonds, Series A of 19!
(La Costa Apartments Project) (the nwBondsBB) , and (iii) to 1(
LA1-Z83261.Vl 041
Owner the proceeds of the sale of the Bonds. Owner's
Obligations under the Loan Agreement are secured by that certain First Deed of Trust and Assignment of Rents and
Fixture Filing of even date herewith (the "First Deed of Trustmp) executed by Owner for the benefit of City.
Concurrently herewith, City is assigning its rights under a
the beneficial interest in the First Deed of Trust to Bank.
The Bonds are further supported by and are payable from
drawings on a letter of credit (the "Letter of Credit") to issued by Bank to Trustee pursuant to that certain
Reimbursement Agreement of even date herewith (the vvReimbursement Agreement8I) between Owner and Bank. Certain Owner's obligations to Bank in connection with the issuance
the Letter of Credit are or will be secured by that certain
Second Deed of Trust and Assignment of Rents and Fixture Filing of even date herewith (the *#Second Deed of Trust1#),
that certain Third Deed of Trust and Assignment of Rents an
Fixture Filing of even date herewith (the "Third Deed of
Trustvv) and that certain Fourth Deed of Trust and Assignmen
of Rents and Fixture Filing (the IvFourth Deed of Trustvv), e
executed or to be executed by Owner for the benefit of Bank
The Loan Agreement, the First Deed of Trust and all other documents and instruments identified in the Loan Agreement "Loan Documents" are sometimes referred to collectively her as the IILoan Documentsmn. The Reimbursement Agreement, the Second Deed of Trust, the Third Deed of Trust, the Fourth D of Trust and all other documents and instruments identified
the Reimbursement Agreement as "L/C Documentsvv are sometime$
referred to collectively herein as the "L/C Documents1!. Thc
Loan Documents and the L/C Documents are sometimes referred collectively herein as the IIBond Transaction Documents". Tl First Deed of Trust, the Second Deed of Trust, the Third Dec
of Trust and the Fourth Deed of Trust are sometimes referrec
to collectively herein as the "Deeds of Trustmg.
C, Tenant and Owner, through its duly authorized agent
so Cal Development, Inc., entered into a lease dated Novembc
1, 1990 (the I1Leasetm), under which Owner leased to Tenant a
portion of the Improvements located within the Property, an( described in the Lease as the Itlaundry roomvt (the "Premises1
D. City is willing to make the loan to Owner and Bank willing to issue the Letter of Credit, provided that Tenant agrees, among other things, to subordinate Tenant's rights under the Lease to the lien or charge of the Bond Transactic Documents and to attorn to City or Bank, as the case may be,
on the terms and conditions of this Agreement. Tenant is willing to agree to such subordination and attornment and other conditions, provided that City or Bank, as the case mi be, agrees not to disturb Tenant's possession under the Lea5
all as set forth more fully below.
LA1-283261.V1 2 041
Aqreement
Therefore, the parties agree as follows:
1. Subordination. The Bond Transaction Documents,
and all supplements, amendments, modifications, renewals,
replacements and extensions of and to them, shall
unconditionally be and remain at all times a lien or charge
the Property prior and superior to the Lease, to the leaseh
estate created by it, and to all rights and privileges of Tenant under it. That Lease and leasehold estate, together
with all rights and privileges of Tenant under that Lease,
hereby unconditionally subjected and made subordinate to th lien or charge of the Loan Documents in favor of City and t
L/C Documents in favor of Bank. Tenant consents to Owner' entering into the Deeds of Trust and the other Bond
Transaction Documents. Tenant further declares, agrees and acknowledges that, in making disbursements under the Bond
Transaction Documents, neither City nor Bank has any obliga tion or duty to, nor has City or Bank represented that it
will, see to the application of such proceeds by the person
persons to whom they are disbursed by City or Bank, and any application or use of such proceeds for purposes other than those provided for in the Bond Transaction Documents shall defeat the subordination made in this Agreement, in whole 0. in part.
2. Definitions of "Transfer of the Property" and
"Purchaser." As used here, the term "Transfer of the
PrOperty" means any transfer of Owner's interest in the Property by foreclosure, trustee's sale or other action or
proceeding for the enforcement of the Deed of Trust or by d8 in lieu thereof. The term mgPurchaser", as used here, means
any transferee, including City and Bank, of the interest of Owner as a result of any such Transfer of the Property, and also includes any and all successors and assigns, including City and Bank, of such transferee.
3. Nondisturbance. So long as Tenant is not in default in the performance of the terms, provisions and conditions contained in the Lease and so long as Tenant observes the provisions of this Agreement:
(a) Tenant shall not be named or joined in any foreclosure, trustee's sale or other proceeding to enfo.
any Deed of Trust unless the joinder is required by law
order to perfect such foreclosure, trustee's sale or ot:
proceeding;
(b) The enforcement of any Deed of Trust shall not terminate the Lease or disturb Tenant in the possession and use of the Premises; and
LA1-283261.W 3 04/
(c) The leasehold estate granted by the Lease shall not be affected in any manner by any Transfer of
Property or any other proceeding instituted or action
taken under or in connection with any Deed of Trust, or the taking possession of the Property or the Premises k
City or Bank, as the case may be, in accordance with an
provision of any Deed of Trust; provided that City or
Bank, if either becomes the Purchaser or takes possessi
under the Deed of Trust, and any other Purchaser shall not:
(i) be liable for any damages or other re1
attributable to any act or omission of any prior
landlord under the Lease (including Owner);
(ii) be liable for any damages or other re1 attributable to any latent or patent defects in construction with respect to any portion of the
Property;
(iii) be liable for any consequential damages attributable to any act or omission of
Purchaser;
(iv) be liable for any damage or other relil
attributable to any breach of any representation or
warranty contained in the Lease by Purchaser or an1
prior landlord under the Lease;
(v) be subject to any offsets or defense nl specifically provided for in the Lease and which
Tenant may have against any prior landlord under tk
Lease; or
(vi) be bound by any prepayment by Tenant 0:
more than one month's installment of rent or for ar security deposit not actually delivered to Purchase or by any modification or amendment of or to the Le unless the prepayment, amendment or modification sh have been approved in writing by City and Bank or k any subsequent beneficiary under the Deed of Trust.
4. Attornment. If any Transfer of the Property
should occur, and if Tenant is not in default under the Lea Purchaser shall be bound to Tenant and Tenant shall be boun to Purchaser under all of the terms, covenants and conditio of the Lease for the balance of the Lease term and any extensions or renewals of it which may then or later be in
effect under any validly exercised extension or renewal opt
contained in the Lease, all with the same force and effect
if Purchaser had been the original landlord under the Lease
Tenant does hereby attorn to Purchaser, including City and Bank if either should become the Purchaser, as the landlord
LA1-283261.Vl 4 04,
under the Lease, This attornment shall be effective and self-operative without the execution of any further instruments, upon Purchaser's succeeding to the interest of the landlord under the Lease.
5. Tenant's Waiver of ODtion Riqhts. In the event
any Transfer of the Property, Tenant specifically waives an] right, whether arising out of the Lease or otherwise, to
exercise any option which remains unexercised at the time 0:
such transfer, to: (a) purchase the Premises or the Propert: or any interest or portion in or of either of them; or (b) expand into other space in the Improvements. The
foregoing waiver does not apply to any option to extend or
renew the Lease term which is set forth in the Lease as of t
date of this Agreement; Tenant does not waive any right to
exercise any such option following a Transfer of the Propert If, after the date of this Agreement, Tenant acquires any purchase option, option to expand into other space in the Improvements, or option to extend or renew the term of the Lease, Tenant agrees that such option shall be subject and subordinate to the lien or charge of the Bond Transaction Documents and shall be null and void upon any Transfer of tk Property.
6. Default BY Owner. In the event of a default by
Owner in its performance of the terms, provisions and conditions of the Bond Transaction Documents, Owner directs Tenant and Tenant agrees to recognize the assignment of rent made by Owner in the Deeds of Trust, and to pay to City or Bank, as the case may be, as assignee all rents due under th Lease, upon Tenant's receipt of written notice from City or
Bank, as the case may be, that Owner is in default under the
terms of the Loan Documents or the L/C Documents, as
applicable. Owner hereby authorizes Tenant to accept such
direction from City and Bank and waives all claims against Tenant for any sums so paid at City's or Bank's direction. Such payments of rents by Tenant to City or Bank by reason o that assignment and of Owner's default shall continue until the first to occur of the following:
(a) No further rent is due or payable under the
Lease;
(b) City or Bank, as applicable, gives Tenant
notice that the default of Owner under the Loan Document
or the L/C Documents, as applicable, has been cured and instructs Tenant that the rents shall thereafter be payable to Owner; or
(c) A Transfer of the Property occurs and Purchaser gives Tenant notice of such transfer. Purchasc shall thereupon succeed to the interest of Owner under tl Lease as provided in Sections 3 and 4 above, after which
LA1-283261.V1 5 04/2i
time the rents and other benefits of Owner under the Le shall be payable to Purchaser as the owner of them.
7. Limitation on Performance by City and Bank.
Nothing in this Agreement shall be deemed or construed to b an agreement by City or Bank to perform any covenant of Own
as landlord under the Lease unless and until City or Bank,
the case may be, obtains title to the Property as Purchaser
obtains possession of the Property under the terms of any D
of Trust, and then only during the time when City or Bank,
the case may be, holds title to the Property.
8. Tenant's Covenants. Tenant agrees that during
term of the Lease, without the prior written consent of Cit
and Bank, Tenant shall not:
(a) pay any rent or additional rent more than month in advance to any landlord (including Owner); or
(b) cancel, terminate or surrender the Lease, except at the normal expiration of the Lease term; or
(c) enter into any amendment, modification or
other agreement relating to the Lease; or
(d) assign or sublet any portion of the Lease the Premises, except as expressly provided in the Lease
9. No Merqer. Owner, Tenant, City and Bank agree that unless Bank shall otherwise consent in writing, Owner,:
estate in and to the Property and the leasehold estate creal
by the Lease shall not merge, but shall remain separate and distinct, notwithstanding the union of such estates either : Owner or Tenant or any third party by purchase, assignment c otherwise.
10. Notices of Default; Material Notices. Tenant,
from and after the date of this Agreement, shall send a cop!
of any notice of default or similar statement under the Lea: to City and to Bank at the same time such notice or statemel is sent to Owner under the Lease. Owner and Tenant shall st copies of all material notices given under the Lease to Cip and to Bank. Such notices shall be delivered to City and tc
Bank in the manner and at the addresses set forth below.
11. Limitation on Liability. Regardless of anythin
in the Lease or this Agreement to the contrary, no Purchaser who acquires title to the Property shall have any obligatior
or liability beyond its interest in the Property. Tenant
shall look exclusively to Purchaser's interest in the Propel
for payment and discharge of any of Purchaser's obligations under this Agreement or under the Lease. Tenant shall not
collect or attempt to collect any judgment based upon such
LA1-283261.V1 6 04/
obligations out of any other assets of Purchaser. By
executing this Agreement, Owner specifically acknowledges a
agrees that nothing contained in this Section shall impair,
affect, lessen, abrogate or otherwise modify the obligation
of Owner to Tenant under the Lease.
12. Tenant's Estoppel Certificate.
(a) Tenant's Option Ricrhts. Tenant has no rig1
or option of any nature whatsoever, whether arisiny out
Property, or any interest or portion in or of either of
them, to expand into other space in the Improvements or
extend or renew the term of the Lease.
the Lease or otherwise, to purchase the Premises or the
(b) True and Complete Lease. Tenant represent: and warrants to City and to Bank that there are no amen ments, supplements, side letters and other agreements a memoranda pertaining to the Lease, the leasehold and/or
the Premises.
(c) No Default. As of the date of this
Agreement, Tenant represents and warrants that there ex no events of default, or events that with notice or the
passage of time or both would be events of default, und'
the Lease, on either the Tenant's part or the Owner's, :
is there any right of offset (including audit or accounting rights which might otherwise give rise to a claim or an offset for rents paid under the Lease) agai: any of Tenant's obligations under the Lease. The Lease in full force and effect as of the date of this Agreeme.
(d) Reliance. Tenant acknowledges that Bank is relying on the representations, certifications and
undertakings made by Tenant in this Agreement in extend:
credit to Owner.
(e) Further Certificates. Within ten (10) days
after City's and/or Bank's request, Tenant shall delive~ to the requesting party and to any person designated by the requesting party, estoppel certificates executed by Tenant, certifying (if such is the case) that the Lease in full force and effect, that there are no defenses or offsets outstanding under the Lease (or stating those claimed by Tenant, as the case may be) and such other
information about Tenant or the Lease as the requesting
party may reasonably request.
(f) Nondisturbance Acrreement. This Agreement
satisfies any condition or requirement in the Lease
relating to the granting of a nondisturbance agreement
from City and Bank.
LA1-283261.Vl 7 04,';
13. Bank's Riqhts to Cure Default. In the event oJ
any act or omission by Owner which would give Tenant the ri to terminate the Lease or to claim a partial or total eviction, Tenant shall not exercise any such right or make such claim until it has given Bank written notice of such a or omission and has given City and Bank either thirty (30)
days to cure the default, if the default is monetary, or a reasonable time for City and Bank to obtain possession of t! Property and cure the default, if the default is nonmonetar: Nothing in this Agreement shall, however, be construed as a promise or undertaking by Bank to cure any default of Owner
14. Inteqration. This Agreement integrates all of
terms and conditions of the parties' agreement regarding thi
subjection and subordination of the Lease and the leasehold estate created by it, together with all rights and privilegl
of Tenant under it, to the lien or charge of the Bond
Transaction Documents. This Agreement supersedes and cance
all oral negotiations and prior and other writings with respect to such subjection and subordination (only to such extent, however, as would affect the priority between the
provisions of the Lease which provide for the subjection or subordination of the Lease and the leasehold estate thereby
created to a deed or deeds of trust or to a mortgage or mortgages. This Agreement is intended by the parties as thl final expression of the agreement, and as the complete and exclusive statement of the terms agreed to by the parties, with respect to such subordination and subjection, to the
extent specified in the foregoing sentence. If there is an;
conflict between the terms, conditions and provisions of th. Agreement and those of any other agreement or instrument, including any of the Bond Transaction Documents, the terms, conditions and provisions of the Bond Transaction Documents shall prevail. This Agreement may not be modified or amende except by a written agreement signed by the parties or their respective successors in interest.
Lease and the Bond Transaction Documents), including any
15. Notices. All notices given under this Agreemen
shall be in writing and shall be given by personal delivery,
overnight receipted courier, or by registered or certified
United States mail, postage prepaid, sent to the party at it
address appearing below. Notices shall be effective upon receipt or when proper delivery is refused. Addresses for notices may be changed by any party by notice to all other
LA1-283261.V1 8 04/:
parties in accordance with this Section. Service of any notice on any one Owner shall be effective service on Owner
for all purposes.
To Bank: Bank of America 450 B Street
Suite 950
San Biego, California 92101 Attn: Mark Scherrer
To City: City of Carlsbad
1200 Carlsbad Village
Carlsbad, California 92008
Attn: City Manager
To Owner: La Costa Partners c/o So Cal Development, Inc.
915 Camino Del Mar
Suite 200
Del Mar, California 92014
To Tenant : California Meter Service
9645 Aero Drive
San Diego, California 92123
16 . Reference: Arbitration. Any controversy 01
claim between or among the parties which arises out of or
relates to this Agreement, including any claim based on or
arising from an alleged tort, shall be determined by refere:
or arbitration as provided in the Bond Transaction Document
17. Attorneys' Fees. If any lawsuit, reference or arbitration is commenced which arises out of or relates to this Agreement, the prevailing party shall be entitled to recover from each other party such sums as the court, refer1 or arbitrator may adjudge to be reasonable attorneys' fees the action, reference or arbitration, including the allocatc costs for services of in-house counsel, in addition to cost:
and expenses otherwise allowed by law.
18. Miscellaneous Provisions. This Agreement shall inure to the benefit of and be binding upon the parties and their respective successors and assigns. This Agreement is governed by the laws of the State of California, without regard to the choice of law rules of that State. As used here, the word llinclude(s) II means llinclude(s) , without limitation,11 and the word llincludingll means llincluding, but
record this Agreement, at Bank's sole discretion. not limited to. I' Bank may but shall not be obligated to
LA1-283261.V1 9 041
19. City Armrovals. So long as Bank holds the beneficial interest in the First Deed of Trust pursuant to assignment described in Recital B hereof, Bank shall be entitled to exercise all consents or approval rights of Cit
hereunder. Owner and Tenant shall be entitled to rely on a approval or consent granted by Bank on City's behalf unless
and until such party has received written notice from City
that the assignment of the beneficial interest in the First
Deed of Trust is no longer in effect.
NOTICE! 'PHIS AGREEMENF CONTAINS A PROVISION WHICH ALLO
THE PERSON OBLIGATED ON YOUR LEASE TO OBTAIN A LOAN, A PORT:
OF WHICH MAY BE EXPENDED FOR PURPOSES OTHER THAN IMPROVEMEN'
OF THE PROPERTY.
OWNER : LA COSTA PARTNERS,
a California general partnersh
By: Rodney F. Stone as Trustee
the Stone Family Trust, un
Declaration of Trust dated
April 8, 1982, as amended that Amendment to Declarat
of Trust dated May 7, 1982 that Second Amendment to Declaration of Trust dated
Third Amendment to Declaration of Trust dated April 12, 1985, general partner
October 14, 1983 I and that
By: George A. Fermanian as Trustee of the Fermanian Family Trust, under Third Amended and Restated
Declaration of Trust
(Fermanian Family Trust)
dated August 28, 1991, general partner
LA1-283261,Vl 10 04/:
TENANT:
CITY:
LA1-283261.V1
BANK:
CALIFORNIA METER SERVICE, a
By :
Title:
Name :
CITY OF CARLSBAD,
a municipal corporation
By :
Name : Title:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, a national banking association
By :
Name :
Title:
11 04/2
EXHIBIT A PROPERTY DESCRIPTION
Lots 1 through 4 inclusive of Carlsbad Tract No. 84
in the City of Carlsbad, County of San Diego, State of California, according to map thereof No. 11391, filed in th
Office of the County Recorder of San Diego County, December
17, 1985.
Excepting therefrom, all minerals, mineral rights,
oil, oil rights, natural gas, natural gas rights, petroleum
petroleum rights, other hydrocarbon substances, geothermal
steam, all underground water, and all products derived from any of the foregoing, in or under or which may be produced
from the property which underlies a plane parallel to and 51
feet below the present surface of the property together wit1 the perpetual right of drilling, mining, exploring and
operating therefor and storing in and removing the same fro]
the property or any other land, including the right to whipstock or directionally drill and mine from lands other
than the property, oil, water or gas wells, tunnels and shaj
into, through or across the subsurface of the property, and
bottom such whipstocked or directionally drilled wells,
tunnels, and shafts under the beneath or beyond the exteriol
limits thereof, and to redrill, retunnel, equip, maintain,
repair, deepen, and operate any such wells or mines, without
however, the right to drill, mine, store, explore, and oper; through the surface or the upper five hundred (500) feet of
the subsurface of the property; as reserved to Daon Corporation in Grant Deed recorded October 29, 1984, Offici; Records, File/Page No. 84-407544.
LA1-283261.V1 A-1 04/2
STATE OF CALIFORNIA
COUNTY OF
1 1 SS 1
On I 19 -I before m , a Notary Public il
and for said State, personally appeared
I personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person(s) whose name(s)
is/are subscribed to the within instrument and acknowledged
tome that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity
upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
[SEAL]
LA1-283261.V1 04/:
STATE OF CALIFORNIA )
COUNTY OF 1 1 ss
On I 19-, before m
f a Notary Public ii and for said State, personally appeared
I personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged
tome that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
[SEAL]
LA1-283261.Vl 04/2
STATE OF CALIFORNIA 1
) ss COUNTY OF 1
On P I’ before TC
I a Notary Public i: -r
and for said State, personally appeared
I personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged tome that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity
upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
[SEAL]
LA1-283261.Vl 04/2
* I ,.
STATE OF CALIFORNIA 1
COUNTY OF 1 1 ss
On I 19 I before m
I a Notary Public i~ -
and for said State, personally appeared
~~
I personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person( s) whose name (s) islare subscribed to the within instrument and acknowledged tome that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
[SEAL]
LAl-283261.V1 04/2
t G afi7 1
DRAFT - FOR DISCUSSION PURPOSES ON1
INTERCREDITOR AGREEMENT
THIS INTERCREDITOR AGREEMENT (this guAgreementg8)
dated as of May 1, 1993 for reference purposes only, is entered into by and among the CITY OF CARLSBAD, a legal
subdivision and body corporate and politic of the State of
California (the Witylm), FIRST TRUST OF CALIFORNIA, NATION1
ASSOCIATION, a national banking association, as trustee
under the below-described Indenture ("Bond Trustee"), and
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, a
national banking association (the vuBankgm).
- REECITA&S:
A. The City has agreed to issue its Variable Rate Demand Multifamily Housing Revenue Refunding Bonds, Series A of 1993 (La Costa Apartments Project) (the
mgBondsgf), in the aggregate principal amount of $15,920,000 and to lend the proceeds from the sale of the Bonds to La
Costa Partners, a California general partnership (the
defined in this Agreement shall have the same meanings as set forth in that certain Reimbursement Agreement of even date herewith between the Developer and the Bank (the
I1Reimbursement AgreementI1) .
developer^^), All initially-capitalized terms not otherwiz
B. The Bonds will be issued pursuant to the
Indenture and the loan of the Bond proceeds to the Develope (the ggLoanlv) is being made pursuant to the Loan Agreement.
C. The City, the Developer and the Bond Trustec
will enter into the Regulatory Agreement imposing upon the Developer and the Project situated on the real property mol
particularly described in Exhibit A attached hereto certair
obligations intended to assure the exclusion from gross
income of interest on the Bonds for federal income tax
purposes and to meet State of California and City requirements.
D. The obligations of the Developer to repay tl
Loan under the Loan Agreement will be evidenced by the Developer Note. The Loan shall be secured by the First Security Documents. The First Deed of Trust, the First
Security Agreement, and this Agreement, together with the
Developer Note, the Loan Agreement, the Regulatory
Agreement, and all other documents evidencing and securing
the obligations of the Developer to repay the Loan, are
LA1-280709.W 1 04/08,
IC I
collectively referred to herein as the 'ILoan Documentsss. Pursuant to the Indenture, the City will assign to the Bonc Trustee certain of its rights under the Loan Documents to secure obligations outstanding under the Indenture and the
Agreement, Bonds and obligations outstanding under the Reimbursement
E. Pursuant to the Reimbursement Agreement, the
Bank will issue an irrevocable direct pay letter of credit in the amount of $ and deliver the same
to the Bond Trustee for the benefit of the holders of the
Bonds outstanding under the Indenture (the fuBondholdersfl).
As used herein, the term "Letter of Credit" shall mean the
above-described letter of credit or any other "Letter of Credit" (as that term is defined in the Indenture) that mal be issued hereafter by the Bank in replacement of the above described letter of credit, in accordance with the terms of the Indenture. Under the Reimbursement Agreement, the
Developer is obligated, inter alia, to reimburse the Bank
any amounts payable to the Bank for draws honored by the
Bank under the Letter of Credit and for other fees and
expenses related to the maintenance of the Letter of Credit
F. The obligations of the Developer to the Bank under the Reimbursement Agreement shall be secured by the
Bank Security Documents and certain other security
documents, executed by the Developer for the benefit of the
Bank, all of which are subject and subordinate to the Loan
Documents. As additional compensation to the Bank for
entering into the Reimbursement Agreement and issuing the
Letter of Credit, the Developer has granted certain profit
participation rights to the Bank pursuant to the Profit Participation Agreement, which shall be secured by the Second Deed of Trust. Moreover, pursuant to the Reimbursement Agreement, the Developer has covenanted to execute and deliver to the Bank a Fourth Deed of Trust to
secure the Developer's guaranties of certain Related
Developers. The Reimbursement Agreement, the Letter of
Credit, the Profit Participation Agreement and such
guaranties of Related Developers by the Developer in favor
of the Bank, together with the Bank Security Documents, the Second Deed of Trust, the Fourth Deed of Trust and all othe: documents at any time evidencing and securing the obligations of Developer to the Bank under the Reimbursemen Agreement, the Profit Participation Agreement or such
guaranties are collectively referred to herein as the "Bank
Documents##.
G. The parties desire to enter into this Intercreditor Agreement with respect to their exercise of certain rights, remedies and options under the above
described documents.
LA1-280709.W 2 04/08/9
t I
NOW THEREFORE, in consideration of the premises, the parties hereto covenant and agree as follows:
Section 1. Bond Trustee as Collateral Aqent for
Bank . The Bank hereby appoints the Bond Trustee as its collateral agent for the purpose of accepting, on the Bank' behalf, the Issuer's pledge and assignment of the Trust Estate, as defined in the Indenture, for the purpose of
securing the Developer's obligations under the Reimburseme]
Agreement. The Bank, the Bond Trustee and the City each hereby acknowledge and agree that the Bond Trustee, as
collateral agent for the Bank, shall have only those
obligations in respect the Trust Estate and the exercise oj
any remedies in relation thereto as are set forth in this
Agreement and the Indenture and that Bank may directly exercise those rights in respect of the Trust Estate as art
no fiduciary duty to the Bank by reason of any provision 01 this Agreement.
provided for in this Agreement. The Bond Trustee shall ha1
Section 2. Exercise of Riqhts Under Loan
Documents and Bank Documents. So long as the Bank is not 1
default in the payment of any amount required to be paid pursuant to the Letter of Credit, the following provisions shall be applicable:
Section 2.1. Upon the occurrence of an Event of Default under, or as defined in, any of the Loan
Documents or any of the Bank Documents, the Bank sole: and exclusively shall be permitted and is hereby authorized to take any and all actions and to exercisc any and all rights, remedies and options which it may
have under the Loan Documents, any Bank Documents or i
law, including, without limitation, the rights to
to be immediately due and payable, to cause such
default to be cured, or to foreclose the First Deed 01
Trust or the Third Deed of Trust and sell the Project
or any part thereof (or accept a deed thereof in lieu of foreclosure), and sell or otherwise realize upon tl property mortgaged, pledged or assigned to or for the benefit of the Bank under the First Security Document:
or the Bank Security Documents, without objection or
interference by the City or Bond Trustee. To permit
the Bank's exercise of such rights and remedies, the Bond Trustee and/or the City shall, upon the Bank's written request, give the Developer such Notices of Default (as defined in the Loan Agreement) and take
such other actions, as are specified by the Bank in
such request, which the Bond Trustee and/or the City
may give or take under the Loan Agreement in respect ( any Event of Default (as defined in the Loan Agreemenl
declare the outstanding balance of the Developer Note
to declare all amounts outstanding under the Loan
LA1-280709.Vl 3 04/08,
r 1
Agreement and the Developer Note to be immediately duc and payable. Without limiting the foregoing, the Citl and Bond Trustee each authorize the Bank, in connectic
with the foreclosure by the Bank of the First Deed of
Trust, to execute, file and/or record an instrument
subordinating the lien and charge of the First Deed of Trust and the other First Security Documents to the lien and charge of the Second Deed of Trust, the Bank
Security Documents and the Fourth Deed of Trust.
Neither the foregoing nor anything set forth elsewherc in this Agreement shall preclude or be deemed to
preclude the City or the Bond Trustee from exercising
any right or remedy under the Loan Agreement or the
Regulatory Agreement (other than to declare the outstanding balance of the Bonds or the Developer Note
to be due except as otherwise expressly set forth in
this Agreement) or under the Environmental Indemnity o
even date herewith executed and delivered by the
Developer in favor of the City and Trustee.
Section 2.2. (a) Except as otherwise expressly permitted by subparaqraDhs (b) and (c) below with
respect to defaults by Developer under the Regulatory
Agreement, neither the City nor the Bond Trustee shall
without the Bank's prior written consent:
(i) take any action to declare the
outstanding balance of the Bonds or the Developer
Note to be due pursuant to the Indenture or the
First Deed of Trust or to sell the property covered thereby, or to enforce any other similar remedy against any of the property described in any of the First Security Documents (the "Collateral'g) ; or
Loan Agreement or to foreclose the lien of the
(ii) take any other action or enforce any other remedy against the Developer on account of any default by Developer with respect to any
obligation secured by the First Security
Documents.
(b) If the Developer defaults in the performance or observance of any covenant, agreement or obligation of the Developer set forth in the Regulatory Agreement, and if such default remains uncured for a period of 30
notice from the Trustee statiny that a Regulatory
Agreement default has occurred and specifying the nature of such default (which 30-day period is hereinafter referred to as the "Cure Period"), then the
City and the Bond Trustee shall thereafter have the
right, without the Bank's consent, to bring an action
days after the Developer and the Bank receive written
LA1-280709.Vl 4 04/08/9:
I 6
to seek specific performance of the Developer's obligations under the Regulatory Agreement, unless thc Bond Trustee, prior to the end of the Cure Period,
determines, or receives an opinion of Bond Counsel (a:
defined in the Indenture) to the effect either (x) thz the failure to cure such default will not cause
interest on the Bonds to become includable in the groc
income of the recipients thereof for federal income ti purposes, or (y) that an extension of the Cure Period
to a date specified in the opinion will not cause
interest on the Bonds to become includable in the gro: income of the recipients thereof for federal income t; purposes, in which case the Cure Period shall be
extended to such date, and either:
(i) action to cure such default is instituted within the Cure Period and diligently pursued thereafter until such default is cured, c
(ii) if such default is not reasonably
curable by the Bank without first securing
possession of the Project, the Bank (A) institutes, within the Cure Period (which
period shall be tolled during the pendency of an1
stay or injunction on account of the bankruptcy c the Developer or by reason of any judicial or administrative action), action to seek performanc
of the Developer's obligations under the
Regulatory Agreement or foreclosure proceedings c
other action for the purpose of obtaining
possession of the Project, (B) thereafter diligently pursues such proceedings, and (C) diligently pursues action to cure such defau: until such default is cured.
(c) In the event of a default under the
Regulatory Agreement which remains uncured after (i) written notice thereof to the Developer and the
Bank and (ii) expiration of the applicable cure period
set forth in the Regulatory Agreement, nothing in thiE Section 2.2 shall restrict or in any way limit the
right of the City or the Bond Trustee to take any
action available under the Regulatory Agreement or at
law or in equity in order to enforce the terms of the Regulatory Agreement and the Loan Agreement. So long as the Bond Trustee shall have received with respect t
such default, prior to the expiration of the applicabl cure period therefor, both an opinion of Bond Counsel in the form specified in subparasraph (b) and evidence
reasonably satisfactory to it that the circumstances
described in either subparasraph (b) (i) or subparasrar
(b) (ii) then exist with respect to such default, then
neither the City nor the Bond Trustee shall take any
LA1-280709.Vl 5 04/08/
I r
action to declare the outstanding balance of the Bonds or the Developer Note to be due pursuant to the
Indenture or the Loan Agreement on account of such
default or to foreclose any liens or security interest or enforce any other remedy against any of the
Collateral.
(d) Nothing in this Section 2.2 shall restrict ( in any way limit the actions required to be taken by the Bond Trustee or the City under the Indenture in connection with any purchase of Bonds, or the payment
of interest thereon, or in connection with any mandatc
ry redemption of the Bonds at or prior to maturity, OL
the application by the Bond Trustee of any funds held
under the Indenture, or the submission of any claim an the collection and application of any funds paid to th
Bond Trustee under the Letter of Credit.
Section 2.3. The Bank (or an affiliate of the Bank) may become the legal or beneficial owner of the Project by foreclosure, deed in lieu of foreclosure, c otherwise. If as a result of the occurrence of an Event of Default on the part of the Developer under an of the First Security Documents or any of the Bank Documents, the Bank or such an affiliate (the "Bank
Affiliate") becomes the owner of the Project by foreclosure of the First Security Documents or by deed
in lieu thereof and the Bonds remain outstanding, then
the Bank agrees (i) to execute and deliver, or cause
the Bank Affiliate to execute and deliver, in favor of the Bond Trustee a deed of trust encumbering the Project (the "L/C Deed of Trust@1) securing the obligation of the Bank or the Bank Affiliate, as applicable, to maintain the Letter of Credit or a Substitute Credit Facility (as defined in the
recordable form, an instrument subordinating the lien
and charge of the Second Deed of Trust, Bank Security
Documents and the Fourth Deed of Trust to the lien and charge of the L/C Deed of Trust. The L/C Deed of Trus and the subordination agreement shall be recorded concurrently with the recordation of either the trustee's deed if title is acquired pursuant to a nonjudicial foreclosure of the First Deed of Trust, tht deed of sale if title is acquired by judicial foreclosure of the First Deed of Trust or the grant deed from the Developer if title is acquired by deed ir lieu of foreclosure under the First Deed of Trust.
Indenture) I and (ii) to execute and deliver, in
(a) The City and the Bond Trustee shall, for all intents and purposes, deem the Bank or the Bank Affiliate (collectively, the "Bank Transferee") to be the glDevelopernl under the Loan Documents, as substitutt
LA1-280709.V1 6 04/08/9
# 6
obligor thereunder, so long as the Bank Transferee delivers to the Bond Trustee, within 10 days after SUC transfer, (i) a written notice of such substitution,
(ii) if such substitution results from a foreclosure
under the First Security Documents or deed in lieu
thereof, then written confirmation that the L/C Deed c Trust and the subordination agreements have been recorded in the official records of the County of San
Diego, California and (iii) a written instrument
assuming and agreeing to perform Developer's
obligations under the Loan Documents accruing from and
after the date of such transfer; provided, however,
that the City and Bond Trustee agree (and such
assumption agreement shall provide) that the Bank Transferee shall have no liability beyond its interest in the Project for any of the Developer's obligations
under the Loan Documents, except that the Bank Transferee shall be personally liable for
(1) Developer's obligation under the Loan Documents tc indemnify the City, the Bank and the Bond Trustee to the extent set forth in Section 6.8 of the Loan Agreement (ttIndemnification of the Issuer, the Bank an the Trustee") and Section 7 of the Regulatory Agreement (ltIndemnification'l) for claims, losses,
costs, damages, fees, expenses, suits, judgments,
actions and liabilities resulting from defaults by the
Bank Transferee under the Loan Agreements or the
Regulatory Agreement during the period that such Bank Transferee holds legal title to the Project, (2) the
Developer's obligation under Section 5.l(d) of the Loa
Agreement to pay the fees and expenses described in such Section accruing during the period that such Bank Transferee holds legal title to the Project, and (3) the Developer's obligation under Section 7.4 of the Loan Agreement to pay reasonable attorneys' fees and enforcement expenses with respect to any Event of Default (as defined in the Loan Agreement) by the Bank Transferee occurring during the period that the Bank Transferee holds legal title to the Project; and
(b) The Bank Transferee may thereafter transfer its interest in the Project to a third party who shall thereupon be deemed to be the 'tDevelopertl under the Loan Documents, as substitute obligor thereunder, provided that the provisions of Section 11 of the Regulatory Agreement are satisfied and that such
transferee delivers to the Bond Trustee, concurrently
with such transfer (i) a written instrument assuming
and agreeing to perform all obligations of the Developer under the Loan Documents (including the Developer's obligations under Sections 5.l(d) and 6,8
of the Loan Agreement and Section 7 of the Regulatory
Agreement) accruing from and after the date of such
LA1-280709.Vl 7 04/08/9
*. e
transfer, with the benefit, however, of any non- recourse provisions contained in the Loan Documents;
(ii) an opinion of counsel to the transferee that suck:
transferee has duly assumed the obligations of the
Developer under the Regulatory Agreement and that suck: obligations and the Regulatory Agreement are binding c the transferee; and (iii) an opinion of Bond Counsel
that such transfer will not adversely affect the
for federal income tax purposes. Upon completion of
any transfer in accordance with this Section 2.3(b),
the Bank Transferee shall thereafter be relieved of ar
further liability for the Developer's obligations unde
the Loan Documents accruing from and after the date of
such transfer.
exclusion from gross income of interest on the Bonds
(c) In accordance with the Loan Documents, the
City and Bond Trustee hereby approve any transfer of title to the Project to a Bank Transferee, or by a Bar Transferee to a third party, so long as such transfer complies with the requirements set forth in Section 2.3(a) or (b) above, whichever is applicable.
Nothing contained in this Section 2.3 shall in any way affect or limit the Bank's obligations under its Lett€
of Credit e
Section 2.4. The City and the Bond Trustee will
cooperate with the Bank and take any action, including joining in such proceedings at law or in equity and executing such documents as the Bank may request and direct, to enforce the obligations of the Developer under the Loan Documents and the Bank Documents (including the Regulatory Agreement), and in order tha the rents, issues, profits, revenues and other income
from the Project (including any proceeds of rent insurance) that are mortgaged, pledged or assigned to the City and/or the Bank, shall be available, after th payment of all costs and expenses of collection, to pa
any outstanding and unpaid obligations of the Develope
under the Developer Note and the Loan Agreement (but
the Loan Documents to receive and apply such rents,
issues, profits, revenues and other income for such purpose), subject to the Bank's rights of subrogation, and under the Reimbursement Agreement, in such order and manner as the Bank shall determine. The Bank, in consideration for the foregoing agreement by the City and the Bond Trustee, agrees to pay, and to indemnify the City and the Bond Trustee against, all costs, fees and expenses (including reasonable attorneys fees and
expenses) incurred by the City or the Bond Trustee in
connection with any action taken by either of them at
only if the City or the Bond Trustee is entitled under
LA1-280709 .V1 8 04/08/'
I- c
the request and direction of the Bank; provided,
however, the Bank shall not be obligated, other than 2
provided in any assumption agreement executed by the Bank pursuant to Section 2.3 (a) above, (i) to pay any
costs, fees or expenses which the Bond Trustee may
suffer or incur by reason of the negligent or willful
failure of the Bond Trustee to perform the trusts and duties imposed upon it under the Indenture, or (ii) tc
pay any costs, fees or expenses which the City or Bond
Trustee may incur by reason of the City’s or the Bond
Trustee‘s exercise or failure to exercise any power OK
discretion other than at the Bank‘s direction.
Section 2.5. Subject to Section 4 of this
Agreement and solely for the purposes of the First Security Documents, the City and Bond Trustee shall
each be deemed to have approved any matters as to whic
Developer is required to obtain the City’s or the Bond
Trustee’s approval under the terms of such documents i
the matter in question shall have been approved in writing by the Bank. Nothing contained in this Agreement shall be deemed to be a waiver by the City o the Bond Trustee of, or be deemed to release the Developer from its obligation to obtain from the City and the Bond Trustee, their prior written consent to a transfer of the Project as more particularly set forth in the Regulatory Agreement. The City and the Bond Trustee shall each promptly execute and deliver to the
Bank such instruments as the Bank may reasonably
request to evidence such approval. The City, Bond
Trustee and the Bank agree that, so long as the Bank holds the beneficial interest under both the First Security Documents and the Bank Security Documents:
(a) Developer‘s compliance with the obligations
on its part to be performed under the Bank Security
Documents shall be deemed to be Developer’s compliance
with corresponding obligations under the First Securit
Documents notwithstanding that the terms of performancc thereunder may differ from those set forth in the Bank Security Documents;
(b) all proceeds received by the Bank under the First Security Documents shall, notwithstanding the express provisions thereof, be applied by the Bank in accordance with the priority specified in the Reimbursement Agreement and the Bank Security Documents; and
(c) any amount which the Bank may advance under
the First Security Documents shall be deemed to be
advanced under the Bank Security Documents and the provisions of the Bank Security Documents shall govern
LA1-280709.Vl 9 04/08/9
SA c
the repayment of such advances notwithstanding the
provisions of the First Security Documents.
By way of example and without limiting the generality of the foregoing, so long as the Developer complies with its obligations under Section 1.08 of the Third
Deed of Trust with respect to the payment of real property taxes and assessments for the Project, it
shall also be deemed to be in compliance with the
provisions of Section 1.08 of the First Deed of Trust.
Similarly, any amount advanced by the Bank pursuant tc
Section 1.10, 1.11, 3.05 or 3.06 of the First Deed of
Section 1.10, 1.11, 3.05 or 3.06, as applicable, of tt
Third Deed of Trust which provisions shall govern the
repayment of such advances by the Developer.
Trust shall be deemed to be advanced by the Bank undey
Section 3. Notice of Default. The City and the Bond Trustee shall each give to the Bank a copy of any notice or other communication given by it to Developer witk respect to (i) any Event of Default (as defined in the applicable Loan Documents), or (ii) any other occurrence that would give the City or Bond Trustee the right (whether
immediately or with notice or lapse of time or both) to accelerate the maturity or require prepayment of all or an1 portion of the Developer Note. Such copy shall be given tc
the Bank in the same manner and at the same time as the
corresponding notice or communication is given to the
Developer under the applicable Loan Document, and before tt City and/or the Bond Trustee exercise any right or remedy available to either under any Loan Document or at law.
Section 4. Amendment of Related Documents. The City and the Bond Trustee each agrees that it will not entc into any amendment, change or modification of any of the Related Documents without the express prior written consent to such amendment, change or modification by the other
parties hereto; provided that none of the parties hereto
will unreasonably withhold or delay such consent if its
interests (and, in the case of the Bond Trustee, the
interests of Bondholders) are not materially adversely affected. The Bank agrees that it will not enter into any amendment, change or modification of the Developer Note, th First Security Documents or any of the Bank Documents which would materially adversely affect the exclusion from gross income of interest on the Bonds for federal income tax purposes.
Section 5. Bond Trustee’s Records- The Bank may at any reasonable time and at its expense examine or copy any letter, account, or other documentation or information in the possession or control of the Bond Trustee relating t or connected with the Project, the Bonds or collections
LA1-280709.V1 10 04/08/
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under the Developer Note and the Loan Agreement. The Bond Trustee shall, at the request of the Bank and at its expense, take reasonable steps to obtain for the Bank any information or documents in the possession of any third party relating to or in connection with the Project or the
Bonds o
Section 60 Pledqed Funds; Certain ACCOUntS, TO
the extent of the Developer's interest therein, all proceec
received by Bond Trustee from the sale of the Bonds, and a1
other funds or amounts now or hereafter deposited with the Bond Trustee or the Bank, together with all earnings on SUC
proceeds, funds and amounts, and all investments made with
the same, including, without limitation, deposit accounts
(but excluding the Collateral Account, as defined in the Reimbursement Agreement), chattel paper, notes, checks,
drafts, securities, certificates of deposit, and instrumenl
(collectively, the "Pledged Funds") have been pledged by tl
Developer to the City as Secured Party under the First Security Agreement and assigned by the City to the Bond
Trustee and the Bank as assignees of Secured Party, and to
the Bank as Secured Party under the Second Security
Agreement, which Second Security Agreement is subject and subordinate to the First Security Agreement. All such
Pledged Funds now or hereafter in the possession of the Bor
and as custodian for the Bank as Secured Party under the First Security Agreement (as assignee of the City's rights thereunder), and as custodian for the Bank as Secured Part! under the Second Security Agreement, subject to the provisions of the Indenture regarding the holding, application and disbursement of such Pledged Funds. All such Pledged Funds now or hereafter in the possession of tl Bank shall be held by the Bank as Secured Party under the
First Security Agreement and the Second Security Agreement, subject to the provisions of the Reimbursement Agreement regarding the holding, application and disbursement of sucl Pledged Funds. The City and the Bond Trustee hereby conseI
to the provisions of the Reimbursement Agreement, includinc
those provisions relating to accounts or deposits which thc
Developer is to establish and maintain.
Trustee shall be held by the Bond Trustee as Secured Party
Section 7. Aqreement for Benefit of Parties
Hereto. Nothing in this Agreement, express or implied, is intended or shall be construed to confer upon, or to give to, any Person other than the City, the Bond Trustee, the Bank and the Developer and their respective successors and assigns, any right, remedy or claim. This Agreement is fol
the sole and exclusive benefit of the City, Bond Trustee,
the Bank and the Developer and their respective successors
and assigns.
LA1-280709.V1 11 04/08,
C' F
Section 8. Severability. If one or more of the provisions contained in this Agreement shall be invalid, illegal or unenforceable in any respect, the remaining provisions shall not in any way be affected or impaired.
Section 9. Notices. All notices and other
communications to be made or permitted to be made hereunder to any party hereto shall be in writing and shall be delivered to the addresses shown below or such other addresses that the parties may provide to one another in accordance herewith. Such notices and other communication shall be given by any of the following means: (a) personal service; (b) by prepaid telegram; (c) by national express
air courier provided such courier maintains written
verification of actual delivery; or (d) by facsimile provided such facsimile transmission is confirmed by sendir
a written copy of same by national express air courier. An
notice or other communication given by subsection (a) or fi
above shall be deemed effective upon the date of receipt or of refusal to accept delivery by the party to whom such notice or other communication has been sent. Any notice or other communication given by subsection (b) or (d) above shall be deemed effective on the Business Day immediately following the date on which the telegraphic or facsimile transmission, as applicable, occurs.
If to the City: City of Carlsbad
1200 Carlsbad Village Drive Carlsbad, California 92008
Attention: City Manager
Facsimile No.: (619)
If to Bond Trustee: First Trust of California
101 California Street, 11th Floor San Francisco, California 94104 Attention:
Facsimile No. : (415) 274-2577
If to the Bank: Bank of America NT & SA.
450 B Street, Suite 950 San Diego, California 92101 Attention: Mr. Mark Scherrer
Facsimile No.: (619) 230-5358
Vice President
LA1-280709.V1 12 04/08/1
'y I "X
With a copy to: Bank of America NT & SA Legal Department
555 California Street
San Francisco,. California 94104
Attention: Ms. Sylvia O'Neill
Reference: SoCal Development - La Costa Partners
Facsimile No.: (415) 622-0254
If to Developer: La Costa Partners
915 Camino Del Mar Suite 200 Del Mar, California 92014
Attention: Mr. George Fermanian
Facsimile No.: (619) 481-7343
Mr. Rodney Stone
Each of the Bond Trustee and the City agrees that
or other communication to or from the Developer pursuant tc the Loan Agreement or the Indenture, it shall send a copy c
such notice, certificate or communication to the Bank in tl
manner set forth in this Section.
immediately upon giving or receiving any notice, certificat
Section 10. Successors and Assiqns. Whenever ir
this Agreement any of the parties hereto is named or referred to, the successors and assigns of such party shall
be deemed to be included and all covenants, promises and
agreements in this Agreement contained by and on behalf of
the respective parties hereto shall bind and inure to the
benefit of the respective successors and assigns of such
parties, whether so expressed or not.
Section 11. Counterparts. This Agreement may bc
executed in any number of counterparts, each executed counterpart constituting an original but all counterparts
together constituting only one instrument.
Section 12. Governinq Law. This Agreement and
the rights and obligations of the parties shall be governec by and construed and enforced in accordance with the laws c
the State of California.
Section 13. No Impairments of Other Riqhts.
Nothing in this Agreement is intended or shall be construec
to impair, diminish or otherwise adversely affect any othe~ rights the Bank may have or may obtain against the Develop6 including, but not limited to, the Bank's rights as a holdc of Bonds, in the event it shall be or become a holder then of, and the Bank's rights of subrogation.
Section 14. Letter of Credit Not be Impaired;
Remedies. No failure of the Bond Trustee or the City to
LA1-280709.Vl 13 04/08,
v I .,I
perform any undertakings or honor any agreements under this Agreement shall affect the obligation of the Bank on the Letter of Credit, but the Bank, the City and the Bond Trustee shall each have full right and power to enforce the undertakings, covenants and agreements of the other parties hereto directly against such other parties by suit for
specific performance or claims for damages or a combinatior of the foregoing. In the event of any dispute between any of the parties hereto arising out of this Agreement, the
prevailing party or parties shall be entitled to recover from the losing party or parties, all fees, costs, and expenses, including, without limitation, attorneys fees,
incurred by such prevailing party or parties in connection with such dispute; provided, however, that the City shall 1: liable in damages for any fees, costs, and expenses,
including, without limitation, attorneys fees, only to the
extent that Revenues (as defined in the Indenture) are
available to pay such damages after payment of all other
costs *
Section 15. Subroqation; Assicmment. Subject tc
the indemnification provisions of Section 2.4 hereof, the
City and the Bond Trustee agree that the Bank shall be
subrogated to their rights and remedies under the Loan
Documents upon and to the extent of the Bank's payment
(whether by virtue of the Bank honoring draws under the Letter of Credit or otherwise) of the principal of or interest on the Bonds or the payment (whether by virtue of
the Bank honoring draws under the Letter of Credit or
otherwise) or performance of any obligation under the Loan
Documents. The City and the Bond Trustee agree to cooperat
with the Bank in connection with the Bank's enforcement of any of such rights and remedies and agree not to take any actions that would prejudice the exercise of such rights 01
subrogation. Upon payment by the Bank to the Bond Trustee
of an amount sufficient to pay or redeem all Bonds then outstanding, and receipt by the Bond Trustee of all other amounts outstanding under the Developer Note (or the makin? of adequate provisions for the payment of such amounts, as permitted by the Indenture), the City and the Bond Trustee, upon the request of the Bank, shall each promptly endorse
the Developer Note to the order of the Bank and shall
deliver or cause to be delivered to the Bank (a) the
Developer Note, the First Deed of Trust and the other Loan
Documents, and all funds, securities, and other property
held by either of them pursuant to the Loan Documents (in-
cluding any documents or instruments evidencing or securinc
same), other than that required for the payment or
redemption of Bonds not theretofore surrendered for such payment or redemption, and (b) assignments to the Bank, in form satisfactory to the Bank, of all of the respective
rights, titles and interests of the City and the Bond
Trustee in and to the First Deed of Trust and the other Lo;
LA1-280709.V1 14 04/08)
4 I -I
Documents, and in and to such funds, securities, and other
property.
Section 16. Headinqs. Headings herein are for
convenience only and shall not be relied upon in
interpreting or enforcing this Agreement.
Section 17. Liability of Bond Trustee. The Bond Trustee is entering into this Agreement solely in its capacity as trustee under the Indenture and shall be accorded all rights, immunities and protections afforded tc
it thereunder except as expressly modified in this Agreement. The Bond Trustee agrees that it shall be
personally liable to compensate the Bank for any loss, cost
liability or expense (including reasonable attorneys' fees) incurred by the Bank as a result of: (i) the Bond Trustee' negligence or willful misconduct in holding funds deposited with it for payment of the Bonds; (ii) the Bond Trustee's
negligence or willful misconduct in holding or investing Bond Proceeds prior to disbursement of the Developer Loan, or (iii) any unauthorized modification or assignment of the Letter of Credit or any other Related Documents. The City
shall have no liability to the Bank for any act or omission
on the part of the Bond Trustee.
Section 18. Amendment and Waiver. This Agreemen may not be amended or modified, nor may compliance with all
or any of the provisions hereof be waived, except in each
instance with the prior written consent of the City, the Bond Trustee and the Bank.
Section 19. Termination. This Agreement shall terminate upon the latest to occur of (A) provision by the Developer to the Bond Trustee of a Substitute Credit Facility (as defined in the Indenture) issued by another bank, (B) surrender by the Bond Trustee of the Bank's Lette
of Credit in accordance with its terms, and (C) full paymen
and performance of all of the Developer's obligations to th Bank under the Reimbursement Agreement. Notwithstanding th foregoing, the City, the Bond Trustee and the Bank each
agree that so long as the Bank is the issuer of the Letter
of Credit, this Agreement shall remain in effect and be binding upon the City, Bond Trustee and the Bank even if th Bank or a Bank Affiliate shall become the Developer under the Loan Documents as the result of a foreclosure or deed i lieu of foreclosure under the First Deed of Trust.
Section 20. Liability of City. Notwithstanding
any provision herein or in any other agreement among the
parties hereto, all obligations of the City incurred under
this Agreement shall be limited obligations of the City
payable solely and only from Bond proceeds, revenues and other amounts derived by the City from the Developer or the
LA1-280709.Vl 15 04/08/1
U r ) bi
Project in connection with the transactions contemplated herein and in the other Loan Documents.
Section 21. Bond Trustee's Obliaations to Bank.
Pursuant to the Indenture, the City has pledged and assignc the Trust Estate, as defined in the Indenture, to the Trustee to secure, among other things, obligations owed to
the Bank under the Reimbursement Agreement. The Trustee's obligations to the Bank with respect to the Trust Estate shall be limited to the Trustee's obligations set forth in this Agreement and the Indenture; provided that the Trustec shall not be deemed a fiduciary of the Bank and shall have
no fiduciary obligations to the Bank, and the liability of the Trustee to the Bank shall be limited as set forth in
Section 17.
IN WITNESS WHEREOF, the City, the Bond Trustee, and the Bank have caused this Agreement to be executed in
above written.
their respective corporate names, all as of the date first
Wity"
CITY OF CARLSBAD
By :
Title: Mayor
ATTEST :
By : Title: City Clerk
"Bond TrUSeee"
FIRST TRUST OF CALIFORNIA,
NATIONAL ASSOCIATION, a national banking association
By :
Its:
ATTEST:
By :
LA1-280709.Vl 16 04/08,
)r ' I ,.w
88Bank8m
BANK OF AMERICA NATIONAL TRUE
AND SAVINGS ASSOCIATION,
a national banking associatic
By : Vice President
LA1-280709.Vl 17 04/08/9
y. c r&
The undersigned, as the Developer referred to in t€
foregoing Intercreditor Agreement, hereby acknowledges il
receipt of such Intercreditor Agreement, and consents to t€
provisions thereof, including, without limitation, Sections
and 7.
s'Developer'g
LA COSTA PARTNERS,
A CALIFORNIA GENERAL PARTNERSHIP
By : George A. Fermanian, as Trustee
for the Fermanian Family Trust,
A General Partner
By :
Rodney F. Stone, as Trustee
for the Stone Family Trust,
A General Partner
LA1-280709.V1 18 04/08/
Ir .x(*
EXHIBIT A
DESCRIPTION OF THE PROPERTY
Lots 1 through 4 inclusive of Carlsbad Tract No. 84
7 , in the City of Carlsbad, County of San Diego, State c
California, according to map thereof No. 11391, filed in tk
Off ice of the County Recorder of San Diego County, Decembc
17, 1985.
Excepting therefrom, all minerals, mineral rights
oil, oil rights, natural gas, natural gas rights, petroleum
petroleum rights, other hydrocarbon substances, geotherma
steam, all underground water, and all products derived fro
any of the foregoing, in or under or which may be produce from the property which underlies a plane parallel to and 50 feet below the present surface of the property together wit the perpetual right of drilling, mining, exploring an
the property or any other land, including the right t whipstock or directionally drill and mine from lands othe
than the property, oil, water or gas wells, tunnels and shaft
into, through or across the subsurface of the property, and t bottom such whipstocked or directionally drilled wells tunnels, and shafts under the beneath or beyond the exteric limits thereof, and to redrill, retunnel, equip, maintain
repair, deepen, and operate any such wells or mines, without
however, the right to drill, mine, store, explore, and operat through the surface or the upper five hundred (500) feet o the subsurface of the property; as reserved to Dao Corporation in Grant Deed recorded October 29, 1984, Officia Records, File/Page No. 84-407544.
operating therefor and storing in and removing the same fro
LA1-280709.V1 A-l 04/08/5
am Ai' For ApdA Phi&:
Jq / L e0-n -
p, 0,s *
Brown &
Draf
4/2 - '"' T'dA w 'L'dGd PRELIMINARY OFFICIAL STA- DATKD MAY -9 1993
NEW ISSUE - BOOK-ENTRY ONLY RATING: Moody's:
(See "RATING" hex
In the opinion of Stradling, Yocca, Carlson & Rauth, a Professi
Corporation, Newport Beach, California, Bond Counsel, under exis
statutes, regulations, rulings and judicial decisions, and assuming cer
representations and compliance with certain covenants and requirem
described herein, interest on the Bonds is excluded from gross income
federal income tax purposes, except during any period while a Bond is
by a "substantial user," or a "related person," within the meaning
Section 103(b)(13) of the Internal Revenue Code of 1954, as amended
"1954 Code"), of the property financed by proceeds of the Bonds, and
interest is not an item of tax preference for purposes of calculating
federal alternative minimum tax imposed on individuals and corporations.
the further opinion of Bond Counsel, interest on the Bonds is exempt
California personal income tax. See "TAX MATTERS" herein.
$15 9 920,000
CITY OF CARISBAD, CALIFORNIA
Variable Rate Demand
Multifamily Housing Revenue Refunding Bonds
Series A of 1993
(La Costa Apartments Project)
Price: 100% Dated: Date of Issue Due: June 1 ,
The Bonds will be issued as fully registered bonds and, when issl
will be registered in the name of Cede & Co. , as nominee for The Deposi
Trust Company ("DTC"), New York, New York. DTC will act as securi
depository for the Bonds. Individual purchases and sales of the Bonds
be made in book-entry form only. Purchasers ("Beneficial Owners") will
receive certificates representing their beneficial ownership interest in
Bonds. The principal of, redemption premium, if any, and interest on
Bonds will be payable when due by First Trust of California, Natil
Association, as trustee and paying agent ("the Trustee"), as Bond regist]
to DTC, which in turn will remit such principal, redemption premium, if :
and interest to the DTC participants for subsequent disbursement to
purchasers of the Bonds as described herein under the caption '
Bonds--Book-Entry-Only System."
Interest on the Bonds will be payable July 1, 1993 and moni
thereafter on the first Business Day of each month (except that during
period while the interest rate on the Bonds is a Reset Rate or a Fixed I
(as such terms are defined herein), interest will be payable semiannuall:
June 1 and December 1 each year). For the period from and including
date of the first delivery of fully executed and authenticated Bonds thri
and including June 1 , 1993, the Bonds will bear interest at the
determined weekly at the times and in the manner described herein
"Adjustable Interest Rate"), unless the Bonds bear interest at a Reset
or a Fixed Rate, as described herein.
of - % per annum. Thereafter, the Bonds will bear interest at a
The Bonds will be issued in denominations of $100,000 ($120,000 in
case of one Bond) or any integral mu1 tiple thereof ; provided, however ,
during a Reset Period of one year or longer, if any, or after the Conver
Date, if any, the Bonds will be issuable in the denomination of $5,001
any integral multiple thereof.
The Bonds will be issued by the City of Carlsbad (the "Issuer") to
a loan to La Costa Partners, a California general partnership (the "Owne
to refund the Issuer's Multifamily Housing Revenue Bonds, Series A of
(La Costa Apartments Project) (the "Prior Bonds"). The proceeds of
Prior Bonds financed the acquisition and construction by the Owner (
multifamily rental housing project (the "Project") in the City
Carlsbad, California, at least 20% of the units in which are required t
rented to persons of low or moderate income within the meaning of the
Code. See "THE PROJECT" and "THE OWNER" herein.
An irrevocable direct draw letter of credit (the "Letter of Cred
will be issued to the Trustee by
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
The drawings under the Letter of Credit will be used to pay principal
interest due on the Bonds, other than Bonds registered in the name of
Owner and in which Bank of America National Trust and Savings Associa
(the "Bank") has a security interest (the "Pledged Bonds"). The Lette
Credit for the Bonds will expire on December 15, 1995, subject to extens
or on such earlier date as a substitute credit facility is issued or
Bonds are no longer Outstanding. A substitute credit facility, me€
certain requirements, may be issued from time to time as described her
See "SUBSTITUTE CREDIT FACILITY ."
Subject to the limitations described herein, while the Bonds
interest at the Adjustable Interest Rate, the registered owners thereof
"Registered Owners") will have the right, on not less than seven days' 1
thereon, if any, to the date of purchase (the "Purchase Price"),
described herein. The right of any Beneficial Owner to tender its intc
in the Bonds and receive payment therefor is based only upon and subjec
the procedures and limitations of the book-entry-only system described I
the caption "THE BONDS--Book-Entry-Only System."
notice, to tender Bonds for purchase at a price of par plus accrued inte
The Bonds will be subject to conversion, with the written consent of
Bank, to a Reset Rate or a Fixed Rate at the election of the Owner, 7
will no longer have the right to require the purchase of the Bonds.
connection with such conversion, the Bonds will be subject to manda
tender and all
Outstanding Bonds not properly tendered for purchase will be deemed to
been so tendered for purchase at the Purchase Price. The Letter of Cr
will be drawn on if and to the extent the Bond6 axe not remarketed to
the Purchase Price of Bonds tendered by the Registered Owners thereof.
"THE BONDS--Book-Entry-Only System," "Interest on the Bonds" and "Purcl
of Bonds" herein.
notice to Registered Owners, and upon such conversion, the Registered Ow
The Bonds will be subject to redemption and under certain circumstan,
mandatory tender in lieu of redemption, prior to maturity, in whole 01
part, at the redemption prices and under the circumstances descr
herein. The Letter of Credit will be drawn on to pay the principal
accrued interest portions, but not redemption premium, if any, of
redemption price of the related Bonds, See "THE BONDS - Redemption" here
THE BONDS , TOGETHER WITH INTEREST THEREON, SHALL BE LIMITED OBLIGAT
OF THE ISSUER, GIVING RISE TO NO PECUNIARY LIABILITY OF THE ISSUER,
STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION THEREOF, NOR ANY CB
AGAINST ITS GENERAL CREDIT, SHALL BE PAYABLE SOLELY FROM AND SHALL I
VALID CLAIM OF THE RESPECTIVE OWNERS THEREOF ONLY AGAINST THE TRUST EST.
THE BONDS SHALL NOT CONSTITUTE AN INDEBTEDNESS OR LOAN OF THE CREDIT OF
ISSUER OR THE STATE OR ANY POLITICAL SUBDIVISION THEREOF WITHIN THE MEAI
OF ANY CONSTITUTIONAL OR STATUTORY PROVISIONS. NEITHER THE FAITH AND CRI
NOR THE TAXING POWER OF THE ISSUER OR THE STATE OR ANY POLITICAL SUBDIVI!
THEREOF IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF 1
PURCHASE PRICE OR INTEREST ON THE BONDS OR ANY OTHER COSTS INCIDENT THERE:
THIS COVER PAGE CONTAINS CERTAIN INFORMATION FOR QUICK REFERENCE 01
STATEMENT TO OBTAIN INFORMATION ESSENTIAL TO THE MAKING OF AN INFO1
INVESTMENT DECISION.
rT rs NOT A SUMMARY OF THIS ISSUE. INVESTORS MUST READ THE ENTIRE OFFI(
The Bonds are offered when, as, and if issued and received by
Underwriter, subject to the opinion of Stradling, Yocca, Carlson & Raut€
Professional Corporation, Newport Beach, California, Bond Counsel, as to
validity of the Bonds and the exclusion of interest thereon from g:
income for federal income tax purposes. Certain legal matters will
passed upon for the Underwriter by Brown & Wood, San Francisco, Califom
Counsel to the Underwriter , for the Bank by O'Melveny & Myers, Los Angel
California, Counsel to the Bank, and for the Owner by Gibson, Dun1
Crutcher, Irvine, California, Counsel to the Owner. It is expected that
Bonds will be available in book-entry form for delivery in New York,
York on or about May 27, 1993 against payment therefor.
DEBN WITTER REYNOLDS INC.
May , 1993
CITY OF CARLSBAO
City Council
Claude A. Lewis, Mayor
Margaret Stanton, Mayor Pro Tern
Ann J. Kulchin, Council Member
Ramona Finnila, Council Member
City Manager
Raymond R. Patchett
City Treasurer
James M. Stanton
Financial Mauagement Director
James F. Elliott
Finance Director
Lisa E. Hildabrand
City Attorney
Ronald R. Ball
City Clerk
Aletha L. Rautenkranz
Housing & Redevelopment Director
Evan E. Becker
Bond Counsel
Stradling, Yocca, Carlson & Rauth,
a Professional Corporation
Newport Beach, California
Trustee
First Trust of California, National Association
San Francisco, California
Julieanne Wygaard, Council Member
Tender Agent
First Trust of California, National Association
c/o IBJ Schroeder Bank & Trust Company
New York, New York
No dealer, broker, salesman or other person has been authorized by
Issuer or Dean Witter Reynolds Inc. (the "Underwriter") to give
information or to make any representations in connection with the offel
sale of the Bonds, other than as contained in this Official Statement, 4
if given or made, such other information or representations must not
relied upon as having been authorized by the Issuer or the Underwri
This Official Statement does not constitute an offer to sell or solicitation of an offer to buy in any jurisdiction in which it is unla
to make such offer, solicitation or sale. The information set forth he
has been obtained from the Issuer, the Owner, the Bank and other sou
which are believed to be reliable, but is not guaranteed as to accurac:
completeness and is not to be construed as a representation by
Underwriter. The information and expressions of opinion herein are sub
to change without notice, and neither the delivery of this Offi
Statement nor any sale made hereunder shall under any circumstances cr
any implication that there has been no change in the information or opin
set forth herein or in the affairs of the Issuer, the Owner or the
after the date of this Official Statement. The Bank does not assume,
will it assume, any responsibility as to the accuracy or completeness of
information in this Official Statement which has been furnished by 0th
The Bank does assume responsibility for the information which appearr
this Official Statement under the caption "THE BANK."
IN CONNECTION WITH THE OFFERING OF THE BONDS, THE UNDERWRITER
OVERALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET P
OF SUCU BONDS AT A LEVEL ABOVE THAT WI-IICI-I MIGHT OTHERWISE PREVAIL IN
OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT
TIME.
TAB= OF CONTENTS
INTRODUCTION ............................................................
THE ISSUER ..............................................................
SECURITY FOR THE BONDS ..................................................
THE BONDS ...............................................................
THE LETTER OF CREDIT ....................................................
SUBSTITUTE CREDIT FACILITY ..............................................
THE BANK ................................................................
SOURCE AND APPLICATION OF FUNDS .........................................
THE PROJECT .............................................................
THE OWNER ...............................................................
THE LOAN AGREEMENT ......................................................
THE REGULATORY AGREEMENT ................................................
THE INDENTURE ...........................................................
THE REIMBURSEMENT AGREEMENT .............................................
THE INTERCREDITOR AGREEMENT .............................................
ENFORCEABILITY OF REMEDIES ..............................................
NO LITIGATION ...........................................................
CERTAIN LEGAL MATTERS ...................................................
TAX MATTERS ..............................................................
UNDERWRITING ............................................................
RATING ..................................................................
MISCELLANEOUS ...........................................................
APPENDIX mefinitions .................................................
APPENDIX B-Proposed Opinion of Bond Counsel ............................
OFPICIAL STATEWENT
$15,920,000
CITY OF CABLSBAD, CALIFORNIA
Variable Rate Demand
Multifamily Housing Revenue Refunding Bonds
Series A of 1993
(La Costa Apartments Project)
INTRODUCTION
This Official Statement sets forth certain information in connec
with the sale by the City of Carlsbad, California (the "Issuer")
$15,920,000 aggregate principal amount of its Variable Rate Dema
Multifamily Housing Revenue Refunding Bonds, Series A of 1993 (La C
Apartments Project) (the "Bonds"). The Bonds will be issued pursuant
authority contained in a resolution which has been adopted by the (
Council of the Issuer on May 11, 1993 (the "Resolution") and in Articlc
of Chapter 3 of Part 1 of Division 2 of the Government Code of the Stat<
California (the "Refunding Law"). The Bonds will be issued under
secured by an Indenture of Trust dated as of May 1, 1993 (the "Indentu:
between the Issuer and First Trust of California, National Association
"Trustee"). An irrevocable direct-draw letter of credit with respect to
Bonds (the "Letter of Credit") will be issued to the Trustee by Bank
America National Trust and Savings Association (the "Bank"). Cer
capitalized terms used in this Official Statement and not otherwise def
herein have the meanings set forth in Appendix A hereto.
The Bonds will be issued for the purpose of providing funds to mal
loan (the "Loan") to La Costa Partners, a California general partner,
(the "Owner"), pursuant to a Loan Agreement dated as of May 1, 1993
"Loan Agreement") among the Issuer, the Trustee and the Owner, to refund
Issuer's Multifamily Housing Revenue Bonds, Series A of 1985 (La C'
Apartments Project) (the "Prior Bonds") 9 the proceeds of which financed
acquisition and construction by the Owner of a multifamily rental hou
project consisting of 320 units in 20 two-story buildings in the CitJ
Carlsbad, California (the "Project"). The Loan will be evidenced b
promissory note (the "Note"), and payments on the Note will be secured 1
First Deed of Trust and Assignment of Rents and Fixture Filing and a F:
Security Agreement, each dated as of May 1, 1993 and in each case from
Owner for the benefit of the Trustee (together, the "First Deed of Trusl
The Deed of Trust will be subject to the provisions of an Intercredi
Agreement dated as of May 1, 1993 (the "Intercreditor Agreement") among
Issuer, the Trustee and the Bank.
1
NUMATTER/lOS
The Project is required to be rented in compliance with Sec
103(b)(4)(A) of the Internal Revenue Code of 1954, as amended (the "
Code"). The Owner will be required to enter into an Amended and Resta
Regulatory Agreement and Declaration of Restrictive Covenants date(
the Trustee. Pursuant to the Regulatory Agreement, the Owner is require'
continue to own and operate the Project in accordance with the requireml
and restrictions mandated by Section 103(b)(4)(A) of the 1954 Code and
regulations thereunder, such requirements of the Internal Revenue Code
1986, as amended (the "1986 Code"), as are applicable, and in accord;
with certain additional requirements of the Issuer.
of May 1, 1993 (the "Regulatory Agreement") among the Issuer, the Owner
Concurrent with, and as a condition to, the issuance of the Bonds,
Bank will issue the Letter of Credit in accordance with a Reimburse1
Agreement dated as of May 1, 1993 (the "Reimbursement Agreement") bet1
the Bank and the Owner. The Letter of Credit will expire on December
1995, subject to extension, or on such earlier date as a Substitute Crc
Facility is issued or the Bonds are no longer Outstanding. See "THE LE
OF CREDIT" and "SUBSTITUTE CREDIT FACILITY" herein. The obligations of
Owner under the Reimbursement Agreement are secured by a Third Deed of Ti
and Assignment of Rents and Fixture Filing (the "Third Deed of Trust").
The Letter of Credit will be in an amount equal to the principal amc
of the Bonds plus, as long as the Bonds pay interest monthly at
Adjustable Interest Rate, an amount equal to __ days' interest on the Bc
Outstanding computed at the Maximum Permitted Rate which shall initially
10% per annum (computed on the basis of a 365- or 366-day year,
applicable, for the actual number of days elapsed) or, under ceri
circumstances, a higher rate designated by the Trustee. The Trustee
required under the Indenture to draw upon the Letter of Credit to the ex1
and at such times as may be necessary to make full and timely payments
(i) principal and interest (but not any premium) on the Bonds (other 1
Pledged Bonds) when due, whether at maturity or upon redemption
acceleration, and (ii) the Purchase Price of the Bonds tendered to Fi
Trust of California, National Association, c/o IBJ Schroeder Bank & TI
Company, as the initial tender agent (the "Tender Agent") and
remarketed. The Letter of Credit will be automatically reinstated by
amount equal to the amount drawn for payment of interest on the Bonds w
respect to a scheduled interest payment following presentation of a den
for payment of such interest and will be reinstated in accordance with
to pay principal and interest on the tendered Bonds. See "THE LETTER
CREDIT" and "THE REIMBURSEMENT AGREEMENT" herein.
terms of the Letter of Credit to the extent oE reimbursement of any drawi
From the date of issuance of the Bonds to and including June 1, 15
the Bonds will bear interest at the rate shown on the cover here
Thereafter, the Adjustable Interest Rate will be determined by Dean Wit
Reynolds Inc., as the initial remarketing agent (the "Remarketing Agent")
the last Business Day preceding each Adjustable Interest Rate Period or,
the case of a conversion from a Reset Rate to an Adjustable Interest Ra
2
NUMATTER/lOS
at least two Business Days prior to the Adjustable Interest Rate Conver
Date, and such rate will be effective during each Adjustable Interest
Period. The Bonds are subject to conversion to a Reset Rate or a Fixed
as described herein. See "THE BONDS-Interest on the Bonds" herein.
Pursuant to the Indenture, while the Bonds bear interest at
Adjustable Interest Rate, Registered Owners of the Bonds (i.e. , Cede &
so long as the book-entry-only system is in effect) will have the ri
upon seven days I notice, to deliver Bonds to the Tender Agent for purc
on a Business Day at 100% of the principal amount thereof plus acc
interest thereon, if any, to the date of purchase (the "Purchase Pric
In addition, upon conversion to a Reset Rate or a Fixed Rate or, at
election of the Owner or the Bank, upon certain redemption dates, the B
will be subject to mandatory tender and all Outstanding Bonds not prop
tendered for purchase will be deemed to have been so tendered for purc
at the Purchase Price. See "THE BONDS - Purchase of Bonds" herein.
Bonds are also subject to mandatory tender under clrcumstances set f
under the caption "THE BONDS - Redemption - Mandatory Tender in Lie1
Redemption" herein. The right of any Beneficial Owner (as defined her
to tender its interest in the Bonds and receive payment therefor is b
only upon and subject to the procedures and limitations of the book-e
system described under the caption "THE BONDS--Book-Entry-Only System."
The Bonds, together with interest thereon, shall be limited obligat
of the Issuer, giving rise to no pecuniary liability of the Issuer,
State of California (the "State") or any political subdivision thereof,
any charge against its general credit, shall be payable solely from
shall be a valid claim of the Registered Owners thereof only against
Trust Estate. The Bonds shall not constitute an indebtedness or loan of
credit of the Issuer or the State or any political subdivision the
within the meaning of any constitutional or statutory provisions. Nei
the faith and credit nor the taxing power of the Issuer or the State or
political subdivision thereof is pledged to the payment of the principal
premium, if any, Purchase Price or interest on the Bonds or any other c
incident thereto.
This Official Statement contains information concerning the Issuer,
Bank, the Owner , the Project and the sources of payment for the Bc
together with summaries of the terms of the Bonds and certain provision
the Indenture, the Letter of Credit, the Loan Agreement , the Reguls
Agreement, the Intercreditor Agreement, the First Deed of Trust,
Reimbursement Agreement, the Third Deed of Trust and certain other docun
related thereto. All references herein to agreements and documents
qualified in their entirety by references to the definitive forms ther
copies of which are available for inspection at the principal corpc
trust office of the Trustee in San Francisco, California.
3
NUMATTER/105
THE ISSUER
The City of Carlsbad is a municipal corporation duly organized
existing under the laws of the State of California. The City is authori
pursuant to the provisions of Chapter 7 of Part 5 of Division 31 of
Health and Safety Code of the State of California (the "Act") and
Resolution, to engage in certain activities related to the provisiox
decent, safe and adequate housing for persons residing in the C
including the financing of multifamily housing through the issuance
obligations such as the Prior Bonds and the Bonds. Issuance of the B
has been approved by the City pursuant to the Resolution and the Refunc
Law.
The City is governed by its City Council. Council members are elec
at large to serve four-year terms. The City Manager administers day-to-
affairs and is appointed by the City Council. The current members of
City Council and the current primary officials of the City are set forti
the back of the cover page hereof.
SECURITY FOR TEE BONDS
The Bonds will be entitled only to the security granted by
Indenture. The Bonds are limited obligations of the Issuer, and are secl
by a pledge of and lien on all Revenues (subject to disbursement
application in accordance with the Indenture), which are defined in
Indenture as the amount pledged under the Indenture to the payment
principal of , premium, if any, and interest on the Bonds, consisting of
following: (i) all income, revenues, proceeds and other amounts, to wl
the Issuer is entitled, derived from or in connection with the Project
the Loan Agreement, the Administration Agreement, dated May 1, 1993 (
"Administration Agreement") among the Issuer, the Owner and the Prol
Administrator (as defined in the Indenture) the Regulatory Agreement,
Note and the First Deed of Trust (the "Loan Documents"), including
scheduled payments of the principal of and interest on the Note and draw!
under the Letter of Credit, and all Prepayments, and including all am01
obtained through the exercise of the remedies provided in the Loan Documt
(excluding Issuer fees and expenses and indemnification), subject to
limitations on such rights contained therein and in the Intercred:
Agreement, upon the occurrence of an event of default thereunder and
receipts of the Trustee credited under the provisions of the Indenl
against said amounts payable, and (ii) moneys in the funds and accounts 1
by the Trustee under the Indenture, together with investment earn:
thereon (except amounts on deposit in the Rebate Fund).
Payment of the Bonds is supported by the Letter of Credit. The Bc
are additionally secured by the First Deed of Trust, subject to
provisions of the Intercreditor Agreement as to the exercise of remed
under the First Deed of Trust. Prior to a Reset Date or a Conversion DE
the Trustee is permitted to draw under the Letter of Credit an amount ul:
(i) the aggregate principal amount of Bonds Outstanding to pay the princj
4
NUMATTER/lOS
of the Bonds (other than Pledged Bonds) (or the portion of the Purc
Price corresponding to principal) when due and (ii) - days' interest on
Bonds, computed at the Maximum Permitted Rate which shall initially be
per annum (computed on the basis of a 365- or 366-day year, as applica
for the actual number of days elapsed) or , under certain circumstancer
higher rate designated by the Trustee to pay interest on the Bonds (0
than Pledged Bonds) (or the portion of the Purchase Price correspondin,
interest) when due. See "THE LETTER OF CREDIT" herein.
Under certain circumstances, the Owner has the right to provid
Substitute Credit Facility in substitution for the Letter of Credit.
"SUBSTITUTE CREDIT FACILITY" herein.
The Bonds, together with interest thereon, shall be limited obligat
of the Issuer, giving rise to no pecuniary liability of the Issuer,
State or any political subdivision thereof, nor any charge against
general credit, shall be payable solely from and shall be a valid clair
the respective Registered Owners thereof only against the Trust Estate.
Bonds shall not constitute an indebtedness or loan of the credit of
Issuer or the State or any political subdivision thereof within the mea
of any constitutional or statutory provisions. Neither the faith and cr
nor the taxing power of the Issuer or the State or any political subdivi
Purchase Price or interest on the Bonds or any other costs incident there
thereof is pledged to the payment of the principal of, premium, if
THE BONDS
General
The following is a summary of certain provisions of the Indenture wl
relate to the Bonds:
While the Bonds bear interest at an Adjustable Interest Rate and du:
a Reset Period of less than one year, the Bonds will be issuable onlg
fully registered Bonds or in book-entry form, without coupons, in
denomination of $100,000 ($120,000 in the case of one Bond) or any intei
multiple thereof; and, during a Reset Period of one year or longer, if i
or after the Conversion Date, if any, the Bonds will be issuable in
denomination of $5,000 or any integral multiple thereof (in each case,
appropriate, the "Authorized Denominations"). The Bonds will be dated
date of delivery thereof and will mature on June 1, 2011. Each Bond I
bear interest from the Interest Payment Date next preceding the date
authentication thereof to which interest has been duly paid or provided f
unless a Bond is authenticated before the first Record Date (the fifth
next preceding an Interest Payment Date), in which case interest will acc
from the date of the first authentication and delivery of the Bonds at
Adjustable Interest Rate, or unless a Bond is authenticated during
period following a Record Date to and including the next Interest Payn
Date, in which case interest will accrue from such Interest Payment Date
5
NUMATTER/105
the Adjustable Interest Rate. Each Bond will bear interest on ove
principal at the rate then in effect on such Bond. No interest will ac
with respect to any Pledged Bond while it is a Pledged Bond.
The principal of the Bonds and premium, if any, will be payable
upon presentation thereof at the principal corporate trust office of
Trustee in San Francisco, California or its successor in interest. Inte
on the Bonds will be paid on each Interest Payment Date and will be paic
check mailed by first-class mail, postage prepaid, to the Registered 0
at its address as it appears on the registration books of the Trustee on
Record Date or, upon the written request of any Registered Owner of at 1'
$1,000,000 in principal amount of Bonds received by the Trustee not 1,
than five days prior to the Record Date for such payment, by wire tran
in immediately available funds to an account designated by such Regist
Owner, any such designation to remain in effect until withdrawn,
Purchase Price of any Bond will be paid only upon surrender of such Bonc
the Tender Agent. The right of any Beneficial Owner (as defined below
tender its interest in the Bonds and receive payment therefor is based
upon and subject to the procedures and limitations of the book-entry sy
described under the caption "The Bonds - Book-Entry Only System."
The Bonds may be transferred or exchanged by the Registered Owners 1
surrender of such Bonds at the principal corporate trust off ice of
Trustee in San Francisco, California or at the office of the Tender Agenl
New York, New York with respect to tendered Bonds. Whenever any Bond
Bonds are to be surrendered for transfer or exchange, the Trustee or
Tender Agent, as applicable,' is required to authenticate and deliver or I
available for pickup in the name of the transferee or transferees a new 1
or Bonds, of the same type, maturity and principal amount. The Trustee I
require the payment by the Registered Owner requesting such exchange
transfer of any tax or other governmental charge required to be paid 1
respect to such transfer or exchange and the Issuer or the Trustee 7
charge Registered hers their reasonable fees and expenses for any exche or registration of transfer of Bonds. Neither the Trustee nor the Ter
Agent is required to register the transfer or exchange of any Bond after
mailing of notice calling such Bond for redemption has been given
provided in the Indenture or during the period of 15 days next preceding
giving of such notice of redemption, except the registration or transfer
any Bond remarketed following an optional tender for purchase pursuant
the Indenture. The Trustee will not register the transfer of any Plei
Bonds unless certain conditions set forth under the Indenture are met.
Upon conversion to an Adjustable Interest Rate following a Reset Per;
or to a Reset Rate or a Fixed Rate or upon delivery of a Substitute Crc
Facility pursuant to the Indenture, the Owner or the issuer of
Substitute Credit Facility, as appropriate, will cause new Bonds reflect
the Adjustable Interest Rate, the Reset Rate, the Fixed Rate or
Substitute Credit Facility to be prepared and approved by Bond Counsel
the Owner's expense and will furnish such Bonds to the Trustee. The Iss
6
NUMATTER/lOS
will execute and the Trustee or the Tender Agent will authenticate
deliver such Bonds to the new Registered Owners thereof.
In the event any Bond or temporary bond is mutilated, lost, stole]
destroyed, the Issuer may cause to be executed and the Trustee
authenticate a new Bond of like date, maturity, type, interest rate
denomination as that mutilated, lost, stolen or destroyed; provided that
surrendered to the Trustee, and in the case of any lost, stolen or destr
Bond, there first must be furnished to the Issuer and the Trustee evid of such loss, theft or destruction satisfactory to them, together
indemnity satisfactory to them. The Issuer and the Trustee will charge
Registered Owner of such Bond with their reasonable fees and expense:
connection with the authentication of a replacement Bond. In the event
such Bond has matured, instead of issuing a replacement Bond, as descr
above, the Trustee may pay the same upon receipt of indemnity satisfac
to the Trustee and the Issuer.
the case of any mutilated Bond, such mutilated Bond must first
Book-Entv Only System
The Depository Trust Company ("DTC"), New York, New York, will act
securities depository for the Bonds. The Bonds will be issued as f
registered securities registered in the name of Cede & Co. (D
partnership nominee). One fully registered Bond certificate will be is
for the single maturity as set forth on the cover page hereof, in
aggregate principal amount of such maturity, and will be deposited with D
DTC is a limited-purpose trust company organized under the New
Banking Law, a "banking organization" within the meaning of the New
Banking Law, a member of the Federal Reserve System, a "clea
corporation" within the meaning of the New York Uniform Commercial Code
a "clearing agency" registered pursuant to the provisions of Section 17,
the Securities Exchange Act of 1934. DTC holds securities that
participants ("Participants") deposit with DTC. DTC also facilitates
settlement among Participants of securities transactions, such as trans
and pledges, in deposited securities through electronic computer
book-entry changes in Participants' accounts, thereby eliminating the
for physical movement of securities certificates. Direct Particip;
include securities brokers and dealers, banks, trust companies, clea:
corporations and certain other organizations. DTC is owned by a numbel
its Direct Participants and by the New York Stock Exchange, Inc.,
American Stock Exchange, Inc. and the National Association of Securi,
securities brokers and dealers, banks and trust companies that clear thrc
or maintain a custodial relationship with a Direct Participant, ei
directly or indirectly ("Indirect Participants"). The Rules applicable
DTC and its Participants are on file with the Securities and Exch;
Commission.
Dealers, Inc, Access to the DTC system is also available to others sucl
7
NUMATTER/105
Purchases of Bonds under the DTC system must be made by or thr
Direct Participants, which will receive a credit for the Bonds on I)
records. The ownership interest of each actual purchaser of each
("Beneficial Owner") is in turn to be recorded on the Direct and Indi
Participants' records. Beneficial Owners will not receive wri
confirmation from DTC of their purchase, but Beneficial Owners are expe
to receive written confirmations providing details of the transaction
well as periodic statements of their holdings, from the Direct or Indi
Participant through which the Beneficial Owner entered into
transaction. Transfers of ownership interests in the Bonds are tc
accomplished by entries made on the books of Participants acting on be
of Beneficial Owners. Beneficial Owners will not receive certific
representing their ownership interests in Bonds, except in the event
use of the book-entry system for the Bonds is discontinued. So long as
& Co. is the registered owner of the Bonds, as nominee of DTC, refere
herein to the Registered Owners of the Bonds shall mean Cede & Co. and s
not mean the Beneficial Owners of the Bonds.
To facilitate subsequent transfers, all Bonds deposited by Particip
with DTC are registered in the name of DTC's partnership nominee, Cec
Co. The deposit of Bonds with DTC and their registration in the namc
Cede & Co. effect no change in beneficial ownership. DTC has no know1
of the actual Beneficial Owners of the Bonds; DTC's records reflect only
identity of the Direct Participants to whose accounts such Bonds
credited, which may dr may not be Beneficial Owners. The Participants
remain responsible for keeping account of their holdings on behalf of t
customers .
Conveyance of notices and other communications by DTC to Di:
Participants, by Direct Participants to Indirect Participants and by Di:
Participants and Indirect Participants to Beneficial Owners will be gove:
by arrangements among them, subject to any statutory or regula
requirements as may be in effect from time to time.
Redemption notices will be sent to Cede & Co. If less than all of
Bonds within an issue are being redeemed, DTC's practice is to determint
be redeemed.
lot the amount of the interest of each Direct Participant in such issuc
Neither DTC nor Cede & Co. will consent or vote with respect to Bo:
Under its usual procedures, DTC mails an Omnibus Proxy to the Issuer as
as possible after the record date. The Omnibus Proxy assigns Cede & CI
consenting or voting rights to those Direct Participants to whose accol
the Bonds are credited on the record date (identified in a listing attac
to the Omnibus Proxy).
Principal and interest payments on the Bonds will be made to DTC. D?
practice is to credit Direct Participants' accounts on the relevant pap
date in accordance with their respective holdings shown on DTC's recc
unless DTC has reason to believe that it will not receive payment on I
8
NUMATT€R/lOS
payment date. Payments by Participants to Beneficial Owners will
governed by standing instructions and customary practices, as is the
with securities held for the accounts of customers in bearer form
registered in "street name," and will be the responsibility of
Participant and not of DTC, the Trustee or the Issuer, subject to
statutory or regulatory requirements as may be in effect from time to t
Payment of principal and interest to DTC is the responsibility of the Is.
or the Trustee; disbursement of such payments to Direct Participants wil:
the responsibility of DTC and disbursement of such payments to
Beneficial Owners will be the responsibility of Direct and Indi.
Participants.
A Beneficial Owner shall give notice to elect to have its securi
purchased or tendered, through its Participant, to the Remarketing Agl
and shall effect delivery of such securities by causing the Di
Participant to transfer the Participant's interest in the securities,
DTC's records, to the Tender Agent. The requirement for physical del?
of securities in connection with a demand for purchase or a manda
purchase will be deemed satisfied when the ownership rights in
securities are transferred by Direct Participants on DTC's records.
So long as Cede & Co. is the registered owner of the Bonds, as nom:
of DTC, the right of a Registered Owner to tender any Bond for purchase,
mechanics for exercising such right to tender and the right of 1
Registered Owner to receive payment of the purchase price of any 1
tendered for purchase described herein pertain only to the rights of Cec
Co. and not the rights of any Beneficial Owner. The ability of
Beneficial Owner to tender its interest in any Bond and receive pay
therefor is based only upon and subject to the procedures and limitation:
Beneficial Owner with one of the DTC Participants or Indirect Particip;
and the contractal arrangements of such Participants or Indi:
Participants with DTC. Such procedures and limitations may cause a delay
the ability of a Beneficial Owner to exercise a right to tender its inter
in the Bonds, or to receive timely payment of the purchase price thereof
the manner described in this Official Statement. Neither the Issuer,
Trustee, the Tender Agent nor the Remarketing Agent will have
responsibility to any Beneficial Owner with respect to the timely exert
by DTC or any DTC Participant or Indirect Participant of any direction E
Beneficial Owner with respect to its election to tender its interest in
Bonds or with respect to the timely remittance by DTC or any DTC Particil
or Indirect Participant of the purchase price of the Bonds,
the book-entry-only system, including the contractual arrangement of :
DTC may discontinue providing its sewices as securities depository P
respect to the Bonds at any time by giving reasonable notice to the Iss
or the Trustee. Under such circumstances, in the event that a succes
securities depository is not obtained. Bond certificates are required to
printed and delivered.
9
NUMATTER/105
The Issuer may decide to discontinue use of the system of book-e:
transfers through DTC (or a successor securities depository). In event, Bund certificates will be printed and delivered.
The infornat ion in this section concerning DTC and DTC 's book-e
system has been obtained from sources that the Issuer believes to
reliable, but the Issuer takes no responsibility for the accuracy thereof
Interest on the Bonds
Adjustable Interest Rate. For the first Adjustable Interest Rate Pe
(from the date of delivery to and including June 1, 1993), the Bonds
bear interest at the rate as shown on the cover page hereof. Thereaf
the Adjustable Interest Rate will be determined by the Remarketing Agen
the last Business Day preceding each Adjustable Interest Rate Period or
the case of a conversion from a Reset Rate to an Adjustable Interest R.
at least two Business Days prior to the Adjustable Interest Rate Conver
Date, and such rate will be effective from and including Wednesday of
week to and including the following Tuesday, such days being subject
change as provided in the Indenture; provided that the Adjustable Inte
Rate in effect on the Record Date for any Interest Payment Date shall rei
in effect until and including the day before such Interest Payment Date,
between such Record Date and such Interest Payment Date shall be effec
on such Interest Payment Date. "Adjustable Interest Rate" means the min
interest rate necessary to enable the Remarketing Agent in its
judgment, under then-prevailing market conditions, to sell the Bonds i
price equal to the principal amount thereof and interest accrued ther
In no event is the Adjustable Interest Rate at any time permitted to ex
the Maximum Permitted Rate. The amount of interest to be paid on
Interest Payment Date on any Bond while the Bonds bear interest at
Adjustable Interest Rate shall be determined by (i) multiplying (A)
principal amount of such Bond by (B) the Adjustable Interest Rate in ef
for each Adjustable Interest Rate Period since the last Interest Pay
Date times the actual number of days in each such period from and inclu
the last Interest Payment Date; (ii) dividing the resulting product by
(or 366 if the year in which such computation is being made has 366 da.
and (iii) rounding the resulting figure to the nearest cent (half CI
being rounded upward) provided that the Adjustable Interest Rate in ef:
until and including the day before such Interest Payment Date, and
change in the Adjustable Interest Rate that would otherwise be effec.
between such Record Date and such Interest Payment Date shall be effec.
on such Interest Payment Date.
any change in the Adjustable Interest Rate that would otherwise be effec
on the Record Date for any Interest Payment Date shall remain in ef:
If the Remarketing Agent fails to determine the Adjustable Interest 1
as described above, then the Adjustable Interest Rate will be the :
determined for the immediately preceding Adjustable Interest Rate Pe:
until the Remarketing Agent again makes such determination.
determination of the Adjustable Interest Rate by the Remarketing Agent 1
10
NUMATTER/lOS
be conclusive and binding (in the absence of manifest error) upon
Registered Owners of the Bonds, the Issuer, the Owner, the Tender Agent,
Bank, the Remarketing Agent, the Trustee and any Paying Agent.
Reset Rate. The rate of interest on all Outstanding Bonds, with
written consent of the Bank, may be converted to a Reset Rate on any R
Date and on any Mandatory Tender Date, which is a date established at
election of the Owner for the purpose of remarketing the Bonds in lie1
redemption under the circumstances described under "THE BONDS - Redemptic
Mandatory Tender in Lieu of Redemption" herein. Provided that no Eveni
Default (as defined in "THE INDENTURE - Events of Default") shall '
occurred and be continuing, in order to effect establishment of a R'
Rate, the Owner must deliver the written consent of the Bank and a wri
notice to the Issuer, the Trustee, the Bank, the Tender Agent and
Remarketing Agent of such election at least 30 days prior to the Reset Dl
specifying (i) the proposed Reset Date, (ii) the proposed duration of
Reset Period, which must be one or more months and must terminate on the
immediately prior to the first Business Day of the next succeeding Inte
Period and (iii) the date on which the Reset Rate will be determined by
Remarketing Agent. Such notice must also be accompanied by (i) an opir
of Bond Counsel to the effect that the establishment of the Reset Rate 1
not adversely affect the exclusion of interest on the Bonds from gi
income for federal income tax purposes; (ii) an irrevocable commitment j
the provider thereof to issue a Substitute Credit Facility unless the Lei
of Credit meets or is amended to meet certain requirements of the Indent1
(iii) if a Substitute Credit Facility is to be provided, a written stater
from the Rating Agency to the effect that the rating expected to be assi]
to the Bonds on the proposed Reset Date is in conformity with the rai
requirements of the Indenture; (iv) payment to the Trustee of such amouni
the Trustee reasonably determines may be required in connection with
establishment of the Reset Rate, including, but not limited to, its
reasonable fees and expenses and the costs of printing new Bonds; and
the form of notice to be given by the Trustee to the Registered Owners
the Bonds with respect to the establishment of the Reset Rate.
If on any day at least 16 days before the applicable Reset Date,
Trustee receives written notice from the Owner to the effect that it
longer wishes to change the interest rate on the Bonds to the proposed RE
Rate, the Trustee will promptly cancel such election to establish a Re
Rate, and the Bonds shall bear interest at an Adjustable Interest I
determined in accordance with the provisions of the Indenture; provic
however, that the Trustee must have received a Substitute Credit Facil
unless the Letter of Credit meets or is amended to meet certain requiremf
of the Indenture. The Trustee will have no liability as a result of
such cancellation. The Trustee will also provide written notice of
cancellation to the Bank, the Issuer and the Remarketing Agent. If
Trustee has not received a notice of cancellation by such date, and
required Substitute Credit Facility has been received by the Trustee, th
at least 15 days prior to the Reset Date, the Trustee will send a notice
each Registered Owner by first-class mail, postage prepaid, stating (i)
11
NUMATTER/105
Reset Date; (ii) that all Outstanding Bonds are subject to manda
purchase on the Reset Date; (iii) that all Outstanding Bonds not tend1
for purchase on or prior to the Reset Date will be deemed to have beel
tendered and shall be purchased on the Reset Date at a price equal to
principal amount thereof plus accrued interest to the Reset Date; and
that all Bonds must be surrendered to the Tender Agent for purchase
later than 9:30 a.m., New York time, on the Reset Date.
From and after each Reset Date until the last day of a Reset Period,
Bonds will bear interest on the Interest Payment Date at the Reset R
computed on the basis of a 365- or 366-day year, as applicable. The R Rate will be that rate, determined by the Remarketing Agent at least
days prior to the Reset Date, which in the judgment of the Remarke
Agent , having due regard for prevailing market conditions, would not ex
the interest rate which would be required to be borne by the Bonds in o
for the market value (disregarding accrued interest) of the Bonds on
Reset Date to be 100% of the principal amount thereof. Notwithstanding
foregoing, the Reset Rate cannot exceed the Maximum Permitted Rate.
determination of a Reset Rate by the Remarketing Agent will be conclu
and binding (in the absence of manifest error) upon the Registered Owner
the Bonds, the Issuer, the Bank, the Owner, the Tender Agent and the Trus
The Bank may elect to exercise the Owner's right to convert the inte
rate on all Outstanding Bonds to a Reset Rate in accordance with the t
of the Indenture.
Conversion to Adjustable Interest Rate. The rate of interest on Outstanding Bonds may, with the written consent of the Bank, be converte
an Adjustable Interest Rate on any Adjustable Interest Rate Conversion
and on any Mandatory Tender Date. Provided that no Event of Default u
the Indenture shall have occurred and be continuing, in order to effect
establishment of an Adjustable Interest Rate, the Owner must deliver
written consent of the Bank and a written notice to the Issuer, the Trus
the Tender Agent, the Remarketing Agent and the Bank of such electior
least 30 days prior to the Adjustable Interest Rate Conversion
specifying the proposed Adjustable Interest Rate Conversion Date.
notice must also be accompanied by (i) an opinion of Bond Counsel to
effect that the establishment of the Adjustable Interest Rate will
adversely affect the exclusion from gross income of interest on the B
for federal income tax purposes; (ii) an irrevocable commitment from
provider thereof to issue a Substitute Credit Facility unless the Lette
Credit meets or is amended to meet certain requirements of the Indent
(iii) if a Substitute Credit Facility is to be provided, a written state
from the Rating Agency to the effect that the rating expected to be assi
Date is at a level which is in conformity with the rating requirement:
the Indenture; (iv) payment to the Trustee of such amount as the Tru
reasonably determines may be required in connection with the establish
of the Adjustable Interest Rate, including, but not limited to, its
reasonable fees and expenses and the cost of printing new Bonds; and (v)
to the Bonds effective on the proposed Adjustable Interest Rate Conver
12
NUMATTERA05
form of notice to be given by the Trustee to Registered Owners regarding
establishment of the Adjustable Interest Rate.
At least 15 days prior to the Adjustable Interest Rate Conversion D
the Trustee will send a notice to each Registered Owner (i .e. 3 Cede &
so long as the book-entry-only system is in effect) by first-class m
postage prepaid, stating (i) the Adjustable Interest Rate Conversion D
(ii) that all Outstanding Bonds are subject to mandatory purchase on
Adjustable Interest Rate Conversion Date; (iii) that all Outstanding BI
not tendered for purchase on or prior to the Adjustable Interest 1
purchased on the Adjustable Interest Rate Conversion Date from
Registered Owners at a price equal to the principal amount thereof
accrued interest to the Adjustable Interest Rate Conversion Date;
(iv) that all Bonds must be surrendered to the Tender Agent for purchase
later than 9:30 a.m., New York time, on the Adjustable Interest
Conversion Date.
Conversion Date will be deemed to have been so tendered and shall
The Remarketing Agent will determine the Adjustable Interest Rate in
manner described under "THE BONDS - Interest on the Bonds - Adjust.
Interest Rate."
The Bank may elect to exercise the Owner's right to convert the inte:
rate on all Outstanding Bonds from the Reset Rate to an Adjustable Inte:
Rate in accordance with the terms of the Indenture.
Fixed Rate. The rate of interest on the Bonds may, with the wri
consent of the Bank, be converted to the Fixed Rate on the Conversion 1
and on any Mandatory Tender Date. Provided that no Event of Default UI
the Indenture shall have occurred and be continuing, in order to effect
establishment of the Fixed Rate, the Owner must deliver the written con;
of the Bank and a written notice at least 30 days prior to the Conver:
Date to the Trustee, the Tender Agent, the Issuer, the Remarketing Agent
the Bank of such election and specifying (i) the proposed Conversion Dz
which may not be less than 30 days after the date on which such notice
received by such parties, and (ii) the date on which the Fixed Rate will
determined by the Remarketing Agent, which date must be at least five c
before the Conversion Date. Such notice must be accompanied by (i)
opinion of Bond Counsel to the effect that the Conversion to a Fixed I
income for federal income tax purposes, (ii) an irrevocable commitment j
the provider thereof to issue a Substitute Credit Facility unless the Le1
of Credit meets or is amended to meet certain requirements of the Indent1
(iii) if a Substitute Credit Facility is to be provided, a written stater
from the Rating Agency to the effect that the rating expected to be assit
to the Bonds on the proposed Conversion Date is in conformity with
requirements of the Indenture, (iv) payment to the Trustee of such amount
the Trustee reasonably determines may be required in connection w
Conversion, including, but not limited to, its own reasonable fees
expenses and the cost of printing new Bonds and (v) the form of notice to
given by the Trustee to the Registered Owners of the Bonds with respect
Conversion.
will not adversely affect the exclusion of interest on the Bonds from g~
13
NUMATTER/105
If on any day at least 16 days before the Conversion Date the Truc
receives notice from the Owner to the effect that it no longer wishes
proceed with the Conversion, the Trustee will promptly cancel such elecl
of Conversion and the Bonds will bear interest at an Adjustable Intel
Rate determined pursuant to the terms of the Indenture; provided, howey
the Trustee must have received a Substitute Credit Facility unless
Letter of Credit meets or is amended to meet certain requirements of
Indenture. Neither the Trustee nor the Issuer will have any liability L result of any such cancellation. The Trustee will also provide wri'
notice of the cancellation to the Bank, the Issuer and the Remarke
Agent. If the Trustee has not received a notice of cancellation and
required Substitute Credit Facility commitment has been received by
Trustee, then, at least 15 days prior to the Conversion Date, the Tru
will send a notice to each Registered Owner of the Bonds (i.e., Cede &
so long as the book-entry-only system is in effect), by first-class m
postage prepaid, stating: (i) the Conversion Date; (ii) that all Outstan
Bonds are subject to mandatory purchase on the Conversion Date: (iii)
all Outstanding Bonds not tendered for purchase on or prior to
Conversion Date will be deemed to have been so tendered and will
purchased on the Conversion Date at a price equal to the principal am
thereof plus accrued interest to the Conversion Date; and (iv) that
Bonds must be surrendered to the Tender Agent for purchase not later
9:30 a.m., New York time, on the Conversion Date.
From the Conversion Date, the Bonds will bear interest at the F
Rate, payable on June 1 and December 1 of each year, commencing on
Interest Payment Date next following the Conversion Date, computed on
basis of a 365- or 366-day year, as applicable. The Fixed Rate will be
rate, determined by the Remarketing Agent at least five days prior to
Conversion Date, which, in the judgment of the Remarketing Agent, having
regard for prevailing financial market conditions, would not exceed
interest rate which would be required to be borne by the Bonds in order
the market value (disregarding accrued interest) of the Bonds on
Conversion Date to be 100% of the principal amount thereof; provided tha
no event will the Fixed Rate exceed the Maximum Permitted Rate.
The determination of the Fixed Rate by the Remarketing Agent will
the absence of the manifest error) be conclusive and binding upon
Registered Owners of the Bonds, the Issuer, the Bank, the Owner, the Te
Agent and the Trustee. The Trustee will notify the purchasers of the B
of the Fixed Rate to be in effect on and after the Conversion Date.
The Bank may elect to exercise the Owner's right to convert the inte
rate on all Outstanding Bonds to the Fixed Rate in accordance with the t
of the Indenture.
Purchase of Bonds
Right To Tender Upon Seven-Day Notice. Any Bond (other than a Ple
Bond) will be purchased by the Tender Agent, at the option of the Regist
Owner thereof (i.e., Cede & Co., so long as the book-entry-only system i
14
NUMATTER/lOS
effect), on any Business Day while the Bonds bear interest at an Adjust?
Interest Rate, at a purchase price equal to 100% of the principal am(
thereof plus accrued interest, if any, to the date of purchase, with E
payment to be made in immediately available funds, upon:
(a) delivery to the Remarketing Agent by 4:OO p.m., New York t:
not less than seven days prior to the applicable Purchase Date o
notice of exercise of option to tender Bonds in substantially the j
set forth on the Bonds, duly completed and executed by the Registc
Owner of the Bond or Bonds (i..e.¶ Cede & Co., so long as
book-entry-only system is in effect) to be purchased (which notice 1
be effective and irrevocable upon receipt ); and
(b) delivery to the Tender Agent (if Bonds are held
certificated form) of the Bonds to be purchased, such Bonds to be
negotiable form, by 9:30 a.m., New York time, on the Purchase 1
specified in the notice, and, in the case of a Bond to be purch;
prior to an Interest Payment Date and after the close of business on
Record Date in respect thereof, a due-bill, in form satisfactory to
Tender Agent, for interest due on such Interest Payment Date. So :
as Bonds are registered in the name of Cede & Co. under
book-entry-only system, any notice of exercise of right to tender Bc
must be provided by the Beneficial Owner through a DTC Participant,
all tenders of Bonds under the Indenture must be made through the
system pursuant to the DTC Letter of Representations.
Registered Owners' Obligation To Tender Bonds for Purchase 1
Conversion to Adjustable Interest Rate, Reset Rate or Fixed Rate or 1
Withdrawal of or Reduction in Rating of Bonds or on a Mandatory T~I
Date. Upon receipt of a notice of conversion of the interest rate on
Bonds to an Adjustable Interest Rate, a Reset Rate or the Fixed Rate, (
withdrawal of or a reduction in the existing rating on the Bonds due to
delivery of a Substitute Credit Facility (a "Substitution Date"), or 1
receipt of notice of a Mandatory Tender Date pursuant to the Indenture, t
Registered Owner (i.e.¶ Cede & Co., so long as the book-entry-only systel
in effect) , other than the Issuer or the Owner, must tender its Bonds
purchase. All Bonds which are not tendered for purchase prior to
Adjustable Interest Rate Conversion Date, a Reset Date, the Conversion D4
a Substitution Date or a Mandatory Tender Date, as applicable, will
deemed purchased on the Adjustable Interest Rate Conversion Date , the R'
Date, the Conversion Date, the Substitution Date or the Mandatory Te:
Date, as applicable, at a price of 100% of the principal amount thereof
Date, the Conversion Date, the Substitution Date or the Mandatory Te!
Date, as applicable.
accrued interest to the Adjustable Interest Rate Conversion Date, the Rl
On or prior to the first Business Day after the seventh day immedia
preceding a Purchase Date, the Remarketing Agent is required to give wri
notice to the Tender Agent specifying the Bond numbers and principal am
of the Bonds to be purchased on a Purchase Date. Failure of the Remarke
15
NUMATTER/105
Agent to give such notice will not dffect the obligation of the Tender A
to purchase Bonds or any of the obligations of the Owner, the Bank or
Trustee in relation thereto.
Remarketing and Purchase of Tendered Bonds. Upon receipt of a nc
resulting in an optional or mandatory tender of Bonds, the Remarketing f!
will immediately provide telephonic notice thereof to the Trustee, and
Trustee shall give the Tender Agent, the Bank and the Owner telepho
facsimile or telegraphic notice of such receipt (any such notice g
telephonically will be promptly confirmed in writing by the Trustee).
receipt of such notice, the Remarketing Agent will use its best effort
remarket all Bonds subject to purchase in accordance with the provision
the Indenture. Any such remarketing will be made at a price equal to
principal amount of the Bonds remarketed, plus interest accrued to
Purchase Date. In no event will the Remarketing Agent remarket any Bond
the Owner or to the Issuer.
Funds for the purchase of Bonds at the principal amount thereof
interest accrued, if any, to the Purchase Date will be paid from
Purchase Fund or by the Tender Agent in the following order of priority:
moneys received from the remarketing of Bonds, in immediately avail
funds, and (ii) moneys representing proceeds of a drawing by the Tru
under the Letter of Credit.
Redemption
The Bonds are subject to redemption upon the circumstances, on the d
and at the prices as follows:
Mandatory Redemption. The Bonds are subject to mandatory redemp
prior to maturity at a redemption price equal to 100% of the princ
amount thereof, without premium, plus accrued interest to the date
redemption to be paid to the Registered Owner of each Bond (other tht
Pledged Bond):
(1) in whole on the first date for which notice of redemption be timely given in the event the Prior Bonds have not been redeemec
whole by the date which is 60 days following the issuance date of
Bonds ;
(2) in whole on the date selected by the Trustee for
redemption of Bonds if, within 60 days after receipt by the Trustet
written notice of the occurrence of an Act of Bankruptcy of Bank, 0:
at least 20 days prior to the expiration date of the Letter of Cre,
the Owner does not cause to be delivered to the Trustee a Substi
Credit Facility, except that in no event shall such redemptions ot
later than five days prior to the expiration date of the Letter
Credit ;
16
NUMATTER/lOS
(3) in whole on the first date for which notice of redemption
be timely given if the Bank fails or refuses to honor a drawing u
the Letter of Credit or to reinstate the Letter of Credit in accord
with its terms;
(4) in whole or in part on the first date for which noticc
redemption may be timely given, if and to the extent that the Not
required to be prepaid pursuant to the Loan Agreement;
(5) in whole not later than 20 days after the Trustee has rece
written notice and direction from the Bank to redeem Bonds as a re
of the occurrence of an event of default under the Reimburse
the Reimbursement Agreement and certain events of default which
result in a redemption of the Bonds); and
Agreement (see "THE REIMBURSEMENT AGREEMmT" herein for a discussio
(6) in whole on the earliest practicable date after receipt by
Trustee of notice from the Issuer of a Determination of Taxability
subject to the provisions of the Intercreditor Agreement,
acceleration of the Note pursuant to the Loan Agreement followi~
default by the Owner under the Loan Agreement or the Reguls
Agreement (see "THE LOAN AGREEMENT" and "THE REGULATORY AGREEP
herein for a discussion of these agreements and certain event(
default thereunder which may result in a redemption of the Bonds).
Optional Redemption. The Bonds are subject to optional redemptio
prices and under the circiunstances described below to be paid to
Registered Owner of each Bond (other than a Pledged Bond):
(1) in whole or in part, with the consent of the Bank, on any
while the Bonds bear interest at an Adjustable Interest Rate, at a E
equal to the principal amount of the Bonds so called for redemption
the event and to the extent the Letter of Credit is drawn upon i
amount representing the voluntary prepayment of the Note; and
(2) in whole or in part, with the consent of the Bank, on
Interest Payment Date during a Reset Period or after the Conversion
in the event and to the extent the Letter of Credit is drawn upon i
amount representing the voluntary prepayment of the Note in accorc
with optional redemption schedules determined by the Owner with res
to a Reset Period or in connection with the conversion of the intc
rate on the Bonds to the Fixed Rate pursuant to the Indenture.
Notice and Effect of Redemption. The Trustee is authorized and dire
by the Indenture to give notice of redemption of Bonds at the times
forth in the Indenture, to fix the date for any such redemption, and
moneys are available, to redeem the Bonds so called on the date so fixe
the Trustee and set forth in such notice. Notice of redemption wil
given not less than 15 days nor more than 20 days prior to the redem1
date; provided, however that with respect to a redemption describec
17
NUMATTER/lOS
subparagraph (5) under "Mandatory Redemption" above, the Trustee will n
notice of redemption immediately following receipt of notice from the BZ
and with respect to a redemption described in subparagraph (6) UT:
"Mandatory Redemption" above, the Trustee will mail a notice of redempt
immediately following receipt of notice from the Issuer; and provic
further, that the Trustee will mail notice of redemption only when it has
Fund amounts sufficient to pay the principal of, premium, if any,
interest on the Bonds so called for redemption unless the Trustee SI
determine that it will have available as a result of a payment pursuant
the Letter of Credit an amount sufficient to pay the principal of , premi
if any, and interest on the Bonds so called for redemption. All notices
redemption will be mailed to the Bank, the Issuer, the Remarketing Agent
to the Registered Owner of each Bond to be redeemed at the address appear
on the registration books of the Trustee as of the date of mailing. Neit
the failure of the Registered Owner of any Bond to receive mailed notice
redemption nor any defect in any notice so mailed will affect the valic
of proceedings for the redemption of any Bond. Bonds or portions the1
noticed for redemption will cease to bear interest on the date fixed
redemption whether or not such Bonds are presented and surrendered
payment on such date. If, during the period that moneys are on deposit H
the Trustee for payment of the redemption price of the Bonds, any Bond
portion thereof called for redemption is not paid upon presentation
interest at the rate set forth thereon until paid or until due provision
made for the payment of the same.
deposit in the Revenue Fund or the Redemption Account of the Debt Sery
surrender thereof, such Bond or portion thereof will continue to f:
Mandatory Tender in Lieu of Redemption. The Owner may elect, with
consent of the Bank, to make any date on which the Bonds may be redee
under circumstances described under paragraphs (1) and (2) under "Optio
Redemption" above a Mandatory Tender Date for the purpose of remarketing
Bonds and selecting a different interest rate mode in accordance with
Indenture. Notice of such election must be given to the Trustee, the Ten
Agent, the Remarketing Agent and the Issuer in the same manner as provi
for in connection with a change in interest mode. A premium will be E
upon the mandatory tender of the Bonds as described under paragraph
under the caption "Optional Redemption." Any Bond not tendered to
Tender Agent on or before the Mandatory Tender Date will be deemed to h
been tendered for purchase on such date for all purposes of the Indenture.
The Bank may elect to make any date on which Bonds may be redeemed un
circumstances described in paragraph (5) under the caption "Mandat Redemption" herein a Mandatory Tender Date for the purpose, among ot
things, of remarketing the Bonds and selecting a different interest r
mode in accordance with the provisions of the Indenture. Notice of s
election must be given to the Trustee, the Tender Agent, the Remarket
Agent and the Issuer in the same manner as provided for in the delivery o
Substitute Credit Facility resulting in a reduction in or withdrawal of
rating on the Bonds. Any Bond not tendered to the Tender Agent on or bef
the Mandatory Tender Date will be deemed to have been tendered for purch
on such date for all purposes of the Indenture.
18
NUMATTER/lOS
Partial Redemption. All or a portion of any Bond may be redeemed,
only in Authorized Denominations while the Bonds bear interest at
Adjustable Interest Rate or during a Reset Period of less than one year
any integral multiple of $5,000 during a Reset Period of one year or I
and after the Conversion Date. In the event that less than all of the Bc
Outstanding are to be redeemed, the Trustee will first select for redemp.
any Pledged Bonds Outstanding, and thereafter will select the Bonds tc
redeemed by lot. Upon surrender to the Trustee of any Bond il
denomination greater than such minimum denomination to be redeemed onl]
part, the Issuer will execute and the Trustee will authenticate and del:
to the Registered Owner thereof, at the expense of the Owner, a new Bonc
Bonds of the same type and maturity and of Authorized Denominations ir
aggregate principal amount equal to the unredeemed portion of the Bonds
surrendered.
THE LRTl'KR OF CREDIT
The Letter of Credit initially delivered will be an irrevoc;
obligation of the Bank which will expire on December 15, 1995 , unI
extended or earlier terminated as described below. The Letter of Cra
will permit the Trustee, in accordance with the terms thereof, to draw UI
(a) an amount not exceeding the aggregate principal amount of Bc
Outstanding to pay (i) principal of such Bonds (other than Pledged Bor
when due (whether upon redemption, acceleration or maturity of the Bonds:
(ii) the portion of the Purchase Price of such Bonds equal to the princ:
amount of Bonds tendered for purchase and not remarketed by the Remarkei
Agent , on the date on which such Bonds are to be purchased, plus (b)
amount equal to - days' accrued interest on the Outstanding Bonds (01
than Fledged Bonds), computed at a rate of 10% per annum, to (i)
interest on the Bonds or (ii) enable the Trustee to pay the portion of
Purchase Price of the Bonds tendered for purchase and not remarketed ec
to the principal amount plus the accrued interest, if any, on such Bonds.
The Letter of Credit will terminate on the earliest of (i) December 1995, subject to extension, (ii) the date on which there has been a dra1
under the Letter of Credit upon the maturity, acceleration or redemption
the entire principal amount of the Bonds Outstanding or (iii) the date
which a Substitute Credit Facility, as defined in the Indenture, becc
effective and the Letter of Credit is surrendered by the Trustee to the BE
The Indenture will direct the Trustee to draw upon the Letter of Crc
(i) to pay principal of and interest on the Bonds (other than Plec
Bonds), (ii) to enable the Trustee to pay the redemption price of Bc
redeemed as specified under "THE BONDS - Redemption" herein except that
Letter of Credit may not be drawn upon to pay any redemption premium, (j
to enable the Trustee to pay the principal of the Bonds on final maturit]
upon acceleration of the Bonds, and (iv) to enable the Trustee to pay
Purchase Price of Bonds tendered but not remarketed, as described under I
BONDS - Purchase of Bonds - Right to Tender Upon Seven-Day Notice" herein
19
NUMATTER/lOS
In the event that tendered Bonds are not remarketed on or prior to
Purchase Date, or if purchasers thereof do not timely deliver the Purct:
Price, the Trustee will draw on the Letter of Credit, in an amc
sufficient to pay the Purchase Price of such Bonds.
The obligations of the Bank under the Letter of Credit will be red1
to the extent of any drawing thereunder subject to reinstatement
hereinafter described. With respect to a drawing by the Trustee solely
pay interest on the Bonds (other than Pledged Bonds) on an Interest Pap
Date, the Trustee's right to draw under the Letter of Credit with respect
the payment of interest on an Interest Payment Date will be automatic:
Purchase Price of tendered Bonds which are not remarketed, the am(
available under the Letter of Credit will be reduced by the amount of s
demand as of the date of payment of such demand, subject to reinstatemenl
the Bank has received repayment of funds in an amount equal to the j
amount of such demand. With respect to a drawing by the Trustee up0
redemption or acceleration of the maturity of the Bonds, the am(
available under the Letter of Credit for payment of principal of or intei
on such Bonds will be reduced by the amount of such demand as of the datc
payment of such demand and shall not be reinstated.
reinstated. With respect to a drawing by the Trustee solely to pay
SUBSTITUTE CREDIT FACILITY
The Owner may from time to time provide the Trustee with a Substi.
Credit Facility upon satisfaction of the requirements described below an(
the Loan Agreement. Except as otherwise described in subparagraph
below, the Trustee will send written notice to the Issuer 9 the Remarke.
Agent and all Registered Owners not less than 10 days in advance of the q
on which any Substitute Credit Facility will take effect, identifying
issuer of the Substitute Credit Facility. Any Substitute Credit Faci
provided to the Trustee as a replacement for the Letter of Credit while
Bonds bear interest at an Adjustable Interest Rate, or in connection wii
reset to a Reset Rate or Conversion, must meet the requirements describe(
subparagraphs (A), (B) and (C), respectively, below. Any Substitute Crl
Facility provided to the Trustee during a Reset Period or after
Conversion Date must meet the requirements described in subparagraph
below. Any Substitute Credit Facility causing a reduction in 0:
withdrawal of the then-existing rating on the Bonds must meet the additil
requirements described in subparagraph (E) below.
(A) Any Substitute Credit Facility provided while the Bonds 1
interest at an Adjustable Interest Rate to maintain an Adjust
Interest Rate or on an Adjustable Interest Rate Conversion Date musi
irrevocably delivered at least 20 days prior to the then-sched,
effective on its date of delivery and must:
expiration date of the Letter of Credit then in effect, must
20
NUMATTER/lOS
(1) be for a term expiring not earlier than one year from
date of delivery thereof (or the remaining term of the Bonds,
shorter); provided that any Substitute Credit Facility may pro'
that it will terminate prior to its stated expiration date 1
receipt by the provider thereof of a notice from the Trustee
no Bonds remain Outstanding or on the date of issuance and deli
of a Substitute Credit Facility;
(2) be in an amount at any date not less than the sum of
aggregate principal amount of the Bonds then Outstanding pluE
amount equal to interest on the Bonds for the number of days
required by the Rating Agency calculated at the Maximum Permi
Rate;
(3) be accompanied by one or more opinions of counsel
law firms acceptable to the Trustee and the Remarketing Agent
in form acceptable to the Rating Agency then rating the BO
addressed to the Trustee to the effect, singly or together,
the Substitute Credit Facility (1) is a legal, valid and bin
obligation of the issuer thereof except (a) as may be limitec
bankruptcy, insolvency, reorganization, moratorium and other
relating to, or affecting generally the enforcement of, credit
rights and the rights of depositors of financial institutions,
the same may be applied in the event of the bankruptcy, insolve
moratorium applicable to such issuer, and (b) as may be limitel
the availability to any person seeking to enforce the Substi
Credit Facility of equitable remedies, including spec
performance and injunctive relief, (2) payments made under
Substitute Credit Facility will not be voidable under Sections
and 550 of the Bankruptcy Code and (3) such Substitute Cr
Facility is exempt from the registration requirements of
Securities Act of 1933, as amended;
reorganization or similar situation of the issuer thereof c
(4) be accompanied by a written statement, signed b
representative of the Rating Agency, indicating whether or not
then-existing rating on the Bonds as a result of the deliver:
such Substitute Credit Facility will be reduced or withdrawn
stating the rating expected to be in effect after the substitut
provided, however, without the Issuer's consent, the rating on
Bonds, after giving effect to such substitution cannot be 1
than the rating of "Aa3/VMIG-1," if the Bonds are to be ratec
Moody's, or "AA-/A-lt," if the Bonds are to be rated by Standa
Poor's; and
(5) be accompanied by an opinion of Bond Counsel to
effect that the delivery of the Substitute Credit Facility will
cause interest on the Bonds to be includable in gross income
federal income tax purposes.
21
NUMATTER/lOS
I
(B) Any Substitute Credit Facility provided on a Reset I
following an Adjustable Interest Rate Period or a Reset Period to bf effect for a Reset Period shall be irrevocably delivered at least
days prior to the then-scheduled expiration date of the Letter
Credit, shall be effective from the Reset Date and must:
(1) be for a term expiring not earlier than at least 20 I
after the last day of the applicable Reset Period; provided
any Substitute Credit Facility may provide that it will term5
prior to its stated expiration date upon receipt by the prov
thereof of a notice from the Trustee that no Bonds re]
Outstanding, or on the date of issuance and delivery 0:
Substitute Credit Facility;
(2) be in an amount at any date not less than the sum of
aggregate principal amount of the Bonds then Outstanding pluE
amount equal to interest on the Bonds for the number of days
required by the Rating Agency calculated at the actual rate
interest on the Bonds;
(3) be accompanied by one or more opinions of counsel of
type described in subparagraph (A)(3) above:
(4) be accompanied by a written statement, signed b
representative of the Rating Agency, indicating whether or not
then-existing rating on the Bonds as a result of the deliver:
such Substitute Credit Facility will be reduced or withdrawn
stating the rating expected to be in effect after the substitut
provided, however, without the Issuer's consent, the rating on
Bonds, after giving effect to such substitution, cannot be 1
than the rating of "Aa3," if the Bonds are to be rated by Mood
or "AA-," if the Bonds are to be rated by Standard & Poor's; and
(5) be accompanied by an opinion of Bond Counsel of the
described in subparagraph (A)(5) above.
(C) Any Substitute Credit Facility provided on the Conversion
shall be irrevocably delivered on the Conversion Date, which shall b
least 20 days prior to the then-scheduled expiration date of the Le
of Credit then in effect, shall be effective from the Conversion
and must :
(1) be for a term expiring not earlier than 20 days after
final maturity date of the Bonds; provided that any Substi
Credit Facility may provide that it will terminate prior to
stated expiration date upon receipt by the provider thereof (
notice from the Trustee that no Bonds remain Outstanding or on
date of issuance and delivery of a Substitute Credit Facility;
22
NUMATTER/105
(2) be in an amount at any date not less than the sum of
aggregate principal amount of the Bonds then Outstanding plus
amount equal to interest on the Bonds for the number of days
required by the Rating Agency calculated at the actual inte~
rate on the Bonds;
(3) be accompanied by one or more opinions of counsel
described in subparagraph (A)(3) above;
(4) be accompanied by a written statement of the 1
described in subparagraph (B)(4) above; and
(5) be accompanied by an opinion of Bond Counsel of the '
described in subparagraph (A)(5) above.
(D) Any Substitute Credit Facility provided during a Reset Pe:
or after the Conversion Date shall be irrevocably delivered at leas1
days prior to the scheduled expiration date of the Letter of Credit
in effect, and must:
(1) if provided during a Reset Period, be for a term expi:
not earlier than 20 days after the last day of the Reset Per
and, if provided after the Conversion Date, be for a term expi
not earlier than 20 days after final maturity date of the Bo1
provided that any Substitute Credit Facility may provide that
will terminate prior to its stated expiration date upon receipi
the provider thereof of a notice from the Trustee that no BI
remain Outstanding or on the date of issuance and delivery c
Substitute Credit Facility;
(2) be in an amount at any date not less than the sum of
aggregate principal amount of the Bonds then Outstanding plus
amount equal to interest on the Bonds for the number of days
required by the Rating Agency calculated at the actual inte
rate on the Bonds;
(3) be accompanied by one or more opinions of counsel
described in subparagraph (A)(3) above;
(4) be accompanied by a written statement, signed b
representative of the Rating Agency, to the effect that
then-existing rating on the Bonds will not be reduced or withd
as a result of the delivery of such Substitute Credit Facility;
(5) be accompanied by an opinion of Bond Counsel of the
described in subparagraph (A)(5) above.
(E)(I) In the event the Owner elects to provide a Substitute Cr
Facility resulting in a reduction in or withdrawal of the then-exis
rating on the Bonds as evidenced by a written statement to that ef
23
NUMATTER/lOS
pursuant to the provisions of the Indenture described in subparagrs
(A)(4), (B)(4) or (C)(4) above (a "Substitution Date"), then at least
days prior to the Substitution Date, the Trustee will send a notice
each Registered Owner by first-class mail, postage prepaid, stating
identifying (i) the Substitution Date, (ii) the Substitute Crf
Facility and the provider thereof, (iii) the rating on the Bc
expected to be in effect on the Substitution Date and that the rating
the Bonds will be reduced or withdrawn on the Substitution Date, 1
that the Bonds are subject to mandatory purchase on the Substitul
Date, (v) that any Bond not delivered to the Tender Agent for mandai
purchase by 9:30 a.m., New York time, on the Substitution Date I
nevertheless be deemed to have been delivered by and purchased from
Registered Owner at such price on the Substitution Date, and from
after the Substitution Date any such Bond so deemed to have been '
delivered and purchased will cease to bear interest and (vi) such 0'
information as is deemed necessary by the Trustee, the Remarke,
Agent, the Bank or the Owner;
(2) The Letter of Credit may not be released until the Registc
Owners of the Bonds have been paid in full from a drawing thereul
unless a drawing has been made under the Letter of Credit and
proceeds thereof have been set aside for such payment; and
(3) Bonds delivered or deemed to have been delivered to the T~I Agent as described in subparagraph (E)(1) above will be purchased
paid for as described herein under "THE BONDS - Purchase
Remarketing of the Bonds" and payment or provision for payment ha-
been made, such Bonds will cease to bear interest and will not be del
to be Outstanding for the purposes of the Indenture from and after
Substitution Date.
Within 10 Business Days after the delivery of a Substitute Crl
Facility to the Trustee, the Trustee will notify the new Registi
Owners of the Bonds by first-class mail, postage prepaid, of
delivery of the Substitute Credit Facility and of the rating on
Bonds.
THEBANK
Bank of America National Trust and Savings Association is a wholly o'
subsidiary and the principal asset of BankAmerica Corporation, a holding company (the "Corporation"). As of December 31, 1992 and base(
the Consolidated Report of Condition of the Bank at such date, the Bank
its consolidated subsidiaries had total deposits of [$106.9 bill
(including deposits from the Corporation and its nonbank subsidiaries
[$1.8 billion]), total assets of [$133.4 billion] and capital and surplu: [$lo. 7 billion].
24
NUMATTER/lOS
The Bank will provide without charge to any person to whom this Off ic
Statement is delivered, upon request, a copy of any or all of the folloi
reports :
(i) the December 31, 1991 and 1992 audited consolidated balance shc
of the Bank, which are included at page 42 of the Corporation's 1992 An1
Report to shareholders;
(ii) the Corporation's 1992 Form 10-K and the Corporation's Form :
and Quarterly Analytical Review for each subsequent quarter for which su(
report has been filed with the Securities and Exchange Commission;
(iii) each of the Corporation's Form 8-K Current Reports filed with
Securities and Exchange Commission subsequent to the filing of
Corporation's 1992 Form 10-K;
(iv) the publicly-available portions of the Consolidated Reports
Income of the Bank for the years ended December 31, 1991 and 1992 and
each subsequent quarter for which such a report has been prepared, in 1
case as submitted to the Comptroller of the Currency: and
(v) the publicly-available portions of the Consolidated Reports
Condition of the Bank at December 31, 1991 and 1992 and at the end of 1
subsequent quarter for which such a report has been prepared, in each
as submitted to the Comptroller of the Currency.
Requests to the Bank for such documents should be directed by telep'
to Kara Hanks at (415) 624-0445 or by mail to Bank of America NT,
External Reporting Department 113703, P.O. Box 37000, San Franci
California 91437.
SOURCE AND APPLICATION OF F[JNDs
The entire amount of the proceeds from the sale of the B
($15,920,000) will be loaned to the Owner and will be used to reimburse
Bank for the payment of the principal due in connection with the redemp
of the Prior Bonds. All costs of issuance, including the Underwriter's will be paid by the Owner with funds from its own sources.
The estimated sources and uses of funds are set forth in the follo
table:
25
NUMATTER/lOS
SOURCES OF FUNDS
Principal Amount of Bonds
Other Owner Funds
Total Sources
$
$, -
USES OF FUNDS
Redemption of Prior Bonds
Costs of Issuance
Total Uses
$
$
TEE PROJECT
The following information has been provided by the Owner for
herein. The financial information included herein is unaudited. Nei
the Issuer, the Bank, the Underwriter, the Remarketing Agent nor an3
their counsel, officers or employees makes any representations as to
accuracy or sufficiency of such information.
The Project
General. Park La Costa Apartments is located at 3393 Calle Cancun;
the City of Carlsbad. Park La Costa is a community located in the n
coastal San Diego County.
Park La Costa Apartments is a 320 unit, garden style residen
development. There are 64 one bedroom/one bath units of approximately
square feet, 64 two bedroom/one bath units of approximately 841 square f
and 192 two bedroom/two bath units of approximately 924 square feet.
Rent Structure. The rent structure for market rate units is summar
below;
Market Rent as of April 1, 1993
Unit Type SCI. Ft. Number Rent
1 Bedroomll Bath 679 64 $680 - 735/mo.
2 Bedroom/l Bath 841 64 750 - 790/mo. 2 Bedroom/2 Bath 9 24 192 790 - 830/mo.
26
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Actual Financial Operating History of the Project
The following is a summary of the (unaudited) financial performancc
the Project for the years 1990, 1991 and 1992:
1990 1991 1992
Gross Rental Revenue $2,525,539 $2,330,289 $2,299,340
Other Revenue 63.708 40.333 36.866
TOTAL REVENUE $2,589,247 $2,370,622 $2,336,206
Net Operating Income (2) $1,663,480 $1,416,382 $1,395,346
Occupancy (yearly avg . ) 90.7% 86.6% 89.5%
Operating Expenses (1) $ <925,767> $ < 954,240) $ <940,860>
I Figures do not include depreciation or debt service.
2 Net Operating Income represents funds potentially available to pay 1
service. Interest for one year on the Bonds at an interest rate oJ
per annum (the actual rate realized by the Owner may be higher or 11
than -%) would be $
Source: The Owner.
THEOWNER
The Owner, La Costa Partners,, is a California general partnership.
Owner was formed for the purpose of engaging in the developm
acquisition, construction and operation of the Project.
The principals of La Costa Partners are the sole shareholders of So
Development, Inc. ("So Cal"), which is a privately owned real es
construction, development and investment company headquartered in Del
California. So Cal's principal activities are the development
management of multifamily residential properties.
So Cal and its partners have developed and managed properties
Southern California for over twenty years, having developed more than 2
units. So Cal currently manages its own multifamily apartment portfl
which is valued in excess of $60,000,000. So Cal is focused on long-
ownership and portfolio growth.
TEE LOAN A(zummNT
The following statements are a brief summary of certain provisions
the Loan Agreement. The summaries do not purport to be complete
reference is made to the Loan Agreement for a full and complete statemen
the provisions thereof.
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General
Pursuant to the Loan Agreement, the Issuer will lend to the Owner,
the purpose of refunding the Prior Bonds, the proceeds derived from the z
of the Bonds. As security for its obligations, the Owner will be requi
under the Loan Agreement (except for certain indemnification rights
rights to its annual fee, expenses and attorneys' fees) will be assignec
the Trustee under the Indenture for the benefit of the Bondholders.
Repayment of the Loan
to deliver the Letter of Credit to the Trustee. All rights of the Isr
The Owner is obligated under the Loan Agreement to repay the Loan
paying to the Trustee principal of , premium, if any, and interest there01
the times, in the manner, and in the amounts such that the Trustee will
all times have funds sufficient to pay the total amount of principal of
interest (but no premium, if any) owing on the Bonds on any Interest Pay
Date, redemption date or principal payment date established under
Indenture, including any date of acceleration of the maturity of the Bo1
The Owner is obligated to repay the Loan irrespective of any rights
set-off, recoupment or counterclaim it might otherwise have against
Issuer , the Trustee, the Bank or any other person. The Owner is
permitted to suspend, discontinue or reduce any payments or (except
expressly provided therein) terminate the Loan Agreement for any ca
except as provided in the Loan Agreement. The Trustee is required to I
on the Letter of Credit to pay all amounts of principal and interest
not premium) due on the Bonds, and any amounts so drawn will satisfy
corresponding obligation of the Owner to repay the Loan to the extent
the Owner reimburses the Bank for such payments made under the Lettel
Credit in accordance with the provisions of the Reimbursement Agreement
that Seasoned Funds are applied by the Trustee to the obligation to
redemption premiums on the Bonds pursuant to the Indenture.
Mandatory Prepayment of the Note. The Note is subject to manda
prepayment in whole or in part, at a price equal to the principal am
thereof to be prepaid, together with accrued interest to the date fixed
redemption of the Bonds to be redeemed with such prepayment:
(a) On the day selected by the Trustee for redemption of the B
in the event that the Prior Bonds have not been redeemed in whole by
date which is 60 days following the Bond Issuance Date;
(b) On the day selected by the Trustee for redemption of the B
where the Owner has failed to deliver to the Trustee a Substitute Cr
Facility satisfying the criteria set forth in the Indenture withi1
days of written notice to the Trustee of the occurrence of an Aci
Bankruptcy of the Bank or at least 20 days prior to the then sched
expiration date of the Letter of Credit, the Owner does not cause tl
delivered to the Trustee a Substitute Credit Facility, except that i
event shall such redemptions occur later than 5 days prior to
expiration date of the Letter of Credit;
28
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(c) On the day selected by the Trustee for redemption of the BI
after the Bank fails or refuses to honor a drawing under the Lettel
Credit or to reinstate the Letter of Credit in accordance with its te
(d) On the day selected by the Trustee for redemption of
Bonds, in the event of an involuntary loss or the substan
destruction of the Project as a result of unforeseen events (e.g., f
seizure, requisition, change in a federal law or an action of a fed
agency after the date of issuance of the Bonds which prevents the Is
from enforcing the requirements of Section 1.103-8(b) of
Regulations, or condemnation), upon receipt of insurance or 01
compensation or, if there are to be no such payments, after the el
giving rise to the involuntary loss or substantial destruction of
Project , in an amount equal to the then unpaid principal amount of
Note. Notwithstanding the foregoing, the Note will not have to
prepaid in whole in such circumstances if (i) within 90 days of
event giving rise to the loss or destruction, the Owner notifies
Trustee, the Issuer and the Bank, in writing, that the Project car:
normal business operations; (ii) within 180 days of the event giy
rise to such taking, loss or destruction, the Owner commences to
such amounts to reconstruct the Project pursuant to the terms of
Loan Agreement and the Indenture; and (iii) such amounts are disbu:
for the restoration of the Project within 18 months after the datr
the notice from the Owner referred to in clause (i) above, but , rat1
the Note must be prepaid, in part, to the extent of undisbursed fund!
deposit in the Insurance Proceeds Account created pursuant to
Indenture at the expiration of the period described in (iii) a1
unless such period is extended with the consent of the Issuer and
Bank, an opinion of Bond Counsel is delivered to the Trustee, the Is$
and the Bank to the effect that an extension of such period will
result in interest on the Bonds becoming includable in the gross in(
of the recipients thereof for federal income tax purposes; provic
however, that prepayment in whole must be immediately due and payablc
in the written opinion of Bond Counsel delivered to the Trustee,
Issuer and the Bank a failure to make such prepayment will ct
interest on the Bonds to be includable in gross income for fed<
income tax purposes;
restored within 18 months to a condition permitting the conduct
(e) On the day selected by the Trustee for redemption of Bc
after the Trustee has received written notice and direction from
Bank to redeem Bonds as a result of the occurrence of an event
default under the Reimbursement Agreement in an amount equal to
then-unpaid principal amount of the Note;
(f) On the day selected by the Trustee for redemption of the Bc
after receipt by the Trustee of notice from the Issuer of
Determination of Taxability, or, subject to the provisions of
Intercreditor Agreement, upon acceleration of the Note pursuant to
Loan Agreement following a default by the Owner under the Loan Agreen
or the Regulatory Agreement, in an amount equal to the then-unl
principal amount of the Note; and
29
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(g) On any Reset Date, any Adjustable Interest Rate Convert
Date, the Conversion Date or any Substitution Date (as defined in
Indenture) in the event the conditions precedent to a remarketing of
Bonds on any of such dates, as set forth in the Indenture, have not 1
satisfied.
Optimal Prepayment of Note. The Owner, at its option and with
prior written consent of the Bank, may prepay the Note, in whole or in pi
on any date that Bonds are permitted to be optionally redeemed pursuani
the Indenture, following written notice of the Owner's intention to do st
described hereinbelow, in any integral multiple of $100,000 ($120,000 in
case of one Bond) while the Bonds bear interest at an Adjustable Inte:
Rate and during any Reset Period of less than one year or $5,000 durir
Reset Period of one year or more or after the Conversion Date, at
principal amounts, together with accrued interest to the date on which €31
will be redeemed with such payment, plus any applicable premium.
premium payable in connection with a prepayment of the Note shall be :
from Seasoned Funds. The Owner must give 45 days' written notice to
Issuer, the Bank and the Trustee of the principal amount to be option,
prepaid and the amount of prepayment premium, if any.
Mandatory Tender in Lieu of Redemption. The Owner, at its option,
with the prior consent of the Bank, may make any date on which the Note
be optionally prepaid a Mandatory Tender Date for remarketing the Bonds
selecting a different interest rate mode as described under "THE BONE
Redemptiodandatory Tender in Lieu of Redemption."
Default
fiats of Default. Each of the following which occurs is an "Even.
Default" under the Loan Agreement:
(a) The Owner fails to pay when due the amounts required tc
paid under the Loan Agreement or the Note when the same becomes due
payable in accordance with the terms of the Loan Agreement or the N
including a failure to repay any amounts which have been previously
but are recovered, attached or enjoined pursuant to any insolve
receivership, liquidation or similar proceedings; or
(b) An event of default shall have occurred under
Reimbursement Agreement and the Bank shall have notified the Trustee
the Issuer of such default and shall have requested the Trustee to i
a notice of default under the Loan Agreement; or
(c) The Owner fails to perform or observe any of its covenant,
agreements contained in the Loan Agreement, the Regulatory Agreem
the Administration Agreement, the Note or the First Deed of Trust, o
than as specified in subparagraph (a) above, and such failure conti
during and after the period specified below in the succeeding subcapt
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Notice of Default; Opportunity To Cure. No default described
subparagraph (c) above will constitute an Event of Default until:
(a) The Trustee or the Issuer, by registered or certified m;
gives notice to the Owner and the Bank of such default specifying
same and stating that such notice is a "Notice of Default"; and
(b) The Owner has 60 days (30 days with respect to a Regula'
Agreement default) after receipt of such notice to correct the def:
and does not correct it; provided, however, that if the default st,
in the notice is of such a nature that it cannot be corrected withi]
days (or 30 days with respect to a Regulatory Agreement default),
default will not constitute an Event of Default under the Loan Agree]
so long as (i) the Owner institutes corrective action within saic
days (or 30 days, as applicable) and diligently pursues such ac
until the default is corrected, and (ii) in the opinion of Bond Coun
the failure to cure said default within 60 days (or 30 days,
applicable) will not adversely affect the exclusion from gross in
for federal income tax purposes of interest on the Bonds. The Bank
but will not be required to, correct the default on behalf of the Own
Remedies. Subject to the provisions of the Intercreditor Agreem
whenever any Event of Default under the Loan Agreement, as described ab
shall have happened and be continuing, the following remedial steps wil
taken :
(a) Immediately upon the occurrence of any Event of Default u
the Loan Agreement, the Trustee will notify the Bank and, at the wri
request of the Issuer, declare all amounts due under the Loan Agree
and the Note to be immediately due and payable, provided, however,
in the case of an Event of Default described in (c) under "Defau:
Events of Default" above, the amounts due under the Loan Agreement
the Note will not be accelerated where (i) the Trustee has receivec
opinion of Bond Counsel that the failure to accelerate the Loan u
such circumstances will not adversely affect the exclusion from g
income for federal income tax purposes of interest on the Bonds,
(ii) the Bank has directed the Trustee not to so declare such amou
and
(b) If the Bank directs the Trustee to redeem the Bonds,
Trustee will, for and on behalf of the Issuer and the Registered Ow
of the Bonds, draw under the Letter of Credit in an amount sufficien
pay amounts due or to become due with respect to the Bonds as prov
for in the Indenture; and
(c) Subject to the provisions of the Indenture and the
Agreement , the Trustee and the Issuer, at the written request or
consent of the Trustee, will take whatever action at law or in eq
which may appear necessary or desirable to collect the payments requ
to be made by the Owner under the Loan Agreement , or to enf
31
NUMATTER/105
performance and observance of any obligation or agreement of the 01
under the Loan Agreement , the Note, the Deed of Trust or the Regulai
Agreement, but in no event will the Trustee be obligated to take
or money or otherwise incur liability unless and until satisfaci
indemnity has been furnished to it.
Any amounts collected as payments made on the Note and pursuant to
repayment provisions of the Loan Agreement, or applicable to such payme]
and any other amounts which would be applicable to payment of principal
premium, if any, and interest on the Bonds collected pursuant to ac
taken under the Loan Agreement will be applied in accordance with
Indenture or, if the Outstanding Bonds have been deemed paid in accord,
with the Indenture, will be paid as provided the "Final Balances" sectiol
the Indenture. Upon payment in full of all amounts owing under
Indenture, including all fees and expenses of the Trustee, the Pro
Administrator, the Tender Agent and the Issuer, the Issuer and the Tru
will transfer any remaining right, title or interest that each has in
Indenture, the Loan Agreement, the Note and the Deed of Trust to the except any rights to receive payment of fees and expenses and to
indemnified, as provided for in said documents.
such action which in its opinion will or might cause it to expend 1
No Remedy Exclusive. No remedy conferred in the Loan Agreement up01
reserved to the Issuer or the Trustee is intended to be exclusive of
other available remedy or remedies, but each and every such remedy will
cumulative and will be in addition to every other remedy given under
Loan Agreement or now or hereafter existing at law or in equity 01
statute. No delay or omission to exercise any right or power accruing
any default shall impair any such right or power or shall be construed t
a waiver thereof, but any such right and power may be exercised from tim
time and as often as may be deemed expedient. In order to entitle
Issuer or the Trustee to exercise any remedy reserved to either of the1
the Loan Agreement, it shall not be necessary to give any notice, other
such notice as may be expressly required in the Loan Agreement. Such ri
and remedies as are given the Issuer under the Loan Agreement shall ex
to the Registered Owners of the Bonds, and the Registered Owners of
Bonds shall be deemed third party beneficiaries of all covenants
agreements contained in the Loan Agreement.
THE REGULATORY AGRElPIENT
The following statements are a brief summary of certain provision!
the Regulatory Agreement. The summary does not purport to be complete
reference is made to the Regulatory Agreement for a full and comp
statement of the provisions thereof. The Program Administrator will mon
the Owner's compliance with the Regulatory Agreement pursuant to
Administration Agreement.
32
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Residential Rental Property. Pursuant to the Regulatory Agreement,
Project is currently and will continue to be owned, managed and operatec
a "residential rental project" within the meaning of the Code for a t
equal to the Qualified Project Period. "Qualified Project Period"
defined as that period, beginning on January 15, 1987 and ending on
latest of (a) the date which is 10 years after the date on which 50% of
dwelling units in the Project were occupied (June 3, 1997) the date whic€
a Qualified Number of Days after the date on which any of the dwelling UI
in the Project was first occupied (December 20, 1999) ; for this purpos
"Qualified Number of Days" means 50% of the number of days comprising
term from the date of issuance of the Prior Bonds (April 26, 1985) until
final maturity date of the Bonds (including any refunding bonds) , (c)
date on which any assistance provided with respect to the Project u1
Section 8 of the United States Housing Act of 1937 terminates or (d)
date on which no Bonds remain Outstanding.
Lower Income Tenants. Pursuant to Section 103(b)(4)(A) of the
Code, and applicable provisions of the Act and the policy requirements
the Issuer, the Owner will be required to represent, warrant and coven;
among other things, that throughout the Qualified Project Period, not
than 20% of the units in the Project will be continuously occupied bq
held available for occupancy by Lower Income Tenants at Affordable Re1
and in no event may the Affordable Rent on such units exceed 90% of rl
charged for comparable market-rate units in the Project. For this purpo:
unit occupied by a Lower Income Tenant who at the commencement of occup<
is a Lower Income Tenant will be treated as occupied by a Lower In1
Tenant during their tenancy 'in such unit even though such Low Income Tel
ceases to be a Lower Income Tenant. Moreover, a unit previously occupiec
a Lower Income Tenant and then vacated will be considered occupied k
Lower Income Tenant until reoccupied, other than for a temporary period
which time the character of the unit will be redetermined, In no event 1
such temporary period exceed 31 days.
Affordable Rent shall not exceed 30% of one-twelfth of the max
adjusted annual income of the household of appropriate size which is de'
to be a "lower income" family in the County of San Diego for purposes of
leased housing program established under Section 8 of the United St,
Housing Act of 1937, as amended, based upon the following appropr
household sizes for various types of residential units in the Project
assuming 80 percent as the percentage of median gross income which quali
as "lower income":
Residential Unit Number of Persons to Familv
One Bedroom
Two Bedroom
2
4
Such amounts will be further reduced by a reduction for tenant-
utilities based on the "Utility Rate Schedule" established for the 1
Housing Authority's Section 8 Rental Assistance Program.
33
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The Lower Income Units will be intermingled with all other dwel:
units in the Project and will be of comparable quality and offer a rangc
sizes and number of bedrooms comparable to those units which are avail;
to other tenants. Tenants in the Lower Income Units will have equal acc
and enjoyment to all common facilities of the Project. For purposes
evidencing compliance with the foregoing, the Owner covenants to main,
complete and accurate records relating to such compliance and to prepare
submit all required certificates,
The Owner will: (a) maintain a list of persons who have notified
Owner of their desire to rent a unit in the Project and who have Adju
Incomes which would qualify them as Very Low Income Tenants, and (b) o
to rent at least half of the Low and Moderate Units (subject to
availability thereof at any time) on a priority basis to the persons on
list prior to offering to rent such units to any other persons ant
choosing such Very Low Income Tenants shall use selection criteria no I
burdensome than shall be applied to other prospective tenants. To ful:
these obligations, upon receiving notice from a Lower-Income Tenant o
Very Low Income Tenant of such tenant's intent to vacate a Low and Mode:
Unit, the Owner shall immediately mail a notice to the City Hou!
Authority stating the date on which such unit will be available
occupancy and the rent for such unit, and shall mail notice to at leas
persons on the list for each unit coming vacant. The Owner agrees to I
the units coming vacant available, on a priority basis, first to any 1
Low Income Tenants who are Section 8 certificate holders or the recipic
of another rent subsidy and second to other Very Low Income Tena~
Notwithstanding the above, the Owner is not required to offer to rent I
units to such persons on terms and conditions which are more favorable
the terms and conditions on which such units will be offered to Lower In1
Tenants generally. Provided that the Owner has complied with the foregc
to attract Very Low Income Tenants to the Project, nothing herein shall
construed as requiring the Owner to keep units vacant for occupancy by '
Low Income Tenants where no Very Low Income Tenants have applied
occupancy.
General Compliance With the Code. The Owner will represent, warrant
agree in the Regulatory Agreement that (1) it will not take or permit i
omit to take or cause to be taken, as is appropriate, any action that wc
adversely affect the exclusion from gross income for federal income purpc
of the interest on the Prior Bonds or the Bonds and, if it should so take
permit, or omit to take or cause to be taken, any such action, it will 1
all lawful actions necessary to rescind or correct such actions or omissi
promptly upon obtaining knowledge thereof; (2) it will take such action
actions as may be necessary, in the written opinion of Bond Counsel,
Regulations or other official statements promulgated, proposed or made
the Department of the Treasury or the Internal Revenue Service pertaining
obligations issued under Section 103(b)(4)(A) of the 1954 Code
transitioned under Section 1313(a) of the Tax Reform Act of 1986, and
comply with the Act; (3) it will file of record such documents and take s
comply fully with all applicable rules, rulings, policies, procedu~
34
NUMATTER/lOS
other steps as are necessary, in the written opinion of Bond Counsel,
insure that the requirements and restrictions of the Regulatory Agreen
will be binding upon any subsequent owner of the Project, including, but
limited to, the execution and recordation of the Regulatory Agreement in
will include the requirements and restrictions contained in the Regula1 Agreement in any documents transferring any interest in the Project
another person to the end that such transferee has notice of y and is bc
by, such restrictions, and to obtain the agreement from any transferee
abide to all requirements and restrictions of the Regulatory Agreement.
real property records of the County of San Diego, CalTfornia; and (4)
Enforcement. Subject to the provisions of the Intercreditor Agreemf
if the Owner defaults in the performance or observance of any of
covenants, agreements or obligations in the Regulatory Agreement and :
default remains uncured for a period of 30 days after written notice the:
is given by the Issuer or the Trustee to the Owner and the Bank, (prov:
that said period may be extended if the Owner has commenced to cure I
default and is diligently pursuing such cure and delivers to the Issuer
the Trustee an opinion of Bond Counsel to the effect that such extenr
will not adversely affect the exclusion from gross income for federal in1
tax purposes of interest on the Bonds) then the Issuer or the Trus
acting on its own behalf or on behalf of the Issuer, will declare a def: under the Regulatory Agreement, and will take any one or more of
following steps:
(a) by mandamus or other suit, action or proceeding at law 01
equity, require the Owner to perform its obligations and covenants ul
the Regulatory Agreement or enjoin any acts or things which may
unlawful or in violation of the rights of the Issuer or the Tru,
thereunder ;
(b) have access to and inspect y examine and make copies of al:
the books and records of the Owner pertaining to the Project;
(c) take such other action at law or in equity as may ap'
necessary or desirable to enforce the obligations, covenants
agreements of the Owner under the Regulatory Agreement; or
(dl require the Issuer to declare a default under the Loan,
accelerate the indebtedness evidenced by the Note, and therea
exercise all other rights and remedies under the Loan Agreem'
including foreclosure under the First Deed of Trust , and to proceec
redeem Bonds in accordance with the Indenture.
Term. The Regulatory Agreement provides that it will become effec
upon its execution and delivery and the Regulatory Agreement will remail
full force and effect for a term and period equal to the Qualified Pro
Period, it being expressly agreed and understood in the Regulatory Agree]
that the provisions thereof are intended to survive the retirement of
Bonds and expiration of the Indenture, the Loan Agreement, the Loan,
Note and the First Deed of Trust.
35
NUMATTER/105
The Regulatory Agreement also provides that it will terminate and bf
no further force and effect in the event of (i) a foreclosure or deliver:
a deed in lieu of foreclosure whereby a third party will take possessio1
the Project which prevents the Issuer and the Trustee from enforcing
provisions of the Regulatory Agreement or involuntary noncompliance with
provisions of the Regulatory Agreement caused by fire, seizure, requisit:
change in a federal law or an action of a federal agency after the datc
its execution which prevents the Issuer and the Trustee from enforcing
provisions of the Regulatory Agreement, or condemnation or a similar ev
and (ii) the payment in full and retirement of the Bonds within a reason'
period thereafter; provided, however, that these provisions outlined in
sentence will cease to apply and the restrictions contained in
Regulatory Agreement shall be reinstated if, at any time subsequent to
termination of such provisions as the result of the foreclosure of the
of the First Deed of Trust or the delivery of a deed in lieu of foreclo
or a similar event, the Owner or any related person to it (within meaning of Section 1,103-10(e) of the Regulations) obtains an owner
interest in the Project for federal income tax purposes. Upon
termination of the terms of the Regulatory Agreement, the parties the
agree to execute, deliver and record appropriate instruments of release
discharge of the terms thereof; provided, however, that the execution
delivery of such instruments will not be necessary or a prerequisite to
termination of the Regulatory Agreement in accordance with its terms.
Housing Comnissicm's Administrative Fees. For its service
administrator under the program, the Carlsbad Housing and Redevelop
Commission (the "Commission") will receive an annual fee equal
twenty-three basis points (0.23%) of the original principal amount of
Bonds, payable in semi-annual installments. The term of payments shal:
the same as the term of the Bonds.
In addition, the Commission will receive an origination fee in
amount of twenty-three basis points (0.23%) of the amount of the Bo
payable at the closing.
Covenants To Run With the Land. The Owner will be required to sub
the Project (including the Project Site) to the covenants, reservations
restrictions set forth in the Regulatory Agreement, and the Issuer and
Owner declare in the Regulatory Agreement their express intent that
covenants, reservations and restrictions set forth in the Regula
Agreement be deemed covenants running with the land and that will pas,
and be binding upon the Owner's successors in title to the Project.
TBE INDKNTURE
The following statements are a brief summary of certain provision,
the Indenture. The summary does not purport to be complete and referenc
made to the Indenture for a full and complete statement of the provis
thereof.
36
NUMATTER/lOS
Pledge and Security
The Bonds are limited obligations of the Issuer payable solely from
equally and ratably secured, to the extent and as provided in the Indent1
by a pledge of: (i) all moneys drawn by the Trustee under the Letter
Credit, (ii) the moneys held in the funds and accounts established under
deposit in the Rebate Fund), (iii) the Issuer's or the Trustee's rights
interest in the Loan Agreement, the Note and the First Deed of Trust (ex for the Issuer's rights to receive certain fees and indemnification),
(iv) the Loan, the Note and the First Deed of Trust including any am0
obtained through the exercise of the remedies provided upon an event
default under such documents (except for the Issuer's rights to certain
and indemnification thereunder).
Indenture, together with investment earnings thereon (except amounts
The Owner is obligated to pay to the Trustee the principal of , prem
if any, and interest on the Loan at the times, in the manner and in
amounts provided in the Loan Agreement. The Owner must make payments on
Loan in amounts and at times sufficient to permit the Trustee to make
payments when due of the principal of, premium, if any, and interest on
the Purchase Price of Bonds in accordance with the Indenture. Draws on
Letter of Credit by the Trustee will be credited to amounts due from
Owner in repayment of the Loan. See "THE LOAN AGREEMENT" herein.
Funds and Accounts
The Indenture creates the following funds and accounts of the Is
which will be held by the Trustee: (a) the Cost of Issuance Fund; (b)
Funds Account and the Insurance Proceeds Account; (c) the Debt Service F
which consists of the Interest Account, the Principal Account and
Redemption Account; (d) the General Fund; (e) the Purchase Fund, which
include a Liquidity Account and a Remarketing Account; and (f) the Re
Fund. The following is a summary of certain of these funds and accounts
their operation.
Revenue Fund, which will include the Letter of Credit Account, the Seas
Cost of Issuance Fund. Moneys on deposit in the Cost of Issuance
will be applied to pay all costs and expenses associated with the issu
of the Bonds. Any moneys remaining in the Costs of Issuance Fund on
180th day following the date of issuance of the Bonds shall be transfe
to the Owner.
Revenue Fund, The Trustee will deposit into the Revenue Fund
Revenues and any other amounts (other than remarketing proceeds) receive
the Trustee which are subject to the lien and pledge of the Indenture
the extent not required to be deposited in other Funds and Account:
proceeds of drawings under the Letter of Credit or the payment of princ
and interest on the Bonds (other than Purchase Price) in the Lettel
Credit Account and in no other Fund or Account. The Trustee will a
accordance with the terms of the Indenture. The Trustee will deposit
37
NUMATTER/lOS
those moneys on deposit in the Letter of Credit Account, other than am01
representing the principal portion of Bonds to be redeemed and acc~
interest related thereto, on each Interest Payment Date, in the order
priority and for the purposes as follows:
(a) First, to the Interest Account of the Debt Service Fund, amount sufficient to pay the interest becoming due and payable on
Bonds on such date: and
(b) Second, to the Principal Account of the Debt Service Fund
amount sufficient to pay the principal of the Bonds maturing on
date, if any.
The proceeds of drawings under the Letter of Credit deposited into
Letter of Credit Account representing Prepayments and related acc
interest will be immediately applied as follows:
(a) First, to the Interest Account of the Debt Service Fund,
accrued interest received with such Prepayment; and
(b) Second, to the Redemption Account for the Debt Service F
the balance of the Prepayments.
Only proceeds from drawings under the Letter of Credit will be depos
in the Letter of Credit Account. The Trustee will not commingle amount;
deposit in the Letter of Credit Account with any other Revenues.
Trustee will have the sole.right of withdrawal from the Letter of Cr
Account, and neither the Issuer nor the Owner shall have any le
equitable or beneficial right, title or interest therein.
Upon receipt, the Trustee will deposit into the Seasoned Funds Acc
moneys constituting Seasoned Funds and moneys deposited by the Owner
moneys to be applied to the payment of premiums, if any, related t
redemption of the Bonds pursuant to the Indenture. Each deposit of mo
received by the Trustee will be held in a separate subaccount in
Seasoned Funds Account until such moneys constitute Seasoned Funds. Mo
on deposit in the Seasoned Funds Account representing Seasoned Funds wil
deposited to the Redemption Account prior to the date notice of redemp
is mailed to the Registered Owners of the Bonds on the date fixed
redemption of the Bonds to the extent necessary to pay the premium on
Bonds as the same shall become due and payable on the Redemption Date.
Seasoned Funds remaining in the Seasoned Funds Account following
redemption of Bonds with respect to which such deposit was made will be
to the Bank.
Moneys on deposit in the Revenue Fund representing amounts depositec
the Owner with the Trustee as payment of the amounts owing under the
Agreement for the fees and expenses of the Issuer, the Trustee, the Pa
Agent, the Tender Agent and the Rebate Analyst will be deposited to
General Fund.
38
NUMATTER/lOS
Moneys on deposit in the Revenue Fund representing loan paymt
deposited by the Owner with the Trustee pursuant to the Loan Agreement
payment of principal (whether at maturity, by prior redemption or otherwi and interest on the Bonds in the event the Bank defaults under the Lette~
Credit will be held by the Trustee in a separate subaccount of the Rev(
Fund and be applied to pay principal and interest on the Bonds when duf
to reimburse the Bank for any amounts paid under the Letter of Credit
cure the default.
The Trustee will deposit into the Insurance Proceeds Account of
Revenue Fund insurance or condemnation proceeds or other compensa
received by it in the event of an involuntary loss, condemnation o
substantial destruction of all or any part of the Project. Subject to
provisions of the Loan Agreement, moneys on deposit in the Insur;
Proceeds Account will be disbursed to the Owner for the restoration of
Project. Immediately upon the receipt of the proceeds of any drawing u1
the Letter of Credit to redeem Bonds as described in subparagraph (4) u1
"THE BONDS - Redemption - Mandatory Redemption," the Trustee will pa3
amounts shall be credited against the Owner's obligations under
Reimbursement Agreement.
the Bank all mounts on deposit in the Insurance Proceeds Account, w:
Debt Service Fund. Moneys on deposit in the Interest Account of
Debt Service Fund will be applied solely to pay the interest on the Bond;
the same becomes due and payable. On each Interest Payment Date,
Trustee will remit to the respective Registered Owners of such Bonds a8
the Record Date for such interest payment, an amount from the Inte
Account sufficient to pay the interest on the Bonds becoming due and pay<
on such date. Upon presentment of Bonds for payment in the case
redemption, the Trustee will remit to the respective Registered Owners
amount from the Interest Account sufficient to pay the interest on the Bl
due on such redemption date.
Moneys on deposit in the Principal Account of the Debt Service Fund 1
be applied solely to pay the principal of the Bonds as the same becomes
and payable at maturity. On the principal payment date on the Bonds,
Trustee will set aside and hold in trust, or remit to any Paying Agent ti
held in trust, an amount from the Principal Account sufficient to pay
principal of the Bonds becoming due and payable on such date.
Moneys on deposit in the Redemption Account of the Debt Service
will be applied solely to pay the principal of and premium, if any, on
Bonds as the same become due and payable by redemption. On each date f
for such redemption, the Trustee will set aside and hold in trust, or '
remit to any Paying Agent to be held in trust, an amount from the Redemp
Account sufficient to pay the principal of and premium, if any, on the B
becoming due and payable on such date.
The Trustee will not commingle amounts on deposit in the Debt Sex-
Fund with any other Revenues. The Trustee will have the sole right
withdrawal from the Debt Service Fund, and neither the Issuer nor the 0.
39
NUMATTER/lOS
will have any legal , equitable or beneficial right, title or inte~
therein. Any excess moneys on deposit in the Debt Service Fund following
Interest Payment Date, principal payment date or redemption date will
wire transferred to the Bank.
General Fund. The Trustee will apply moneys on deposit in the Gem
Fund solely for the following purposes, in the following order or prio
and in accordance with the following conditions:
(a) to the Trustee, the Tender Agent and any Paying Agent for
cost of Ordinary Expenses incurred and Ordinary Services rendered,
receipt of a written request from any of such parties stating that
amount indicated thereon is justly due and owing, and has not been
subject of another written request has been paid:
(b) to the Issuer on each June 1, commencing June 1, 1994,
annual fee equal to .23 percent of the principal amount of Bonds on
Bond Issuance Date;
(c) to the Trustee, the Tender Agent and any Paying Agent for
cost of Extraordinary Expenses incurred and Extraordinary Serv
rendered;
(d) to the Trustee or the Issuer for fees and expenses incurre
connection with the enforcement of the Regulatory Agreement and for
payment of annual Rating Agency fees;
(e) to the Rebate Analyst for fees incurred in the calculatiol
rebate under the terms of the Indenture; and
(f) to the Rebate Fund all amounts required to be depos
pursuant to the Indenture with respect to rebates to the United State
Any moneys on deposit in the General Fund which the Trustee determ
are not necessary to pay the amounts set forth above shall be transferre
the Bank for disbursement in accordance with the provisions of
Reimbursement Agreement.
Purchase Fund. All moneys drawn by the Trustee under the Lette~
Credit in connection with the purchase of Bonds at the option of
Registered Owners thereof or following tender of Bonds in connection
the conversion to an Adjustable Interest Rate, a Reset Rate or a Fixed R
the withdrawal of, or a reduction in, the rating of the Bonds or in
event the Owner elects to make a redemption date a Mandatory Tender D
will be deposited into the Liquidity Account of the Purchase Fund unless
Trustee directs the Bank to deposit or wire transfer such proceeds dire
to an account held by the Tender Agent. All moneys received from
remarketing of Bonds by the Remarketing Agent pursuant to the Indenture
be deposited into the Remarketing Account of the Purchase Fund. Money
deposit in the Purchase Fund will be invested by the Trustee in accord
40
NUMATTER/lOS
with the provisions of the Indenture as described below under "Investmeni
Moneys ,I' and any proceeds of a drawing transferred to the Tender Agent I
in the Purchase Fund or held by the Tender Agent after payment of
purchase price of Bonds purchased on each Purchase Date will be paid to
Bank.
be invested by the Tender Agent on behalf of the Trustee, Moneys remail
Funds for the purchase of Bonds at the principal amount thereof
interest accrued to the Purchase Date, if any, will be paid from
Purchase Fund or by the Tender Agent in the order of priority indic
below:
(i) moneys received from the remarketing of Bonds, in immedia
available funds, pursuant to the Indenture; and
(ii) moneys representing proceeds of a drawing by the Trustee u
the Letter of Credit.
The Trustee will have the sole right of withdrawal from the Purchase
and neither the Issuer nor the Owner will have any legal, equitable
beneficial right, title or interest therein.
Drawings Under the Letter of Credit
The Letter of Credit will be held by the Trustee and drawn upor
accordance with its terms when needed to timely pay the purchase pricc
and principal and interest on the Bonds (whether for scheduled paymentr
principal and interest, at maturity or upon the earlier redemption of
Bonds) consistent with the provisions of the Indenture and the
Agreement. Moneys derived from draws under the Letter of Credit will
deposited in the Letter of Credit Account of the Revenue Fund or
Liquidity Account of the Purchase Fund, as applicable.
The Trustee will draw moneys under the Letter of Credit in accord
with the terms, to the extent, at such times and for the purposes set f
in the Letter of Credit.
Nonpresentment of Bonds
In the event any Bond shall not be presented for payment when
principal or purchase price thereof becomes due, either at maturity, I
Purchase Date or otherwise, or at the date fixed for redemption thereof
moneys sufficient to pay such Bond will have been deposited in the
Service Fund or the Purchase Fund, as applicable, all liability of
Issuer to the Registered Owner thereof for the payment of such Bond
forthwith cease, terminate and be completely discharged. However, after
years, or as otherwise provided by state law, such moneys will be pai,
the Trustee to the Issuer free from the trusts created by the Indenture,
thereafter Registered Owners will be entitled to look only to the Issuer
payment and then only to the extent of the amount so repaid by the Trus
41
NUMATTER/lOS
The Issuer shall not be liable for any interest on the sums paid to it
shall not be regarded as a trustee of such money.
Investment of Moneys
Moneys in all Funds and Accounts, except moneys held for non-prese~
Bonds, will be continuously invested and reinvested in Permitted Investmc
by the Trustee as follows: (1) amounts drawn under the Letter of Credit,
the extent such amounts are held overnight, and amounts on deposit in
Revenue Fund (including the Seasoned Funds Account but excluding amounts
deposit in the Insurance Proceeds Account), the Debt Service Fund and
Purchase Fund will be invested and reinvested by the Trustee only
Government Obligations, as specified in writing by the Bank, maturing 1
needed but not later than 30 days after the date on which they are acqui
and (2) amounts on deposit in the Insurance Proceeds Account of the Rev1
Fund will be invested in any Permitted Investments as specified in wri
by the Owner and approved by the Bank, provided that, with respect to
Insurance Proceeds Account, an opinion of Bond Counsel is delivered to
Trustee to the effect that such investment does not adversely affect
exclusion from gross income for federal income tax purposes of interesl
the Bonds. Investments in all Funds and Accounts must mature or
redeemable at par not later, nor, to the extent reasonably practica'
earlier, than the date such moneys or investment proceeds are required
the purposes of the respective Funds and Accounts; provided, however,
the proceeds of drawings under the Letter of Credit may be invested '
with the consent of the Bank in accordance with clause (1) above.
Trustee will have no liability or responsibility for any loss resulting
any investment made as provided in the Indenture.
All investments will constitute a part of the Fund or Account from w
the moneys used to acquire such investments have come. The Trustee
sell and reduce to cash a sufficient amount of investments in a Fun(
Account whenever the cash balance therein is insufficient to pay the am0
required to be paid therefrom in accordance with the written instruction
an Owner Representative. The Trustee may transfer investments from any
or Account to any other Fund or Account in lieu of cash when requirec
permitted by the provisions of the Indenture.
In computing the amount in any Fund or Account, Permitted Investm
purchased as an investment of moneys therein will be valued at the
market price of such obligations, excluding any accrued interest. If
market price of such obligations is not readily available, the Trustee
determine the value of such obligations at cost. Any other provision!
the Indenture to the contrary notwithstanding, for purposes of the arbit
requirements under Section 148 of the 1986 Code and the Regulations,
computing the amount in any Fund or Account held by the Trustee under
provisions of the Indenture, investments shall be valued at cost, excep
any investment is purchased at a discount, and if the amount of inte
accruing in any period is greater than the amount of interest in the p
period (thus reflecting the reinvestment of interest as principal)
42
NUMATTER/lOS
amount of such discount or excess interest shall be added to the cost of
investment ratably each year over its term. The Trustee may
conclusively upon and shall be fully protected from all liability if ac
in conformity with and in good faith as to any opinion of Bond Cou
obtained by it and upon any analysis or advice of any independent certi
public accounting firm engaged by it as to the permissibility of
investment proposed to be made under the Indenture.
Rebate of Rebatable
Arbitrage to the United States
The Issuer shall calculate or cause to be calculated and furnishec
the Trustee the amount of Rebatable Arbitrage (as defined in the Indent
in accordance with the Indenture and the 1986 Code and shall pay
Rebatable Arbitrage to the United States in accordance with the Indenture
Events of Default
Each of the following events is an Event of Default under the Indentu
(a) Failure to make due and punctual payment of any installmen
interest upon any Bond when the same becomes due and payable;
(b) Failure to make due and punctual payment of the principa:
or premium, if any, on any Bond, whether at the stated maturity ther
or upon proceedings for redemption thereof or upon the maturity the
by declaration;
(c) Any representation or warranty made by the Issuer in
Indenture or the Bonds is reasonably determined by the Trustee to
been untrue in any material respect when made or any failure by
Issuer to observe and perform any covenant, condition or agreemen'
its part to be observed and performed under the Indenture or the Bo
other than as referred to in subparagraphs (a) or (b) above , fc
period of 60 days after written notice specifying such breach or fai
and requesting that it be remedied, given to the Issuer and
Registered Owners by the Trustee or by the Registered Owners of not
than 25% in aggregate principal amount of the Bonds then Outstand
unless (i) the Trustee shall agree in writing to an extension of
time prior to its expiration or (ii) if the breach or failure be
that it cannot be corrected within the applicable period, correc
action is instituted by the Issuer within the applicable period an
being diligently pursued; and
(d) Failure to pay the Purchase Price for the Bonds delivered
Purchase Date pursuant to the Indenture.
43
NUMATTER/105
Acceleration of Maturities
Subject to the provisions of the Intercreditor Agreement, upon
occurrence of an Event of Default (other than an Event of Default descr
in subparagraph (c) of the immediately preceding subcaption), the Tru
shall, or in the case of an Event of Default described in said subparag
(c) may, declare the principal of all of the Bonds then Outstanding, and
interest accrued to the redemption or payment date, to be due and pay
immediately, and upon any such declaration the same shall become and s
the Bonds to the contrary notwithstanding.
be immediately due and payable, anything contained in the Indenture 01
Upon such acceleration, the Trustee will provide the Registered Ow
with an appropriate notice of default and acceleration, and the Trustee
will draw on the Letter of Credit as provided below, and (ii) immedia.
after the Bank honors the Trustee's request to draw upon the Letter
Credit, will transfer all funds held by it to the Bank (except any am01
drawn under the Letter of Credit and any Seasoned Funds to be applied to
the Bonds or other funds required to make the payments described below ul
the subcaption "Application of Moneys"), and (iii) will take such actio1
is necessary to pay the Bonds out of such moneys at the earliest poss
date after providing the Registered Owners with a notice of default
acceleration as provided in the Indenture. The amount drawn under
Letter of Credit will equal the aggregate unpaid principal and interesi
the Outstanding Bonds to the payment date fixed by the Trustee. The Tru,
also will take whatever additional action at law or in equity may ap:
the principal of and accrued interest on the Bonds to the accelerz
payment date.
necessary or desirable to the Trustee to collect the moneys necessary to
Nothing described above, however, shall be construed to allow
Trustee to permit its rights on behalf of the Registered Owners under
Letter of Credit to be reduced, to lapse or otherwise be extinguished.
Application of Moneys
All moneys received by the Trustee pursuant to any right given or aci
taken under the default and remedies provisions of the Indenture must, al
payment of the reasonable costs and expenses of the proceedings resulting
the collection of such moneys and of the reasonable expenses, liabilii
and advances incurred or made by the Trustee and its Counsel and of
other amounts then owing for any Ordinary Services, Ordinary Expen:
Extraordinary Services and Extraordinary Expenses, be deposited in
Revenue Fund and all such moneys in the Revenue Fund will be applied to
payment of the principal and interest then due and unpaid upon
Outstanding Bonds (other than Pledged Bonds) , without preference or prior
of any kind, ratably, according to the amounts due and payable on such Bc
for principal, Purchase Price and interest, respectively, to the pers
entitled thereto without any discrimination or privilege; provided, howec
that Seasoned Funds, funds drawn under the Letter of Credit and amounts
44
NUMATTER/105
deposit in the Debt Service Fund and the Purchase Fund will be used so:
to pay the purchase price, principal of , premium, if any, and interest
the Bonds or to reimburse the Bank for excess drawings under the Lette~
Credit to pay the foregoing and will not be applied to pay any 0'
expenses.
Whenever all principal of , premium, if any, and interest on all BI
(other than Pledged Bonds) have been paid in accordance with
above-described provisions and all expenses and charges of the Trustee 1
been paid, any balance remaining in all Funds and Accounts, except am01
on deposit in the Rebate Fund, will be paid to the Bank as provided in
Indenture.
Trustee to Represent Registered Owners
The Trustee is irrevocably appointed (and the successive respec
Registered Owners, by taking and holding the Bonds will be conclusi
deemed to have so appointed the Trustee) as trustee and true and la1
attorney-in-fact of the Registered Owners for the purpose of exercising
prosecuting on their behalf such rights and remedies as may be availablt
such Registered Owners under the provisions of the Bonds and the Indent) as well as under the applicable provisions of any law. Subject to
provisions of the Intercreditor Agreement (as long as the Letter of Crl
is outstanding and the Bank is not in default of its obligat
thereunder), upon the occurrence and continuance of any Event of Defauli
other occasion giving rise to a right in the Trustee to represent
Registered Owners, the Trustee in its discretion may, and upon the wri
request of the Bank or the Registered Owners of not less than 25%
aggregate principal amount of the Bonds then Outstanding, and upon bl
indemnified to its satisfaction therefor, will proceed to protect or enfl
its rights or the rights of the Registered Owners by such appropriate s
action, mandamus or other proceedings as it shall deem most effectual
protect and enforce any such right, at law or in equity, either for
specific performance of any covenant or agreement contained in
Indenture, or in aid of the execution of any power granted in the Indent
or for the enforcement of any other appropriate legal or equitable righ
remedy vested in the Trustee or in the Registered Owners under
Indenture, the Bonds or any law; and upon instituting such proceeding,
Trustee shall be entitled, as a matter of right, to the appointment (
receiver of the Revenues and other assets pledged under the Indent
pending such proceedings.
All rights of action under the Indenture or the Bonds or otherwise
be prosecuted and enforced by the Trustee without the possession of an:
the Bonds or the production thereof in any proceedings relating thereto,
any such suit, action or proceeding instituted by the Trustee shall
brought in the name of the Trustee for the benefit and protection of all
Registered Owners, subject to the provisions of the Indenture.
45
NUMATTER/lOS
In addition, subject to the provisions of the Intercreditor Agreemj
the Trustee may, without the consent of the Issuer or the Owner, a
giving them at least five days' written notice of any intended act
exercise any and all remedies afforded the Issuer under the Loan Docum1
in its name or the name of the Issuer.
Registered Owners' Direction of Proceedings
Anything in the Indenture to the contrary notwithstanding and, sub
to the terms of the Intercreditor Agreement (as long as the Letter of Cr
is outstanding and the Bank is not in default of its obligations thereun
the Registered Owners of at least a majority in aggregate principal am
of the Bonds then Outstanding will have the right, by an instrument
concurrent instruments in writing executed and delivered to the Trustee
direct the method of conducting all remedial proceedings taken by
otherwise than in accordance with law and the provisions of the Inden
and the Intercreditor Agreement, and that the Trustee will have the righ
decline to follow any such direction which in the opinion of the Tru
would be unjustly prejudicial to Registered Owners not parties to
direction. In forming such opinion, the Trustee may rely on the opiniol
Counsel selected by the Trustee.
Limitation on Registered Owners' Right To Sue
Trustee under the Indenture, provided that such direction shall not
No Registered Owner will have the right to institute any suit, actio
proceeding at law or in equity, for the protection or enforcement of
right or remedy under the Indenture or any applicable law with respec'
any Bond, unless (A) such Registered Owner has given to the Trustee and
Bank written notice of the occurrence of an Event of Default; (B)
Registered Owners of not less than 25% in aggregate principal amount of
Bonds then outstanding have made written request upon the Trustee
exercise the powers granted in the Indenture or to institute such s
action or proceeding in its own name: (C) such Registered Owners
tendered to the Trustee reasonable indemnity against the costs, expenses
liabilities to be incurred in compliance with such request; and (D)
Trustee has refused or omitted to comply with such request for a perioi
60 days after such written request has been received by, and said tende
indemnity has been made to , the Trustee.
Such notification, request, tender of indemnity and refusal or omis
are declared, in every case, to be conditions precedent to the exercisl
any Registered Owner of any remedy under the Indenture or under law;
being understood and intended that no one or more Registered Owners s
have any right in any manner whatever by his or their action to aff
disturb or prejudice the security of the Indenture or the rights of
other Registered Owners, or to enforce any right under the Indenture
other applicable law with respect to the Bonds, except in the ma
provided in the Indenture, and that all proceedings at law or in equit
enforce any such right shall be instituted, had and maintained in the ma
46
NUMATTER/lOS
provided in the Indenture and for the benefit and protection of all ow1
of Outstanding Bonds , subject to the provisions of the Indenture. Not:
in the Indenture , however, affects or impairs the right of any Registl
Owner to enforce the payment of the principal of , premium, if any, Purc:
Price and interest on any Bond at or after the maturity thereof, or
obligation of the Issuer to cause to be paid the principal of , premium
any, and interest on each of the Bonds issued under the Indenture to
respective Registered Owners thereof at the time and place, from the sou
and in the manner expressed in the Bonds and in the Indenture.
Termination of Proceedings
In case any proceedings taken by the Trustee or any one or r
Registered Owners on account of any Event of Default have been discontir
or abandoned for any reason or have been determined adversely to the Truj
or the Registered Owners , then in every such case the Issuer, the Trusl
the Bank, the Owner and the Registered Owners, subject to any determinaf in such proceedings, will be restored to their former positions and ril
under the Indenture, severally and respectively, and all rights, remed:
powers and duties of the Issuer, the Trustee, the Bank, the Owner and
Registered Owners will continue as though no such proceedings had been tal
Remedies Not Jkclusive
No remedy conferred in the Indenture upon or reserved to the Trustec
to the Registered Owners is intended to be exclusive of any other remed;
remedies, and each and every such remedy, to the extent permitted by law,
now or hereafter existing at law or in equity or otherwise.
Waivers of Events of Default
cumulative and in addition to any other remedy given under the Indenture
Provided that all payments of interest, principal and Purchase Price
and owing on the Bonds have been paid and provided further that the Let
of Credit is then in full force and effect and has been reinstated to
full face amount and the Bank is not in default of its payment obligatj
thereunder, the Trustee in its discretion may or, upon the written demanc
the Bank or the Registered Owners of not less than a majority in aggreg
principal amount of all Bonds Outstanding must, waive any Event of Def:
under the Indenture and rescind its consequences; provided, however, 1
the Trustee may not waive any Events of Default which constitute a bread
a covenant set forth in the Indenture with respect to the investment yj
limitations set forth in the 1986 Code or the tax covenants required by
1954 Code and the 1986 Code or any other covenant with respect to
tax-exempt status of the Bonds unless there has been delivered to
adversely affect the exclusion from gross income for federal income
purposes of interest on the Bonds. In the case of any such waiver
rescission, the Issuer, the Trustee, the Bank and the Owner and
Registered Owners shall be restored to their former positions and rig
Trustee an opinion of Bond Counsel to the effect that such waiver will
47
NUMATTER/lOS
under the Indenture, respectively, but no such waiver and rescission SI
extend to any subsequent or other default, or impair any right conseqt
thereon. All waivers under the Indenture must be in writing and a (
thereof will be delivered to the Issuer, the Bank, the Remarketing Agent
to the Owner.
Supplemental Indentures Requiring
Consent of Registered Owners
The Indenture and the rights and obligations of the Issuer,
Registered Owners and the Trustee may be modified or amended at any timc
a Supplemental Indenture which shall become effective upon receipt of
consent of the Bank, the Owner and when the written consents of
Registered Owners of more than 50% in aggregate principal amount of
Bonds then Outstanding shall have been filed with the Trustee. No :
modification or amendment shall (1) extend the stated maturity of any Bc
or reduce the amount of principal thereof , or reduce the rate of intel
thereon, or alter the method for determining the applicable interest 1
(other than as permitted by the Indenture), or extend the time of paymenl
interest thereon, or reduce any premium payable upon the redemption then
or (2) reduce the aforesaid percentage of Bonds the consent of
Registered Owners of which is required to effect any such modification
to or on a parity with the lien created by the Indenture, or deprive
Registered Owners of the lien created by the Indenture upon the Trust Esi
(except as expressly provided in the Indenture), without in each case
consent of the Registered Owners of 100% of Outstanding Bonds which
affected by the modifications or amendment.
amendment, or (3) permit the creation of any lien on the Trust Estate PI
If at any time the Issuer requests the Trustee to enter into any :
Supplemental Indenture for any of the purposes allowed by the Indenture,
Trustee must, at the request of the Issuer, and upon being satisfacto:
indemnified with respect to expenses, cause notice of the proposed execu
of such Supplemental Indenture to be given in substantially the mal
provided in the Indenture with respect to redemption of Bonds. The rei
date for such consent shall be the close of business on the fifth busi~
day following the mailing of the notice (the "Consent Record Date"). I
notice shall briefly set forth the nature of the proposed supple me^
Indenture and shall state that copies thereof are on file at the Princ
Off ice of the Trustee for inspection by all Registered Owners. If , wi
60 days or such longer perlod as shall be prescribed by the Issuer folio?
the Consent Record Date, the Registered Owners of more than 50% (unless
of the Bonds affected by such notice is required as provided above)
aggregate principal amount of the Bonds Outstanding on the Consent Re1
Date shall have consented to and approved the execution thereof as prov
in the Indenture, no Registered Owner of any Bond shall have any right
object to any of the terms and provisions contained therein, or
operation thereof, or in any manner to question the propriety of
execution thereof , or to enjoin or restrain the Trustee or the Issuer
executing the same or from taking any action pursuant to the provis
48
NUMATTER/105
thereof. The Issuer shall have the right to extend from time to time
period within which such consent and approval may be obtained :
Registered Owners as of the Consent Record Date.
Supplemental Indentures Not
Requiring Consent of Registered Owners
The Indenture and the rights and obligations of the Issuer,
Registered Owners, the Trustee and Paying Agent may also be modified
amended at any time by a Supplemental Indenture, without the consent of
Registered Owners , upon receipt of the consent of the Bank and the Ow
which amendment will become effective upon execution (or such later datc
may be specified in such Supplemental Indenture), but only to the ex
permitted by law and only for any one or more of the following purposes:
(1) to add to the covenants and agreements of the Issuer conta.
in the Indenture other covenants and agreements thereafter to
observed, to pledge or assign additional security for the Bonds, 01
surrender any right or power reserved in the Indenture to or confel
upon the Issuer, provided that no such covenant, agreement , plec
assignment or surrender will materially adversely affect the inter1
of the Registered Owners;
(2) to make such provisions for the purpose of curing
ambiguity, inconsistency or omission, or of curing or correcting
defective provision, contained in the Indenture, or in regard to mat'
or questions arising under the Indenture, as the Issuer may I
necessary or desirable and not inconsistent with the Indenture,
which will not materially adversely affect the interests of
Registered Owners;
(3) to modify, amend or supplement the Indenture in such manne:
to permit the qualification of the Indenture under the Trust Inden
Act of 1939, as amended, or any similar federal statute hereafter
permitted by said act or similar federal statute, and which will
materially adversely affect the interests of the Registered Owners;
effect, and to add such other terms, conditions and provisions as ma:
(4) to modify, amend or supplement the Indenture in any mar
which, in the reasonable judgment of the Trustee, does not materi:
adversely affect the interests of the Registered Owners of Bc
Outstanding, and in making such determination, the Trustee may rely
the advice of Counsel selected by the Trustee and not be liable therej
(5) to change any provisions of the Indenture as of a Substitui
Date, an Adjustable Interest Rate Conversion Date, a Reset Date or
Conversion Date; or
(6) to provide for the substitution of a Substitute Crf
Facility.
49
NUMATTER/lOS
No such Supplemental Indenture can be executed which, in the judgment
the Trustee, materially adversely affects the interests of the Registc
Owners of the Bonds. In making such determination the Trustee
conclusively rely upon the advice of Counsel. Before the Issuer can exec
any Supplemental Indenture, there must have been filed with the Trustee
opinion of Bond Counsel stating that such Supplemental Indenture: (i)
authorized or permitted by the Indenture and complies with its terms; (
will be valid and binding upon the Issuer in accordance with its terms ai
its execution by the Issuer and the Trustee; and (iii) will comply with
Refunding Law and will not impair the exclusion from gross income
federal income tax purposes of interest on the Bonds.
Amendments to Loan Documents and Letter of Credit
Not Requiring Consent of Registered Owners
The Issuer, the Trustee and the Owner may, subject to the provision2
the Indenture and with the written consent of the Bank and the Trustee,
without the consent of or notice to any of the Registered Owners, enter
any amendment, change or modification of the Loan Documents and the Le
of Credit as may be required (a) by the provisions of the Loan Documel
the Letter of Credit or the Indenture, (b) for the purpose of curing
ambiguity or formal defect or omission, (c) so as to 'add additional ri,
acquired in accordance with the provisions of the Loan Documents and
Letter of Credit, (d) to facilitate the provision of a Substitute Crj
Facility, (e) to change any provisions of the Loan Documents as o
Substitution Date, an Adjustable Interest Rate Conversion Date, a Reset :
or the Conversion Date, or (f) in connection with any other change the
which, in the reasonable judgment of the Trustee, is not to the prejudicl
the Trust Estate or the Registered Owners of the Bonds, but only if
Issuer and the Trustee receive an opinion of Bond Counsel acceptable to
Issuer and the Trustee to the effect that such amendment, change
modification is authorized or permitted by the Indenture, will comply
the Indenture and the Act, and will not impair the exclusion from g
income for federal income tax purposes of interest on the Bonds; provi
however, that as long as the Letter of Credit is in effect and the Bonds
not in default, the consent of the Trustee and the Issuer shall not
required to any amendment to the First Deed of Trust which does
materially reduce the security interests of the Trustee and the Is
contained in the First Deed of Trust. In making a determination under
above, the Trustee may conclusively rely on an opinion of Counsel.
Issuer and the Owner shall, without the consent of or notice to any of
Registered Owners but after notice to the Bank and the Trustee and with
prior written consent of the Bank (which consent shall not be unreason
withheld), enter into any amendment, change or modification of the
Documents or the Letter of Credit as may be necessary, in the opinioI
Bond Counsel, to comply fully with all applicable rules, rulings, polic
procedures, regulations or other official statements promulgated or prop
to obligations issued under Section 103(b)(4)(A) of the 1954 C
Notwithstanding anything in the Indenture to the contrary, the Reimburse
by the Department of the Treasury or the Internal Revenue Service pertai
50
NUMATTER/105
Agreement and all security instruments for the benefit of the Bank may
modified or amended without notice to or the consent of the Registt
Owners , the Issuer or the Trustee as long as such modification or amendr
does not adversely affect the exclusion from gross income for federal in(
tax purposes of interest on the Bonds.
Amendments to Loan Documents and Letter
of Credit Requiring Consent of Registered Owners
Except for the amendments, changes or modifications described under
preceding subcaption, and subject to the provisions of the Indent1
neither the Issuer, the Trustee nor the Owner shall enter into any oi
Credit without the written consent of the Bank, and without mailing
notice and the written approval or consent of the Registered Owners of 1
than 50% in aggregate principal amount of the Bonds at the time Outstan1
given and procured as provided in the Indenture; provided, however,
nothing in the Indenture will permit or be construed as permitting (a:
extension of the time of the payment of any amounts payable under the :
or the Letter of Credit, or (b) a reduction in the amount of any paymen
in the total amount due under the Note or the Letter of Credit without
consent of the Registered Owners of all Bonds then Outstanding. If at
time the Issuer and the Owner request the consent of the Trustee to any
proposed amendment, change or modification of the Loan Documents or
being satisfactorily indemnified with respect to expenses, cause notict
such proposed amendment, change or modification to be given in the
manner as with respect to redemption of Bonds. The record date for
consent shall be the Consent Record Date established for consents
connection with Supplemental Indentures. Such notice will briefly set f
the nature of such proposed amendment, change or modification and state
copies of the instruments modifying the same are on file with the Tru
for inspection by all Registered Owners. If, within 60 days, or such lo
period as shall be prescribed by the Issuer, following the mailing of
notice, the Registered Owners of more than 50% in aggregate principal am
of the Bonds Outstanding as of the Consent Record Date shall have conse
to and approved the execution of any such amendment, change or modifica
as provided in the Indenture, no Registered Owner of any Bond will have
right to object to any of the terms and provisions contained therein, or
operation thereof, or in any manner to question the propriety of
execution thereof, or to enjoin or restrain the Owner or the Issuer
executing the same or from taking any action pursuant to the provis
thereof, or the Trustee from consenting thereto. The Issuer will have
right to extend from time to time the period within which such consent
approval may be obtained from Registered Owners as of the Consent Re
Date. Upon the execution of any such amendment, change or modification,
Loan Documents or the Letter of Credit, as the case may be, will be an1
deemed to be modified, changed and amended in accordance therewith.
amendment, change or modification of the Loan Documents or the Letter
Letter of Credit, the Trustee will, at the request of the Issuer and
51
NUMATTER/105
The Issuer and the Trustee are not permitted under the Indenture
enter into or consent to any amendment, change or modification to any on{ more of the Loan Documents unless the Issuer and the Trustee have rece
an opinion of Bond Counsel to the effect that such amendment will not im
the exclusion from gross income for federal income tax purposes of
interest on the Bonds. The Issuer and the Trustee may rely upon an opil
of Bond Counsel to the effect that any such proposed amendment, change
modification will comply with the provisions of the Indenture.
Remarketing Agent
The Indenture requires that the Remarketing Agent be a ban1
institution or a member of the National Association of Securities Deal1
Inc. , in each case authorized by law to perform all the duties imposed '
it by the Indenture and the Remarketing Agreement. The Remarketing A,
may be removed from, and may at any time resign and be discharged of,
duties and obligations created by the Indenture under the circumstances
in the manner provided in the Indenture and in the Remarketing Agreement.
Defeasance
If there is paid or provision for payment is made to or for the bent
of the Registered Owners of the Bonds, the principal, premium, if any,
interest due or to become due thereon at the time and in the mar
stipulated in the Bonds, and if the Issuer keeps, performs and observes
covenants and promises in the Bonds and in the Indenture expressed as tc
kept, performed and observed by it or on its part, and there is paid to
Trustee, the Tender Agent , the Remarketing Agent and any Paying Agent
sums of money due or to become due according to the provisions of
Indenture, then the Indenture and the lien, rights and interests crei
thereby will cease, terminate and become null and void (except as to
surviving rights of registration, transfer or exchange of Bonds provided
in the Indenture and except for any rebate obligations), whereupon
Trustee will cancel and discharge the Indenture and execute and deliver
the Issuer and the Owner such instruments in writing as are requested by
Issuer or the Owner and requisite to discharge the Indenture, and reles
assign and deliver to the Issuer any and all the estate, right, title
otherwise subject to the Indenture, except moneys or securities held by
Trustee for the payment of the Purchase Price and the principal of, premi
if any, and interest on the Bonds; provided, however, while the Bonds b
interest at an Adjustable Interest Rate, the Bonds may not be defeased.
the Bonds are defeased for a period containing more than one Reset Peri
the Bonds will be defeased at the Maximum Permitted Rate.
interest in and to any and all rights assigned or pledged to the Trustee
Any Bond or portion thereof in principal amounts of $5,000 or
integral multiple thereof will, prior to the maturity or redemption d
thereof , be deemed to be paid and defeased within the meaning of
Indenture when payment of the principal of and the applicable redempt.
premium, if any, on such Bond or portion thereof, plus interest thereon
52
NUMATTER/lOS
the due date thereof (whether such due date be by reason of maturity or
redemption as provided in the Indenture, or otherwise), either:
(a) shall have been made or caused to be made in accordance 1
the terms thereof, but only from proceeds of the Letter of Credit to
extent the Letter of Credit or any Substitute Credit Facility
provides, or
(b) shall have been provided for by irrevocably depositing
the Trustee, in trust and irrevocably setting aside exclusively for
payment :
(i) Seasoned Funds which shall be sufficient to make I
payment when due, or
(ii) Seasoned Funds invested in Government Obligat
maturing as to principal and interest in such amounts and at ;
times as to insure the availability of sufficient moneys,
verified by an independent certified public accountant accept;
to the Issuer, to make such payment, and all necessary and pn
fees, compensation and expenses of the Trustee and any Paying a;
pertaining to the Bonds with respect to which such deposit is I
shall have been paid or the payment thereof provided for to
satisfaction of the Trustee and any Paying Agent.
Notwithstanding the foregoing, no deposit described under clause (b:
the second preceding paragraph will be deemed a payment of such Bonds
portions thereof as aforesaid until (1) proper notice of redemption of z
Bonds or portions thereof has been previously given in accordance with
Indenture to the Registered Owners of the Bonds or portions thereof, 01
the event that such Bonds are not by their terms subject to redemption
such time, there has been given to the Trustee, in a form satisfactor3 the Trustee, irrevocable instructions to mail a notice to such Registc Owners that the deposit required by (b) above has been made with the Tru:
and that said Bonds or portions thereof are deemed to have been paid
stating such maturity or redemption date (which redemption date must
before the next Purchase Date) or dates upon which moneys are to
available for the payment of the principal or redemption price,
applicable, on said Bonds, or (2) the maturity of such Bonds has occurred
At such time as the Bonds or portions thereof are deemed to be 1
under the Indenture, as described above, they will no longer be securec
or entitled to the benefits of the Indenture, except for the purposes
certain transfer and exchange provisions and except for any such pap
from such moneys or Government Obligations.
Notwithstanding any provisions of the Indenture, all such moneys
Government Obligations set aside and held in trust for the payment of Bc
(including interest and premium thereon, if any) will be applied to and 1
solely for the payment of the particular Bonds (including interest
53
NUMATTER/lOS
premium thereon, if any) with respect to which such moneys and Govern1
Obligations have been so set aside in trust. If such moneys or Govern
Obligations have been deposited or set aside with the Trustee for
payment of Bonds and interest and premium thereon, if any, and such BI
have not in fact been actually paid in full, no amendment to the provis
of the defeasance provisions of the Indenture shall be made without
consent of the Registered Owner of each Bond affected thereby.
TBE REIMBIJRS~ AG"NT
The following statements are a brief summary of certain provisions
the Reimbursement Agreement. The summary does not purport to be comp:
and reference is made to the Reimbursement Agreement for a full and comp
statement of the provisions thereof.
The Owner and the Bank will enter into the Reimbursement Agreement
provide for, among other things, reimbursement to the Bank of amounts d
under the Letter of Credit and security for such reimbursement obligat
The Owner covenants in the Reimbursement Agreement that (i) it will
certain actions regarding its continued existence and compliance with
and (ii) it will not, among other things, without the written consent of
Bank, (a) dispose of certain of the collateral pledged to the Bank under
Reimbursement Agreement, (b) create or permit the existence of any 1
security interest or other encumbrance on certain collateral pledged to
Bank under the Reimbursement Agreement or (c) amend or consent to amendment of the Loan Agreement 9 the Note or the Regulatory Agreement.
The general partners of the Owner are also the general partners of
related developers in connection with related projects, the 184-1
multifamily residential Encinitas Project in Encinitas, California, and
256-unit multifamily residential Golden Triangle Project in San Dit
California. In connection with each of these related projects, the re12
developers and the general partners thereof have executed certain secuj
documents and guarantees in favor of the Bank.
The occurrence of any of the following is an event of default under
Reimbursement Agreement, unless waived in writing by Bank pursuant to
terms of the Reimbursement Agreement:
(a) The Owner fails to pay when due any amount owing to the 1
under Reimbursement Agreement relating to the fees of the Bank,
Owner's reimbursement obligation to the Bank, and certain intel
payment obligations, and such failure remains unremedied for 10 days;
(b) The Owner fails to make any deposit or payment when due of
amount required to be deposited to the Reimbursement Account required
the Reimbursement Agreement, and such failure remains unremedied for
days ;
54
NUMATTER/lOS
(c) Any representation or warranty made by the Owner in
Reimbursement Agreement or in any other related document proves to 1 been incorrect in any material respect when made;
(d) The Owner or either or both of the general partners of
Owner fails to perform or observe any other term, covenant or agreer
contained in the Reimbursement Agreement, and such failure SI
continue for 30 days; provided, however, if such failure is capable
being cured but is not capable of being cured within 30 days and
Owner diligently attempts to cure said failure, the Bank may allow
Owner such additional time as may be necessary to cure said failure,
the Bank's sole discretion;
(e) The occurrence of an event of default under any First Secu
Documents or the Bank Security Documents, as defined in
Reimbursement Agreement, and continuance thereof for a period in ex,
of any applicable grace period specified therein;
(f) An Event of Default (as defined in the Indenture) has OCCUI
and is continuing under the Indenture;
(g) An Event of Default (as defined in the Loan Agreement)
occurred and is continuing under the Loan Agreement;
(h) Any material provision of the Reimbursement Agreement or
Bank Security Document at any time for any reason ceases to be valid
binding on the Owner, or is declared to be null and void, or
validity or enforceability thereof is contested by the Owner,
Guarantor (as defined in the Reimbursement Agreement) of the Ownc
obligations under the Reimbursement Agreement or any governmental agc
or authority (other than the Issuer), or the Owner denies that it
any or further liability or obligation under the Reimbursement Agree1
or any Bank Security Document;
(i) The Owner (i) fails to make any payment of any indebtednes!
described in the Reimbursement Agreement or to make any payment of
interest or premium thereon, when due (whether by scheduled matur.
shall continue after the applicable grace period, if any, specified
the agreement or instrument relating to such indebtedness, except to
extent that such payment is being contested as provided in
Reimbursement Agreement, or (ii) fails to perform or observe any tc
covenant or condition on its part to be performed or observed under
agreement or instrument relating to any such indebtedness when requj
to be performed or observed, and such failure shall continue after
applicable grace period, if any, specified in such agreement
instrument, if the effect of such failure to perform or observe is
accelerate, or to permit the acceleration of, the maturity of any z
indebtedness ;
required prepayment, acceleration, demand or otherwise) and such fail
55
NUMATTER/lOS
(j) The Owner or either of its general partners becomes ins017
or generally fails to pay, or admits in writing its inability to I
debts as they become due, or the Owner or either of its general partr
applies for , consents to, or acquiesces in the appointment of
trustee, receiver or other custodian for itself or any of its propel
or makes a general assignment for the benefit of creditors; or , in
receiver or other custodian is appointed for the Owner or either of
general partners, or for a substantial part of any of their property
is not discharged within 60 days; or any bankruptcy, reorganizat.
debt arrangement, or other case or proceeding under any bankruptq
insolvency law, or any dissolution or liquidation proceeding,
commenced in respect of the Owner or either of its general partners
any event occurs similar to any of the foregoing under the laws of
jurisdiction, and if such case or proceeding 1s not commenced by Owner or either of its general partners, it is consented to
acquiesced in by the Owner or either of the Partners or remains for
days undismissed;
absence of such application, consent or acquiescence, a trus’
(k) Any money judgment or judgments in the aggregate sum
$100,000 are rendered against the Owner or its assets; any writ
warrant of attachment, or similar process is entered or filed aga:
the Owner or any of its assets, and such judgment, writ, warrant
process remains unsatisfied or unsettled or unbonded for a period
60 days or in any event later than 5 days prior to the date of
proposed sale thereunder;
(1) A material breach of the agreements, covenants or obligat:
contained in any of certain documents related to the Reimburse1
Agreement has occurred and has not been cured or waived within
applicable grace period; or the enforceability of any such docw
shall be contested by any Guarantor, the Owner, any governmental agc
or authority (other than the Issuer), as the case may be, or
Guarantor denies that it has any or further liability or obliga.
under any Guaranty or the Collateral Account Agreement, as definec
the Reimbursement Agreement, or, upon and after the execution them
certain deeds of trust, as described in the Reimbursement Agreeml
executed in favor of the Bank by the related developers;
(m) Any related developer identified in the Reimbursen
Agreement (other than the Owner) (i) fails to make any payment
principal in respect of any indebtedness owed to the Bank (wl:
indebtedness is secured by a Lien on any Related Project, as such tc are defined in the Reimbursement Agreement) or to make any payment
any interest or premium thereon, when due (whether by schedt
maturity, required prepayment, acceleration, demand or otherwise)
such failure continues after the applicable grace period, if t
specified in the agreement or instrument relating to such indebtednc
or (ii) fails to perform or observe any term, covenant or condition
56
NUMATTER/lOS
its part to be performed or observed under any agreement or instrur
relating to any such indebtedness owed to the Bank when required tc
performed or observed, and such failure continues after the applic;
grace period, if any, specified in such agreement or instrument, if
effect of such failure to perform or observe is to accelerate, or
permit the Bank to accelerate, the maturity of such indebtedness;
(n) Any Guarantor becomes insolvent or generally fails to pay
admits in writing its inability to pay debts as they become due or
Guarantor applies for, consents to, or acquiesces in the appointment
a trustee, receiver or other custodian for itself or any Of
property, or makes a general assignment for the benefit of creditc
or, in the absence of such application, consent or acquiescence
trustee , receiver or other custodian is appointed for any Guarantor!
for a substantial part of any of its property and is not discha]
within 60 days; or any bankruptcy, reorganization, debt arrangement,
other case or proceeding under any bankruptcy or insolvency law, or
dissolution or liquidation proceeding, is commenced in respect of
Guarantor, or any event shall occur similar to any of the foregc
under the laws of any jurisdiction, and if such case or proceeding
not commenced by such Guarantor, it is consented to or acquiesced in
such Guarantor or remains for 60 days undismissed;
(0) The Owner, following any substantial damage to the Projc
fails to satisfy any condition precedent to the Bank's consent
Disbursements set forth in the Reimbursement Agreement within 30 c
after written notice from the Bank.
Upon the occurrence of any event of default under the Reimbursen
Agreement, the Bank may, at its option, do any or all of the following:
(a) At its option, send to the Trustee the notice to the Trur
prescribed under the Indenture requesting that the Trustee immediat
call all Bonds for mandatory redemption, and an amount equal to
amount drawn by the Trustee under the Letter of Credit with respect
such redemption shall become due and payable by the Owner immediat
after such draw, without presentment, demand, protest or ot
requirements of any kind; provided, however, that upon the occurrence
an Event of Default described in item (j) above, whether or not s
notice is delivered to the Trustee, an amount equal to the Stated Am0
under the Letter of Credit shall become immediately due and payable
the Owner, without presentment, demand, protest or other requirements
any kind. Amounts due under the Reimbursement Agreement must
immediately deposited in a special account with the Bank as collate
security to be held ratably for the benefit of the Bank and the hold
of the Bonds, for the reimbursement of any drawings under the Letter
Credit and other amounts due and payable under the Reimbursem
Agreement.
(b) The Bank may exercise any rights and remedies under the B
Security Documents, including without limitation initiation
57
NUMATTER/105
foreclosure proceedings thereunder, and the substitution of itself
lieu of the Owner as obligor under the Loan Agreement and owner of
Project subject to the rights of the Issuer and the Trustee set fortf
certain related documents.
Upon the occurrence of an Event of Default under the Reirnbursen Agreement, an mount equal to the sum of (i) the then Stated Amount of
Letter of Credit, (ii) any unreimbursed drawings thereunder, and (iii)
and all other amounts due to the Bank under the Letter of Credit,
Reimbursement Agreement or any of certain related documents shall bec
immediately due and payable by the Owner to the Bank, without presentmc
demand, protest or other requirements of any kind, and such amount shall
immediately deposited in a special account with the Bank as collatc
security to be held ratably for the benefit of the Bank and the holders
the Bonds, for the reimbursement of any drawings under the Letter of Crc
and other amounts due and payable under the Reimbursement Agreement.
Furthermore, upon the occurrence of an Event of Default, the Bank
(whether or not any foreclosure or trustee's proceedings have been comme~
or completed) take possession of the Project and employ security persol
to protect the Project from injury. All sums expended by the Bank to dc
shall be deemed to have been paid to the Owner and secured by the :
the Owner assigns to the Bank all of the Owner's interest in the Pro
Agreements, Permits and Licenses, as defined in the Reimbursement Agree]
but such assignment will not in the absence of an affirmative wri
assumption of all or part of the Project Agreements, Permits and License:
the Bank, be deemed to impose upon the Bank any of the Owner 's obligat
under such agreements , licenses or permits. In such event, the 0
appoints the Bank its attorney-in-fact to operate and manage the Projec,
the name of the Owner upon the occurrence and during the continuance of
Event of Default.
Security Documents. Effective upon the occurrence of an Event of Defa.
Upon the occurrence of an Event of Default, the Bank will have
right, to the extent permitted by law, to impound and take possessior
books, records, notes and other documents evidencing the Owner's accou
accounts receivable and other claims for payment of money arising
connection with the Project, to give notice to the obligors thereunde~
the Bank's interest therein, and to make direct collections on accounts 9 accounts receivable and claims.
In addition, the Bank may, at any time and from time to time, wit
notice to the Owner or any other person (any such notice being expre
waived) , set off and appropriate and apply, against and on account of
obligations and liabilities of the Owner to the Bank arising under
Reimbursement Agreement, any and all deposits and any other indebtednes:
any time held or owing by the Bank to or for the credit or the accoun
the Owner.
58
NUMATTER/lOS
In addition to the other remedies provided to the Bank in
Reimbursement Agreement, at law, in equity or otherwise , the Bank may, I
the occurrence of an Event of Default, (a) declare all sums then owing UI
the Note to be immediately due and payable by the Owner to the Bank, wit1
presentment, demand, protest or notice of any kind; provided that upon
occurrence of any Event of Default described in item (j) above, foregoing sums shall automatically become immediately due without any I
declaration by the Bank; and (b) enforce any and all rights, remedies
Liens granted under the First Security Documents.
The Bank may cure an event of default under the Indenture, 1
Agreement, Regulatory Agreement, any First Security Document or 1
Security Document; provided, however, that nothing shall obligate the 1
to cure such an event of default.
Where disputes have arisen which, in the good faith opinion of the Bz
may endanger the fulfillment or satisfaction of any condition or term in
Reimbursement Agreement or certain related documents, the Bank may advl
funds for the account of the Owner without prejudice to the Owner's rig1
if any, to recover said funds from the party to whom paid. Such adval.
may be pursuant to agreement or agreements in the form the Bank, in its E
discretion, deems proper, and may include agreements to indemnify a ti
insurer against possible assertion of lien claims or to pay disputed amo~
to contractors if the Owner is unable or unwilling to pay them. All E
paid or agreed to be paid pursuant to any such agreement shall be for
account of the Owner, shall be reimbursed to the Bank by the Owner L
demand (with interest at the' Bank Rate, commencing from the date of payme
until the date of reimbursement), and shall be secured (along with accl
interest) by the Bank Security Documents. The Bank must use its k
efforts to give notice within a reasonable time to the Owner of the Bar
advancement of funds for the account of the Owner. Notwithstanding
foregoing, the Bank's failure to give such notice will not prejudice any
the Bank's right under the Reimbursement Agreement.
Upon 24 hours prior telephonic or written notice to the Owner and
occurrence of (a) an Event of Default or potential default curable by
payment of money, or (b) any other matter described in the immediat
preceding paragraph, the Bank, without waiving any other right the Bank
have against the Owner, will have the right to make such cure by paym
from the Operating Account or from any other funds deposited with the B
by or on behalf of the Owner pursuant to the Collateral Agreem
(including, at the sole option of the Bank, funds on deposit in
Collateral Account).
59
NUMATTER/lOS
THE INTKRCRKDITOR AGREWENT
The following statements are a brief summary of certain provisions
the Intercreditor Agreement. This summary does not purport to be compl
and reference is made to the Intercreditor Agreement for a full and compl statement of such provisions.
So long as the Bank is not in default in the payment of any am(
required to be paid pursuant to the Letter of Credit, the follos
provisions will be applicable:
Upon the occurrence of an Event of Default under any of the 1
Documents or any of the Bank Documents, as defined in the Intercred:
Agreement, the Bank is authorized to take any and all actions and
exercise any and all rights, remedies and options which it may have UI
the Loan Documents, any Bank Documents or at law, including, wit1
limitation, the rights to declare the outstanding balance of the Note tc
immediately due and payable, to cause such default to be cured, or
foreclose the First Deed of Trust or the Third Deed of Trust and sell
Project or any part thereof (or accept a deed thereof in lieu
foreclosure), and sell or otherwise realize upon the property mortgal
pledged or assigned to or for the benefit of the Bank under the F:
Security Documents or the Bank Security Documents, without objection
interference by the Issuer or Trustee. The Issuer and Trustee t
authorize the Bank, in connection with the foreclosure by the Bank of
First Deed of Trust, to execute, file and/or record an instrw
subordinating the lien and charge of the First Deed of Trust and the o
First Security Documents to the lien and charge of the Second Deed of Trl
the Bank Security Documents and the Fourth Deed of Trust. Neither
foregoing nor anything set forth elsewhere in the Intercreditor Agree! will preclude or be deemed to preclude the Issuer or the Trustee
exercising any right or remedy under the Loan Agreement or the Regula
Agreement (other than to declare the outstanding balance of the Bonds or
Note to be due except as otherwise expressly set forth in this Agreement
under the Environmental Indemnity executed by the Owner in favor of
Issuer.
Except as otherwise expressly permitted by subparagraphs (b) and
below with respect to defaults by Owner under the Regulatory Agreem
neither the Issuer nor the Trustee shall, without the Bank's prior wri
consent:
(i) take any action to declare the outstanding balance of
Bonds or the Note to be due pursuant to the Indenture or the
Agreement or to foreclose the lien of the First Deed of Trust or to
the property covered thereby, or to enforce any other similar re.
against any of the property described in any of the First Secu
Documents: or
(ii) take any other action or enforce any other remedy against
Owner on account of any default by Owner with respect to any obliga
secured by the First security Documents (the "Collateral").
60
NUMATTER/105
(b) If the Owner defaults in the performance or observance of
covenant, agreement or obligation of the Owner set forth in the Regula!
Agreement , and if such default remains uncured for a period of 30 days a: the Owner and the Bank receive written notice from the Trustee stating
a Regulatory Agreement default has occurred and specifying the nature
such default (which 30-day period is referred to as the "Cure Period") ,
the Issuer and the Trustee shall thereafter have the right, without
Bank's consent, to bring an action to seek specific performance of
Owner's obligations under the Regulatory Agreement, unless the Trus
prior to the end of the Cure Period, determines , or receives an opinior
Bond Counsel to the effect either (x) that the failure to cure such def,
will not cause interest on the Bonds to become includable in the g
income of the recipients thereof for federal income tax purposes, or
that an extension of the Cure Period to a date specified in the opinion 7
not cause interest on the Bonds to become includable in the gross incomc
the recipients thereof for federal income tax purposes, in which case
Cure Period shall be extended to such date, and either:
(i) action to cure such default is instituted within the '
Period and diligently pursued thereafter until such default is cured,
(ii) if such default is not reasonably curable by the Bank wit:
first securing possession of the Project, the Bank (A) institu
within the Cure Period (which period shall be tolled during the pendl
of any stay or injunction on account of the bankruptcy of the Ownel
by reason of any judicial or administrative action), action to
performance of the Owner's obligations under the Regulatory Agreemen,
foreclosure proceedings or other action for the purpose of obtail
possession of the Project, (B) thereafter diligently pursues
proceedings, and (C) diligently pursues action to cure such def,
until such default is cured.
In the event of a default under the Regulatory Agreement which rem,
uncured after (i) written notice thereof to the Owner and the Bank and
expiration of the applicable cure period set forth in the Regula
Agreement, nothing in the Intercreditor Agreement shall restrict or in
way limit the right of the Issuer or the Trustee to take any ac
available under the Regulatory Agreement or at law or in equity in orde:
enforce the terms of the Regulatory Agreement and the Loan Agreement.
to the expiration of the applicable cure period therefor, both an opinio~
Bond Counsel in the form specified in subparagraph (b) above and evid,
reasonably satisfactory to it that the circumstances described in ei
subparagraph (b) (i) or subparagraph (b) (ii) above then exist with respec
such default, then neither the Issuer nor the Trustee shall take any ac
to declare the outstanding balance of the Bonds or the Note to be
pursuant to the Indenture or the Loan Agreement on account of such def;
or to foreclose any liens or security interests or enforce any other re]
against any of the Collateral.
long as the Trustee shall have received with respect to such default, p
61
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Nothing in the Intercreditor Agreement shall restrict or in any
limit the actions required to be taken by the Trustee or the Issuer w:
the Indenture in connection with any purchase of Bonds, or the payment
interest thereon, or in connection with any mandatory redemption of
Bonds at or prior to maturity, or the application by the Trustee of
funds held under the Indenture, or the submission of any claim and
collection and application of any funds paid to the Trustee under the Le
of Credit.
The Bank (or an affiliate of the Bank) may become the legal
beneficial owner of the Project by foreclosure, deed in lieu of foreclosl
or otherwise. If as a result of the occurrence of an Event of Default
the part of the Owner under any of the First Security Documents or anj
the Bank Documents, the Bank or such an affiliate (the "the Bank Affiliai
becomes the owner of the Project by foreclosure of the First Secul
Documents or by deed in lieu thereof and the Bonds remain outstanding, '
execute and deliver, in favor of the Trustee a deed of trust encumbering
Project (the "L/C Deed of Trust") securing the obligation of the Bank or
Bank Affiliate, as applicable, to maintain the Letter of Credit o
Substitute Credit Facility, and (ii) to execute and deliver, in record;
form, an instrument subordinating the lien and charge of the Second Deec
Trust, Bank Security Documents and the Fourth Deed of Trust to the lien
charge of the L/C Deed of Trust.
the Bank agrees (i) to execute and deliver, or cause the Bank Affiliatc
The Issuer and the Trustee shall, for all intents and purposes, deem
Bank or the Bank Affiliate .(collectively, the "the Bank Transferee") to
the "Owner" under the Loan Documents, as substitute obligor thereunder,
long as the Bank Transferee delivers to the Trustee , within 10 days ai
such transfer, (i) a written notice of such substitution, (ii) if I!
substitution results from a foreclosure under the First Security Documt
or deed in lieu thereof, then written confirmation that the L/C Deed
Trust and the subordination agreements have been recorded in the offic
instrument assuming and agreeing to perform Owner's obligations under
Loan Documents accruing from and after the date of such transfer; provic
however, that the Issuer and Trustee agree (and such assumption agreen
shall provide) that the Bank Transferee shall have no liability beyond
interest in the Project for any of the Owner's obligations under the 1
Documents, except for certain stated obligations.
records of the County of San Diego, California and (iii) a wril
The Bank Transferee may thereafter transfer its interest in the Pro:
to a third party who shall thereupon be deemed to be the "Owner" under
Loan Documents, as substitute obligor thereunder, provided that s
transferee delivers to the Trustee, concurrently with such transfer (i
written instrument assuming and agreeing to perform all obligations of
Owner under the Loan Documents (including the Owner's obligations under
Loan Agreement and the Regulatory Agreement) accruing from and after
date of such transfer, with the benefit, however, of any non-recou
provisions contained in the Loan Documents; (ii) an opinion of counsel
62
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the transferee that such transferee has duly assumed the obligations of
Owner under the Regulatory Agreement and that such obligations and
Regulatory Agreement are binding on the transferee; and (iii) an opinio~
Bond Counsel that such transfer will not adversely affect the exclusion
gross income of interest on the Bonds for federal income tax purposes. '
completion of any such transfer, the Bank Transferee shall thereafter
relieved of any further liability for the Owner's obligations under the
Documents accruing from and after the date of such transfer.
In accordance with the Loan Documents, the Issuer and Trustee appi
any transfer of title to the Project to a the Bank Transferee, or by a
Bank Transferee to a third party, so long as such transfer complies with
requirements set forth above, whichever is applicable.
The Issuer, Trustee and the Bank agree in the Intercreditor Agree1
that, so long as the Bank holds the beneficial interest under both the F:
Security Documents and the Bank Security Documents:
(a) the Owner's compliance with the obligations on its part to
performed under the Bank Security Documents shall be deemed to be
Owner's compliance with corresponding obligations under the First Secur
Documents notwithstanding that the terms of performance thereunder
differ from those set forth in the Bank Security Documents;
(b) all proceeds received by the Bank under the First Secul
Documents shall, notwithstanding the express provisions thereof, be appl
by the Bank in accordance with the priority specified in the Reimbursen
Agreement and the Bank Security Documents; and
(c) any amount which the Bank may advance under the First Secu~
Documents shall be deemed to be advanced under the Bank Security Documc
and the provisions of the Bank Security Documents shall govern the repay
of such advances notwithstanding the provisions of the First Secur
Do cumen t s .
EIUFORCEABILITP OF REMEDIES
The remedies available to the Trustee, the Issuer and the Registe
Owners of Bonds upon an event of default under the Loan Agreement or
Indenture are in many respects dependent upon judicial actions which
often subject to discretion and delay. Under existing law and judic
decisions, including specifically Title 11 of the United States Code,
Agreement and the other documents described herein may not be read
available or may be limited. The various legal opinions to be delivered
connection with the delivery of the Bonds will be qualified as to
enforceability of the various legal instruments by limitations imposed
principles of equity and by bankruptcy, reorganization, insolven
moratorium or other similar laws affecting the rights of creditors general
remedies specified by the Federal Bankruptcy Code, the Indenture, the I
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NO LITIGATION
At closing, the Issuer will deliver a certificate to the effect that
the knowledge of the officer signing such certificate, there is
controversy or litigation of any nature pending against the Issuer
restrain or enjoin the issuance, sale, execution or delivery of the Bond,
in any way contesting or affecting the validity of the Bonds,
proceedings of the Issuer taken with respect to the issuance or :
thereof, the pledge or application of any moneys or securities provided
the payment of the Bonds and the existence or powers of the Issuer or
title of any officers of the Issuer to their respective positions.
cmTAIN LEGAL HATTERS
Legal matters related to the authorization, issuance, sale and deli.
of the Bonds are subject to the approval of Stradling, Yocca, Carlso
Rauth, a Professional Corporation, Newport Beach, California, Bond Coun!
Certain legal matters will be passed upon €or the Underwriter by Broh
Wood, San Francisco, California, Counsel to the Underwriter. The paymenl
the fees of Bond Counsel and Underwriter Is Counsel are contingent on
issuance and delivery of the Bonds. Certain legal matters will be pas
upon for the Bank by O'Melveny & Myers , Los Angeles , California, Counsel
the Bank, and for the Owner by Gibson, Dunn & Crutcher, Imine, Californis
TBX MATTKRS
The Tax Reform Act of 1986 (the "Tax Reform Act") imposed restrictj
upon the issuance of tax-exempt obligations which were not contained in
1954 Code, and which are now set forth in the 1986 Code. The Tax Reform
contains several "transition rules," one of which is applicable to the Bc
which are being issued to refund bonds issued before August 16, 1986.
Pursuant to Section 1313 of the Tax Reform Act, certain provisions
the 1954 Code and the 1986 Code will be applicable with respect to
Bonds, including a requirement that 20 percent (15 percent for proje
located in targeted areas) or more of the completed rental units in
project financed or refinanced by an issue of bonds be occupied by pers
of low or moderate income continuously during a specified period provi
under the 1954 Code, and that such a project be rented or available
rental on a continuous basis during a specified period provided under
1954 Code.
Failure to satisfy certain requirements of the 1954 Code on a continu
basis, unless corrected within a reasonable period of time, will cause 1
of the tax-exempt status of the interest on the Bonds retroactive to
date of issuance of the Bonds. In order to assure compliance with the 1
Code and the 1986 Code, the Issuer will require, among other things, t
the Owner enter into the Regulatory Agreement. The Owner will enter i
64
NUMATTER/105
the Regulatory Agreement containing provisions designed to req1
compliance with certain restrictions under the 1954 Code and the 1986 Cc
In addition, the Issuer and the Owner have covenanted to comply with
applicable requirements of the 1954 Code and the 1986 Code. Ii
Determination of Taxability occurs with respect to the Bonds, the Inden'
provides for redemption of the Bonds.
In rendering its opinion as to the exclusion from gross income
federal income tax purposes of interest on the Bonds, Bond Counsel H
assume compliance with the provisions of the 1954 Code and the 1986 (
with respect to the Bonds.
The Loan Agreement, the Regulatory Agreement and the Indenture coni
restrictions designed to assure compliance with the 1954 Code and the :
Code. If such requirements are not complied with, it is possible that
interest on the Bonds may not be excluded from gross income retroactive
the date of issue of the Bonds. In the event of noncompliance with I
requirements, enforcement remedies available to the Issuer and/or
Registered Owners of the Bonds may be limited by applicable provisions
law and may, therefore, be inadequate to prevent the loss of the tax-ext
status of interest on the Bonds.
In the opinion of Stradling, Yocca, Carlson & Rauth, a Professic
Corporation, Newport Beach, California, Bond Counsel, under exist
statutes, regulations, rulings and judicial decisions, interest on the Bc
is excluded from gross income for federal income tax purposes except du~
any period while a Bond is held by a "substantial user," or a "re12
person," within the meaning of Section 103(b)(13) of the 1954 Code, of
property financed by proceeds of the Bonds and is not an item of
preference for purposes of calculating the federal alternative minimum
imposed on individualo and corporations; however, Bond Counsel notes tl
with respect to corporations, interest on the Bonds may be included as
adjustment in the calculation of alternative minimum taxable income wh
may affect a corporation's alternative minimum tax liability. In
further opinion of Bond Counsel, interest on the Bonds is exempt f
California personal income tax.
The opinions expressed by Bond Counsel are based on an analysis
existing statutes, regulations, rulings and judicial decisions. S
opinions may be affected by actions taken (or not taken) or events occurr
(or not occurring) after the date hereof. Bond Counsel has not underta
to determine, or to inform any person, whether any such actions or eve
are taken or do occur.
Additionally, Bond Counsel's opinions are based upon cert
representations made by the Issuer, the Owner and others, and are subject
the condition that the Issuer and the Owner comply with certain covena
and the requirements of the 1954 Code and the 1986 Code that must
satisfied subsequent to the issuance of the Bonds to assure that interest
the Bonds will remain excludable from gross income for federal income
65
NUMATTER/105
purposes. Failure to comply with such requirements may cause interest
the Bonds to be included in gross income for federal income tax purpc
retroactive to the date of issuance of the Bonds. The Issuer and the OU
have covenanted to comply with all such requirements.
Although Bond Counsel has rendered an opinion that interest on the Bc
is excluded from gross income for federal income tax purposes , as descri
the Bonds may otherwise affect the tax liability of certain persons. 1
Counsel expresses no opinion regarding any such tax consequenc
Accordingly, all potential purchasers of the Bonds should consult their
advisors before purchasing any of the Bonds with respect to collateral
consequences.
above, the ownership of the Bonds and the accrual or receipt of interest
UNDERWRITING
Dean Witter Reynolds Inc. (the "Underwriter") has agreed, subject
certain conditions, to purchase the Bonds from the Issuer at 100% of
principal amount thereof and will be paid a fee by the Owner upon deli7
of the Bonds in the amount of $63,680.
The obligation of the Underwriter to purchase the Bonds is subject
certain terms and conditions set forth in the purchase contract entered :
among the Underwriter, the Owner and the Issuer, The Bonds may be of fr
and sold to certain dealers, banks and others at prices lower than
initial offering prices, and such initial offering prices may be chang
from time to time, by the Underwriter.
RATING
The Bonds have been rated " '' by Moody's. Such rating ref 16
only the views of such organization at the time such rating is given,
the Issuer makes no representation as to the appropriateness of the ratj
An explanation of the significance of such rating may be obtained only f
such organization. Such rating is not a recommendation to buy, sell or t
securities. The rating represents a judgment as to the likelihood of tin
payment of the Bonds according to their terms but does not address
likelihood of redemption or other payments on the Bonds prior to tk
stated maturity. There is no assurance that such rating will continue
any given period of time or that it will not be revised downward
withdrawn entirely by such organization, if in the judgment of s
organization, circumstances so warrant. Any such downward revision
withdrawal of such rating may have an adverse effect on the market price
the Bonds.
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NUMATTER/105
MISCELTANEOUS
Certain provisions of the Indenture, the Letter of Credit,
Reimbursement Agreement, the Intercreditor Agreement, the Loan Agreemc
the Regulatory Agreement and certain other documents related thereto
summarized in this Official Statement. Such summaries do not purport tc
comprehensive or definitive, and reference is made to such documents fc
full and complete statement of their respective provisions.
The information contained above is subject to change without notice
no implication is to be derived therefrom or from the sale of the Bonds t
there has been no change in the affairs of the Issuer, the Owner nor
Bank from the date hereof. Pursuant to the Indenture, the Trustee
covenanted to keep proper books of record and account in which accurate
complete entries will be made of all dealings and transactions under
Indenture. The Indenture requires that such books, along with the Indenl
and other documents relating to the Bonds, be available for inspection
all reasonable times and under reasonable circumstances by the Issuer,
Bank, the Owner and by any Registered Owner or its agent or representai
duly authorized in writing.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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This Official Statement is submitted in connection with the sale of
securities referred to herein and may not be reproduced or used, as a w1
or in part, for any other purpose. Any statements in this Offil
Statement involving matters of opinion, whether or not expressly so sta
are intended as such and not as representations of fact. This Offit
Statement is not to be construed as a contract or agreement between
Issuer and the purchasers or owners of any of the Bonds.
The execution and delivery of this Official Statement has been 4
authorized by the Issuer.
CITY OF CARLSBAD
BY Mayor
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APPENDIX A
DEFINITIONS
The following definitions govern the interpretation of capitalized tl
used herein except where (i) such terms are otherwise defined herein or (
reference is made to a separate definition (e.g., "as defined in
Reimbursement Agreement"):
"Act of Bankruptcy" means the filing of a petition in bankruptcy (or
commencement of a bankruptcy or similar proceeding) by or against the 01
or any general partner or guarantor of the Owner under any applic:
bankruptcy, insolvency or similar law as now or hereafter in effect.
"Act of Bankruptcy of Bank" means that the Bank has become insolvent
has failed to pay its debts generally as such debts become due (includ
its obligations to pay drawings under the Letter of Credit) or has admit
in writing its inability to pay any of its indebtedness or has consented
or has petitioned or applied to any authority for the appointment 0:
receiver, liquidator, trustee or similar official for itself or for all
any substantial part of its properties or assets or that any such trust
receiver, liquidator or similar official has been appointed or t
insolvency, reorganization, arrangement or liquidation proceedings
similar proceedings) have been instituted by or against the Bank unless
appropriate regulatory agency has confirmed in writing the effectiveness the Letter of Credit.
"Adjustable Interest Rate" means the adjustable interest rate determi
pursuant to the terms of the Indenture.
"Adjustable Interest Rate Conversion Date" means the day immediat
following the final day of a Reset Period on which interest on the Bonds
converted from a Reset Rate to an Adjustable Interest Rate as provided
the Indenture or any Mandatory Tender Date on which interest on the Bonds
converted to an Adjustable Interest Rate as provided in the Indenture.
"Adjustable Interest Rate Period" means (i) the initial per
commencing on the date of the initial issuance and delivery of the Bonds ;
continuing to and including Tuesday, June 1, 1993, and (ii) after June
1993, and after any Adjustable Interest Rate Conversion Date, the per
from and including Wednesday of each week through and including
following Tuesday; provided, however, that the Remarketing Agent may,
written notice to the Issuer, the Trustee, the Bank, the Tender Agent I
the Owner, cause the Adjustable Interest Rate Period to commence on Tuesl
of each week to end the following Monday, to commence on Thursday of e,
week to end the following Wednesday, or to commence on Friday of each wm to end the following Thursday.
"Adjusted Income" means the adjusted income of a person together wj
the adjusted income of all persons who intend to reside with such person
A-1
NUMATTER/105
one residential unit, as calculated in the manner prescribed in Regula1
Section 1.167(k)-3(b)(3) in effect as of the date of delivery of the Bondr
"Administration Agreement" means the Administration Agreement dated
of May 1, 1993 among the Issuer, the Owner and the Program Administra,
and any amendments thereto.
"Affordable Rent" means a monthly rent which does not exceed 302
one-twelfth of the maximum adjusted annual income of the household
appropriate size which is deemed to be a "lower income" family in the Co.
of San Diego for purposes of the leased housing program established UI
Section 8 of the United States Housing Act of 1937, as amended, based I
the following appropriate household sizes for various types of residenl
units in the Project and assuming 80% as the percentage of median gl
income which qualifies as "lower income":
Residential Unit Number of Persons to Familv
One Bedroom
Two Bedroom
2
4
Such amounts will be further reduced by a reduction for tenant-]
utilities based on the "Utility Rate Schedule" established for the (
Housing Authority's Section 8 Rental Assistance Program. In no event si
the monthly rent exceed 90% of rents charged for units in the Project 01
than Low and Moderate Units.
"Area" means the San Diego, California Primary Metropolitan Statisti
Area.
"Bank" means Bank of America National Trust and Savings Association,
its successors and assigns acting as the issuer of the Letter of Credit,
the issuer of a Substitute Credit Facility, if one has been delivered
provided in the Indenture.
"Beneficial Owners" means the actual purchasers of the Bonds wf
ownership interests are recorded on the books of the .DTC Participants.
"Bond Counsel" means an attorney or a firm of attorneys of nationz
recognized standing in matters pertaining to the tax status of interest
bonds issued by states and their political subdivisions, selected by
Issuer and duly admitted to the practice of law before the highest court
any state of the United States of America or the District of Columbia.
"Bondholder" or "Registered Owner" means the person or persons in wh
name or names a Bond shall be registered on the books of the Trustee k
for that purpose in accordance with the terms of the Indenture.
"Bond Issuance Date" means the date of initial issuance and sale of
Bonds (May 27, 1993).
A-2
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"Business Day" means any day other than a Saturday, a Sunday, or a
on which banks in the city in which the Principal Office of the Trustee
the city in which the office of the Bank is located which is designated
the presentation of drawings under the Letter of Credit are authorized
obligated by law or executive order to close, or a day on which the New 1
Stock Exchange is closed. [Needs reconciliation with definition in Lei
of Credit.]
the Tender Agent is located or a day on which the banking institutions
"Code" or "1986 Code" means the Internal Revenue Code of 1986,
amended, and any regulations, rulings, judicial decisions, and notic
announcements, and other releases of the United States Treasury Departn
or Internal Revenue Service interpreting and construing it.
"Conversion" means establishment of the interest rate on the Bonds
the Fixed Rate pursuant to the terms of the Indenture.
"Conversion Date" means any Interest Payment Date while the Bonds 1:
interest at an Adjustable Interest Rate or the day immediately following
final day of any Reset Period, in either case, on which interest on
Bonds is converted to a Fixed Rate as provided in the Indenture.
"Counsel" means an attorney at law or a firm of attorneys (who may bc
employee of or counsel to the Issuer or the Owner or the Trustee) (
admitted to the practice of law before the highest court of any state of
United States of America or of the District of Columbia.
"Demand Purchase Option" means the option of the Registered Owners
have Bonds Outstanding purchased by the Tender Agent in accordance with
Indenture.
"Determination of Taxability" means (1) the failure of the Bank or
Owner either to consent in writing within 45 days to any amendment to
Indenture, the Loan Agreement or the Regulatory Agreement which in
written opinion of Bond Counsel addressed to the Issuer, the Trustee and
Bank is necessary to preserve the exclusion from gross income of interest
the Bonds for federal income tax purposes, or (2) the enactment
legislation or a final judgment or order of a court of origi
jurisdiction, a final order of any other court of competent jurisdiction,
a final ruling or decision of the Internal Revenue Service, in any such c
to the effect that the interest on any of the Bonds (other than interest
any Bond for any period during which such Bond is held by a "substant
user" of any facility financed with the proceeds of the Bonds or a "rela
person," as such terms are used in Section 103(b)(13) of the Prior Code
except for any alternative minimum or preference tax) is not excludable
federal income tax purposes from the gross income of the recipients ther
subject to federal income taxes as a result of action or inaction of
Owner while the Bonds bear interest at an Adjustable Interest Rate and a
result of any action during a Reset Period or after the Conversion Da
With respect to clause (2) above, a judgment or order of a court or a rul
A-3
NUMATTER/lOS
or decision of the Internal Revenue Service shall be considered final (
if no appeal or action for judicial review has been filed and the time
filing such appeal or action has expired.
"DTC Participants" means securities brokers and dealers, banks, t,
companies, clearing corporations and other organizations maintail
accounts with DTC.
"Extraordinary Services" and "Extraordinary Expenses" mean all serv:
reasonably required to be rendered and all fees and reasonable expel
incurred by the Trustee, the Tender Agent, the Paying Agent or their cow
under the Indenture or other agreements referred to therein, other i
Ordinary Services and Ordinary Expenses.
"First Deed of Trust" means, collectively, the First Deed of Trust
Assignment of Rents and Fixture Filing executed by the Owner and grantin
security interest in the Project to the deed trustee for the benefit of
Trustee to secure the Owner's obligations under the Note, the First Secux
Agreement and the First Financing Statement executed by the Owner for
benefit of the Bank and the Trustee,
"Fixed Rate" means the interest rate borne by the Bonds after
Conversion Date and until the maturity date of the Bonds as provided
Section 213 hereof.
"Government Obligations" means noncallable , nonprepayable (i) dire
general obligations of the United States of America, or (ii) any obligati
unconditionally guaranteed as to the full and timely payment of all amou
due thereunder by the full faith and credit of the United States of her
(including obligations held in book-entry form), but specifically exclud
any mutual funds or unit investment trusts invested in such obligations.
"Interest Payment Date" means (i) while the Bonds bear interest at
Adjustable Interest Rate, the first Business Day of each month commenc
July 1, 1993 for the first Interest Payment Date, and commencing with
first Business Day of the month following an Adjustable Interest R
Conversion Date, (ii) during a Reset Period of less than one year, the fi
Business Day following the last day of the Reset Period, (iii) during
Reset Period of one year or longer, June 1 and December 1 of each ye
commencing on the June 1 or December 1 next following the applicable Re
Date, and (iv) after the Conversion Date, June 1 and December 1 of e
year, commencing on the June 1 or December 1 next following the Convers
Date.
"Interest Period" means an Adjustable Interest Rate Period, a Re
Period or the Fixed Rate Period.
"Loan Documents" means the documents identified in the Reimbursem. Agreement.
A-4
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"Lower Income Tenants" means persons or families with an Adjusted In(
which does not exceed 80% of the Median Income for the Area. In no el
will the occupants of a unit be considered to be Lower-Income Tenants if
of such occupants are students (as defined in Section 151(c)(4) of
Code), no one of whom is entitled to file a joint return under Section (
of the Code.
"Lower Income Units" means dwelling units in the Project designated
occupancy by Lower Income Tenants pursuant to the Regulatory Agreement.
"Mandatory Tender Date" means the date on which the Owner or, ur
certain circumstances, the Bank, elects to require Registered Owners
tender their Bonds as described under the heading "THE BONDS - Redemptic
Mandatory Tender in Lieu of Redemption" herein.
"Maximum Permitted Rate" means ten percent (10%) per year (computed
the basis of a 365- or 366-day year, as applicable, for the actual numbel
daya elapsed): provided, however, that the Trustee will designate a I
higher than ten percent (10%) per year as the Maximum Permitted Rate if
Trustee receives (i) evidence satisfactory to the Trustee that the st:
amount of the Letter of Credit has been increased by an amount equal to
principal amount of the Bonds Outstanding times the increase in the inter
rate for the number of days of interest coverage then required to
maintained under the Letter of Credit, and (ii) an opinion of Bond Corn
to the effect that the designation of such higher Maximum Permitted Rate
the determination that no Maximum Permitted Rate will be applicable to
Bonds will not violate any provision of any law applicable to the Bonds
the Loan.
"Median Income for the Area" means the median income for the Area
most recently determined by the Secretary of Housing and Urban Developn
under Section 8 of the United States Housing Act of 1937, as amended, or
programs under Section 8 are terminated, median income for the 1
determined under the method used by the Secretary prior to such terminatio
"Moody's" means Moody's Investors Service, a corporation organized
existing under the laws of the State of Delaware, its successors and th
assigns, and, if such corporation shall for any reason no longer perform
function of a securities rating agency, "Moody's'' shall be deemed to re
to any other nationally recognized rating agency designated by the Iss
with the approval of the Owner and the Bank.
"Ordinary Services" and "Ordinary Expenses" mean those services to
rendered by and those actual and reasonable fees and expenses, includ
without limitation, actual and reasonable fees and expenses of counsel,
be incurred by the Trustee, any persons engaged to enable the Trustee
perform its obligations under Article V of the Indenture, any Paying Ag
or the Tender Agent in performing such duties as they may have under
Indenture, including, but not limited to, the cost of printing any Bond
any services rendered by the Trustee or any expenses incurred in connect
A-5
NUMATTER/lOS
with any exchange or transfer of Bonds provided for in the Indenture under other agreements ref erred to in the Indenture, for which the Trus
any Paying Agent or Tender Agent shall be compensated.
"Outstanding" or "Bonds Outstanding" means, as of the time in quest:
all Bonds authenticated and delivered under the Indenture, except,:
(a) Bonds cancelled or required to be cancelled;
(b) Bonds paid or deemed to have been paid in accordance with
Indenture ;
(c) Bonds in substitution for which other Bonds have 't
authenticated and delivered pursuant to the Indenture; and
(d) Any Bonds not tendered for purchase when required under
provisions of the Indenture which are deemed tendered.
In determining whether the Registered Owners of a requisite aggreg
principal amount of Outstanding Bonds have concurred in any request, demz
authorization, direction, notice, consent or waiver under the provisions
the Indenture , Bonds which are owned by the Owner, the Issuer or any ot
obligor on the Bonds, or any affiliate of any one of said entities (for
purpose of this definition an "affiliate" of any specified Person means
other Person directly or indirectly controlling or controlled by or un
direct or indirect common control with such specified Person) will
disregarded and deemed not to be Outstanding under the Indenture for
purpose of any such determination; provided, however, that the Trustee w
not be deemed to have knowledge that any Bond is owned by any such obli
or affiliate unless the Issuer or the Owner is the Registered Owner or
Trustee has received written notice that any other Registered Owner is s
an obligor or affiliate; provided, further, that Pledged Bonds will
deemed Outstanding and shall, at the option of the Bank, be voted by
Bank or, if the Bank declines to vote such Bonds, be voted in proportion
the vote of Outstanding Bonds other than Pledged Bonds. For purposes
this definition, "control" when used with respect to any specified Per
means the power to direct the management and policies of such Pers
directly or indirectly, whether through the ownership of voting securiti
by contract or otherwise; and the terms "controlling" and "controlled" h
meanings correlative to the foregoing. Bonds so owned which have b
pledged in good faith may be regarded as Outstanding if the pledgee w:
establish to the satisfaction of the Trustee the pledgee's right to v(
such Bonds and that the pledgee is not a Person directly or indirec,
controlling or controlled by, or under direct or indirect common cont:
with, the Owner, the Issuer or any other obligor on the Bonds. In case ol
of Counsel will be full protection to the Trustee. For the purposes of tl
paragraph, the Bank will be deemed to be an "obligor on the Bonds" if it 1
been substituted in lieu of the Owner as obligor under the Loan Agreemc
and as Owner of the Project.
dispute as to such right, any decision by the Trustee taken upon the adv:
A-6
NUMATTER/lOS
"Owner Representative" means the person or persons at the 1
designated by the Owner to act on behalf of the Owner by written certific
furnished to the Issuer and the Trustee containing the specimen signatl
of such person or persons and signed by a co-trustee of the Owner. f
certificate may designate an alternate or alternates.
"Permitted Investments" means any of the following which at the time
legal investments for the Issuer under the laws of the State for the mol
held under the Indenture then proposed to be invested therl
(i) Government Obligations; (ii) time or demand deposits in any Un
States bank or trust company, including the Trustee, having aggreg
capital and surplus of at least $50,000,000 and authorized to acc
deposits of public funds (including the banking department of the Trur
and the Bank), which are secured at all times by bonds or other obligati
which are authorized by law as security for public deposits; (i
obligations, participations or other instruments of , or issued by, Fedt
National Mortgage Association, or issued by a United States agency
instrumentality; (iv) evidence of indebtedness of corporations authorizec
the provisions of Section 1364 of the California Financial Code, wl
include an affiliate of the Trustee, provided such indebtedness is rated,
is on a parity with obligations that are rated "P-1" or "A-1" b;
nationally recognized rating agency; (v) repurchase agreements with
banking or financial institution, or with any governmental bond de: recognized as a primary dealer by the Federal Reserve Bank of New Yc
provided (a) the long-term debt of the provider of any such agreement
rated, at the time of investment, at least "A" or better by two of the :
nationally recognized rating agencies, and that the short-term debt of
provider is rated either "Al" by Standard & Poor's or "Pl" by Moody's,
(b)(l) any such agreement is collateralized with obligations referred to
(i), (ii) or (iii) above and has a value, determined week
marked-to-market at the current market price plus accrued interest, equal
at least 102% of the principal amount invested under such agreement, wk
collateral shall be held by the Trustee (2) is registered in the name o
third-party trustee during the term of such agreement and (3) is not sub:
to liens or claims of third parties; provided that, any such agreement sk
include a provision to the effect that in the event the long-term c
rating of the provider of such agreement is downgraded below "A" by two
of the four nationally recognized rating agencies, or the short-term debt
the provider is downgraded below "Al" by Standard & Poor Is or "P1"
agreement; (vi) a promissory note, investment agreement or other obligal
of a bank holding company or other financial institution whose long-1
obligations are rated at least as high as the then rating on the Bon
(vii) obligations the interest on which is excludable from gross income
federal income tax purposes under the Code and rated not less than "Aaa/P
or "AAA/A-l ,11 including money market funds composed solely of s
obligations; (viii) any taxable money market fund invested solely
Government Obligations (including any money market fund sponsored by
Trustee or its affiliates) with a rating of not less than "Aaa/P-1"
"AAA/A-l"; or (ix) any other investment approved by the Bank.
Moody's, the Trustee has the right to withdraw all funds invested in 6
A-7
NUMATTER/lOS
"Person" means a natural person, firm, partnership, associati
corporation, trust or public body.
"Pledge Agreement" means that certain Bond Pledge and Security Agreer
dated as of May 1 , 1993 among the Owner, the Tender Agent and the Bank 5
respect to the Pledged Bonds and any amendments thereto.
"Pledged Bond" means a Bond registered in the name of the Owner ant which the Bank has a security interest in accordance with the provisionlr
the Pledge Agreement as a result of such Bond having been purchased 1
funds drawn under the Letter of Credit.
"Prepayments" means (a) any payments under the Letter of Crc
representing prepayments paid by or on behalf of the Owner, whether optic
or mandatory, of the principal of the Note together with any acc~
the Owner on the Note; and (c) any proceeds or other amounts obtained by
Trustee or the Issuer through the exercise of the remedies provided in
Loan Documents (excluding amounts payable for fees, expenses
indemnification of the Issuer and the Trustee) upon the occurrence of
event of default by the Owner.
interest paid thereon; (b) any prepayment premiums paid by or on behalf
"Principal Off ice" means (i) when used with respect to the Trustee ,
principal corporate trust office of the Trustee, which as of the 1
Issuance Date is located in San Francisco, California (except for paymt
on the Bonds and transfers and exchanges thereof , which shall take place
the office of the Tender Agent) and (ii) when used with respect to
Paying Agent, other than the Tender Agent , means the off ice of such Pag
Agent as designated by notice given by the Trustee to the Registered Ow
and (iii) when used with respect to the Tender Agent appointed pursuant
the Indenture means the office of such Tender Agent as designated in
Indenture or by notice given by the Trustee to the Registered Owners,
(iv) when used with respect to the Remarketing Agent, means the off ice
Registered Owners.
the Remarketing Agent as designated by notice given by the Trustee to
"Prior Bonds" means the Issuer's Multifamily Housing Revenue Bor
Series A of 1985 (La Costa Apartments Project).
"Prior Bonds Trustee" means First Trust of California, Natic
Association, as successor to the Bank of California, N.A. , a natic
banking association, as trustee under that certain Indenture of Trust d: as of April 1, 1985, between the Issuer and the Prior Bonds Trustee.
"Prior Code" or "1954 Code" means the Internal Revenue Code of 1954,
amended, as in effect on the day before the date of enactment of the
Reform Act of 1986, and any regulations, rulings, judicial decisions
notices, announcements and other releases of the United States Treas
Department or Internal Revenue Service interpreting or construing it.
NUMATTER/lOS
A-8
"Purchase Date" means any Business Day on which Bonds are subject
purchase pursuant to the tender provisions or the Demand Purchase Op,
provisions of the Indenture.
"Purchase Price" means with respect to a Bond required to be tenderec
subject to purchase pursuant to the Indenture, the principal amount of E Bond plus accrued interest thereon, if any, to the Purchase Date.
"Rating Agency" means Moody's, if Moody's then rates the Bor
Standard & Poor '6, if Standard & Poor's then rates the Bonds, and any ol
nationally recognized rating agency agreed to by the Issuer, the Bank
the Owner.
"Record Date" means (i) while the Bonds bear interest at an Adjust;
Interest Rate and during a Reset Period of less than six months, the f:
day next preceding each Interest Payment Date, and (ii) during a RE
Period of six months or longer and after the Conversion Date, the close
business on the fifteenth day of the calendar month next preceding E
Interest Payment Date. With respect to any payment of defaulted interest
special Record Date will be established in accordance with the provisions
the Indenture.
"Regulations" or "Treasury Regulations" means the income tax regulatj
promulgated or proposed from time to time by the United States Department
the Treasury with respect to obligations issued pursuant to the Prior (
or the Code.
"Remarketing Agent" means the remarketing agent appointed in accorda
with the provisions of the Indenture, initially Dean Witter Reynolds Inc.
"Reset Date" means any Interest Payment Date while the Bonds b
interest at an Adjustable Interest Rate or the day immediately following
final day of a Reset Period on which interest on the Bonds is reset tl
Reset Date for the next succeeding Reset Period as provided in
Indenture, or any Mandatory Tender Date on which interest on the Bonds
converted to a Reset Rate as provided in the Indenture.
"Reset Period" means any period during which the Bonds bear interest
a Reset Rate.
"Reset Rate" means the interest rate to be borne by the Bonds durinl
Reset Period in accordance with the Indenture.
"Seasoned Funds" means any moneys (i) derived from proceeds of the BO
held by the Trustee in a segregated account from the date of issuance of
Bonds, or (ii) paid under the Letter of Credit or any Substitute Cre
Facility, or (iii) derived from proceeds from the remarketing of the Bo
to or the purchase of the Bonds by any entity or by any person, other t.
the Owner or the Issuer, or (iv) which constitute proceeds of refund:
bonds or moneys from any other source so long as the Trustee receives
A-9
NUMATTER/lOS
opinion from nationally recognized bankruptcy counsel acceptable to
Rating Agency prior to the giving of notice of redemption of any Bonds
the effect that (a) such moneys do not constitute a loan to or asset of
Owner or the Issuer, and (b) such moneys are not recapturable a
preferential payment by any trustee in bankruptcy under the United St
Bankruptcy Code in the event of an Act of Bankruptcy, or (v) moneys prov
by the Owner and held on deposit in the Seasoned Funds Account of
Revenue Fund for at least 366 days, or such shorter period as ma3
permitted by an opinion of nationally recognized bankruptcy cou
acceptable to the Rating Agency then maintaining the rating on the Bo
prior to the date notice of redemption of the Bonds to be redeemed with
moneys is required to be given during which no Act of Bankruptcy shall
occurred; provided that an opinion of nationally recognized bankru
counsel acceptable to the Rating Agency is received by the Trustee to
effect that such moneys are not recapturable as a preferential payment '
trustee in bankruptcy in the event of an Act of Bankruptcy, or (vi)
investment of any of the moneys above once they constitute Seasoned FUI
or (vii) which constitute any combination of the foregoing.
"Standard & Poor's" means Standard & Poor's Corporation, a corpora
organized and existing under the laws of the State of Delaware,
successors and their assigns, and, if such corporation shall for any re'
no longer perform the function of a securities rating agency, Standar
Poor's shall be deemed to refer to any other nationally recognized ra
agency designated by the Issuer with the approval of the Owner and the Be
"Substitute Credit Facil'ity" means any credit facility delivered to
Trustee to secure the Bonds (other than any amendment of the Letter
Credit, the issuance of a new letter of credit by the Bank, the issuancl
any letter of credit confirming the Letter of Credit or the issuance of
other credit facility in addition to the Letter of Credit that enhances
then-rating on the Bonds, which satisfies the criteria set forth in
Indenture.
"Supplemental Indenture" means any agreement hereafter authorized
entered into between the Issuer and the Trustee which amends, modifier
supplements and forms a part of the Indenture.
"Tender Agent" means First Trust of California, National Associat:
c/o IBJ Schroeder Bank and Trust Company, acting in the capacity of Tel
Agent under the Indenture, or any successor tender agent appointed
accordance with the terms of the Indenture.
"Trust Estate" means the property conveyed to the Trustee pursuant
the Granting Clauses of the Indenture.
"Very Low Income Tenants" means Lower Income Tenants whose Adjur
Income does not exceed 50% of the Median Income for the Area.
A-10
NUMATTER/105
APPENDIX B
[Form of Bond Counsel Opinion]
Honorable City Council
City of Carlsbad
1200 Carlsbad Village Drive
Carlsbad, CA 92008
Re: $15,920,000 City of Carlsbad, California, Variable Rate Del
Multifamily Housing Revenue Refunding Bonds, Series A of
(La Costa Apartments Project)
Ladies and Gentlemen:
We have examined certified copies of the proceedings of the CitJ
Carlsbad, California (the "Issuer"), and other information and docum
submitted to us relative to the issuance and sale by the Issuer of
Variable Rate Demand Multifamily Housing Revenue Refunding Bonds, Serif
of 1993 (La Costa Apartments Project), in the aggregate principal amoun
$15,920,000 (the "Bonds").
The Bonds have been issued pursuant to a resolution of the City Cou
of the Issuer adopted on May 11, 1993 (the "Resolution"), Article 11
Chapter 3 of Part 1 of Division 2 of Title 5 of the Government Code of
State of California (the "Refunding Law") and an indenture of trust date
of May 1, 1993 (the "Indenture") by and between the Issuer and First T
of California, National Association, as trustee (the "Trustee").
repayment of the Bonds is secured by a letter of credit (the "Lette~
Credit") issued by Bank of America National Trust and Savings Associa
(the "Bank"). We express no opinion as to the validity or enforceabilit
the Letter of Credit.
The Bonds are dated the date, mature on the date and bear inte
payable on the dates and at the rates per annum to be established from
to time in the manner set forth in the Indenture. The Bonds are issu
only as fully registered Bonds in the form set forth in the Indent
redeemable in the amounts, at the times and in the manner provided fo:
the Indenture.
B-1
NUMATTER/lOS
City of Carlsbad
[DATE]
Page 2
In rendering our opinion, we have examined the Refunding Law
originals or certified copies of the Resolution, the Indenture, the :
Agreement dated as of May 1, 1993 (the "Loan Agreement") by and among
Issuer, the Trustee and La Costa Partners, a California general partner
(the "Owner"), the Amended and Restated Regulatory Agreement and Declarai
of Restrictive Covenants dated as of May 1, 1993 (the "Regulai
Agreement") by and among the Issuer, the Trustee and the Owner, and t
other information and documents as we have deemed necessary to render
opinions set forth herein. As to questions of fact material to the opin.
stated herein, we have relied upon representations made by the Issuer
the Owner contained in the Indenture, the Loan Agreement and the Regula
Agreement and the certified proceedings and certifications of pul
officials, the Bank and others furnished to us without undertaking to ve'
certifications relied upon by us. through independent investigation the accuracy of the representations
Based upon our examination of all of the foregoing, and in relic
thereon, and on all matters of fact as we deem relevant under
circumstances, and upon consideration of applicable laws, we are of
opinion that:
(1) The Issuer is a municipal corporation duly organized
validly existing under the Constitution and the laws of the State
California, with full power and authority to adopt the Resolution,
execute, deliver and perform the Bond Purchase Agreement (the "Purcl
Agreement") by and among the Issuer, Dean Witter Reynolds Inc. and
Owner, the Indenture, the Loan Agreement and the Regulatory Agreer
(collectively, the "Bond Documents"), to loan the proceeds from the :
of the Bonds to the Owner, and to issue, sell and deliver the Bonds.
(2) The execution and delivery of the Bond Documents have 1:
duly authorized by the Issuer and, assuming proper authorizati
execution and delivery by the respective other parties thereto,
valid and binding obligations of the Issuer enforceable in accorda
with their terms, except to the extent that enforceability may
limited by moratorium, bankruptcy, reorganization, insolvency or ot
laws affecting creditors' rights generally or by the exercise
judicial discretion in accordance with general principles of equity.
(3) The Bonds have been duly and validly authorized and exec1
by the Issuer and are valid and binding special and limited obligatj
of the Issuer, payable solely out of the revenues and receipts provj
therefor in the Indenture, and all conditions precedent to the deli1
of the Bonds have been fulfilled. The Bonds are enforceable
accordance with their terms and the terms of the Indenture, except
the extent that enforceability may be limited by moratorium, bankrupt
reorganization, insolvency or other laws affecting creditors' rig
generally or by the exercise of judicial discretion in accordance w
general principles of equity.
B-2
NUMATTER/105
City of Carlsbad
[DATE]
Page 3
(4) The Indenture creates a valid, express and irrevocable t:
under the laws of the State of California of the Trust Estate (as !
term is defined in the Indenture) held or set aside under the Indent1
subject to the application thereof to the purposes and on the condit
permitted by the Indenture.
(5) Assuming continuing compliance subsequent to the issuancc
the Bonds with the applicable provisions of the Internal Revenue Cod'
1954, as amended (the "1954 Code"), and the Internal Revenue Codc
1986, as amended (the "1986 Code"), with respect to the Bonds, u
existing statutes, regulations, rulings and judicial decisions, inte
on the Bonds is excluded from gross income for federal income
purposes (except during any period while a Bond is held b>
"substantial user ,I1 or a "related person," within the meaning of Sec.
103(b)(13) of the 1954 Code, of the property financed by proceeds of
Bonds) and is not an item of tax preference for purposes of calcula.
the federal alternative minimum tax imposed on individuals
corporations; however, we note that, with respect to corporatic
interest on the Bonds may be included as an adjustment in
calculation of alternative minimum taxable income which may affect I
corporation's alternative minimum tax liability. We express no opil
regarding other federal tax consequences with respect to the Bonds.
(6) In our further opinion, interest on the Bonds is exempt
California personal income tax.
The opinions expressed herein are based on an analysis of exis
statutes, regulations, rulings and judicial decisions and cover cer
matters not directly addressed by such authorities. Such opinions maJ
affected by actions taken (or not taken) or events occurring (or
occurring) after the date hereof. We have not undertaken to determine
to inform any person, whether any such actions or events: are taken 01
occur.
Additionally, our opinion set forth in paragraph (5) above is subjeci
the condition that the Issuer and the Owner comply with certain coven:
and the applicable requirements of the 1954 Code and the 1986 Code that I
be satisfied subsequent to the issuance of the Bonds to assure that inte~
on the Bonds will remain excludable from gross income for federal income
purposes. Failure to comply with such requirements may cause interest
retroactive to the date of issuance of the Bonds.
the Bonds to be included in gross income for federal income tax purpc
Respectfully submitted,
B-3
NUMATTER/lOS
EM
Brown & Wc
Draft #2
4/29/93
BOND PURCHASE AGREEMENT
Among
CITY OF CARLSBAD
and
DEAN WITTER REYNOLDS INC.
and
LA COSTA PARTNERS
Dated May 1, 1993
$15,920,000 CITY OF CARLSBAD, CALIFORNIA
VARIABLE RATE DEMAND MULTIFAMILY HOUSING REVENUE REFUNDING I30NDS
SERIES A OF 1993
(LA COSTA APARTMENTS PROJECT)
BOND PURCHASE AGREEHEXIT
May -I 1993
City of Carlsbad 1200 Carlsbad Village Drive Carlsbad, California 92008
La Costa Partners
c/o SoCal Development, Inc.
Del Mar, California 92014
a California general partnership
915 Camino Del Mar, Suite 200
$15,920,000 City of Carlsbad, California Variable Rate Demand
Issue A of 1993 (La Costa Apartments Project)
Multifamily Housing Revenue Refunding Bonds
Ladies and Gentlemen:
Dean Witter Reynolds Inc. (the "Underwriter") hereby offei to enter into this Bond Purchase Agreement with th.e City of Carlsbad (the "Issuer") and La Costa Partners, a Clalifornia
general partnership (the "Owner"). This Bond Purchase Agreement will be binding upon the Underwriter, thie Issuer ant the Owner upon acceptance of such offer by the Issuer and the Owner at or prior to 6:OO p.m., Pacific Time, on the date hereof.
Section 1. Introduction, The Issuer is authorized to
issue $15,920,000 aggregate principal amount of its Variable
of 1993 (La Costa Apartments Project) (the "Bonds") in accordance with the authority contained in Article! I1 of
Chapter 3 of Part I of Division 2 of Title 5 of the Governmend Code of the State of California, as amended (the "'Refunding Law"). The Bonds will be issued pursuant to an Indenture of
Rate Demand Multifamily Housing Revenue Refunding Bonds Issue
1
NUMATTER/108
Trust dated as of May 1, 1993 (the llIndenturell) between the Issuer and First Trust of California, National Association, a:
trustee (the "Trustee"), and will mature and bear interest as
set forth in the Indenture. The proceeds of the E3onds will bt
used to provide funds to make a loan (the "Loan") to the Ownel
pursuant to a Loan Agreement dated as of May 1, 1993 (the "Lo:
Agreement") among the Issuer, the Trustee and the Owner, to
refund the Issuer's Multifamily Housing Revenue Bolnds, Series of 1985 (La Costa Apartments Project) (the "Prior Bonds"), tht proceeds of which financed the acquisition and construction ol
a multifamily rental housing project consisting of 320 units :
20 two-story buildings in the City of Carlsbad, California (tl
"Project"). The Loan will be evidenced by a promissory note
(the "Note") and secured by a Deed of Trust, Assignment of Rents and Fixture Filing dated as of May 1, 1993 (the "Deed o Trust") from the Owner for the benefit of the Trustee and the
Bank (as hereinafter defined) and by a Security Agreement datl
as of May 1, 1993 (the "Security Agreement") from the Owner fi
the benefit of the Trustee and the Bank.
Section 2. PUrchase, Sale and Delivery of the Bonds. On
the basis of the representations, warranties and agreements contained herein, but subject to the terms and conditions herein set forth, the Underwriter hereby jointly and severall: agrees to purchase from the Issuer, and the Issuer hereby agrees to sell to the Underwriter, all, but not less than all of the Bonds for a purchase price of 100% of the principal amount of the Bonds. The Owner agrees to pay to the
Underwriter, as compensation for its services hereunder, an
underwriting fee (the "Underwriting Fee") equal to $63,680. The Underwriting Fee shall be due and payable in immediately available funds on the Closing Date (as defined herein), sole and exclusively from funds provided by the Owner.
The Issuer will deliver the Bonds to or for the account o
by wire transfer of immediately available funds to the Truste
at or prior to 1O:OO a.m., Pacific time, on June :L, 1993, or such other time not later than five business days thereafter the Underwriter and the Issuer shall mutually agree (the "Closing Date"). The Bonds will be delivered in fully registered or book-entry form in such denominations and registered to such persons as the Underwriter shall request a least two days prior to the Closing Date. The Bolnds may be i printed, engraved or typewritten form, and each such form sha
constitute "definitive" form.
the Underwriter against payment of the purchase price therefo
The Bonds shall bear interest at the rates, mature on the date and have such other terms as described in the Indenture and the Official Statement, dated , 1993 (the "Offici
Statement") e
2
NUMATTER/l08
Section 3. Financing Documents. On or prior to the
Closing Date, the Underwriter shall have received the followin
(a) The Preliminary Official Statement dated May -,
1993 (the "Preliminary Official Statement");
(b) The Official Statement, as amended and
supplemented, duly executed on behalf of the Issuer; and
(c) A copy of each of the following documents, duly executed by all parties thereto or certified to the
satisfaction of the Underwriter:
(i) The Indenture;
(ii) The Loan Agreement;
(iii) The Note;
(iv) The First Deed of Trust and the First
Security Agreement;
(v) The Amended and Restated Regulatory
Agreement and Declaration of Restrictive Covenants dated as of May 1, 1993 (the "Regulatory Agreement") among the Issuer, the Trustee and the Owner;
(vi) The Remarketing Agreement dated as of May
1993 (the "Remarketing Agreement") between the Owner
and Dean Witter Reynolds Inc. (in such capacity, the
"Remarketing Agent") ;
(vii) The Administration Agreement dated as of
May 1, 1993 (the "Administration Agreement**) among t Issuer, the Owner and the Program Administrator (as defined in the Indenture);
(viii) The Agreement Regarding Redemption and Payment of Prior Bonds dated June 1, 1993 (the "Escr Agreement") among the Issuer, the Owner, First Trust
of California, as trustee (the "Prior Trustee") and
Bank of America National Trust and Savings
Association, successer by merger to Security Pacific National Bank, as provider of the letter of credit f
the Prior Bonds (in such capacity, the "Prior Bonds
Bank") ;
(ix) The Reimbursement Agreement dated as of May 1, 1993 (the "Reimbursement Agreement**) between
3
NUMATTER/l08
Bank of America National Trust and Savings Associa- tion, as the provider of the Letter of Credit (as
defined below) for the Bonds (the "Bank") , and the Owner ;
(x) The Intercreditor Agreement dated as of May 1, 1993 (the "Intercreditor Agreement") among tht
Issuer, the Trustee and the Bank;
(xi) The irrevocable, direct draw letter of credit of the Bank issued in favor of the Trustee in
stated amount sufficient to pay principal of and interest on, and the purchase price of, the Bonds in accordance with the Indenture (the "Letter of Credit
(xii) The Guaranty dated as of May 1, 1993 (the
"Guaranty") by the general partners of the Owner, by Encinitas Partners and by Golden Triangle Partners;
(xiii) The Collateral Account Agreement dated as
May 1, 1993 (the "Collateral Account Agreement")
between the Owner, Encinitas Partners, Golden Triang
Partners and the Bank.
The foregoing documents are hereinafter collectively referred to as the "Bond Documents .I1
The Issuer hereby authorizes the Underwriter to use both the Preliminary Official Statement and the Official Statement in connection with the offer, sale and distribution of the Bonds.
Section 4. Representations of the Issuer. The Issuer
represents to the Underwriter as follows:
(a) The Issuer is a legal subdivision and a body corporate and politic duly organized and validly existing
under the laws of the State of California and has full legal right, power and authority (i) to enter into this Bond Purchase Agreement, (ii) to issue, sell and deliver the Bonds as provided herein, (iii) to use the proceeds c
the Bonds to make the Loan and (iv) to carry out the
transactions on its part contemplated by this Bond Purcha
Agreement, the Official Statement and the Bond Documents
which it is a party, as they may be amended or supplement from time to time by the Issuer.
(b) Information in the Preliminary Official Statemc
and the Official Statement under the caption "THE ISSUER"
is, on the date hereof, true and correct and did not, on
4
NUMATTER/l08
the date thereof, and does not, on the date hereof, conta:
any untrue statement of a material fact or omit to state : material fact necessary in order to make the statements
contained therein, in light of the circumstances under
which they were maded not misleading.
(c) By the official action of the Issuer (the "Bond Resolution") taken prior to or concurrently with the
acceptance hereof, the Issuer has duly authorized and
approved the execution, delivery and use of the Prelimina Official Statement and the Official Statement, has duly
authorized and approved the execution and delivery of, an(
the performance by the Issuer of the obligations on its part contained in this Bond Purchase Agreement and the Bo: Documents to which it is a party, has duly authorized and approved the issuance, execution and delivery of, and the performance by the Issuer of its obligations under, the Bonds and has duly authorized and approved the consummatif
this Bond Purchase Agreement and the Official Statement.
The Bond Resolution has been duly adopted by the Issuer,
has not been amended, modified or repealed and is in full force and effect on the date hereof.
by it of all other transactions on its part contemplated :
(d) To the best of its actual knowledge following diligent investigation of matters related thereto, the Issuer is not in breach of or default under any applicabli law or administrative regulation of the State of Californ or of the United States, or any applicable judgment or decree or any loan agreement, note, resolution, agreement or other instrument to which the Issuer is a party or is otherwise subject, which would impair in any material respect the performance of its obligations under the Bond
Documents to which it is a party or this Bond Purchase
Agreement.
(e) The execution and delivery by the Issuer of the
Bonds, the Bond Documents to which it is a party and this Bond Purchase Agreement, compliance by it with the provisions of each thereof and, to the best of its knowledge, the consummation by it of the transactions on its part contemplated thereby will not conflict with or constitute a breach of or default under any law, administrative regulation, judgment, decree, loan agreement, note, resolution, agreement or other instrumen. to which the Issuer is a party or is otherwise subject, which conflict, breach or default has or may have an
adverse effect on the Issuer's ability to perform its obligations under such documents.
5
NUMATTER/108
(f) To the best of its actual knowledge following
diligent investigation of matters related thereto, all
approvals, consents and orders of any governmental authority, board, agency or commission having jurisdictio.
which would constitute a condition precedent to the
performance by the Issuer of its obligations hereunder an
under the Bonds and the Bond Documents to which it is a
party have been obtained.
(9) Except as disclosed in the Official Statement,
the best of the Issuer's knowledge, after due inquiry wit
respect thereto, no litigation or other proceedings to
which the Issuer is a party and has been served with a
summons or other written notice thereof are pending or, t
the best of its knowledge without independent inquiry,
threatened in any court or other tribunal of competent
jurisdiction, State or federal, in any way (a) restrainin
or enjoining the issuance, sale or delivery of any of the
Bonds, or (b) questioning or affecting the validity of th
Bond Documents, or (c) questioning or affecting the
validity of any of the proceedings relating to the authorization, sale, execution, issuance or delivery of t
Bonds, or (d) questioning or affecting the organization o existence of the Issuer or the title to office of the officers thereof.
(h) The Issuer has not been notified of any listing
or proposed listing by the Internal Revenue Service to th effect that the Issuer is a bond issuer whose arbitrage
certifications may not be relied upon.
(i) Any certificate signed by any authorized offici of the Issuer and delivered to the Underwriter shall be
deemed to be a representation and warranty by the Issuer the Underwriter as to the statements made therein.
(j) Neither the Issuer nor anyone acting with its
authorization on its behalf (other than the Underwriter) has, directly or indirectly, offered for sale or solicitem any offer to acquire the Bonds or any security, the
offering of which would be deemed for purposes of the
Securities Act of 1933, as amended, to be part of the offering of the Bonds contemplated hereby.
(k) The Issuer has hereby authorized its counsel an
Bond Counsel to render to the Underwriter opinions
substantially in the form of Exhibit B and Exhibit G,
respectively, to this Bond Purchase Agreement.
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Section 5. Covenants of the Issuer. The Issuer covenant with the Underwriter as follows:
(a) The Issuer shall not take or omit to take, as j appropriate, any action, the taking or omission of which
would adversely affect the exclusion of interest on the
Bonds from gross income for purposes of federal income taxation or from California personal income tax.
(b) The Issuer shall furnish or cause to be furnish
to the Underwriter, in such reasonable quantities as shal be requested by the Underwriter, copies of the Official Statement and all amendments and supplements thereto, in
each case as soon as available, at the expense of the Own
(c) The Issuer shall furnish such information,
execute such instruments and take such other action consistent with law as may be required, and shall otherwi
cooperate with the Underwriter in taking all action
necessary, to qualify the Bonds for offer and sale and to
determine the eligibility for investment in the Bonds und the laws of such jurisdictions as the Underwriter designates and the continuation of such qualification in effect so long as required for distribution of the Bonds;
Issuer to pay any fees in connection with the foregoing o
to execute a general consent to service of process in any foreign jurisdiction or to register as a broker-dealer or qualify as a foreign corporation in any foreign jurisdiction.
provided, however, that the foregoing will not require th
(d) After becoming aware thereof, the Issuer shall promptly notify the Underwriter of the institution of any action, suit, proceeding, inquiry or investigation known it seeking to prohibit, restrain or otherwise restrict th issuance of the Bonds, the making of the Loan, the
execution, delivery and performance by the Issuer of the Bond Documents to which it is a party or the use of the
Official Statement in connection with the offering, sale
distribution of the Bonds.
(e) If between the date of this Bond Purchase
Agreement and the date which is 90 days after the Closing
Date an event occurs, that is known to the Issuer,
affecting the Issuer, that would cause the Official Statement to contain an untrue statement of a material fat or omit to state a material fact necessary in order to mal
the statements therein with respect to the Issuer, in ligl of the circumstances under which they were made, not misleading, the Issuer shall promptly notify the
7
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Underwriter, and, if in the opinion of the Issuer or the
Underwriter such event requires an amendment of or
supplement to the Official Statement, the Issuer, at the
expense of the Owner, will amend or supplement the Offici
Statement in a form and manner jointly approved by the
Issuer and the Underwriter: provided, however, if such
event shall occur on or prior to the Closing Date, the Underwriter in its sole discretion shall have the right t'
terminate its obligations hereunder by written notice to
the Issuer and the Owner, and the Underwriter shall have obligation to purchase and pay for the Bonds.
Section 6. Representations, Warranties and Covenants of the Owner. The Owner represents and warrants to, and covenan with, the Issuer and the Underwriter as follows:
(a) If between the date of this Bond Purchase Agreement and the date which is 90 days after the Closing
Date, an event occurs that is known to the Owner that wou
cause the Official Statement to contain an untrue stateme
necessary in order to make the statements therein, in lig
of the circumstances under which they were made, not
misleading, the Owner shall notify the Issuer and the
Underwriter, and, if in the opinion of the Issuer or the
Underwriter such event requires an amendment or supplemen to the Official Statement, the Issuer, at the expense of
the Owner, will amend or supplement the Official Statemen in a form and manner jointly approved by the Issuer and t:
Underwriter; provided, however, if such event shall occur
on or prior to the Closing Date, the Underwriter in its
sole discretion shall have the right to terminate the
obligations of the Underwriter hereunder by written noticl to the Issuer and the Owner, and the Underwriter shall ha, no obligation to purchase and pay for the Bonds.
of a material fact or omit to state a material fact
(b) The Owner shall take all necessary action on it,
part to cause the Bonds to comply with the provisions of
the laws and regulations of the State of California
pursuant to which the Bonds are issued and the applicable
provisions of the Internal Revenue Code of 1986, as amended, and the applicable regulations promulgated thereunder or under any prior or succeeding Code (collectively, the "Code"), and will not take any, or permit any action within its control to be taken, which would violate such provisions or which would cause intere, on the Bonds to become subject to federal income taxation
pursuant to the Code.
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(c) The Owner represents and warrants to the Issuer
and the Underwriter that, to the best of its actual knowledge following diligent investigation of matters related thereto, the statements and information contained under the captions "SOURCE AND APPLICATION OF FUNDS" and
"THE PROJECT" and "THE OWNER" in the Official Statement are, on the date hereof, true and correct and the
information under such captions does not, on the date hereof, contain any untrue statement of a material fact
necessary in order to make the statements, in light of thl circumstances under which they were made, not misleading. The Owner hereby authorizes the use by the Underwriter of the Official Statement in connection with the offering, sale and distribution of the Bonds.
(d) To the best of its actual knowledge following diligent investigation of matters related thereto, the Owner has full legal right, power and authority to own an'
operate the Project and to execute, deliver and perform i obligations under the Bond Documents to which it is a par. and all documents to be executed in connection with the Loan.
(e) To the best of its actual knowledge following diligent investigation of matters related thereto, the Bo: Documents, to which it is a party, when duly executed and delivered by the Owner and the other parties thereto, and
all other documents to be delivered by the Owner in connection with the consummation of the transactions
contemplated hereby and by the Official Statement and the Bond Documents, will constitute valid, legal and binding obligations of the Owner, enforceable in accordance with their terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or othc
similar laws affecting creditors' rights generally.
(f) To the best of its actual knowledge following diligent investigation of matters related thereto, the execution, delivery and performance of this Bond Purchase Agreement, the Bond Documents to which it is a party and all other documents to be delivered by the Owner in connection with the consummation of the transactions contemplated hereby and by the Official Statement and the Bond Documents will not conflict with, or constitute a breach of or default under, any indenture, mortgage, deed
of trust, lease, note, commitment, agreement or other instrument or obligation to which the Owner is a party or
by which the Owner or any of its property is bound, or under any law, rule, regulation, judgment, order or decrec
to which the Owner is subject or by which the Owner or an1
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of its property is bound. The Owner (with the exception
certain loans or obligations associated with the Prior
Bonds and the related documents and agreements) is not nc
in default in the payment of the principal of, or premiun or interest on, or otherwise in default with respect to,
any bonds, notes or other obligations which it has
incurred, assumed or guaranteed as to payment of principc
premium or interest, and, to the best of its actual knowledge following diligent investigation of matters related thereto, the Owner is not in default under any
document, instrument or commitment to which the Owner is
party or to which the Owner or any of its property is
subject, which document, instrument or commitment or default thereunder relates to the Bonds.
(9) To the best of its actual knowledge following diligent investigation of matters related thereto, there
no action, suit, proceeding, inquiry or investigation by before any governmental agency, public board or body pending or, to the best of its knowledge, threatened against the Owner (nor to the best of its knowledge is there any basis therefor), which (i) affects or seeks to
enjoin, prohibit or restrain the issuance, sale or delive
of the Bonds under Section 103 of the Code or the use of
the proceeds of the Bonds to make the Loan or the use of the Preliminary Official Statement or the Official Statement or the execution and delivery of this Bond Purchase Agreement or any of the Bond Documents,
the Bonds, this Bond Purchase Agreement or any of the Bor!
Documents, (iii) questions the tax-exempt status of the
Bonds or the completeness or accuracy of the Official
Statement or (iv) questions the power or authority of the
Owner to own and operate the Project or to execute, deliv or perform its obligations under this Bond Purchase Agreement or the Bond Documents to which it is a party.
(ii) affects or questions the validity or enforceability
(h) Any certificate signed by the Owner or the Owne Representative (as defined in the Indenture) and delivere to the Underwriter or the Issuer shall be deemed to be a representation and warranty by the Owner to the Underwrit and the Issuer as to the statements made therein.
(i) The information contained in the certificate entitled Original Owners' Use of Proceeds Certificate,
relating to Project costs, use of Bond proceeds and relat matters and dated the Closing Date will be correct and complete as of the Closing Date.
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(j) To the best knowledge of the Owner following
diligent investigation of matters related thereto, all
permits, licenses and other authorizations necessary for the ownership and operation of the Project in the manner
contemplated by the Official Statement and the Bond
Documents have been or will be obtained, and said ownersh and operation are not in conflict with any zoning or similar ordinance applicable to the Project.
(k) The Owner (i) will not knowingly take or permit any person controlled by it to take action that would adversely affect the exclusion of interest on the Bonds from gross income for federal income tax purposes, and, i
it should take or permit any such action, it will take a1 lawful actions to rescind such action promptly upon havin
actual knowledge thereof, (ii) will not fail to take any
action within its control that is required in order to
preserve the exclusion from gross income of the interest
the Bonds for federal income tax purposes under Section 1 of the Code and (iii) will take such action or actions as it can take including amending the Bond Documents, as may be necessary, in the opinion of bond counsel acceptable t
the Issuer, to comply fully with all applicable rules, rulings, policies, procedures, regulations or other official statements promulgated by the Department of the Treasury or the Internal Revenue Service pertaining to th Bonds.
(1) The money on deposit in any fund or account in connection with the Bonds or the Loan over which the Owne has control, whether or not such money was derived from other sources, will not be used by or under the direction of the Owner in a manner which would cause the Bonds to b
"arbitrage bonds" within the meaning of Section 148 of th Code, and the Owner specifically agrees that the investme
of money in any such fund shall be restricted as may be
necessary in the opinion of Bond Counsel acceptable to th. Issuer, and the earnings over which the Owner has control
on such investment rebated to the United States to the
"arbitrage bonds. "
extent necessary, to prevent the Bonds from being
(m) The Owner will not knowingly take or omit to
take, as may be applicable, any action which would in any way cause the proceeds of the Bonds to be applied in a manner contrary to the requirements of the Bond Documents
(n) Neither the Owner, any guarantor of the Owner,
any, nor any "related person" to the Owner within the
meaning of Section 147 of the Code has acquired or shall
11
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acquire, pursuant to any arrangement, formal or informal, any Bonds, other than as provided under the Reimbursement
Agreement or the Pledge Agreement.
(0) Whether or not the sale of the Bonds by the Issuer to the Underwriter is consummated, the Underwriter shall have no obligation to pay any costs or expenses
incident to the performance of the obligations of the Issuer or the Underwriter under this Bond Purchase Agreement. All costs and expenses to effect the authorization, preparation, issuance, sale and delivery o the Bonds, including the printing, execution and delivery of the Official Statement (together with any amendments
thereof and supplements thereto) and the Bond Documents,
the rating agency fees, the fees and expenses of Bond Counsel, Counsel to the Underwriter and Counsel to the
if the Bonds are not sold by the Issuer to the Underwrite
for any reason other than by reason of a default by the
Underwriter under this Bond Purchase Agreement, then the
Owner shall be responsible only for payment of the costs
printing the Official Statement and the rating agency fee
if any, in no event shall any of such costs be paid by th
Issuer.
Section 7. Conditions to Obligations of the Underwriter.
The obligation of the Underwriter to purchase and pay for the Bonds and the obligation of the Issuer to sell the Bonds shal be subject to the following conditions precedent:
Bank, shall be paid by the Owner: provided, however, that
(a) The representations and warranties of the Owner herein and the representations and warranties made in eac of the Bond Documents by the respective parties thereto
shall be true and correct in all material respects on the
date hereof and on the Closing Date, as if made on the
Closing Date, and each such party to the Bond Documents shall deliver a certificate to such effect. The Issuer
shall have performed all of its obligations hereunder and the statements made on behalf of the Issuer hereunder sha be true and correct on the date hereof and on the Closing Date, as if made on the Closing Date, and the Issuer shal deliver a certificate to such effect. The Official Statement (as the same may be amended or supplemented wit the written approval of the Underwriter) shall be true an
correct in all material respects and shall not contain an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements
contained therein, in light of the circumstances under which they were made, not misleading.
12
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(b) Except as may have been agreed to by the
Underwriter, as of the Closing Date, each of the Bond
Documents, the Bond Resolution and all other official
action of the issuer relating thereto shall be in full
force and effect and shall not have been amended, modifiel
or supplemented, and the Official Statement shall not havl
been amended or supplemented.
(c) The Issuer shall have received the approving
opinion of Bond Counsel, in substantially the form set forth in Exhibit A hereto, and the Underwriter shall have
and addressed to the Underwriter, to the effect that the Underwriter may rely upon such firm's opinion as if it we addressed to the Underwriter and the Issuer, and a supplemental opinion of said firm dated the Closing Date
and addressed to the Issuer and the Underwriter
substantially in the form set forth in Exhibit B hereto.
The Underwriter shall have received the opinion of Counse
to the Issuer dated the Closing Date and addressed to the
Underwriter substantially in the form set forth in Exhibi
G hereto.
received a letter from said firm, dated the Closing Date
(d) No default or event of default (as defined in a.
of the Bond Documents) shall have occurred and be continuing, and no event shall have occurred and be continuing which, with the lapse of time or the giving of
notice or both, would constitute such a default or event
default.
(e) No material adverse change shall have occurred,
nor shall any development involving a prospective materia and adverse change in, or affecting the affairs, business
financial condition, results of operations, prospects or properties (including the Project) of, any of the Issuer, the Bank or the Owner have occurred between the date here and the Closing Date.
(f) On or prior to the Closing Date, all actions required to be taken as of the Closing Date in connection with the Bonds, the Bond Resolution and the Bond Document
by the Issuer, the Owner and the Bank shall have'been taken, and the Issuer, the Owner and the Bank shall each have performed and complied with all agreements, covenant
and conditions required to be performed or complied with this Bond Purchase Agreement, the Bonds, the Bond
Resolution and the Bond Documents, and each party shall
deliver a certificate to such effect insofar as the foregoing actions, agreements, covenants and conditions apply to each such party, and each of such agreements sha
13
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be in full force and effect and shall not have been
amended, modified or supplemented, except as has been
agreed to in writing by the Underwriter.
(9) Each of the Bond Documents shall have been
executed and delivered by each of the respective parties
the Underwriter on the date hereof with only such changes
as the Underwriter may approve in writing, and each of thl
Bond Documents shall be in full force and effect.
thereto, all such documents shall be in forms exhibited tl
(h) None of the events referred to in Section 8 of this Bond Purchase Agreement shall have occurred.
(i) The Underwriter shall have received a certificate, dated the Closing Date and signed on behalf the Issuer, to the effect that:
(i) Except as disclosed in the Official Statement, the Issuer has not received written notic of any pending, nor, to the best of Issuer's actual knowledge following diligent investigation is there
any threatened, action, suit, proceeding, inquiry or
investigation against the Issuer, at law or in equit
by or before any court, public board or body, nor, t the best of Issuer's knowledge following diligent
investigation is there any basis therefor, affecting
the existence of the Issuer or the titles of its
officials to their respective offices, or seeking to
prohibit, restrain or enjoin the sale, issuance or delivery of the Bonds or the pledge of revenues or assets of the Issuer pledged or to be pledged to pay
the principal of and interest on the Bonds, or in an
way materially adversely affecting or questioning (a) the territorial jurisdiction of the Issuer,
(b) the use of the Preliminary Official Statement or
the Official Statement, (c) the use of the proceeds the Bonds to make the Loan, (d) the validity or enforceability of the Bonds, any proceedings of the Issuer taken with respect to the Bonds, or any of th Bond Documents to which it is a party, (e) the exclusion of interest on the Bonds from gross income
for purposes of federal income taxation or Californi
personal income tax or the accuracy or completeness the Official Statement, (f) the execution and delive of this Bond Purchase Agreement or the Bonds, or
(9) the power of the Issuer to carry out the transactions contemplated by this Bond Purchase Agreement, the Bonds, the Official Statement or any the Bond Documents to which it is a party;
14
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(ii) to the best knowledge and belief of the
persons signing the certificate, the information
contained under the headings "THE ISSUER" and "NO
LITIGATION" in the Official Statement does not conta any untrue statement of a material fact or omit to
state any material fact necessary in order to make t statements contained under such headings, in light o
the circumstances under which they were made, not misleading; and
(iii) the Issuer has complied with all the
covenants and satisfied all the conditions on its pa
to be performed or satisfied at or prior to the
Closing Date, and the representations and warranties of the Issuer contained herein and in each of the Bo Documents to which it is a party are true and correc as of the Closing Date.
(j) The Underwriter shall have received an opinion Gibson, Dunn & Crutcher, Counsel to the Owner, substantially in the form set forth in Exhibit C hereto.
(k) The Underwriter shall have received written evidence that Moody's Investors Service has issued a rati
of at least Aa3NMIG-l with respect to the Bonds, and as
the Closing Date, the rating shall not have been withdraw
or lowered.
(1) The Underwriter shall have received a certifica of an Owner Representative to the effect that:
(i) to the best knowledge and belief of the Owner, the Preliminary Official Statement did not ar the Official Statement does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the
statements contained therein, with respect to the
sources and application of funds, the Owner and the Project, in light of the circumstances under which they were made, not misleading; and
(ii) the Owner has complied with all the covenants and satisfied all the conditions to be performed or satisfied by the Owner on or prior to t
Closing Date, and the representations and warrantie: of the Owner contained in this Bond Purchase Agreemf and in each of the Bond Documents to which it is a party are true, correct and complete in all materia:
respects as of the Closing Date, and the Owner has full legal right, power and authority to enter into
and carry out the transactions contemplated by the Bond Documents.
15
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(m) The Underwriter shall have received an opinion o , Counsel to the Trustee substantially in the form set forth in Exhibit D hereto.
(n) The Underwriter shall have received a certifi-
cate, dated the Closing Date and signed by an authorized
officer of the Trustee, to the effect that (i) he or she i
an authorized officer of the Trustee; (ii) the Indenture has been duly executed and delivered by the Trustee; (iii) the Trustee has all necessary corporate and trust
powers required to carry out the trust created by the
Indenture; (iv) to the best of his or her knowledge, the
acceptance by the Trustee of the duties and obligations of the Trustee under the Indenture and compliance with the provisions thereof will not conflict with or constitute a
breach of or default under any law, administrative regula-
tion or consent decree to which the Trustee is subject or
by which the Trustee is bound; (v) the Trustee has duly authenticated the Bonds, and the person signing the certificate of authentication on each Bond has been duly
authorized to do so.
(0) The Underwriter shall have received verificatior satisfactory to the Underwriter and Counsel to the Underwriter that the proceeds of the Bonds will be used tc make the Loan to refund the Prior Bonds.
(p) The Underwriter shall have received a letter of
representations and warranties from the Bank substantial11 in the form set forth in Exhibit F hereto.
(9) The Underwriter shall have received the opinion
of Counsel to the Bank, substantially in the form set fort in Exhibit E hereto.
(r) The Underwriter shall have received a certificat
of the Issuer, dated the Closing Date, with respect to thc
facts, estimates and circumstances and reasonable
expectations pertaining to Section 148 of the Code to
support the conclusion that none of the Bonds will be an
"arbitrage bond."
(s) The Underwriter shall have received such
additional legal opinions, certificates, proceedings,
instruments and other documents as the Underwriter or Boni
Counsel may reasonably request.
(t) The Underwriter shall have received an opinion (
its counsel, Brown & Wood, substantially in the form set
forth in Exhibit H hereto.
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(u) The Underwriter shall have received an opinion
from counsel acceptable to it to the effect that the Lett of Credit issued by the Bank is exempt from the registra- tion requirements of the Securities Act of 1933, as amend
If any conditions to the obligations of the Underwriter o
satisfied and the satisfaction of such conditions shall not b
waived by the Underwriter and the Issuer, then, at the option
of the Underwriter and the Issuer, (i) the Closing Date shall be postponed for such period, not to exceed seven days, as ma be necessary for such conditions to be satisfied or {ii) wit)! out limiting the generality of Section 13 of this Bond Purcha
Agreement, the obligations of the Underwriter and the Issuer
under this Bond Purchase Agreement shall terminate, and neitk
the Underwriter nor the Issuer shall have any further
obligations or liabilities hereunder.
the Issuer contained in this Bond Purchase Agreement are not
All of the legal opinions, certificates, proceedings,
instruments and other documents mentioned above or elsewhere
this Bond Purchase Agreement shall be deemed to be in
compliance with the provisions hereof if, but only if, they a
in form and substance satisfactory to the Underwriter and the
Issuer.
Section 8. Termination. The Underwriter may terminate i
obligations hereunder by written notice to the Issuer if, at any time subsequent'to the date hereof and on or prior to thc Closing Date:
(a)(i) Legislation shall have been enacted by the
Congress, or recommended to the Congress for passage by t
President of the United States or the Department of the
Treasury of the United States or the Internal Revenue
Service or any member of the United States Congress, or favorably reported for passage to either House of the
Congress by any Committee of such House to which such
legislation has been referred for consideration, or (ii)
decision shall have been rendered by a court established
under Article I11 of the Constitution of the United Statc or the United States Tax Court, or (iii) an order, rulin5 regulation or communication (including a press release)
shall have been issued by the Department of the Treasury
the United States or the Internal Revenue Service, in eac
case referred to in clauses (i), (ii) and (iii), with thc
purpose or effect, and reasonable likelihood, directly 01
indirectly, of imposing federal income taxation upon
interest to be received by any owners of the Bonds.
17
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(b) Legislation shall have been enacted or a decisi
by a court of the United States shall have been rendered any action shall have been taken by the Securities and Exchange Commission which, in the opinion of counsel to t
Underwriter, has the effect of requiring the offer or sal of the Bonds to be registered under the Securities Act of
1933, as amended, or the Indenture to be qualified under
the Trust Indenture Act of 1939, as amended, or any event
shall have occurred that, in the judgment of the
Underwriter, makes untrue or incorrect in any material
respect any statement or information contained in the Preliminary Official Statement or the Official Statement that, in the judgment of the Underwriter, should be
reflected therein in order to make the statements contain
therein not misleading in any material respect.
(c)(i) In the sole judgment of the Underwriter, the market price of the Bonds is adversely affected because
(A) additional material restrictions not in force as of t
securities generally by any governmental authority or by
any national securities exchange; (B) the New York Stock
Exchange or other national securities exchange, or any
governmental authority, shall impose, as to the Bonds or
similar obligations, any material restrictions not now in
force, or increase materially those now in force, with
respect to the extension of credit by, or the charge to t net capital requirements of, the Underwriter; (C) a gener banking moratorium shall have been established by federal New York or California authorities; or (D) a war involvin
the United States of America shall have been declared, ox
any other national or international calamity shall have
occurred, or any conflict involving the armed forces of t
United States of America shall have escalated to such a
magnitude as to materially affect the ability of the Unde
writer to market the Bonds; (ii) any litigation shall be
instituted, pending or threatened to restrain or enjoin t
issuance or sale of the Bonds or in any way contesting 01 affecting any authority or security for or the validity c the Bonds, or the existence or powers of the Issuer or generally relating to the issuance of the Bonds or the refunding of the Prior Bonds; or (iii) legislation shall have been introduced in or enacted by the Legislature of the State of California with the purpose or effect, directly or indirectly, of imposing State of California income taxation upon interest to be received by any ownel of the Bonds or that would, in the reasonable judgment of
the Underwriter, adversely affect the security for the Bonds.
date hereof shall have been imposed upon trading in
18
NUMATTER/lOB
(d) There shall have occurred any change that, in tk reasonable judgment of the Underwriter, makes unreasonablc or unreliable any of the assumptions upon which (i) yield on the Bonds for purposes of compliance with the Code, (ii) payment of debt service on the Bonds, or (iii) the basis for the exclusion from gross income for federal income tax purposes of interest on the Bonds, is predicatc
(e) Additional material restrictions, not in force i
of the date hereof, shall have been imposed upon trading :
securities generally by any governmental authority or by
any national securities exchange.
(f) There shall have occurred any outbreak or
material escalation of hostilities or other calamity or crisis which materially and adversely affects the Remarketing Agent's ability to remarket the Bonds or to
enforce commitments for the purchase of the Bonds.
Section 9. Indemnification. The Owner agrees to indemni
and hold harmless the Issuer, Counsel to the Issuer, Bond
Counsel, the Underwriter, Counsel to the Underwriter, Counsel
to the Owner, the Trustee, Counsel to the Trustee, any member
officer, official or employee of the Issuer, any independent
financial advisor of the Issuer and each person, if any, who
controls any of the foregoing within the meaning of Section 1 of the Securities Act of 1933, as amended, or Section 20 of t
Securities Exchange Act of 1934, as amended (collectively
referred to herein as the **Indemnified Parties"), against any
and all losses, claims, damages, liabilities or expenses whatsoever caused by or in any way related to the redemption the Prior Bonds and/or the use of the proceeds of the Bonds t refund the Prior Bonds or any untrue or misleading statement alleged untrue or alleged misleading statement of a material fact relating to the Owner or the Project contained in the Official Statement, or caused by any omission or alleged omission from the Official Statement of any material fact relating to the Owner and the Project necessary to be stated therein in order to make the statements made therein, in ligh of the circumstances under which they were made, not misleadi
In case any action shall be brought against one or more o
the Indemnified Parties based upon the information described the preceding paragraph and in respect of which indemnity may be sought against the Owner, the Indemnified Parties shall promptly notify the Owner in writing and the Owner shall
promptly assume the defense thereof, including the employment of counsel acceptable to the Indemnified Parties, who shall n
unreasonably withhold such acceptance, the payment of all
reasonable and necessary expenses, and the right to negotiate
19
NUMATTER/lOB
and consent to settlement. Any one or more of the Indemnifiel
Parties has the right to employ separate counsel in any such
action and to participate in the defense thereof at their own expense. The Owner shall not be liable for any settlement of any such action effected without its consent, but if settled with the consent of the Owner, or if there be a final judgmen
for the plaintiff in any such action with or without consent, the Owner agrees to indemnify and hold harmless the Indemnifi Parties from and against any loss or liability by reason of such settlement or judgment.
Section 10. Expenses. The Owner shall pay all costs of issuing the Bonds, including, but not limited to, the fees an expenses described in Section 6(0) of this Bond Purchase Agreement and the Underwriter's actual expenses referred to i Section 2 hereof.
Section 11. Notices, Any notice or other communication
be given to the Issuer under this Bond Purchase Agreement may be given by delivering the same in writing, by certified mail postage prepaid, or by a delivery service that provides notic of delivery, to the Issuer at City of Carlsbad, 1200 Carlsbad
Village Drive, Carlsbad, California 92008, Attention: Lisa
communication to be given to the Underwriter under this Bond
Purchase Agreement may be given by delivering the same in
writing, by certified mail, postage prepaid, or by a delivery
service that provides notice of delivery, to Dean Witter
Reynolds Inc., 2nd Floor, 101 California Street, San Francisc
California 94111, Attention: Mr. Peter J. Ross, and any notj
or other communication to be given to the Owner under this Bc
Purchase Agreement may be given by delivering the same in
writing, by certified mail, postage prepaid, or by a deliver1
service that provides notice of delivery, to La Costa Partner
c/o SoCal Development Inc., 915 Camino, Suite 200, Del Mar,
California 92014, Attention: Rodney F. Stone.
Hildabrand, Finance Director, and any notice or other
Section 12. Successors. This Bond Purchase Agreement is made solely for the benefit of the Issuer, the Underwriter ar the Owner (including their assigns) and no other person shall
acquire or have any right hereunder or by virtue hereof (othg than pursuant to Section 9 hereto. The representations, warranties and agreements contained herein shall remain operative and in full force and effect and shall survive delivery of and payment for the Bonds hereunder, regardless c any investigation made by or on behalf of the Underwriter or the Issuer.
20
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Section 13. Survival of Certain Representations and Warranties. All agreements, covenants, representations and
warranties and all other statements of the Issuer and its
officials and officers and of the Owner set forth in or made
pursuant to this Bond Purchase Agreement shall remain in full force and effect, regardless of any investigation, or statemel as to the results thereof made by or on behalf of the Underwriter, the Issuer or the Owner, and shall survive the
Closing Date and the delivery of and payment for the Bonds.
Section 14. Governing Law. This Bond Purchase Agreement
shall be governed by the laws of the State of California.
Section 15. Counterparts, This Bond Purchase Agreement
may be executed in several counterparts, each of which shall
an original and all of which shall constitute but one and the same instrument L
Very truly yours,
DEAN WITTER REYNOLDS INC.
BY Its
Accepted on May -, 1993
CITY OF CARLSBAD
BY Mayor
LA COSTA PARTNERS, a California General Partners
BY
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EXHIBIT A
[Form of Bond Counsel Opinion]
(Closing Date)
City of Carlsbad
1200 Carlsbad Village Drive
Carlsbad, CA 92008
Re: $15,920,000 City of Carlsbad, California,
Variable Rate Multifamily Housing Revenue
Refunding Bonds, Series A of 1993 (La Costa
Apartments Project)
Ladies and Gentlemen:
We have examined certified copies of the proceedings of t City of Carlsbad, California (the "Issuer") and other informa tion and documents submitted to us relative to the issuance a sale by the Issuer of its Variable Rate Demand Multifamily
Housing Revenue Refunding Bonds, Series A of 1993 (La Costa
Apartments Project), in the aggregate principal amount of
$15,920,000 (the "Bonds") *
The Bonds have been issued pursuant to a resolution of th City Council of the Issuer adopted on (the "Resolution"), Article I1 of Chapter 3 of Part 1 of Division
of Title 5 of the Government Code of the State of California (the "Refunding Law") and an indenture of trust dated as of M
1, 1993 (the "Indenture") by and between the Issuer and First Trust of California, National Association, as trustee (the
"Trustee"). The repayment of the Bonds is secured by a lette of credit (the "Letter of Credit") issued by Bank of America National Trust and Savings Association (the "Bank"). We express no opinion as to the validity or enforceability of th Letter of Credit.
The Bonds are dated the dates, mature on the date and bea
interest payable on the dates and at the rates per annum to I= established from time to time in the manner set forth in the
Bonds in the form set forth in the indenture, redeemable in t amounts, at the times and in the manner provided for in the Indenture.
Indenture. The Bonds are issuable only as fully registered
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In rendering our opinion, we have examined the Refunding
Law and originals or certified copies of the Resolution, the
Indenture, the Loan Agreement dated as of May 1, 1993 (the "Loan Agreement") by and among the Issuer, the Trustee and
La Costa Partners, a California general partnership (the
Declaration of Restrictive Covenants dated as of May 1, 1993 (the "Regulatory Agreement") by and among the Issuer, the Trustee and the Owner, and such other information and documen
as we have deemed necessary to render the opinions set forth
herein. As to questions of fact material to the opinions stated herein, we have relied upon representations made by th Issuer and the Owner contained in the Indenture, the Loan
Agreement and the Regulatory Agreement and the certified
proceedings and certifications of public officials, the Bank and others furnished to us without undertaking to verify
through independent investigation the accuracy of the
representations and certifications relied upon by us.
"Owner"), the Amended and Restated Regulatory Agreement and
Based upon our examination of all of the foregoing, and i reliance thereon, and on all matters of fact as we deem relevant under the circumstances, and upon consideration of
applicable laws, we are of the opinion that:
(1) The Issuer is a legal subdivision and body corporate and politic of the State of California, duly organized and validly existing under the laws and Constitution of the State of California, with full power and authority to adopt the Resolution, to execute, delive and perform the Bond Purchase Agreement (the "Purchase Agreement") by and among the Issuer, Dean Witter Reynolds Inc., and the Owner, the Indenture, the Loan Agreement an the Regulatory Agreement (collectively, the "Bond Documents"), to loan the proceeds from the sale of the Bonds to the Owner and to issue, sell and deliver the Bon
(2) The execution and delivery of the Bond Document
have been duly authorized by the Issuer and, assuming
proper authorization, execution and delivery by the respective other parties thereto, are valid and binding obligations of the Issuer enforceable in accordance with
be limited by moratorium, bankruptcy, reorganization,
insolvency or other laws affecting creditors' rights
generally or by the exercise of judicial discretion in
accordance with general principles of equity.
their terms, except to the extent that enforceability may
(3) The Bonds have been duly and validly authorized
and executed by the Issuer and are valid and binding special and limited obligations of the Issuer, payable
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NUMATTER/l08
solely out of the revenues and receipts provided therefor
in the Indenture, and all conditions precedent to the delivery of the Bonds have been fulfilled. The Bonds are enforceable in accordance with their terms and the terms (
be limited by moratorium, bankruptcy, reorganization,
insolvency or other laws affecting creditors' rights generally or by the exercise of judicial discretion in
accordance with general principles of equity.
the Indenture, except to the extent that enforceability m:
(4) The Indenture creates a valid, express and irrevocable trust under the laws of the State of Californ of the Trust Estate (as defined in the Indenture) held or
set aside under the Indenture, subject to the application
thereof to the purposes and on the conditions permitted b the Indenture.
(5) Assuming continuing compliance subsequent to th
issuance of the Bonds with the applicable provisions of t Internal Revenue Code of 1954, as amended (the "1954
Code"), and the Internal Revenue Code of 1986, as amended (the "1986 Code"), with respect to the Bonds under existi
statutes, regulations, rulings and judicial decisions,
interest on the Bonds is excluded from gross income for
federal income tax purposes except during any period whil
a Bond is held by a "substantial user" or a "related person," within the meaning of Section 103(b)(13) of the
1954 Code, of the property financed by proceeds of the
Bonds and is not an item of tax preference for purposes o
calculating the federal alternative minimum tax imposed o
individuals and corporations; however, Bond Counsel notes that, with respect to corporations, interest on the Bonds may be included as an adjustment in the calculation of
alternative minimum taxable income which may affect such
corporation's alternative minimum tax liability. We
express no opinion regarding other tax consequences with
respect to the Bonds.
(6) In our further opinion, interest on the Bonds i exempt from California personal income tax.
(7) Payments made under the Letter of Credit to Trustee, and in turn to Bond Holders, in respect of principal and interest owing in connection with the Bonds
(or with respect to the purchase price owing in connectic
with tendered Bonds), would not constitute a transfer of
property by or of Owner avoidable under Section 547 of tt Federal Bankruptcy Code, or recoverable under Section 55C of the Federal Bankruptcy Code as a result of avoidance under Section 547, by a trustee or debtor in possession i a petition under the Federal Bankruptcy Code was
subsequently filed by or against Owner or Issuer.
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The opinions expressed herein are based on an analysis of existing statutes, regulations, rulings and judicial decision:
and cover certain matters not directly addressed by such authorities. Such opinions may be affected by actions taken (or not taken) or events occurring (or not occurring) after tl date hereof. We have not undertaken to determine, or to info] any person, whether any such actions or events are taken or dc
occur o
Additionally, our opinion set forth in paragraph (5) abovt
comply with certain covenants and the applicable requirements of the 1954 Code and the 1986 Code that must be satisfied subsequent to the issuance of the Bonds to assure that interel on the Bonds will remain excludable from gross income for federal income tax purposes. Failure to comply with such requirements may cause interest on the Bonds to be included ii gross income for federal income tax purposes retroactive to tl date of issuance of the Bonds.
is subject to the condition that the Issuer and the Owner
Respectfully submitted,
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EXHIBIT B
[Letterhead of Bond Counsel]
(Closing Date)
City of Carlsbad
1200 Carlsbad Village Drive
Carlsbad, CA 92008
Dean Witter Reynolds Inc.
2nd Floor
101 California Street San Francisco, CA 94111
$15,920,000 City of Carlsbad, California
Variable Rate Demand
Multifamily Housing Revenue Refunding Bonds Series A of 1993
(La Costa Apartments Project)
[After appropriate introductory language,
the opinion shall state substantially as fol1ows:I
1. The Issuer has full right and lawful authority to
enter into and perform its obligations under the Agreements; and the Agreements have been duly authorized, executed and delivered by the Issuer and, assuming due authorization, execution and delivery by the other parties thereto, constitu valid and binding obligations of the Issuer, enforceable against the Issuer in accordance with their terms, except to the extent that enforceability may be limited by moratorium, bankruptcy, insolvency, reorganization, or other laws affecti
creditors' rights generally or by the exercise of judicial discretion in accordance with general principles of equity.
2. The statements contained in the Official Statement under the captions entitled: "SECURITY FOR THE BONDS," "THE BONDS, I' "SUBSTITUTE CREDIT FACILITY, I' "THE LOAN AGREEMENT, I'
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"THE REGULATORY AGREEMENT, I' "THE INDENTURE, '' "TAX MATTERS" anc "APPENDIX A," insofar as such statements contained under such
captions purport to summarize certain provisions of the Bonds the Loan Agreement, the Indenture, the Regulatory Agreement ai
the federal and state income tax implications of owning the Bonds are fair and accurate in all material respects as of thc date of the Official Statement.
3. The Bonds are exempt from registration pursuant to t:
Securities Act of 1933, as amended, and the Indenture is exem from qualification pursuant to the Trust Indenture Act of 193 as amended.
4. The Indenture, the Loan Agreement and the Regulatory Agreement have been drafted to satisfy the requirements of th
Internal Revenue Code of 1986 and Section 103(b)(4)(A) of the Internal Revenue Code of 1954 if complied with on a continuou
basis by all parties.
Except for the portions of the Official Statement referenced in paragraph 2 above, we have not verified the information contained in any other portion of the Official Statement and disclaim any responsibility for the accuracy of its contents, including any financial and statistical data contained therein.
Respectfully submitted,
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EXHIBIT C
[Letterhead of Counsel to the Owner]
(Closing Date)
Dean Witter Reynolds Inc.
2nd Floor
101 California Street
San Francisco, CA 94111
City of Carlsbad
1200 Carlsbad Village Drive
Carlsbad, CA 92008
First Trust of California, National Association
Suite 1150
101 California Street
San Francisco, CA 94111
$15,920,000 City of Carlsbad, California Variable Rate Demand
Multifamily Housing Revenue Refunding Bonds Series A of 1993
(La Costa Apartments Project)
[After appropriate introductory language, the opinion shall state substantially as follows:l
Based on the foregoing, and upon such matters as are stat
belowp we are of the opinion that:
(a) The Owner is a California general partnership
duly organized and existing under the laws of the State a California.
(b) Each of the Indenture, the Loan Agreement, the
Reimbursement Agreement, the Letter of Credit, the Offici Statement (the "OS1*), the Bond Purchase Agreement, the Remarketing Agreement and the Regulatory Agreement (collectively, the "Project Instruments**) to which the Owner is a party each has been duly authorized and execut
by the Owner and constitutes a valid, legally binding anc enforceable obligation of the Owner.
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(c) The execution and delivery by the Owner of the
Project Instruments (i) will not conflict with, or
constitute on the part of the Owner, a violation, breach c
default under the provisions of, the Owner's partnership agreement, and (ii) to our knowledge are not in contravention of any law or any ordinance or governmental rule or regulation known to us that is applicable to the Owner which would render any of the Project Instruments unenforceable, (iii) to our knowledge will not conflict with, or constitute on the part of the Owner a violation, breach or default under any indenture, mortgage, deed of trust, note, agreement or other instrument or agreement known to us to which the Owner is a party or by which it :
bound, or of any license, judgment, decree or order known to us of any court, agency or body having jurisdiction ovi the Owner or any of its activities or properties.
(d) The Owner has duly authorized the taking of any and all actions necessary to carry out and give effect to
the transactions contemplated to be performed on its part
by the Project Instruments.
(e) To our knowledge, there is no action, suit, proceeding or investigation at law or in equity before an court, public board or body, pending or threatened agains the Owner, wherein an unfavorable decision, ruling or finding would materially adversely effect the transaction
contemplated by, or the validity or unenforceability of, the Project Instruments.
(f) To our knowledge, and to the extent required to be made or obtained prior to the date hereof, the Owner h made all filings with and received all approvals, consent
and orders of any governmental authority, legislative bod board, agency or commission which are necessary to permit the Owner to perform its obligations under the Project
transactions contemplated by the OS and to own and operat the Project.
Instruments to which it is a party, to carry out the
(9) To our knowledge, no consent, approval, authori tion or order of, or registration or filing with, any cou
or governmental or public agency, authority or body is
required with respect to the Owner for the execution, delivery and performance of the Project Instruments to which the Owner is a party.
c-2 NUMATTER/lOB
(h) To our knowledge, the statements under the caption "THE PROJECT AND THE OWNER" contained in the OS (a the same may have been supplemented or amended with the
written approval of the Owner) are true and correct in all material respects as of the date thereof, and the OS did not, as of the date thereof, and does not,. as of the date hereof, contain any untrue statement of a material fact 01 omit to state any material fact required to be stated therein or necessary to make the statements made therein
under the caption "THE PROJECT AND THE OWNER" in light of the circumstances under which they were made, not
misleading. We have not participated in the preparation (
any portion of the OS other than that set forth under the
caption "THE PROJECT AND THE OWNER,Il and we express no opinion whatsoever and assume no responsibility whatsoeve] for the accuracy, completeness or fairness of the
statements contained in such other portions of the OS.
Our opinions are limited to the specific opinions expresst herein, and no further opinions are intended to be, or should be, inferred therefrom. This opinion is limited to the laws ( the State of California and applicable laws of United States, and we express no opinion with respect to the effect or applicability of the laws of other jurisdictions. This opinic is as of the date hereof only, and we expressly decline any undertaking to advise you of any matters arising subsequent tc the date hereof which would cause us to amend the foregoing opinions, in whole or in part. This opinion letter is for thc benefit solely of the addressees hereof and, except in connection with the issuance of the Bonds and the consummatio: of the transactions contemplated thereunder, no other person '
persons shall be entitled to rely on the contents hereof without our express written consent.
Very truly yours,
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EXHIBIT D
[Letterhead of Counsel to the Trustee]
(Closing Date)
Dean Witter Reynolds Inc. 2nd Floor
101 California Street San Francisco, CA 94111
Bank of America National
450 B Street, Suite 950
San Diego, CA 92101
City of Carlsbad
1200 Carlsbad Village Drive Carlsbad, CA 92008
Trust and Savings Association
$15,920,000
Variable Rate Demand
City of Carlsbad, California
Multifamily Housing Revenue Refunding Bonds Series A of 1993
(La Costa Apartments Project)
[After appropriate introductory language, the opinion shall
state substantially as follows:]
We are of the opinion, as of the date hereof, as follows:
1. The Trustee is a national banking association
duly organized and validly existing under the laws of the United States of America, having full power and being qualified to enter, accept and carry out the duties creat under the Indenture.
2. The Indenture has been duly authorized, execute
and delivered by the Trustee, and constitutes the valid z
binding agreement of the Trustee, enforceable against the Trustee in accordance with its terms, except insofar as t validity, binding nature and enforceability of the
Trustee's obligations under the Indenture may be limited
the effect of (i) insolvency, reorganization, arrangement
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NUMATTER/lOB
moratorium, fraudulent transfer and other similar laws, ar (ii) the discretion of any court of competent jurisdictior in awarding equitable remedies, including, without
the effect of general principles of equity embodied in California statutes and common law.
limitation, specific performance or injunctive relief, ani
This opinion is limited to the laws of the State of California and applicable federal laws of the United States, and we express no opinion with respect to the effect or
applicability of the laws of other jurisdictions.
The opinions expressed herein are solely for your benefit in connection with the above transaction and may not be reliec on in any manner or for any purpose by any other person with01 our express written consent.
Respectfully submitted,
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EXHIBIT E
[Letterhead of Counsel to the Bank1
(Closing Date)
Moody's Investors Services, Inc.
99 Church Street
New York, NY 10007
First Trust of California,
National Association
Suite 1150
San FranciscoI CA 94111
Dean Witter Reynolds Inc. 2nd Floor
101 California Street San Francisco, CA 94111
City of Carlsbad 1200 Carlsbad Village Drive
Carlsbad, CA 92008
101 California Street
Re: Letter of Credit No. in the Amount of $-
issued by Bank of America National Trust and Savings Association in connection with $15,920,000 City of
Revenue Refunding Bonds, Series A of 1993 (La Costa
Apartments Project) (the "Bonds")
Carlsbad Variable Rate Demand Multifamily Housing
Ladies and Gentlemen:
We have acted as special counsel to Bank of America National Trust and Savings.Association, a national banking association ("Bank"), in connection with the issuance by Bank of that certain Letter of Credit No. (the "Letter of Credit") in favor of First Trust of California, National
Association, as Trustee ("Trustee"), in the face amount of
certain Reimbursement Agreement (the "Reimbursement Agreement
executed as of May 1, 1993 between the Bank and La Costa
Partners, a California general partnership ("Owner").
Capitalized terms used in this letter and not otherwise defir herein shall have the meanings set forth for such terms in ti
$ The Letter of Credit is being issued pursuant to thz
Reimbursement Agreement.
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This opinion letter is given pursuant to that certain Bont Purchase Contract among and Dean Witter Reynolds Inc. (the "Underwriter"), the City of Carlsbad ("Issuer") and Owner. 11 connection with this opinion, we have examined the Letter of
Credit, the Reimbursement Agreement and such other documentsp records, certificates and other instruments, and we have made such investigations of law, as we have deemed appropriate to
enable us to give the opinion expressed below. We have assuml
of the Bank, as to which this assumption does not apply), the authenticity of all items submitted to us as originals and thl conformity to the originals of all items submitted to us as
copies. We have assumed that each person and entity (other than Bank) executing any such document has the power and capacity to enter into and perform all of its obligations und such documents, and we have assumed the due authorization by each entity (other than Bank) of all requisite action and the due execution and delivery of such documents by each such person and entity (other than Bank).
the genuineness of all signatures (other than those on behalf
Our opinion is subject to the effect of (a) bankruptcy, insolvency, reorganization, arrangement, moratorium or other
similar laws related to or affecting the rights of creditors generally as the same would apply in the event of a bankruptc insolvency, reorganization, arrangement or similar proceeding
affecting Bank; and (b) general principles of equity and
limitations upon the specific enforceability of any remedies,
covenants or other provisions of relevant documents and upon the availability of injunctive relief or other equitable remedies (except as specifically addressed in paragraph 2
below).
Our examination of law relevant to the matters contained this opinion has been limited to the laws of the State of California and the federal laws of the United States of America. We have not examined the laws of the any state othe than California or of any foreign nation. Accordingly, we express no opinion as to matters governed by the laws of any state other than the State of California or of any foreign nation.
We have assumed for purposes of this opinion that Issuer, Trustee or any owner of a Bond ("Bond Holder") or group of Bc Holders will be an "insider" (as defined in the Federal
Bankruptcy Code) of Owner, and none of Owner, Trustee, Underwriter, any Bond Holder any group of Bond Holders will I: an insider of Issuer.
E-2
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Based upon and subject to the foregoing, we are of the opinion that:
1. Bank is a national banking association, duly organized and validly existing under the laws of the Unitc States, and has full corporate right, power and authority
to perform all obligations on its part to be performed, ai to take all actions required or permitted on its part to !
taken, under the Letter of Credit.
2. The Letter of Credit and the Reimbursement Agreement have been duly authorized, executed and deliver1
by Bank, and constitute valid, legal and binding obligations of Bank, enforceable against Bank in accordant with their respective terms, subject to the limitations SI forth above; provided, however, that we express no opinio as to whether a court might grant a temporary or
preliminary injunction against payment of a drawing under the Letter of Credit in the event of a bankruptcy or similar proceeding affecting Owner. It is our opinion th any such payment would not be permanently enjoined by a
court which correctly applies the law which exists as of the date of this letter. In Twist Cau. Inc. v. Southeast
Bank (In re Twist CaD. Ine.), 1 Bankr. 284 (Bankr. D. Fla
1979), as best we can determine from the reported decisio: a bankruptcy court issued a preliminary injunction agains payments on letters of credit. We note, however, that thl Federal District Court for the District of Columbia, in a case with facts similar to Twist CaD, cited Twist Cap but set aside an injunction issued by the Bankruptcy Court enjoining payment of a letter of credit. Paae v. First National Bank of Marvland, 18 Bankr. 713 (D.D.C. 1982).
3. We do not believe that the materials contained the Preliminary Official Statement for the Bonds dated , 1993 and the final Official Statement for the Bonds dated , 1993 (i) under the heading "THE BANK
(excluding financial or statistical information, with respect to which no opinion is expressed), and (ii) under
the headings "THE LETTER OF CREDIT" and "THE REIMBURSEMEN
AGREEMENT" contain any untrue statement of a material fac
or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, no misleading in any material respect.
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This opinion is rendered to you in connection with the
issuance of the Letter of Credit by Bank, and is intended solely for your use in connection therewith, It is not to be
relied upon in any other context, nor is it to be relied upon
by any other person or entity, for any other reasons whatsoeve
Very truly yours,
O'MELVENY & MYERS
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EXHIBIT F
CERTIFICATE OF BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
The undersigned, being duly authorized to execute this Certificate on behalf of Bank of America National Trust and Savings Association (the "Bank") l hereby certifies as follows
1. The Letter of Credit No. , dated 1993 (the
"Letter of Credit"), issued by the Bank in favor of First Tru
of California, National Association, as trustee (the
"Trustee"), has been duly authorized, executed and delivered
the Bank.
2. To the best knowledge of the undersigned, the inforn tion set forth under the caption "THE BANK" in the Official
Statement relating to City of Carlsbad, California, Variable
Rate Demand Multifamily Housing Revenue Refunding Bonds, Series A of 1993 (La Costa Apartments Project) is true and
correct in all material respects.
3. To the best knowledge of the undersigned without
independent inquiry, the Bank has not received notice of any action, suit or proceeding pending, nor, to the best knowledc
of the undersigned without independent inquiry, are there an1 actions, suits or proceedings threatened against or affectin5 the Bank in any court or before any governmental commission, arbitrator, board or authority challenging the validity of tk Letter of Credit or seeking to enjoin the performance of the Bank thereunder.
Dated: June 1, 1993
NUMATTER/128
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIAT'
BY Title
F-1
EXHIBIT G
[Letterhead of Counsel to the Issuer]
June 1, 1993
Stradling, Yocca, Carlson & Rauth, a Professional Corporation
Newport Beach, CA 92660
Dean Witter Reynolds Inc.
101 California Street San Francisco, CA 94111
$15,920,000
City of Carlsbad, California
Variable Rate Demand Multifamily Housing Revenue Refunding Bonds Series A of 1993
(La Costa Apartments Project)
[After appropriate introductory language, the opinion shall state substantially as follows:]
(i) The City is a municipal corporation establishec and validly existing under the Constitution and laws of the State of California;
(ii) The Resolution was duly adopted at a meeting of the City which was called and held pursuant to law and with E public notice, including posting notice as required by the provisions of the Ralph M. Brown Act constituting Sections
54950 and 54961 of the California Government Code, as amende?
required by law and at which a quorum was present and acting throughout;
(iii) The City has full right and lawful authority tc execute and deliver the Indenture, the Loan Agreement, the Bonds, the Purchase Contract, the Regulatory Agreement, the Escrow Agreement and the Intercreditor Agreement (collective1 the "Bond Documents"), and the Bond Documents have been duly authorized, executed and delivered on behalf of the City and, assuming the due authorization, execution and delivery by thc
G-1
NUMATTER/128
other parties thereto, constitute legal, valid and binding agreements of the City enforceable against the City in accordance with their terms, except to the extent that enforcc ability may be limited by bankruptcy, insolvency, reorganiza- tion, moratorium or similar laws or equitable principles
relating to or affecting creditors' rights generally;
(iv) The execution and delivery of the Bond Document;
and compliance with the provisions thereof by the City, under
the circumstances contemplated thereby, do not and will not i~
any material respect conflict with or constitute on the part
the City a breach of or default under any agreement or other
instrument applicable to or binding upon the City or any
which the City is subject; existing law, regulation, court order or consent decree to
(v) Except as disclosed in the Official Statement, the best of our knowledge, after due inquiry with respect thereto, no litigation or other proceedings to which the City
is a party and has been served with a summons or other writte
notice thereof are pending or, to the best of the undersigned knowledge without independent inquiry, threatened in any cour
or other tribunal of competent jurisdiction, State or federal in any way (a) restraining or enjoining the issuance, sale or delivery of any of the Bonds, or (b) questioning or affecting the validity of the Bond Documents or (c) questioning or
affecting the validity of any of the proceedings relating to the authorization, sale, execution, issuance or delivery of t Bonds or (d} questioning or affecting the organization or
existence of the City or the title to office of the officers
thereof;
(vi) The Official Statement and distribution thereof have been duly authorized by the City; and
(vii) Based upon our participation in the preparatior of the Official Statement as City Attorney to the City, we h: no reason to believe that the information relating to the Cii contained in the Official Statement as of its date or as of t date hereof, contained or contains any untrue statement of a material fact or omitted or omits to state any material fact
which should be included therein for the purposes for which 1 Official Statement is to be used or which is necessary in or( to make the statements contained therein, in the light of thl circumstances under which they were made, not misleading. I that connection, however, the limitations inherent in the
examination made by us and the knowledge available to us dur
our participation are such that we do not assume any
responsibility for, nor have we independently verified the
accuracy, completeness or fairness of the statements contain
NUMATTER/128
G-2
in the Official Statement, except under the heading "NO
LITIGATION." In addition, we express no opinion or belief wi respect to any appendices to the Official Statement and/or an
statistical and other financial data included in the Official Statement.
Very truly yours,
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EXHIBIT H
[Letterhead of 1
June 1, 1993
Dean Witter Reynolds
101 California Street
San Francisco, CA 94111
$15,920,000 City of Carlsbad, California
Variable Rate Demand Multifamily Housing Revenue Refunding Bonds
Series A of 1993 (La Costa Apartments Project)
Ladies and Gentlemen:
This letter is being delivered to you pursuant to the Bo1 Purchase Agreement dated May -, 1993 (the "Bond Purchase Agreement") among the City of Carlsbad (the "Issuer"), La Co: Partners, a California general partnership (the "Owner") and Dean Witter Reynolds Inc. (the "Underwriter") relating to thc purchase by the Underwriter of the above-captioned Bonds (tht "Bonds"). The terms defined in the Bond Purchase Agreement i used in this letter with the meanings assigned to them in tht
Bond Purchase Agreement.
We have acted as counsel to the Underwriters in connectic
with the offering of the Bonds to the public by them, and in
that capacity have examined an executed counterpart of the Indenture, the Loan Agreement, the Regulatory Agreement, the Note, the Remarketing Agreement and the Bond Purchase Agreement. We have also examined the originals or copies, certified or otherwise identified to our satisfaction, of su(
other documents, corporate records, certificates and other
instruments as we have deemed necessary or advisable for purposes of this letter.
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Dean Witter Reynolds Inc.
April I, 1993 Page 2
In connection with the Official Statement dated May -,
1993 (the "Official Statement"), we have generally reviewed
certain information furnished to us by, and have participated
in conferences with, representatives of the Issuer, the Owner
Bank of America National Trust and Savings Association, as th issuer of the Letter of Credit (the "Bank"), the Trustee and their respective counsel and representatives of Stradling,
Beach, California, in their capacity as Bond Counsel. We hav also reviewed other records relating to the authorization,
issuance and offering of the Bonds to the public and have
relied upon certificates of officials of the Issuer, the Own€
and the Bank and upon written opinions and letters received from the Issuer, the Owner, the Bank, the Trustee and their
respective counsel and Bond Counsel.
Yocca, Carlson & Rauth, a Professional Corporation, Newport
Based solely on the foregoing, you have asked us whether
believe that the Official Statement (with certain exceptions referred to below) contains an untrue statement of a material fact or omitted to state a material fact necessary to make tk statements therein, in light of the circumstances under whick they were made, not misleading, as of the date of the Offici? Statement and as of the date hereof. In response to your request, and subject to the further qualifications and assumptions set forth below, we can advise you that, althougk
we have made no independent investigation or verification of
the correctness and completeness of the information included
the Official Statement, nothing which came to our attention i the course of our review of the Official Statement and
believe that the Official Statement as of its date contained,
or as of the date hereof, contains any untrue statement of a material fact or as of its date omitted to state any material fact necessary to make the statements therein, in the light c the circumstances under which they were made, not misleading. However, the character of determinations involved in assistar in the preparation of documents such as the Official Statemer is such that we do not assume any responsibility for the accuracy, completeness or fairness of the statements contain€ in the Official Statement; further, we do not express any vie or belief with respect to any financial or statistical data c with respect to any information generally relating to the Bar the Reimbursement Agreement, the Letter of Credit, the Owner the Project included in the Official Statement or as to any information in the Official Statement under the captions "THE BANK," "THE PROJECT, VI "THE OWNER" and "TAX MATTERS" or in
Appendix B thereto.
participation in the preparation thereof has caused us to
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Dean Witter Reynolds Inc.
April 1, 1993
Page 3
This opinion is rendered solely for your use and may not
relied upon by any other person without our express written consent, and you may rely upon it only in connection with the transaction specifically referred to herein. We assume no
obligation to review or supplement this opinion after its dat,
action, judicial decision or otherwise.
should the present laws be changed by legislative or regulato
Very truly yours,
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