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Home My WebLink About2003-05-20; City Council; 17176 Exhibit 4; Multi-Family Housing Revenue Bonds13061-10 JHTADarm 1 Exhibit 4 rw 17,176 TRUST INDENTURE s---ao-cj 3 by and between CITY OF CARLSBAD as Issuer and WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee Dated as of June 1,2003 Relating to: $------------ City of Carlsbad Multifamily Housing Revenue Bonds (Mariposa Apartments) 2003 Series A and $----------- City of Carlsbad Multifamily Housing Revenue Bonds (Mariposa Apartments) 2003 Series B TABLE OF CONTENTS ARTICLE I DEFINITIONS ANTI GENERAL PROVISIONS Section 1.01. Section 1.02. Section 2.01. Section 2.02. Section 2.03. Section 2.04. Section 2.05. Section 2.06. Section 2.07. Section 2.08. Section 2.09. Section 3.01. Section 3.02. Section 3.03. Section 4.01. Section 4.02. Section 4.03. Section 4.04. Section 4.05. Section 4.06. Section 5.01. Section 5.02. Section 5.03. Section 5.04. Section 5.05. Section 5.06. Section 6.01. Section 6.02. Section 6.03. Section 6.04. Section 6.05. Section 6.06. Section 6.07. Section 6.08. Definitions .......................................................................................................... 3 Rules of Construction .......................................................................................... 15 ARTICLE 11 THE BONDS Authorization and Terms of Bonds ...................................................................... 16 Determination of Interest Rate on the Bonds ....................................................... 17 Demand for and Mandatory Purchase of Bonds .................................................... 22 Execution of Bonds; Limited Obligation .............................................................. 24 Bond Register and Authenticating Agent ............................................................ 26 Temporary Bonds ............................................................................................... 26 Bonds Mutilated, Lost. Destroyed or Stolen ........................................................ 26 Transfer and Exchange of Bonds .......................................................................... 25 Use of Depository .............................................................................................. 27 ARTICLE III ISSUANCE OF BONDS; APPLICATION OF PROCEEDS Authentication and Delivery of the Bonds ......................................................... 30 Application of Proceeds of Bonds ........................................................................ 30 Program Fund .................................................................................................... 30 ARTICLE IV REDEMPTION OF BONDS Circumstances of Redemption ............................................................................. 32 Selection of Bonds for Redemption ...................................................................... 34 Notice of Redemption ........................................................................................ 35 Partial Redemption of Bonds ............................................................................. 35 Purchase in Lieu of Redemption .......................................................................... 36 Effect of Redemption ......................................................................................... 36 ARTICLE V REVENUES Pledge of Revenues ............................................................................................ 37 Bond Fund ......................................................................................................... 37 Investment of Moneys ......................................................................................... 38 Assignment to Trustee; Enforcement of Obligations .............................................. 39 Letter of Credit ................................................................................................. 39 Standby Letter of Credit .................................................................................... 41 ARTICLE VI COVENANTS OF THE ISSUER Payment of Principal and Interest ...................................................................... 42 Compliance With Indenture ............................................................................... 43 Paying Agents ................................................................................................... 42 Preservation of Revenues; Amendment of Documents ........................................... 42 Further Assurances ............................................................................................ 43 Rebate of Excess Investment Earnings to United States ........................................ 43 Limitations on Liability .................................................................................... 44 Request and Indemnification .............................................................................. 44 i Section 7.01. Section 7.02. Section 7.03. Section 7.04. Section 7.05. Section 7.06. Section 7.07. Section 7.08. Section 7.09. Section 7.10. Section 7.11. Section 7.12. Section 8.01. Section 8.02. Trustee 8.03. Section 8.04. Section 8.05. Section 8.06. Section 8.07. Section 8.08. Section 8.09. Section 8.10. Section 8.11. Section 8.12. Section 8.13. Section 8.14. Section 8.15. Section 8.16. Section 8.17. Section 8.18. Section 8.19. Section 9.01. Section 9.02. Section 9.03. Section 9.04. Section 9.05. Section 9.06. Section 10.01. Section 10.02. Section 10.03. Section 10.04. ARTICLE VII DEFAULT Events of Default; Acceleration; Waiver of Default ............................................ 45 Institution of Legal Proceedings by Trustee .......................................................... 46 Application of Moneys Collected by Trustee ....................................................... 46 Remedies Cumulative ........................................................................................ 47 Covenant To Pay Bonds in Event of Default ......................................................... 47 Trustee Appointed Agent for Bondholders .......................................................... 47 Right of Credit Bank and Bondholders to Direct Proceedings .............................. 47 Limitation on Bondholders' Right To Sue ........................................................... 48 Notice of Default .............................................................................................. 48 Effect of Delay or Omission To Pursue Remedy .................................................... 47 Limitation of Liability to Revenues ................................................................... 48 No Default; Deemed Redemption ....................................................................... 49 ARTICLE WI THE TRUSTEE AND AGENTS Duties. Immunities and Liabilities of Trustee ..................................................... 50 Not Responsible for Recitals .............................................................................. 53 Moneys Received by Trustee To Be Held in Trust ................................................. 53 Compensation and Indemnification of Trustee and Agents .................................... 53 Qualifications of Trustee ................................................................................... 54 Resignation and Removal of Trustee and Appointment of Successor Trustee .......... 54 Acceptance of Trust by Successor Trustee .............................................................. 55 Merger or Consolidation of Trustee ..................................................................... 56 Accounting Records and Reports .......................................................................... 56 Remarketing Agent ............................................................................................ 56 Qualifications of Remarketing Agent ................................................................. 57 Remarketing of Bonds ........................................................................................ 57 Purchase of Bonds Not Remarketed .................................................................... 58 Delivery of Purchased Bonds ............................................................................. 59 Tender Agent ..................................................................................................... 59 Qualifications of Tender Agent .......................................................................... 60 Dealing in Bonds ............................................................................................... 61 Right of Trustee To Rely Upon Documents ........................................................... 52 Intervention by Trustee ...................................................................................... 53 ARTICLE D( MODIFICATION OF INDENTURE Modification of Indenture Without Consent of Bondholders ................................ 62 Modification of Indenture With Consent of Bondholders ..................................... 63 Opinion of Counsel as to Supplemental Indenture ................................................ 64 Notation of Modification on Bonds; Preparation of New Bonds ............................ 64 Effect of Supplemental Indenture ....................................................................... 64 Notice to Rating Agency .................................................................................... 64 ARTICLE X DEFEASANCE Discharge of Indenture ....................................................................................... 66 Discharge of Liability on Bonds ......................................................................... 66 Payment of Bonds After Discharge of Indenture .................................................. 67 Deposit of Money or Securities With Trustee ...................................................... 67 ii Section 11.01. Section 11.02. Section 11.03. Section 11.04. Section 11.05. Section 11.06. Section 11.07. Section 11.08. Section 11.09. Section 11.10. Section 11.11. Section 11.12. Section 11.13. Section 11.14. EXHIBIT A-1 EXHIBIT A-2 EXHIBIT B EXHIBIT C EXHIBIT D-1 EXHIBIT D-2 EXHIBIT E EXHIBIT F ARTICLE XI MISCELLANEOUS Successors of Issuer ............................................................................................. 68 Limitation of Rights to Parties and Bondholders ................................................. 68 Waiver of Notice .............................................................................................. 68 Destruction of Bonds .......................................................................................... 68 Separability of Invalid Provisions ..................................................................... 68 Notices ............................................................................................................. 68 Authorized Bank Representatives May Act for Borrower .................................... 69 Evidence of Rights of Bondholders ..................................................................... 70 Holidays .......................................................................................................... 71 Governing Law .................................................................................................. 71 Execution in Several Counterparts ...................................................................... 71 References to the Credit Bank; Other Documents ................................................ 71 Replacement Trust Indenture .............................................................................. 72 Qualified Project Costs ...................................................................................... 72 FORM OF VARIABLE RATE (DAILY MODE) BOND ..................................... A-1-1 FORM OF VARIABLE RATE (WEEKLY MODE) BOND ................................. A-2-1 FORM OF RESET RATE BOND ......................................................................... 8-1 FORM OF FIXED RATE BOND ......................................................................... C-1 FORM OF TENDER NOTICE-DAILY MODE .................................................. D-1-1 FORM OF TENDER NOTICE-WEEKLY MODE .............................................. D-2-1 FORM OF INVESTOR LETTER ......................................................................... E-1 FORM OF PERMANENT PHASE TRUST INDENTURE .................................... F-1 iii I ‘I7 TRUST INDENTURE THIS TRUST INDENTURE (the ”Indenture”) is dated as of June 1, 2003, and is by and between CITY OF CARLSBAD, a municipal corporation duly organized and existing under the laws of the State of California (herein called the ”Issuer”), and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association organized under the laws of the United States of America, with a corporate trust office in Los Angeles, California, and being qualified to accept and administer the trusts hereby created (herein called the ”Trustee”). WITNESSETH: WHEREAS, the Issuer is authorized pursuant to the provisions of Chapter 7 of Part 5 of Division 31 of the California Health and Safety Code (the ”Act” or ”Housing Law”), to issue bonds and loan the proceeds thereof to qualified borrowers for the purpose of financing, among other things, the acquisition, construction and development of multifamily housing projects for persons and families of low income; and WHEREAS, all conditions, things and acts required by the Act and the Housing Law, and by all other applicable laws of the State, to exist, have happened and have been performed precedent to and in connection with the issuance of City of Carlsbad Multifamily Housing Revenue Bonds (Mariposa Apartments) 2003 Series A and of City of Carlsbad Multifamily Housing Revenue Bonds (Mariposa Apartments) 2003 Series B (the ”Bonds”) exist, have happened, and have been performed in due time, form and manner as required by law, and the Issuer is now duly authorized and empowered, pursuant to each and every requirement of law, to issue the Bonds for the purpose, in the manner and upon the terms herein provided; and WHEREAS, the Issuer has duly entered into a Financing Agreement, dated as of June 1, 2003 (“Financing Agreement”) with the Trustee and CIC Calavera, L.P., a California limited partnership (the ”Borrower”), specdying the terms and conditions of the loan of the proceeds of the Bonds to the Borrower to assist in the financing the acquisition, construction and development of a rental housing development known as the Mariposa Apartments, located within the City of Carlsbad, California (the ”Project”); and WHEREAS, in order to provide for the authentication and delivery of the Bonds, to establish and declare the terms and conditions upon which the Bonds are to be issued and secured and to secure the payment of the principal thereof and of the interest and premium, if any, thereon, the Issuer has authorized the execution and delivery of this Indenture; and WHEREAS, all acts and proceedings required by law necessary to make the Bonds, when executed by the Issuer, authenticated and delivered by the Trustee and duly issued as provided herein, the valid, binding and legal limited obligations of the Issuer, and to constitute this Indenture a valid and binding agreement for the uses and purposes herein set forth, in accordance with its terms, have been done and taken; and the execution and delivery of this Indenture have been in all respects duly authorized; NOW, THEREFORE, THIS INDENTURE WITNESSETH, that in order to secure the payment of the principal of, and the interest and premium, if any, on, all Bonds at any time issued and outstanding under this Indenture, according to their tenor, and to secure the performance and observance of all the covenants and conditions therein and herein set forth, and to declare the terms and conditions upon and subject to which the Bonds are to be issued and received and to secure the amounts owed to the Credit Bank under the Credit Agreement, and for and in consideration of the premises and of the mutual covenants herein contained and of the purchase and acceptance of the Bonds by the holders thereof, and for other valuable 1 consideration, the receipt of which is hereby acknowledged, the Issuer covenants and agrees with the Trustee, for the equal and proportionate benefit of the respective registered owners from time to time of the Bonds and the Credit Bank, as follows: 2 ARTICLE I DEFINITIONS AND GENERAL PROVISIONS Section 1.01. Definitions. Unless the context otherwise requires, the tern defined m this Section 1.01 shall, for all purposes of this Indenture and of the Financing Agreement and of any indenture supplemental hereto or agreement supplemental thereto, have the meanings herein specified, as follows: ”Acceleration Default” shall mean an Event of Default described in Section 7.l(a) of the “Act of Bankruptcy” shall mean the filing of a petition in bankruptcy (or other commencement of a bankruptcy or similar proceeding) by or against the Borrower and/or a general partner of the Borrower, under any applicable bankruptcy, insolvency or similar law as now or hereafter in effect, provided that any filing of a petition against the Borrower or any general partner of the Borrower (or other involuntary commencement of a bankruptcy or similar proceeding), shall not constitute an Act of Bankruptcy if a court of competent jurisdiction dismisses such petition (or such proceeding) within 60 days of the filing thereof. Financing Agreement. ”Act of Bankruptcy of the Credit Bank’’ shall mean the closing, liquidation, insolvency or bankruptcy of the Credit Bank, or its failure to pay its debts generally as such debts become due (including its obligations to pay draws made on the Letter of Credit) or its admission in writing of its inability to pay any of its indebtedness or its consent to appointment of a receiver, liquidator, trustee or similar official for itself or for all or any substantial part of its properties or assets or the appointment of any such trustee, receiver, liquidator or similar official or the institution of insolvency, reorganization, arrangement or liquidation proceedings (or similar proceedings) by or against the Credit Bank, unless the appropriate regulatory agency has confirmed in writing the effectiveness of the Letter of Credit. ”Administrator” shall mean the Issuer, or a substitute or replacement administrator, if any, appointed by the Issuer, in any case acting as agent of the Issuer in the administration of the Regulatory Agreement, and may include the Issuer or the Credit Bank. ”Agents” shall mean the Remarketing Agent, the Tender Agent and any paying agents hereunder. ”Authorized Amount” shall mean $8,107,000, the authorized aggregate principal amount of the Bonds. ”Authorized Bank Representative” shall mean any person who at the time and from time to time may be designated as such, by written certificate furnished to the Issuer and the Trustee containing the specimen signature of such person and signed on behalf of the Credit Bank or the Standby Credit Bank by any officer or agent of the Credit Bank or the Standby Credit Bank, respectively, which certificate may designate an alternate or alternates. “Authorized Denominations” shall mean $100,000 and any integral multiple of $5,000 in excess thereof during any Variable Period (provided, one Series B Bond maybe an integral multiple of $7,000 in excess thereof), and shall mean $5,000 and any integral multiple thereof during any Reset Period or on and after the Conversion Date. 3 /54 "Authorized Borrower Representative" shall mean any person who at the time and from time to time may be designated as such by written certificate furnished to the Issuer and the Trustee containing the specimen signature of such person and signed on behalf of the Borrower by an authorized representative of the Borrower, which certificate may designate an alternate or alternates. "Available Amounts" shall mean moneys that are (a) continuously on deposit with the Trustee in trust for the benefit of the owners of the Bonds in a separate and segregated account in which only Available Amounts are held and (b) any of the following: (i) amounts drawn under the Letter of Credit, (ii) amounts drawn under the Standby Letter of Credit, (iii) proceeds of sale of the Bonds received contemporaneously with the issuance and sale of the Bonds, (iv) proceeds of the remarketing of the Bonds, and (v) any other amounts for which in each case the Trustee has received, at the time such amounts are deposited with the Trustee, an opinion of nationally recognized counsel experienced in bankruptcy matters or Bond Counsel to the effect that the use of such amounts to make payments on the Bonds would not be voidable as preferential payments or recoverable under the United States Bankruptcy Code should the Issuer, the Borrower or any general partner of the Borrower become a debtor in proceedings commenced thereunder and (v) income from the investment of any of the foregoing. "Bond Counsel" shall mean any attorney at law or firm of attorneys, selected by the Issuer, of nationally recognized standing in matters pertaining to the federal tax exemption of interest on bonds issued by states and political subdivisions, and duly admitted to practice law before the highest court of any state of the United States of America or the District of Columbia, but shall not include counsel for the Borrower or the Credit Bank. "Bond Fund" shall mean the fund established pursuant to Section 5.02 hereof. "Bond PZedge Agreement'' shall mean the Pledge and Security Agreement dated as of June 1, 2003, by and among the Borrower, the Trustee and the Credit Bank, as amended, restated or supplemented and any similar document with the issuer of any substitute Letter of Credit or other credit instrument. "Bonds" shall mean collectively the Series A Bonds and the Series B Bonds issued in the aggregate principal amount of $ "Bond Year" shall mean the period of 12 consecutive months ending on the last day of May in each year in which Bonds are or will be Outstanding, provided that the first Bond Year shall commence on the Delivery Date and end on May 31,2004. "Borrower" shall mean (a) CIC Calavera, L.P., a California limited partnership, and its successors and assigns and (b) any surviving, resulting or transferee entity as provided in Section 5.2 of the Financing Agreement. "Business Day" shall mean any day, not including Saturday or Sunday, on which banks in the City of New York, New York, banks and trust companies in the city in which the Principal Office of the Trustee is located and banks in the city in which the Principal Office of the Credit Bank is located are not required or authorized by law to remain closed and on which the New York Stock Exchange is not closed. "Closing Date'' shall mean June 2003, the date of initial issuance and delivery of the Bonds. 4 "Code" shall mean the Internal Revenue Code of 1986 as in effect on the date of issuance of the Bonds or (except as otherwise referenced herein) as it may be amended to apply to obligations issued on the date of issuance of the Bonds, together with applicable temporary and final regulations promulgated, and applicable official public gudance published, under the Code. "Collateral Funds" shall mean any amounts realized by the Trustee from the liquidation "Completion Date" shall mean , 200- or such later date determined "Construction Phase Investment Agreement" shall mean the , dated pursuant to which the Bond proceeds "Conversion" shall mean establishment of the interest rate on the Series B Bonds at the of Eligible Collateral. pursuant to Section 3.03(c). as of June are invested prior to Conversion. 2003 between the Trustee and Fixed Rate, pursuant to Section 2.02(d). "Conversion Date" shall mean the date on which the Fixed Rate becomes effective with respect to the Series B Bonds. "Costs of Issuance Fund" shall mean the fund established pursuant to Section 3.04 hereof. "Credit Agreement" shall mean the Reimbursement Agreement, dated as of June 1, 2003, between the Borrower and the Credit Bank, as originally executed or as it may from time to time be supplemented or amended, providing for the issuance of the Letter of Credit, and any subsequent agreement pursuant to which a substitute Letter of Credit is issued and all of the "Credit Documents" (as defined in the Credit Agreement). "Credit Bank" shall mean Provident Bank, as issuer of the Letter of Credit, or any issuer of a substitute Letter of Credit as permitted under Section 5.8 of the Financing Agreement, and the respective successors and assigns of the business thereof and any surviving, resulting or transferee banking association or corporation with or into which it may be consolidated or merged or to which it may transfer all or substantially all of its banking business. "Daily Mode" shall mean any period during which the interest rate on the Bonds is reset on each Business Day, as provided in Section 2.02(a) hereof. "Debt Service" means the scheduled amount of interest and amortization of principal payable on the Bonds during the period of computation, excluding amounts scheduled during such period which relate to principal which has been retired before the beginning of such period. "Deed of Trust" shall mean the Multifamily Deed of Trust Assignment of Rents, Security Agreement and Fix the Filing securing the obligation under the Financing Agreement and the Credit Agreement. "Demand Date" shall mean any date on which any Bond is required to be purchased pursuant to Sections 2.02 and 2.03 hereof. "Designated Officer" shall mean the Mayor, City Manager or Finance Issuer and any other officer or employee of the Issuer authorized by resolution perform a specified act or sign a specified document. Director of the of the Issuer to 5 / 52 “Determination of TaxabiZity” shall mean (a) the failure of the Credit Bank or the Borrower to consent within 45 days to any amendment to the Indenture, the Financing Agreement or the Regulatory Agreement, which in the written opinion of Bond Counsel is necessary to preserve the exclusion from gross income for federal income tax purposes of interest on the Bonds, or (b) the 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 effect that the interest on 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 of the Bonds or a ”related person,’’ as such terms are used in Section 147(a) of the Code) is includable for federal income tax purposes in the gross income of all recipients thereof subject to federal income taxes. With respect to clause (b) above, a judgment or order of a court or a ruling or decision of the Intemal 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. “Eligible Collateral” shall mean cash, noncallable Government Obligations maturing on or prior to the applicable Interest Payment Dates or other collateral, which shall be rated “AAA (or the equivalent) by the Rating Agency, which collateral may be provided pursuant to a collateral pledge agreement acceptable to the Issuer and the Rating Agency. ”Event of Default” as used herein other than with respect to defaults under the Financing Agreement shall have the meaning specified in Section 7.01 hereof, and as used in the Financing Agreement shall have the meaning specified in Section 7.1 thereof. ”Fair Market Value” shall mean the price at which a willing buyer would purchase the investment from a willing seller in a bona fide, arm’s-length transaction (determined as of the date the contract to purchase or sell the investment becomes binding) if the investment is traded on an established securities market (within the meaning of Section 1273 of the Code) and, otherwise, the term ”Fair Market Value” means the acquisition price in a bona fide arm’s length transaction (as referenced above) if (a) the investment is a certificate of deposit that is acquired in accordance with applicable regulations under the Code, (b) the investment is an agreement with specifically negotiated withdrawal or reinvestment provisions and a specifically negotiated interest rate (for example, a guaranteed investment contract, a forward supply contract or other investment agreement) that is acquired in accordance with applicable regulations under the Code, (c) the investment is a United States Treasury Security-State and Local Government Series that is acquired in accordance with applicable regulations of the United States Bureau of Public Debt, or (d) the investment is the Local Agency Investment Fund, but only if at all times during which the investment is held its yleld is reasonably expected to be equal to or greater than the yield on a reasonably comparable direct obligation of the United States. The Trustee shall have no duty in connection with the determination of Fair Market Value other than to follow the investment directions of the Borrower in any written direction of the Borrower. “Financing Agreement” shall mean the Financing Agreement, dated as of June 1, 2003, among the Issuer, the Trustee and the Borrower, as originally executed or as it may from time to time be supplemented or amended. ”Fixed Rate“ shall mean the interest rate borne by the Bonds after Conversion and until the maturity date of the Bonds, determined in accordance with Section 2.02(d) hereof. ”Funding Requisition” shall mean the requisition form requesting disbursement of moneys from the Program Fund in the form attached as Exhibit A to the Financing Agreement. 6 153 "Government Obligations" shall mean noncallable and nonprepayable direct obligations of the United States of America or obligations which as to full and timely payment of principal and interest constitute full faith and credit obligations of the United States of America (excluding therefrom unit investment trusts and money market funds comprised of such securities). "holder" or "Bondholder" or "owner" shall mean the person in whose name any Bond is registered. "Housing Law" or "Act" shall mean, Chapter 7 of Part 5 of Division 31 of the California Health and Safety Code, as amended to the date hereof, as in effect at the time of the issuance and delivery of the Bonds. "Indenture" shall mean this Trust Indenture, as origmally executed or as it may from time to time be supplemented, modified or amended by any supplemental indenture entered into pursuant to the provisions hereof, as succeeded by that certain Trust Indenture, dated as of June 1, 2003, by and between the Issuer and the Trustee, to be effective as of the Loan Conversion. "Inducement Date" shall have the meaning set forth in the Tax Certificate. "Information Services " shall mean Financial Information, Inc. "Daily Called Bond Service," 10th Floor, 30 Montgomery Street, Jersey City, New Jersey 07302, Attention: Editor; Kenny Information Services, "Called Bond Service," 28th Floor, 55 Broad Street, New York, New York 10004; Moody's Investors Service "Municipal and Government," 8th Floor, 99 Church Street, New York, New York 10007, Attention: Municipal News Reports; and Standard & Poor's Ratings Group "Called Bond Record," 55 Water, New York, New York 10004; or, in accordance with then current guidelines of the Securities and Exchange Commission, such other addresses and/or such other services providing information with respect to called bonds, or any other such services as the Issuer may designate in writing to the Trustee. "Intercreditor Agreement" shall mean the Intercreditor Agreement of even date herewith among the Trustee, the Issuer and the Credit Bank, as it may be originally executed or as it may from time to time be supplemented or amended, and any similar agreement with any issuer of a substitute Letter of Credit. "Interest Payment Date" shall mean (a) for interest accrued during any Variable Period, the first Business Day of each month, (b) for interest accrued during any Reset Period, June 1 and December 1 of each year, commencing on the June 1 or December 1 next following the applicable Reset Date (c) for interest accrued on and after the Conversion Date, June 1 and December 1 of each year, commencing on the June 1 or December 1 next following the Conversion Date; provided, however, the "Interest Payment Date" for the Bonds initially shall be June 1 and December 1 of each year, commencing December 1,2003. "Interest Period" shall mean each period commencing on an Interest Payment Date and ending on the day before the next succeeding Interest Payment Date, except that the first Interest Period shall begin on the Closing Date and shall end on the day before the first Interest Payment Date. "Investment Property" shall mean any security (as said term is defined in Section 165(g)(2)(A) or (B) of the Code), obligation, annuity or investment-type property, excluding, however, obligations the interest on which is excluded from gross income under Section 103 of the Code. 7 ”Investment Securities” shall mean any of the following (including any funds comprised of any of the following, which may be funds maintained, available to or managed by the Trustee or its affiliates and which are rated in the highest rating category by the Rating Agency): (a) United States Treasury notes, bonds, bills or certificates of indebtedness, or those for which the full faith and credit of the United States are pledged for the full and timely payment of principal and interest (including state and local government series); (b) obligations, participation or other instruments of or issued by a federal agency or a United States government-sponsored enterprise, the principal of and interest on which is unconditionally guaranteed by the United States; (c) any obligations on which the interest is exempt from federal income taxation and which are rated by the Rating Agency in one of its two highest long- Term rating categories or its highest short-Term rating category; (d) certificates of deposit issued by, or time or demand deposits or other banking arrangements with, a nationally- or state- chartered bank (including the Credit Bank, the Standby Credit Bank and the Trustee or its affiliates) or savings and loan association which, to the extent they are not insured by federal deposit insurance, are collateralized by securities eligible to secure public deposits in the state, or which are issued by or with such an institution having a minimum capital of $500,000,000 and rated within the top two ratings of a nationally recognized rating service; (e) money market portfolios rated “AAA by the Rating Agency; (f) repurchase agreements, which may include repurchase agreements of the Trustee, secured by any of the obligations referred to in (a) and (b) above and the debt of the issuer of the repurchase agreement is rated at least in one of two highest rating categories of the Rating Agency; (g) any other investments selected by the Borrower and approved by the Credit Bank, the unsecured general obligations of the provider of which are rated at least in one of the two highest rating categories of the Rating Agency, and (h) the Construction Phase Investment Agreement. “Issuunce Costs” shall mean all costs and expenses of issuance of the Bonds including, but not limited to: (a) underwriters’ fees; (b) counsel fees, including Bond Counsel, underwriters’ counsel, Borrower’s counsel and Issuer attorneys’ fees, as well as any other specialized counsel fees incurred in connection with the borrowing; (c) the Issuer fees and expenses incurred in connection with the issuance of the Bonds; (d) Rating Agency fees; (e) initial Trustee’s fees and Trustee’s counsel fees, and initial fees of the Remarketing Agent and Tender Agent; (f) paying agent and cerbfymg and authenticating agent fees related to issuance of the Bonds; (g) accountant fees related to issuance of the Bonds; (h) printing costs of the Bonds and of the preliminary and final official statement; and (i) publication costs associated with the financing proceedings. “Issuer” shall mean City of Carlsbad, a joint exercise of powers authority duly organized and existing under the laws of the State. ”Issuer Fee” shall mean the annual fee payable to the Issuer pursuant to Section 4.2(c) of the Financing Agreement. ”Issuer Loan Documents” shall mean the Financing Agreement, the Regulatory Agreement, the Letter of Credit and the Deed of Trust and such other agreements and instruments executed for the purpose of granting the Issuer or the Trustee a senior lien upon the Project. ”Letter of Credit” shall mean that certain irrevocable, direct-pay letter of credit issued by the Credit Bank on or before the Closing Date, or any reissuance or extension thereof or any substitute letter of credit or other credit instrument provided during any Variable Period meeting the requirements of Section 5.8(a) of the Financing Agreement, or provided during any Reset Period meeting the requirements of Section 5.8(b) of the Financing Agreement, or provided in connection with or after Conversion meeting the requirements of Section 5.8(c) of the 8 Financing Agreement; it being understood that no more than one Letter of Credit shall be required in order to secure payment of the Bonds. ”Loan” shall mean the mortgage loan made by the Issuer to the Borrower pursuant to the Financing Agreement. “Loan Conversion” shall mean the date on which there is delivered to the Trustee a Subordinate Credit Facility pursuant to the provision of the Indenture in the form of a Credit Enhancement Investment (Stand-by) issued by Fannie Mae. “Market Risk Event” shall mean (a)(i) legislation enacted by the Congress, or (ii) a decision rendered by a court established under Article JII of the Constitution of the United States, or the United States Tax Court, or (iii) an order, ruling or regulation issued by the United States Department of the Treasury or the Internal Revenue Service, with the purpose or effect, directly or indirectly, of causing interest on the Bonds to be includable in the gross income of the holders thereof for purposes of federal income taxation; or (b) legislation enacted or any action taken by the Securities and Exchange Commission which, in the opinion of counsel to the Remarketing Agent, has the effect of requiring the remarketing of the Bonds to be registered under the Securities Act of 1933, as amended (the ”Securities Act”), or any other ”security,” as defined in the Securities Act, issued in connection with or as part of the remarketing of the Bonds to be so registered or this Indenture to be qualified as an indenture under the Trust Indenture Act of 1939, as amended; or any event shall have occurred or shall exist which, in the reasonable judgment of the Remarketing Agent, makes or has made untrue or incorrect in any material respect any statement or information contained in any reoffering circular distributed in connection with the next succeeding Reset Date or the Conversion or is not or was not reflected in such reoffering circular but should be or should have been reflected therein in order to make the statements or information contained therein not misleading in any material respect; or (c) in the reasonable judgment of the Remarketing Agent, any event which makes it impractical or inadvisable for the Remarketing Agent to remarket or enforce agreements to remarket Bonds because (i) trading in securities generally shall have been suspended on the New York Stock Exchange, Inc., or a general banking moratorium shall have been established by federal, New York or State of California authorities or (ii) the State of New York or the State of California shall have taken any action, whether administrative, legislative, judicial or otherwise which materially and adversely affects the Remarketing Agent’s ability to remarket the Bonds or (iii) a war involving the United States or other national calamity shall have occurred. “Maximum Interest Rate” shall mean the lesser of 12% or any maximum rate permitted by law (as set forth in an Opinion of Counsel) to be paid on the Bonds or to be charged on the Loan. ”Net Proceeds,” when used with respect to any insurance proceeds or condemnation award, shall mean the amount remaining after deducting from the gross proceeds thereof all expenses (including attorneys’ fees) inwed in the collection of such proceeds or award and, whenused with respect to the Bonds, means the proceeds of the Bonds received by or for the Issuer on the Closing Date, less amounts, if any, used to pay Issuance Costs. ”Nonpurpose Obligation” shall mean any Investment Property which is acquired with the Gross Proceeds of the Bonds other than the Loan. ”Oficer’s Certificate” shall mean a certificate signed by a Designated Officer. ”Opinion of Counsel” shall mean a written, opinion satisfactory to the Credit Bank, which counsel shall not be of counsel in form and substance unsatisfactory to the Credit Bank 9 and, may be counsel for the Issuer or Bond Counsel or counsel for the Trustee or counsel for the Borrower. "Original Purchaser" shall mean the purchaser or purchasers of the Bonds from the Issuer on the Closing Date. "Outstanding," when used as of any particular time with reference to Bonds, shall mean, subject to the provisions of Section 11.08(e), all Bonds which have been authenticated and delivered by the Trustee or the Tender Agent under this Indenture except: (a) cancellation; Bonds which have been cancelled by the Trustee or surrendered to the Trustee for (b) Bonds for the payment or redemption of which moneys or securities in the necessary amount (as provided in Section 10.04) have been deposited with the Trustee (whether upon or prior to the maturity or the redemption date of such Bonds), provided that, if such Bonds are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given as in Article IV provided or provision satisfactory to the Trustee shall have been made for the giving of such notice; and (c) Bonds in lieu of or in substitution for which other Bonds shall have been authenticated and delivered by the Trustee pursuant to the terms of Sections 2.07 and 2.08. "person" shall mean an individual, a corporation, a partnership, a trust, an unincorporated organization or a government or any agency or political subdivision thereof. "Pledged Bonds" shall mean Bonds purchased by the Trustee with the proceeds of a draw on the Letter of Credit under Section 2.03(c) hereof so long as such Bonds are held in accordance with the terms of the Bond Pledge Agreement. "Pledged Bonds Rate'' shall mean the rate of interest borne by Pledged Bonds, as "Principal Office" with respect to the Trustee shall mean the corporate trust office of the Trustee located at the address set forth in Section 11.06 hereof, or at such other place as the Trustee shall designate by notice given under said Section 11.06 or such office designated by the Trustee in writing for the payment, transfer, exchange or registration of the Bonds; and with respect to the Borrower shall mean its office located at the address set forth in Section 11.06 hereof, or at such other place as the Borrower shall designate to the Trustee as provided in Section 11.06 hereof; and with respect to the Remarketing Agent shall mean its office located at the address set forth in Section 11.06 hereof, or at such other place as the Remarketing Agent shall designate to the Trustee as provided in Section 8.12; and with respect to the Credit Bank shall mean its office located at the address set forth in Section 11.06 hereof, or at such other place as the Credit Bank shall designate as provided in said Section 11.06; and with respect to the Standby Credit Bank shall mean its office located at the address set forth in Section 11.06 or at such other place as the Standby Credit Bank shall designate as provided in said Section 11.06; and with respect to the Tender Agent shall mean its office located at the address set forth in Section 11.06 hereof, or at such other place as the Tender Agent shall designate to the Trustee as provided in Section 8.17. specified in the Credit Agreement. "Program Fund" shall mean the fund established pursuant to Section 3.03 hereof. 10 ”Project” shall mean the multifamily rental housing development located in the City of Carlsbad, California consisting of those facilities, structures, buildings, fixtures or equipment, as it may at any time exist, on the real property described in Exhibit A to the Regulatory Agreement, the acquisition, construction and development of which is to be financed, in part, from the proceeds of the sale of the Bonds and any interest in real property, structures, buildings, fixtures or equipment acquired in substitution for, as a renewal or replacement of, or a modification or improvement to, all or any part of such facilities. ”Project Costs” shall mean to the extent authorized by the Code, the Regulations, the Act and the Housing Law, any and all costs incurred by the Borrower with respect to the acquisition, construction and development of the Project. ”Purchase Price,“ with respect to any Bond required to be purchased pursuant to Section 2.02 and 2.03 hereof, shall mean the principal amount of such Bond plus interest accrued thereon to the Demand Date. ”Purchase Price,” for the purpose of computation of the Yield of the Bonds, has the same meaning as the term ”issue price” in Sections 1273(b) and 1274 of the Code, and, in general, means the initial offering price to the public (not including bond houses and brokers, or similar persons or organizations acting in the capacity of underwriters or wholesalers) at which price a substantial amount of the Bonds are sold or, if the Bonds are privately placed, the price paid by the first buyer of the Bonds or the acquisition cost of the first buyer. The term ”Purchase Price,” for the purpose of computation of the Yield of Nonpurpose Obligations, means the fair market value of the Nonpurpose Obligations on the date of use of Gross Proceeds of the Bonds for acquisition thereof, or if later, on the date that Investment Property constituting a Nonpurpose Obligation becomes a Nonpurpose Obligation of the Bonds. “Qualified Project Costs” shall mean Project Costs (excluding Issuance Costs) incurred after the Inducement Date, which either constitute land or property of a character subject to the allowance for depreciation under Section 167 of the Code or are chargeable to a capital account with respect to the Project for federal income tax and financial accounting purposes, or would be so chargeable either with a proper election by the Borrower or but for the proper election by the Borrower to deduct those amounts within the meaning of Regulation 1.103-8(a)(l)(i); provided, however, that only such portion of interest accrued during construction of the Project shall constitute a Qualified Project Cost as bears the same ratio to all such interest as the Qualified Project Costs bear to all Project Costs; and provided further that interest accruing after the Completion Date shall not be a Qualified Project Cost; and provided still further that if any portion of the Project is being constructed by an ”affiliated party” (whether as a general contractor or a subcontractor), ”Qualified Project Costs” shall include only (a) the actual out- of-pocket costs incurred by such affiliated party in constructing the Project (or any portion thereof), (b) any reasonable fees for supervisory services actually rendered by the affiliated party and (c) any overhead expenses incurred by the affiliated party that are directly attributable to the work performed on the Project, and shall not include, for example, intercompany profits resulting from members of an affiliated group (within the meaning of Section 1504 of the Code) participating in the construction of the Project or payments received by such affiliated party due to early completion of the Project (or any portion thereof). ”Rating Agency” shall mean Standard & Poor’s Ratings Services, a Division of The McGraw-Hill Companies, Inc., or its successors and assigns, or any other nationally recognized rating agency designated by the Issuer with the consent of the Credit Bank. “Rebate Analyst” shall mean a certified public accountant, financial analyst or attorney, or any firm of the foregoing, or a financial institution (which may include the Trustee) experienced in making the arbitrage and rebate calculations required pursuant to Section 148 of the Code and retained by the Borrower to calculate the amount of rebatable arbitrage. 11 ”Record Date” shall mean, with respect to each Interest Payment Date during a Variable Period, the close of business on the Business Day before such Interest Payment Date, and with respect to any Interest Payment Date during a Reset Period or after Conversion, the close of business on the fifteenth day of the month (whether or not a Business Day) prior to the calendar month in which an Interest Payment Date occurs. “Regulations“ shall mean the Income Tax Regulations promulgated by the Department of the Treasury pursuant to the Code from time to time or pursuant to any predecessor statute to the Code. ”ReguIatory Agreement“ shall mean the Regulatory Agreement and Declaration of Restrictive Covenants, dated as of June 1,2003, among the Issuer, the Trustee and the Borrower required to be executed, delivered and recorded with respect to the Project pursuant to Section5.7 of the Financing Agreement, as the same may be amended, modified or supplemented from time to time. “Remarketing Agent” shall mean the remarketing agent or agents, as applicable, appointed in accordance with Section 8.12 hereof. “Remarketing Agreement” shall mean the Remarketing Agreement, dated as of June 1, 2003, the Trustee, the Borrower and the Remarketing Agent and any similar substitute or additional such agreement providing for the remarketing of the Bonds, in each case as supplemented or amended from time to time. “Remarketing Date” shall mean the date, on or prior to each Demand Date, by which the Remarketing Agent is required to notify the Trustee, the Tender Agent and the Credit Bank of the Bonds for which it has found purchasers, as set forth in Section 8.14 hereof. ”Reserved Rights“ shall mean those certain rights of the Issuer under the Issuer Loan Documents to indemnification and to payment or reimbursement of fees and expenses of the Issuer, its right to enforce the Regulatory Agreement and to enforce the provisions of the Financing Agreement relating to the Issuer’s rights to notice and reporting requirements and restrictions on transfer of ownership, its right to inspect and audit the books, records and premises of the Borrower and the Project, its right to collect attorneys’ fees and related expenses, its right to enforce the Borrower’s covenant to comply with applicable federal tax law and State law (including the Act, the Housing Law and the rules of the Issuer, if any), its right to grant or withhold consents or waivers under the Issuer Loan Documents, and its right to amend the Issuer Loan Documents in accordance with the provisions thereof. “Reset Date” shall mean any date upon which the Series B Bonds begin to bear interest at a new Reset Rate for the succeeding Reset Period, at a Variable Rate following a Reset Period or in a Variable Rate of a different mode. ”Reset Period” shall mean each period during which the Bonds bear interest at a Reset Rate. ”Reset Rate” shall mean the rate of interest borne by the Bonds as determined in accordance with Section 2.02(c) hereof. ”responsible officer” of the Trustee shall mean and include any Vice President, Assistant Vice President or other officer of the Trustee having regular responsibility for corporate trust matters related to this Indenture. 12 ”Revenues” shall mean all amounts pledged under this Indenture to the payment of principal of, premium, if any, and interest on the Bonds, consisting of the following: (a) all moneys drawn by the Trustee under the Letter of Credit and the Standby Letter of Credit; (b) any portion of the Net Proceeds of the Bonds deposited with the Trustee under Section 3.02 hereof; (c) Collateral Funds; (d) any income earned on investments pursuant to Section 5.03 hereof; and (e) any repayments of the Loan made by the Borrower pursuant to Section 4.2(a) or 8.1 of the Financing Agreement and any amounts derived from or in connection with the Borrower or the Issuer Loan Documents, including all amounts obtained through the exercise of the remedies provided in the Issuer Loan Documents upon the occurrence of an event of default thereunder; but such term shall not include payments to the United States, the Issuer, the Administrator or the Trustee, for its account, pursuant to Sections 4.2(b), 4.2(c), 4.2(d), 4.2(e), 7.3, 8.3,9.2 and 9.3 of the Financing Agreement or Section 7(a) of the Regulatory Agreement or Section 8.06 hereof; nor shall Revenues include remarketing proceeds or any amount drawn on the Letter of Credit to pay the Purchase Price. “Securities Depositories ” shall mean The Depository Trust Company, 711 Stewart Avenue, Garden City, New York 11530, Fax: (516) 227-4171 or 4190; or in accordance with the then current guidelines of the Securities and Exchange Commission, such other addresses and/or such other securities depositories as the Issuer may designate in writing to the Trustee and the Credit Bank. “Series A Bonds” shall mean the City of Carlsbad Multifamily Housing Revenue Bonds (Mariposa Apartments) 2003 Series A issued in the origmal aggregate principal amount of ”Series B Bonds ” shall mean the City of Carlsbad Multifamily Housing Revenue Bonds (Mariposa Apartments) 2003 Series B issued in the original aggregate principal amount of A. ”Standby Credit Bank” shall mean the Federal Home Loan Bank of Cincinnati, as issuer of the Standby Letter of Credit, or any issuer of a substitute Standby Letter of Credit, if any, as permitted by Section 5.9 of the Financing Agreement to secure payments under the Letter of Credit, and the respective successors and assigns of the business thereof and any surviving, resulting or transferred banking association or corporation with or into which it may be consolidated or merged or to which it may transfer all or substantially all of its banking business. ”Standby Letter of Credit” shall mean that certain irrevocable standby letter of credit issued by the Standby Credit Bank on or before the Closing Date, or any reissuance or extensions thereof or any substitute standby letter of credit meeting the requirements of Section5.9 of the Financing Agreement, but only to the extent required by Section5.9 of the Financing Agreement. ”State” shall mean the State of California. “Substitute Credit FaciIity ” shall mean bond insurance or third-party guarantees, Eligible Collateral, direct pay and standby letter of credit, liquidity facilities, loans to lenders or other credit instruments, or any combination of the foregoing, acceptable to the Issuer and the Rating Agency, and meeting the requirements of Section 5.10 of the Financing Agreement. ”supplemental indenture” or “indenture supplemental hereto’’ shall mean any indenture hereafter duly authorized and entered into between the Issuer and the Trustee in accordance with the provisions of this Indenture. 13 ”Tax Certificate” shall mean the Certificate As To Arbitrage dated the Closing Date, executed and delivered by the Issuer and the Borrower, together with the Certificate Regarding Use of Proceeds, dated as of the Closing Date, executed and delivered by the Borrower. ”Tender Agent” means the Tender Agent appointed in accordance with Section 8.17. ”Tender Notice” shall mean a notice of demand for purchase of Bonds given by any Bondholder pursuant to Section 2.03 hereof. ”Trustee” shall mean Wells Fargo Bank, National Association, a national banking association, an organized or existing under the laws of the United States of America, or its successors or any other corporation or association resulting from or surviving any consolidation or merger to which it or its successors may be a party and any successor trustee at any time serving as successor trustee hereunder. “Variable Interest Accrual Period’’ shall mean (i) during any Variable Period that the Bonds bear interest in a Weekly Mode, a period beginning on any Thursday and ending on the following Wednesday, except that the first Variable Interest Accrual Period for any Variable Period shall begin on the first day of such Variable Period and end on the following Wednesday (the Remarketing Agent may, by prior written notice to the Trustee, cause the Variable Interest Accrual Period to begin on any Tuesday and end on the following Monday, to begin on any Wednesday and end on the following Tuesday, or to begin on any Friday and end on the following Thursday), and (ii) during any Variable Period that the Bonds bear interest in a Daily Mode, a period beginning on each Business Day and ending on the following Business Day. “Variable Interest Computation Date” shall mean, with respect to any Variable Interest Accrual Period (other than the first Interest Accrual Period), the last Business Day before the first day of such Variable Interest Accrual Period. ”Variable Mode” shall mean the Daily Mode and/or Weekly Mode. ”Variable Period” shall mean each period during which the Bonds bear interest at a Variable Rate. ”Variable Rate’’ shall mean the variable rate of interest borne by the Bonds in a Daily Mode or Weekly Mode as determined in accordance with Section 2.02(a) hereof. “Variable Rate Adjustment Date’’ shall mean any date upon which the Bonds begin to bear interest at a Variable Rate for the succeeding Variable Period. ”Weekly Mode” shall mean any period during which the interest rate on the Bonds is reset once each week, as provided in Section 2.02(b) hereof. Written Demand, ” ”Written Direction,” ”Written E lection, ”Written Notice, ” ”Written Order, ’I ”Written Request ” and ”Written Requisition” of the Issuer shall mean, respectively, a written certificate, consent, demand, direction, election, notice, order, request or requisition signed on behalf of the Issuer by an Designated Officer. “Written Certificate, ” “Written Consent, I’ “Yield“ shall mean that yield which, when used in computing the present worth of all payments of principal and interest (or other payments in the case of Nonpurpose Obligations which require payments in a form not characterized as principal and interest) on a Nonpurpose Obligation or on the Bonds produces an amount equal to the Purchase Price of such 14 Nonpurpose Obligation or the Bonds, all computed as prescribed in applicable Regulations and, in the case of variable rate obligations, as further prescribed in Section 6.07 hereof. Section 1.02. Rules of Construction. The singular form of any word used herein, including the tern defined in Section 1.01, shall include the plural, and vice versa, unless the context othenvise requires. The use herein of a pronoun of any gender shall include correlative words of the other genders. i) All references herein to "Articles," "Sections" and other subdivisions hereof are to the corresponding Articles, Sections or subdivisions of this Indenture as originally executed; and the words "herein," "hereof," "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or subdivision hereof. ii) The headings or titles of the several Articles and Sections hereof, and any table of contents appended to copies hereof, shall be solely for convenience of reference and shall not affect the meaning, construction or effect of this Indenture. 15 Id2 ARTICLE I1 THE BONDS Section 2.01. Authorization and Terms of Bonds. (a) Authorization. There are hereby authorized to be issued bonds of the Issuer designated as "City of Carlsbad Multifamily Housing Revenue Bonds (Mariposa Apartments) 2003 Series A in the aggregate principal amount of $ and "City of Carlsbad Multifamily Housing Revenue Bonds (Mariposa Apartments) 2003 Series B" in the aggregate principal amount of $ . Any Bonds delivered during any Period shall also carry the designation "Variable Rate Demand." No Bonds may be issued hereunder except in accordance with this Article. The fnaximum principal amount of Bonds that may be issued and Outstanding under this Indenture shall not exceed the Authorized Amount, exclusive of Bonds executed and authenticated as provided in Section 2.08. (b) Genera2 Terms. Any Bonds delivered on a Variable Rate Adjustment Date or during a Variable Period shall be in substantially the form set forth in Exhibit A-1 or A-2 hereto, as appropriate; any Bonds delivered on a Reset Date (other than a Reset Date for a period during which the Bonds bear interest at a Variable Rate, in which case the Bonds shall be in the form of Exhibit A-1 or Exhibit A-2 as appropriate) or during a Reset Period shall be in substantially the form set forth in Exhibit B hereto; any Bonds delivered on or after Conversion shall be in substantially the form set forth in Exhibit C hereto; in each case with necessary or appropriate variations, omissions and insertions as permitted or required by this Indenture, including any supplemental indenture. Any portion of the text of any Bond may be set forth on the reverse thereof, with an appropriate reference thereto on the face of such Bond. Bonds may be typewritten, printed, engraved, lithographed or otherwise produced. The Bonds shall be issuable only as fully registered Bonds, without coupons, in Authorized Denominations, and shall be numbered in the order of their authentication, with any other designation as the Trustee deems appropriate. The Bonds shall be dated May 1, 2003, and shall be subject to redemption prior to maturity as provided in Article IV of this Indenture. The Series A Bonds originally shall be issued and delivered in a Fixed Rate bearing interest at the rate of -YO and shall mature on . The Series B Bonds originally shall be issued and delivered at a Reset Rate of YO for a Reset Period comxnencing on the Closing Date and terminating on [May 31,20051 and shall mature on . Each Bond shall bear interest from the date to which interest has been paid on the Bonds next preceding the date of its authentication, unless it is authenticated as of an Interest Payment Date for which interest has been paid or after the Record Date in respect thereof, in which event it shall bear interest from such Interest Payment Date, or unless it is authenticated on or before the Record Date for the first Interest Payment Date, in which event it shall bear interest from its date. (c) Payment. Both the principal and redemption price, including premium (if any), of the Bonds shall be payable by check in lawful money of the United States of America only upon presentation thereof at the Principal Office of the Trustee. Payment of the interest on any Bond shall be made by check in like lawful money to the person appearing on the Bond registration books of the Trustee as the registered owner thereof on the applicable Record Date, such interest to be paid by check mailed on the Interest Payment Date by first-class mail, postage prepaid, to the registered owner at its address as it appears on such registration books, except that the Trustee will with respect to Pledged Bonds, and, at the written request of any registered owner of $1,000,000 or more in aggregate principal amount of Bonds, make payments of interest on such Bonds by wire transfer to the account designated by such owner to the 16 Trustee in writing at least 15 days before the Record Date for such payments, any such designation to remain in effect until withdrawn. Section 2.02. Determination of Interest Rate on the Bonds. (a) VariabZe Rate. The Variable Rate of interest borne by the Bonds during each Variable Interest Accrual Period while the Bonds bear interest in the Daily Mode or a Weekly Mode, as applicable, shall be the Variable Rate determined by the Remarketing Agent and reported to the Trustee, the Tender Agent, the Borrower and the Credit Bank, as provided in Section 8.12 hereof, on the Variable Interest Computation Date for such Variable Interest Accrual Period. Any Bondholder may obtain information on the Variable Rate by written request to the Trustee. The Bonds shall bear interest during any Variable Period computed on the basis of a 365- or 366-day year, as appropriate, and actual number of days elapsed. The Variable Rate determined by the Remarketing Agent on each Variable Interest Computation Date shall be that rate of interest which, if borne by the Bonds, would, in its reasonable commercial judgment, having due regard to prevailing financial market conditions, be the interest rate necessary, but which would not exceed the interest rate necessary, to produce as nearly as practicable a par bid (disregarding accrued interest) if Bonds were sold on the first day of the next Variable Interest Accrual Period; provided, however, that in no event shall the Variable Rate at any time exceed the Maximum Interest Rate. If the Remarketing Agent shall fail or refuse to determine the Variable Rate on any Variable Interest Computation Date, then the existing Variable Rate shall remain in effect for each Variable Interest Accrual Period thereafter until the Remarketing Agent determines the Variable Rate as provided above. The determination of the Variable Rate by the Remarketing Agent shall (in the absence of manifest error) be conclusive and binding on the holders of the Bonds, the Issuer, the Borrower, the Credit Bank, the Remarketing Agent, the Tender Agent and the Trustee, and each shall be protected in relying on it. On any date on which the Bonds begin to bear interest in Weekly Mode or a Daily Mode, the Issuer shall cause to be prepared, if necessary, at the expense of the Borrower, new Bonds m the form set forth in Exhibit A. Any such Bonds shall be executed and authenticated as provided in Section 2.04 and shall be delivered to Bondholders on the Interest Payment Date on which such mode change is effective without charge in exchange for any Outstanding Bonds. Change in Variable Rate. The Variable Rate of interest borne by the Bonds may, at the request of the Borrower and with the written consent of the Credit Bank, be converted to a Variable Mode other than the Variable Mode then in effect on any Interest Payment Date during a Variable Period or to a Variable Mode on any Reset Date in accordance with the procedures set forth in this subsection (b). In order to effect establishment of a Variable Mode other than the Variable Mode then in effect, or a Variable Mode, the Borrower must deliver such written consent and a written notice to the Trustee, the Issuer, the Tender Agent and the Remarketing Agent at least 40 days prior to the effective date of such Variable Mode speclfylng the Interest Payment Date on which such Variable Mode will be effective. Such notice must be accompanied by (i) an opinion of Bond Counsel to the effect that the establishment of the Variable Mode in accordance with the procedure described in this subsection (b) is permitted by this Indenture and will not adversely affect the exclusion from gross income for federal income tax purposes or state tax purposes of interest on the Bonds, (ii) if necessary pursuant to Section 5.8(b) of the Financing Agreement, a written commitment, subject to customary commercial conditions, for the issuance of a Letter of Credit, including, if applicable, evidence that the Borrower has obtained a binding commitment for the issuance of a Standby Letter of Credit meeting the requirements of Section5.9 of the Financing Agreement or a Substitute Credit Facility meeting the requirements of Section 5.10 of the Financing Agreement, to be in effect on (b) 17 and after the Reset Date, together with accompanying documentation required by Section 5.8(b) of the Financing Agreement, (iii) the form of notice to be given by the Trustee to the owners of the Bonds with respect to the establishment of such Variable Mode, (iv) payment to the Trustee of such amount as the Issuer reasonably determines may be required in connection with the establishment of such Variable Mode, including, but not limited to, the Trustee’s fees and expenses and the cost of printing Bonds, (v) written evidence from the Rating Agency to the effect that the then current rating of the Bonds will not be lowered below an “A” or withdrawn solely as a result of the establishment of such Variable Mode, and (vi) any redemption amounts for each Interest Payment Date thereafter at a price equal to the principal amount of Bonds subject to redemption plus interest accrued thereon to the date fixed for redemption, without premium, pursuant to Section 4.01 hereof. If on any day at least eleven days before an applicable Reset Date, the Trustee (i) receives written notice from the Borrower to the effect that it no longer wishes to change the interest rate on the Bonds to the proposed Variable Mode, (ii) receives written notice from the Remarketing Agent or the Borrower that a Market Risk Event has occurred, or (iii) fails to receive a substitute Letter of Credit, Standby Letter of Credit or Substitute Credit Facility as provided by Sections 5.8, 5.9 or 5.10 of the Financing Agreement, as applicable, the Trustee shall promptly cancel such election to establish a Variable Mode and the Bonds will bear interest at a Variable Rate in the Weekly Mode; provided, however, to the extent that the Bonds will bear interest at a Variable Rate in the Weekly Mode, the Trustee shall have received a Letter of Credit, conforming to the provisions of Section 5.8(a) of the Financing Agreement, which is effective on the date such Variable Rate is to be effective. If notice to registered owners of the Bonds has been given by the Trustee of the establishment of the Variable Mode other than a Weekly Mode, such notice of cancellation shall be sent to the registered owners by first class mail by the Trustee as soon as reasonably practicable which also shall now the registered owners that the Bonds will bear interest at a Variable Rate in a Weekly Mode. In the event such Letter of Credit is not received by the Trustee, the Trustee shall redeem the Bonds pursuant to the provisions of Section 4.01(d) hereof. 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 Credit Bank, the Issuer and the Remarketing Agent. If the establishment of a Variable Mode has not been cancelled pursuant to the preceding paragraph, the Trustee shall give notice to the registered owners of the Bonds, by first class mail, not less than ten days before the Interest Payment Date on which the Variable Mode will be effective: (i) the Variable Mode chosen by the Borrower, (ii) the Interest Payment Date on which the Variable Mode will be effective; (iii) that all Outstanding Bonds shall be purchased on the Interest Payment Date on which the Variable Mode will be effective at a price equal to the Purchase Price and that Bonds not tendered for purchase on or before the Interest Payment Date on which the Variable Mode will be effective will be deemed to have been so tendered; and (iv) that all Bonds must be surrendered to the Tender Agent for purchase not later than 9:30 a.m., New York City time, on the Interest Payment Date on which the Variable Mode will be effective. Any Bond not tendered to the Tender Agent for purchase on or before an applicable Reset Date on which a Variable Mode will be effective shall be deemed to have been tendered for purchase pursuant to Section 2.03 hereof on such date for all purposes of this Indenture, including particularly Article VIU hereof. Upon the receipt of written notice from the Remarketing Agent that the first day of a Variable Interest Accrual Period is to change, the Trustee shall provide written notice to the Bondholders of such change. (c) Reset Rate. The rate of interest on the Bonds may, at the request of the Borrower and with the written consent of the Credit Bank, be established at a Reset Rate on any Interest Payment Date during a Variable Period or on any Reset Date, in accordance with the 18 // L=‘ procedures set forth in this subsection (c). In order to effect establishment of a Reset Rate, the Borrower must deliver such written consent and a written notice to the Trustee, the Issuer, the Tender Agent and the Remarketing Agent at least 40 days prior to the Reset Date specdying (i) the Reset Date, (ii) the proposed duration of the Reset Period, which shall be at least six months and shall terminate on the day immediately prior to an Interest Payment Date, and (iii) the date on which the Reset Rate will be determined by the Remarketing Agent, which date shall be not less than seven days before the Reset Date. Such notice must be accompanied by (i) an opinion of Bond Counsel to the effect that the establishment of the Reset Rate in accordance with the procedure described in this subsection (c) is permitted by this Indenture and will not adversely affect the exclusion from gross income for federal income tax purposes or state tax purposes of interest on the Bonds, (ii) if necessary pursuant to Section 5.8(b) of the Financing Agreement, a commitment, subject to customary commercial conditions, for the issuance of a Letter of Credit, including, if applicable, evidence that the Borrower has obtained a binding commitment for the issuance of a Standby Letter of Credit meeting the requirements of Section 5.9 of the Financing Agreement or a Standby Credit Facility meeting the requirements of Section 5.10 of the Financing Agreement, to be in effect on and after the Reset Date, together with accompanying documentation required by Section 5.8(b) of the Financing Agreement, (iii) the fom-t of notice to be given by the Trustee to the owners of the Bonds with respect to the establishment of a Reset Rate, (iv) payment to the Trustee of such amount as the Issuer reasonably determines may be required in connection with the establishment of the Reset Rate, including, but not limited to, the Trustee's fees and expenses and the cost of printing Bonds, (v) written evidence from the Rating Agency to the effect that the then current rating of the Bonds will not be lowered below an "A or withdrawn solely as a result of the establishment of the Reset Rate (except for any withdrawal of a short-Term rating if any corresponding long-Term rating is confirmed, and a rating lower than "A is permissible with the prior written consent of the Issuer which consent may be withheld in its sole and absolute discretion), and (vi) any redemption amounts for each Interest Payment Date thereafter at a price equal to the principal amount of Bonds subject to redemption plus interest accrued thereon to the date fixed for redemption, without premium, pursuant to Section 4.01 hereof. If on any day at least 11 days before the applicable Reset Date, the Trustee (i) receives written notice from the Borrower to the effect that it no longer wishes to change the interest rate on the Bonds to the proposed Reset Rate, (ii) receives written notice from the Remarketing Agent or the Borrower that a Market Risk Event has occurred, or (iii) fails to receive a substitute Letter of Credit, Standby Letter of Credit or Substitute Credit Facility as provided in Sections 5.8, 5.9 or 5.10 of the Financing Agreement, as applicable, the Trustee shall promptly cancel such election to establish a Reset Rate and the Bonds will bear interest at a Variable Rate in the Weekly Mode (unless the Bonds are then in a Daily Mode, in which case the Bonds shall continue to bear interest in a Daily Mode); provided, however, to the extent that the Bonds will bear interest at a Variable Rate, the Trustee shall have received a Letter of Credit, conforming to the provisions of Section 5.8(a) of the Financing Agreement, which is effective on the date such Variable Rate is to be effective. If notice to registered owners of the Bonds has been given by the Trustee of the establishment of the Reset Rate, such notice of cancellation shall be sent to the registered owners by first class mail by the Trustee as soon as reasonably practicable. In the event such Letter of Credit is not received by the Trustee, the Trustee shall redeem the Bonds pursuant to the provisions of Section 4.01(d) hereof. 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 Credit Bank, the Issuer and the Remarketing Agent. If the establishment of a Reset Rate has not been cancelled pursuant to the preceding paragraph, the Trustee shall give notice to the registered owners of the Bonds, by first class mail, not less than 10 days before the Reset Date speclfymg: (i) the Reset Date; (ii) that all Outstanding Bonds shall be purchased on the Reset Date at a price equal to the principal amount thereof plus interest accrued to such date and that Bonds not tendered for purchase on 19 or before the Reset Date will be deemed to have been so tendered; and (iii) that all Bonds must be surrendered to the Tender Agent for purchase not later than 9:30 a.m., New York City time, on the Reset Date. Any Bond not tendered to the Tender Agent for purchase on or before a Reset Date shall be deemed to have been tendered for purchase pursuant to Section 2.03 hereof on such Reset Date for all purposes of this Indenture, including particularly Article VI11 hereof. From and after each Reset Date until the last day of the related Reset Period, the Bonds will bear interest at the applicable Reset Rate, payable on June 1 and December 1 of each year, commencing on the Interest Payment Date next following the Reset Date, 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 on the date specified in the notice from the Borrower referred to in the first paragraph of this subsection (c), which, in the reasonable commercial judgment of the Remarketing Agent, having due regard to prevailing market conditions, would be required, but would not exceed the rate that would be required, to be borne by the Bonds in order for the market value of such Bonds on the Reset Date to be 100% of the principal amount thereof (disregarding accrued interest), provided that in no event shall any Reset Rate exceed the Maximum Interest Rate. The determination of a Reset Rate by the Remarketing Agent in accordance with the provisions of this subsection (c) shall (in the absence of manifest error) be conclusive and binding upon the holders of the Bonds, the Issuer, the Credit Bank, the Remarketing Agent, the Tender Agent, the Borrower and the Trustee, and each shall be protected in relying on it. At least 40 days prior to the Interest Payment Date following the final day of a Reset Period, the Borrower shall elect to have the Bonds bear interest from and after such Interest Payment Date at a Reset Rate for a new Reset Period or at a Variable Rate (either in a Daily Mode or a Weekly Mode) or Fixed Rate by giving written notice of such election to the Trustee, the Tender Agent, the Issuer, the Credit Bank and the Remarketing Agent and shall provide a Letter of Credit pursuant to the provisions of Section 5.8(b), (a) or (c), respectively, of the Financing Agreement or the then-existing Letter of Credit shall meet the requirements of such applicable Section. If the Borrower fails to make such election, or fails to supply the items required by the applicable subsection of this Section 2.02 by the dates specified in such subsection, the interest rate on the Bonds shall be a Variable Rate in a Weekly Mode determined in accordance with the procedures set forth in subsection (a) of this Section commencing on the day immediately following the last day of the Reset Period; provided, however, to the extent Bonds will bear interest at a Variable Rate, the Trustee shall have received a Letter of Credit conforming to the provisions of Section 5.8 (a) of the Financing Agreement, which is effective on the date such Variable Rate is to be effective. On any Reset Date or Variable Rate Adjustment Date, the Issuer shall cause to be prepared, if necessary, at the expense of the Borrower, new Bonds in the form set forth in Exhibit A or Exhibit B, as applicable. Any such Bonds shall be executed and authenticated as provided in Section 2.04, and shall be delivered to Bondholders on the Reset Date or Variable Rate Adjustment Date without charge in exchange for any Outstanding Bonds. (d) Fixed Rate. The rate of interest on the Bonds may, at the request of the Borrower and with the written consent of the Credit Bank, be established at a Fixed Rate on any Interest Payment Date during a Variable Period or on any Reset Date, in accordance with the procedures set forth in this subsection (d). In order to effect the Conversion, the Borrower must deliver such written consent and a written notice to the Trustee, the Issuer, the Credit Bank, the Tender Agent and the Remarketing Agent speclfylng (i) the Conversion Date, which shall be not less than 40 days after such notice is received by such parties, and (ii) the date on which the 20 Fixed Rate will be determined by the Remarketing Agent, which date shall be not less than 10 days before the Conversion Date. Such notice must be accompanied by (i) an opinion of Bond Counsel to the effect that Conversion in accordance with the procedures described in this subsection (d) is permitted by this Indenture and will not adversely affect the exclusion of interest on the Bonds from gross income for federal income tax or state tax purposes, (ii) if necessary pursuant to Section 5.8(c) of the Financing Agreement, a commitment subject to customary commercial conditions, for the issuance of a Letter of Credit to be in effect upon and after Conversion, together with accompanying documentation required by Section 5.8(c) of the Financing Agreement, (iii) the form of notice to be given by the Trustee to the owners of the Bonds with respect to Conversion, (iv) payment to the Trustee of such amount as the Issuer reasonably determines may be required in connection with Conversion, including, but not limited to, the Trustee's fees and expenses and the cost of printing Bonds, (v) written evidence from the Rating Agency to the effect that the then current rating of the Bonds will not be lowered below an "A" or withdrawn solely as a result of Conversion (except for any withdrawal of a short- Term rating if any corresponding long-Term rating is confirmed, and a rating lower than "A" is permissible with the prior written consent of the Issuer which consent may be withheld in its sole and absolute discretion) and (vi) notice of any redemption amounts for each Interest Payment Date thereafter at a price equal to the principal amount of Bonds subject to redemption, plus interest accrued thereon to the date fixed for redemption, without premium, pursuant to Section 4.01 hereof. If on any day at least 11 days before the Conversion Date, the Trustee (i) receives written notice from the Borrower to the effect that it no longer wishes to proceed with the Conversion or (ii) receives written notice from the Remarketing Agent or the Borrower that a Market Risk Event has occurred, (iii) fails to receive a substitute Letter of Credit, Standby Letter of Credit or Substitute Credit Facility as provided in Sections 5.8, 5.9 or 5.10 of the Financing Agreement, as applicable, the Trustee shall promptly cancel such election of Conversion and the Bonds will bear interest at a Variable Rate in the Weekly Mode (unless the Bonds are then in a Daily Mode); provided, however, to the extent that Bonds will bear interest at a Variable Rate, the Trustee shall have received a Letter of Credit, conforming to the provisions of Section 5.8(a) of the Financing Agreement, which is effective on the date such Variable Rate is to be effective. If notice to registered owners of the Bonds has been given by the Trustee of the establishment of the Conversion, such notice of cancellation shall be sent to the registered owners by first class mail by the Trustee as soon as reasonably practicable. The Trustee shall have no liability as a result of such cancellation. The Trustee shall also provide written notice of the cancellation to the Credit Bank, the Issuer and the Remarketing Agent. If the election to proceed with the Conversion has not been cancelled pursuant to the preceding paragraph, the Trustee shall give notice to the registered owners of the Bonds, by first class mail, not less than 10 days before the Conversion Date, specifying (i) that the interest rate on the Bonds will be established at the Fixed Rate and the date the Fixed Rate will become effective; (ii) that all Outstanding Bonds shall be purchased on the Conversion Date at a price equal to the principal amount thereof plus interest accrued to such date and that Bonds not tendered for purchase on or before the Conversion Date will be deemed to have been so tendered; and (iii) that all Bonds must be surrendered to the Tender Agent for purchase not later than 9:30 a.m., New York City time, on the Conversion Date. Any Bond not tendered to the Tender Agent for purchase on or before the Conversion Date shall be deemed to have been tendered for purchase pursuant to Section 2.03 hereof on the Conversion Date for all purposes of this Indenture, including particularly Article VIII hereof. From and after the Conversion and until maturity, the Bonds will bear interest at the Fixed Rate, payable on June 1 and December 1 of each year, commencing on the Interest Payment Date next following the Conversion Date, computed on the basis of a 360-day year of 21 twelve 30-day months. The Fixed Rate shall be that rate, determined by the Remarketing Agent on the date specified in the notice from the Borrower referred to in the first paragraph of this subsection (d), which, in the reasonable commercial judgment of the Remarketing Agent, having due regard for prevailing financial market conditions, would be required, but would not exceed the rate that would be required, to be borne by the Bonds in order for the market value of such Bonds on such date to be 100% of the principal amount thereof (disregarding accrued interest), provided that in no event shall the Fixed Rate exceed the Maximum Interest Rate. The determination of the Fixed Rate by the Remarketing Agent shall (in the absence of manifest error) be conclusive and binding on the holders of the Bonds, the Issuer, the Trustee, the Tender Agent, the Credit Bank and the Remarketing Agent, and each shall be protected by relying on the rate. The Trustee shall, upon request of any Bondholder, notify such Bondholder of the Fixed Rate to be in effect on and after the Conversion Date. On the day of the Conversion, the Issuer shall cause to be prepared, at the expense of the Borrower, new Bonds in the form set forth in Exhibit C hereto and stating the Fixed Rate. Any such Bonds shall be executed and authenticated as provided in Section 2.04, and shall be delivered to Bondholders on the Conversion Date without charge in exchange for any Outstanding Bonds. (e) PZedged Bonds Rate. Anything in this Section2.02 to the contrary notwithstanding, Pledged Bonds shall bear interest at the Pledged Bonds Rate regardless of the interest rate that is applicable to any other Bonds. Section 2.03. Demand for and Mandatory Purchase of Bonds. (a) Demand Purchase. Any Bond (other than Pledged Bonds), or any units of principal amount thereof in Authorized Denominations, shall be purchased, from the sources prescribed in Sections 8.14 and Section 8.15 hereof upon the election of the registered owner thereof as set forth below, on any Business Day during a Variable Period at the Purchase Price. Such purchase shall be made upon (i) in the case of a demand purchase while the Bonds bear interest at a Variable Rate in the Daily Mode, delivery of an irrevocable notice in the form set forth in Exhibit D-1 hereto (a “Tender Notice”), which includes the name of such Owner (or Beneficial Owner) and the aggregate principal amount and CUSIP number of the Bonds to be tendered to the Remarketing Agent, the Tender Agent and the Trustee at or prior to 9:OO a.m., New York City time, on a Business Day by facsimile transmission to such numbers designated for such purpose by the Remarketing Agent, the Trustee and the Tender Agent stating the Owner’s (or Beneficial Owner’s) irrevocable and unconditional election to tender Bonds in the amount specified in such Tender Notice on such Business Day (if such Bonds are not held in certificated form, the Beneficial Owner of the Bonds must, prior to 9:30 a.m., New York City time, cause to be delivered to DTC a ”Same Day Funds Settlement Delivery Order”) and, if the Bonds are in certificated form, deliver such Bonds, to the Tender Agent at or prior to 9:30 a.m., New York City time, on such Business Day with all necessary endorsements, and (ii) in the case of a demand purchase while the Bonds bear interest at a Variable Rate in the Weekly Mode, delivery to the Tender Agent, with a copy provided by the Tender Agent to the Trustee and the Remarketing Agent, of a written notice in the form set forth as Exhibit D-2 hereto (a ”Tender Notice”), which notice shall upon receipt by the Tender Agent be irrevocable, and states (A) the principal amount of such Bond for which payment is demanded, and (B) the date on which such Bond or units of principal amount thereof in Authorized Denominations shall be purchased pursuant to this Section 2.03, which date shall be a Business Day not prior to the seventh day next succeeding the date of the receipt of the Tender Notice by the Tender Agent. In all cases (other than as described in (i) of the preceding sentence), such Bond (with an appropriate transfer of registration form executed in blank and in form satisfactory to the Tender Agent) shall be delivered to the Tender Agent at or prior to 9:30 a.m., New York City time, on the Demand Date. In the event that a depository is appointed pursuant to Section 2.09 hereof and a ”book-entry-only” system is in effect with 22 respect to the Bonds, delivery of Bonds for purchase on the Demand Date may be effected m the manner set forth by such depository. Immediately upon receipt of a Tender Notice described in (i) and (ii) above, the Tender Agent shall give telephonic or facsimile transmission notice to the Trustee of the principal amount of Bonds to be purchased pursuant to such Tender Notice. The Trustee shall, on receipt of any Tender Notice described in (i) above, draw on the Letter of Credit immediately in an amount equal to the principal amount of the Bonds to be purchased plus accrued interest thereon. Payment of the Purchase Price of any Bond shall be made by check or by wire transfer (if requested in writing by the registered owner of $1,000,000 or more in aggregate principal amount of Bonds) or as designated in the Tender Notice with respect to such Bond, but only upon delivery and surrender of such Bond to the Tender Agent on the Demand Date. Anything herein to the contrary notwithstanding, no Bonds shall be purchased pursuant to this Section or remarketed pursuant to Section 8.14 if an Event of Default hereunder, other than an Event of Default under Section 7.01(d), shall have occurred and be continuing and notice of redemption pursuant to Section 4.01(c) shall have been given to Bondholders; and no Bonds shall be purchased pursuant to this Section or remarketed pursuant to Section 8.14 after the Conversion Date; nor shall any Bond be purchased pursuant to this Section if such Bond is known by the Trustee to be registered in the name of the Issuer, the Borrower or any general partner or guarantor of the Borrower. (b) Munduto y Purchase. The Trustee shall no@ the registered owners of the Series B Bonds of a mandatory tender and purchase of the Series B Bonds at the Purchase Price (A) on any Reset Date or the Conversion Date; (B) on any date on which a substitute Letter of Credit or substitute Standby Letter of Credit is to be exchanged for the then-effective Letter of Credit or Standby Letter of Credit, respectively, pursuant to the terms of the Financing Agreement; (C) on any date on which a Substitute Credit Facility is being provided pursuant to Section 5.10 of the Financing Agreement; (D) on the last Business Day that is not less than five days before the date of the expiration of the Standby Letter of Credit, unless (1) a Standby Letter of Credit is no longer required to be provided pursuant to Section 5.9 of the Financing Agreement and the Trustee received written confirmation that the expiration of the Standby Letter of Credit will not cause the rating on the Bonds to be withdrawn or reduced, or (2) the Trustee receives, on a Business Day that is not less than 30 days before such date of expiration, a renewal or extension of or replacement for such Standby Letter of Credit meeting the requirements of Section 5.9 of the Financing Agreement; or (E) on the first Business Day that is at least five days after the occurrence of a Determination of Taxability (each a "Mandatory Tender Date"), by first-class mail, postage prepaid, not less than 10 days prior to the Mandatory Tender Date as further described below. Any Series B Bond not tendered for purchase on or before the Mandatory Tender Date shall be deemed to have been tendered for purchase on such Mandatory Tender Date for all purposes of this Indenture, including particularly Article VI11 hereof. On the seventh day before each Mandatory Tender Date, the Trustee shall notify the Tender Agent by telephone, promptly confirmed in writing, with a copy to the Remarketing Agent, that all of the Bonds are deemed tendered for purchase on the Mandatory Tender Date and such notice from the Trustee shall be treated as a Tender Notice for all purposes of this Indenture, including this Section and Article WI hereof, whether or not the Bonds referred to therein are delivered to the Tender Agent; provided that payment of the Purchase Price of any such Bonds shall be made only upon delivery and surrender thereof to the Tender Agent. 23 The Trustee shall give notice of the mandatory tender and purchase to the registered owners of the Bonds speclfymg: (i) the Mandatory Tender Date, (ii) that all Outstanding Bonds not tendered for purchase on or before the Mandatory Tender Date will be deemed to have been so tendered and shall be purchased on the Mandatory Tender Date at a price equal to the principal amount thereof plus interest accrued to such date; and (iii) that all Bonds must be surrendered to the Tender Agent for purchase not later than 9:30 a.m., New York City time, on such Mandatory Tender Date. Any Bond not tendered to the Tender Agent on or before the Mandatory Tender Date shall be deemed to have been tendered for purchase on such Mandatory Tender Date pursuant to this section for all purposes of this Indenture, including particularly Article VIII hereof. Any Bond subject to mandatory tender pursuant to the provisions of subsection (a) hereof from the date notice of mandatory purchase pursuant to this subsection (b) is given through the Mandatory Tender Date, shall not be remarketed except to a purchaser who, at the time of such purchase, agrees that such Bond will be deemed tendered on the Mandatory Tender Date. Unless a Letter of Credit meeting the requirements of Section 5.8 of the Financing Agreement and, to the extent required, a Standby Letter of Credit meeting the requirements of Section 5.9 of the Financing Agreement or Substitute Credit Facility meeting the requirements of Section 5.10 of the Financing Agreement is provided, the Bonds tendered or deemed tendered pursuant to this subsection (b) shall not be remarketed. Section 2.04. Execution of Bonds; Limited Obligation. The Bonds shall be executed on behalf of the Issuer by the manual or facsimile signature of its Mayor, City Manager of Finance Director and its City Clerk. Any facsimile signatures shall have the same force and effect as if said officers had manually signed the Bonds. In case any one or more of the officers of the Issuer who shall have signed any of the Bonds or whose signature appears on any of the Bonds shall cease to be such officer before the Bonds so signed shall have been actually authenticated or delivered or caused to be delivered by the Trustee or issued by the Issuer, such Bonds may, nevertheless, be authenticated and issued and, upon such authentication, delivery and issue, shall be as binding upon the Issuer as if the persons who signed or sealed such Bonds or whose signatures appear on any of the Bonds had not ceased to hold such offices until such delivery. Any Bond may be signed on behalf of the Issuer by such persons as at the actual time of execution of the Bonds shall be duly authorized or hold the proper office in the Issuer, although at the date of issuance and delivery of the Bonds such persons may not have been so authorized or have held such office. The Bonds are issued pursuant to the Act and are limited obligations of the Issuer. Neither the Issuer nor any member, participant, official or employee of the Issuer nor any person executing the Bonds shall be liable personally on the Bonds or subject to any personal liability or accountability by reason of their issuance. The Bonds and the interest thereon are limited obligations of the Issuer, payable only from the sources described in this Indenture. Neither the Issuer, any program participant thereof, the State nor any other political corporation or subdivision or agency thereof shall be obligated to pay the principal of such Bonds or the interest thereon or other costs incident thereto except from the money pledged therefor. Neither the faith and credit nor the taxing power of the State, nor any political corporation or subdivision or agency thereof, nor the faith and credit of the Issuer is pledged to the payment of the principal of, premium, if any, or interest on the Bonds or other costs incident thereto. The Bonds are not a debt of the United States of America or any other agency thereof and are not guaranteed by the full faith and credit of the United States of America. No recourse shall be had for the payment of the principal of, premium, if any, or interest on any of the Bonds or for any claim based thereon or upon any obligation, covenant or 24 agreement in this Indenture contained, against the Issuer, any past, present or future member of its governing body, its officers, attorneys, accountants, financial advisors, agents or staff, or the officers, attorneys, accountants, financial advisors, agents or staff of any successor public entity, as such, either directly or through the Issuer or any successor public entity, under any rule of law or penalty or otherwise, and all such liability of the Issuer, any member of its governing body and its officers, attorneys, accountants, financial advisors, agents and staff is hereby, and by the acceptance of the Bonds, expressly waived and released as a condition of, and in consideration for, the execution of this Indenture and the issuance of any of the Bonds. It is recognized that notwithstanding any other provision of this Indenture, neither the Owner, the Trustee nor any Bondholder shall look to the Issuer for damages suffered by the Owner, the Trustee or such Bondholder as a result of the failure of the Issuer to perform any covenant, undertaking or obligation under this Indenture, the Financing Agreement, the Bonds or any of the other documents referred to herein, or as a result of the incorrectness of any representation made by the Issuer in any of such documents, nor for any other reason. Although this Indenture recognizes that such documents shall not give rise to any pecuniary liability of the Issuer, nothing contained in this Indenture shall be construed to preclude in any way any action or proceeding (other than that element of any action or proceeding involving a claim for monetary damages against the Issuer) in any court or before any governmental body, agency or instrumentality or otherwise against the Issuer or any of its officers or employees to enforce the provisions of any of such documents which the Issuer is obligated to perform and the performance of which the Issuer has not assigned to the Trustee or any other person; provided, however, that as a condition precedent to the Issuer proceeding pursuant to this Section, the Issuer shall have received satisfactory indemnification. Only such of the Bonds as shall bear thereon a certificate of authentication in the form set forth in Exhibit A-1, Exhibit A-2, Exhibit B or Exhibit C hereto, manually executed by the Trustee or the Tender Agent, as the case may be, shall be valid or obligatory for any purpose or entitled to the benefits of this Indenture, and such certificate of the Trustee or the Tender Agent, as the case may be, shall be conclusive evidence that the Bonds so authenticated have been duly authenticated and delivered hereunder and are entitled to the benefits of this Indenture. Section 2.05. Transfer and Exchange of Bonds. Any Bond may, in accordance with the terms of this Indenture, be transferred, upon the books of the Trustee required to be kept pursuant to the provisions of Section 2.06, by the person in whose name it is registered, m person or by his duly authorized attorney, upon surrender of such Bond for cancellation at the Principal Office of the Trustee, accompanied by a written instrument of transfer in a form acceptable to the Trustee, duly executed. Bonds may be exchanged at the Principal Office of the Trustee for a like aggregate principal amount of Bonds of the same series of other authorized denominations. Whenever any Bond shall be surrendered for transfer or exchange, the Issuer shall execute and the Trustee shall authenticate and deliver a new Bond or Bonds of the same series, for a like aggregate prinapal amount in Authorized Denominations. The Trustee shall require the payment by the Bondholder requesting any such transfer or exchange of any tax, fee or other governmental charge required to be paid with respect to such transfer or exchange. The cost of printing any Bonds and any services rendered or any expenses incurred by the Trustee in connection with any transfer or exchange shall be paid by the Borrower. Any Bond containing provisions relating to a Variable Rate, a Variable Rate mode or a Reset Rate which are no longer applicable shall, on or after any Reset Date, any Variable Rate Adjustment Date or the Conversion Date, be surrendered in exchange for a Bond or Bonds of the same series, for a like aggregate principal amount, stating interest at the Reset Rate, Variable Rate mode or Fixed Rate, as applicable, and any such exchange shall be without charge to the holder of such Bond. 25 No transfer or exchange shall be required to be made of any Bonds called for redemption or of any Bonds during the 15 days next preceding the giving of any notice of redemption, other than any transfer required pursuant to a demand for purchase given by a holder pursuant to Section 2.03 (a) hereof. Notwithstanding anything to the contrary contained herein, at any time while there is no Letter of Credit in effect hereunder (as allowed under the circumstances described in Section 4.06 hereof), no transfer of any Bonds shall be made by the Trustee or the Tender Agent unless all of the Bonds are transferred in whole to one entity, and the Trustee has received from such transferee and delivered to the Issuer an Investor’s Letter in substantially the form of Exhibit E hereto, with any such changes therein as may be approved in writing by the Issuer in its sole and absolute discretion. The foregoing transfer restrictions may be waived by the Issuer from time to time in its sole and absolute discretion. No such waiver shall be construed to be a waiver of, or shall impair the right of the Issuer to enforce, such restrictions upon any other transfer of Bonds. Section 2.06. Bond Register and Authenticating Agent. The Issuer hereby appoints the Trustee as registrar and authenticating agent and the Tender Agent as co-authenticating agent for the Bonds, provided that the Tender Agent shall act as co-authenticating agent only for purposes of demands for purchase or mandatory purchases pursuant to Section 2.03 hereof. The Trustee as such registrar will keep or cause to be kept its Principal Offices sufficient books for the transfer of the Bonds, which shall at all times during regular business hours and upon reasonable prior notice be open to inspection by the Issuer, the Credit Bank and the Borrower; and, upon presentation for such purpose, the Trustee as such registrar shall, under such reasonable regulations as it may prescribe, transfer or cause to be transferred, on said books, Bonds as hereinbefore provided. Section 2.07. Temporary Bonds. The Bonds may be issued initially in temporary form exchangeable for definitive Bonds when ready for delivery. The temporary Bonds may be printed, lithographed or typewritten, shall be of such denominations as may be determined by the Issuer and may contain such reference to any of the provisions of this Indenture as may be appropriate. Every temporary Bond shall be executed by the Issuer and be authenticated and registered by the Trustee upon the same conditions and in substantially the same manner as the definitive Bonds. If the Issuer issues temporary Bonds, it will execute and furnish without delay definitive Bonds, which may be printed, lithographed or typewritten, and thereupon the temporary Bonds may be surrendered, for cancellation, in exchange therefor at the Principal Office of the Trustee, and the Trustee shall authenticate and deliver in exchange for such temporary Bonds an equal aggregate principal amount of definitive Bonds of Authorized Denominations. Until so exchanged, the temporary Bonds shall be entitled to the same benefits under this Indenture as definitive Bonds authenticated and delivered hereunder. Section 2.08. Bonds Mutilated, Lost, Destroyed or Stolen. If any Bond shall become mutilated, the Issuer, at the expense of the holder of said Bond, shall execute, and the Trustee shall thereupon authenticate and deliver, a new Bond of like tenor and principal amount in exchange and substitution for the Bond so mutilated, but only upon surrender to the Trustee of the Bonds so mutilated. Every mutilated Bond so surrendered to the Trustee shall be cancelled by it. If any Bond issued hereunder shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Trustee, and if such evidence is satisfactory to it and indemnity for the Issuer and the Trustee satisfactory to the Trustee shall be given, the Issuer, at the expense of the holder, shall execute, and the Trustee shall thereupon authenticate and deliver, a new Bond of like tenor and principal amount in lieu of and in substitution for the Bond so lost, destroyed or stolen (or if any such Bond shall have matured or shall have been called for redemption, instead of issuing a substitute Bond, the Trustee on behalf of the Issuer may pay the same without surrender thereof) upon receipt of the aforementioned indemnity. The Issuer may require payment of a reasonable fee for each new Bond delivered under this 26 Section and payment of the expenses which may be incurred by the Issuer and the Trustee. Any Bond delivered under the provisions of this Section in lieu of any Bond alleged to be lost, destroyed or stolen shall constitute an original additional contractual obligation on the part of the Issuer whether or not the Bond so alleged to be lost, destroyed or stolen be at any time enforceable by anyone, and shall be equally and proportionately entitled to the benefits of this Indenture with all other Bonds secured by this Indenture. Section 2.09. Use of Depository. Notwithstanding any provision of this Indenture to the contrary: (a) As per the direction of the initial purchasers of the Bonds, the ownership of one fully registered Bond for each maturity of the Bonds shall be registered in the name of Cede & Co. (”Cede”), as nominee of The Depository Trust Company (“DTC”), New York, New York. The Bonds shall be held by the Trustee pursuant to DTC’s Fast Automated Securities Transfer (FAST) Program. Payments of interest on, principal of and any premium on the Bonds shall be made to the account of Cede on each payment date at the address indicated for Cede in the registration books of the Issuer kept by the Trustee by transfer of immediately available funds. DTC has represented to the Issuer that it will maintain a book-entry system in recording ownership interests of its participants (the ”Direct Participants”), and the ownership interests of a purchaser of a beneficial interest in the Bonds (a “Beneficial Owner”) will be recorded through book entries on the records of the Direct Participants. (b) With respect to Bonds registered in the name of Cede, the Issuer, the Trustee, the Credit Bank and the Tender Agent shall have no responsibility or obligation to any Direct Participant or to any Beneficial Owner of such Bonds. Without limiting the immediately preceding sentence, the Issuer, the Trustee, the Credit Bank and the Tender Agent shall have no responsibility or obligation with respect to (i) the accuracy of the records of DTC, Cede or any Direct Participant with respect to any beneficial ownership interest in the Bonds, (ii) the delivery to any Direct Participant, Beneficial Owner or other person, other than DTC, of any notice with respect to the Bonds, including any notice of redemption, (iii) the payment to any Direct Participant, Beneficial Owner or other person, other than DTC, of any amount with respect to the principal or redemption price of, or any interest on, the Bonds or (iv) any consent given or other action taken by DTC as owner of the Bonds. The Issuer, the Trustee, the Credit Bank and the Tender Agent may treat DTC as, and deem DTC to be, the absolute owner of each Bond for all purposes whatsoever including (but not limited to) (i) payment of the principal or redemption price of, and interest on, each such Bond, (ii) giving notices of purchase or redemption and other matters with respect to such Bonds and (iii) registering transfers with respect to such Bonds. The Trustee shall pay the principal or redemption price of, and interest on, all Bonds only to or upon the order of DTC, and all such payments shall be valid and effective to fully satisfy and discharge the Issuer’s obligations with respect to such principal or redemption price, and interest, to the extent of the sum or sums so paid. No person other than DTC shall receive a Bond evidencing the obligation of the Issuer to make payments of principal or redemption price of, and interest on, the Bonds pursuant to this Indenture. Upon delivery by DTC to the Trustee of written notice to the effect that DTC has determined to substitute a new nominee in place of Cede, and subject to the transfer provisions hereof, the word ”Cede” in this Indenture shall refer to such new nominee of DTC. i. DTC may determine to discontinue providing its services with respect to the Bonds at any time by giving reasonable written notice to the Issuer, the Trustee and the Tender Agent and discharging its responsibilities with respect thereto under applicable law. ii. The Issuer, in its sole discretion and without the consent of any other person, or the Borrower, with the consent of the Issuer, may terminate, upon provision of 27 7Y notice to the Trustee, the Credit Bank and Tender Agent, the services of DTC with respect to the Bonds if the Issuer or the Borrower determines that the continuation of the system of book-entry-only transfers through DTC (or a successor securities depository) is not in the best interests of the Beneficial Owners of the Bonds or is burdensome to the Issuer, and shall terminate the services of DTC with respect to the Bonds upon receipt by the Issuer, the Trustee and the Tender Agent of written notice from DTC to the effect that DTC has received written notice from Direct Participants having interests, as shown in the records of DTC, in an aggregate principal amount of not less than 50% of the aggregate principal amount of the then Outstanding Bonds to the effect, that: (A) DTC is unable to discharge its responsibilities with respect to such Bonds; or (B) a continuation of the requirement that all of the Outstanding Bonds be registered in the registration books kept by the Trustee in the name of Cede, as nominee of DTC, is not in the best interest of the Beneficial Owners of such Bonds. (d) Upon the termination of the services of DTC with respect to the Bonds pursuant to subsection (c)(ii)(B) hereof, or upon the discontinuance or termination of the services of DTC with respect to the Bonds pursuant to subsection (c)(i) or subsection (c)(ii)(A) hereof after which no substitute securities depository willing to undertake the functions of DTC hereunder can be found or which, in the opinion of the Issuer, is willing and able to undertake such functions upon reasonable and customary terms, the Bonds shall no longer be restricted to being registered in the registration books kept by the Trustee in the name of Cede as nominee of DTC. In such event, the Issuer shall issue and the Trustee shall transfer and exchange Bond certificates as requested by DTC or Direct Participants and confirmed by DTC of like principal amount, series and maturity, in Authorized Denominations to the identifiable Beneficial Owners in replacement of such Beneficial Owners’ beneficial interests in the Bonds. (e) Notwithstanding any other provision of this Indenture to the contrary, so long as any Bond is registered in the name of Cede, as nominee of DTC, all payments with respect to the principal or redemption price of, and interest on, such Bond and all notices with respect to such Bond shall be made and given, respectively, to DTC as provided in the representation letter of the Issuer and the Trustee addressed to DTC with respect to the Bonds. (f) In connection with any notice or other communication to be provided to Bondowners pursuant to this Indenture by the Issuer, the Tender Agent or the Trustee with respect to any consent or other action to be taken by Bondowners, the Issuer, the Tender Agent, the Credit Bank or the Trustee, as the case may be, shall establish a record date for such consent or other action and give DTC notice of such record date not less than 15 calendar days in advance of such record date to the extent the Trustee is reasonably able to do so. (g) Notwithstanding any provision herein to the contrary, the Issuer and the Trustee may agree to allow DTC, or its nominee, Cede, to make a notation on any Bond redeemed in part to reflect, for informational purposes only, the principal amount and date of any such redemption; provided, however, the Trustee shall incur no liability for any error or failure of DTC to make such notation, and the records of the Trustee shall be controlling. (h) Notwithstanding any provision herein to the contrary, so long as the Bonds are subject to a system of book-entry-only transfers pursuant to this Section, any requirement for the delivery of Bonds to the Trustee or the Tender Agent in connection with a mandatory tender pursuant to Section2.02 or Section 2.03 shall be deemed satisfied upon the transfer, on the registration books of DTC, of the beneficial ownership interests in such Bonds tendered for purchase to the account of the Tender Agent, or a Direct Participant acting on behalf of the Tender Agent. 28 (i) Notwithstanding any provision herein to the contrary, the services of DTC with respect to the Bonds shall be terminated during any period in which no Letter of Credit is then in effect by reason of the provisions of Section 4.06 hereof. In such event, the Trustee shall cooperate with the Credit Bank to effect the provisions of Section 2.09(d) above. 29 ARTICLE I11 ISSUANCE OF BONDS; APPLICATION OF PROCEEDS Section 3.01. Authentication and Delivery of the Bonds. Upon the execution and delivery of this Indenture, the Issuer shall execute the Bonds and deliver them to the Trustee. Thereupon, and upon satisfaction of the conditions set forth in this Section, and without any further action on the part of the Issuer, the Trustee shall authenticate the Bonds in an aggregate principal amount not exceeding the Authorized Amount, and shall deliver them to or upon the Written Order of the Issuer hereinafter mentioned. Prior to the authentication and delivery of any of the Bonds by the Trustee, there shall have been filed with the Trustee each of the following: (a) a certified resolution of the Issuer authorizing issuance and sale of the Bonds and execution and delivery of all related documents required to be executed and delivered by the Issuer; (b) original executed counterparts of this Indenture, the Financing Agreement the original of the Letter of Credit and the Standby Letter of Credit; and and the Tax Certificate and a conformed copy of the Regulatory Agreement; (c) (d) a Written Order of the Issuer to the Trustee to authenticate and deliver the Bonds as directed in such Written Order, upon payment to the Trustee, for the account of the Issuer, of the sum specified therein. Section 3.02. Application of Proceeds of Bonds. The proceeds received by the Issuer from the sale of the Bonds shall be deposited in trust with the Trustee, who shall deposit $- of such proceeds in the Program Fund and $ of such proceeds in the Costs of Issuance Fund. Section 3.03. Program Fund. (a) There is hereby created and established with the Trustee a separate trust fund which shall be designated the ”Program Fund.” Moneys in the Program Fund, which shall include the moneys in the accounts therein, shall be applied only as provided in this Section. The Credit Bank is hereby granted a security interest in the amounts held in the Program Fund to secure the Borrower’s repayment obligations under the Credit Agreement, said security interest to be subordinate to the pledge and lien on such amounts hereunder for the benefit of the Bondowners. (b) No moneys shall be disbursed from the Program Fund until the Trustee shall have received evidence that the Regulatory Agreement and the Deed of Trust have been recorded in the office of the Recorder of the County of San Diego. The Trustee may conclusively rely on notification from the title company responsible for recording such documents (which may be telephonic) of such recordation. The Trustee shall make all disbursements from the Program Fund only after compliance with the provisions for disbursement under Section 3.2 of the Financing Agreement and Section 3.03(d) below, to pay or reimburse the Borrower for Project Costs. On the Completion Date (provided that such date may be extended one or more times upon delivery by the Borrower of a Written Notice to the Trustee at least 60 days prior to each such date speclfylng a new Completion Date accompanied by an opinion of Bond Counsel to the effect that the provision for any such later date will not, in itself, cause the interest on the (c) 30 Bonds to be included in the gross incomes of the Bondholders for purposes of federal income taxation), the Trustee shall (i) if the amount then on deposit in the Program Fund is less than $100,000, transfer all amounts then on deposit to the Bond Fund, to be used to pay Debt Service on the Bonds, or (ii) if the amount then on deposit in the Program Fund is equal to or greater than $100,000, transfer all amounts then in such Account to the Bond Fund to be used by the Trustee to redeem a portion of the Bonds pursuant to Section 4.01(a). (d) Any provision in this Indenture to the contrary notwithstanding, the Trustee shall not disburse any funds from the Program Fund unless (i) it has received a Funding Requisition executed by an Authorized Borrower Representative and approved in writing by an Authorized Bank Representative, representing that the full amount of such disbursement will be applied to pay or reimburse the Borrower for the payment of Project Costs and such disbursement, when added to all previous disbursements from the Program Fund, will result in not less than 95% of all such disbursements having been used to pay or reimburse the Borrower for Qualified Project Costs and no more than 25% of all such disbursements having been used for the acquisition of land or an interest therein, or (ii) it has received a written request from the Credit Bank (without the need for any approval by the Borrower) idenbfymg the amount to be withdrawn and representing that the amount withdrawn is being paid to the Credit Bank pursuant to the Credit Agreement. Proceeds of the Series B Bonds on deposit in the Program Fund shall be applied to the funding of Funding Requisitions, and deemed expended, prior to the application of the proceeds of the Series A Bonds. (e) Neither the Trustee nor the Issuer shall be responsible for the application by the Credit Bank or the Borrower of moneys disbursed to the Credit Bank or the Borrower in accordance with this Section 3.03. Section 3.04. Costs of Issuance Fund. [TO COME] 31 ARTICLE IV REDEMLTION OF BONDS Section 4.01. Circumstances of Redemption. The Bonds are subject to redemption upon the circumstances, on the dates and at the prices set forth as follows: (a) (i) The Bonds shall be subject to redemption in part on the first Interest Payment Date that is at least 180 days after the Completion Date (or such later date as may be established under Section 3.03(c) hereof), at a price equal to the principal amount of the Bonds called for redemption, plus interest accrued thereon to the date of redemption, without premium, in the event and to the extent that funds on deposit in the Program Fund are transferred to the Bond Fund as described in Section 3.03(c). (ii) The Series A Bonds shall be subject to redemption in part on the date of the Loan Conversion in the event that the Substitute Credit Facility delivered on the date of the Loan Conversion credit enhances a principal amount of Series A Bonds less than the principal amount of Series A Bonds outstanding on the date of Loan Conversion, in the amount of such difference at a price equal to the principal amount of the Bonds called for redemption, plus interest accrued there on to the date of the redemption. (b) The Bonds shall be subject to redemption in whole or in part on any Interest Payment Date, at a price equal to the principal amount of Bonds redeemed, plus interest accrued thereon to the date fixed for redemption, without premium, upon prepayment of the Loan in whole or in part, (i) in an amount as nearly equal as possible to, but not exceeding, the amount of any Net Proceeds of insurance or condemnation awards not used to repair or replace the Project, or (ii) during any Variable Period or on any Reset Date or the Conversion Date, from moneys on deposit in the Bond Fund and paid therefrom as set forth in Section 5.02 hereof in the amount of any voluntary prepayments of principal of the Loan (provided, however, that following any such prepayment no Bond shall be Outstanding in an amount other than an Authorized Denomination). (c) The Bonds shall be subject to redemption in whole on any date at a price equal to the principal amount of Bonds redeemed, plus interest accrued thereon to the date fixed for redemption, without premium, upon acceleration of the Loan in whole following an Acceleration Default or at the request of or with the consent of the Credit Bank (or with the written consent of the sole Bondowner, in the circumstances described in Section 7.12) (i) following any other Event of Default under the Financing Agreement (except an Event of Default under Section 7.l(e) of the Financing Agreement), in an amount as nearly equal as possible to, but not exceeding, the amount of the Loan so accelerated, or (ii) following any Event of Default under the Credit Agreement as so notified by the Credit Bank, and in each case on a date not later than 10 days after receipt of such notice, in an amount equal to the amount of the Bonds Outstanding. The Bonds shall be subject to redemption in whole, at a price equal to the principal amount thereof, plus interest accrued thereon to the date fixed for redemption, without premium, on the last Business Day that is not less than five days before the date of expiration of the Letter of Credit unless, in each case not less than 10 days before the expiration of the then existing Letter of Credit, the Trustee receives a renewal or extension of or replacement for such Letter of Credit meeting the requirements of (d) 32 I79 Section 5.8 of the Financing Agreement or, in the case of replacement of the Letter of Credit in connection with any Reset Date or the Conversion Date pursuant to Section 2.02(b), (c) or (d), meeting the requirements of Section 5.8 of the Financing Agreement, such Letter of Credit to be effective upon and after such Reset Date or Conversion Date or a Substitute Credit Facility meeting the requirements of Section 5.10 of the Financing Agreement, such Substitute Credit Facility to be effective upon and after such Reset Date of Conversion Date. (e) (i) The Series B Bonds are subject to optional redemption in whole or in part, on any Interest Payment Dates during any Reset Period or after Conversion from voluntary prepayments of the Loan, at the respective redemption prices set forth below expressed as percentages of the principal amount of the Bonds called for redemption, such redemption prices declining 1/20/, each year until such redemption price equals 100% of the principal amount of the Bonds: Term of Reset Period or from Conversion to Maturity 7 or more years 5 or more years (but less than 7 years) More than 2 years 2 years or less Initial Redemption No-Call Period Price First 5 years after 101.5% Reset or Conversion Date Reset or Conversion Date year preceding end of Reset Period or maturity of Bonds Period up to one year preceding end of Reset Period or maturity of Bonds First 3 years after 101.0% Period up to 2nd 1 00.5 Yo 100.0% No Premium 9'h year 6* year Final year Final year Notwithstanding the foregoing, the Borrower and the Remarketing Agent may, not later than fifteen (15) days before the first day of such Reset Period, give notice to the Issuer, the Credit Bank and the Trustee setting forth a redemption schedule different from that set forth in this paragraph, accompanied by (i) the written consent of the Credit Bank for such Reset Period, and (ii) an Opinion of Bond Counsel to the effect that such change will not adversely affect the exclusion of interest on the Bonds from gross income for federal income tax purposes; and upon such notice and delivery of the consent and the opinion, such different redemption schedule shall apply to any redemption pursuant to this paragraph for such Reset Period, without further action by any party. (ii) The Series A Bonds are subject to optional redemption in whole or in part, on any Interest Payment Date from voluntary prepayments of the Loan, on the dates and at the respective redemption prices set forth below expressed as percentages of the principal amount of the Bonds called for redemption plus interested accrued to the redemption date as follows: Redemtltion Period Redemption Prices 33 (f) The Bonds shall be subject to redemption in whole, at a price equal to the principal amount of Bonds so called for redemption, plus interest accrued thereon to the date of redemption, without premium, on a date not later than five days after the date on which the Credit Bank wrongfully fails to honor a properly presented and conforming draw on the Letter of Credit or the Letter of Credit is repudiated. (g) The Series B Bonds shall be subject to redemption in whole, at a price equal to the principal amount of the Series B Bonds so called for redemption, plus interest accrued thereon to the date of redemption, without premium, on the earlier to occur of Loan Conversion or Dune 1, 20051; provided, however, a redemption pursuant to this Section 4.01(g) shall not occur prior to (h) The Series A Bonds shall be subject to redemption in whole, at a redemption price equal to the principal amount of Series A Bonds so called for redemption, plus interest accrued thereon to the date of redemption, without premium, on , 2005, in the event that Loan Conversion has not occurred on or prior to such date. The Trustee is hereby authorized and directed, and hereby agrees, to give notice of the call for redemption of Bonds at the times set forth in this paragraph, to fix the date for any such redemption within the periods prescribed by Section 4.03 hereof, and, if moneys are available, to redeem the Bonds so called on the date so fixed by the Trustee and set forth in such notice. The Trustee shall give such redemption notice (i) in the case of redemption pursuant to (b) above, not less than 30 days after receipt of the amount of the Loan prepayment to be applied to such redemption; (ii) in the case of redemption pursuant to (a) or (d) above, at the time required therefor pursuant to Section 4.03, without any further authorization or direction; (iii) in the case of redemption pursuant to (e) above, at the time required therefor pursuant to Section 4.03, upon receipt of notice that the option is being exercised but only if the Trustee then holds Available Amounts on deposit in the Bond Fund sufficient to pay, and set aside for the payment of, any premium due upon such redemption, or if the Letter of Credit then in effect may be drawn upon to pay such premium and is in an amount equal to such premium plus the other amounts required by Section 5.8 of the Financing Agreement (which Available Amounts or funds available under the Letter of Credit shall be used to pay premiums on the Bonds); (iv) in the case of redemption pursuant to (c) or (g) above, as soon as practicable, but not more than five days after receipt (A) with respect to (c), from the Credit Bank of a request for or consent to acceleration of the Loan following any Event of Default under the Financing Agreement or following any Event of Default under the Credit Agreement and (B) with respect to (g), from the Borrower of a written notice, acknowledged by Fannie Mae, of the Loan Conversion; and (v) in the case of a redemption pursuant to (f) above, as soon as practicable, but not more than two days after the Credit Bank has failed to honor a drawing made under the Letter of Credit or the Trustee has actual knowledge such Letter of Credit has been repudiated [and (vi) in case of (h), as soon as practicable, after , 2005. For all purposes of this Indenture, such ”actual knowledge” shall mean actual knowledge at the Principal Office of the Trustee by the officer of the Trustee with responsibility for the regular administration of matters related to this Indenture. Section 4.02. Selection of Bonds for Redemption. When any redemption is made pursuant to any of the provisions of this Indenture and less than all of the Outstanding Bonds are to be redeemed, the Trustee shall select the Bonds to be redeemed by lot, in any manner the 34 Trustee deems appropriate, in whole multiples of Authorized Denominations, unless otherwise provided herein or as directed by the Bank in writing as to the section of Bonds for redemption. In no event shall Bonds be redeemed in amounts other than whole multiples of Authorized Denominations. For purposes of redeeming Bonds in denominations greater than minimum Authorized Denominations, the Trustee shall assign to such Bonds a distinctive number for each such principal amount and, in selecting Bonds for redemption by lot, shall treat such amounts as separate Bonds. The Trustee shall promptly no* the Issuer in writing of the numbers of the Bonds selected for redemption. If any Bonds tendered for purchase pursuant to Section 2.03 hereof and delivered pursuant to Section 8.16 hereof shall have been selected for redemption, then the new Bond delivered pursuant to Section 8.16 hereof shall be delivered with notice that it is subject to such redemption and shall be deemed to be the Bond so selected for redemption notwithstanding the notice period stated in Section 4.03 hereof. Section 4.03. Notice of Redemption. Notice of redemption shall be given by the Trustee for and on behalf of the Issuer, by first-class mail, not more than 20 and not less than 10 days or, in the case of a redemption pursuant to Sections 4.01(c), (d) or (g) [or (h)], not less than five days or in the case of a redemption pursuant to Section 4.01(f) not less than three days, prior to the redemption date, to the registered owner of each Bond called for redemption, at its address as it appears on the registration books, and the Remarketing Agent but neither failure to mail such notice to any Bondholder nor any defect in any notice so mailed shall affect the sufficiency of the proceedings for the redemption of any of the Bonds with respect to which such failure or defect shall have occurred. Each notice of redemption shall state the redemption date, the place of redemption, the source of the funds to be used for such redemption, the principal amount and, if less than all, the distinctive numbers of the Bonds to be redeemed, and shall also state that the interest on the Bonds in such notice designated for redemption shall cease to accrue from and after such redemption date and that on said date there will become due and payable on each of said Bonds the principal amount thereof to be redeemed, interest accrued thereon to the redemption date and the premium, if any, thereon (such premium to be specified). Neither the Issuer nor the Trustee shall have any responsibility for any defect in the CUSIP number that appears on any Bond or in any redemption notice with respect thereto, and any such redemption notice may contain a statement to the effect that CUSIP numbers have been assigned by an independent service for convenience of reference and that neither the Issuer nor the Trustee shall be liable for any inaccuracy in such numbers. Each redemption notice shall also be sent by facsimile transmission, overnight delivery service or other secure means, postage prepaid, to certain municipal registered Securities Depositories that are known to the Trustee to be holding Bonds and to at least two of the national Information Services that disseminate securities redemption notices, at the time notice is provided to the registered owners prior to the redemption date, and in the case of the notice to Securities Depositories, when possible, at least two days prior to the mailing of notices required by the first paragraph of this Section. Failure to give notice by mailing to any Securities Depository or Information Service, failure to receive such notice, any defect of any notice so mailed or the failure to give timely notice of redemption shall not affect the validity of the proceedings for the redemption of any Bond. Section 4.04. Partial Redemption of Bonds. Any Bond may be redeemed in whole or in part, but no part of any Bond shall be redeemed in an amount less than an Authorized Denomination. Upon surrender of any Bond redeemed in part only, the Issuer shall execute and the Trustee shall authenticate and deliver to the registered owner thereof, without charge to the owner thereof, a new Bond or Bonds of like series and maturity and of Authorized Denominations designated by such owner equal in aggregate principal amount to the unredeemed portion of the Bond surrendered. 35 Section 4.05. Effect of Redemption. Notice of redemption having been duly given as aforesaid, and moneys for payment of the redemption price being held by the Trustee, the Bonds so called for redemption shall, on the redemption date designated in such notice, become due and payable at the redemption price specified in such notice, interest on the Bonds so called for redemption shall cease to accrue, said Bonds shall cease to be entitled to any lien, benefit or security under this Indenture, and the holders of said Bonds shall have no rights in respect thereof except to receive payment of the redemption price thereof. All Bonds fully redeemed pursuant to the provisions of this Article IV shall be destroyed by the Trustee, which shall thereupon deliver to the Issuer a certificate evidencing such destruction. Section 4.06. Purchase in Lieu of Redemption. Notwithstanding anything to the contrary provided in this Indenture, if the Bonds shall become eligible for redemption pursuant to Section 4.01(b), (c), (d), (f) or (g) [or (h)] of this Indenture, then the Bonds shall either (i) be redeemed in accordance with the applicable provisions of this Indenture or (ii) be purchased in lieu of redemption by the Credit Bank if the Credit Bank shall have given written notice to the Trustee no later than 1O:OO a.m., Pacific time, on or before the second Business Day immediately preceding the date otherwise scheduled for redemption to the effect that the Credit Bank desires that all of the Bonds be purchased by the Credit Bank and not redeemed. If such a notice is provided to the Trustee by the Credit Bank, then (a) the Bonds shall not be redeemed but shall be purchased by the Credit Bank, and (b) after the consummation of the purchase of the Bonds in accordance with this paragraph (i) the rights of the holders of the Bonds and the benefits and security of this Indenture shall not be adversely affected by the giving of any notice of redemption pursuant to Section 4.03 hereof, (ii) so long as the Bonds are owned by a single Bondowner there shall be no requirement for a Letter of Credit or a Standby Letter of Credit to be outstanding securing the repayment of the Bonds, the Bonds shall be subject to transfer solely as permitted by the last paragraph of Section 2.05 hereof, and all rights of the Credit Bank under and as set forth in Section 7.02 of the Financing Agreement shall be exercised by the sole Bondowner and all references to the Credit Bank in said Section shall be deemed to be references to the sole Bondowner, and (iii) the Trustee shall surrender the Letter of Credit and Standby Letter of Credit in effect prior to such purchase to the respective providers thereof with written directions of the Trustee to terminate such Letter of Credit and Standby Letter of Credit. The purchase price for each Bond shall be equal to the redemption price which would otherwise apply pursuant to Section 4.01 hereof and shall be paid as provided in Section 8.15 hereof. Anything to the contrary contained elsewhere in this Indenture notwithstanding, Bonds purchased in lieu of redemption pursuant to this paragraph shall only be remarketed by the Remarketing Agent if there shall have been delivered to the Trustee, in trust, a new Letter of Credit satisfymg the requirements of this Indenture and Section 5.8 of the Financing Agreement and, to the extent required, a new Standby Letter of Credit satisfying the requirements of this Indenture and Section 5.9 of the Financing Agreement or any other credit facility of a kind described in the definition of "Substitute Credit Facility" and satisfymg the requirements of Section 5.10 of the Financing Agreement; provided, however, that for all purposes of this Indenture, notwithstanding any provision to the contrary contained herein, no such Letter of Credit or Standby Letter of Credit shall be required to be delivered so long as none of the Bonds is remarketed by the Remarketing Agent. No interest shall accrue on the Bonds while Bonds are owned by the Credit Bank pursuant to this Section. Bonds purchased pursuant to this Section 4.06 shall be registered by the Trustee in the name of the Credit Bank of its successor or assignee, if any, shall not be Pledged Bonds and the Borrower shall have no interest therein. 36 ARTICLE V REVENUES Section 5.01. Pledge of Revenues. All of the Revenues are hereby irrevocably pledged first to the punctual payment of the principal of, premium, if any, and interest on the Bonds and second to the payment of all amounts owed to the Credit Bank under the Credit Agreement, subject to the provisions of this Indenture permitting the application of such Revenues for the purposes and on the terms and conditions set forth herein. The Issuer also hereby transfers in trust, grants a security interest in and assigns to the Trustee, for the benefit of the holders from time to time of the Bonds and the Credit Bank, all of its right, title and interest in the Revenues, as further provided in Section 5.04, and in the Issuer Loan Documents (except for its Reserved Rights). All Revenues shall be held in trust for the benefit of the holders from time to time of the Bonds and the Credit Bank, but shall nevertheless be disbursed, allocated and applied solely for the uses and purposes hereinafter set forth in this Article V. Section 5.02. Bond Fund. There is hereby created and established with the Trustee a separate trust fund which shall be designated the "Bond Fund." Moneys in the Bond Fund shall be applied only as provided in this Section. The Trustee shall deposit in the Bond Fund from time to time, upon receipt thereof, (i) all amounts drawn by the Trustee under the Letter of Credit and the Standby Letter of Credit as provided in Section 5.05 hereof; (ii) income received from the investment of moneys on deposit in the Bond Fund; and (iii) any other Revenues, including insurance proceeds, condemnation awards and other Loan prepayment amounts received from or for the account of the Borrower. Amounts drawn under the Letter of Credit, the Standby Letter of Credit and other Available Amounts shall not be commingled with other moneys in the Bond Fund and the Trustee shall set up separate sub-accounts in the Bond Fund for amounts drawn under the Letter of Credit, the Standby Letter of Credit and other Available Amounts, respectively. The Trustee shall have the sole right of withdrawal from the sub-accounts of the Bond Fund m which amounts drawn under the Letter of Credit, the Standby Letter of Credit and other Available Amounts are deposited, and none of the Issuer, the Borrower or any general partner or guarantor of the Borrower shall have any legal, equitable or beneficial right, title or interest in amounts on deposit therein. Except as provided in this Section 5.02 and in Section 10.03, moneys in the Bond Fund shall be used solely for the payment of the principal of and premium, if any, and interest on the Bonds as the same shall become due, whether at maturity or upon redemption or acceleration or otherwise. In making such payments, the Trustee shall (a) use amounts drawn by the Trustee under the Letter of Credit, (b) then use amounts drawn by the Trustee under the Standby Letter of Credit, (c) then use Available Amounts held hereunder (except proceeds of a draw under the Letter of Credit or Standby Letter of Credit) and (d) then use any other Revenues received by the Trustee. Any amounts remaining in the Bond Fund on June 15 of each year that represent investment earnings on amounts on deposit in the Bond Fund shall be transferred on such date by the Trustee to the Credit Bank and applied to the reimbursement of the Credit Bank for drawings made on the Letter of Credit. 37 Section 5.03. Investment of Moneys. Except as otherwise provided in this Section, any moneys in any of the funds and accounts established by the Trustee pursuant to this Indenture shall be invested by the Trustee, if and to the extent then permitted by law, in Investment Securities selected and directed by the Borrower in a Written Direction, as approved in writing by the Credit Bank, such direction to be given to the Trustee by noon Pacific Time on the second Business Day prior to such investment with respect to which payments of principal thereof and interest thereon are scheduled or otherwise payable not later than the date on which it is estimated that such moneys will be required by the Trustee. In the absence of such Written Direction from the Borrower, the Trustee shall invest solely in Investment Securities described in clause (e) of the definition thereof with maturities of 30 days or less, as needed. The Borrower shall provide investment instructions, approved m writing by the Credit Bank, such that amounts drawn under the Letter of Credit, the Standby Letter of Credit, any Collateral Funds and proceeds received from the remarketing of the Bonds shall be invested, if at all, only in Investment Securities described in clause (a) of the definition thereof (or money market funds comprised solely of such securities which are rated not lower than the rating on the Bonds) with maturities of 30 days or less as needed. The Borrower shall provide investment instructions, approved in writing by the Credit Bank, such that Available Amounts held in the Bond Fund, other than amounts drawn under the Letter of Credit, the Standby Letter of Credit, and any Collateral Funds shall be invested only in Investment Securities described in clause (a) of the definition thereof (or money market funds comprised solely of such securities which are rated no lower than the then-current rating on the Bonds, but not in unit investment trusts comprised of securities described in such clause) maturing or subject to payment at the principal amount thereof upon demand of the holder thereof within 30 days after the acquisition of any such investment and in any event not later than the date on which it is estimated that such moneys will be required by the Trustee. The Trustee shall have no liability or responsibility for any loss resulting from any investment made in accordance with this Section 5.03, except through its negligence or willful misconduct. Except as otherwise provided in the next sentence, all investments of amounts deposited in any fund or account created by or pursuant to this Indenture or otherwise containing gross proceeds of the Bonds (within the meaning of Section 148 of the Code) shall be acquired, disposed of, and valued (as of the date that valuation is required by this Indenture or the Code) at Fair Market Value. Investments in funds or accounts (or portions thereof) that are subject to a yield restriction under applicable provisions of the Code shall be valued at their present value (within the meaning of Section 148 of the Code). Any interest, profit or loss on such investment of moneys in any fund or account shall be credited or charged to the respective funds or accounts from which such investments are made. The Trustee may sell or present for redemption any obligations so purchased whenever it shall be necessary in order to provide moneys to meet any payment, and the Trustee shall not be liable or responsible for any loss resulting from such sale or redemption, except through its negligence or willful misconduct. The Trustee may make any and all investments permitted under this Section 5.03 through its own investment or bond department (or that of any of its affiliates) and may pay said bond or investment department reasonable, customary fees for placing such investments. The Issuer (and the Borrower by its execution of the Financing Agreement) acknowledges that to the extent regulations of the Comptroller of the Currency or other applicable regulatory entity grant the Issuer or the Borrower the right to receive brokerage confirmations of security transactions as they occur, the Issuer and the Borrower specifically waive receipt of such confirmations to the extent permitted by law. The Trustee will furnish the Issuer and the 38 Borrower monthly cash transaction statements which include detail for all investment transactions made by the Trustee hereunder. The Trustee or any of its affiliates may act as sponsor, advisor, manager or provide administrative services in connection with any Investment Securities purchased by the Trustee hereunder. Section 5.04. Assignment to Trustee; Enforcement of Obligations. The Issuer hereby transfers, assigns and sets over to the Trustee, for the benefit of the Bondholders and the Credit Bank, and the Trustee hereby accepts, all of the Revenues, all moneys at any time held in any fund hereunder (other than moneys held in the Rebate Fund), and any and all rights and privileges the Issuer has under the Financing Agreement, other than the Issuer’s Reserved Rights and any Revenues or other amounts payable to the Trustee hereunder or under the Financing Agreement that are collected or received by the Issuer and shall be deemed to be held, and to have been collected or received, by the Issuer as the agent of the Trustee, and shall forthwith be paid by the Issuer to the Trustee. The Trustee also shall be entitled to and shall subject to the provisions of this Indenture take all steps, actions and proceedings reasonably necessary in its judgment (1) to enforce the terms, covenants and conditions of, and preserve and protect the priority of its interest in and under, the Financing Agreement and the Letter of Credit and (2) to assure compliance with all covenants, agreements and conditions on the part of the Issuer contained in this Indenture with respect to the Revenues. Section 5.05. Letter of Credit. The Issuer hereby authorizes and directs the Trustee, and the Trustee hereby agrees, to draw on the Letter of Credit in accordance with its terms, in order to receive payment thereunder on the following dates in the following amounts: (a) On the Business Day preceding each Interest Payment Date, in an mount that will be sufficient to pay the interest due and payable on such Interest Payment Date on all Outstanding Bonds; On the Business Day preceding any date fixed for redemption of Bonds under Sections 4.01(b), (c), (d) or (g) [or (h)], in an amount that will be sufficient to pay the redemption price, including accrued interest to the date of redemption; On the Business Day preceding the date fixed for payment of the Bonds in connection with any declaration of the acceleration of the maturity of the Bonds following an Event of Default, as provided in Section 7.01 hereof, in an amount that will be sufficient to pay all principal and interest due on the Bonds as a result of such declaration on the date fixed for such payment; (b) (c) (d) On the Business Day preceding each Demand Date (other than Demand Dates representing optional tenders of Bonds while in the Daily Mode), in an amount sufficient to pay the Purchase Price of any Bonds tendered pursuant to Section 2.02 (other than Section 2.02(a)) and 2.03 hereof, such draw to be in an amount not less than the total Purchase Price of the Bonds so tendered, as such amounts are identified to the Trustee by the Remarketing Agent and the Tender Agent pursuant to the provisions of Section 8.14 hereof; (e) By 4:OO p.m., New York City time, on any Demand Date while the Bonds are in the Daily Mode, in an amount sufficient to pay the Purchase Price of any Bonds tendered pursuant to Section 2.02(a) hereof and for which the Tender Agent has not received remarketing proceeds, such draw to be in an amount which, together with the remarketing proceeds received by the Tender Agent pursuant to Section 8.14 hereof, will equal the total Purchase Price of the Bonds so tendered, as such amounts are identified 39 to the Trustee by the Remarketing Agent and the Tender Agent pursuant to the provisions of Section 8.14 hereof; (f) On the Business Day preceding the final maturity date of the Bonds, in an amount that will be sufficient to pay the principal and interest due on all Outstanding Bonds on such final maturity date; and (g) On the Business Day prior to the date fixed for redemption of Bonds under Section 4.01(b), (c), (d), (f) or (g) [or (h)] hereof and in the event that the Credit Bank shall have provided the notice described in Section 4.06, in an amount sufficient to pay the Purchase Price of all Bonds to be purchased in lieu of redemption pursuant to the terms of said paragraph. Except as provided in (e) above, each such drawing shall be made not later than the time required by the Letter of Credit in order to receive payment thereunder on the Business Day preceding the day on which payment of the amount of such drawing is required to be made to the holders of the Bonds pursuant to this Indenture. The Trustee shall give notice of each such drawing to the Borrower at the time of each draw. The Trustee shall comply with all provisions of the Letter of Credit in order to realize upon any drawing thereunder, and will not draw upon the Letter of Credit at any time for payment of the principal or Purchase Price of and interest on any Bonds registered in the name of the Credit Bank or the Borrower or any general partner or guarantor of the Borrower or the Issuer or known by the Trustee to be registered in the name of any nominee of the Credit Bank, the Borrower, any general partner or guarantor of the Borrower, or the Issuer (provided that the Trustee shall have no duty to investigate whether Bonds are registered in the names of such nominees). In the event that the Credit Bank wrongfully fails to honor a properly presented and conforming draw on the Letter of Credit or the Letter of Credit is repudiated, the Trustee shall, upon receipt of actual knowledge thereof immediately, notify the Standby Credit Bank, the Borrower and the Issuer of such event. The Trustee shall draw on the Standby Letter of Credit in accordance with its terms when required pursuant to Section 5.06 hereof. The Trustee agrees to accept any Letter of Credit conforming to the requirements of Section 5.8(a) of the Financing Agreement that is delivered to the Trustee while the Bonds bear interest at a Variable Rate in substitution for the then outstanding Letter of Credit, to accept any Letter of Credit conforming to the requirements of Section 5.8(b) of the Financing Agreement that is delivered to the Trustee in connection with a Reset Date or during a Reset Period in substitution for the then outstanding Letter of Credit, and to accept any Letter of Credit conforming to the requirements of Section 5.8(c) of the Financing Agreement that is delivered to the Trustee in connection with Conversion or which is delivered to the Trustee at any time after Conversion in substitution for the then outstanding Letter of Credit and any Standby Letter of Credit conforming to the requirement of Section 5.9 of the Financing Agreement. Upon acceptance of any such substitute Letter of Credit or Standby Letter of Credit, the Trustee shall surrender the superseded Letter of Credit or Standby Letter of Credit to the issuer thereof and the Trustee shall provide written direction to such issuer or issuers to terminate the superseded Letter of Credit and/or Standby Letter of Credit. The Trustee shall give all required notices to the Credit Bank and the Standby Credit Bank in accordance with the provisions of the Letter of Credit and the Standby Letter of Credit, respectively, including, but not limited to, notice of a substitute Letter of Credit or substitute Standby Letter of Credit, notice of a successor Trustee, and notice of discharge or defeasance of this Indenture. Written notice of a substitute Letter of Credit "substitute Standby Letter of Credit" or Substitute Credit Facility shall also be provided by the Trustee to the Bondholders not less than 15 days prior to the delivery of the substitute Letter of Credit, substitute Standby 40 Letter of Credit, or Substitute Credit Facility. In the case of a draw on the Letter of Credit to pay the Purchase Price of any Bonds tendered pursuant to Sections 2.02 and 2.03 hereof and not remarketed pursuant to Section 8.14 hereof, the Trustee shall arrange for payments under the Letter of Credit to be made directly to the Tender Agent. All draws made on a date when the applicable interest rate on the Bonds through the date proceeds of such draw will be applied to payment of the Bonds is unknown shall be made assuming that the interest rate will, on each Variable Rate Computation Date prior to the date such payment on the Bonds is made, be the Maximum Interest Rate. Excess funds remaining from such draw on such payment date shall be returned to the Credit Bank or the Standby Credit Bank, as appropriate. Section 5.06. Standby Letter of Credit. Except as otherwise provided in the following paragraph, in the event the Credit Bank wrongfully fails to honor a properly presented and conforming draw on the Letter of Credit in a timely manner or the Letter of Credit is repudiated, the Issuer hereby authorizes and directs the Trustee, and the Trustee hereby agrees, to draw on the Standby Letter of Credit in the full stated amount of the Standby Letter of Credit in accordance with its terms, in order to immediately receive payment thereunder, on the date amounts drawn on the Letter of Credit were to be applied pursuant to this Indenture, as to allow the payments due and payable to the Bondholders to be made in a timely manner and to effect a redemption of the Bonds pursuant to Section 4.01(f) hereof. Such drawing shall be made not later than the time required by the Standby Letter of Credit in order to receive payment thereunder on the Business Day on which payment of the amount of such drawing is required to be made to the holders of the Bonds pursuant to this Indenture. The Trustee shall give notice of such drawing to the Borrower at the time of each draw. The Trustee shall comply with all provisions of the Standby Letter of Credit in order to realize upon any drawing thereunder, and will not draw upon the Standby Letter of Credit at any time for payment of the principal or Purchase Price of any Bonds registered in the name of the Credit Bank, the Borrower, any general partner or guarantor of the Borrower, the Issuer, or known by the Trustee to be registered in the name of any nominee of the Credit Bank, the Borrower, any general partner or guarantor of the Borrower, or the Issuer (provided that the Trustee shall have no duty to investigate whether Bonds are registered in the names of such nominees). The Trustee agrees to accept, subject to the terms of a supplemental indenture amending or supplementing the Indenture and Section 5.10 of the Financing Agreement, a Substitute Credit Facility in substitution for the then existing Standby Letter of Credit. Upon acceptance of any such Substitute Credit Facility, the Trustee shall surrender the superseded Standby Letter of Credit or Substitute Credit Facility then existing to the issuer thereof and the Trustee shall provide written direction to such issuer to terminate the superseded Standby Letter of Credit or substitute credit facility. The Trustee shall give notice of such substitution to Bondholders (with a copy to the Issuer) by first class mail as soon as practicable upon receipt by the Trustee of notice of such substitution. The Trustee shall give all required notices to the Standby Credit Bank in accordance with the provisions of the Standby Letter of Credit, including, but not limited to, notice of a substitute Standby Letter of Credit, notice of a successor Trustee, and notice of discharge or defeasance of this Indenture. The Trustee shall transfer, in a timely manner, to any paying agent, if other than the Trustee, all amounts drawn under the Standby Letter of Credit in order to make payments on the Bonds. The Trustee shall not, under any circumstances, draw on the Standby Letter of Credit in an amount less than the amount required to redeem the Bonds in whole pursuant to Section 4.01(f) hereof. 41 ARTICLE VI COVENANTS OF THE ISSUER Section 6.01. Payment of Principal and Interest. The Issuer shall punctually pay, but only out of Revenues as herein provided, the principal and the interest (and premium, if any) to become due in respect of every Bond issued hereunder at the times and places and in the manner provided herein and in the Bonds, according to the true intent and meaning thereof. When and as paid in full, all Bonds shall be delivered to the Trustee and shall forthwith be cancelled and destroyed. Section 6.02. Paying Agents. The Issuer, with the written approval of the Trustee and the Credit Bank, may appoint and at all times shall have one or more paying agents (which paying agent or agents shall be a commercial bank with trust powers, trust company, or an entity (other than the initial Paying Agent) with trust powers the rating of which is at least "A/A-1" by the Rating Agency) in such place or places as the Issuer may designate, for the payment of the principal of, and the interest (and premium, if any) on, the Bonds. It shall be the duty of the Trustee to make such arrangements with any such paying agent as may be necessary and feasible to assure, to the extent of the moneys held by the Trustee for such payment, the availability of funds for the prompt payment of the principal of and interest and premium, if any, on the Bonds presented at either place of payment. The paying agent initially appointed hereunder is the Trustee. Section 6.03. Preservation of Revenues; Amendment of Documents. The Issuer shall not take any action to interfere with or impair the pledge and assignment hereunder of Revenues and the assignment to the Trustee of rights of the Issuer under the Issuer Loan Documents, or the Trustee's enforcement of any rights hereunder or thereunder, shall not take any action to impair the validity or enforceability of the Issuer Loan Documents, and shall not waive any of its rights under or any other provision of or permit any amendment of the Issuer Loan Documents, without the prior written consent of the Trustee and the Credit Bank (except as provided in clause (iii) of the next succeeding paragraph). The Trustee may give such written consent, and may itself take any such action or consent to a waiver of any provision of or an amendment or modification to or replacement of any Issuer Loan Documents, or any other document, instrument or agreement relating to the security for the Bonds, only if (i) such action or such waiver, amendment, modification or replacement (a) is authorized or required by the tenns of this Indenture or the Financing Agreement, (b) will not, in the Opinion of Counsel delivered to the Trustee and the Credit Bank, materially adversely affect the interests of the holders of the Bonds or result in any impairment of the security hereby given for the payment of the Bonds or (c) has first been approved by the written consent of the holders of at least 60% in principal amount of the Bonds then Outstanding; (ii) any such action or such waiver, amendment, modification or replacement will not have the effect of extending the time for payment or reducing the amount due and payable of any amount due and payable by the Credit Bank under the Letter of Credit; and (iii) the Trustee shall have received the prior written approval of the Credit Bank, provided that such approval of the Credit Bank shall not be required (although the Trustee shall give notice to the Credit Bank) if the Trustee and the Credit Bank shall have received an opinion of Bond Counsel to the effect that such action or such waiver, amendment, modification or replacement is required to preserve the exclusion of interest on the Bonds from gross income for federal income tax purposes or compliance by the Bonds and the Project with the Act, the Housing Law and other laws of the State. 42 Section 6.04. Compliance With Indenture. The Issuer shall not issue, or permit to be issued, any bonds or other evidence of indebtedness secured or payable in any manner out of Revenues or the Issuer Loan Documents other than in accordance with the provisions of this Indenture; it being understood that the Issuer reserves the right to issue obligations payable from and secured by sources other than the Revenues and the assets assigned herein. The Issuer shall not suffer or permit any default to occur under this Indenture, but shall faithfully observe and perform all the covenants, conditions and requirements hereof. So long as any Bonds are Outstanding, the Issuer shall not create or suffer to be created any pledge, lien or charge of any type whatsoever upon all or any part of the Revenues, other than the lien of this Indenture. Section 6.05. Further Assurances. Whenever and so often as requested to do so by the Trustee, the Issuer shall promptly execute and deliver or cause to be executed and delivered all such further instruments, documents or assurances, and promptly do or cause to be done all such other things, as may be necessary or reasonably required in order to further and more fully vest in the Trustee, the Credit Bank and the Bondholders all of the rights, interests, powers, benefits, privileges and advantages conferred or intended to be conferred upon them by this Indenture and to perfect and maintain as perfected such rights, interests, powers, benefits, privileges and advantages. Section 6.06. Rebate of Excess Investment Earnings to United States. The Borrower shall, annually, within 30 days of the end of each Bond Year, cause a Rebate Analyst to calculate, in accordance with the Regulations and the Tax Certificate, excess investment earnings to the extent required by Section 148(f) of the Code from amounts deposited with the Trustee as provided in the Financing Agreement. The Borrower shall engage a Rebate Analyst (i) to make such calculations; (ii) to provide a written copy of all such calculations to the Issuer and written instructions to the Trustee of amounts to be paid from the Rebate Fund; and (iii) to demand in writing from the Borrower any amounts required to be rebated to the federal government in accordance with such calculations pursuant to Section 4.2(d) of the Financing Agreement. Any fees or expenses incurred by the Trustee or the Issuer under or pursuant to this Section 6.06 shall be billed to the Borrower under Section 4.2(d) of the Financing Agreement. The Trustee shall not be responsible for calculating rebate amounts or for the adequacy or correctness or any rebate report or rebate calculations. The Trustee shall be deemed conclusively to have complied with the provisions of this Indenture regarding calculations and payments of rebate if it follows the directions as provided herein and it shall have no independent duty to review such calculations or enforce the compliance with such rebate requirements. In order to provide for the administration of this Section, the Trustee may provide for the employment of independent attorneys (including Bond Counsel), accountants and consultants compensated on such reasonable basis as the Trustee may deem appropriate, and in addition to and without limitation of the provisions of Section 8.02, the Trustee may rely conclusively upon and shall be fully protected from all liability in relying upon the opinions, calculations, determinations, directions and advice of such attorneys, accountants and consultants employed by it hereunder. In order to provide for the administration of this Section, there shall be created by the Trustee a fund to be known as the "Rebate Fund." The Trustee shall deposit to such fund any amounts paid to the Trustee to be rebated to the federal government pursuant to this Section 6.06 and Section 4.2(d) of the Financing Agreement. Any amount deposited in such Fund, together with any earnings thereon, shall be for the sole benefit of the United States of America and shall not be subject to the lien of the Indenture or to the claim of any other person, including, without limitation, the Bondholders and the Issuer. The requirements of this Section 6.06 are subject to, and shall be interpreted in accordance with, Section 148(f) of the Code and 43 190 the Treasury Regulations applicable thereto (the "Regulations") and shall apply except to the extent the Trustee and the Credit Bank are furnished with an opinion of Bond Counsel or other satisfactory evidence that the Regulations contain an applicable exception. Section 6.07. Limitations on Liability. Notwithstanding anything in this Indenture or in the Bonds, the Issuer shall not be required to advance any money derived from any source other than the Revenues and other assets pledged under this Indenture for any of the purposes of this Indenture. No agreements or provisions contained in this Indenture, nor any agreement, covenant or undertaking by the Issuer contained in any document executed by the Issuer in connection with the Project, or the issuance, sale and delivery of the Bonds shall give rise to any pecuniary liability of the Issuer or a charge against its general credit, or shall obligate the Issuer financially in any way except from the application of Revenues or proceeds pledged to the payment of the Bonds and the proceeds of the Bonds. No failure of the Issuer to comply with any term, condition, covenant or agreement herein or in any document executed by the Issuer in connection with the Project, or the issuance, sale and delivery of the Bonds shall subject the Issuer to liability for any claim for damages, costs or other financial and pecuniary charge except to the extent that the same can be paid or recovered from the Financing Agreement or the Revenues or other assets pledged to the payment of the Bonds or the proceeds of the Bonds. Section 6.08. Request and Indemnification. Where the consent of or other action on the part of the Issuer is required in this or any other document, the Issuer shall have no obligation to act unless first requested to do so, and the Issuer shall have no obligation to expend time or money or to otherwise incur any liability unless indemnity satisfactory to the Issuer has been furnished to it. 44 ARTICLE VI1 DEFAULT Section 7.01. Events of Default; Acceleration; Waiver of Default. Each of the following events shall constitute an ”Event of Default” hereunder: (a) failure to pay the principal of or premium (if any) on any Bond when and as the same shall become due and payable, whether at maturity as therein expressed, by proceedings for redemption, by declaration or otherwise; failure to pay any installment of interest on any Bond when such interest (b) installment shall become due and payable; (c) failure to pay the Purchase Price of any Bond tendered in accordance with the provisions of Section 2.02 or 2.03 hereof when such Purchase Price shall become due and payable; and failure by the Issuer to perform or observe any other of the covenants, agreements or conditions on its part in this Indenture or in the Bonds contained, and the continuation of such failure for a period of 60 days after written notice thereof, specdying such default and requiring the same to be remedied, shall have been given to the Issuer, the Borrower and the Credit Bank by the Trustee, or to the Issuer, the Credit Bank, the Borrower and the Trustee by the holders of not less than 25% in aggregate principal amount of the Bonds at the time Outstanding. No default specified in (d) above shall constitute an Event of Default unless the Issuer, the Borrower or the Credit Bank shall have failed to correct such default within the applicable period; provided, however, that if the default shall be such that it cannot be corrected within such period, it shall not constitute an Event of Default if corrective action is instituted by the Issuer, the Borrower or the Credit Bank within the applicable period and diligently pursued until the default is corrected. With regard to any alleged default conceming which notice is given to the Borrower or the Credit Bank under the provisions of (d) above, the Issuer hereby grants the Borrower and the Credit Bank full authority for the account of the Issuer to perform any covenant or obligation the nonperformance of which is alleged in said notice to constitute a default in the name and stead of the Issuer with full power to do any and all things and acts to the same extent that the Issuer could do and perform any such things and acts and with power of substitution. Notwithstanding any other provision of this Indenture or the Financing Agreement, if the Credit Bank is unable to cure any default specified in Section 7.01(d) and no default has occurred under any other subsection of this Section 7.01, no person other than the Credit Bank shall have the right to declare an Event of Default under Section 7.01(d) or exercise any right arising from any such Event of Default. In the event of an Event of Default and subject to the terms of the Intercreditor Agreement, unless the principal of all the Bonds shall have already become due and payable, the Trustee may, and upon the occurrence of any Event of Default specified in (a), (b) or (c) above or upon the written request of the Credit Bank in the case of any other Event of Default, the Trustee shall, by notice in writing to the Issuer, the Credit Bank, the Borrower and the Remarketing Agent, declare the principal of all the Bonds then Outstanding, and the interest accrued thereon, to be due and payable immediately, and upon any such declaration the same shall become and shall be immediately due and payable, anything in this Indenture or in the Bonds contained to the contrary notwithstanding. Upon any such declaration of acceleration the Trustee shall fix a date for payment of the Bonds, which date shall be as soon as (d) 45 I qz practicable after such declaration, and shall draw upon any then outstanding Letter of Credit in accordance with its terms and the provisions of Article V hereof and apply the amount so drawn to pay the principal of and interest on the Bonds so due and payable. The preceding paragraph, however, is subject to the condition that if, at any time after the principal of the Bonds shall have been so declared due and payable, and before any drawing is made under the Letter of Credit or any judgment or decree for the payment of the moneys due shall have been obtained or entered as hereinafter provided, there shall have been deposited with the Trustee a sum sufficient to pay all the principal of the Bonds matured prior to such declaration and all matured installments of interest (if any) upon all the Bonds, with interest on such overdue installments of principal, and the reasonable fees and expenses of the Trustee, its agents and counsel, and any and all other defaults known to the Trustee (other than in the payment of principal of and interest on the Bonds due and payable solely by reason of such declaration) shall have been made good or cured to the satisfaction of the Trustee or provision deemed by the Trustee to be adequate shall have been made therefor, then, and m every such case, the holders of at least a majority in aggregate principal mount of the Bonds then Outstanding, by written notice to the Issuer and to the Trustee and with indemnification satisfactory to the Trustee and with the written approval of the Credit Bank, may, on behalf of the holders of all the Bonds, rescind and annul such declaration and its consequences and waive such default; but no such rescission and annulment shall extend to or shall affect any subsequent default, or shall impair or exhaust any right or power consequent thereon. Section 7.02. Institution of Legal Proceedings by Trustee. If one or more of the Events of Default shall occur and subject to the terms of the Intercreditor Agreement, the Trustee in its discretion may, and upon the written request of the holders of a majority in principal amount of the Bonds then Outstanding and, in the case of an Event of Default described in Section 7.01(d), upon the written request of the Credit Bank, and upon being indemnified to its satisfaction therefor the Trustee shall proceed to protect or enforce its rights or the rights of the holders of Bonds under this Indenture, the Financing Agreement and the Letter of Credit, by a suit in equity or action at law, either for the specific performance of any covenant or agreement contained herein or therein, or in aid of the execution of any power herein or therein granted, or by mandamus or other appropriate proceeding for the enforcement of any other legal or equitable remedy as the Trustee shall deem most effectual in support of any of its rights or duties hereunder, provided that any such request from the Bondholders or the Credit Bank shall not be in conflict with any rule of law or with this Indenture, expose the Trustee to personal liability or be unduly prejudicial to Bondholders not joining therein. Section 7.03. Application of Moneys Collected by Trustee. Any moneys collected by the Trustee pursuant to Section 7.02 or 7.06, provided, however, any moneys realized from a draw on the Letter of Credit or the Standby Letter of Credit shall be applied only to the payment of the principal and Purchase Price of and interest on the Bonds, shall be applied in the order following, at the date or dates fixed by the Trustee and, in the case of distribution of such moneys on account of principal (or premium, if any) or interest, upon presentation of the Bonds and stamping thereon the payment, if only partially paid, and upon surrender thereof, if fully paid: First: For payment of all amounts due to the Trustee under Section 8.06. Second: For deposit in the Bond Fund and applied to payment of the principal of all Bonds then due and unpaid and the premium, if any, and interest thereon, ratably to the persons entitled thereto without discrimination or preference; except that no payment of principal or premium or interest shall be made with respect to any Bonds known by the Trustee to be registered in the name of the Issuer, the Credit Bank or the Borrower and/or a general partner or any guarantor of the Borrower to the extent 46 certified in writing to the Trustee, until all amounts due on all Bonds not so registered have been paid. Third: For payment of all other amounts due to any person hereunder or under the Financing Agreement as certified by the Credit Bank to the Trustee. Fourth: To the Credit Bank to the extent of any amounts due it under the Credit Agreement. Section 7.04. Effect of Delay or Omission To Pursue Remedy. No delay or omission of the Trustee, of the Credit Bank or of any holder of Bonds to exercise any right or power arising from any default shall impair any such right or power or shall be construed to be a waiver of any such default or acquiescence therein, and every power and remedy given by this Article W to the Trustee, to the Credit Bank or to the holders of Bonds may be exercised from time to time and as often as shall be deemed expedient. In case the Trustee shall have proceeded to enforce any right under this Indenture, and such proceedings shall have been discontinued or abandoned because of waiver or for any other reason, or shall have been determined adversely to the Trustee, then and in every such case the Issuer, the Trustee, the Credit Bank and the holders of the Bonds, severally and respectively, shall be restored to their former positions and rights hereunder in respect to the trust estate; and all remedies, rights and powers of the Issuer, the Trustee, the Credit Bank and the holders of the Bonds shall continue as though no such proceedings had been taken. Section 7.05. Remedies Cumulative. No remedy herein conferred upon or reserved to the Trustee, to the Credit Bank or to any holder of the Bonds is intended to be exclusive of any other remedy, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity. Section 7.06. Covenant To Pay Bonds in Event of Default. The Issuer covenants that, upon the happening of any Event of Default, the Issuer will pay to the Trustee upon demand, but only out of Revenues, for the benefit of the holders of the Bonds, the whole amount then due and payable thereon (by declaration or otherwise) for interest or for principal and premium, or both, as the case may be, and all other sums which may be due hereunder or secured hereby, including reasonable compensation to the Trustee, its agents and counsel, and any expenses or liabilities incurred by the Trustee hereunder. In case the Issuer shall fail to pay the same forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, and upon being indemnified to its satisfaction shall be entitled to institute proceedings at law or inequity in any court of competent jurisdiction to recover judgment for the whole amount due and unpaid, together with costs and reasonable attorneys’ fees, subject, however, to the condition that such judgment, if any, shall be limited to, and payable solely out of, Revenues and any other assets pledged, transferred or assigned to the Trustee under Section 5.04 as herein provided and not otherwise. The Trustee shall be entitled to recover such judgment as aforesaid, either before or after or during the pendency of any proceedings for the enforcement of this Indenture, and the right of the Trustee to recover such judgment shall not be affected by the exercise of any other right, power or remedy for the enforcement of the provisions of this Indenture. Section 7.07. Trustee Appointed Agent for Bondholders. The Trustee is hereby appointed the agent and attorney of the holders of all Bonds Outstanding hereunder for the purpose of filing any claims relating to the Bonds. Section 7.08. Right of Credit Bank and Bondholders to Direct Proceedings. Anything in this Indenture to the contrary notwithstanding, the Credit Bank (so long as the Standby Credit Bank, if any, is not in default under the Standby Letter of Credit), and the Holders of a 47 majority in aggregate principal amount of the Bonds then Outstanding shall have the right, by an instrument or concurrent instruments in writing executed and delivered to the Trustee, 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 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 Bondholders not parties to such direction or for which it has not been provided adequate indemnity. In the event of conflict between the directions of the Credit Bank and those of the registered owners with respect to an Event of Default, the directions of the Credit Bank shall prevail so long as the Standby Credit Bank is not in default under the Standby Letter of Credit. Section 7.09. Limitation on Bondholders’ Right To Sue. No holder of any Bond issued hereunder shall have the right to institute any suit, action or proceeding at law or in equity, for any remedy under or upon this Indenture, unless (a) such holder shall have previously given to the Trustee written notice of the occurrence of an Event of Default hereunder; (b) the holders of at least a majority in aggregate principal amount of all the Bonds then Outstanding shall have made written request upon the Trustee to exercise the powers hereinbefore granted or to institute such action, suit or proceeding in its own name; (c) said holders shall have tendered to the Trustee indemnity satisfactory to it against the costs, expenses and liabilities to be incurred in compliance with such request; (d) the Trustee shall have refused or omitted to comply with such request for a period of 30 days after such written request shall have been received by, and said tender of indemnity shall have been made to, the Trustee; and (e) so long as the Standby Credit Bank is not in default under the Standby Letter of Credit, the Credit Bank has pen its consent to such suit, action or proceeding. Such notification, request, tender of indemnity and refusal or omission are hereby declared, in every case, to be conditions precedent to the exercise by any holder of Bonds of any remedy hereunder; it being understood and intended that no one or more holders of Bonds shall have any right in any manner whatever by its or their action to enforce any right under this Indenture, except in the manner herein provided, and that all proceedings at law or in equity to enforce any provision of this Indenture shall be instituted, had and maintained in the manner herein provided and for the equal benefit of all holders of the Outstanding Bonds. The right of any holder of any Bond to receive payment of the principal of (and premium, if any) and interest on such Bond out of Revenues, as herein and therein provided, on and after the respective due dates expressed in such Bond, or to institute suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such holder, notwithstanding the foregoing provisions of this Section or Section 7.08 or any other provision of this Indenture. Section 7.10. Limitation of Liability to Revenues. Notwithstanding anything in this Indenture contained, the Issuer shall not be required to advance any moneys of the Issuer, the State or by any political subdivision thereof or from any source of income of any of the foregoing other than the Revenues, for any of the purposes in this Indenture mentioned, whether for the payment of the principal of or interest on the Bonds or for any other purpose of this Indenture. The Bonds are limited obligations of the Issuer, and are payable from and secured by the Revenues only. Section 7.11. Notice of Default. If a default occurs of which the Trustee is by Section 8.01(c) hereof required to take notice or if notice of default be given as in said Section 8.01(c) provided, the Trustee shall (a) unless the Trustee received notice thereof from the Credit Bank, immediately give telephonic notice thereof to the Borrower and the Credit Bank, with written confirmation of such notice to follow within three Business Days thereafter, and (b) within 15 days thereafter (unless such default is cured or waived), give notice of such default to each 48 registered owner of Bonds then Outstanding, provided that, except in the case of a default m the payment of the principal of, premium, if any, or interest on any Bond, the Trustee may withhold such notice to the Bondholders if and so long as the Trustee in good faith determines that the withholding of such notice is in the interests of the Bondholders; and provided further that, in the case of any default of the character specified in Section 7.01(d), no such notice to the Bondholders shall be given until at least 30 days after notice thereof is received by the Trustee. Section 7.12. No Default; Deemed Redemption. Notwithstanding the provisions of Section 7.01 hereof, during any period in which no Letter of Credit is then in effect (by reason of the provisions of Section 4.06 hereof) there shall never occur an Event of Default pursuant to Section 7.01(a), (b) or (c) hereof, by reason of a failure of the Borrower to make full payments on the Loan. If there is an Event of Default under and as defined in the Financing Agreement, the then sole Bondholder shall have the right to cause the Bonds to be subject to mandatory redemption pursuant to Section 4.01(c) hereof. Upon such mandatory redemption of the Bonds, all Outstanding Bonds shall be deemed redeemed as of the date of mandatory redemption. Upon such redemption date, all of the Bonds shall cease to bear interest and the sole Bondholder shall have no further rights except to obtain the distribution of the proceeds of the funds and other assets pledged to the Bonds, and such deemed redemption shall constitute payment in full of the Bonds, notwithstanding that amounts so distributed may be insufficient to pay the outstanding principal amount of the Bond and accrued interest thereon. The Trustee shall liquidate and distribute such funds and assets in accordance with Section 7.03 hereof. By their acceptance of the Bonds, the Bondholder hereby consents to the deemed redemption as described above and upon such deemed redemption the Bondholder shall no longer look to the Issuer to receive payment of the principal and interest and all other sums, if any, which are due under the Bonds, but shall look solely to the funds and other assets pledged to the Bondholder hereunder. 49 ARTICLE VI11 THE TRUSTEE AND AGENTS Section 8.01. Duties, Immunities and Liabilities of 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 as are specifically set forth in this Indenture, including the duty to draw on the Letter of Credit as required by Section 5.05 hereof and the Standby Letter of Credit as required by Section 5.06 hereof, and no additional covenants or duties of the Trustee shall be implied in this Indenture, the Issuer Loan Documents or otherwise. The Trustee shall, during the existence of any Event of Default (which has not been cured), exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under similar circumstances in the conduct of its own affairs. No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action or its own negligent failure to act, except that: (a) Prior to such an Event of Default hereunder and after the curing of all Events of Default which may have occurred, (i) the duties and obligations of the Trustee shall be determined solely by the express provisions of this Indenture, the Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (ii) in the absence of bad faith on the part of the Trustee, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificate or written opinion furnished to the Trustee conforming to the requirements of this Indenture; but in the case of any such certificate or written opinion which by any provision hereof is specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not it conforms to the requirements of this Indenture; (b) At all times, regardless of whether or not any Event of Default shall exist, (i) the Trustee shall not be liable for any error of judgment made in good faith by a responsible officer or officers or by any agent or attorney of the Trustee appointed with due care unless the Trustee was negligent in ascertaining the pertinent facts; and (ii) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it m good faith in accordance with the direction of the Credit Bank, accompanied by an opinion of Bond Counsel as provided herein or in accordance with the directions of the holders of not less than a majority, or such other percentage as may be required hereunder, in aggregate principal amount of the Bonds at the time Outstanding relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee under this Indenture; (c) The Trustee shall not be required to take notice or be deemed to have notice of (i) any default hereunder or under the Financing Agreement, except defaults under Section 7.01(a), (b) or (c) hereof, unless a responsible officer of the Trustee shall be specifically notified in writing of such default by the Issuer, the Credit Bank or the owners of at least 25% in aggregate principal amount of all Bonds then Outstanding, or (ii) any default under the Regulatory Agreement unless a responsible officer of the Trustee shall be specifically notdied in writing of such default by the Issuer; 50 (d) Before taking any action under this Indenture at the request or direction of the Bondholders the Trustee may require that a satisfactory indemnity bond be furnished by the Bondholders for the reimbursement of all expenses (including fees of its attorneys) to which it may be put and to protect it against all liability, except liability which is adjudicated to have resulted from its negligence or willful misconduct in connection with any action so taken; (e) Upon any application or request by the Issuer to the Trustee to take any action under any provision of this Indenture, the Issuer shall furnish to the Trustee a Written Direction, Written Order or Written Request stating, among other things, that all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with, and, upon the request of the Trustee, an Opinion of Counsel stating that in the opinion of such Counsel all such conditions precedent, if any, have been complied with, except that in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or request, no additional certificate or opinion need be furnished; (f) The Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder or under the Financing Agreement or the Regulatory Agreement either directly or through agents, receivers or attorneys; (g) Neither the Credit Bank, the Remarketing Agent, the Issuer, the Tender Agent nor the Borrower shall be deemed to be agents of the Trustee for any purpose, and the Trustee shall not be liable for any noncompliance of any of them in connection with their respective duties hereunder or in connection with the transactions contemplated hereby; (h) The Trustee shall be entitled to rely upon telephonic notice for all purposes whatsoever so long as the Trustee reasonably believes such telephonic notice has been given by a person authorized to give such notice; and (i) The immunities extended to the Trustee also extend to its directors, officers, employees and agents. The Trustee is authorized and directed to execute in its capacity as Trustee the Regulatory Agreement, the Financing Agreement, the Intercreditor Agreement, the Bond Pledge Agreement and the Remarketing Agreement. Subsequent to the delivery of the Bonds, the Trustee is authorized and directed to execute such reconveyance documents as directed by the Borrower, with the consent of, or concurrently with, the Credit Bank. None of the provisions contained in this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur individual financial liability in the performance of any of its duties or in the exercise of any of its rights or powers. The Trustee shall have no responsibility with respect to any information, statement, or recital in any official statement, offering memorandum or any other disclosure material prepared or distributed with respect to the Bonds. Anything to the contrary notwithstanding, the Trustee shall not be required to enter, take possession of, or take any other action whatsoever with respect to the Project, and shall not be required to initiate foreclosure proceedings with respect to the Project and the Deed of Trust unless the Trustee is satisfied that the Trustee will not be subject to any liability under any local, state or federal environmental laws or regulations of any kind whatsoever or from any 51 circumstances present at the Project relating to the presence, use management, disposal or, or contamination by any environmentally hazardous materials or substances of any kind whatsoever. The Trustee shall not be liable for any actions taken or not taken by it in accordance with the direction of a majority (or other percentage provided for herein) in aggregate principal amount of Bonds outstanding relating to the exercise of any right, power or remedy available to the Trustee. Section 8.02. Right of Trustee To Rely Upon Documents. Except as otherwise provided in Section 8.01: (a) The Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, requisition, certificate, statement, instrument, opinion, report, notice, request, consent, demand, direction, order, 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; (b) Any certificate, consent, demand, direction, requisition, election, notice, order or request of the Issuer mentioned herein shall be sufficiently evidenced by a Written Consent, Written Demand, Written Direction, Written Election, Written Notice, Written Order or Written Request of the Issuer, and any resolution of the Issuer may be evidenced to the Trustee by a certified copy of any such resolution; (c) The Trustee may consult with counsel (who may be counsel for the Issuer, counsel for the Trustee or Bond Counsel) and the written opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good faith and in accordance with the opinion of such counsel; (d) Whenever in the administration of the trusts of this Indenture 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, in the absence of negligence or bad faith on the part of the Trustee, be deemed to be conclusively proved and established by a Written Certificate of the Issuer; and such Certificate of the Issuer shall, in the absence of negligence or bad faith on the part of the Trustee, be full warrant to the Trustee for any action taken or suffered by it under the provisions of this Indenture upon the faith thereof; and (e) The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, requisition, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture or other paper or document, but the Trustee, in its discretion, may make such further inqury or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Issuer, subject to certain privileges and upon written notice at a reasonable time, the Borrower and the Remarketing Agent, personally or by agent or attorney. The Trustee’s rights to immunities and protection from liability hereunder (excluding such rights with respect to the payment of principal of and interest on the Bonds and making draws on the Letter of Credit pursuant hereto) and its rights to payment of its fees and 52 expenses shall survive its resignation or removal and the final payment or the defeasance of the Bonds (or the discharge of the Bonds or the defeasance of the lien of this Indenture). Trustee 8.03. Not Responsible for Recitals. The recitals contained herein and in the Bonds shall be taken as the statements of the Issuer, and the Trustee assumes no responsibility for the correctness of the same. The Trustee makes no representations as to the value or condition of any assets pledged or assigned as security for the Bonds, or as to the right, title or interest of the Issuer therein, or as to the security provided thereby or by this Indenture, the Financing Agreement or the Letter of Credit or Standby Letter of Credit, or as to the compliance of the Project with the Housing Law, or as to the tax-exempt status of the Bonds, or as to the technical or financial feasibility of the Project, or as to the validity or sufficiency of this Indenture as an instrument of the Issuer or of the Bonds as obligations of the Issuer. The Trustee shall not be accountable for the use or application by the Issuer or the Remarketing Agent of any of the Bonds authenticated or delivered hereunder or of the use or application of the proceeds of such Bonds by the Issuer or the Borrower. The Trustee shall have no responsibility, opinion or liability with respect to any information, statement or recital in any offering memorandum or other disclosure material prepared or distributed with respect to the issuance of the Bonds. Section 8.04. Intervention by Trustee. The Trustee may intervene on behalf of the Bondholders or the Credit Bank in any judicial proceeding to which the Issuer is a party and which, in the opinion of the Trustee and its counsel, has a substantial bearing on the interests of owners of the Bonds or the Credit Bank hereunder and, subject to the provisions of Section S.Ol(d), shall do so if requested in writing by the owners of a majority in aggregate principal amount of all Bonds then Outstanding or the Credit Bank and if indemnified to its satisfaction from any liability or expenses. Section 8.05. Moneys Received by Trustee To Be Held in Trust. All moneys received by the Trustee shall, until used or applied as herein provided, be held in trust for the purposes for which they were received, but need not be segregated from other funds except to the extent required by law or as otherwise provided herein. Amounts drawn under the Letter of Credit and proceeds of any remarketing of Bonds shall not be commingled with any other funds held by the Trustee hereunder. The Trustee shall be under no liability for interest on any moneys received by it hereunder except such as it may agree with the Issuer to pay thereon. Any moneys held by the Trustee may be deposited by it in its banking department and invested as provided in this Indenture. Section 8.06. Compensation and Indemnification of Trustee and Agents. The Issuer wiU require the Borrower to make provisions (a) to pay, pursuant to Section 4.2(b) of the Financing Agreement, to the Trustee from time to time reasonable compensation for all services rendered by it hereunder and under the other agreements related to the Bonds to which it is a party (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (b) except as otherwise expressly provided herein, to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture or other agreement related to the Bonds to which the Trustee is a party or incurred in complying with any request made by the Issuer or Rating Agency with respect to the Bonds (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be adjudicated by a court of competent jurisdiction to be attributable to its negligence, bad faith or willful misconduct; (c) to indemrufy the Trustee for, and to hold it harmless against, any loss, liability or expense incurred without negligence, willful misconduct or bad faith on its part, arising out of or in connection with the acceptance or administration of this trust, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder or other agreement to which the Trustee is a party, such indemnity to survive 53 200 termination of this Indenture, resignation or removal of the Trustee and discharge of the Bonds; and (d) to indermufy the Trustee for any reasonable fees and expenses (including fees of its attorneys) incurred during a period of default hereunder. The Agents shall be entitled to reasonable compensation for all services rendered by them as such Agents, and the Issuer will require the Borrower to provide for payment or reimbursement of the Agents upon request for all expenses, disbursements and advances incurred or made by the Agents in accordance with any of the provisions of this Indenture (including the reasonable compensation and the expenses and disbursements of their counsel and of all persons not regularly in their employ) except any such expense, disbursement or advance as may arise from their negligence or bad faith. The rights of the Trustee and the Agents to compensation for services and to payment or reimbursement for expenses, disbursements, liabilities and advances shall have a lien prior to the Bonds in respect of all property and funds held or collected by the Trustee as such, except funds held in trust by the Trustee for the benefit of the holders of particular Bonds, proceeds of any drawing on the Letter of Credit, proceeds received from the remarketing of the Bonds and any Available Amounts held by the Trustee for the payment of premium on the Bonds upon redemption, all of which amounts shall be held solely for the benefit of the Bondholders and used only for the payment of principal of and premium, if any, and interest on the Bonds. The rights of the Trustee hereunder shall survive the resignation or removal of the Trustee or the discharge of this Indenture. Section 8.07. Qualifications of Trustee. There shall at all times be a trustee hereunder, which shall be a banking association with trust powers organized and doing business under the laws of the United States or of a state thereof, authorized under such laws to exercise corporate trust powers, having (or, in the case of a corporation, its corporate parent shall have) a combined capital and surplus of at least $50,000,000, and subject to supervision or examination by federal or state authority. If such corporation or banking association publishes reports of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority above referred to, then for the purposes of this Section the combined capital and surplus of such corporation or banking association shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. h case at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, the Trustee shall resign immediately in the manner and with the effect specified in Section 8.08. Section 8.08. Resignation and Removal of Trustee and Appointment of Successor Trustee. (a) The Trustee may at any time resign by giving written notice delivered to the Issuer, the Borrower and the Credit Bank and by giving written notice to the Bondholders by first-class mail. Upon receiving such notice of resignation, the Issuer shall promptly appoint a successor trustee by an instrument in writing. If no successor trustee shall have been so appointed and have accepted appointment within 45 days after the giving of such notice of resignation, the resigning trustee may petition any court of competent jurisdiction for the appointment of a successor trustee, or the Credit Bank or any Bondholder who has been a bona fide holder of a Bond for at least six months may, on behalf of itself and others similarly situated, petition any such court for the appointment of a successor trustee. Such court may thereupon, after such notice, if any, as it may deem proper and may prescribe, appoint a successor trustee. (b) In case at any time either (i) the Trustee shall cease to be eligible in accordance with the provisions of Section 8.07 and shall fail to resign after written request therefor by the Issuer or the Credit Bank or by any Bondholder who has been a bona fide holder of a Bond for at least six months, or (ii) the Trustee shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or of its property shall be appointed, or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any such case, the Issuer shall remove the Trustee and, upon such removal or upon any removal pursuant to paragraph (c) of 54 2 this Section 8.08, except as otherwise provided in said paragraph (c), the Issuer shall appoint a successor trustee by an instrument in writing, with the consent of the Credit Bank and notice to theRemarketing Agent and the Borrower, or any such Bondholder or the Credit Bank may, on behalf of itself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor trustee. Such court may thereupon, after such notice, if any, as it may deem proper and may prescribe, remove the Trustee and appoint a successor trustee. (c) The Issuer or the Credit Bank, with the written consent of the Issuer, or, if the Issuer is in default hereunder, the holders of a majority in aggregate principal amount of the Bonds at the time Outstanding, may at any time remove the Trustee and may appoint a successor Trustee, by an instrument or concurrent instruments in writing signed by the Issuer or such Bondholders, as the case may be, and delivered to the Trustee, the Tender Agent, the Issuer, the Credit Bank, the Borrower and the Remarketing Agent. Any resignation or removal of the Trustee and appointment of a successor Trustee pursuant to any of the provisions of this Section shall become effective only upon acceptance of appointment and assumption of duties by the successor trustee as provided in Section 8.09, upon transfer of the Letter of Credit and the Standby Letter of Credit in accordance with its terms to the successor Trustee. (d) Section 8.09. Acceptance of Trust by Successor Trustee. Any successor Trustee appointed as provided in Section 8.08 shall execute, acknowledge and deliver to the Issuer, the Credit Bank and to its predecessor Trustee an instrument accepting such appointment hereunder, and thereupon the resignation or removal of the predecessor Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with and shall assume all the rights, powers, trusts, duties and obligations of its predecessor in the trusts hereunder, with like effect as if originally named as Trustee herein; but, nevertheless, on the Written Request of the Issuer, the Credit Bank or the request of the successor Trustee, the Trustee ceasing to act shall execute and deliver an instrument transferring to such successor Trustee, upon the trusts herein expressed, all the rights, powers and trusts of the Trustee so ceasing to act, including any instruments required to transfer the Letter of Credit and the Standby Letter of Credit, if any, to such successor Trustee. Upon request of any such successor Trustee, the Issuer shall execute any and all instruments in writing necessary or desirable for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and duties. Any Trustee ceasing to act shall, nevertheless, retain a lien upon all property or funds held or collected by such Trustee to secure the amounts due it as compensation, reimbursement, expenses and indemnity afforded to it by Section 8.06. No successor Trustee shall accept appointment as provided in this Section 8.09 unless at the time of such acceptance such successor Trustee shall be eligible under the provisions of Section 8.07. Upon acceptance of appointment by a successor Trustee as provided in this Section, such successor Trustee shall give Bondholders notice by first-class mail of the succession of such Trustee to the trusts hereunder. In the event of the appointment of a successor Trustee, the predecessor Trustee which has resigned or been removed shall cease to be Trustee of the funds hereunder and bond registrar and paying agent for the Bonds, and the successor Trustee shall become such trustee and shall accept such other appointments as the trustee may hold, including the offices of bond registrar and paylng agent hereunder. 55 Section 8.10. Merger or Consolidation of Trustee. Any corporation or association into which the Trustee may be merged or with which it may be consolidated, or any corporation or association resulting from any merger or consolidation to which the Trustee shall be a party, or any corporation or association succeeding to all or part of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder without the execution or filing of any paper or any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding, provided that such successor trustee shall be eligible under the provisions of Section 8.07. Section 8.11. Accounting Records and Reports. The Trustee shall keep proper books of record and account in which complete and correct entries shall be made of all transactions made by it relating to the receipt, disbursement, allocation and application of the Revenues and the proceeds of the Bonds. Such records and other information shall be open to inspection by the Issuer, by the Borrower and by the Credit Bank at any reasonable time on reasonable notice. The Trustee shall furnish to the Issuer, the Credit Bank and the Borrower regular reports on a monthly basis covering the foregoing transactions. Section 8.12. Remarketing Agent. The Borrower shall, with the written approval of the Credit Bank (such approval not to be unreasonably withheld), appoint a Remarketing Agent for the Bonds, subject to the conditions set forth in Section 8.13 hereof. The Remarketing Agent initially appointed hereunder is Red Capital Markets, Inc. The Remarketing Agent shall designate to the Trustee its Principal Office and sigrufy its acceptance of the duties and obligations imposed upon it hereunder by execution of the Remarketing Agreement. The Remarketing Agent shall agree in the Remarketing Agreement to do each of the following: (a) determine the Variable Rate and, if and as necessary, the Reset Rate or the Fixed Rate; (b) notify the Trustee, the Credit Bank, the Borrower and the Tender Agent of the Variable Rate determined in accordance with Section 2.02(a) or Section 2.02(b), the Reset Rate determined in accordance with Section 2.02(c), and the Fixed Rate determined in accordance with Section 2.02(d), on the Variable Interest Computation Date or other date required for such determination, each such notification to be m writing or by telex or telecopier or other communication device which produces a written record thereof, or by telephone confirmed within one Business Day by any such written communication; and upon request by the Issuer, submit copies of any such notices to the Issuer; (c) receive and hold Bonds tendered for purchase and hold all moneys delivered to it hereunder for the purchase of Bonds in trust for the benefit of the person which shall have so delivered such moneys until the Bonds purchased with such moneys shall have been delivered to or for the account of such person, and not commingle such moneys with other funds of the Remarketing Agent; keep such books and records as shall be consistent with prudent industry practice and make such books and records available for inspection by the Issuer, the Trustee, the Credit Bank and the Borrower at all reasonable times; and (d) (e) perfom the duties and comply with the provisions set forth in Sections 8.13 through 8.16 hereof, inclusive. Upon a purchase of the Bonds by the Credit Bank pursuant to Section 4.06 of this Indenture, the Remarketing Agent shall have no duty to remarket Bonds or to determine the rate of interest on the Bonds until, and only if, there shall have been delivered to the Trustee a new 56 Letter of Credit satisfying the requirements of this Indenture and Section 5.8 of the Financing Agreement and a new Standby Letter of Credit satisfymg the requirements of this Indenture and Section 5.9 of the Financing Agreement or a Substitute Credit Facility satisfymg the requirements of Section 5.10 of the Financing Agreement. Section 8.13. Qualifications of Remarketing Agent. (a) Any Remarketing Agent shall be a national banking association or a member of the National Association of Securities Dealers, Inc., and authorized by law to perform all the duties imposed upon it by this Indenture and the Remarketing Agreement. (b ) A Remarketing Agent may resign and be discharged of the duties and obligations created by this Indenture pursuant to the provisions of the Remarketing Agreement. (c) Any entity serving as a Remarketing Agent may be removed at any time, and a successor Remarketing Agent appointed at the direction of the Borrower with the approval of the Credit Bank (such approval not to be unreasonably withheld) and the Issuer, upon receipt by the Trustee of notification of such removal and appointment, signed by the Credit Bank and the Borrower and filed with the Issuer, such Remarketing Agent and the Trustee. Within 30 days after receipt of such notification, the Borrower shall confirm in writing to the successor Remarketing Agent, the Credit Bank, the Trustee, the Tender Agent and the Issuer that such removal has been approved and the successor Remarketing Agent has been appointed and has accepted such appointment. No removal of a Remarketing Agent shall be effective unless there is another entity then also serving as a Remarketing Agent or until a successor is appointed and has accepted such appointment. (d) In the event of the resignation or removal of the Remarketing Agent, the Remarketing Agent shall pay over, assign and deliver any moneys and Bonds held by it in such capacity to any other entity then serving as a Remarketing Agent or to its successor. Section 8.14. Remarketing of Bonds. Upon the receipt by the Remarketing Agent of a Tender Notice or of any notice from the Trustee or the Tender Agent that any Bondholder has delivered a Tender Notice or Bonds are subject to mandatory purchase pursuant to Section 2.03 hereof, the Remarketing Agent shall offer for sale and use its best efforts to market the Bonds referred to in such Tender Notice or such notice from the Trustee (which shall be deemed to be a Tender Notice as provided in Section 2.03) at a price of par plus accrued interest to the Demand Date, in accordance with the Remarketing Agreement; provided, however, that the Remarketing Agent shall not offer for sale or sell such Bonds (a) in the case of Pledged Bonds, unless the Trustee confirms in writing to the Remarketing Agent that the Trustee has received evidence that amounts drawn under the Letter of Credit in respect of Bonds tendered or deemed tendered and remarketed hereunder has been reinstated, or (b) to the Issuer, the Borrower or any general partner of the Borrower. During any period while the Bonds are in the Daily Mode, the Remarketing Agent shall, with respect to any Bonds optionally tendered pursuant to Section 2.03(a)(i) hereof, give telegraphic or telephonic notice, promptly confirmed in writing, to the Trustee, the Tender Agent and the Credit Bank as soon as possible speclfylng the names, addresses, and taxpayer identification numbers of the purchasers, and the principal amount and denominations, of such Bonds, if any, for which it has found purchasers, the Purchase Price at which the Bonds are to be sold (which shall be par plus accrued interest to the date of remarketing and the date of remarketing). The Remarketing Agent shall instruct such purchasers to deliver to it, in same day funds, the amount required to purchase such Bonds. Upon receipt by the Remarketing Agent of such amount from such purchasers and receipt by the Tender Agent, pursuant to Section 8.17 hereof, of the Bonds tendered for purchase, the Remarketing Agent will give written instructions to the Tender Agent, as co-authenticating agent for the Bonds, to transfer the registered 57 ownership of the Bonds to the respective purchasers, and to deliver such Bonds to such purchasers (subject to the provisions of Section 8.16(b) hereof). The Remarketing Agent shall remit the Purchase Price of such Bonds to the Tender Agent immediately upon receipt, and the Tender Agent shall remit the Purchase Price of such Bonds to the Credit Bank in repayment of the drawing made upon the Letter of Credit pursuant to Section 5.05 hereof in the amount of the Purchase Price of the Bonds tendered. On the Demand Date, the Tender Agent shall now the Trustee, the Credit Bank and the Remarketing Agent of the amount of funds held by the Tender Agent as of 11:30 a.m., New York City time, on the Demand Date constituting the Purchase Price of the Bonds remarketed by the Remarketing Agent. Payment of the Purchase Price of the Bonds shall be made solely with the proceeds on a draw on the Letter of Credit or the Standby Letter of Credit. With respect to any tender of Bonds other than Bonds in the Daily Mode, the Remarketing Agent shall give telegraphic or telephonic notice, promptly confirmed in writing, to the Trustee, the Tender Agent, the Borrower and the Credit Bank by 1:OO p.m., New York City time, not less than two Business Days (or such lesser period of time as to which the Trustee, the Credit Bank and the Tender Agent shall agree) prior to each Demand Date, including any Reset Date or Conversion Date (the "Remarketing Date") speclfylng the names, addresses, and taxpayer identification numbers of the purchasers of, and the principal amount and denominations of, such Bonds, if any, for which it has found purchasers as of such Remarketing Date, the purchase price at which the Bonds are to be sold (which shall be par plus accrued interest to the Demand Date) and the Demand Date. The Remarketing Agent shall instruct such purchasers to deliver to it, not later than 9:OO a.m., New York City time, on the Demand Date, in same day funds, the amount required to purchase such Bonds. Upon receipt by the Remarketing Agent of such amount from such purchasers and receipt by the Tender Agent, pursuant to Section 8.17 hereof, of the Bonds tendered for purchase at or prior to 9:30 a.m., New York City time, on such Demand Date in good form for delivery, the Remarketing Agent will give written instructions to the Tender Agent, as co-authenticating agent for the Bonds, to transfer the registered ownership of the Bonds to the respective purchasers, and to deliver such Bonds and due-bills, if any, to such purchasers. The Remarketing Agent shall remit the Purchase Price of such Bonds to the Tender Agent, no later than 9:30 a.m., New York City time, on the Demand Date, and the Tender Agent shall remit the Purchase Price of such Bonds to the Credit Bank in repayment of the drawing made upon the Letter of Credit pursuant to Section 5.05 hereof in the amount of the Purchase Price of the Bonds tendered. In the event that any purchaser which shall have been identified by the Remarketing Agent to the Trustee and the Tender Agent shall fail to pay the Purchase Price for any Bonds prior to 9:30 a.m., New York City time, on the Demand Date, the Remarketing Agent shall not be obligated to accept delivery of such amount after such time. The Remarketing Agent will immediately notify the Trustee, the Credit Bank and the Tender Agent of any such failure to receive funds in the amount of the Purchase Price for such Bonds. On the Demand Date, the Tender Agent shall notify the Trustee, the Credit Bank and the Remarketing Agent of the amount of funds held by the Tender Agent as of 9:45 a.m., New York City time, on the Demand Date constituting the Purchase Price of the Bonds remarketed by the Remarketing Agent. The Issuer hereby agrees that it will not purchase any Bonds from the Remarketing Agent or otherwise. Section 8.15. Purchase of Bonds Not Remarketed. On each Demand Date the Trustee shall pay to the Tender Agent, or cause to be paid to the Tender Agent, but only from amounts drawn under the Letter of Credit, the Purchase Price of any Bonds for which it has received a Tender Notice or which are subject to mandatory tender pursuant to the provisions of this Indenture or arrange to have such amounts drawn under the Letter of Credit to be paid directly to the Tender Agent. Upon receipt of such Purchase Price and upon receipt of the Bonds 58 tendered for purchase pursuant to Section 2.03 hereof, the Tender Agent shall pay such Purchase Price to the registered owners thereof. Any amounts drawn under the Letter of Credit to purchase Bonds shall be used solely for such purpose. Bonds in a principal amount equal to the difference between (i) the amount drawn on the Letter of Credit to pay the Purchase Price of Bonds tendered, and (ii) the amount remitted to the Tender Agent by the Remarketing Agent as the Purchase Price paid to the Remarketing Agent for the purchase of the remarketed Bonds, which amount shall be applied to the reimbursement of the Credit Bank for amounts drawn on the Letter of Credit, shall be purchased for the account of the Credit Bank and shall become Pledged Bonds. Amounts drawn under the Letter of Credit which are not used to purchase Bonds pursuant to this Section 8.15 shall be remitted by the Trustee or the Tender Agent to the Credit Bank on the Business Day after each Demand Date. Section 8.16. Delivery of Purchased Bonds. (a) Bonds remarketed by the Remarketing Agent pursuant to Section 8.14 hereof shall be cancelled by the Tender Agent and new Bonds in a like aggregate principal amount shall be registered by the Tender Agent in the names and shall be in the denominations set forth in the written notice given to the Trustee and the Tender Agent by the Remarketing Agent pursuant to Section 8.14 hereof, and the Tender Agent shall deliver (or make available for pickup) such Bonds to the purchasers thereof at the written direction of the Remarketing Agent and shall promptly nobfy the Trustee in writing of such cancellation and registration. (b) Pledged Bonds shall be registered and held by the Trustee or the Tender Agent in accordance with the Bond Pledge Agreement. Pledged Bonds may not be held through the facilities of DTC. So long as any Bonds are registered in the name of the Credit Bank or its nominee, the Borrower or its nominee, or the Issuer or its nominee, such Bonds shall be subordinate as to principal and interest to all other Bonds Outstanding hereunder and may not be tendered for purchase pursuant to Section 2.03 hereof. The Remarketing Agent shall, however, continue its efforts to remarket such Bonds on behalf of the Credit Bank unless the Credit Bank tells the Remarketing Agent not to remarket such Bonds. Pledged Bonds shall not, upon remarketing, be reregistered or delivered to the purchaser of such Bonds until the Tender Agent has received written evidence from the Credit Bank that the Letter of Credit has been reinstated in an amount equal to the amount of all Bonds Outstanding (other than Pledged Bonds) plus 39 days’ interest on such amount at the Maximum Interest Rate. Section 8.17. Tender Agent. The Trustee, or an affiliate thereof, shall serve as Tender Agent hereunder. The Trustee acknowledges its qualifications to act as Tender Agent under this Indenture and agrees, particularly, as follows: (a) The Tender Agent shall, upon receipt of a Tender Notice from any Bondholder, give prompt telephonic notice thereof to the Trustee and the Remarketing Agent, speclfylng the amount of Bonds to be purchased and the Demand Date, and shall, not later than the following Business Day, confirm such telephonic notice in writing and deliver to the Remarketing Agent, the Trustee and the Credit Bank a copy of such Tender Notice. (b) On each Demand Date, the Tender Agent shall give the Remarketing Agent and the Trustee telephonic notice, confirmed in writing by the following Business Day, of the aggregate principal amount of Bonds delivered pursuant to Sections 2.02 and 2.03 hereof. (c) The Tender Agent shall hold all Bonds delivered to it pursuant to Section 2.02 and 2.03 in trust for the benefit of the respective Bondholders which shall have so delivered such Bonds until such Bonds are required by this Indenture to be delivered to the respective purchasers thereof. 59 (d) The Tender Agent shall cancel all Bonds for which it has received written notice of remarketing from the Remarketing Agent and shall register and authenticate new Bonds in a like aggregate principal amount in the names and in the denominations set forth in the written notice given to the Tender Agent by the Remarketing Agent pursuant to Section 8.14 hereof. (e) thereof in accordance with Section 8.16 hereof. The Tender Agent shall remit the Purchase Price of tendered Bonds to the tendering Bondholders in accordance with Section 8.14 hereof. (f) The Tender Agent shall deliver to the Trustee all tendered Bonds. (g) The Tender Agent shall keep such books and records as shall be consistent with prudent industry practice and shall make such books and records available for inspection by the Issuer, the Trustee and the Credit Bank at all reasonable times. Section 8.18. Qualifications of Tender Agent. The Tender Agent shall be a commercial bank, banking association or trust company with trust powers with a principal office or an affiliate in New York, New York, having a capitalization of at least $10,000,000 and authorized by law to perform all the duties imposed upon it by this Indenture. The Tender Agent (unless the Trustee is the Tender Agent) may be an affiliate of the Trustee unless the Trustee has no affiliate meeting the requirements of the first sentence of this Section, in which case the selection of the Tender Agent shall be subject to the approval of the Credit Bank. The Tender Agent may at any time resign and be discharged by giving at least 60 days' notice to the Trustee, the Issuer and the Credit Bank. The Tender Agent may be removed at any time, with the approval of the Credit Bank, by an instrument signed by the Trustee and filed with the Tender Agent, the Remarketing Agent and the Issuer. In the event of the resignation or removal of the Tender Agent, the Tender Agent shall pay over, assign and deliver any moneys and Bonds held by it in such capacity, and shall deliver all books and records relating thereto, to its successor or, if there be no successor, to the Trustee. In the event that the Tender Agent shall resign or be removed, or be dissolved, or if the property or affairs of the Tender Agent shall be taken under the control of any state or federal court or administrative body because of bankruptcy or insolvency, or for any other reason, and the Trustee shall not have appointed its successor as Tender Agent, the Trustee, notwithstanding the provisions of the first paragraph of this Section 8.18, shall be deemed to be the Tender Agent for all purposes of this Indenture until the appointment by the Trustee of the Tender Agent, notwithstanding the fact that the Trustee may not meet the qualifications set forth in the first paragraph of this Section 8.18. The Tender Agent shall pay to tendering Bondholders the Purchase Price of any Bonds for which it has received a Tender Notice and which have not been remarketed pursuant to Section 8.15 hereof, but solely from amounts received from the Trustee pursuant to a draw under the Letter of Credit; and the Tender Agent shall pay to tendering Bondholders the Purchase Price of any Bonds for which it has received a Tender Notice and which have been remarketed pursuant to Section 8.14 hereof, but solely from amounts received from the Remarketing Agent. Insofar as such provisions may be applicable, the Tender Agent shall enjoy the same protective provisions in the performance of its duties hereunder as are specified in Sections 8.01(a), (b), (f) and (h), 8.02, 8.03 and 8.06(c), with respect to the Trustee. The Tender Agent 60 shall perform such duties, and only such duties, as are specifically set forth in this Indenture and the Financing Agreement and no implied covenants shall be read into this Indenture or the Financing Agreement against the Tender Agent. Section 8.19. Dealing in Bonds. The Credit Bank, the Trustee, the Tender Agent or the Remarketing Agent, each in its individual capacity, may in good faith buy, sell, own, hold and deal in any of the Bonds, and may join in any action which any Bondholder may be entitled to take with like effect as if it did not act in any capacity hereunder. The Trustee, the Tender Agent, the Credit Bank or the Remarketing Agent, each in its individual capacity, either as principal or agent, may also engage in or be interested in any financial or other transaction with the Issuer or the Credit Bank, and may act as depository, trustee or agent for any committee or body of Bondholders secured hereby or other obligations of the Issuer as freely as if it did not act in any capacity hereunder. It is expressly understood that the Trustee and the Tender Agent in carrying out their respective duties hereunder shall each be acting as a conduit with respect to deliveries of Bonds for purchase and purchases pursuant to Section 2.02 and 2.03 hereof. 61 ARTICLE IX MODIFICATION OF INDENTURE Section 9.01. Modification of Indenture Without Consent of Bondholders. The Issuer and the Trustee, from time to time and at any time, subject to the conditions and restrictions in this Indenture contained, may, and specifically as set forth in Section 11.13 hereof shall, enter into an indenture or indentures supplemental hereto, which indenture or indentures thereafter shall form a part hereof, for any one or more of the following purposes: to add to the covenants and agreements of the Issuer in this Indenture contained, other covenants and agreements thereafter to be observed, or to assign or pledge 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, assignment, pledge or surrender shall materially adversely affect the interests of the holders of the Bonds; (a) (b) to evidence the succession of a new Trustee hereunder, or to provide for the appointment of a co-Trustee or for a paying agent in addition to the Trustee; (c) to make such provisions for the purpose of curing any ambiguity, inconsistency or omission, or of curing, correcting or supplementing 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 desirable and not inconsistent with this Indenture and which shall not materially adversely affect the interests of the holders of the Bonds; (d) to provide for the issuance of coupon bonds or to provide for the use of a book-entry system; provided, however, that the Issuer and the Trustee shall have received an opinion of Bond Counsel to the effect that issuance of the Bonds in coupon form or the use of a book-entry system, respectively, complies with all applicable laws and will not adversely affect the exclusion of interest on the Bonds from gross income for federal income tax purposes; (e) to moddy, amend or supplement this Indenture or any indenture supplemental hereto in such manner as to permit the qualification hereof or thereof under the Trust Indenture Act of 1939 or any similar federal statute hereafter in effect, and, if they so determine, to add to this Indenture or any indenture supplemental hereto such other terms, conditions and provisions as may be permitted by said Trust Indenture Act of 1939 or similar federal statute, and which shall not materially adversely affect the interests of the holders of the Bonds; to make such additions, deletions or modifications as may be necessary to assure compliance with Section 142(d), 148(d)(3) or 148(f) of the Code, or otherwise to assure the exclusion from gross income under federal tax law of interest on the Bonds; to moddy, alter, amend or supplement this Indenture in any other respect, including amendments which would otherwise be described in Section 9.02 hereof, if notice of the proposed supplemental indenture is given to Bondholders (in the same manner as notices of redemption are given) at least 30 days before the effective date thereof and, on or before such effective date, the Bondholders have the right to demand purchase of their Bonds pursuant to Section 2.03 hereof; (f) (g) 62 (h) to modify, alter, amend or supplement this Indenture in any other respect, in connection with the providing of a substitute Letter of Credit or a substitute Standby Letter of Credit (including a Substitute Credit Facility as set forth in Section 5.10 of the Financing Agreement), and which shall not materially adversely affect the interests of the holders of the Bonds; (i) to mode, alter, amend or supplement this Indenture in any other respect, including amendments that would otherwise be described in Section 9.02, (1) if such supplemental indenture will take effect on a Demand Date (other than as described in Section 2.03(a)(A)) following the mandatory purchase of Bonds, or (2) if notice of the proposed supplemental indenture is given to Bondholders (in the same manner as notices of redemption are given) at least thirty (30) days before the effective date thereof and, on or before such effective date, the Bondholders have the right to demand purchase of their Bonds pursuant to Section 2.03; or (j) to modify, alter, amend or supplement this Indenture in any other respect in connection with the Loan Conversion, if such modification, alteration, amendment or supplement shall not materially adversely affect the interests of the holders of the Bonds. Any supplemental indenture authorized by the provisions of this Section may be executed by the Issuer and the Trustee without the consent of or, except in the case of clause (g) above, notice to the holders of any of the Bonds at the time Outstanding, notwithstanding any of the provisions of Section 9.02, but (i) the Trustee shall not be obligated to enter into any such supplemental indenture which affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise; (ii) the Trustee shall not enter into any such supplemental indenture which affects the rights or obligations of the Borrower hereunder or under the Financing Agreement without first obtaining the written consent of the Borrower, except as required in the opinion of Bond Counsel to maintain the tax-exempt status of interest on the Bonds, in which case the Trustee shall give notice thereof to the Borrower; and (iii) the Trustee shall not enter into any such supplemental indenture without first obtaining the written consent of the Credit Bank and the Standby Credit Bank, if any, except as required in the opinion of Bond Counsel to maintain the tax-exempt status of interest on the Bonds, in which case the Trustee shall give notice thereof to the Credit Bank and the Standby Credit Bank. Section 9.02. Modification of Indenture With Consent of Bondholders. With the prior written consent of the Credit Bank and the consent of the holders of a majority in aggregate principal amount of the Bonds at the time Outstanding, evidenced as provided in Section 11.08, the Issuer and the Trustee may from time to time and at any time enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of any supplemental indenture; provided, however, that, except to the extent permitted by Section 9.01, no such supplemental indenture shall (a) extend the fixed maturity of any Bond or reduce the rate of interest thereon or extend the time of payment of interest, or reduce the amount of the principal thereof, or reduce any premium payable on the redemption thereof, without the consent of the holder of each Bond so affected, or (b) reduce the aforesaid percentage of holders of Bonds whose consent is required for the execution of such supplemental indentures, or permit the creation of any lien on the Revenues prior to or on a parity with the lien of this Indenture, except as permitted herein, or permit the creation of any preference of any Bondholder over any other Bondholder or deprive the holders of the Bonds of the lien created by this Indenture upon the Revenues, or impair the right of the owners of Bonds to demand purchase thereof pursuant to Section 2.03 hereof, without in each case the consent of the holders of all the Bonds then Outstanding. Nothing in this paragraph shall be construed as making necessary the approval of any Bondholder of any supplemental indenture permitted by the provisions of Section 9.01. 63 Upon receipt by the Trustee of a Certified Resolution authorizing the execution of any such supplemental indenture, and upon the filing with the Trustee of evidence of the consent of Bondholders, as aforesaid, the Trustee shall join with the Issuer in the execution of such supplemental indenture, unless (i) such supplemental indenture affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such supplemental indenture; (ii) such supplemental indenture affects the rights or obligations of the Borrower hereunder or under the Financing Agreement, in which case the Trustee shall enter into such supplemental indenture only if the Trustee has received the Borrower’s written consent thereto, except as required in the opinion of Bond Counsel to maintain the tax-exempt status of interest on the Bonds, in which case the Trustee shall give notice thereof to the Borrower; or (iii) such supplemental Indenture affects the rights or obligations of the Tender Agent hereunder, in which case the Trustee shall enter into such supplemental indenture only if the Trustee has received the Tender Agent’s written consent thereto, except as required in the opinion of Bond Counsel to maintain the tax- exempt status of interest on the Bonds, in which case the Trustee shall give notice thereof to the Tender Agent. It shall not be necessary for the consent of the Bondholders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such consent shall approve the substance thereof. Promptly after the execution by the Issuer and the Trustee of any supplemental indenture pursuant to the provisions of this Section, the Trustee shall give Bondholders, by first- class mail, a notice setting forth in general terms the substance of such supplemental indenture. Any failure of the Trustee to give such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture. Section 9.03. Effect of Supplemental Indenture. Upon the execution of any supplemental indenture pursuant to the provisions of this Article IX, this Indenture shall be and be deemed to be modified and amended in accordance therewith, and the respective rights, duties and obligations under this Indenture of the Issuer, the Trustee and all holders of Outstanding Bonds shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such supplemental indenture shall be part of the terms and conditions of this Indenture for any and all purposes. Section 9.04. Opinion of Counsel as to Supplemental Indenture. Subject to the provisions of Section 8.01, the Trustee shall be entitled to receive, and shall be fully protected in relying upon, an Opinion of Counsel for the Issuer or Bond Counsel as conclusive evidence that any supplemental indenture executed pursuant to the provisions of this Article lX is authorized and permitted by this Indenture. Section 9.05. Notation of Modification on Bonds; Preparation of New Bonds. Bonds authenticated and delivered after the execution of any supplemental indenture pursuant to the provisions of this Article lX may bear a notation, in form approved by the Trustee and the Issuer as to any matter provided for in such supplemental indenture, and if such supplemental indenture shall so provide, new Bonds, so modified as to conform, in the opinion of the Trustee and the Issuer, to any modification of this Indenture contained in any such supplemental indenture, may be prepared by the Issuer, authenticated by the Trustee and delivered without cost to the holders of the Bonds then Outstanding, upon surrender for cancellation of such Bonds in equal aggregate principal amounts. Section 9.06. Notice to Rating Agency. The Trustee shall gve to each Rating Agency which maintains a rating on the Bonds notice of any amendment made to this Indenture the 64 Letter of Credit or the Standby Letter of Credit or the termination, expiration, extension or substitution of the Letter of Credit or the Standby Letter of Credit, notice of any amendment made to the Financing Agreement, notice of any pledge of additional collateral to the Credit Bank known to the Trustee, notice of any extraordinary redemptions or any redemption, purchase or defeasance of all of the Bonds, notice of any Reset Period or Conversion, and notice of any successor Trustee or Tender Agent hereunder or any successor Remarketing Agent. Notwithstanding the foregoing, it is expressly understood and agreed that failure to provide any such notice to any Rating Agency or any defect therein will not affect the validity of any action with respect to which notice is to be given or the effectiveness of any such action. \ 65 ARTICLE X DEFEASANCE Section 10.01. Discharge of Indenture. If the entire indebtedness on all Bonds Outstanding shall be paid and discharged in any one or more of the following ways: (a) by the payment of the principal of (including redemption premiurn, if any) and interest on all Bonds Outstanding; or by the deposit or credit to the account of the Trustee, in trust, at or before maturity, of money or Government Obligations in the necessary amount (as provided in Section 10.04) to pay or redeem Bonds Outstanding, whether by redemption or otherwise and prior receipt by the Trustee of written evidence from the Rating Agency that such deposit or credit will not cause a reduction or withdrawal of the then current rating on the Bonds; or by the delivery to the Trustee, for cancellation by it, of all Bonds Outstanding; (b) (c) and if all other sums payable hereunder by the Issuer and all amounts payable to the Credit Bank under the Credit Agreement shall be paid and discharged, then and in that case this Indenture shall cease, terminate and become null and void, except only as provided in Sections 2.04,2.05 and 10.02 hereof, and thereupon the Trustee shall, upon Written Request of the Issuer, and upon receipt by the Trustee of a Written Certificate of the Issuer and an Opinion of Counsel, each stating that in the opinion of the signers all conditions precedent to the satisfaction and discharge of this Indenture have been complied with, forthwith execute proper instruments acknowledging satisfaction of and discharging this Indenture. The fees and charges of the Trustee and the Tender Agent (including reasonable counsel fees) must be paid in order to effect such discharge. The satisfaction and discharge of this Indenture shall be without prejudice to the rights of the Trustee to charge and be reimbursed by the Borrower for any expenditures which it may thereafter incur in connection herewith. The Issuer or the Credit Bank or the Borrower may at any time surrender to the Trustee for cancellation by it any Bonds previously authenticated and delivered which the Issuer or the Credit Bank or the Borrower lawfully may have acquired in any manner whatsoever, and such Bonds upon such surrender and cancellation shall be deemed to be paid and retired. Subject to the provisions of Section 10.03 hereof and notwithstanding any other provision of this Indenture, the Financing Agreement or any other document, agreement or instrument executed in connection with the issuance and delivery of the Bonds, any amounts remaining in any fund or account established under this Indenture after the discharge of this Indenture pursuant to this Article X shall be paid to the Borrower. Section 10.02. Discharge of Liability on Bonds. Upon the deposit with the Trustee, in trust, at or before maturity, of money or securities in the necessary amount (as provided in Section 10.04) to pay or redeem Outstanding Bonds (whether upon or prior to their maturity or the redemption date of such Bonds) provided that, if such Bonds are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given as in Article IV provided or provision satisfactory to the Trustee shall have been made for the giving of such notice, all liability of the Issuer in respect of such Bonds shall cease, terminate and be completely discharged, except only that thereafter the holders thereof shall be entitled to payment by the 66 Issuer, and the Issuer shall remain liable for such payment, but only out of the money or securities deposited with the Trustee as aforesaid for their payment, subject, however, to the provisions of Section 10.03. Section 10.03. Payment of Bonds After Discharge of Indenture. Notwithstanding any provisions of this Indenture, any moneys deposited with the Trustee or any paying agent in trust for the payment of the principal of, or interest or premium on, any Bonds remaining unclaimed for two years after the principal of all the Outstanding Bonds has become due and payable (whether at maturity or upon call for redemption or by declaration as provided in this Indenture), shall then be paid to the Issuer, and the holders of such Bonds shall thereafter be entitled to look only to the Issuer for payment thereof, and only to the extent of the amount so paid to the Issuer, and all liability of the Trustee or any paying agent with respect to such moneys shall thereupon cease. In the event of the payment of any such moneys to the Issuer as aforesaid, the holders of the Bonds in respect of which such moneys were deposited shall thereafter be deemed to be unsecured creditors of the Issuer for amounts equivalent to the respective amounts deposited for the payment of such Bonds and so paid to the Issuer (without interest thereon). Section 10.04. Deposit of Money or Securities With Trustee. Whenever in this Indenture it is provided or permitted that there be deposited with or credited to the account of or held in trust by the Trustee money or securities purchased with Available Amounts in the necessary amount to pay or redeem any Bonds (assuming for any Variable Period that the Bonds will bear interest at the Maximum Interest Rate from the date of such deposit or credit through the redemption or payment date), the money or securities so to be deposited or held shall be Available Amounts constituting: (a) lawful money of the United States of America in an amount equal to the principal amount of such Bonds and all unpaid interest thereon to maturity, except that, in the case of Bonds which are to be redeemed prior to maturity and in respect of which there shall have been furnished to the Trustee proof satisfactory to it that notice of such redemption on a specified redemption date has been duly given or provision satisfactory to the Trustee shall be made for such notice, the amount so to be deposited or held shall be the principal amount of such Bonds and interest thereon to the redemption date, together with the redemption premium, if any; or (b) Government Obligations in such amounts and maturing at such times that the proceeds of said obligations received upon their respective maturities and interest payment dates, without further reinvestment, will provide funds sufficient, in the opinion of a nationally recognized firm of certified public accountants, to pay the principal, premium, if any, and interest to maturity, or to the redemption date, as the case may be, with respect to all of the Bonds to be paid or redeemed, as such principal, premium and interest become due, provided that the Trustee shall have been irrevocably instructed by the Issuer to apply the proceeds of said obligations to the payment of said principal, premium, if any, and interest with respect to such Bonds. 67 ARTICLE XI MISCELLANEOUS Section 11.01. Successors of Issuer. All the covenants, stipulations, promises and agreements in this Indenture contained, by or on behalf of the Issuer, shall bind and inure to the benefit of its successors and assigns, whether so expressed or not. If any of the powers or duties of the Issuer shall hereafter be transferred by any law of the State of California, and if such transfer shall relate to any matter or thing permitted or required to be done under this Indenture by the Issuer, then the body or official who shall succeed to such powers or duties shall act and be obligated in the place and stead of the Issuer as in this Indenture provided. Nothing in this Indenture or in the Bonds expressed or implied is intended or shall be construed to give to any person other than the Issuer, the Trustee, the Borrower, the Credit Bank, the Standby Credit Bank, the Agents and the holders of the Bonds issued hereunder any legal or equitable right, remedy or claim under or in respect of this Indenture or any covenant, condition or provision therein or herein contained; and all such covenants, conditions and provisions are and shall be held to be for the sole and exclusive benefit of the Issuer, the Trustee, the Borrower, the Credit Bank, the Standby Credit Bank, the Agents and the holders of the Bonds issued hereunder. Section 11.02. Limitation of Rights to Parties and Bondholders. Section 11.03. Waiver of Notice. Whenever in this Indenture the giving of notice by mail or otherwise is required, the giving of such notice may be waived in writing by the person entitled to receive such notice and in any such case the giving or receipt of such notice shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. Section 11.04. Destruction of Bonds. Whenever in this Indenture provision is made for the cancellation by the Trustee and the delivery to the Issuer of any Bonds, the Trustee shall, in lieu of such cancellation and delivery, destroy such Bonds and, upon written request of the Issuer, deliver a certificate of such destruction to the Issuer. Section 11.05. Separability of Invalid Provisions. In case any one or more of the provisions contained in this Indenture or in the Bonds shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Indenture, but this Indenture shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein. Section 11.06. Notices. It shall be sufficient service of any notice, request, complaint, demand or other paper on the Issuer, the Administrator, the Trustee, the Tender Agent, the Credit Bank, the Remarketing Agent, the Administrator, the Rating Agency or the Borrower if the same shall, except as otherwise provided herein, be duly mailed by first-class mail, postage prepaid, or given by telephone or telecopier and confirmed by such mail, and to the other parties as follows: The Issuer: City of Carlsbad 1200 Carlsbad Village Drive Carlsbad, CA 92008 Attention: 68 The Trustee and Tender Agent: The Credit Bank: The Standby Credit Bank: The Remarketing Agent: The Borrower: with a copy to: Rating Agency: Wells Fargo Bank, National Association 707 Wilshire Boulevard, 17th Floor Los Angeles, CA 90071 Attention: Corporate Trust Service Federal Home Loan Bank 600 California Street San Francisco, CA 94108 Red Capital Markets, Inc. 150 East Gay Street, 22nd Floor Columbus, Ohio 43215 Attention: Remarketing Desk Facsimile: (614) 857-1605 CIC Calavera, L.P. c/o Chelsea Investment Corporation 215 South Highway 101, Suite 200 Solano Beach, CA 92075 Attention: Wallace C. Dieckman SCDC, LLC c/o Red Capital Markets, Inc. 150 East Gay Street, 22nd Floor Columbus, Ohio 43215 Standard & Poor’s Rating Group 55 Water Street New York, NY 10041 Any telecopy or other electronic transmission received by any party after 4:OO p.m., local time, as evidenced by the time shown on such transmission, shall be deemed to have been received the following Business Day. A duplicate copy of each notice, certificate or other communication given hereunder by the Issuer or the Trustee to the other shall be given to the Tender Agent and the Credit Bank. The Issuer, the Administrator, the Trustee, the Tender Agent, the Credit Bank, the Remarketing Agent, the Rating Agency and the Borrower may, by notice given hereunder, designate any further or different addresses to which subsequent notices, certificates or other communications shall be sent. Failure to provide any such duplicate notice pursuant to the foregoing sentence, or any defect in any such duplicate notice so provided, shall not be treated as a failure to give the primary notice or affect the validity thereof or the effectiveness of any action taken pursuant there to. Notwithstanding the foregoing provisions of this Section 11.06, the Trustee shall not be deemed to have received, and shall not be liable for failing to act upon the contents of, any notice unless and until the Trustee actually receives such notice. Section 11.07. Authorized Bank Representatives May Act for Borrower. Whenever under the provisions of this Indenture the approval of the Issuer, the Credit Bank or the 69 Borrower is required for any action, and whenever the Issuer, the Credit Bank or the Borrower is required to deliver any notice or other writing, such approval or such notice or other writing shall be given, respectively, on behalf of the Issuer by the Designated Officer or on behalf of the Credit Bank by the Authorized Bank Representative or on behalf of the Borrower by the Authorized Borrower Representative, and the Issuer, the Trustee, the Credit Bank and the Borrower shall be authorized to act on any such approval or notice or other writing and neither party hereto nor the Credit Bank nor the Borrower shall have any complaint against the others as a result of any such action taken; provided, however any approval of the Credit Bank required under this Indenture shall not be a requirement during any period in which the Standby Credit Bank is in default of its payment obligations under the Standby Letter of Credit. €n designating its Authorized Bank Representative, the Credit Bank shall have the right to provide specific instructions to the Trustee in relation to the action which any of such Authorized Bank Representatives is authorized to take as a representative of the Credit Bank under this Indenture. Following receipt of a notice from the Credit Bank of its election to do so based upon an event of default by the Borrower under the Credit Agreement, the Trustee shall recognize any request, notice, approval or other action of the Credit Bank instead of the request, notice, approval or other action of the Borrower relating to requests, notices, approvals or other actions which the Borrower is entitled to take under this Indenture. All of such rights of the Borrower hereunder may be exercised by the Credit Bank upon receipt of such notice by the Trustee; provided, however, the Credit Bank shall not be deemed to have assumed the obligations of the Borrower under this Indenture, the Financing Agreement, the Regulatory Agreement or any other document, certification or other instrument relating to the Bonds by reason of such notice or the exercise of such rights. Section 11.08. Evidence of Rights of Bondholders. (a) Any request, consent or other instrument required by this Indenture to be signed and executed by Bondholders may be in any number of concurrent writings of substantially similar tenor and may be signed or executed by such Bondholders in person or by an agent or agents duly appointed in writing. Proof of the execution of any such request, consent or other instrument or of a writing appointing any such agent, or of the ownership of any Bonds, shall be sufficient for any purpose of this Indenture and shall be conclusive in favor of the Trustee and of the Issuer if made in the manner provided in this Section. (b) The fact and date of the execution by any person of any such request, consent or other instrument or writing may be proved by the affidavit of a witness of such execution or by the certificate of any notary public or other officer of any jurisdiction, authorized by the laws thereof to take acknowledgments of deeds, cerhfylng that the person signing such request, consent or other instrument or writing acknowledged to him the execution thereof. (c) The ownership of Bonds shall be proved by the Bond register maintained pursuant to Section 2.06 hereof. The fact and the date of execution of any request, consent or other instrument and the amount and distinguishing numbers of Bonds held by the person so executing such request, consent or other instrument may also be proved in any other manner which the Trustee may deem sufficient. The Trustee may nevertheless, in its discretion, require further proof in cases where it may deem further proof desirable. Any request, consent or vote of the holder of any Bond shall bind every future holder of the same Bond and the holder of any Bond issued in exchange therefor or in lieu thereof, in respect of anything done or suffered to be done by the Trustee or the Issuer in pursuance of such request, consent or vote. (d) 70 (e) In determining whether the holders of the requisite aggregate principal amount of Bonds have concurred in any demand, request, direction, consent or waiver under this Indenture, Bonds which are owned by the Issuer or by any other direct or indirect obligor on the Bonds, or by any person directly or indirectly controlling or controlled by, or under direct or indirect common control with, the Issuer or any other direct or indirect obligor on the Bonds, shall be disregarded and deemed not to be Outstanding for the purpose of any such determination, provided that, for the purpose of determining whether the Trustee shall be protected in relying on any such demand, request, direction, consent or waiver, only Bonds which the Trustee knows to be so owned shall be disregarded. Bonds so owned which have been pledged in good faith may be regarded as Outstanding for the purposes of this subsection (e) if the pledgee shall certify to the Trustee and the Issuer 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 Issuer or any other direct or indirect obligor on the Bonds. In case of a dispute as to such right, any decision by the Trustee taken upon the advice of counsel shall be full protection to the Trustee. Solely for purposes of the limitation expressed in this paragraph (e), the Credit Bank and the Borrower shall be deemed to be indirect obligors on the Bonds. The provisions of this paragraph (e) shall not apply to the Credit Bank for the period of time that it is the owners of all the Bonds. (f) In lieu of obtaining any demand, request, direction, consent or waiver in writing, the Trustee may call and hold a meeting of the Bondholders upon such notice and in accordance with such rules and regulations as the Trustee considers fair and reasonable for the purpose of obtaining any such action. Section 11.09. Holidays. If the date for making any payment or the last date for performance of any act or the exercising of any right, as provided in this Indenture, is not a Business Day, such payment may be made or act performed or right exercised on the next succeeding Business Day with the same force and effect as if done on the date provided therefor in this Indenture and, in the case of any payment, no interest shall accrue for the period from and after such date. Section 11.10. Governing Law. This Indenture shall be governed by and construed in accordance with the laws of the State. Section 11.11. Execution in Several Counterparts. This Indenture may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original; and all such counterparts, or as many of them as the Issuer and the Trustee shall preserve undestroyed, shall together constitute but one and the same instrument. Section 11.12. References to the Credit Bank; Other Documents. All provisions hereof regarding consents, approvals, directions, waivers, appointments, requests or other actions by the Credit Bank shall be deemed not to require or permit such consents, approvals, directions, waivers, appointments, requests or other actions and shall be read as if the Credit Bank were not mentioned therein (a) during any period during which there is a payment default under the Standby Letter of Credit, or (b) after the Standby Letter of Credit shall at any time for any reason cease to be valid and binding on the Standby Credit Bank, or shall be declared to be null and void by final judgment of a court of competent jurisdiction, or after the Standby Credit Bank has rescinded, repudiated or terminated the Standby Letter of Credit in writing; provided, however, that the payment of amounts due (including without limitation all indemnity payments) to the Credit Bank pursuant to the terms hereof shall continue in full force and effect. The foregoing shall not affect any other rights of the Credit Bank. All provisions herein relating to the rights of the Credit Bank shall be of no force and effect if there is no Letter of Credit in effect, the Credit Bank does not own any Bonds pursuant 71 to Section 4.06 and all amounts owing to the Credit Bank under the Credit Agreement have been paid. In such event, all references to the Credit Bank shall have no force or effect. The Credit Bank shall be entitled to enforce its rights hereunder as a third party beneficiary hereof; provided that the Issuer shall be under no obligation to enforce any of such rights. Nothing contained herein or in any other document, including without limitation the Credit Agreement or any other document to which the Credit Bank is a party, shall be construed to impose on the Issuer any obligation to enforce or to assist any other party in enforcing any provision of any document to which the Issuer is not a party. Section 11.13. Replacement Trust Indenture. Notwithstanding the provisions of the Indenture, upon Loan Conversion, the terms and provisions of the Trust Indenture executed and delivered by the Issuer and the Trustee on the Closing Date, a form of which is attached hereto as Exhibit F, shall become effective and the terms and provisions of this Indenture executed and delivered on the Closing Date shall be of no further affect and shall be null and void. Section 11.14. Qualified Project Costs. The Borrower has covenanted in the Financing Agreement that the proceeds of the Bonds shall be used exclusively to pay costs which (i) are (A) capital expenditures (as defined in Treasury Regulation Section 1.150-1(a)) and (B) not made for the acquisition of existing property, to the extent prohibited in Section 147(d) of the Code, and (ii) are made exclusively with respect to a ”qualified residential rental project” within the meaning of Section 142(d) of the Code and that for the greatest number of buildings the proceeds of the Bonds shall be deemed allocated on a pro rata basis to each building in the Project and the land on which it is located so that each building and the land on which it is located will have been financed 50% or more by the proceeds of the Bonds for the purpose of complying with Section 42(h)(4)(B) of the Code. Notwithstanding anything in the foregoing to the contrary, such covenant is made for the benefit of the Borrower and its partners and neither the Trustee nor the Issuer shall have any obligation to enforce this statement nor shall they in= any liability to any person, including without limitation, the Borrower, the partners of the Borrower, any other affiliate of the Borrower or the holders of the Bonds for any failure to meet the intent expressed in the foregoing covenant. 72 IN WITNESS WHEREOF, CITY OF CARLSBAD has caused this Indenture to be signed in its name by its duly authorized member and WELLS FARGO BANK, NATIONAL ASSOCIATION, in token of its acceptance of the trust created hereunder, has caused this Indenture to be signed in its name by its duly authorized officer, all as of the day and year first above written. CITY OF CARLSBAD, as Issuer BY WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee Authorized Officer BY 73 2 2G EXHIBIT A-1 FORM OF VARIABLE RATE (DAILY MODE) BOND No. - $----- CITY OF CARLSBAD VARIABLE RATE DEMAND MULTIFAMILY HOUSING REVENUE BOND (MARIPOSA APARTMENTS), 2003 SERIES B INTEREST RATE: MATURITY DATE: ISSUE DATE: CUSIP: Variable REGISTERED OWNER CEDE & CO PRINCIPAL SUM: City of Carlsbad, a municipal corporation organized and existing under the laws of the State of California (herein called the "Issuer"), for value received, hereby promises to pay (but only out of Revenues as hereinafter provided) to the Registered Owner identified above or registered assigns, on the Maturity Date stated above (subject to any right of prior redemption hereinafter mentioned), the Principal Amount identified above, in lawful money of the United States of America; and to pay interest thereon in like lawful money, until payment of such Principal Amount, at the rates and at the times as hereinafter provided. The principal or redemption price hereof is payable by check only upon presentation and surrender hereof at the principal corporate trust office of Wells Fargo Bank, National Association, or such other place as designated by the Trustee (herein called the "Trustee"), and interest shall be paid by check, mailed on the Interest Payment Date by first-class mail, postage prepaid, to the registered owner of this Bond on the applicable Record Date (as hereinafter defined), at the address of such registered owner shown on the registration books of the Trustee, except that such interest payments may be made by wire transfer to any registered owner of $1,000,000 or more in aggregate principal amount of the Bonds who shall have designated in writing to the Trustee an account for such payments at least fifteen days before the Record Date therefor. This Bond is one of a duly authorized issue of bonds of the Issuer designated as "City of Carlsbad Variable Rate Demand Multifamily Housing Revenue Bonds (Mariposa Apartments) 2003 Series B" (the "Bonds"), in the initial aggregate principal amount of $ authorized to be issued pursuant to Chapter 7 of Part 5 of Division 31 of the Califomia Health and Safety Code (the "Housing Law"), and issued under and secured by an Trust Indenture, dated as of June 1, 2003 (herein called the "Indenture"), between the Issuer and the Trustee. Reference is hereby made to the Indenture and all indentures supplemental thereto for a description of the rights thereunder of the registered owners of the Bonds, of the nature and extent of the security, of the rights, duties and immunities of the Trustee and of the rights and obligations of the Issuer thereunder, to all of the provisions of which Indenture the registered owner of this Bond, by acceptance hereof, assents and agrees. This Bond shall bear interest from the date to which interest has been paid next preceding the date of authentication of this Bond (unless this Bond is authenticated as of an Interest Payment Date, as defined below, for which interest has been paid, or after the Record Date in respect thereof, in which event it shall bear interest from such Interest Payment Date, or unless it is authenticated on or before the Record Date for the first Interest Payment Date, in which event it shall bear interest from the date of the Bonds), at the initial rate per annum for the initial period set forth in the Indenture, and thereafter, at the rate determined as provided A-1-1 herein, payable on each Interest Payment Date. The term "Interest Payment Date" means the first Business Day of each month commencing , until the rate of interest on the Bonds is established at a Reset Rate or Fixed Rate, both as defined in the Indenture, and thereafter means June 1 and December 1 of each year. The term "Record Date" means, during any Variable Period, as defined in the Indenture, the close of business on the Business Day immediately preceding an Interest Payment Date. THE BONDS ARE NOT AN OBLIGATION, EITHER GENERAL OR SPECIAL, AND DO NOT CONSTITUTE A PLEDGE OF THE GENERAL CREDIT OR TAXING POWER (AS APPLICABLE), OF CITY OF CARLSBAD, THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION THEREOF, BUT ARE PAYABLE SOLELY FROM THE REVENUES AND PROPERTY PLEDGED THEREFOR IN THE INDENTURE, AND NEITHER CITY OF CARLSBAD, THE STATE OF CALIFORNIA NOR ANY SUCH POLITICAL SUBDIVISION THEREOF SHALL BE LIABLE THEREON. THE ISSUER HAS NO TAXING POWER. The Bonds are limited obligations of the Issuer and, as and to the extent set forth in the Indenture, are payable solely from, and secured by a pledge of and lien on, the Revenues, as that term is defined in the Indenture/ consisting primarily of amounts drawn under an irrevocable direct-pay letter of credit issued by (the "Credit Bank"), for the account of CIC Calavera, L.P., a California limited partnership (the "Borrower"), in favor of the Trustee concurrently with the issuance of the Bonds, or any qualified letter of credit or other credit instrument issued in substitution therefor (such initial letter of credit or substitute being referred to herein as the "Letter of Credit") or, under the circumstances provided in the Indenture, under an irrevocable standby letter of credit (the "Standby Letter of Credit") issued by the Federal Home Loan Bank of Cincinnati (the "Standby Credit Bank). The Bonds are being issued in order to provide funds to make a loan (the "Loan") to the Borrower pursuant to a Financing Agreement, dated as of June 1, 2003 (the "Financing Agreement"), among the Issuer, the Trustee and the Borrower, in connection with the acquisition, construction and development by the Borrower of a multifamily rental housing development (the "Project") located within the City of Carlsbad, California. The rate of interest on the Bond shall be calculated as provided in the Indenture. Until the rate of interest on this Bond is converted to a Variable Rate in the Weekly Mode, the first Reset Rate or to the Fixed Rate, each as defined in the Indenture, the rate of interest hereon shall be calculated on the basis of a year of 365 or 366 days, as appropriate, for the actual number of days elapsed, and shall be a rate (the "Variable Rate"), determined by the remarketing agent appointed pursuant to the Indenture (the "Remarketing Agent"), on each Business Day (a "Variable Interest Computation Date"), for the period beginning on such day and ending on the next succeeding Business Day (each a "Variable Interest Accrual Period"). The Variable Rate determined by the Remarketing Agent on each Variable Interest Computation Date shall be that rate of interest which, if borne by the Bonds, would, in its judgment having due regard to prevailing financial market conditions, be the interest rate necessary, but which would not exceed the interest rate necessary, to produce as nearly as practicable a par bid (disregarding accrued interest) if the Bonds were sold on the first day of the next Variable Interest Accrual Period, subject to the limitations on such rate set forth in the Indenture. The determination of the Variable Rate by the Remarketing Agent shall (in the absence of manifest error) be conclusive and binding on the registered owners of the Bonds, the Issuer, the Trustee, the Credit Bank, the Tender Agent, the Borrower and the Remarketing Agent. Any registered owner may obtain information on the Variable Rate by request to the Trustee. Any Bond or Authorized Denomination of principal amount thereof shall be purchased (i) on any Business Day during a Variable Period on demand of the reptered owner of such Bond, (ii) on any Reset Date or Conversion Date, (iii) on any date on which a substitute Letter of Credit or substitute Standby Letter of Credit is to be exchanged for the then existing Letter of A-1-2 Credit or Standby Letter of Credit, respectively, if such substitution, by itself, would result in a reduction or withdrawal of the rating then in effect on the Bonds, (iv) on any date on which a Substitute Credit Facility is being provided pursuant to the Financing Agreement, (v) on the last Business Day not less than 5 days before the date of expiration of the Standby Letter of Credit if a substitute Standby Letter of Credit (or Substitute Credit Facility) as set forth in the Financing Agreement is not delivered in substitution thereof, unless a Standby Letter of Credit is no longer required pursuant to the provisions of the Financing Agreement or (vi) on the first Business Day which is at least five days following the occurrence of a Determination of Taxability, at a purchase price equal to the principal amount thereof, or of any Authorized Denomination thereof purchased, plus interest accrued thereon, if any, to the date of purchase (the Turchase Price”), upon (a) in the case of a demand purchase while the Bonds bear interest at a Variable Rate in the Daily Mode, delivery of an irrevocable notice in the form set forth in the Indenture including the name of the owner (or Beneficial Owner) of the relevant Bonds and the aggregate principal amount and CUSIP number of the Bonds to be tendered (a “Tender Notice”) to the Remarketing Agent, the Tender Agent and the Trustee at or prior to 1O:OO a.m., New York City time, on a Business Day by facsimile transmission to such numbers designated for such purpose by the Remarketing Agent, the Trustee and the Tender Agent stating such owner’s (or Beneficial Owner’s) irrevocable and unconditional election to tender Bonds in the amount specified in such Tender Notice on such Business Day (if such Bonds are not held m certificated form, the Beneficial Owner of the Bonds must, prior to 1O:OO a.m., New York City time, caused to be delivered to DTC a ”Same Day Funds Settlement Delivery Order”) and, if the Bonds are in certificated form, deliver such Bond, together with any applicable due bills, to the Tender Agent at or prior to 1O:OO a.m., New York City time, on such Business Day with all necessary endorsements. Payment of the Purchase Price of any Bond so delivered shall be made by check or by wire transfer as provided in the Indenture, as designated in the Tender Notice, but only upon delivery and surrender of such Bond and due-bill, if any, to the Tender Agent on the Demand Date. No Bonds shall be so purchased or remarketed if an Event of Default under and as defined in the Indenture, other than certain specified covenant defaults as described in the Indenture, shall have occurred and be continuing, and no Bonds shall be so purchased or remarketed while the Bonds bear interest at a Reset Rate or a Fixed Rate except on a Reset Date or the Conversion Date. . The rate of interest on the Bonds may be established at a Variable Rate in the Weekly Mode, a Reset Rate or Fixed Rate on any Interest Payment Date in accordance with the procedures set forth in the Indenture. The Reset Rate or Fixed Rate shall be computed on the basis of a year of 360 days with twelve 30-day months, and shall be determined by the Remarketing Agent as provided in the Indenture. The Trustee shall, upon request of any registered owner, no* such registered owner of the Reset Rate or Fixed Rate to be in effect on and after the Reset Date or Conversion Date. The Trustee shall give to the registered owners of the Bonds, in the same manner that notices of redemption are given, notice of any mandatory tender of Bonds pursuant to the Indenture, specifying the information set forth in the Indenture. If this Bond is not tendered for purchase pursuant to the provisions of the Indenture, it will be deemed to have been so tendered and shall be purchased on such Weekly Date, Reset Date, or Conversion Date, such substitution date, such expiration date of the Standby Letter of Credit or such date a Substitute Credit Facility is provided, at a price equal to the principal amount hereof plus interest accrued to such date. The Bonds shall be subject to optional and mandatory redemption pursuant to the terms and conditions set forth in the Indenture. Notice of redemption of Bonds shall be given by the Trustee to the registered owners thereof by first-class mail, as provided in the Indenture, not more than 30 days and not less than 15 days or, in the case of redemption following an acceleration of the Loan or expiration of the Letter of Credit, not less than five days before the date fixed for redemption; or in the event A-1-3 of a failure to honor a drawing under the Letter of Credit or a repudiation of the Letter of Credit, not less than three days before the date fixed for redemption. If this Bond is called for redemption and payment is duly provided therefor as specified in the Indenture, interest hereon shall cease to accrue from and after the date fixed for redemption. If an Event of Default (as defined in the Indenture) shall occur, the principal of all Bonds may be declared due and payable upon the conditions, in the manner and with the effect provided in the Indenture. The Indenture provides that in certain events such declaration and its consequences may be rescinded by the registered owners of at least a majority in aggregate principal amount of the Bonds then Outstanding. The Bonds are issuable only as fully registered Bonds without coupons in authorized denominations of $100,000 or any integral multiple of $5,000 in excess thereof during any Variable Period and $5,000 or any integral multiple thereof during any Reset Period or on and after the Conversion Date. Subject to the limitations and upon payment of the charges, if any, provided in the Indenture, Bonds may be exchanged at the corporate trust office of the Trustee for a like aggregate principal amount of Bonds of the same series of other authorized denominations. This Bond is transferable by the registered owner hereof, in person, or by its attorney duly authorized in writing, at the corporate trust office of the Trustee, 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. Upon such transfer a new fully registered Bond or Bonds, of the same series and of authorized denomination or denominations, for the same aggregate principal amount, will be issued to the transferee in exchange herefor. The Trustee shall not be required to register the transfer or exchange of any Bond within 15 days of the selection of Bonds for redemption or if selected for redemption. The Issuer and the Trustee may treat the registered owner hereof as the absolute owner hereof for all purposes, and the Issuer and the Trustee shall not be affected by any notice to the contrary. The Indenture contains provisions permitting the Issuer and the Trustee to execute supplemental indentures adding provisions to, or changing or eliminating any of the provisions of, the Indenture, subject to the limitations set forth in the Indenture. Additional bonds on a parity with the Bonds may be issued pursuant to the terms of the Indenture. No officer, agent or employee of the Issuer or the State of California, nor any person executing this Bond, shall in any event be subject to any personal liability or accountability by reason of the issuance of the Bonds. The Bonds are not a debt, nor a pledge of the faith and credit, of the Issuer, the State of California, or any of its political subdivisions and neither are they liable on the Bonds, nor are the Bonds payable out of any funds or properties other than those pledged under the Indenture for the payment thereof. The Bonds do not constitute an indebtedness within the meaning of any constitutional or statutory debt limitation. The Issuer hereby certifies that all of the conditions, things and acts required to exist, to have happened and to have been performed precedent to and in the issuance of this Bond do exist, have happened and have been performed in due time, form and manner as required by the Constitution and statutes of the State of California and that the amount of this Bond, together with all other indebtedness of the Issuer, does not exceed any limit prescribed by the Constitution or statutes of the State of California. This Bond shall not be entitled to any benefit under the Indenture, or become valid or obligatory for any purpose, until the certificate of authentication hereon endorsed shall have been manually signed by the Trustee or the Tender Agent. A-1-4 IN WITNESS WHEREOF, the City of Carlsbad has caused this Bond to be executed on , and attested to by the facsimile its behalf by the facsimile signature of its signature of its City Clerk, all as of the Issue Date set forth above. CITY OF CARLSBAD Attest: City Clerk A-1-5 [FORM OF CERTIFICATE OF AUTHENTICATION] This is one of the Bonds described in the within-mentioned Indenture. Dated: __ ____ WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee Authorized Signatory BY or WELLS FARGO BANK, NATIONAL ASSOCIATION, as Tender Agent Authorized Signatory BY A-1-6 326 (FORM OF ASSIGNMENT) For value received, the undersigned dotes) hereby sell, assign and transfer unto (Name, Address and Tax Identification or Social Security Number of Assignee)the within Bond and do(es) hereby irrevocably constitute and appoint attorney, to transfer the same on the registration books of the Trustee, with full power of substitution in the premises. Dated: Signature Guaranteed: -~---- ----~ ---1-------1_--- NOTICE: Signature(s) must be guaranteed NOTICE: The signature on this assignment by an eligible guarantor institution must correspond with the name(s) as written on the face of the within Bond in every particular without alteration or enlargement or any change whatsoever. A-1-7 EXHIBIT A-2 FORM OF VARIABLE RATE (WEEKLY MODE) BOND CITY OF CARLSBAD VARIABLE RATE DEMAND MULTIFAMILY HOUSING REVENUE BOND (MARIPOSA APARTMENTS), 2003 SERIES B INTEREST RATE: MATURITY DATE: ISSUE DATE: CUSIP: Variable REGISTERED OWNER PRINCIPAL SUM: The City of Carlsbad, California, a municipal corporation organized and existing under the laws of the State of California (herein called the ”Issuer”), for value received, hereby promises to pay (but only out of Revenues as hereinafter provided) to the Registered Owner identified above or registered assigns, on the Maturity Date stated above (subject to any right of prior redemption hereinafter mentioned), the Principal Amount identified above, in lawful money of the United States of America; and to pay interest thereon in like lawful money, until payment of such Principal Amount, at the rates and at the times as hereinafter provided. The principal or redemption price hereof is payable by check only upon presentation and surrender hereof at the principal corporate trust office of Wells Fargo Bank, National Association, or such other place as designated by the Trustee (herein called the “Trustee”), in Los Angeles, California or such other place as designated by the Trustee and interest shall be paid by check, mailed on the Interest Payment Date by first-class mail, postage prepaid, to the registered owner of this Bond on the applicable Record Date (as hereinafter defined), at the address of such registered owner shown on the registration books of the Trustee, except that such interest payments may be made by wire transfer to any registered owner of $1,000,000 or more in aggregate principal amount of the Bonds who shall have designated in writing to the Trustee an account for such payments at least fifteen days before the Record Date therefor. This Bond is one of a duly authorized issue of bonds of the Issuer designated as ”City of Carlsbad Variable Rate Demand Multifamily Housing Revenue Bonds (Mariposa Apartments) 2003 Series B (the ”Bonds”), in the initial aggregate principal amount of $ authorized to be issued pursuant to Chapter 7 of Part 5 of Division 31 of the California Health and Safety Code (the “Housing Law”), and issued under and secured by an Trust Indenture, dated as of June 1, 2003 (herein called the “Indenture”), between the Issuer and the Trustee. Reference is hereby made to the Indenture and all indentures supplemental thereto for a description of the rights thereunder of the registered owners of the Bonds, of the nature and extent of the security, of the rights, duties and immunities of the Trustee and of the rights and obligations of the Issuer thereunder, to all of the provisions of which Indenture the registered owner of this Bond, by acceptance hereof, assents and agrees. This Bond shall bear interest from the date to which interest has been paid next preceding the date of authentication of this Bond (unless this Bond is authenticated as of an Interest Payment Date, as defined below, for which interest has been paid, or after the Record Date in respect thereof, in which event it shall bear interest from such Interest Payment Date, or unless it is authenticated on or before the Record Date for the first Interest Payment Date, in A-2-1 which event it shall bear interest from the date of the Bonds), at the initial rate per annum and for the period as set forth in the Indenture, and thereafter at the rate determined as provided herein, payable on each Interest Payment Date. The term ”Interest Payment Date” means the first Business Day of each month commencing , until the rate of interest on the Bonds is established at a Reset Rate or Fixed Rate, both as defined in the Indenture, and thereafter means June 1 and December 1 of each year. The term ”Record Date” means, during any Variable Period, as defined in the Indenture, the close of business on the Business Day immediately preceding an Interest Payment Date. THE BONDS ARE NOT AN OBLIGATION, EITHER GENERAL OR SPECIAL, AND DO NOT CONSTITUTE A PLEDGE OF THE GENERAL CREDIT OR TAXING POWER (AS APPLICABLE), OF THE CITY OF CARLSBAD, THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION THEREOF, BUT ARE PAYABLE SOLELY FROM THE REVENUES AND PROPERTY PLEDGED THEREFOR IN THE INDENTURE, AND NEITHER THE CITY OF CARLSBAD, THE STATE OF CALIFORNIA NOR ANY SUCH POLITICAL SUBDIVISION THEREOF SHALL BE LIABLE THEREON. THE ISSUER HAS NO TAXING POWER. The Bonds are limited obligations of the Issuer and, as and to the extent set forth in the Indenture, are payable solely from, and secured by a pledge of and lien on, the Revenues, as that term is defined in the Indenture, consisting primarily of amounts drawn under an irrevocable direct-pay letter of credit issued by (the ”Credit Bank”), for the account of CIC Calavera, L.P., a California limited partnership (the ”Borrower”), in favor of the Trustee concurrently with the issuance of the Bonds, or any qualified letter of credit or other credit instrument issued in substitution therefor (such initial letter of credit or substitute being referred to herein as the ”Letter of Credit”) or, under the circumstances provided in the Indenture, under an irrevocable standby letter of credit (the ”Standby Letter of Credit”) issued by the Federal Home Loan Bank of Cincinnati (the ”Standby Credit Bank”). The Bonds are being issued in order to provide funds to make a loan (the “Loan”) to the Borrower pursuant to a Financing Agreement, dated as of June 1,2003 (the ”Financing Agreement”), among the Issuer, the Trustee and the Borrower, in connection with the acquisition, construction and development by the Borrower of a multifamily rental housing development (the ”Project”) located within the City of Carlsbad, California. The rate of interest on the Bond shall be calculated as provided in the Indenture. Until the rate of interest on this Bond is converted to a Variable Rate in the Daily Mode, the first Reset Rate or to the Fixed Rate, each as defined in the Indenture, the rate of interest hereon shall be calculated on the basis of a year of 365 or 366 days, as appropriate, for the actual number of days elapsed, and shall be a rate (the ”Variable Rate”), determined by the remarketing agent appointed pursuant to the Indenture (the ”Remarketing Agent”), on the last Business Day before Thursday of each week (a ”Variable Interest Computation Date”), for the period beginning on such Thursday and ending on the next succeeding Wednesday (each a ”Variable Interest Accrual Period”), provided that the Variable Rate in effect on the Record Date for any Interest Payment Date shall remain in effect from such Record Date until and including the day immediately preceding such Interest Payment Date, and any change in the Variable Rate which would otherwise take effect between such Record Date and such Interest Payment Date shall take effect on such Interest Payment Date. The Variable Rate determined by the Remarketing Agent on each Variable Interest Computation Date shall be that rate of interest which, if borne by the Bonds, would, in its judgment having due regard to prevailing financial market conditions, be the interest rate necessary, but which would not exceed the interest rate necessary, to produce as nearly as practicable a par bid (disregarding accrued interest) if the Bonds were sold on the first day of the next Variable Interest Accrual Period, subject to the limitations on such rate set forth in the Indenture. The determination of the Variable Rate by the Remarketing Agent shall (in the absence of marufest error) be conclusive and binding on the registered owners of the Bonds, the Issuer, the Trustee, the Credit Bank, the A-2-2 Borrower and the Remarketing Agent. Any registered owner may obtain information on the Variable Rate by request to the Trustee. Any Bond or Authorized Denomination of principal amount thereof shall be purchased (i) on any Business Day during a Variable Period, (ii) on any Reset Date or the Conversion Date, (iii) on any date on which a substitute Letter of Credit or substitute Standby Letter of Credit is to be exchanged for the then effective Letter of Credit or Standby Letter of Credit, respectively, if such substitution, by itself, would result in a reduction or withdrawal of the rating then in effect on the Bonds, (iv) on any date on which a Substitute Credit Facility is being provided pursuant to the Financing Agreement, (v) on the last Business Day not less than five days before the date of expiration of the Standby Letter of Credit if a substitute Standby Letter of Credit (or Substitute Credit Facility) as set forth in the Financing Agreement is not delivered in substitution thereof unless a Standby Letter of Credit is no longer provided pursuant to the provisions of the Financing Agreement or (vi) on the first Business Day which is at least five days following the occurrence of a Determination of Taxability, as defined in the Indenture, at a purchase price equal to the principal amount thereof, or of any Authorized Denomination thereof purchased, plus interest accrued thereon, if any, to the date of purchase (the "Purchase Price"), upon (a) in the case of a demand purchase while the Bonds bear interest at a Variable Rate in the Daily Mode, delivery of an irrevocable notice in the form set forth in the Indenture including the name of the owner (or Beneficial Owner) of the relevant Bonds and the aggregate principal amount and CUSIP number of the Bond to be tendered (a "Tender Notice") and (b) in all cases, delivery to the Tender Agent, at or prior to 9:30 a.m., New York City time, on the Demand Date (as defined in the Indenture) of such Bond (with an appropriate transfer of registration form executed in blank and in form satisfactory to the Tender Agent) and, in the case of a Bond or units of principal amount thereof to be purchased prior to any Interest Payment Date and after the Record Date in respect thereof, a due-bill, in a form satisfactory to the Tender Agent, for interest due on such Interest Payment Date. Payment of the Purchase Price of any Bond so delivered shall be made by check or by wire transfer as provided in the Indenture, as designated in the Tender Notice, but only upon delivery and surrender of such Bond and due-bill, if any, to the Tender Agent on the Demand Date. No Bonds shall be so purchased or remarketed if an Event of Default under and as defined in the Indenture, other than certain specified covenant defaults as described in the Indenture, shall have occurred and be continuing, and no Bonds shall be so purchased or remarketed while the Bonds bear interest at a Reset Rate or a Fixed Rate except on a Reset Date or the Conversion Date. The rate of interest on the Bonds may be established at a Variable Rate in the Daily Mode, a Reset Rate or Fixed Rate on any Interest Payment Date in accordance with the procedures set forth in the Indenture. The Reset Rate or Fixed Rate shall be computed on the basis of a year of 360 days with twelve 30-day months, and shall be determined by the Remarketing Agent as provided in the Indenture. The Trustee shall, upon request of any registered owner, now such registered owner of the Reset Rate or Fixed Rate to be in effect on and after the Reset Date or Conversion Date. The Trustee shall give to the registered owners of the Bonds, in the same manner that notices of redemption are given, notice of any mandatory tender of Bonds pursuant to the Indenture, specifying the information set forth in the Indenture. If this Bond is not tendered for purchase pursuant to the provisions of the Indenture, it will be deemed to have been so tendered and shall be purchased on such Daily Date, Reset Date, or Conversion Date, such substitution date, such expiration date of the Standby Letter of Credit or such date a Substitute Credit Facility is provided, at a price equal to the principal amount hereof plus interest accrued to such date. The Bonds shall be subject to optional and mandatory redemption pursuant to the terms and conditions set forth in the Indenture. A-2-3 Notice of redemption of Bonds shall be given by the Trustee to the registered owners thereof by first-class mail, as provided in the Indenture, not more than 30 days and not less than 10 days or, in the case of redemption following an acceleration of the Loan or expiration of the Letter of Credit, not less than five days before the date fixed for redemption or in the event of a failure to honor a drawing under the Letter of Credit or a repudiation of the Letter of Credit, not less than three days before the date fixed for redemption. If this Bond is called for redemption and payment is duly provided therefor as specified in the Indenture, interest hereon shall cease to accrue from and after the date fixed for redemption. If an Event of Default (as defined in the Indenture) shall occur, the principal of all Bonds may be declared due and payable upon the conditions, in the manner and with the effect provided in the Indenture. The Indenture provides that in certain events such declaration and its consequences may be rescinded by the registered owners of at least a majority in aggregate principal amount of the Bonds then Outstanding. The Bonds are issuable only as fully registered Bonds without coupons in authorized denominations of $100,000 or any integral multiple of $5,000 in excess thereof during any Variable Period and $5,000 or any integral multiple thereof during any Reset Period or on and after the Conversion Date. Subject to the limitations and upon payment of the charges, if any, provided in the Indenture, Bonds may be exchanged at the corporate trust office of the Trustee for a like aggregate principal amount of Bonds of the same series of other authorized denominations. This Bond is transferable by the registered owner hereof, in person, or by its attorney duly authorized in writing, at the corporate trust office of the Trustee, 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. Upon such transfer a new fully registered Bond or Bonds, of the same series and of authorized denomination or denominations, for the same aggregate principal amount, will be issued to the transferee in exchange herefor. The Trustee shall not be required to register the transfer or exchange of any Bond within 15 days of the selection of Bonds for redemption or if selected for redemption. The Issuer and the Trustee may treat the registered owner hereof as the absolute owner hereof for all purposes, and the Issuer and the Trustee shall not be affected by any notice to the contrary. The Indenture contains provisions permitting the Issuer and the Trustee to execute supplemental indentures adding provisions to, or changing or eliminating any of the provisions of, the Indenture, subject to the limitations set forth in the Indenture. Additional bonds on a parity with the Bonds may be issued pursuant to the terms of the Indenture. No officer, agent or employee of the Issuer or the State of California, nor any person executing this Bond, shall in any event be subject to any personal liability or accountability by reason of the issuance of the Bonds. The Bonds are not a debt, nor a pledge of the faith and credit, of the Issuer, the State of California, or any of its political subdivisions and neither are they liable on the Bonds, nor are the Bonds payable out of any funds or properties other than those pledged under the Indenture for the payment thereof. The Bonds do not constitute an indebtedness within the meaning of any constitutional or statutory debt limitation. The Issuer hereby certifies that all of the conditions, things and acts required to exist, to have happened and to have been performed precedent to and in the issuance of this Bond do exist, have happened and have been performed in due time, form and manner as required by the Constitution and statutes of the State of California and that the amount of this Bond, together with all other indebtedness of the Issuer, does not exceed any limit prescribed by the Constitution or statutes of the State of California. A-2-4 This Bond shall not be entitled to any benefit under the Indenture, or become valid or obligatory for any purpose, until the certificate of authentication hereon endorsed shall have been manually signed by the Trustee or the Tender Agent. A-2-5 IN WITNESS WHEREOF, the City of Carlsbad has caused this Bond to be executed on , and attested to by the facsimile its behalf by the facsimile signature of its signature of its City Clerk, all as of the Issue Date set forth above. CIlY OF CARLSBAD Attest: City Clerk A-2-6 [FORM OF CERTIFICATE OF AUTHENTICATION] This is one of the Bonds described in the within-mentioned Indenture. Dated: ____________ WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee Authorized Signatory BY WELLS FARGO BANK, NATIONAL ASSOCIATION, as Tender Agent Authorized Signatory A-2-7 (FORM OF ASSIGNMENT) For value received, the undersigned do(es) hereby sell, assign and transfer unto (Name, Address and Tax Identification or Social Security Number of Assignee) the within Bond and do(es) hereby irrevocably constitute and appoint attorney, to transfer the same on the registration books of the Trustee, with full power of substitution in the premises. Dated: __ _____ Signature Guaranteed: ______I__________--_- NOTICE: Signature(s) must be guaranteed NOTICE: The signature on this assignment by an eligible guarantor institution must correspond with the name(s) as written on the face of the within Bond in every particular without alteration or enlargement or any change whatsoever. A-2-8 EXHIBIT B FORM OF RESET RATE BOND No. !§- CITY OF CARLSBAD MULTIFAMILY HOUSING REVENUE BOND (MARIPOSA APARTMENTS), 2003 SERIES B INTEREST RATE: REGISTERED OWNER LAST DAY OF RESET PERIOD: RESET DATE: CUSIP: PRINCIPAL SUM: The City o CarLad, a municipal corporation, joint powers agency organized and existing under the laws of the State of California (herein called the ”Issuer”), for value received, hereby promises to pay (but only out of Revenues as hereinafter provided) to the Registered Owner identified above or registered assigns, on [MATURITY DATE] (subject to any right of prior redemption hereinafter mentioned), the principal sum identified above in lawful money of the United States of America; and to pay interest thereon in like lawful money, until payment of such Principal Sum, at the rate of [RATE]% per annum, on June 1 and December 1 of each year, commencing December 1, 2003 (each such date herein called an ”Interest Payment Date”) to and including [DATE] and thereafter at the rate and times as provided in the Indenture referred to herein. The principal or redemption price hereof is payable by check only upon presentation and surrender hereof at the corporate trust office of Wells Fargo Bank, National Association, or such other place as designated by the Trustee (herein called the ”Trustee”), in Los Angeles, California, and interest shall be paid by check, mailed on the Interest Payment Date by first- class mail, postage prepaid, to the registered owner of this Bond on the applicable Record Date (as hereinafter defined), at the address of such registered owner shown on the registration books of the Trustee, except that such interest payments may be made by wire transfer to any registered owner of $1,000,000 or more in aggregate principal amount of the Bonds who shall have designated in writing to the Trustee an account for such payments at least fifteen days before the Record Date therefor. This Bond is one of a duly authorized issue of bonds of the Issuer designated as ”City of Carlsbad Multifamily Housing Revenue Bonds (Mariposa Apartments) 2003 Series B” (herein called the “Bonds”), in the initial aggregate principal amount of $[AMOUNT] authorized to be issued pursuant to Chapter 7 of Part 5 of Division 31 of the California Health and Safety Code (the ”Housing Law”), and issued under and secured by an Trust Indenture, dated as of June 1, 2003 (herein called the ”Indenture”), between the Issuer and the Trustee. Reference is hereby made to the Indenture and all indentures supplemental thereto for a description of the rights thereunder of the owners of the Bonds, of the nature and extent of the security, of the rights, duties and immunities of the Trustee and of the rights and obligations of the Issuer thereunder, B-1 to all of the provisions of which Indenture the registered owner of this Bond, by acceptance hereof, assents and agrees. This Bond shall bear interest from the date to which interest has been paid next preceding the date of registration of this Bond (unless this Bond is registered as of an Interest Payment Date for which interest has been paid, or after the Record Date in respect thereof, in which event it shall bear interest from such Interest Payment Date, or unless it is registered on or before the Record Date for the first Interest Payment Date, in which event it shall bear interest from the date of the first authentication and delivery of the Bonds). The term "Record Date" means the fifteenth day of the month prior to an Interest Payment Date (whether or not a Business Day). THE BONDS ARE NOT AN OBLIGATION, EITHER GENERAL OR SPECIAL, AND DO NOT CONSTITUTE A PLEDGE OF THE GENERAL CREDIT OR TAXING POWER (AS APPLICABLE), OF THE CITY OF CARLSBAD, THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION THEREOF, BUT ARE PAYABLE SOLELY FROM THE REVENUES AND PROPERTY PLEDGED THEREFOR IN THE INDENTURE, AND NEITHER THE CITY OF CARLSBAD, THE STATE OF CALIFORNIA NOR ANY SUCH POLITICAL SUBDIVISION THEREOF SHALL BE LIABLE THEREON. THE ISSUER HAS NO TAXING POWER. The Bonds are limited obligations of the Issuer and, as and to the extent set forth in the Indenture, are payable solely from, and secured by a pledge of and lien on, the Revenues (as that term is defined in the Indenture), consisting primarily of amounts drawn under an irrevocable direct-pay letter of credit issued by (the "Credit Bank"), for the account of CIC Calavera, L.P., a California limited partnership (the "Borrower"), in favor of the Trustee concurrently with the issuance of the Bonds, or any qualified letter of credit or other credit instrument issued in substitution therefor (such letter of credit or substitute being referred to herein as the "Letter of Credit"), or under the circumstances provided in the Indenture under an irrevocable standby letter of credit (the "Standby Letter of Credit") issued by the Federal Home Loan Bank of Cincinnati. The Bonds are being issued in order to provide funds to make a loan (the "Loan") to the Borrower pursuant to a Financing Agreement, dated as of June 1, 2003 (the "Financing Agreement"), among the Issuer, the Trustee and the Borrower, for the acquisition, construction and development by the Borrower of a mulbfamily rental housing development (the "Project") located within the City of Carlsbad, California. All Bonds shall be purchased on the day after the last day of a Reset Period set forth on the face of this Bond at a Purchase Price equal to the principal amount thereof plus interest accrued thereon, if any, to the date of purchase upon delivery to , or its successor as Tender Agent (the "Tender Agent"), at its principal office in New York, New York of such Bond (with an appropriate transfer or registration form executed in blank and in form satisfactory to the Tender Agent) and, in the case of a Bond or units of principal amount thereof to be purchased prior to the Interest Payment Date and after the Record Date in respect thereof, a due-bill, in form satisfactory to the Tender Agent, for interest due on such Interest Payment Date. Any Bond not so tendered shall be deemed tendered under and in accordance with the Indenture. Payment of the Purchase price of any Bond so delivered shall be made by check or wire transfer as provided in the Indenture, as designated by the Bondowner, but only upon delivery and surrender of such Bond and due-bill, if any, to the Tender Agent. No Bonds shall be so purchased if a Event of Default under the Indenture (other than certain specified covenant defaults as described in the Indenture) shall have occurred be continuing, or if all of the Bonds shall have been called for redemption. B-2 At the end of the Reset Period, the rate of interest on the Bonds will be established at a new Reset Rate for a new Reset Period or at a Variable Rate or Fixed Rate. The Trustee shall give to the owners of the Bonds, in the same manner that notices of redemption are given, notice of the establishment of a Reset Rate or Fixed Rate not less than 15 days before any Reset Date or Conversion Date, speclfylng the information set forth in the Indenture. If this Bond is not tendered for purchase before the Reset Date or Conversion Date it will be deemed to have been so tendered and shall be purchased on the Reset Date or Conversion Date, at a price equal to the principal amount hereof plus interest accrued to such date. The Bonds shall be subject to optional and mandatory redemption subject to the terms and conditions set forth in the Indenture. Notice of redemption of Bonds shall be given by the Trustee to the registered owners thereof by first-class mail, as provided in the Indenture, not more than 30 days and not less than 10 days or, in the case of redemption following an acceleration of the Loan or expiration of the Letter of Credit, not more nor less than five days before the date fixed for redemption. If this Bond is called for redemption and payment is duly provided therefor as specified in the Indenture, interest hereon shall cease to accrue from and after the date fixed for redemption. If an Event of Default (as defined in the Indenture) shall occur, the principal of all Bonds may be declared due and payable upon the conditions, in the manner and with the effect provided in the Indenture. The Indenture provides that in certain events such declaration and its consequences may be rescinded by the registered owners of at least a majority in aggregate principal amount of the Bonds then Outstanding. The Bonds are issuable only as fully registered Bonds without coupons in denominations of $5,000 or any integral multiple of $5,000 in excess thereof. Subject to the limitations and upon payment of the charges, if any, provided in the Indenture, Bonds may be exchanged at the principal corporate trust office of the Trustee for a like aggregate principal amount of Bonds of the same series of other authorized denominations. This Bond is transferable by the registered owner hereof, in person, or by its attorney duly authorized in writing, at the principal corporate trust office of the Trustee, 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. Upon such transfer a new fully registered Bond or Bonds, of the same series and of authorized denomination or denominations, for the same aggregate principal amount, will be issued to the transferee in exchange herefor. The Trustee shall not be required to register the transfer or exchange of any Bond within 15 days of the selection of Bonds for redemption or if selected for redemption. The Issuer and the Trustee may treat the registered owner hereof as the absolute owner hereof for all purposes, and the Issuer and the Trustee shall not be affected by any notice to the contrary. The Indenture contains provisions permitting the Issuer and the Trustee to execute supplemental indentures adding provisions to, or changing or eliminating any of the provisions of, the Indenture, subject to the limitations set forth in the Indenture. Additional bonds on a parity with the Bonds may be issued pursuant to the terms of the Indenture. No officer, agent or employee of the Issuer, and no officer, official, agent or employee of the State of California, nor any person executing this Bond, shall in any event be subject to any personal liability or accountability by reason of the issuance of the Bonds. The Bonds are not a debt, nor a pledge of the faith and credit, of the State of California, nor any of its political subdivisions and neither are they liable on the Bonds, nor are the Bonds payable out of any B-3 funds or properties other than those of the Issuer pledged for the payment thereof. The Bonds do not constitute an indebtedness within the meaning of any constitutional or statutory debt limitation. The Issuer hereby certifies that all of the conditions, things and acts required to exist, to have happened and to have been performed precedent to and in the issuance of this Bond do exist, have happened and have been performed in due time, form and manner as required by the Constitution and statutes of the State of California and that the amount of this Bond, together with all other indebtedness of the Issuer, does not exceed any limit prescribed by the Constitution or statutes of the State of California. This Bond shall not be entitled to any benefit under the Indenture, or become valid or obligatory for any purpose, until the certificate of authentication hereon endorsed shall have been manually signed by the Trustee. B-4 IN WITNESS WHEREOF, the City of Carlsbad has caused this Bond to be executed on , and attested to by the facsimile its behalf by the facsimile signature of its signature of its Secretary, all as of the Issue Date set forth above. CITY OF CARLSBAD Attest: City Clerk B-5 [FORM OF CERTIFICATE OF AUTHENTICATION] This is one of the Bonds described in the within-mentioned Indenture. Dated: -____-___ WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee Authorized Signatory BY WELLS FARGO BANK, NATIONAL ASSOCIATION, as Tender Agent Authorized Signatory BY B-6 (FORM OF ASSIGNMENT) For value received, the undersigned do(es) hereby sell, assign and transfer unto (Name, Address and Tax Identification or Social Security Number of Assignee) the within Bond and do(es) hereby irrevocably constitute and appoint attorney, to transfer the same on the registration books of the Trustee, with full power of substitution in the premises. Dated: -~__-__ Signature Guaranteed: ___ ____ I__-___-- NOTICE: Signature(s) must be guaranteed NOTICE: The signature on this assignment by an eligible guarantor institution must correspond with the name@) as written on the face of the within Bond in every particular without alteration or enlargement or any change whatsoever. B-7 EXHIBIT C FORM OF FIXED RATE BOND No. $- CITY OF CARLSBAD MULTIFAMILY HOUSING REVENUE BOND (MARIPOSA APARTMENTS), 2003 SERIES B MATURITY DATE: CONVERSION DATE: CUSIP: INTEREST RATE: 1, - REGISTERED OWNER PRINCIPAL SUM: The City of Carlsbad, a municipal corporation organized and existing under the laws of the State of California (herein called the "Issuer"), for value received, hereby promises to pay (but only out of Revenues as hereinafter provided) to the registered owner identified above or registered assigns, on 1, - (subject to any right of prior redemption hereinafter mentioned), the Principal Sum identified above in lawful money of the United States of America; and to pay interest thereon in like lawful money, until payment of such Principal Sum, at the rate of percent ( YO) per annum, on June 1 and December 1 of each year, commencing December 1,2003 (each such date herein called an "Interest Payment Date"). The principal or redemption price hereof is payable by check only upon presentation and surrender hereof at the corporate trust office of Wells Fargo Bank, National Association (herein called the "Trustee"), or such other place as designated by the Trustee, and interest shall be paid by check, mailed on the Interest Payment Date by first-class mail, postage prepaid, to the registered owner of this Bond on or before the Record Date (as hereinafter defined), at the address of such registered owner shown on the registration books of the Trustee, except that such interest payments may be made by wire transfer to any registered owner of $1,000,000 or more in aggregate principal amount of the Bonds who shall have designated in writing to the Trustee an account for such payments at least fifteen days before the Record Date therefor. This Bond is one of a duly authorized issue of bonds of the Issuer designated as "City of Carlsbad Multifamily Housing Revenue Bonds (Mariposa Apartments) 2003 Series A (herein called the "Bonds"), in the initial aggregate principal amount of $[AMOUNT] authorized to be issued pursuant to Chapter 7 of Part 5 of Division 31 of the California Health and Safety Code (the "Act"), as amended (the "Housing Law"), and issued under and secured by an Trust Indenture, dated as of June 1, 2003 (herein called the "Indenture"), between the Issuer and the Trustee. Reference is hereby made to the Indenture and all indentures supplemental thereto for a description of the rights thereunder of the registered owners of the Bonds, of the nature and extent of the security, of the rights, duties and immunities of the Trustee and of the rights and obligations of the Issuer thereunder, to all of the provisions of which Indenture the registered owners of this Bond, by acceptance hereof, assents and agrees. c-1 This Bond shall bear interest from the date to which interest has been paid next preceding the date of registration of this Bond (unless this Bond is registered as of an Interest Payment Date for which interest has been paid, or after the Record Date in respect thereof, in which event it shall bear interest from such Interest Payment Date, or unless it is registered on or before the Record Date for the first Interest Payment Date, in which event it shall bear interest from the date of the first authentication and delivery of the Bonds). The term ”Record Date” means the fifteenth day of the month (whether or not a Business Day) prior to an Interest Payment Date. THE BONDS ARE NOT AN OBLIGATION, EITHER GENERAL OR SPECIAL, AND DO NOT CONSTITUTE A PLEDGE OF THE GENERAL CREDIT OR TAXING POWER (AS APPLICABLE), OF THE CITY OF CARLSBAD, THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION THEREOF, BUT ARE PAYABLE SOLELY FROM THE REVENUES AND PROPERTY PLEDGED THEREFOR IN THE INDENTURE, AND NEITHER THE CITY OF CARLSBAD, THE STATE OF CALIFORNIA NOR ANY SUCH POLITICAL SUBDIVISION THEREOF SHALL BE LIABLE THEREON. THE ISSUER HAS NO TAXING POWER. The Bonds are limited obligations of the Issuer and, as and to the extent set forth in the Indenture, are payable solely from, and secured by a pledge of and lien on, the Revenues (as that term is defined in the Indenture), consisting primarily of amounts drawn under an irrevocable direct-pay letter of credit issued by (the ”Credit Bank”), for the account of CIC Calavera, L.P., a California limited partnership (the “Borrower”), in favor of the Trustee concurrently with the issuance of the Bonds, or any qualified letter of credit or other credit instrument issued in substitution therefor (such letter of credit or substitute being referred to herein as the ”Letter of Credit”). The Bonds are being issued in order to provide funds to make a loan (the ”Loan”) to the Borrower pursuant to a Financing Agreement, dated as of June 1,2003 (the ”Financing Agreement”), among the Issuer, the Trustee and the Borrower, for the acquisition, construction and development by the Borrower of a multifamily rental housing development (the ”Project”) located within the City of Carlsbad, California. The Bonds shall be subject to optional and mandatory redemption subject to the terms and conditions set forth in the Indenture. Notice of redemption of Bonds shall be given by the Trustee to the registered owners thereof by first-class mail, as provided in the Indenture, not more than 30 days and not less than 10 days or, in the case of redemption following an acceleration of the Loan, not more nor less than five days before the date fixed for redemption. If this Bond is called for redemption and payment is duly provided therefor as specified in the Indenture, interest hereon shall cease to accrue from and after the date fixed for redemption. If an Event of Default (as defined in the Indenture) shall occur, the principal of all Bonds may be declared due and payable upon the conditions, in the manner and with the effect provided in the Indenture. The Indenture provides that in certain events such declaration and its consequences may be rescinded by the registered owners of at least a majority in aggregate principal amount of the Bonds then Outstanding. The Bonds are issuable only as fully registered Bonds without coupons in denominations of $5,000 or any integral multiple thereof. Subject to the limitations and upon payment of the charges, if any, provided in the Indenture, Bonds may be exchanged at the principal corporate trust office of the Trustee for a like aggregate principal amount of Bonds of the same series of other authorized denominations. c-2 This Bond is transferable by the registered owner hereof, in person, or by its attorney duly authorized in writing, at the principal corporate trust office of the Trustee, 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. Upon such transfer a new fully registered Bond or Bonds, of the same series and of authorized denomination or denominations, for the same aggregate principal amount, will be issued to the transferee in exchange herefor. The Trustee shall not be required to register the transfer or exchange of any Bond within 15 days of the selection of Bonds for redemption or if selected for redemption. The Issuer and the Trustee may treat the registered owner hereof as the absolute owner hereof for all purposes, and the Issuer and the Trustee shall not be affected by any notice to the contrary. The Indenture contains provisions permitting the Issuer and the Trustee to execute supplemental indentures adding provisions to, or changing or eliminating any of the provisions of, the Indenture, subject to the limitations set forth in the Indenture. Additional bonds on a parity with the Bonds may be issued pursuant to the terms of the Indenture. No officer, agent or employee of the Issuer, and no officer, official, agent or employee of the State of California, nor any person executing this Bond, shall in any event be subject to any personal liability or accountability by reason of the issuance of the Bonds. The Bonds are not a debt, nor a pledge of the faith and credit, of the State of California, nor any of its political subdivisions and neither are they liable on the Bonds, nor are the Bonds payable out of any funds or properties other than those of the Issuer pledged for the payment thereof. The Bonds do not constitute an indebtedness within the meaning of any constitutional or statutory debt limitation. The Issuer hereby certifies that all of the conditions, things and acts required to exist, to have happened and to have been performed precedent to and in the issuance of this Bond do exist, have happened and have been performed in due time, form and manner as required by the Constitution and statutes of the State of California and that the amount of this Bond, together with all other indebtedness of the Issuer, does not exceed any limit prescribed by the Constitution or statutes of the State of California. This Bond shall not be entitled to any benefit under the Indenture, or become valid or obligatory for any purpose, until the certificate of authentication hereon endorsed shall have been manually signed by the Trustee. c-3 IN WITNESS WHEREOF, the City of Carlsbad has caused this Bond to be executed on , and attested to by the facsimile its behalf by the facsimile signature of its signature of its City Clerk, all as of the Issue Date set forth above. CITY OF CARLSBAD Attest : City Clerk c-4 [FORM OF CERTIFICATE OF AUTHENTICATION] This is one of the Bonds described in the within-mentioned Indenture. Dated: ___I_ ________ c-5 WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee Authorized Signatory BY (FORM OF ASSIGNMENT) For value received, the undersigned do(es) hereby sell, assign and transfer unto (Name, Address and Tax Identification or Social Security Number of Assignee) the within Bond and do(es) hereby irrevocably constitute and appoint attorney, to transfer the same on the registration books of the Trustee, with full power of substitution in the premises. Dated: _____ ~ Signature Guaranteed: ---I---- ~-___-- -----I NOTICE: Signature(s) must be guaranteed NOTICE: The signature on this assignment by an eligible guarantor institution must correspond with the name(s) as written on the face of the within Bond in every particular without alteration or enlargement or any change whatsoever. C-6 EXHIBIT D-1 FORM OF TENDER NOTICE-DAILY MODE Notice of Demand for Purchase To: Red Capital Markets, Inc., as Remarketing Agent Wells Fargo Bank, National Association, as Tender Agent Wells Fargo Bank, National Association, as Trustee The undersigned is the registered owner (or, if the referenced bonds are then held in book-entry form, the beneficial owner) of City of Carlsbad Variable Rate Demand Multifamily Housing Revenue Bond(s) (Mariposa Apartments) 2003 Series B No(s). , CUSP No. (the "Bonds"). The undersigned hereby irrevocably and unconditionally elects to tender the Bonds on the date hereof for payment of $ aggregate principal amount of the Bonds and accrued interest thereon to the date of payment (the "Purchase Price"). If the Bonds are held through the facilities of the Depository Trust Company ("DTC"), the undersigned certifies that it has delivered or caused to be delivered to DTC a "Same Day Funds Settlement Order" prior to 1O:OO a.m., New York City time, on the date hereof. Payment of the Purchase Price shall be made in the following manner: Check and complete (a) or (b): (a) By check mailed to the undersigned at the following address: (b) By wire transfer of immediately available funds to Account No. bank: at the following The Bonds shall be tendered to the Tender Agent, at its address set forth above, with a duly executed instrument of transfer in the fom set forth on the Bonds, with signature guaranteed in a manner satisfactory to the Tender Agent, at or prior to 1O:OO a.m., New York City time, on the date hereof, and if the Bonds are not delivered by such time, the undersigned shall not be entitled to payment of the Purchase Price therefor. The Bonds shall conform in all respects to the description thereof in this Notice. The undersigned hereby authorizes and directs the Remarketing Agent indicated above, to arrange for the sale of all or any part of the Bonds at not less than par plus accrued interest to the date hereof. If the date hereof is within two Business Days before any Interest Payment Date, as defined in the Indenture, accompanying this notice is a due-bill for interest due on the Bonds on such date. D-1-7 This notice shall not be effective unless, simultaneously with the delivery hereof to the Tender Agent, a copy hereof is sent to the Trustee and the Remarketing Agent by facsimile transmission prior to 1O:OO a.m., New York City he, on the date hereof. Dated: (Name of Registered/Beneficial Owner) Authorized Signature Address of Trustee: D-1-2 EXHIBIT D-2 FORM OF TENDER NOTICE-WEEKLY MODE Notice of Demand for Purchase To: Red Capital Markets, Inc., as Remarketing Agent Wells Fargo Bank, National Association, as Tender Agent Wells Fargo Bank, National Association, as Trustee The undersigned is the registered owner of City of Carlsbad Variable Rate Demand Mulbfamily Housing Revenue Bond(s) (Mariposa Apartments) 2003 Series B No@). The undersigned hereby irrevocably demands payment of $[AMOUNT] aggregate principal amount of the Bonds and accrued interest thereon to the date of payment (the "Purchase Price"). Payment of the Purchase Price shall be made in the following manner: (the "Bonds"). Check and complete (a) or (b): (a) By check mailed to the undersigned at the following address: (b) By wire transfer of immediately available funds to Account No. bank: at the following Payment shall occur on (the "Demand Date"), which shall be a Business Day not prior to the seventh calendar day after (but not including) the date of receipt of this notice by the addressee hereof, as Tender Agent (the "Tender Agent") or, if such seventh calendar day is not a Business Day (as defined in the Indenture pursuant to which the Bonds were issued), the Business Day next succeeding such day. Delivery hereof shall be made in person or by registered mail, return receipt requested, to the address set forth above and shall occur upon receipt hereof by the Tender Agent on a Business Day. The Bonds shall be tendered to the Tender Agent, at its address set forth above, with a duly executed instrument of transfer in the form set forth on the Bonds, with signature guaranteed in a manner satisfactory to the Tender Agent, at or prior to 9:30 a.m., New York City time, on the Demand Date, and if the Bonds are not delivered by such time, the undersigned shall not be entitled to payment of the Purchase Price therefor. The Bonds shall conform in all respects to the description thereof in this Notice. The undersigned hereby authorizes and directs the Remarketing Agent indicated above, to arrange for the sale of all or any part of the Bonds at not less than par plus accrued interest to the Demand Date. If the Demand Date is within two Business Days before any Interest Payment Date, as defined in the Indenture, accompanying this notice is a due-bill for interest due on the Bonds on such date. D-2-1 This notice shall not be effective unless, simultaneously with the delivery hereof to the Tender Agent, a copy hereof is sent to the Trustee and the Remarketing Agent at the address set forth below. Dated: (Name of Registered/Beneficial Owner) Authorized Signature Address of Trustee: D-2-2 EXHIBIT E FORM OF INVESTOR LETTER [date of transfer] City of Carlsbad Carlsbad, California Wells Fargo Bank, National Association City of Carlsbad Multifamily Housing Revenue Bonds (Mariposa Apartments) 2003 Series B Ladies and Gentlemen: The undersigned (the ”Investor”) hereby acknowledges receipt, [as transferee from the previous owner thereof,] of the above-referenced bonds (the ”Bonds”), dated and bearing interest from the date thereof, in fully registered form and in the aggregate principal amount of $[AMOUNT] , constituting [all 04 the Bonds currently outstanding. The undersigned acknowledges that the Bonds were issued for the purpose of making a mortgage loan to assist in the financing of the acquisition and construction of a certain multifamily rental housing development located in Carlsbad, California (the ”Project”), as more particularly described in that certain Financing Agreement, dated as of June 1, 2003 (the ”Financing Agreement”), by and between the City of Carlsbad (the ”Issuer”) and CIC Calavera, L.P., a California limited partnership, (the ”Borrower”). The undersigned further acknowledges that the Bonds are secured by an Indenture dated as of June 1, 2003 (the ”Indenture”), between the Issuer and the , as Trustee, which creates a security interest in Revenues for the benefit of the holders and owners of the Bonds. In connection with the sale of the Bonds to the Investor, the Investor hereby makes the following representations upon which you may rely: 1. The Investor has authority to purchase the Bonds and to execute this letter and any other instruments and documents required to be executed by the Investor in connection with the purchase of the Bonds. 2. The Investor is a ”qualified institutional buyer” under Rule 144(a) of said Act, and, therefore, has sufficient knowledge and experience in financial and business matters, including purchase and ownership of municipal obligations, to be able to, and is able to, evaluate the risks and merits of the investment represented by the Bonds. The Bonds are being acquired by the Investor for investment and not with a view to, or for resale in connection with, any distribution of the Bonds, and the Investor intends to hold the Bonds for its own account and for an indefinite period of time, and does not intend at this time to dispose of all or any part of the Bonds. The Investor understands that it may need to bear the risks of this investment for an indefinite time, since any sale prior to maturity may not be possible. 3. E-1 4. The Investor understands that the Bonds are not registered under the 1933 Act and that such registration is not legally required as of the date hereof; and further understands that the Bonds (a) are not being registered or otherwise qualified for sale under the "Blue Sky" laws and regulations of any state, (b) will not be listed in any stock or other securities exchange, (c) will not carry a rating from any rating service and (d) will be delivered in a form which may not be readily marketable. The Investor understands that (a) the Bonds are not secured by any pledge of any moneys received or to be received from taxation by the State of California or any political subdivision thereof and that the Issuer has no taxing power, (b) the Bonds do not and will not represent or constitute a general obligation or a pledge of the faith and credit of the Issuer, the State of California or any political subdivision thereof; and (c) the liability of the Issuer with respect to the Bonds is limited to the Revenues as set forth in the Indenture. The Investor acknowledges that its has either been supplied with or been given access to information, including financial statements and other financial information, to which a reasonable investor would attach sigruficance in making investment decisions, and the Investor has had the opportunity to ask questions and receive answers from knowledgeable individuals concerning the Borrower, the Project and the Bonds and the security therefor so that, as a reasonable investor, the Investor has been able to make our decision to purchase the Bonds. The Investor acknowledges that it has not relied upon the Issuer for any information in connection with the Investor's purchase of the Bonds. 5. 6. 7. The Investor has made its own inquiry and analysis with respect to the Bonds and the security therefor, and other material factors affecting the security and payment of the Bonds. The Investor is aware that the business of the Borrower involves certain economic variables and risks that could adversely affect the security for the Bonds. 8. The Investor acknowledges that it has the right to sell and transfer the Bonds, subject to the delivery to the Trustee of an investor's letter from the transferee to the same effect as this Investor's Letter, with no revisions except as may be approved in writing by the Issuer. Failure to deliver such investor's letter shall cause the purported transfer to be null and void. The Investor agrees to indemrufy and hold harmless the Issuer with respect to any claim asserted against the Issuer that is based upon our sale, transfer or other disposition of the Bonds in violation of the provisions hereof, other than any claim that is based upon the willful misconduct of the Issuer. Capitalized terms used herein and not otherwise defined have the meanings given such terms in the Indenture. Very truly yours, [NAME OF INVESTOR] By: Name: Title: E-2 a 3-3 13061-10 JH:TAD:arm 5 / 21 03D 5-a043 TRUST INDENTURE Between CITY OF CARLSBAD, as Issuer and WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee relating to $5,185,000 City of Carlsbad Multifamily Housing Revenue Bonds (Mariposa Apartments) 2003 Series A Dated as of June 1,2003 TABLE OF CONTENTS Section 1.1. Section 1.2. Section 1.3. Section 1.4. Section 1.5. Section 2.1. Section 2.2. Section 2.3. Section 2.4. Section 2.5. Section 2.6. Section 2.7. Section 2.8. Section 2.9. Section 2.10. Section 2.11. Section 2.12. Section 2.13. Section 2.14. Section 2.15. Section 2.16. Section 2.17 Section 3.1. Section 3.2. Section 3.3. Section 3.4. Section 3.5. Section 3.6. Section 3.7. Section 3.8. Section 3.9. Section 4.1. Section 4.2. Section 4.3. Section 4.4. Section 4.5. Section 4.6. Section 4.7. Section 4.8. Section 4.9. Section 4.10. Section 4.10. ARTICLE 1 INCORPORATION OF RECITALS; DEFINITIONS; INTERPRETATION Incorporation of Recitals ............................................................................................................ 5 Definitions; Terms Defined In Financing Agreement ........................................................... 5 Rules of Construction ................................................................................................................ 19 Content of Certificates and Opinions ..................................................................................... 20 Effective Date .............................................................................................................................. 20 ARTICLE 2 THE BONDS Authorized Amount of Bonds ................................................................................................. 21 Issuance of Bonds ...................................................................................................................... 21 Registered Bonds; Authorized Denomination; Numbering .............................................. 21 Security is Sole Source for Payments of Principal and Interest ........................................ 21 Ratably Secured .......................................................................................................................... 21 Terms of Bonds ........................................................................................................................... 21 Form of Bonds ............................................................................................................................ 23 Temporary Bonds ...................................................................................................................... 23 Execution ..................................................................................................................................... 24 Authentication ............................................................................................................................ 24 Mutilated. Lost. Stolen or Destroyed Bonds ......................................................................... 24 Book-Entry System .................................................................................................................... 24 Bond Registrar; Exchange and Transfer of Bonds; Persons Treated as the Bondholders ................................................................................................................................. 26 Cancellation ................................................................................................................................ 27 Conditions for Conversion ....................................................................................................... 27 [Reserved] ................................................................................................................................... 28 Remarketing of Bonds ................................................................................................................ 28 ARTICLE 3 REDEMPTION OF BONDS Redemption ................................................................................................................................. 38 Optional Redemption ................................................................................................................ 38 Special Mandatory Redemption ............................................................................................. 39 Mandatory Sinking Fund Redemption .................................................................................. 40 Redemption Payments .............................................................................................................. 43 Purchase of Bonds In Lieu of Redemption ........................................................................... 44 Cancellation of Bonds ............................................................................................................... 45 Notice of Redemption ............................................................................................................... 41 Selection of Bonds to be Redeemed Upon Partial Redemption of Bonds ....................... 44 ARTICLE 4 FUNDS AND ACCOUNTS Creation of Funds and Accounts ............................................................................................ 46 [Reserved] ................................................................................................................................... 46 [Reserved] ..................................................................................................................................... 46 The Revenue Fund General Account ..................................................................................... 46 The Revenue Fund - Redemption Account ........................................................................... 48 The Revenue Fund - Credit Facility Account ....................................................................... 48 The Revenue Fund - Fees Account ......................................................................................... 49 [Reserved] ..................................................................................................................................... 49 The Rebate Fund ........................................................................................................................ 49 Bond Purchase Fund ................................................................................................................. 50 Certain Moneys to be Applied at the Direction of the Credit Provider .......................... 51 Section 4.11. Section 4.12. Section 4.13. Section 4.14. Section 5.1. Section 5.2. Section 6.1. Section 6.2. Section 6.3. Section 6.4. Section 6.5. Section 6.6. Section 6.7. Section 6.8. Section 6.9. Section 6.10. Section 6.11. Section 6.12. Section 7.1. Section 7.2. Section 7.3. Section 7.4. Section 7.5. Section 7.6. Section 7.7. Section 7.8. Section 7.9. Section 8.1. Section 8.2. Section 8.3. Section 9.1. Section 9.2. Section 9.3. Section 9.4. Section 9.5. Section 9.6. Section 9.7. Section 9.8. Section 9.9. Records ........................................................................................................................................ 51 Reports By the T~stee .............................................................................................................. 51 Nonpresentment of Bonds ....................................................................................................... 52 Moneys Held for Particular Bonds ......................................................................................... 52 ARTICLE 5 INVESTMENTS Investment Limitations ............................................................................................................. 53 Trustee's Authority and Responsibilities .............................................................................. 53 ARTICLE 6 SECURITY Security; Pledge of Trust Estate; Compliance with Law .................................................... 54 Issuer's Negative Covenants .................................................................................................... 54 Enforcement ................................................................................................................................ 55 Preservation of Revenues ......................................................................................................... 56 Request and Indemnification ................................................................................................... 56 Possession of the Mortgage Note and Security Instrument .............................................. 56 No Disposition of Mortgage Loan. Mortgage Note or Security Instrument; Excepted Assignments; Amendment; Substitution .............................................................. 56 Books. Records and Accounts ................................................................................................. 57 Maintenance of Lien on Trust Estate ...................................................................................... 58 Compliance with Rating Agency Requests ........................................................................... 58 Tax Covenants ............................................................................................................................ 58 Limitations on Liability ............................................................................................................ 55 ARTICLE 7 THE CREDIT FACILITY Acceptance of the Credit Facility ............................................................................................ 60 No Disposition of Credit Facility ............................................................................................ 60 Replacement Credit Facility ..................................................................................................... 60 Advances Under the Credit Facility ....................................................................................... 60 Enforcement of Credit Facility ................................................................................................ 60 Certain Notices to the Credit Provider .................................................................................. 61 Certain Rights of the Credit Provider .................................................................................... 61 Limitations on Rights of Credit Provider .............................................................................. 61 References to Credit Provider When No Credit Facility Is In Effect ................................ 61 ARTICLE 8 DISCHARGE OF LIEN Discharge of Lien and Security Interest ................................................................................. 63 Payment of Outstanding Amounts ........................................................................................ 63 Defeasance ................................................................................................................................... 64 ARTICLE 9 DEFAULT PROVISIONS AND REMEDIES Events of Default; Preliminary Notice ................................................................................... 66 Remedies; Rights of Bondholders ........................................................................................... 67 Other Remedies .......................................................................................................................... 67 Preservation of Security and Remedies if Wrongful Dishonor Occurs; Rights of Bondholders ................................................................................................................................. 68 Remedies Not Exclusive ........................................................................................................... 68 Waiver .......................................................................................................................................... 68 Limited Effect of Waiver .......................................................................................................... 69 Delay or Omission ..................................................................................................................... 69 Rights of the Credit Provider and the Bondholders To Direct Proceedings; Rights and Limitations Applicable to Bondholders, Issuer and Trustee ...................................... 69 Section 9.10. Section 9.11. Section 9.12. Section 10.1. Section 10.2. Section 10.3. Section 10.4. Section 10.5. Section 10.6. Section 10.7. Section 10.8. Section 10.9. Section 10.10. Section 10.11. Section 10.12. Section 10.13. Section 10.14. Section 10.15. Section 11.1. Section 11.2. Section 11.3. Section 11.4. Section 11.5. Section 11.6. Section 11.7. Section 11.8. Section 11.9. Section 12.1. Section 12.2. Section 12.3. Section 12.4. Section 12.5. Section 12.6. Section 12.7. Section 12.8. Section 12.9. Section 12.10. Section 12.11 EXHBBIT A Discontinuance of Proceedings ............................................................................................... 70 Action by Trustee ....................................................................................................................... 70 Application of Moneys ............................................................................................................. 70 ARTICLE 10 THE TRUSTEE Appointment of Trustee; Duties ............................................................................................. 73 Quantification ............................................................................................................................. 76 Fees; Expenses ............................................................................................................................ 76 Merger; Consolidation .............................................................................................................. 76 Intervention in Litigation ......................................................................................................... 76 Resignation of Trustee .............................................................................................................. 76 Removal of Trustee .................................................................................................................... 77 Appointment of Successor Trustee ......................................................................................... 77 Qualifications of Successor Trustee ........................................................................................ 77 Transfer of Rights and Property to Successor Trustee ........................................................ 77 Instruments of Bondholders .................................................................................................... 78 Power To Appoint Co-Trustees and Separate Trustees ..................................................... 78 Filing of Financing Statements ................................................................................................ 80 Servicing the Mortgage Loan .................................................................................................. 80 Disclosure Agreement ............................................................................................................... 80 ARTICLE 11 SUPPLEMENTAL INDENTURES; AMENDMENTS Supplemental Indentures Not Requiring Bondholder Consent ....................................... 81 Supplemental Indentures Requiring Bondholder Consent ............................................... 82 Amendments to Financing Agreement Not Requiring Bondholder Consent ................ 83 Amendments to Financing Agreement Requiring Bondholder Consent ........................ 84 Amendments, Changes and Modifications to the Credit Facility and the Regulatory Agreement ............................................................................................................... 84 Notice to and Consent of Bondholders .................................................................................. 85 Required Approvals .................................................................................................................. 85 Opinions of Counsel .................................................................................................................. 85 Notation of Modification on Bonds; Preparation of New Bonds ..................................... 85 ARTICLE 12 MISCELLANEOUS Consents. Etc., of Bondholders ................................................................................................ 87 Limitation of Rights ................................................................................................................... 87 Severability ................................................................................................................................. 87 Notices ......................................................................................................................................... 87 Action Required to be taken on a Non-Business Day ......................................................... 89 Binding Effect ............................................................................................................................. 90 Governing Law .......................................................................................................................... 90 No Personal Liability; No Recourse ....................................................................................... 90 Captions ....................................................................................................................................... 91 Counterparts ............................................................................................................................... 91 Qualified Project Costs .............................................................................................................. 91 Form of Bond A-1 TRUST INDENTURE This TRUST INDENTURE, dated as of June 1, 2003 (the "Indenture"), is between the CITY OF CARLSBAD, a municipal corporation organized and existing under the laws of the State of California (together with its permitted successors and assigns, the "Issuer"), and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association organized and existing under the laws of the United State of America (together with its permitted successors and assigns, the "Trustee"). THE MEANING OF CAPITALIZED TERMS CAN BE DETERMINED BY REFERENCE TO ARTICLE I OF THIS INDENTURE. RECITALS A. The Issuer is authorized by the Act to issue revenue bonds for the purpose of financing the development of multifamily rental housing for persons of low and moderate income. B. The Borrower has (a) requested the Issuer to provide financing for the Mortgaged Property by issuing the Bonds and by using the Net Bond Proceeds to fund the Mortgage Loan and (b) agreed to secure the Mortgage Loan by placing the Security Instrument on the Mortgaged Property. C. The Issuer has determined that the issuance and sale of the Bonds and the application of the Net Bond Proceeds to fund the Mortgage Loan will facilitate the financing of the Mortgaged Property and will accomplish a valid public purpose of the Issuer. D. The Issuer has, pursuant to the Act and the Bond Resolution, authorized (a) the issuance of the Bonds in the Principal Amount for the purpose of providing financing for the Mortgaged Property, (b) the execution and delivery of this Indenture to establish the terms of the Bonds and the security for the Bonds and (c) the execution and delivery of the Financing Agreement to provide for and establish certain terms and conditions of the Mortgage Loan. E. By executing this Indenture, the Issuer is directing the deposit of the Net Bond Proceeds with the Trustee, to be used by the Trustee to fund the Mortgage Loan to the Borrower. The proceeds of the Mortgage Loan will be applied to the financing of the Mortgaged Property. F. The Issuer, the Trustee and the Borrower are concurrently entering into the Financing Agreement. G. The Mortgage Loan will be (a) made by the Issuer pursuant to and in accordance with the Financing Agreement, (b) evidenced by the Mortgage Note, (c) secured by the Security Instrument and (d) otherwise documented, evidenced and secured by the other Mortgage Loan Documents. H. Fannie Mae has issued the Fannie Mae Commitment pursuant to which it has agreed, subject to the satisfaction of certain conditions, to facilitate the financing of the Mortgaged Property by providing credit enhancement for the Mortgage Loan [and, if Conversion occurs, liquidity support for the Bonds Outstanding on each Remarketing Date so long as the Credit Facility remains in effect] pursuant to, and subject to the limitations of, the Credit Facility. 1 I. manner: The financing of the Mortgaged Property will be structured in the following (i) the Issuer will issue the Bonds under the Act and pursuant to the Bond Resolution and the Prior Indenture; (ii) the Issuer will originate the Mortgage Loan to the Borrower pursuant to the terms and provisions of the Financing Agreement, the Security Instrument and the other Mortgage Loan Documents (provided that the Credit Provider may directly enter into certain Mortgage Loan Documents); (iii) at Conversion the Mortgage Note and the Security Instrument will be executed by the Borrower in favor of the Issuer; (iv) pursuant to the Assignment, the Issuer will assign and deliver all of its right, title and interest in and to the Mortgage Loan, including the Mortgage Note, the Security Instrument and the other Mortgage Loan Documents, to the Trustee and the Credit Provider, as their interests may appear; (v) as provided in the Assignment, the Issuer will assign (a) the Mortgage Loan Payments Interest to the Trustee and (b) the Mortgage Loan Rights to the Credit Provider; (vi) the Credit Provider will deliver the Credit Facility to the Trustee to provide credit enhancement for the Mortgage Loan and liquidity support for the Bonds Outstanding on each Remarketing Date so long as the Credit Facility remains in effect; (vii) the Mortgage Loan will be funded on the Closing Date with the Net Bond Proceeds, provided that disbursements of Net Bond Proceeds will be made to the Borrower periodically, in accordance with the provisions of this Indenture; and (viii) Mortgaged Property. the proceeds of the Mortgage Loan will be applied to the financing of the J- The Bonds will be secured by, among other property comprising the Trust Estate and the security for the Bonds, the following: (a) the Mortgage Loan, (b) the Credit Provider's credit enhancement of the Mortgage Loan and liquidity support for Bonds Outstanding on each Remarketing Date so long as the Credit Facility is in effect pursuant to the Credit Facility, (c) the Net Bond Proceeds, to the extent not disbursed to the Borrower, (d) the Revenues and any other moneys received by the Trustee for the payment of the principal of and interest on the Bonds, (e) amounts otherwise on deposit in the Funds and Accounts (excluding amounts on deposit from time to time, in the Rebate Fund, the Costs of Issuance Deposit Account of the Costs of Issuance Fund and the Fees Account) and (f) Investment Income (excluding Investment Income earned on amounts on deposit in the Rebate Fund and Investment Income earned on amounts on deposit in the Costs of Issuance Deposit Account of the Costs of Issuance Fund). K. The development and operation of the Mortgaged Property will be regulated by, among other documents, the terms of the Financing Agreement and the Regulatory Agreement. L. The Issuer has determined that all things necessary to make the Bonds, when executed by the Issuer and authenticated by the Trustee and issued in accordance with this Indenture, the valid, binding and legal obligations of the Issuer and to constitute this Indenture a valid assignment and pledge of the Revenues to the payment of the principal of, premium, if 2 any, on, and interest on, the Bonds, have been duly taken, and the creation, execution and delivery of this Indenture and the creation, execution and delivery of the Bonds, subject to the terms of this Indenture, have been duly authorized by the Issuer. M. The Trustee has trust powers and the power and authority to enter into this Indenture, to accept trusts generally and to accept and execute the trust created by this Indenture; the Trustee has accepted the trust so created, and to evidence such acceptance, has joined in the execution of this Indenture. GRANT OF TRUST ESTATE On the basis of the foregoing recitals and in consideration of the premises, the acceptance by the Trustee of its obligations under this Indenture, and for other good and valuable consideration, the receipt and sufficiency of which are acknowledged, in order to secure the payment of the principal of, redemption premium, if any, and interest on, and the purchase price of, the Bonds according to their tenor and effect, to secure, on a parity basis, all obligations owed to the Credit Provider under the Credit Facility Agreement and the Mortgage Loan Documents, and to secure the performance and observance by the Issuer of the covenants expressed or implied in this Indenture and in the Bonds, the Issuer assigns and grants a security interest in and to the property described in paragraphs (i) through (v) below to the Trustee and its successors in trust, for the benefit of the Bondholders, and to the Credit Provider, and its successors and assigns, as their interests may appear, subject to the provisions of the Assignment and subject to the provisions of this Indenture permitting the application of such property for the purposes set forth in this Indenture: (i) all right, title and interest of the Issuer in and to the Financing Agreement, the Mortgage Loan, including the Mortgage Note, the Security Instrument and the other Mortgage Loan Documents, and all amendments, modifications, supplements, renewals and restatements of the foregoing, reserving, however, the Reserved Rights; (ii) all rights to receive payments on the Mortgage Note and under the other Mortgage Loan Documents, including all proceeds of insurance or condemnation awards; (iii) all right, title and interest of the Issuer in and to the Net Bond Proceeds and the accrued interest, if any, derived from the sale of the Bonds, and all Funds, Accounts and Investments under this Indenture (including, but not limited to, moneys, documents, securities, investments, instruments and general intangibles on deposit or otherwise held by the Trustee under this Indenture), including Investment Income, but excluding moneys in the Fees Account, the Rebate Fund and the Costs of Issuance Deposit Account of the Costs of Issuance Fund (including within such exclusion Investment Income retained in the Costs of Issuance Deposit Account of the Costs of Issuance Fund and Investment Income retained in the Rebate Fund); (iv) all documents, securities, instruments and general intangibles and any and all other rights and interests in property, whether tangible or intangible, from time to time by delivery or by writing of any kind conveyed, mortgaged, pledged, assigned or transferred as and for additional security under this Indenture for the Bonds by the Issuer, or by anyone on its behalf, or with its written consent, to the Trustee, which is authorized by this Indenture to receive any and all such property at any and all times, and to hold and apply the same subject to the terms of this Indenture; and (v) all of the proceeds of the foregoing, including, but not limited to, Investments and Investment Income (except as excluded in paragraph (iii) above); 3 TO HAVE AND TO HOLD all the same with all privileges and appurtenances conveyed and assigned by this Indenture, or agreed or intended to be so assigned, to the Trustee, and its successors in trust, and to the Credit Provider, and its successors and assigns, as their interests may appear, subject to the provisions of the Assignment; IN TRUST, NEVERTHELESS, upon the terms and trusts set forth in this Indenture for the equal and proportionate benefit, security and protection (subject to the terms of this Indenture) of (a) all Registered Owners of the Bonds, without privilege, priority or distinction as to the lien or otherwise of any of the Bonds over any of the others of the Bonds and (b) the Credit Provider to secure the payment of all amounts owed to the Credit Provider under the Financing Agreement and the Credit Facility Agreement; PROVIDED, HOWEVER, that, as set forth in the Assignment, the Issuer has further specifically assigned the Mortgage Loan Rights exclusively to the Credit Provider and the Mortgage Loan Payments Interest exclusively to the Trustee, provided further that, as also set forth in the Assignment, the Credit Provider may direct the Trustee to assign the Trustee's interest in the Mortgage Loan, including the Mortgage Note, the Security Instrument, the other Mortgage Loan Documents and, under certain circumstances, the Financing Agreement, to the Credit Provider, subject to reassignment to the Trustee; PROVIDED FURTHER, HOWEVER, that if the Issuer or its successors or assigns shall pay or cause to be paid to the Registered Owners of the Bonds the principal, redemption premium, if any, and interest to become due on the Bonds at the times and in the manner provided in this Indenture, and if no amount shall be owing by the Borrower to the Issuer or the Trustee under the Financing Agreement or to the Credit Provider under the Credit Facility Agreement, and if the Issuer shall keep, perform and observe, or cause to be kept, performed and observed, all of its covenants, warranties and agreements contained in this Indenture, this Indenture and the estate and rights granted by this Indenture shall terminate and be discharged in accordance with the terms of this Indenture, upon which the Trustee shall execute and deliver to the Issuer such instruments in writing as shall be necessary to satisfy the lien of this Indenture, and, in accordance with Article VIII, shall reconvey to the Issuer any property at the time subject to the lien of this Indenture which may then be in the Trustee's possession, except amounts held by the Trustee for the payment of principal of, redemption premium, if any, and interest on the Bonds, or moneys held in the Rebate Fund for payment to the United States Government or moneys held in the Fees Account for the payment of accrued and unpaid Third Party Fees; otherwise this Indenture shall be and remain in full force and effect, upon the trusts and subject to the covenants and conditions set forth in this Indenture; and FINALLY, all Bonds issued and secured under this Indenture are to be issued, authenticated and delivered, and all property, rights and interests, including, but not limited to, the amounts payable under the Financing Agreement and any other amounts assigned and pledged by this Indenture are to be dealt with and disposed of under, upon and subject to, the terms, conditions, stipulations, covenants, agreements, trusts, uses and purposes expressed in this Indenture, and the Issuer has agreed and covenanted, and agrees and covenants with the Trustee and with the respective owners of the Bonds as set forth in this Indenture: 4 ARTICLE 1 INCORPORATION OF RECITALS; DEFINITIONS; INTERPRETATION Section 1.1. Incorporation of Recitals. The Recitals to this Indenture are, by this reference, incorporated into and deemed a part of this Indenture. Section 1.2. Definitions; Terms Defined In Financing Ameement. - All capitalized terms used in this Indenture shall have the meanings given to those terms in this Section 1.2 or as elsewhere defined in this Indenture unless the context or use clearly indicates a different meaning. Certain capitalized terms used and not otherwise defined in this Indenture are defined in the Financing Agreement. "Account" means any Account within a Fund. "Act" means Chapter 7 of Part 5 of Division 31 of the California Health and Safety Code, as now in effect and as it may from time to time hereafter be amended and supplemented. "Act of Bankruptcy" means any proceeding instituted under the Bankruptcy Code or other applicable insolvency law by or against the Issuer. "Advance" means an advance under the Credit Facility, which may be a Scheduled Payment Advance, a Bankruptcy-Related Advance or an Extraordinary Advance, as each is defined in the Credit Facility. "Assignment" means the Assignment and Intercreditor Agreement, dated as of June 1, 2003, by and among the Issuer, the Trustee and Fannie Mae, and acknowledged, accepted and agreed to by the Borrower, as it may be amended, modified, supplemented or restated from time to time. "Authorized Attesting Officer" means the City Clerk of the Issuer, or such other officer or official of the Issuer who, in accordance with the laws of the State, the bylaws or other governing documents of the Issuer, or practice or custom, regularly attests or certifies official acts and records of the Issuer, and includes any assistant or deputy officer to the principal officer or officers exercising such responsibilities. "Authorized Borrower Representative" means any person who, at any time and from time to time, may be designated as the Borrower's authorized representative by written certificate furnished to the Issuer, the Loan Servicer, the Credit Provider and the Trustee containing the specimen signature of such person and signed on behalf of the Borrower by or on behalf of any authorized general partner of the Borrower if the Borrower is a general or limited partnership, by any authorized managing member of the Borrower if the Borrower is a limited liability company, or by any authorized officer of the Borrower if the Borrower is a corporation, which certificate may designate an alternate or alternates. The Trustee may conclusively presume that a person designated in a written certificate filed with it as an Authorized Borrower Representative is an Authorized Borrower Representative until such time as the Borrower files with it (with a copy to the Issuer, the Loan Servicer and the Credit Provider) a written certificate identrfying a different person or persons to act in such capacity. "Authorized Denomination" means $5,000 or any integral multiple of $5,000. "Authorized Officer" means the Mayor, City Manager or Finance Director of the Issuer, and any other officer or employee of the Issuer designated to perform a specified act, to sign a 5 am specified document or to act generally, on behalf of the Issuer by a written certificate furnished to the Trustee, which certificate is signed by the Mayor, City Manager or Finance Director and contains the specimen signature of such other officer or employee of the Issuer. "Available Moneys" means, as of any date of determination (a) the proceeds of the Bonds and remarketing proceeds (other than funds provided by the Borrower, any general partner of the Borrower or any guarantor of the Borrower's obligations relating to the Mortgage Loan or the Bonds, if applicable, or the Issuer), (b) moneys received by the Trustee pursuant to the Credit Facility, (c) any other amounts with respect to which the Trustee has received an Opinion of Counsel to the effect that (1) the use of such amounts to make payments on the Bonds would not violate Section 362(a) of the Bankruptcy Code or that relief from the automatic stay provisions of such Section 362(a) would be available from the bankruptcy court and (2) payments of such amounts to the Bondholders would not be avoidable as preferential payments under Section 547 of the Bankruptcy Code should the Issuer or the Borrower become a debtor in proceedings commenced under the Bankruptcy Code, and (d) Investment Income derived from the investment of moneys described in clause (a), (b) or (c). "Bankruptcy Code" means Title 11 of the United States Code, entitled "Bankruptcy," as in effect now and in the future, or any successor statute. "Beneficial Owner" means the beneficial owner of any Bond held in book-entry form or the Registered Owner of any Bond held in certificated form. "Bond" or "Bonds" means the Issuer's City of Carlsbad Multifamily Housing Revenue Bonds (Mariposa Apartments) 2003 Series A in the original aggregate principal amount of $5,185,000. "Bond Counsel" means (a) on the Closing Date, the law firm or law firms delivering the approving opinion(s) with respect to the Bonds or (b) after the Closing Date, any law firm selected by the Issuer and acceptable to the Credit Provider, of nationally recognized standing in matters pertaining to the excludability from gross income, for federal income tax purposes, of the interest payable on bonds issued by states and political subdivisions. "Bond Documents" means this Indenture, the Financing Agreement, the Regulatory Agreement, the Bond Purchase Agreement, the Assignment, the endorsement of the Mortgage Note, the Credit Facility, the Tax Certificate, the Disclosure Agreement, and all other documents, agreements and instruments executed and delivered in connection with the issuance, sale, delivery and/or remarketing of the Bonds, as each such document, agreement or instrument may be amended, modified, supplemented or restated from time to time. "Bondholder," "holder," "Owner," "owner," "Registered Owner" or "registered owner" means, with respect to any Bond, the Registered Owner of the Bond. "Bond Payment Date" means any (a) Interest Payment Date, (b) other date on which interest is payable, including any Redemption Date, each Maturity Date and the date of acceleration of the Bonds and (c) date on which principal of the Bonds is payable. "Bond Purchase Agreement" means the Bond Purchase Agreement, dated June -, 2003, by and among the Underwriter, the Issuer and the Borrower. "Bond Purchase Fund' means the Bond Purchase Fund created by Section 4.1. 6 a "Bond Register" means the bond register established and maintained by the Trustee pursuant to Section 2.13(1). "Bond Registrar" means the Trustee or its designee as keeper of the Bond Register. "Bond Resolution" means the resolution adopted by the Issuer on May -, 2003, authorizing and approving the issuance and sale of the Bonds and authorizing and approving the execution and delivery of this Indenture, the Financing Agreement, the Regulatory Agreement, the Bond Purchase Agreement, the Assignment, the endorsement of the Mortgage Note, the Mortgage Loan Documents, the Tax Certificate and certain other documents, making certain appointments and determining certain details with respect to the Bonds.] "Bond Year" means the period of twelve consecutive months ending on June 1 in any year in which Bonds are or will be Outstanding, provided that the first Bond Year shall commence on the Closing Date and end on May 31,2004. "Book-Entry Bonds" means any Bonds which are issued in book-entry form, as evidenced by a single certificate for each stated principal maturity of the Bonds, and registered in the name of and delivered to a Securities Depository. "Book-Entry System" means an electronic system in which the clearance and settlement of securities transactions is made through electronic book-entry changes. "Borrower" means CIC Calavera, L.P., a limited partnership organized and existing under the laws of the State of California, and its successors and assigns. "Business Day" means any day other than (a) a Saturday or a Sunday, (b) any day on which banking institutions located in the city or cities in which the Principal Office of the Trustee is located are required or authorized by law or executive order to close, (c) on and after the Conversion Date, a day on which banking institutions located in the city in which the Principal Office of the Loan Servicer is located are required or authorized by law or executive order to close; (d) a day on which the Credit Provider is closed [or (e) a day or on which the New York Stock Exchange is closed.] "Cash Flow Projection" means a cash flow projection prepared by an independent firm of certified public accountants, a financial advisory firm or other independent third party qualified and experienced in the preparation of cash flow projections for mortgage loans, designated by the Borrower and acceptable to the Credit Provider and the Rating Agency, establishing, to the satisfaction of the Rating Agency, the sufficiency of (a) the scheduled payments due under the Mortgage Note (together with and after taking into account the Initial Debt Service Deposit) and (b) Investment Income with respect to the General Account to pay the principal of and interest on the Bonds and the Third Party Fees (to the extent included in the Mortgage Note Rate), in each instance, when due and payable, including, but not limited to, any cash flow projection prepared in connection with (A) the initial issuance and delivery of the Bonds, as provided in paragraph (xi) of Section 2.15, (B) Conversion, [(C)] [a remarketing of the Bonds, as provided in paragraph (v) of Section 2.17(1)(3)] or a partial prepayment of the Mortgage Loan and a corresponding partial redemption of Bonds pursuant to Section 3.2 or 3.3. "Closing Date" means the date on which the Bonds are issued and delivered. "Code" means the Internal Revenue Code of 1986, as amended; each reference to the Code shall be deemed to include (a) any successor internal revenue law and (b) the applicable regulations whether final, temporary or proposed under the Code or such successor law. Any 7 reference to a particular provision of the Code shall be deemed to include (a) any successor provision of any successor internal revenue law and (b) the applicable regulations, whether final, temporary or proposed, under such provision or successor provision. "Completion Date" means the date on which the Mortgaged Property is completed, in accordance with the Credit Provider's requirements, as evidenced by a certification of the Loan Servicer delivered to the Issuer, the Trustee the Construction Lender and the Borrower. "Computation Date" means the last day of each Bond Year commencing June 1, 2008, and the date on which the final payment in full of all Outstanding Bonds is made. "Construction Phase" has the meaning given to that term in the Construction Phase Financing Agreement. "Conversion" means the conversion of the Mortgage Loan from the Construction Phase to the Permanent Phase. "Cost," "Costs" or "Costs of the Mortgaged Property" means, with respect to the Mortgaged Property, the costs chargeable to the Mortgaged Property in accordance with generally accepted accounting principles, including, but not limited to, the costs of acquisition, construction, rehabilitation, reconstruction, restoration, repair, alteration, improvement and extension (in any of such events, "construction") of any building, structure, facility or other improvement; stored materials for work in progress; the cost of machinery and equipment; the cost of the Land, rights-in-lands, easements, privileges, agreements, franchises, utility extensions, disposal facilities, access roads and site development necessary or useful and convenient for the Mortgaged Property; financing costs, including, but not limited to, the Costs of Issuance, engineering and inspection costs; fees paid to the developer of the Mortgaged Property; organization, administrative, insurance, legal, operating, letter of credit and other expenses of the Borrower actually incurred prior to and during construction; and all such other expenses as may be necessary or incidental to the financing, acquisition, construction or completion of the Mortgaged Property or any part of it, including, but not limited to, the amount of interest expense incurred with respect to the Mortgage Loan prior to the Completion Date; insurance premiums payable by the Borrower and taxes and other governmental charges levied on the Mortgaged Property. "Credit Facility" means the Credit Enhancement Instrument (Stand-By), dated June 1, 2003, issued by the Credit Provider to the Trustee. "Credit Facility Account" means the Credit Facility Account of the Revenue Fund. "Credit Facility Agreement" means, individually or collectively, the Reimbursement Agreement, the Pledge Agreement and all other agreements and documents securing the Credit Provider or otherwise relating to the provision of the Credit Facility, as any such agreement may be amended, modified, supplemented or restated from time to time. "Credit Provider" means Fannie Mae. "Custodian" means the custodian under the Pledge Agreement. "Dated Date" means the date designated as such on the face of the Bonds. "Disclosure Agreement" means the Continuing Disclosure Agreement, dated as of June 1,2003, between the Borrower and the Trustee. 8 "DTC" means The Depository Trust Company and any successor to it or any nominee of it. "DTC Participant" has the meaning given to that term in Section 2.12(2). "DTC System" has the meaning given to that term in Section 2.12(1). "Electronic Means" means telecopy transmission or other similar electronic means of communication approved in writing by the Credit Provider, including a telephonic communication confirmed by writing or written transmission. "End Period Payment" means, with respect to any optional redemption of Bonds pursuant to Section 3.2, the premium due on the Bonds, if any, and interest due on the Bonds from the date of prepayment of the Mortgage Loan to the Redemption Date. "Event of Default" means any of the events specified in Section 9.1(1). "Extraordinary Items" means, with respect to the Trustee, reasonable compensation for extraordinary services and/or reimbursement for reasonable extraordinary costs and expenses. "Fair Market Value" means the price at which a willing buyer would purchase the investment from a willing seller in a bona fide, arm's length transaction (determined as of the date the contract to purchase or sell the investment becomes binding) if the investment is traded on an established securities market (within the meaning of Section 1273 of the Code) and, otherwise, the term "Fair Market Value" means the acquisition price in a bona fide arm's length transaction (as referenced above) if (i) the investment is a certificate of deposit that is acquired in accordance with applicable regulations under the Code, (ii) the investment is an agreement with specifically negotiated withdrawal or reinvestment provisions and a specifically negotiated interest rate (for example, a guaranteed investment contract, a forward supply contact or other investment agreement) that is acquired in accordance with applicable regulations under the Code, (iii) the investment is a United States Treasury Security-State and Local Government Series that is acquired in accordance with applicable regulations of the United States Bureau of Public Debt, or (iv) any commingled investment fund in which the Issuer and related parties do not own more than a ten percent (10%) beneficial interest therein if the return paid by the fund is without regard to the source of the investment. "Fannie Mae" means Fannie Mae, a corporation organized and existing under the Federal National Mortgage Association Charter Act, 12 U.S.C., S1716 et seq., and its successors and assigns. "Fannie Mae Commitment" means Fannie Mae's Commitment to the Loan Servicer, dated , pursuant to which Fannie Mae has agreed, upon satisfaction of the terms and conditions set forth in the Fannie Mae Commitment, to provide credit enhancement for the Mortgage Loan and liquidity support for Bonds Outstanding on the Remarketing Date. , 2003, accepted by the Loan Servicer on "Fees Account" means the Fees Account of the Revenue Fund. "Financing Agreement" means the Financing Agreement, dated as of June 1, 2003, among the Issuer, the Trustee and the Borrower, as amended, modified, supplemented, replaced or restated from time to time. 9 "Fund" means any Fund created by Section 4.1. "General Account" means the General Account of the Revenue Fund. "Government Obligations" means direct obligations of, and obligations on which the full and timely payment of principal and interest is unconditionally guaranteed by, the full faith and credit of the United States of America. "Highest Rating Category" means, with respect to an Investment, that the Investment is rated by S&P or Moody's, or both, and the rating assigned to the security is the highest rating given by that rating agency for that general category of security; by way of example, the Highest Rating Category for the general category of tax-exempt municipal debt established by S&P is "A-l+" for debt with a term of one year or less and "AAA" for a term greater than one year, with corresponding ratings by Moody's of "MIG-1" (for fixed rate) or "VMIG-1" (for variable rate) for one year or less and "Aaa" for greater than one year; if both S&P and Moody's rate the Investment and one of those ratings is not in the Highest Rating Category, then such Investment is not rated in the Highest Rating Category. "Improvements" means the improvements made or to be made upon the Land. "Indenture" means this Trust Indenture, dated as of June 1,2003, as amended, modified, supplemented or restated from time to time as permitted by this Indenture. "Indirect Participant" has the meaning given to that term in Section 2.12(2). "Initial Debt Service Deposit" means the deposit to be made by the Borrower with the Trustee on the Closing Date, as required by Section 4.2(3) of the Financing Agreement and deposited by the Trustee into the General Account as provided in paragraph (ii) of Section 4.2(3). "Initial Remarketing Date" means ,I, -. "Interest Payment Date" means June 1 and December 1 of each year beginning December 1,2003, each Redemption Date, each Maturity Date and the date of acceleration of the Bonds. "Investment Agreement" means any investment agreement with respect to amounts on deposit in any Fund or Account, as described in paragraph (vii) of the definition of Permitted Investments. "Investment Income" means the earnings, profits and accreted value derived from the investment of moneys pursuant to Article V. "Investments" means any Permitted Investment and any other investment held under this Indenture that does not constitute a Permitted Investment. "Issuer" means City of Carlsbad, a municipal corporation organized and existing under the laws of the State of California, and its successors and assigns. "Issuer's Annual Fee" means the Issuer's annual fee equal to [.125]'/0 of the original principal amount of the Bonds payable by the Borrower pursuant to Section 4.3 of the Financing Agreement. "Land' means the real property described in the Security Instrument. 10 ab7 "Loan Servicer" means Red Mortgage Capital, Inc., an Ohio corporation, as servicer of the Mortgage Loan, and any successor servicer appointed by the Credit Provider. "Maturity Date" means any maturity date shown in Section 2.6(1). "Moody's'' means Moody's Investors Service, a Delaware corporation, and its successors and assigns, or if it shall be dissolved or shall no longer assign credit ratings to long term debt, then any other nationally recognized statistical rating agency, designated by the Credit Provider, as shall assign credit ratings to long term debt. "Mortgage Loan" means the loan made by the Issuer to the Borrower pursuant to the terms and provisions of the Financing Agreement for the purpose of providing funds to the Borrower to finance the acquisition, construction and equipping of the Mortgaged Property. "Mortgage Loan Documents" has the meaning given to that term in the Financing Agreement. "Mortgage Loan Fund' means the Mortgage Loan Fund created by Section 4.1. "Mortgage Loan Payments Interest" has the meaning given to that term in the Assignment. "Mortgage Loan Rights" has the meaning given to that term in the Assignment. "Mortgage Note" means the Multifamily Note, dated as of the Conversion Date, executed by the Borrower in favor of the Issuer, together with all addenda and schedules, as the same may be amended, modified, supplemented or restated from time to time, or any note executed in substitution therefor, as such substitute note may be amended, modified, supplemented or restated from time to time. "Mortgage Note Rate" has the meaning given to that term in the Financing Agreement. "Mortgaged Property" means the Land and the Improvements. "Net Bond Proceeds" means the proceeds derived from the issuance, sale and delivery of the Bonds, representing the total purchase price of the Bonds, including any premium paid as part of the purchase price of the Bonds, but excluding the accrued interest, if any, on the Bonds paid by the initial purchaser(s) of the Bonds. "Opinion of Bond Counsel" means a written opinion of Bond Counsel addressed to the Issuer, the Trustee and, at its request, the Credit Provider, and in form and substance acceptable to the Issuer, the Trustee and the Credit Provider. "Opinion of Counsel" means a written opinion of legal counsel acceptable to the recipient(s) of the opinion; if the opinion is with respect to an interpretation of federal tax laws or regulations, or bankruptcy matters, such legal counsel shall also be an attorney or firm of attorneys experienced in such matters. "Outstanding" means, when used with reference to the Bonds at any date as of which the amount of Outstanding Bonds is to be determined, all Bonds which have been authenticated and delivered under this Indenture except: 11 (i) Bonds canceled or delivered for cancellation at or prior to such date; (ii) Bonds deemed to be paid in accordance with Article VIII; and (iii) 2.11 or 2.13. Bonds in lieu of which others have been authenticated under Sections 2.8, 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, Bonds which are owned or held by or for the account of the Borrower, including Purchased Bonds, shall be disregarded and deemed not to be Outstanding under this Indenture for the purpose of any such determination unless all Bonds are owned or held by or for the account of the Borrower. In determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Bonds which are either registered in the name of or known by the Trustee to be held for the account of the Borrower, including Purchased Bonds, shall be disregarded. “Pass-Through Rate” has the meaning given to that term in the Mortgage Note. “Permitted Investments” means, to the extent authorized by law for the investment of moneys of the Issuer: (i) Government Obligations; (ii) direct obligations of, and obligations on which the full and timely payment of principal and interest is unconditionally guaranteed by, any agency or instrumentality of the United States of America (other than the Federal Home Loan Mortgage Corporation) or direct obligations of the World Bank, which obligations are rated in the Highest Rating Category; (iii) obligations, in each case rated in the Highest Rating Category, of (a) any state or territory of the United States of America, (b) any agency, instrumentality, authority or political subdivision of a state or territory, (c) any public benefit or municipal corporation the principal of and interest on which are guaranteed by such state or political subdivision or (d) any state or territory of the United States of America or any agency, instrumentality, authority or political subdivision of a state or territory which have been advance refunded and are secured by Government Obligations or by other such pre-refunded municipal securities; (iv) any written repurchase agreement entered into with a Qualified Financial Institution whose unsecured short-term obligations are rated in the Highest Rating Category; (v) (vi) (a) interest-bearing negotiable certificates of deposit, interest-bearing time deposits, interest-bearing savings accounts and bankers’ acceptances, issued by a Qualified Financial Institution if either (a) the Qualified Financial Institution’s unsecured short-term obligations are rated in the Highest Rating Category or (b) such deposits or accounts are fully insured by the Federal Deposit Insurance Corporation; commercial paper rated in the Highest Rating Category; 12 (vii) an agreement held by the Trustee for the investment of moneys at a guaranteed rate (an "Investment Agreement") with (a) the Credit Provider or (b) a Qualified Financial Institution whose unsecured long-term obligations are rated in the Highest Rating Category, or whose obligations are unconditionally guaranteed or insured by a Qualified Financial Institution whose unsecured long-term obligations are rated in the Highest Rating Category, provided that the Investment Agreement is in a form acceptable to the Issuer and the Credit Provider, and provided, further, that the Investment Agreement includes the following restrictions: (1) the invested funds are available for withdrawal without penalty or premium at any time that (a) the Trustee is required to pay moneys from the Fund(s) to which the Investment Agreement is applicable or (b) any Rating Agency indicates that it will lower, suspend or withdraw or actually lowers, suspends or withdraws the rating on the Bonds on account of the rating of the Qualified Financial Institution providing, guaranteeing or insuring, as applicable, the Investment Agreement; (2) the Investment Agreement is the unconditional and general obligation of the Qualified Financial Institution providing, and, if applicable, the Qualified Financial Institution guaranteeing or insuring, the Investment Agreement, and is not subordinated to any other obligation; (3) the Trustee receives an Opinion of Counsel that the Investment Agreement is legal, valid, binding and enforceable, in accordance with its terms, upon the Qualified Financial Institution providing the Investment Agreement and, if applicable, an Opinion of Counsel that any guaranty or insurance policy provided by a Qualified Financial Institution guaranteeing or insuring the Investment Agreement is legal, valid, binding and enforceable, in accordance with its terms, upon such Qualified Financial Institution; and (4) the Investment Agreement provides that if during its term the rating of the Qualified Financial Institution providing, guaranteeing or insuring, as applicable, the Investment Agreement is withdrawn or suspended by any rating agency or falls below the Highest Rating Category, such Qualified Financial Institution will, within ten (10) days following the withdrawal, suspension or downgrade, either: (a) (1) collateralize the Investment Agreement (if the Investment Agreement is not already collateralized) with Permitted Investments described in paragraph (i) or (ii) above by depositing such collateral with the Trustee or a third party custodian, such collateralization to be effected in a manner and in an amount sufficient to maintain (A) the integrity of the Cash Flow Projection most recently provided with respect to the Bonds and (B) the then-current rating of the Bonds, or, if the Investment Agreement is already collateralized, increase the collateral with Permitted Investments described in paragraph (i) or (ii) above by depositing such collateral with the Trustee or a third party custodian, such collateralization to be effected in a manner and in an amount sufficient to maintain (C) the integrity of the Cash Flow Projection most recently provided with respect to the Bonds and (D) the then-current rating of the Bonds, (2) transfer the Investment Agreement and the rights and obligations of the Qualified Financial Institution under the Investment Agreement to a Qualified Financial Institution whose unsecured long-term obligations are rated in the Highest Rating Category or whose obligations are unconditionally guaranteed or insured by a Qualified Financial Institution whose unsecured long-term obligations are rated in the Highest Rating Category or (3) deliver a 13 guarantee from a Qualified Financial Institution whose unsecured long-term obligations are rated in the Highest Rating Category or (b) at the direction of the Trustee, following the failure of the Qualified Financial Institution to take one or more of the actions described in the foregoing clauses (a)(l)-(a)(3), repay the principal of and accrued but unpaid interest on the investment, in either case with no penalty or premium to the Trustee unless required by law (the Investment Agreement may provide that the Qualified Financial Institution providing the Investment Agreement shall have the right to elect among the actions described in clauses (a)(l), (a)(2) and (a)(3), but shall not have the right to elect the action described in clause (b) as an alternative to the actions described in clauses (a)(l), (a)(2) and (a) (3); (viii) any money market mutual fund (including those of the Trustee and its affiliates) registered under the Investment Company Act of 1940, as amended, that have been rated "AAAm-G" or "AAAm" by S&P or "Aaa" by Moody's, so long as the portfolio of such money market mutual fund is limited to Government Obligations and/or agreements to purchase Government Obligations; if approved in writing by the Credit Provider, a money market mutual fund portfolio may also contain obligations and agreements to repurchase obligations described in paragraphs (ii) or (iii) above; a money market mutual fund is not a Permitted Investment if both S&P and Moody's rate the money market mutual fund and one such rating is below the level required by this paragraph (viii); (ix) any other investment authorized by the laws of the State if such investment is approved by the Credit Provider and the Rating Agency; (x) the Construction Phase Investment Agreement; provided that Permitted Investments shall not include the following: (1) any investment with a final maturity or any agreement with a term greater than one year from the date of the investment (except (a) obligations that provide for the optional or mandatory tender, at par, by the holder of such obligations at least once within one year of the date of purchase, (b) Government Obligations irrevocably deposited with the Trustee for payment of Bonds pursuant to Article VI11 and (c) investments listed in paragraph (vii) and (ix) above), (2) any obligation (other than obligations described in paragraph (i) and (ii) above) with a purchase price greater or less than the par value of such obligation, (3) any asset-backed security, including mortgage- backed securities, real estate mortgage investment conduits, collateralized mortgage obligations, credit card receivable asset-backed securities and auto loan asset-backed securities, (4) any interest-only or principal-only stripped security, (5) any obligation bearing interest at an inverse floating rate, (6) any investment which may be prepaid or called at a price less than its purchase price prior to stated maturity, (7) any investment the interest rate on which is variable and is established other than by reference to a single interest rate index plus a single fixed spread, if any, and which interest rate moves proportionately with that index, (8) any investment described in paragraph (iv) or (vii) above with a Qualified Financial Institution (as defined in clause (d) of the definition of "Qualified Financial Institution") if the Qualified Financial Institution does not agree to submit to jurisdiction, venue and service of process in the United States of America in the Investment Agreement and (9) any investment to which the Rating Agency has added an "r" or "t" highlighter. If an Investment Agreement is entered into which does not require the Qualified Financial Institution providing the Investment Agreement to either (a) satisfy one or more of the requirements of clause (a) of subparagraph (4) of paragraph (vii) above upon a withdrawal or suspension of, or downgrade in the rating of the Qualified Financial Institution providing the 14 Investment Agreement or (b) compensate the Trustee for any loss in yield upon reinvestment if the Investment Agreement is terminated following a withdrawal or suspension of, or downgrade in, the rating of the Qualified Financial Institution providing, guaranteeing or insuring the Investment Agreement, the yield on the Investment Agreement above the minimum yield permitted by the Rating Agency (presently [[1.5°/~]] per annum) shall not be taken into account in any Cash Flow Projection provided to the Rating Agency in connection with its rating of the Bonds. "Person" means any natural person, estate, trust, corporation, partnership, limited liability company, association, public body or any other organization or entity (whether governmental or private). "Pledge Agreement" means the Pledge, Security and Custody Agreement, dated as of June 1, 2003, by and among the Borrower, the Trustee, as collateral agent for the Credit Provider, and the Credit Provider, as such agreement may be amended, modified, supplemented or restated from time to time. 'Re-Conversion Loan Equalization Payment" has the meaning given to that term in the Mortgage Note. "Preference Claim'' has the meaning given to that term in Section 7.6. "Principal Amount" means the original principal amount of the Bonds outstanding on the Conversion Date. "Principal Office" of the Trustee ,the Remarketing Agent or the Loan Servicer means, respectively, the office of the Trustee, the Remarketing Agent or tlie Loan Servicer at the respective address set forth in Section 12.4, or such other address as may be specified in writing by the Trustee, the Remarketing Agent or the Loan Servicer, as applicable, as provided in Section 12.4. "Prior Indenture" means the Trust Indenture, dated as of June 1,2003, by and between the Issuer and the Trustee pursuant to which the Bonds were originally issued and delivered. "Proceeds" has the meaning given to that term in Section 3.3(4). "Project Account" means the Project Account of the Mortgage Loan Fund. "Purchased Bond" means any Bond (a) tendered for purchase by a Bondholder pursuant to Section 2.17(1)(5) and purchased by the Trustee for the account of the Borrower, with amounts provided by the Credit Provider under the Credit Facility, and (b) pledged to the Custodian under the Pledge Agreement for the benefit of the Credit Provider. A Bond is a "Purchased Bond" only during the period (a) beginning on and including the date of its purchase by the Borrower and (b) ending on and excluding the date on which the Amount Available under (and as defined in) the Credit Facility with respect to the Bond is reinstated under the Credit Facility. "Qualified Financial Institution" means any (a) bank or trust company organized under the laws of any state of the United States of America, (b) national banking association, (c) savings bank, a savings and loan association, or an insurance company or association chartered or organized under the laws of any state of the United States of America, (d) federal branch or agency pursuant to the International Banking Act of 1978 or any successor provisions of law or a domestic branch or agency of a foreign bank which branch or agency is duly licensed or a14 15 authorized to do business under the laws of any state or territory of the United States of America, (e) government bond dealer reporting to, trading with, and recognized as a primary dealer by the Federal Reserve Bank of New York, (f) securities dealer approved in writing by the Credit Provider the liquidation of which is subject to the Securities Investors Protection Corporation or other similar corporation, (g) any other entity which is acceptable to the Credit Provider. With respect to an entity which provides an agreement held by the Trustee for the investment of moneys at a guaranteed rate as set out in paragraph (vii) of the definition of the term "Permitted Investments" or an entity which guarantees or insures, as applicable, the agreement, a "Qualified Financial Institution" may also be a corporation or limited liability company organized under the laws of any state of the United States of America. "Rating Agency" means any national rating agency then maintaining a rating on the Bonds. "Rating Category" means one of the generic rating categories of the Rating Agency. "Rebate Analyst" means a person that is (a) qualified and experienced in the calculation of rebate payments under Section 148 of the Code and in compliance with the arbitrage rebate regulations promulgated under the Code, (b) chosen by the Borrower and (c) engaged for the purpose of determining the amount of required deposits, if any to the Rebate Fund. "Rebate Analyst's Annual Fee" means the annual fee of the Rebate Analyst, if any, in the amount of $ for its rebate calculation services. "Rebate Fund" means the Rebate Fund created by Section 4.1. "Record Date" means, with respect to any Interest Payment Date, the fifteenth day of the month preceding the month in which the Interest Payment Date falls. "Redemption Account" means the Redemption Account of the Revenue Fund. "Redemption Date" means any date upon which Bonds are to be redeemed pursuant to this Indenture. "Registered Owner" means the registered owner of any Bonds, as shown in the Bond Register. "Regulatory Agreement" means the Regulatory Agreement and Declaration of Restrictive Covenants, relating to the Mortgaged Property, dated as of June 1, 2003, by and among the Issuer, the Trustee and the Borrower, as amended, modified, supplemented or restated from time to time. "Reimbursement Agreement" means the Reimbursement Agreement, dated as of June 1, 2003, between the Credit Provider and the Borrower, as amended, modified, supplemented or restated from time to time or any agreement entered into in substitution therefor. "Remarketing Agent" means Red Capital Markets, Inc. and any successor designated in the manner provided in Section 2.17(4). "Remarketing Agreement" means the Remarketing Agreement, dated as of June 1,2003, between the Borrower and the Remarketing Agent, as amended, modified, supplemented or restated from time to time, or any agreement entered into in substitution therefor with a substitute Remarketing Agent. 16 "Remarketing Date" means the Initial Remarketing Date and, if the Bonds Outstanding on such date or on any subsequent Remarketing Date are remarketed pursuant to Section 2.17(1)(2) for a Remarketing Period which does not extend to the final maturity of the Bonds, the day after the last day of the Remarketing Period. "Remarketing Expenses" means the costs and expenses incurred by the Trustee and its counsel, the Remarketing Agent and its counsel, the Issuer and its counsel, the Loan Servicer and its counsel, the Credit Provider and its counsel and Bond Counsel in connection with the remarketing of the Bonds, including bond printing and registration costs, costs of funds advanced by the Remarketing Agent, registration and filing fees, rating agency fees and other costs and expenses incurred in connection with or properly attributable to the remarketing of Bonds. "Remarketing Expenses Account" means the Remarketing Expenses Account of the Bond Purchase Fund. "Remarketing Period' means the period beginning on a Remarketing Date and ending on the last day of the term for which Bonds are remarketed pursuant to Section 2.17(1)(2) or the final Maturity Date of the Bonds, as applicable. "Remarketing Proceeds Account" means the Remarketing Proceeds Account of the Bond Purchase Fund. "Remarketing Rate" means the interest rate established pursuant to Section 2.6(4)(1) and borne by the Bonds then Outstanding from and including each Remarketing Date to, but not including, the next succeeding Remarketing Date or the final Maturity Date of the Bonds, as applicable. "Replacement Credit Facility" has the meaning given to that term in Section 7.3. "Representation Letter" has the meaning given to that term in Section 2.12(1). "Reserved Rights" means those certain rights of the Issuer under the Financing Agreement to indemnification and to payment or reimbursement of fees and expenses of the Issuer, its right to give and receive notices and to enforce notice and reporting requirements and restrictions on transfer of ownership, its right to inspect and audit the books, records and premises of the Borrower and of the Mortgaged Property, its right to collect attorneys' fees and related expenses, its right to specifically enforce the Borrower's covenant to comply with applicable federal tax law and State law (including the Act and the rules and regulations of the Issuer, if any), and its rights to give or withhold consent to amendments, changes, modifications and alterations to the Financing Agreement and the Regulatory Agreement. "Revenue Fund' means the Revenue Fund created by Section 4.1. "Revenues" means all (a) payments made under the Mortgage Note, (b) payments made under the Credit Facility and (c) Investment Income (excluding Investment Income earned from moneys on deposit in the Rebate Fund and the Costs of Issuance Deposit Account of the Costs of Issuance Fund). "S&P" means Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc., and its successors and assigns, or if it shall be dissolved or shall no longer assign credit ratings to long term debt, then any other nationally recognized statistical rating 17 agency, designated by the Issuer and acceptable to the Trustee, the Credit Provider and the Borrower, as shall assign credit ratings to long term debt. "Securities Depository" means, initially, The Depository Trust Company, New York, New York, and its successors and assigns, and any replacement securities depository appointed under this Indenture. "Security" means the Trust Estate and the Credit Facility. "Security Instrument" means the Multifamily Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing, dated as of the Conversion Date, together with all riders and exhibits, securing the Mortgage Note, executed by the Borrower with respect to the Mortgaged Property, as it may be amended, modified, supplemented or restated from time to time, or any security instrument executed in substitution therefor, as such substitute security instrument may be amended, modified, supplemented or restated from time to time. "Set Rate Interest" has the meaning given to that term in the Mortgage Note. "Special Purchase Bonds" has the meaning given to that term in Section 3.9(1). "Special Purchase Date" has the meaning given to that term in Section 3.9(1). "Special Purchase Price" has the meaning given to that term in Section 3.9(1). "State" means the State of California. "Strike Rate" means -% per annum or such other per annum interest rate as may be approved by the Credit Provider in its sole discretion, but in no event higher than -YO. "Supplemental Indenture" means any indenture duly authorized and entered into between the Issuer and the Trustee amending or supplementing this Indenture in accordance with the provisions of this Indenture. "Tax Certificate" means the Certificate As To Arbitrage dated the Closing Date, executed and delivered by the Issuer and the Borrower, together with the Certificate Regarding Use of Proceeds dated the Closing Date, executed and delivered by the Borrower.. "Third Party Fees" means, individually or collectively, as the context shall require, the (a) Issuer's Annual Fee, (b) Trustee's Annual Fee and (c) Rebate Analyst's Annual Fee, if any. "Trust Estate" means the property, rights, money, securities and other amounts pledged and assigned by the Issuer to the Trustee pursuant to this Indenture and the Assignment. "Trustee" means Wells Fargo Bank, National Association, a national banking association, duly organized and existing under the laws of the [ 1, or its successors or assigns, or any other corporation or association resulting from or surviving any consolidation or merger to which it or its successors may be a party and any successor trustee at any time serving as successor trustee under this Indenture. "Trustee's Annual Fee" means the annual ongoing trust administration fee of the Trustee equal to -YO per annum of the principal amount of the Bonds Outstanding payable as provided in Section 4.3(1) of the Financing Agreement, computed and payable semiannually in advance on each Interest Payment Date. 18 "U.C.C." means the Uniform Commercial Code of the State as in effect now or in the future, whether or not such Uniform Commercial Code is applicable to the parties or the transactions. ["Undelivered Bond" means any Bond that is required under this Indenture to be delivered to the Remarketing Agent or the Trustee for purchase on a Remarketing Date but that has not been received on the date such Bond is required to be so delivered.] "Underwriter" means Red Capital Markets, Inc. "Verification Agent" means an independent firm of certified public accountants, an independent financial advisory firm or other independent third party designated by the Borrower and acceptable to the Credit Provider, qualified and experienced in the verification of the mathematical accuracy of scheduled cash flows and other funds to pay the principal of and interest on bonds and fees, which has been engaged to prepare a Verification Report. "Verification Report" means a report prepared by a Verification Agent verifying the mathematical accuracy of a Cash Flow Projection. "Wrongful Dishonor" has the meaning given to that term in the Assignment. Section 1.3. Rules of Construction. The rules of construction set forth in this Section 1.3 shall apply to this Indenture: Section 1.3(1) The singular form of any word used in this Indenture, including the terms defined in Section 1.2, includes the plural, and vice versa, unless the context otherwise requires. The use in this Indenture of a pronoun of any gender includes correlative words of the other genders. Section 1.3(2) All references in this Indenture to "Articles," "Sections" and other subdivisions are to the corresponding Articles, Sections or other subdivisions of this Indenture; the words "in this Indenture," "of this Indenture," "under this Indenture" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or subdivision of this Indenture. Section 1.3(3) Any captions, headings or titles of the Articles and Sections of this Indenture, and any table of contents appended to this Indenture, are solely for convenience of reference, do not limit or otherwise affect the meaning, construction or effect of this Indenture or describe the scope or intent of any provision of this Indenture. Section 1.3(4) All accounting terms not otherwise defined in this Indenture have the meanings assigned to them in accordance with applicable generally accepted accounting principles as in effect from time to time. Section 1.3(5) Every "request," "order," "demand," "direction," "application," "appointment," "notice," "statement," "certificate," "consent" or similar action under this Indenture by any party shall, unless the form to be used is specifically provided, be in writing and signed by a duly authorized representative of such party with a duly authorized signature. Section 1.3(6) All references in this Indenture to "counsel fees," "attorneys fees" or the like shall mean and include fees and disbursements allocable to in-house or of outside counsel, 19 whether or not suit is instituted, and include fees and disbursements preparatory to and during trial and appeal and in any bankruptcy or arbitration proceeding. Section 1.3(7) Whenever the term "includes" or "including" is used in this Indenture, such terms mean "includes or including by way of example and not limitation"; and Section 1.3(8) The term "immediate notice" means personal delivery of a written notice given by Electronic Means or by messenger service promptly followed by a duplicate or "hard copy" of such written notice sent by certified mail, return-receipt requested or by any nationally recognized overnight delivery service. Section 1.4. Content of Certificates and Ouinions. Every certificate or opinion with respect to compliance by or on behalf of any party with a condition or covenant provided for in this Indenture or the Financing Agreement shall include (a) a statement that the person or persons providing or giving the certificate or opinion have read the covenant or condition and the definitions in this Indenture relating to the covenant or condition, (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in the certificate or opinion are based, (c) 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 the covenant or condition has been complied with and (d) a statement as to whether, in the opinion of the signers, the condition or covenant has been complied with. Any such certificate or opinion provided or given by an officer of any party may be based, insofar as it relates to legal matters, upon a certificate or opinion of or representations by counsel, unless such officer knows that the certificate or opinion or representation with respect to any matter upon which his or her certificate or opinion may be based is erroneous, or in the exercise of reasonable care should have known that the same is erroneous. Any certificate or opinion provided or given by counsel may be based, insofar as it relates to factual matters (with respect to which information is in the possession of a party), upon the certificate or opinion of or representation by an officer of the party, unless such counsel knows that the certificate or opinion or representation with respect to the matter upon which his or her opinion may be based is erroneous, or in the exercise of reasonable care should have known that the same is erroneous. Section 1.5. Effective Date. The provisions of this Indenture shall be effective on and as of the Conversion Date. 20 ARTICLE 2 THE BONDS Section 2.1. ithorized Amount of Bonds. No Bonds may be issued inder this Indenture except as provided in Section 2.2. The total principal amount of Bonds that may be issued and outstanding under this Indenture is expressly limited to the Principal Amount. Section 2.2. Issuance of Bonds. The Bonds are authorized to be issued pursuant to and in accordance with Prior Indenture. The Bonds shall (a) be designated "City of Carlsbad Multifamily Housing Revenue Bonds (Mariposa Apartments) 2003 Series A' (b) be issued in the Principal Amount, (c) be dated the Dated Date, (d) bear interest from the Dated Date at the rate or rates provided in Section 2.6(1), payable on each Interest Payment Date and on each other Bond Payment Date on which interest is payable, until the Bonds are paid in full or earlier redeemed, and (e) mature, subject to redemption prior to maturity as provided in [Section 2.17(1)(9) and Article 111, on the dates and in the principal amounts set forth in Section 2.6(1). Section 2.3. Registered Bonds; Authorized Denomination; Numbering. The Bonds shall be issued as registered bonds without coupons. Each Bond shall be issued in an Authorized Denomination. The Bonds shall be numbered consecutively from R-1 upwards, bearing numbers not then contemporaneously outstanding (in order of issuance) according to the Bond Register. Section 2.4. Securitv is Sole Source for Pavments of Principal and Interest. The Bonds are payable solely from the Security. Section 2.5. Ratablv Secured. All Bonds issued under this Indenture shall (a) be equally and ratably secured under this Indenture without preference, priority or distinction and (b) have the same right, lien and preference under this Indenture. Section 2.6. Terms of Bonds. Section 2.6(1) Interest Rates; Principal Maturity. The Bonds shall bear interest, subject to adjustment as described in Section 2.6(4), at the rate(s) per annum and shall mature (subject to redemption prior to maturity, including sinking fund redemption), on the dates and in the principal amounts set forth below: Date PrinciDal Amount Maturing Interest Rate Interest shall be calculated on the basis of a 360-day year consisting of twelve 30-day months. Section 2.6(2) Accrual of Interest. The Bonds shall bear interest from the Interest Payment Date next preceding the date of authentication of the Bonds. If the date of authentication is an Interest Payment Date for which interest has been paid or is after the 21 Record Date, but prior to the next Interest Payment Date, the Bonds shall bear interest from such Interest Payment Date. If the date of authentication is prior to the Record Date for the first Interest Payment Date, the Bonds shall bear interest from the Dated Date of the Bonds. Notwithstanding the foregoing, if at the time of authentication of any Bond, interest on the Bond is in default, the Bond shall bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment, or if no interest has been paid on the Bond, from the Dated Date of the Bond. Section 2.6(3) Payment of Principal and Interest. The principal of, premium, if any, and the interest on the Bonds shall be payable in lawful money of the United States of America to the persons in whose names the Bonds are registered on the Bond Register at the close of business on the applicable Record Date. Payment of the interest on the Bonds shall be made to the Registered Owners of the Bonds (as determined at the close of business on the Record Date next preceding the applicable Interest Payment Date) by check drawn upon the Trustee and mailed by first class mail, postage prepaid, on the Interest Payment Date to the addresses of such Registered Owners as they appear on the Bond Register or to such other address as may be furnished in writing by any Registered Owner to the Trustee prior to the applicable Record Date. Payment of the principal amount of any Bond and premium, if any, together with interest payable on any Bond Payment Date (other than interest payable on a regularly scheduled Interest Payment Date) shall be made by check only upon presentation and surrender of the Bond on or after its maturity date or date fixed for purchase, redemption or other payment at the office of the Trustee designated by the Trustee for that purpose. Notwithstanding the foregoing, payment of principal of, premium, if any, and interest on any Bond on any Bond Payment Date shall be made by wire transfer to any account within the United States of America designated by a Registered Owner owning $1,000,000 or more in aggregate principal amount of Bonds if a written request for wire transfer is delivered to the Trustee by any such Registered Owner not less than five (5) Business Days prior to the applicable Bond Payment Date and if any such Registered Owner otherwise complies with the reasonable requirements of the Trustee. A request for wire transfer may specify that it is effective with respect to all succeeding payments of principal, premium, if any, and interest and will be so effective unless and until rescinded in writing by the Registered Owner at least five (5) days prior to the Record Date for the Bond Payment Date to which such rescission is designated to apply. Notwithstanding the foregoing, payments of the principal of, premium, if any, and interest on any Bonds that are subject to the Book-Entry System shall be made as provided in Section 2.12(3). If interest on the Bonds is in default, the Trustee shall, prior to the payment of interest, establish a special record date (the "Special Record Date") for such payment. A Special Record Date shall be not more than fifteen (15) nor less than ten (10) days prior to the date of the proposed payment. Payment of defaulted interest shall then be made by check or wire transfer, as permitted above, mailed or remitted to the persons in whose names the Bonds are registered on the Special Record Date at the addresses or accounts of such persons shown on the Bond Register . Section 2.6(4) Establishment of Interest Rate After the Conversion Date In Connection With Remarketing of Bonds. Section 2.6(4)(1) Establishment of Interest Rate. On and after each Remarketing Date, to, but not including, the earlier of the next succeeding Remarketing Date or final Maturity Date, the interest rate on the Bonds then Outstanding shall be established by the Remarketing Agent at the Remarketing Rate in accordance with this Section 2.6(4)(1). Not less than ten (10) days preceding each Remarketing Date, the Remarketing Agent, taking into consideration prevailing market conditions, shall, using its best professional judgment, determine the minimum rate of interest which, if borne by the Bonds then Outstanding for the period [beginning on the Remarketing Date and ending on the final Maturity Date of the Bonds] [beginning on the 22 Remarketing Date and extending through the date specified by the Remarketing Agent, at the direction of the Borrower, which period may be any period extending as long as to the final Maturity Date of the Bonds, but in no event less than ten (10) years, unless the final Maturity Date of the Bonds will occur in less than ten (10) years, in which event such period shall extend to the final Maturity Date of the Bonds], would be the rate of interest, but would not exceed the rate of interest, that would enable the Remarketing Agent to remarket all Bonds then Outstanding on the Remarketing Date for that period at a price equal to 100°/~ of the principal amount of such Bonds, and the rate of interest so determined shall be the Remarketing Rate for such Remarketing Period, provided that if the rate of interest so determined for such period would exceed the Strike Rate, the Bonds Outstanding shall be remarketed for the longest Remarketing Period, ending on the last day of a Bond Year, at the minimum rate of interest that would enable such Bonds to be remarketed at a price equal to 100% of the principal amount of such Bonds and that would not exceed the Strike Rate; notwithstanding the foregoing, if the rate of interest so determined for any Remarketing Period in excess of one year would exceed the Strike Rate, the Bonds Outstanding shall be remarketed for a Remarketing Period of one year at the lowest rate of interest that would enable such Bonds to be remarketed at a price equal to 100% of the principal amount of such Bonds, and the rate of interest so determined shall be the Remarketing Rate for such Remarketing Period. Section 2.6(4)(2) Notice. The Remarketing Agent shall, upon determination of the Remarketing Rate and Remarketing Period, immediately (and in no event later than the Business Day following the day on which the Remarketing Agent makes its determination of the Remarketing Rate and the Remarketing Period) give notice of its determination, by Electronic Means, promptly confirmed in writing, to the Trustee, the Issuer, the Borrower, the Loan Servicer and the Credit Provider. The establishment of the Remarketing Rate and the Remarketing Period shall be conclusive and binding for the purposes of this Indenture upon the Trustee, the Issuer, the Borrower, the Loan Servicer, the Credit Provider and the Bondholders. Section 2.7. Form of Bonds. The Bonds, the certificate of authentication on the Bonds and the form of assignment on the Bonds shall be in substantially the forms set forth in Exhibit A to this Indenture with such appropriate variations, omissions, substitutions and insertions as are permitted or required by this Indenture or are required by law. The Bonds may have such letters, numbers or other marks of identification and such legends and endorsements placed on the Bonds as any Authorized Officer shall deem appropriate. Any portion of the text of any Bond may be set forth on the reverse of such Bond, with an appropriate reference on the face of the Bond to the reverse side of the Bond. Bonds may be typewritten, printed, engraved, lithographed or otherwise reproduced. Section 2.8. Temuorarv Bonds. If definitive Bonds are not ready for delivery on the Closing Date, then, unless Section 2.12 is applicable, the Issuer shall execute, and at the request of the Issuer, the Trustee, as Bond Registrar, shall authenticate and deliver, one or more temporary typewritten, printed or lithographed Bonds, in any Authorized Denomination, in fully registered form, and in substantially the tenor set forth and with such appropriate omissions, insertions and variations as may be required. If temporary Bonds shall be issued, the Issuer shall prepare and deliver to the Trustee a supply of blank forms of the Bonds, executed by facsimile signatures and bearing the Issuer's official seal imprinted or impressed on the forms, for issuance upon subsequent transfers or in the event of partial redemption. In the event that such supply of blank forms shall be insufficient to meet the requirements of the Trustee, the Trustee shall order printed, at the Borrower's expense, an additional supply of blank forms and request their execution by manual or facsimile signature of an Authorized Officer of the Issuer and attested by an Authorized Officer of the Issuer under the official seal of the Issuer or a facsimile of the official seal. The Issuer shall cause definitive Bonds to be prepared and to be executed and delivered to the Trustee. Upon presentation to the Trustee of 23 any temporary Bond, the Trustee shall cancel the same and authenticate and deliver in exchange therefor, without charge to the owner of such Bond, a definitive Bond or Bonds of an equal aggregate principal amount of Authorized Denominations, of the same maturity and series, and bearing interest at the same rate as the temporary Bond surrendered. Until so exchanged, the temporary Bonds shall in all respects be entitled to the same benefit and security of this Indenture as the definitive Bonds to be issued and authenticated under this Indenture. Interest on temporary Bonds, when due and payable, if the definitive Bonds are not ready, shall be paid on presentation of such temporary Bonds for notation of such payment on such Bonds by the Trustee. Section 2.9. Execution. The Bonds shall be executed on behalf of the Issuer by the manual or facsimile signature of its Authorized Officer and attested by the manual or facsimile signature of its Authorized Attesting Officer. Any facsimile signatures shall have the same force and effect as if the Authorized Officer had manually signed and attested the Bonds. In case any officer whose signature or a facsimile of whose signature appears on any Bond ceases to be such officer before the delivery of such Bond, such signature or such facsimile shall nevertheless be valid and sufficient for all purposes as if such officer had remained in office until delivery. Any reproduction of the official seal of the Issuer on the Bonds shall have the same force and effect as if the official seal of the Issuer had been manually impressed on the Bonds. Section 2.10. Authentication. Only such Bonds as shall have endorsed on them a certificate of authentication substantially in the form(s) set forth in Exhibit A to this Indenture duly executed by the Trustee, as Bond Registrar, shall be entitled to any right or benefit under this Indenture. No Bond shall be valid or obligatory for any purpose unless and until such certificate of authentication shall have been manually executed by the Trustee; and such executed certificate upon any such Bond shall be conclusive evidence that such Bond has been authenticated and delivered under this Indenture. The Trustee's certificate of authentication on any Bond shall be deemed to have been executed by it if signed by an authorized representative of the Trustee, but it shall not be necessary that the same person sign the certificates of authentication on all of the Bonds. Section 2.11. Mutilated, Lost, Stolen or Destroved Bonds. If any Bond is mutilated, lost, stolen or destroyed, the Issuer may execute and the Trustee may authenticate and deliver a new Bond of the same maturity, interest rate, principal amount, series and tenor in lieu of and in substitution for the mutilated, lost, stolen or destroyed Bond, provided that in the case of any mutilated Bond, the mutilated Bond shall first be surrendered to the Trustee, and in the case of any lost, stolen or destroyed Bond, there shall be first furnished to the Trustee evidence satisfactory to it of the ownership of the Bond, and of the loss, theft or destruction, together with indemnity satisfactory to the Trustee and the Issuer and compliance with such other reasonable requirements as the Issuer and the Trustee may prescribe. If any such Bond has matured or will mature within the ensuing 60 day period, or if such Bond has been called for redemption or a redemption date pertaining to such Bond has passed, instead of replacing the Bond, the Trustee may, upon receipt of such indemnity, pay the Bond. Any mutilated Bond surrendered to the Trustee shall be canceled by it. In connection with any such payment, the Issuer and the Trustee may charge the holder of such Bond with their reasonable fees and expenses, including attorneys' fees and expenses. Section 2.12. Book-Entrv Svstem. Section 2.12(1) Registration in the Book-Entry System. The Bonds shall be issued initially as Book-Entry Bonds. A separate single fully registered Bond shall be issued for each of the maturities of the Bonds. The initial Securities Depository shall be DTC, and the initial 24 securities depository system shall be the DTC system (the "DTC System"). The Bonds shall be registered in the name of Cede & Co., as nominee of DTC. The Issuer and the Trustee are authorized to execute and deliver such letters to or agreements with DTC as shall be necessary to effectuate the DTC System, including a letter of representations in the form required by DTC (the "Representation Letter"). In the event of any conflict between the terms of any such letter or agreement, including the Representation Letter, and the terms of this Indenture, the terms of this Indenture shall control. DTC may exercise the rights of a Bondholder only in accordance with the terms of this Indenture applicable to the exercise of such rights. Section 2.12(2) Exculpation. With respect to Bonds registered in the Bond Register in the name of Cede & Co., as nominee of DTC, the Issuer, the Trustee, the Credit Provider, the Loan Servicer, the Construction Lender and the Borrower shall have no responsibility or obligation to any broker-dealer, bank or other financial institution for which DTC holds Bonds from time to time as securities depository (each such broker-dealer, bank or other financial institution being referred to in this Indenture as a "DTC participant") or to any person on behalf of whom such a DTC Participant directly or indirectly holds an interest in the Bonds (each such person being referred to in this Indenture as an "Indirect Participant"). Without limiting the immediately preceding sentence, the Issuer, the Trustee, the Credit Provider, the Loan Servicer, the Construction Lender and the Borrower shall have no responsibility or obligation with respect to (a) the accuracy of the records of DTC, Cede & Co. or any DTC Participant with respect to any ownership interest in the Bonds, (b) the delivery to any DTC Participant or any Indirect Participant or any other person, other than Cede & Co., as nominee of DTC; as Bondholder on the Bond Register, of any notice with respect to the Bonds, including any notice of redemption, (c) the payment to any DTC Participant or Indirect Participant or any other Person, other than Cede & Co., as nominee of DTC, as Bondholder on the Bond Register, of any amount with respect to principal of, premium, if any, or interest on, the Bonds or (d) any consent given by Cede & Co., as nominee of DTC as Registered Owner. So long as certificates for the Bonds are not issued pursuant to Section 2.12(5) and the Bonds are registered in the name of Cede & Co., as nominee for DTC, the Issuer, the Borrower, the Credit Provider, the Loan Servicer and the Trustee shall treat DTC or any successor securities depository as, and deem DTC or any successor securities depository to be, the absolute owner of the Bonds for all purposes whatsoever, including, but not limited to, the (a) payment of the principal of, premium, if any, and interest on the Bonds, (b) giving notice of redemption and other matters with respect to the Bonds, (c) registration of transfers with respect to the Bonds and (d) selection of Bonds for redemption. While in the DTC System, no person other than Cede & Co., or any successor to it, as nominee for DTC, shall receive a Bond certificate with respect to any Bond. Section 2.12(3) Payments/Notices with Respect to Bonds Registered in the Book-Entry System. Notwithstanding any other provision of this Indenture to the contrary, so long as any of the Bonds are registered in the name of Cede & Co., as nominee of DTC, all payments with respect to principal of, premium, if any, and interest on such Bonds and all notices with respect to such Bonds shall be made and given, respectively, in the manner provided in the Representation Letter. Section 2.12(4) Substitution of Nominee. Upon delivery by DTC to the Trustee of written notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co., and subject to the provisions of this Indenture with respect to interest checks being mailed to the Registered Owner at the close of business on the Record Date applicable to any Interest Payment Date, the name "Cede & Co." in this Indenture shall refer to such new nominee of DTC. Section 2.12(5) Successor Securities Depository; Transfers Outside Book-Entry System. DTC may determine to discontinue providing its services with respect to the Bonds at any time 25 by giving written notice to the Issuer, the Trustee and the Borrower and by discharging its responsibilities with respect to the Bonds under applicable law. The Trustee may determine that the Bonds shall be registered in the name of and deposited with a successor depository operating a securities depository system, qualified to act as such under Section 17(a) of the Securities Exchange Act of 1934, as amended, as may be acceptable to the Issuer, or such depository's agent or designee. The Issuer or the Borrower, with the consent of the other, but without the consent of any other person, may terminate the services of DTC with respect to the Bonds. If the Borrower is in default under any Bond Document or any Mortgage Loan Document, the Issuer shall not be required to obtain the consent of the Borrower to termination of the services of DTC. Upon the discontinuance or termination of the services of DTC, unless a substitute securities depository is appointed to undertake the functions of DTC under this Indenture, the Issuer, at the expense of the Borrower, is obligated to deliver Bond certificates to the Beneficial Owners of the Bonds, 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 the Registered Owners transferring or exchanging Bonds shall designate to the Trustee in writing. Section 2.13. Bond Registrar; - Exchange and Transfer of Bonds; Persons Treated as the Bondholders. The provisions of this Section 2.13 shall govern the transfer and exchange of Bonds at such time or times as the Bonds are not in a Book-Entry System. Section 2.13(1) Bond Registrar; Bond Register. The Trustee is, by this Indenture, constituted and appointed the Bond Registrar for the Bonds. The Trustee shall keep the Bond Register for the registration of the Bonds and for the registration of transfer of the Bonds. Section 2.13(2) Transfers. Subject to the express limitations contained in this Section 2.13, any Bondholder or its attorney duly authorized in writing may transfer title to a Bond on the Bond Register kept by the Trustee, upon surrender of the Bond at the office of the Trustee designated by the Trustee for that purpose, together with a written instrument of transfer (in substantially the form of assignment, including signature guarantee, attached to the Bond) satisfactory to the Trustee executed by the Bondholder or its attorney duly authorized in writing. Upon surrender for registration of transfer of any Bond, the Issuer shall execute and the Trustee shall authenticate and deliver in the name of the transferee or transferees a new Bond or Bonds of the same aggregate principal amount, rate of interest, maturity, series and tenor as the Bond surrendered and of any Authorized Denomination. Transfers of an interest in the Bonds shall be in principal amounts equal to any Authorized Denomination. If Fannie Mae is the Credit Provider, notwithstanding anything to the contrary contained in this Indenture, any purported transfer to the Credit Provider[(other than a transfer of Purchased Bonds if the Credit Provider has become the owner of the Mortgaged Property and would be required to advance funds under the Credit Facility in connection with a mandatory purchase of Bonds) shall be accompanied by the written consent of the General Counsel and the Controller of Fannie Mae. Section 2.13(3) Exchanges. Subject to the express limitations contained in this Section 2.13, Bonds may be exchanged upon surrender of such Bonds at the office of the Trustee designated by the Trustee for that purpose together with a written instrument of transfer (in substantially the form of assignment, including signature guarantee, attached to the Bond) satisfactory to the Trustee, executed by the Bondholder or its attorney duly authorized in writing, for an equal aggregate principal amount of Bonds of the same aggregate principal amount, rate of interest, maturity, series and tenor as the Bonds being exchanged and of any Authorized Denomination. The Issuer shall execute and the Trustee shall authenticate and deliver Bonds which the Bondholder making the exchange is entitled to receive, bearing numbers not contemporaneously outstanding. 26 Section 2.13(4) Exceptions to Transfers and Exchanges. The Trustee shall not be required to register any transfer or exchange of any Bond (or portion of any Bond) called for redemption. Section 2.13(5) Charges. Registrations of transfers or exchanges of Bonds shall be without charge to the Bondholders, but any taxes or other governmental charges required to be paid with respect to a transfer or exchange shall be paid by any Bondholder requesting the registration of transfer or exchange as a condition precedent to the exercise of such privilege. Any service charge made by the Trustee for any such registration, transfer or exchange shall be paid by the Borrower. Section 2.13(6) Recognized Owners. The person in whose name any Bond is registered on the Bond Register shall be deemed and regarded as the absolute owner of such Bond for all purposes, and payment of or on account of either principal or interest shall be made only to or upon the order of such person or its attorney duly authorized in writing, but such registration may be changed as provided in this Section 2.13. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so paid. Section 2.13(7) Bonds Protected. All Bonds issued upon any registration of transfer or exchange of Bonds shall be legal, valid and binding limited obligations of the Issuer, evidencing the same debt, and entitled to the same security and benefits under this Indenture, as the Bonds surrendered upon such transfer or exchange. Section 2.13(8) Issuer's Reliance. In executing any Bond upon any exchange or registration of transfer provided for in this Section 2.13, the Issuer may rely conclusively on a representation of the Trustee that such execution is required. Section 2.14. Cancellation. All Bonds (other than Purchased Bonds) which have been surrendered pursuant to Section 2.6(3) or Article I11 for payment upon maturity or redemption prior to maturity shall be canceled by the Trustee and shall not be reissued. Canceled Bonds shall be destroyed by the Trustee unless the Trustee receives contrary instructions from the Issuer with respect to the disposition of such canceled Bonds. Section 2.15. Conditions for Conversion. Prior to Conversion there shall be delivered to the Trustee the following: (i) a certified copy of the Bond Resolution authorizing the execution and delivery on behalf of the Issuer of the Bonds and the Bond Documents to which it is a party and related matters; (ii) executed original counterparts of the Bond Documents and the Mortgage Loan Documents, the original executed Credit Facility, the Assignment, the Issuer's endorsement of the Mortgage Note, without recourse, to the order of the Trustee and the Credit Provider, as their interests may appear, the Remarketing Agreement and all other agreements, documents and instruments to be executed and delivered on the Closing Date by the parties to those agreements, documents and instruments; (iii) an Opinion of Bond Counsel to the effect that the Bonds have been duly and validly authorized, issued and delivered and constitute valid and binding obligations of the Issuer, enforceable against the Issuer in accordance with their terms, that the interest payable on the Bonds is excludable from gross income for federal income tax purposes, the Issuer has the power and authority to execute and deliver each 27 28'4 of the Bond Documents to which the Issuer is a party and each of the Bond Documents to which the Issuer is a party has been duly and validly authorized, executed and delivered by the Issuer and each constitutes the legal, valid and binding obligation of the Issuer, enforceable against the Issuer in accordance with its terms, subject to customary qualifications on enforceability; (iv) receipt from the Borrower of the Initial Debt Service Deposit; (v) evidence, acceptable to the Issuer, the Trustee, the Credit Provider and the Loan Servicer, of proper recordation of (a) the Regulatory Agreement and (b) the Security Instrument and the Assignment (or a title insurance binder acceptable to the Credit Provider and the Loan Servicer insuring the "gap" in a manner acceptable to the Credit Provider and the Loan Servicer); and (vi) written evidence that the Bonds have been assigned a rating in the Highest Rating Category by the Rating Agency rating the Bonds; (vii) the Credit Facility; (viii) the Cash Flow Projection; and (ix) the Verification Report. For the purpose of establishing that the Regulatory Agreement, the Security Instrument and the Assignment have been properly recorded, the Issuer, the Trustee, the Borrower, the Credit Provider and the Loan Servicer shall be authorized and entitled to rely conclusively on the oral or written advice of an attorney-at-law or a title company to which any such instrument has been delivered to and entrusted for filing that such instrument has been delivered to and accepted for recording by the public officer responsible under the laws of the State for receiving such instrument for recording in the appropriate public records, provided that, based on local custom and practice, the Credit Provider and the Loan Servicer may rely on a title insurance policy covering any "gap" in a manner acceptable to the Issuer, the Trustee, the Credit Provider and the Loan Servicer. Section 2.16. JReservedl. The Issuer and the Trustee acknowledge that if the Conversion Notice is not issued on or before the Termination Date (a) Conversion will not occur and (b) the Bonds will be subject to special mandatory redemption pursuant to Section 3.3(3) not later than twenty (20) days after the Termination Date unless the Bonds are purchased by or for the account of the Construction Lender pursuant to Section 3.9. Section 2.17 Remarketing of Bonds . If Conversion occurs, the Bonds Outstanding on each Remarketing Date shall be remarketed in accordance with this Section 2.17. Section 2.17(1) Purchase of Bonds on a Remarketing Date. Section 2.17(1)(1) Notice. Not less than 60 days preceding a Remarketing Date, the Trustee shall give written notice of the Remarketing Date to the Credit Provider, the Remarketing Agent and the Loan Servicer; not less than 30 days preceding a Remarketing Date, the Trustee shall give written notice of tender and remarketing to the Bondholders of the Bonds then Outstanding (with a copy to the Credit Provider and the Loan Servicer) by mail, at their respective addresses appearing on the Bond Register; the notice shall state: 28 (i) the Remarketing Date and that (a) all Outstanding Bonds are subject to mandatory tender for purchase on the Remarketing Date, (b) all Outstanding Bonds must be tendered for purchase on the Remarketing Date and (c) Bondholders will not have the right to elect to retain their Bonds; (ii) the address of the office of the Trustee at which Bondholders should deliver their Bonds for purchase and the date of the required delivery; (iii) that all Outstanding Bonds will be purchased on the Remarketing Date (or not later than three (3) Business Days after the Remarketing Date, in the event that the Trustee does not, after a remarketing, have sufficient funds on the Remarketing Date to purchase all of the Outstanding Bonds) at a price equal to the principal amount of the Outstanding Bonds plus interest accrued to the Remarketing Date; and (iv) any Bonds not tendered will nevertheless be deemed to have been tendered and will cease to bear interest from and after the Remarketing Date. Section 2.17(1)(2) Remarketing. Not less than seven (7) days prior to the Remarketing Date, the Remarketing Date, the Remarketing Agent shall use its best efforts to sell the Bonds Outstanding on the Remarketing Date at a price equal to 100°/~ of the principal amount of such Bonds. Not less than four Business Days before each Remarketing Date, the Remarketing Agent shall give notice, by Electronic Means, promptly confirmed in writing, to the Trustee, the Credit Provider and the Loan Servicer specifying the principal amount of Bonds, if any, it has remarketed (including Bonds to be purchased by the Remarketing Agent on the Remarketing Date for its own account), the Remarketing Rate and the Remarketing Period applicable to the Bonds. Immediately upon receipt of the Remarketing Agent's notice, the Trustee shall give notice, by Electronic Means, to the Borrower, the Loan Servicer and the Issuer of the principal amount of Bonds remarketed, the Remarketing Rate and the Remarketing Period. Section 2.17(1)(3) Conditions. If, not less than four Business Days preceding the Remarketing Date: (i) the Remarketing Agent shall have notified the Trustee pursuant to Section 2.17(1)(2) of the remarketing of the Outstanding Bonds and that the proceeds from the remarketing (including proceeds of remarketing of Outstanding Bonds to be purchased by the Remarketing Agent on the Remarketing Date for its own account) or other funds equal to the amount needed to purchase the remarketed Bonds on the Remarketing Date are expected to be available to the Trustee on the Remarketing Date and deposited into the Bond Purchase Fund in an amount equal to the principal amount of the Outstanding Bonds; (ii) there shall be on deposit with the Trustee, from funds provided by the Borrower, the Issuer or the Credit Provider, in the Bond Purchase Fund an additional amount sufficient to pay estimated Remarketing Expenses, or provision for the payment of the estimated Remarketing Expenses shall have been made to the satisfaction of the Trustee and the Remarketing Agent; (iii) the Issuer shall have notified the Trustee in writing that it has approved as to form and substance any disclosure document or offering materials which, in the opinion of counsel to the Issuer and the Remarketing Agent, is necessary to be used in connection with the remarketing of the Outstanding Bonds; 29 (iv) the Trustee shall have received written confirmation from the Credit Provider that the Credit Facility is in full force and effect and will continue in full force and effect during the ensuing Remarketing Period or that a Replacement Credit Facility will be in full force and effect during the ensuing Remarketing Period; (v) the Trustee shall have received confirmation that the Rating Agency shall have received and approved a Cash Flow Projection and a Verification Report, each based on the Mortgage Note Rate, as revised, to reflect the interest rate to be in effect with respect to the Outstanding Bonds on and after the Remarketing Date; and (iv) the Trustee shall have received written notice from the Remarketing Agent that the Remarketing Agent has received written confirmation from the Rating Agency that the then current rating assigned to the Outstanding Bonds will continue to be effective on the Remarketing Date; then the Trustee shall immediately give notice, by Electronic Means, which notice shall be immediately confirmed in writing, to the Credit Provider, the Remarketing Agent and the Loan Servicer that (a) all conditions precedent to the remarketing of the Outstanding Bonds have been satisfied and (b) the sale and settlement of the Outstanding Bonds is expected to occur on the Remarketing Date. Following the Trustee’s notice, the Outstanding Bonds shall be sold to the purchasers identified by the Remarketing Agent for delivery and settlement on the Remarketing Date, and the Trustee shall apply the funds in the Bond Purchase Fund on the Remarketing Date to payment of the purchase price of the Outstanding Bonds. Section 2.17(1)(4) Purchase of Tendered Bonds. If, not less than four (4) Business Days preceding a Remarketing Date, any condition set forth in Section 2.17(1)(3) has not been satisfied, then, unless the Outstanding Bonds are otherwise purchased on the Remarketing Date (a) the Remarketing Agent shall not sell any of the Outstanding Bonds on the Remarketing Date and (b) the Trustee shall, not less than four (4) Business Days preceding the Remarketing Date, give notice of that fact to the Credit Provider, by Electronic Means, and shall, not later than 9:30 a.m., Washington, D.C. time, on the third Business Day preceding the Remarketing Date, present a Certificate for a Purchased Bonds Advance under the Credit Facility. In the event that all of the conditions set forth in Section 2.17(1)(3) are satisfied not less than four (4) Business Days preceding the Remarketing Date, but there are insufficient moneys available to the Trustee on the Remarketing Date to purchase all of the tendered Outstanding Bonds on the Remarketing Date, then, unless the Outstanding Bonds are otherwise purchased on the Remarketing Date, (a) the Trustee shall, not later than 9:30 a.m., Washington, D.C. time, on the Business Day following the Remarketing Date, give notice of that fact to the Credit Provider, by Electronic Means, and with such notice shall present a certificate for a Purchased Bonds Advance under the Credit Facility and (b) any funds deposited by the Remarketing Agent with the Trustee shall be returned to the Remarketing Agent. Section 2.17(1)(5) Delivery of Bonds. Not later than 12:OO noon, New York time, on the Remarketing Date, each Bondholder of the Bonds then Outstanding will be required to deliver its Bonds to the Trustee (a) for delivery to the purchaser or purchasers identified by the Remarketing Agent or (b) for purchase by the Trustee for the account of the Borrower if the Outstanding Bonds are not to be remarketed. Bonds received by the Trustee shall be held by the Trustee in trust for the tendering Bondholders pending receipt of funds for the payment of such Bonds. Section 2.17(1)(6) Additional Remarketings. After the Initial Remarketing Date and prior to the final maturity of the Bonds, the Bonds Outstanding on the day immediately 30 -2% 7 following the last day of each Remarketing Period shall be remarketed on such day in accordance with the procedures set forth in this Section 2.17. Section 2.17(1)(7) Ownership and Pledge of Purchased Bonds. Purchased Bonds shall be owned by the Borrower and pledged to the Custodian, for the benefit of the Credit Provider, pursuant to the Pledge Agreement. As set forth in Section 2.4(ii) of the Pledge Agreement, the Trustee shall either (a) ensure that Purchased Bonds are delivered to the Custodian under the Pledge Agreement or (b) if, and only if, delivery of the Bonds is not possible, deliver a written entitlement order to the applicable financial intermediaries on whose records ownership of the Purchased Bonds is reflected directing the intermediaries to credit the security entitlement to the Purchased Bonds to the account of the custodian for the benefit of the Credit Provider and deliver to the Custodian a written confirmation of such credit, whether or not the Borrower notifies the Remarketing Agent to do so. Purchased Bonds shall not be held as Book-Entry Bonds, but shall, as soon as practicable, be issued in certificated form. Section 2.17(1)(8) Remarketing of Purchased Bonds. At such time as a Purchased Bond is remarketed by the Remarketing Agent, the Trustee shall (a) remit the proceeds from the remarketing to the Credit Provider, and (b) give written notice to the Remarketing Agent, the Borrower, and the Credit Provider that such Bond is no longer a Purchased Bond. A Purchased Bond shall not be remarketed without the consent of the Credit Provider during the occurrence and continuance of an Event of Default under the Indenture or any Credit Facility Agreement. Section 2.17(1)(9) Cancellation of Purchased Bonds. Purchased Bonds shall be cancelled and deemed redeemed, without any further action by the Trustee or otherwise under this Indenture, at the direction of the Credit Provider if the Purchased Bonds are not remarketed as of the first anniversary of the date of purchase of such Bonds. Section 2.17(1)(10) Purchased Bonds: No Credit Facility Support. The Credit Facility shall not constitute security, or provide liquidity, for Purchased Bonds. Section 2.17(2) Bond Purchase Fund. The Bond Purchase Fund is provided for in Section 4.10 and is to be implemented and applied solely in connection with the remarketing of Bonds pursuant to this Section 2.17. Section 2.17(3) Registration, Exchange and Delivery of Bonds In Connection With Remarketing. Section 2.17(3)(1) Execution, Authentication and Delivery. Bonds sold by the Remarketing Agent pursuant to Section 2.17(1)(2) shall be transferred by the Bond Registrar on the Bond Register and registered in the names of the purchasers of such Bonds, as specified in instructions from the Remarketing Agent; new Bonds shall be executed by the Issuer by manual or facsimile signature, authenticated by the Trustee and delivered to or upon the direction of such purchasers. Section 2.17(3)(2) Undelivered Bonds. An Undelivered Bond shall be treated as a lost Bond and shall be deemed tendered and a new Bond may be issued in place of it pursuant to Section 2.11 without providing indemnity. An Undelivered Bond shall not bear interest from and after the applicable Remarketing Date, and shall not be otherwise entitled to any rights under, or be secured by the lien of, this Indenture, but shall have only the right to receive the amount due as a result of the purchase of the Bonds pursuant to Section 2.17(1)(4), and only upon surrender of such Undelivered Bond to the Trustee or compliance with the provisions of Section 2.11 concerning payment of lost, stolen or destroyed Bonds. 31 Section 2.17(3)(3) Second Notices. In the event that any Bond required to be delivered to the Trustee for payment of the purchase price of such Bond shall not have been delivered to the Trustee on or before the 30th day following a Remarketing Date, the Trustee shall mail a second notice to the holder of the Bond at its address as shown on the Bond Register setting forth the requirements set forth in this Indenture for delivery of the Bond to the Trustee and stating that delivery of the Bond to the Trustee (or compliance with the provisions of this Indenture concerning payment of lost, stolen or destroyed Bonds) must be accomplished as a condition to payment of the purchase price or redemption price applicable to the Bond. Section 2.17(3)(4) Payment of Accrued Interest; Payment of Principal. Accrued interest payable to the Remarketing Date on the Outstanding Bonds shall be paid to the owners of the Outstanding Bonds as of the Record Date in the same manner as if the Outstanding Bonds were not purchased pursuant to Section 2.17(1)(4). The principal portion of the purchase price of the Outstanding Bonds shall be payable only upon surrender of such Bonds pursuant to Section 2.17(1)(5). Section 2.17(4) Appointment and Succession of Remarketing Agent. Section 2.17(4)(1) Appointment; Duties. The Issuer at the discretion of the Borrower appoints Red Capital Markets, Inc. as the Remarketing Agent for the Bonds. The Remarketing Agent shall advise the Trustee of its address for purposes of receipt of notices to be given to the Remarketing Agent under this Indenture and shall signify its acceptance of the duties and obligations imposed upon it under this Indenture by a written instrument of acceptance delivered to the Issuer and the Trustee, with copies to the Credit Provider and the Borrower. Under such acceptance, the Remarketing Agent must agree, with respect to each remarketing of Bonds: (i) to determine the Remarketing Period and establish the Remarketing Rate pursuant to and in accordance with Section 2.6(4)(1); (ii) to give the notices provided for or otherwise required in Section 2.6(4)(2); (iii) to hold all Bonds delivered to it under this Indenture in trust for the benefit of the Bondholders which shall have so delivered such Bonds until such Bonds are required to be delivered to the Trustee under this Indenture or until moneys representing the purchase price of such Bonds shall have been delivered to or for the account of or to the order of such Bondholders; (iv) to hold all moneys, if any, delivered to it under this Indenture for the purchase of Bonds in trust for the benefit of the purchaser delivering such moneys until such moneys are required to be delivered to the Trustee under this Indenture or mtil the Bonds purchased with such moneys shall have been delivered to or for the account of such purchasers, and not to commingle such funds with its general funds; and (v) to keep such books and records with respect to all actions taken and all funds and securities received, held and delivered under this Indenture as shall be consistent with prudent industry practice and to make such books and records available for inspection by the Issuer, the Trustee and the Credit Provider at all reasonable times. Section 2.17(4)(2) Merger; Consolidation; Sale of Business. Any legal entity into which the Remarketing Agent may be merged, or with which it may be consolidated, or to which its investment banking business and assets may be sold or transferred as a whole or substantially as a whole, shall be and become the successor Remarketing Agent under this Indenture and 32 shall be vested with all the powers, rights, obligations and duties under this Indenture as was its predecessor, without the execution or filing of any instrument by any party to this Indenture. Section 2.17(4)(3) Resignation. The Remarketing Agent may at any time resign and be discharged of the duties and obligations created by this Indenture by giving at least 90 days’ prior written notice to the Issuer, the Credit Provider, the Loan Servicer and the Trustee, provided that such resignation shall become effective prior to the expiration of such 90 day period upon, or shall not take effect in any event until, the date on which a successor Remarketing Agent approved in writing by the Credit Provider shall have been appointed, shall have executed a written instrument accepting its duties and obligations and sigrufying its rights under this Indenture and the Remarketing Agreement, and shall be serving as Remarketing Agent under this Indenture and the Remarketing Agreement. Section 2.17(4)(4) Removal. The Remarketing Agent may be removed at any time, upon thirty (30) days notice, by any instrument in writing executed by the Borrower, with the prior written consent of the Credit Provider, (provided that the Borrower is not in default under any Bond Document or any Mortgage and the Issuer Loan Document and provided that no event shall have occurred which, with notice or the lapse of time or both, would constitute such a default) delivered to the former Remarketing Agent, the Loan Servicer, the Issuer and the Trustee. The Borrower shall remove the Remarketing Agent at any time, upon thirty (30) days notice, by an instrument in writing, executed by the Borrower, at the direction of the Credit Provider. If the Remarketing Agent fails to perform its duties under this Indenture or the Remarketing Agreement (as determined by the Credit Provider, in its sole and absolute discretion) the Credit Provider will have the right, with or without cause, to remove the Remarketing Agent upon thirty (30) days notice by an instrument in writing filed with the Remarketing Agent, the Trustee, the Borrower, the Loan Servicer and the Issuer, provided that no such removal shall be effective unless contemporaneously with such removal a successor Remarketing Agent shall be appointed in the manner provided in this Indenture; the duties and obligations of the Remarketing Agent under this Indenture must be accepted by the successor Remarketing Agent. Section 2.17(4)(5) Successor Remarketing Agent. In the event of the resignation or removal of the Remarketing Agent, or in the event the Remarketing Agent shall be dissolved, or if the property or affairs of the Remarketing Agent shall be taken under the control of any state or federal court or administrative body, or if the Remarketing Agent shall have ceased to conduct its investment banking business, or if the authorization of the Remarketing Agent to conduct its investment banking business or to hold funds or securities of customers shall have been terminated or suspended by any regulatory body having jurisdiction over the affairs of the Remarketing Agent, by reason of insolvency, bankruptcy, violation of capitalization requirements, or for any other reason, a successor Remarketing Agent meeting the requirements set forth in Section 2.17(5) shall be appointed by the Borrower with the prior written consent of the Credit Provider (provided that the Borrower is not in default under any Bond Document or any Mortgage Loan Document and provided that no event shall have occurred which, with notice or the lapse of time or both, would constitute such a default) and written notice of such appointment shall be filed with the Trustee and the Loan Servicer. If the Borrower is disqualified from making such appointment, a successor Remarketing Agent may be appointed by the Credit Provider; notice of such appointment shall be given to the Issuer, the Trustee, the Loan Servicer and the Borrower. The former Remarketing Agent shall pay over, assign and deliver any moneys and Bonds held by it in such capacity to the successor Remarketing Agent when appointed, or, if no successor Remarketing Agent is appointed within 30 days, to the Trustee. 33 Section 2.17(4)(6) Rights of the Credit Provider; Trustee as Remarketing Agent. The Credit Provider shall be entitled to appoint a successor Remarketing Agent in the event that the Borrower shall fail to appoint a successor Remarketing Agent by the 90th day prior to a Remarketing Date. If neither the Borrower nor the Credit Provider has appointed a successor Remarketing Agent under this Indenture, then the Trustee shall assume from that point forward the duties of the Remarketing Agent stated in paragraph (iii) and (iv) of Section 2.17(4)(1), and only those duties, provided that the Trustee shall not be deemed to be the Remarketing Agent and shall not be responsible for any prior action or inaction of the Remarketing Agent. In no event shall the Trustee be required to market or sell any Bonds or to determine the Remarketing Period or the Remarketing Rate for any Bonds. Section 2.17(5) Qualifications of Successor Remarketing Agent. Any successor Remarketing Agent shall be a member of the National Association of Securities Dealers, Inc., or a commercial bank (or a separate department or division of one of the foregoing) which is a registered Municipal Securities Dealer, shall have a capitalization of at least $10,000,000 and shall be authorized by law to perform all the duties imposed upon it by this Indenture and applicable law. Section 2.17(6) Duties of Remarketing Agent with Respect to Remarketing. In addition to the duties and responsibilities of the Remarketing Agent prior to the remarketing of Bonds specified in Section 2.6(4)(1) and 2.6(4)(2) and elsewhere in this Section 2.17, with respect to each scheduled remarketing of Bonds, the Remarketing Agent shall: (i) not less than 75 days prior to the scheduled Remarketing Date, advise the Trustee (a) of its estimate of all Remarketing Expenses (except that such estimate need not include estimates of fees and expenses of the Trustee) expected to be incurred in connection with the remarketing of the Bonds, (b) whether any disclosure document or offering materials or any legal opinions will be required by the Remarketing Agent for use in offering the Bonds or as a condition to settlement and delivery of the Bonds on the Remarketing Date, whether counsel has been retained by the Remarketing Agent or (to the knowledge of the Remarketing Agent) by the Issuer or the Borrower in connection with the preparation of any such document, and (if such counsel has been or is to be retained) the identity and address of such counsel, and (c) that it will request from the Rating Agency confirmation and continuation of the existing rating for the Bonds, as contemplated in paragraph (vi) of Section 2.17(1)(3), and the information, if any, required to be furnished by the Trustee, the Issuer or the Credit Provider in connection with the request for confirmation of the existing rating of the Bonds; (ii) not less than 60 days prior to the Remarketing Date (a) submit a request to the Rating Agency for confirmation and continuation of the existing rating of the Bonds, and thereafter from time to time respond promptly to requests received from the Rating Agency for additional information requested by the rating agency and (b) request from the Issuer, the Borrower and the Credit Provider (with a copy of any such request being given to each other such party and to the Trustee) any information required to be furnished by any of such parties in order to complete the information necessary in connection with the request for confirmation and continuation of the existing rating of the Bonds or preparation or completion of any disclosure documents or offering materials to be used in the remarketing of the Bonds, and any information expected to be required in connection with any legal opinions to be rendered in connection with the remarketing of the Bonds or as a condition to settlement and delivery of the Bonds on the Remarketing Date; 34 (iii) not less than 35 days prior to the Remarketing Date, advise the Trustee, in writing, of (a) the Remarketing Date and (b) the rating, if any, then in effect with respect to the Bonds, and whether the rating then in effect for the Bonds is expected to continue upon the remarketing of the Bonds; (iv) not less than 15 Business Days prior to the Remarketing Date, submit to the Trustee a revised statement for all Remarketing Expenses which have been or are expected to be incurred by or are payable to the Remarketing Agent, together with statements or other appropriate information concerning any other Remarketing Expenses known to the Remarketing Agent which are payable to other parties, accompanied by (if the amount of such Remarketing Expenses shall exceed the estimate of such Remarketing Expenses previously furnished to the Trustee pursuant to paragraph (i) of this Section 2.17(6) by the Remarketing Agent), an explanation of such discrepancy; (v) not less than 10 days prior to the Remarketing Date, offer the Bonds for sale as contemplated in Section 2.17(1)(2), establish the Remarketing Rate and the Remarketing Period in the manner contemplated in Section 2.6(4)(1), and give notice to the Trustee, the Issuer, the Borrower and the Credit Provider of the Remarketing Rate and Remarketing Period so established, as required under Section 2.6(4)(2); (vi) not less than four Business Days prior to the Remarketing Date (a) advise the Trustee, the Credit Provider and the Loan Servicer whether the Bonds have been remarketed, and if the Bonds have been remarketed, commit to transfer to the Trustee by 12:OO noon, New York time, on the Remarketing Date, for deposit into the Bond Purchase Fund, an amount equal to the purchase price of all Bonds sold by the Remarketing Agent together with the purchase price of all Bonds, if any, to be purchased by the Remarketing Agent for its own account, (b) deliver to the Trustee information as to denominations, names and addresses of the purchasers of the Bonds and such other information with respect to the Bonds which have been remarketed by the Remarketing Agent as shall be necessary to enable the Trustee to prepare definitive Bonds for delivery to the purchasers of such Bonds, and (c) deliver to the Trustee all Bonds to be purchased on the Remarketing Date, if any, which may have been delivered to the Remarketing Agent; and (vii) not less than one Business Day prior to the Remarketing Date, notify the Trustee, the Credit Provider, the Loan Servicer and the Rating Agency of any Bonds which the Remarketing Agent was unable to remarket, if any; (viii) not later than 1:00 p.m., New York time, on the Remarketing Date, deliver to the Trustee all proceeds of remarketing, if any, which have been deposited with the Remarketing Agent; and (ix) on the Remarketing Date, provide to the Trustee, the Borrower, the Loan Servicer and the Credit Provider the schedule of sinking fund installments for the Bonds as provided in Section 3.4(1). Section 2.17(7) Duties of Trustee with Respect to Remarketing. In addition to the duties and responsibilities of the Trustee with respect to the remarketing of Bonds specified elsewhere in this Indenture, with respect to each scheduled remarketing of Bonds, the Trustee shall: (i) not less than 120 days prior to the scheduled Remarketing Date, give written notice to the Issuer, the Borrower, the Credit Provider, the Loan Servicer and the 35 Remarketing Agent to the effect that remarketing of the Bonds is scheduled to occur on such Remarketing Date and, if the Remarketing Agent shall have resigned, been removed or shall no longer be serving in such capacity and if no successor Remarketing Agent shall have been appointed as provided in this Indenture, request that the Issuer and the Credit Provider designate a successor to the Remarketing Agent as provided in Section 2.17( 4)( 5); (ii) not less than 60 days prior to the scheduled Remarketing Date, advise the Credit Provider, the Loan Servicer and the Borrower of the estimated amount of all Remarketing Expenses expected to be incurred in connection with the remarketing (including the estimate of Remarketing Expenses furnished by the Remarketing Agent, together with estimated fees and expenses of the Trustee) and that an amount equal to the estimated Remarketing Expenses is required to be on deposit with the Trustee as a condition to the remarketing of the Bonds; (iii) not less than 30 days prior to the scheduled Remarketing Date, give the notice to Bondholders required to be given pursuant to Section 2.17(1)(1); (iv) not less than 12 Business Days prior to the Remarketing Date, not* the Borrower of any deficiency in the amounts required to be deposited with the Trustee to pay estimated Remarketing Expenses, and not less than seven Business Days prior to the scheduled Remarketing Date, notify the Borrower, the Loan Servicer and the Credit Provider if such deficiency has not been funded by the Borrower by such date; (v) if applicable, on the Remarketing Date, notify the Credit Provider that it has not received all of the remarketing proceeds it expected to receive from the Remarketing Agent and, not later than 9:30 a.m. on the Business Day following the Remarketing Date, request a Purchased Bonds Advance from the Credit Provider pursuant to Section 2.17(1)(4); (vi) within 15 days following each Remarketing Date (a) if the Bonds shall have been remarketed, disburse funds held in the Remarketing Expenses Account for the payment of Remarketing Expenses for which it has received statements or other appropriate payment information sufficient to support such disbursement, remit any excess amounts on deposit in the Remarketing Expenses Account to the General Account (provided, that if the Trustee shall not have received a statement or other appropriate information sufficient for payment of any Remarketing Expenses of which the Trustee is aware, such disbursement will not be required to be made until five days subsequent to the date on which the amount of such remaining Remarketing Expenses required to be paid is established), and advise the Borrower and the Loan Servicer of the amount, if any, by which all Remarketing Expenses incurred with respect to the remarketing of which the Trustee is aware exceed the amount on deposit in the Remarketing Expenses Account for the payment of any Remarketing Expenses, and (b) in the event the Bonds were not remarketed on the Remarketing Date, remit to the Loan Servicer for the account of the holder of the Mortgage Note all amounts which have been deposited in the Remarketing Expenses Account for payment of Remarketing Expenses incurred notwithstanding that the Bonds have not been remarketed; and (vii) give a second notice to Bondholders who have failed to surrender their Bonds for payment or exchange on or before the 30th day following each Remarketing Date, as provided in Section 2.17(3)(3). 36 $73 Section 2.17(8) Failure to Give Notice. Neither failure to give or receive any notice described in this Section 2.17, nor the lack of timeliness of such notice or any defect in any notice (or in its content) shall affect the validity or sufficiency of any action required or provided for in this Section 2.17.1 37 ARTICLE 3 REDEMPTION OF BONDS Section 3.1. RedemDtion. The Bonds are subject to redemption prior to maturity only as set forth in this Article 111. All redemptions shall be in Authorized Denominations. Section 3.2. Optional Redemption. The Bonds are not subject to optional redemption prior to June 1,20-. Section 3.2(1) [OPTIONAL REDEMPTION ON AND AFT'ER JUNE 1, 20- and prior to the Initial Remarketing Date- AND PRIOR TO INITIAL REMARKETING DATE]. On and after June 1,20- the Bonds shall be subject to optional redemption only upon optional prepayment of the Mortgage Loan in accordance with the Mortgage Loan Documents. Optional redemption shall occur on the first day of any month for which timely notice of redemption can be given during the periods and at the respective redemption prices set forth below (expressed as percentages of the principal amounts of the Bonds called for redemption), plus accrued interest, if any, to the Redemption Date: Redemption Period {Both Dates Inclusive) to to and thereafter Redemption Prices {Expressed as a PercentaEe) 102% 101 100 [3.2(2) Optional Redemption After Initial Remarketing Date. If the Bonds then Outstanding are remarketed on the Initial Remarketing Date or, if applicable, any subsequent Remarketing Date for a Remarketing Period: (i) of 10 years or more, such Bonds shall be subject to optional redemption upon optional prepayment of the Mortgage Loan in accordance with the Mortgage Loan Documents; such redemption shall occur on the first day of any month on or after the seventh anniversary of the Remarketing Date, at a redemption price equal to (a) 102% of the principal amount of such Bonds if the redemption occurs in the period beginning on the seventh anniversary of the Remarketing Date and ending on the day prior to the eighth anniversary of the Remarketing Date, (b) 101% of the principal amount of such Bonds if the redemption occurs in the period beginning on the eighth anniversary of the Remarketing Date and ending on the day prior to the ninth anniversary of the Remarketing Date and (c) 100% of the principal amount of such Bonds if the redemption occurs on or after the ninth anniversary of the Remarketing Date, in each case together with accrued interest to the Redemption Date; (ii) less than 10 years but not less than four years, such Bonds shall be subject to optional redemption upon optional prepayment of the Mortgage Loan in accordance with the Mortgage Loan Documents; such redemption shall occur on the first day of any month on or after the second anniversary of the most recent Remarketing Date, at a redemption price equal to (a) 102% of the principal amount of such Bonds if the redemption occurs in the period beginning on the second anniversary of the Remarketing Date and ending on the day prior to the third anniversary of the Remarketing Date, (b) 101% of the principal amount of such Bonds if the redemption occurs in the period beginning on the third anniversary of the Remarketing Date and 38 ending on the day prior to the fourth anniversary of the Remarketing Date and (c) 100% of the principal amount of such Bonds if the redemption occurs on or after the fourth anniversary of the Remarketing Date, in each case together with accrued interest to the Redemption Date; (iii) greater than one year but less than four years, such Bonds shall be subject to optional redemption upon optional prepayment of the Mortgage Loan in accordance with the Mortgage Loan Documents, on the first day of any month on or after the first anniversary of the Remarketing Date at a redemption price equal to 100.5% of the principal amount of such Bonds plus accrued interest to the Redemption Date; or (iv) of one year or less, such Bonds shall not be subject to optional redemption prior to the next succeeding Remarketing Date or maturity date of such Bonds, as appropriate . ] Section 3.2(2)[3] Available Moneys Requirement. Optional redemption pursuant to Section 3.2(1) [or Section 3.2(2)] is not permitted unless (a) the redemption is effected solely with Available Moneys or (b) the Credit Provider provides its prior written consent to a redemption with other than Available Moneys. Notwithstanding any other provision of this Indenture to the contrary, optional redemption of the Bonds shall not be permitted unless on or before the Redemption Date, the Trustee has on hand Available Moneys in an amount sufficient to pay the End Period Payment on the Redemption Date. Neither the Issuer, the Credit Provider nor the Loan Servicer shall have any responsibility or liability to provide funds to be included in the End Period Payment. Section 3.3. Special - Mandatorv Redemption. The Bonds are subject to special mandatory redemption as provided in this Section. Unless otherwise specified in any subsection, each special mandatory redemption shall be (a) effected on the earliest practicable Redemption Date for which timely notice of redemption can be given pursuant to Section 3.5 following the occurrence of the event requiring such redemption and (b) at a redemption price equal to 100% of the principal amount of the Bonds to be redeemed plus accrued interest on such Bonds to the Redemption Date. Bonds subject to special mandatory redemption in part shall be redeemed in Authorized Denominations; if the Trustee receives an amount for the special mandatory redemption of the Bonds which is not equivalent to an Authorized Denomination, Bonds shall be redeemed in an amount equal to the next lowest whole integral of an Authorized Denomination to the amount received by the Trustee, with any excess to be held in the Redemption Account. Section 3.3(1) [Reserved] Section 3.3(2) [Reserved] Section 3.3(3) [Reserved] Section 3.3(4) Casualty or Condemnation. The Bonds shall be redeemed in whole or in part, at the direction of the Credit Provider in the event and to the extent that proceeds of insurance from any casualty to, or proceeds of any award from any condemnation, or any award as part of a settlement in lieu of condemnation, of the Mortgaged Property (in any such events, "Proceeds") are not applied in accordance with the Financing Agreement and the Mortgage Loan Documents, after payment of the expenses, if any, of collecting the Proceeds, to restoring or repairing the Mortgaged Property or, with the prior written consent of the Credit Provider, otherwise used for improvements to the Mortgaged Property, or applied to the 39 reimbursement of amounts owed to the Credit Provider pursuant to the Reimbursement Agreement. Such special mandatory redemption shall be: (i) (A) in whole following the involuntary destruction or loss of the Mortgaged Property in its entirety or nearly in its entirety, (B) funded with the Proceeds, with funds on deposit in the Funds and Accounts (other than the Rebate Fund, the Costs of Issuance Fund and the Fees Account) and with funds provided by the Borrower pursuant to the Financing Agreement, provided, however, that the Trustee shall be entitled to an Advance under the Credit Facility, in accordance with its terms, to the extent that the sum of the Proceeds, funds on deposit in the Funds and Accounts (other than the Rebate Fund, the Costs of Issuance Fund and the Fees Account) and funds provided by the Borrower pursuant to the Financing Agreement are insufficient to redeem all of the Bonds Outstanding and (C) deemed a corresponding involuntary prepayment of the Mortgage Loan; or (ii) (A) in part following the involuntary destruction or loss of the Mortgaged Property in part, (B) funded with the Proceeds, (C) in a principal amount equal to the next lowest whole integral of an Authorized Denomination to which such Proceeds can be rounded with any remaining Proceeds to be held in the Redemption Account and (D) deemed a corresponding involuntary prepayment of the Mortgage Loan in part. Section 3.3(5) Certain Defaults. The Bonds shall be redeemed in whole or in part at the written direction, or with the prior written consent, of the Credit Provider given to the Trustee and in the amount specified by the Credit Provider if the redemption is in part, or in whole or in part on or after the Conversion Date, upon the occurrence of an Event of Default under (and respectively as defined in) the Security Instrument, the Credit Facility Agreement or the Financing Agreement; or Section 3.3[6] From Excess Cash Flow Distributions. The Bonds shall be redeemed in whole or in part, in the event and to the extent that funds are transferred to the Redemption Account pursuant to paragraph (v) of Section 4.4(2). Section 3.4. Mandatorv Sinking Fund Redemption. Section 3.4(1) Bonds Maturing On June 1, 20-. The Bonds maturing on June 1, 20- shall be subject to mandatory sinking fund redemption in part, by lot, prior to maturity, from sinking fund installments [(a) on and before the Initial Remarketing Date] on the dates and in the amounts set forth in the below table, and (b) after the Initial Remarketing Date in principal amounts to be determined by the Remarketing Agent and the Loan Servicer upon the remarketing of the Outstanding Bonds on the Remarketing Date, so as to maintain payments on the Mortgage Loan, and amortization of principal of the Mortgage Loan, consistent with a term equivalent to the number of months remaining to the maturity date of the Mortgage Loan. The redemption price shall be equal to 100% of the principal amount of Bonds to be redeemed (and, therefore, without premium), plus accrued interest to the Redemption Date. Maturitv Date Principal Amount 40 as3 *Maturity [Not less than two Business Days prior to each Remarketing Date, the Loan Servicer shall prepare and provide to the Trustee, the Borrower, the Remarketing Agent and the Credit Provider an amortization schedule for the Mortgage Note showing substantially level monthly debt service on the Mortgage Note, based on the principal amount of the Mortgage Note outstanding on the applicable Remarketing Date and the interest rate established under the Mortgage Note in connection with the remarketing of the Bonds. Based on that amortization schedule, the Remarketing Agent shall provide to the Trustee, the Borrower, the Loan Servicer and the Credit Provider a schedule showing the sinking fund installments for the Bonds beginning on 1 and 1 following the Remarketing Date. The amortization schedule shall become effective on the applicable Remarketing Date and shall be binding on the Trustee, the Issuer, the Borrower, the Loan Servicer, the Credit Provider and the Bondholders, absent manifest error in the amortization schedule.] Section 3.4(2) Adjustment for Redemptions From Other Than Sinking Fund Installments. If less than all of the Bonds of a specific maturity have been redeemed other than from sinking fund installments applicable to such Bonds, the principal amount of the Bonds of such maturity to be redeemed in each year from sinking fund installments shall be decreased pro rata among all sinking fund installments applicable to such Bonds. Any such proportional redemption shall be confirmed in writing to the Trustee by the Loan Servicer. Section 3.5. Notice of Redemution. Section 3.5(1) Notice Requirement. The Trustee shall give notice of redemption of any Bonds in the name and on behalf of the Issuer by mail not less than fifteen (15) nor more than twenty (20) days prior to the specified Redemption Date, to the Registered Owner of each Bond to be redeemed at the address of such Registered Owner as shown on the Bond Register. Notwithstanding the foregoing, so long as the Book Entry System is maintained in effect, the Trustee must give notice of redemption only to the entity designated in the Representation Letter. The Trustee may give notice of redemption prior to the receipt of all funds necessary to effect the redemption, provided that redemption shall not occur unless and until the Trustee has on deposit and available or, if applicable, has received, all of the funds necessary to effect the redemption; otherwise, such redemption shall be cancelled. The Trustee shall cause a second notice of redemption to be sent by mail within ten (10) days after the 30th day after the Redemption Date to any Bondholder who has not submitted its Bond to the Trustee for payment on or before the 30th day following the Redemption Date. Section 3.5(1) Content of Notice. Each notice of redemption shall state: (i) (ii) the date of the redemption notice; the date of issue of the Bonds as originally issued and the complete official name of the Bonds, including the series designation; (iii) the numbers of the Bonds to be redeemed, by giving the individual certificate number of each Bond to be redeemed (or stating that all Bonds between two stated certificate numbers, both inclusive, are to be redeemed, or that all or a stated portion of the Bonds of one or more maturities have been called for redemption); 41 (iv) the CUSIP numbers of all Bonds being redeemed; (v) in the case of a partial redemption of Bonds, the principal amount of each Bond being redeemed; (vi) the rate or rates of interest borne by each Bond being redeemed; (vii) the maturity date of each Bond being redeemed; (viii) the place or places where amounts due upon such redemption will be payable; (ix) redeemed; the Redemption Date and redemption price of each Bond being (x) the name, address and telephone number and the contact person at the office of the Trustee with respect to such redemption; (xi) that all Bonds to be redeemed are required to be surrendered at the office of the Trustee designated by the Trustee for that purpose for redemption at the redemption price; (xii) Redemption Date; that interest on such Bonds will not accrue from and after the (xiii) that redemption is conditional upon receipt by the Trustee of sufficient moneys to redeem the Bonds; and (xiv) any conditions precedent to redemption. Section 3.5(3) Additional Notice. At the same time notice of redemption is sent to the Registered Owners pursuant to Section 3.5(1), the Trustee shall send notice of redemption by first class mail, overnight delivery service or other overnight means, postage or charges prepaid, (a) to the Rating Agency, (b) if the Bonds are not subject to the Book-Entry System, to any Registered Owner of $1,000,000 or more in aggregate principal amount of Bonds to be redeemed, (c) to any Securities Depository holding Bonds and (d) to at least two (2) of the national information services (described below) that disseminate securities redemption notices. For this purpose Information Services include: Financial Information, Inc. "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 10004; Moody's Investors Service "Municipal and Government," 99 Church Street, 8th Floor, New York, New York 10007, Attention: Municipal News Reports; and Standard and Poor's Ratings Group "Called Bond Record," 25 Broadway, New York, New York 10004; or, in accordance with then current guidelines of the Securities and Exchange Commission, such other addresses and/or such other services providing information with respect to called bonds, or any other such services as the Issuer may designate in writing to the Trustee. Section 3.5(4) Validity of Proceedings for the Redemption of Bonds. Neither failure to give or receive any notice described in Sections 3.5(1) or 3.5(3), failure to give notice timely nor any defect in any notice (or in its content, as required by Section 3.5(2) or in the manner in which notice is given) shall affect the validity or sufficiency of any proceedings for the redemption of the Bonds to be redeemed. 42 Section 3.5(5) Revocation of Notice of Redemption; Cancellation of Redemption. The Trustee shall revoke any notice of optional redemption if the requirements of Section 3.2(3) have not been satisfied. The Trustee shall revoke any notice of optional or special mandatory redemption if the Trustee does not, on a Redemption Date, have sufficient funds, as permitted or required by this Indenture, to redeem the Bonds to be redeemed on such Redemption Date. The Trustee shall give notice of revocation by the same means as is provided in this Section 3.5 for the giving of notice of redemption, or by Electronic Means confirmed in writing. The redemption shall be canceled once the Trustee has given notice of revocation. Notwithstanding notice having been given in the manner provided above, any redemption of Bonds shall be canceled at the direction of the Credit Provider if the Credit Provider has notified the Trustee in writing that a default under any Credit Facility Agreement has occurred. Section 3.5(6) Copies to the Credit Provider, the Loan Servicer and the Remarketing Agent. The Trustee shall provide copies of all notices given under this Section 3.5 and of all revocations of notices to the Credit Provider, the Remarketing Agent and the Loan Servicer at the same time it gives notices to Bondholders. Neither the failure to give such notice to the Credit Provider, the Loan Servicer or the Remarketing Agent, nor any defect in such notice shall affect the validity of any proceedings for the redemption of the Bonds. Section 3.6. Redemption Pavments. Notice of redemption having been given in the manner provided in Section 3.5, and all conditions precedent to redemption having been satisfied, the Bonds so called for redemption shall become due and payable on the Redemption Date, and interest on the Bonds shall cease to accrue from and after the Redemption Date and the holders of the Bonds so called for redemption shall thereafter no longer have any security or benefit under this Indenture except to receive payment of the redemption price for such Bonds upon surrender of such Bonds to the Trustee. Except during any period in which the Bonds are subject to the Book Entry System: (i) no payment shall be made by the Trustee with respect to any Bond called for redemption until such Bond is presented for payment or cancellation or the Trustee receives the items required by Section 2.11 with respect to any mutilated, lost, stolen or destroyed Bond; and (ii) if less than the entire principal amount of a Bond is called for redemption, the Issuer shall execute, and the Trustee shall authenticate and deliver, upon the surrender of such Bond to the Trustee, without charge by the Issuer or the Trustee to the Bondholder, in exchange for the unredeemed principal amount of such Bond, a new Bond or Bonds of the same interest rate, maturity and term, in any Authorized Denomination, in aggregate principal amount equal to the unredeemed balance of the principal amount of the Bond so surrendered. During any period in which the Bonds are subject to the Book Entry System, the rules, regulations and practices governing the Book Entry System shall govern whether and the extent to which the Trustee shall make payments on any Bond called for redemption with or without surrender of the Bond (or portion of the Bond) to be redeemed, and the circumstances (if any) under which the Issuer shall be required to execute, and the Trustee shall authenticate and deliver, a new Bond in exchange for the unredeemed portion of any Bond called for redemption in part. All moneys held by or on behalf of the Trustee for the redemption of particular Bonds shall be held in trust for the account of the holders of the Bonds to be redeemed, as provided in and in accordance with Section 4.14. CUSIP number identification with appropriate dollar amounts for each CUSIP number also shall accompany all redemption payments. 43 Section 3.7. Selection of Bonds to be Redeemed Upon Partial Redemption of Bonds. If less than all of the Outstanding Bonds are called for redemption (other than mandatory sinking fund redemption), Bonds to be redeemed shall be selected by the Trustee on a reasonably proportionate basis, in minimum amounts of $5,000, from, among all the then existing maturities of the Bonds Outstanding. If less than all of the Outstanding Bonds are called for redemption, Bonds to be redeemed shall be selected by the Trustee on a reasonably proportionate basis, in minimum amounts of $5,000, from among all the then existing maturities of the Outstanding Bonds. "Reasonably proportionate basis" shall be determined and effectuated as nearly as practicable by multiplying the total amount of money available to redeem Bonds by the ratio which the principal amount of Bonds Outstanding in each maturity bears to the principal amount of all of the Bonds Outstanding, and within a maturity by lot or in such other manner as the Trustee shall, in its sole discretion, deem fair. In the case of an optional redemption from an optional prepayment of the Mortgage Loan, the Trustee shall make its selection immediately following receipt of notice of the optional prepayment. In the case of a special mandatory redemption, the Trustee shall make such selection immediately following: (i) a transfer of funds pursuant to paragraph (v) of Section 4.4(2) with respect to a special mandatory redemption under Section 3.3(4); or (ii) receipt of funds with respect to a special mandatory redemption under Section 3.3(4) or 3.3(5). With respect to any special mandatory redemption in part pursuant to Section 3.3(2), 3.3(4) or 3.3(5), the sufficiency of the scheduled cash flow from the monthly payments to be made under the Mortgage Note and Investment Income with respect to the General Account to pay the principal of and interest on the Bonds and the Third Party Fees (to the extent included in the Mortgage Note Rate) when due and payable following such redemption, shall, if necessary, be established by a then current Cash Flow Projection which shall be verified by a Verification Report (upon each of which the Trustee may rely), each prepared and delivered to the Trustee, the Credit Provider and the Loan Servicer, at the Borrower's expense, at least 15 days prior to the Redemption Date. Absent a Cash Flow Projection, the Bonds to be redeemed shall be redeemed proportionately. In the event that any Bonds of the same maturity are to be redeemed in part, the Trustee shall assign to each Bond then Outstanding a distinctive number for each $5,000 of the principal amount of such Bond and from the numbers so assigned to such Bonds, the Trustee shall randomly select as many numbers as, at $5,000 for each number, shall equal the principal amount of such Bonds to be redeemed. The Bonds within a maturity that are to be redeemed shall be the Bonds to which are assigned the numbers selected by the Trustee, but only so much of the principal amount of each such Bond of a denomination of more than $5,000 shall be redeemed as shall equal $5,000 for each number assigned to it and so selected. Bonds may be redeemed only in Authorized Denominations. For the purposes of this Section 3.7, Bonds which have theretofore been selected for redemption shall not be deemed Outstanding. If there is called for redemption less than the entire principal amount of a Bond, the Issuer shall execute and the Trustee shall authenticate and deliver, upon surrender of such Bond, without charge to the holder of such Bond, in exchange for the unredeemed principal amount of such Bond, Bonds of the same maturity, interest rate, principal amount, series and tenor in any Authorized Denomination in the amount of the unredeemed principal of the surrendered Bond. Section 3.8. Purchase of Bonds In Lieu of Redemution. Unless otherwise expressly provided in this Indenture, and subject to the provisions of Section 3.9, if at any time Available Moneys are held in any Fund or Account to be used to redeem Bonds, in lieu of such redemption the Borrower may, in writing and with the written consent of the Credit Provider, 44 direct the Trustee to use part or all of such moneys to purchase Bonds which would otherwise be subject to redemption from such moneys. The purchase price of such Bonds (excluding accrued interest, but including any brokerage and other charges) shall not exceed the applicable redemption price of the Bonds which would be redeemed but for the operation of this Section 3.8, with accrued interest on any such Bond to be paid from the same Fund or Account from which accrued interest would be paid upon the redemption of such Bond. Any such purchase must be completed prior to the time notice would otherwise be required to be given to redeem the Bonds and may not occur, without the consent of the Trustee, after a Record Date. All Bonds so purchased shall be canceled by the Trustee and the face amount of the Bonds so purchased shall be applied as a credit against the Issuer's obligation to redeem such Bonds from such moneys. Savings resulting from the purchase of Bonds at less than their respective redemption prices shall be used to purchase or redeem additional Bonds to the extent permitted by this Indenture. The Borrower may, at the expense of the Borrower, direct the Trustee to request the submission of tenders following notice to Bondholders requesting such submission prior to making the purchases authorized by this Section 3.8. Notice of acceptance of tenders shall be given by first-class mail, postage prepaid, to all registered Bondholders, or in the case of Book-Entry Bonds, to DTC, or any successor Securities Depository. The Borrower may specify the maximum and minimum period of time which shall transpire between the date upon which such notice is to be given and the date upon which such tenders are to be accepted. No tenders shall be considered or accepted at any price exceeding the price specified in this Section 3.8. The Trustee shall accept bids with the lowest price and in the event the moneys available for purchase pursuant to such tenders are not sufficient to permit acceptance of all tenders and if there are tenders at an equal price above the amount of moneys available for purchase, then the Trustee shall select by lot, in such manner as it shall determine in its discretion, the Bonds tendered which shall be purchased. Section 3.9. Cancellation of Bonds. All Bonds which have been redeemed, paid, retired or delivered to the Trustee for exchange shall not be reissued but shall be canceled and destroyed by the Trustee. 45 ARTICLE 4 FUNDS AND ACCOUNTS Section 4.1. Creation of Funds and Accounts. The following Funds and Accounts are created with the Trustee: (i) the Revenue Fund and within the Revenue Fund, the General Account, the Redemption Account, the Credit Facility Account and the Fees Account; (ii) the Rebate Fund; and. (ii) the Bond Purchase Fund, and within the Bond Purchase Fund, a Remarketing Proceeds Account and a Remarketing Expenses Account. The Trustee shall hold and administer the Funds and Accounts in accordance with this Indenture. Section 4.2. IReservedl. On the Closing Date, the Trustee shall make the following deposits: Section 4.3. IReservedl. Section 4.4. The Revenue Fund General Account. Section 4.4(1) Deposits Into the General Account. The Trustee shall deposit each of the following amounts into the General Account: (i) on the Conversion Date, the Initial Debt Service Deposit, as provided in paragraph (iii) of Section 4.2; (ii) all regularly scheduled payments of principal, if any, and interest on the Mortgage Loan; (iii) interest paid in connection with any prepayment of the Mortgage Loan; (iv) all Investment Income on the Funds and Accounts (except that, as provided in Article V, Investment Income earned on amounts on deposit in the 46 Accounts of the Mortgage Loan Fund shall be credited to and be retained in the respective Accounts of the Mortgage Loan Fund, Investment Income earned on amounts on deposit in the Rebate Fund shall be credited to and be retained in the Rebate Fund and Investment Income earned on amounts on deposit in the Costs of Issuance Deposit Account of the Costs of Issuance Fund shall be credited to and be retained in the Costs of Issuance Deposit Account of the Costs of Issuance Fund); (v) from time to time, upon receipt, Available Moneys provided pursuant to Section 3.2(2) to fund the interest portion of any End-Period Payment; and (vi) any other moneys made available for deposit into the General Account from any other source[, including, but not limited to, any excess amounts in the Bond Purchase Fund pursuant to Section 4.10(3)]. Section 4.4(2) Disbursements From the General Account. The Trustee shall disburse or transfer, as applicable, moneys on deposit in the General Account at the following times and apply such moneys in the following manner and in the following order of priority: (i) on each Interest Payment Date, the Trustee shall disburse an amount equal to the amount of interest due on the Bonds on such Interest Payment Date and shall apply such amount to the payment of such interest so due; (ii) on each Redemption Date on which a mandatory sinking fund redemption pursuant to Section 3.4 is scheduled to take place, the Trustee shall transfer to the Redemption Account an amount of principal equal to the sinking fund redemption payment due on such Redemption Date; (iii) on each Maturity Date and the date of acceleration of the Bonds, the Trustee shall disburse an amount equal to the principal due on the Bonds on such date and shall apply such amount to the payment of such principal so due; (iv) on each Interest Payment Date, the Trustee shall transfer an aggregate amount equal to that portion of the Issuer's Annual Fee, the Trustee's Annual Fee and the Rebate Analyst's Annual Fee (to the extent (a) such Third Party Fees are included in the Mortgage Note Rate, as described in Section 4.3 of the Financing Agreement, and (b) such Third Party Fees are not paid in advance on the Closing Date) payable on such date (or on any date prior to the next Interest Payment Date) to the Fees Account; and (v) on each Interest Payment Date and following the disbursement, transfer and application of funds described in the preceding paragraphs (i) through (iv), the Trustee shall transfer any amounts remaining in the General Account in excess of $ , the minimum balance required to be maintained on the basis of the Cash Flow Projection attached to this Indenture as Exhibit -, to the Redemption Account and, following such transfer, shall apply any moneys so transferred (including any moneys so transferred on any prior Interest Payment Date), to the redemption of Bonds as provided in Section 3.3(6). Section 4.4(3) Remittance of Set Rate Interest to the Credit Provider. In addition to the disbursements and transfers provided for in Section 4.4(2), on and before the Conversion Date, the Trustee shall, monthly, remit to the Credit Provider, out of the General Account, in accordance with written instructions provided by the Credit Provider to the Trustee, that portion of the Borrower's monthly payment of interest under the Mortgage Note allocable to Set Rate Interest. The Trustee's remittance shall be made immediately upon receipt of the 47 Borrower's monthly payment of interest under the Mortgage Note, but in any event, not later than the Business Day following receipt of payment from the Borrower or, if applicable, the Business Day following the date on which any such payment of interest is made from amounts on deposit in the Mortgage Loan Fund and credited to the Borrower under the terms of the Mortgage Note. Section 4.4(4) Funds Transfers to Facilitate Purchases. The Trustee is authorized to treat the date of any purchase of Bonds pursuant to Section 3.9 as a Redemption Date, and for such purpose to transfer moneys to the Redemption Account from the General Account as necessary in connection with any such application of moneys. Section 4.5. The Revenue Fund - Redemution Account. Section 4.5(1) Deposits Into the Redemption Account. The Trustee shall deposit each of the following amounts into the Redemption Account: (i) any prepayment of principal of the Mortgage Loan, and any Available Moneys provided by or on behalf of the Borrower pursuant to Section 3.2(3) to fund any premium on the Bonds to be paid in connection with such prepayment; (ii) that portion of any other deposit or transfer of funds representing principal corresponding to the principal to be paid on any optional or special mandatory redemption of Bonds; (iii) any amount required to be transferred to the Redemption Account pursuant to paragraph (ii) of Section 4.4(2); (iv) Section 4.4(2); and after the Conversion Date, the amounts provided for in paragraph (v) of (v) any other amount received by the Trustee and required by the terms of this Indenture or the Financing Agreement to be deposited into the Redemption Account. Section 4.5(2) Disbursements From the Redemption Account. The Trustee shall disburse moneys on deposit in the Redemption Account at the following times and apply such monies in the following manner: (i) on each Redemption Date on which a mandatory sinking fund redemption pursuant to Section 3.4 is scheduled to take place, the Trustee shall apply amounts on deposit in the Redemption Account, including amounts transferred pursuant to paragraph (ii) of Section 4.4(2), to payment of the sinking fund redemption due on such Redemption Date; and (ii) on each Redemption Date on which a redemption pursuant to Section 3.2 or Section 3.3 is scheduled to take place, the Trustee shall apply amounts on deposit in the Redemption Account to the payment of principal of and premium, if any, on the Bonds to be redeemed on such Redemption Date. Section 4.6. The Revenue Fund - Credit Facilitv Account. Section 4.6(1) Deposits Into the Credit Facility Account. The Trustee shall deposit all amounts advanced under the Credit Facility into the Credit Facility Account. No other moneys 48 shall be deposited into the Credit Facility Account. The Credit Facility Account shall be closed at such time as the Credit Provider has no continuing liability under the Credit Facility. Section 4.4(2) Disbursements From the Credit Facility Account. The Trustee shall, on each date on which a payment is due under this Indenture and in respect of which an Advance is made under the Credit Facility, apply such Advance, on the date such payment is due, to the payment of the amounts in respect of which such Advance was made. Section 4.7. The Revenue Fund - Fees Account. Section 4.7(1) Deposits Into the Fees Account. The Trustee shall deposit into the Fees Account (a) amounts provided for in paragraph (iv) of Section 4.4(2) and (b) any payment of a Third Party Fee pursuant to Section 4.3 of the Financing Agreement to the extent that such Third Party Fee is not included in the Mortgage Note Rate. Section 4.7(2) Disbursements From the Fees Account. Following the deposit provided for in Section 4.7(1), the Trustee shall disburse moneys on deposit in the Fees Account on each Interest Payment Date to the payment of Third Party Fees in satisfaction of the obligations of the Borrower under Section 4.3 of the Financing Agreement. In the event the amount in the Fees Account is insufficient to pay such Third Party Fees, the Trustee shall inform the Loan Servicer and make written demand on the Borrower for the amount of such insufficiency and, pursuant to the terms of the Financing Agreement, the Borrower shall be liable to promptly pay the amount of such insufficiency to the Trustee within five Business Days after the date of the Trustee's written demand. Section 4.8. JReservedl. Section 4.9. The Rebate Fund. Section 4.9(1) Deposits; Administration. The "Rebate Fund' shall be held and applied as provided in this Section 4.9. On any date on which any amounts are required by applicable federal tax law to be rebated to the federal government, amounts shall be withdrawn by the Trustee from the General Account and deposited into the Rebate Fund for such purpose. All money at any time deposited into the Rebate Fund shall be held by the Trustee in trust, to the extent required to satisfy any rebate requirement (as calculated by the Rebate Analyst) to the United States Government. Neither the Issuer, the Borrower, the Bondholders nor the Credit Provider shall have any rights in or claim to such moneys. All amounts deposited into or on deposit in the Rebate Fund shall be governed by this Section, by Section 7.2(9) of the Financing Agreement and by the Tax Certificate. The Trustee shall conclusively be deemed to have complied with such provisions if it follows the written instructions of the Issuer or of Bond Counsel or the Rebate Analyst on behalf of the Issuer, including supplying all necessary information in the manner set forth in the Tax Certificate. The Trustee shall not be required to take any actions,under the Tax Certificate in the absence of written instructions from the Issuer, or from Bond Counsel or the Rebate Analyst on behalf of the Issuer. Within 55 days of the end of each Bond Year, the Borrower shall cause the Rebate Analyst to calculate the amount of rebatable arbitrage, in accordance with Section 148(f)(2) of the Code and Section 1.148-3 of the Rebate Regulations (taking into account any applicable exceptions with respect to the 49 computation of the rebatable arbitrage, described, if applicable, in the Tax Certificate (eg, the temporary investments exceptions of Section 148(f)(4)(B) and (C) of the Code), for this purpose treating the last day of the applicable Bond Year as a Computation Date, within the meaning of Section 1.148-l(b) of the Rebate Regulations (the "Rebatable Arbitrage"). Within 55 days of the end of each fifth Bond Year, upon the written direction of the Issuer, or Bond Counsel or the Rebate Analyst on behalf of the Issuer, the Trustee shall deposit into the Rebate Fund amounts provided by the Borrower, if and to the extent required in order that the balance in the Rebate Fund shall equal the amount of Rebatable Arbitrage so calculated in accordance with the foregoing provisions of this Section 4.9(1). Any funds remaining in the Rebate Fund after redemption and payment of all of the Bonds and payment and satisfaction of any rebate requirement, or provision made therefor satisfactory to the Trustee, shall be withdrawn and remitted to the Issuer as provided for in Section 8.1. The Trustee shall pay, as directed by the Issuer, or Bond Counsel or the Rebate Analyst on behalf of the Issuer, to the United States Treasury, out of amounts in the Rebate Fund: (i) not later than 60 days after the end of (a) the fifth Bond Year and (b) each applicable 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 (ii) not later than 60 days after the payment of all of the Bonds, an amount equal to 100°/~ of the Rebatable Arbitrage calculated as of the end of such applicable Bond Year, and any income attributable to the Rebatable Arbitrage, computed in accordance with Section 148(f) of the Code. Each payment required to be made under this Section shall be made to the Internal Revenue Service Center at the address required for such submission on or before the date on which such payment is due, and shall be accompanied by Internal Revenue Service Form 8038- T, which shall be prepared by the Rebate Analyst and provided to the Trustee. Notwithstanding any provision of this Indenture to the contrary, the obligation to remit payment of the rebate amount to the United States and to comply with all other requirements of this Section 4.9, Section 7.2(9) of the Financing Agreement and the requirements of the Tax Certificate shall survive the defeasance or payment in full of the Bonds. Section 4.9(2) Records. The Trustee shall obtain and keep such records of the computations made pursuant to this Section 4.9 as are required under Section 148(f) of the Code. The Trustee shall keep and make available to the Issuer and the Borrower such records concerning the investments of the gross proceeds of the Bonds and the investments of earnings from those investments as may be requested by the Issuer or the Borrower in order to enable the Borrower to make the computations required under Section 148(f) of the Code. Section 4.9(3) Exception. Notwithstanding the foregoing, the computations and payments of rebate amounts referred to in this Section 4.9 need not be made to the extent that neither the Issuer nor the Borrower will thereby fail to comply with any requirements of Section 148(f) of the Code based on an Opinion of Bond Counsel, a copy of which shall be provided to the Trustee. [Section 4.10. Bond Purchase Fund. 4.10(1) CREATION; DEPOSITS; APPLICATION. The Trustee shall deposit: (i) all proceeds of the remarketing of Bonds remitted to the Trustee by the Remarketing Agent pursuant to the provisions of paragraph (viii) of Section 2.17(6) into the Remarketing Proceeds Account; and 50 (ii) all amounts paid to the Trustee by the Borrower, the Issuer or the Credit Provider to pay Remarketing Expenses into the Remarketing Expenses Account. (iii) The Trustee shall apply amounts on deposit in the (a) Remarketing Proceeds Account to pay the purchase price of Bonds purchased under this Indenture to the former owners of such Bonds upon presentation of the Bonds to the Trustee, and (b) Remarketing Expenses Account to pay Remarketing Expenses, as provided in paragraph (vi) of Section 2.17(7). 4.10(2) PAYMENT OF EXCESS AMOUNTS IF BONDS NOT REMARKETED. In the event that the Bonds Outstanding are not remarketed on a scheduled Remarketing Date, all amounts in the Bond Purchase Fund in excess of amounts on deposit in the Bond Purchase Fund required to pay the purchase price of the Bonds shall be disbked as provided in Section 2.17( 7). 4.10(3) PAYMENT OF EXCESS AMOUNTS IF BONDS REMARKETED. In the event that the Bonds Outstanding are remarketed and the proceeds of remarketing exceed 100% of the principal amount of the Bonds Outstanding or in the event funds received by the Trustee to pay Remarketing Expenses are not required for such purpose, such excess amounts shall be transferred to the General Account.] Section 4.10. Certain Monevs to be Auulied - at the Direction of the Credit Provider. Upon a special mandatory redemption of the Bonds in whole pursuant to Section 3.3(3), paragraph (i) of Section 3.3(4) or Section 3.3(5), or in part pursuant to paragraph (i) of Section 3.3(5), the funds on deposit in the Funds and Accounts (other than in the Rebate Fund, the Costs of Issuance Fund and the Fees Account) shall, at the direction of the Credit Provider, in its discretion, be transferred to the Redemption Account and applied to the redemption of the Bonds to be redeemed. Section 4.11. Records. The Trustee shall keep and maintain accurate records with respect to the Funds and Accounts. The Trustee shall file at least an annual accounting of the Funds and Accounts and the payment history on the Bonds and the Mortgage Loan with the Issuer, the Loan Servicer, the Construction Lender and the Borrower. Any notices, reports or other information delivered by the Trustee to the Loan Servicer with respect to any Fund or Account shall also be delivered, upon request, to the Credit Provider. Section 4.12. Reuorts Bv the Trustee. The Trustee shall, on or before the 20th day of each month, file with the Loan Servicer and the Borrower a statement setting forth in respect of the preceding calendar month (i) the amount withdrawn or transferred by it and the amount deposited within or on account of each Fund and Account, including the amount of Investment Income on each Fund and Account transferred to the General Account; (ii) the amount on deposit with it at the end of such month to the credit of each Fund and Account; (iii) a brief description of all obligations held as an investment of moneys in each such Fund and Account; (iv) the amount applied to the purchase or redemption of Bonds and a description of the Bonds or portions of Bonds so purchased or redeemed; and / 51 (v) any other information which the Borrower, the Credit Provider, the Loan Servicer or the Issuer may reasonably request. No such monthly statement need be rendered pursuant to the provisions of this Indenture if no activity occurred in the Fund or Account during such preceding month. Upon the written request of any Bondholder owning 25% or more in aggregate principal amount of Bonds then Outstanding, the Trustee, at the Borrower's expense, shall provide a copy of such statement to the Bondholder. All records and files pertaining to the Trust Estate shall be open at all reasonable times during regular business hours of the Trustee to inspection and audit by the Issuer, the Borrower, the Loan Servicer, the Credit Provider and, so long as the Letter of Credit is in effect, the Construction Lender, and their agents and representatives upon reasonable prior notice. Section 4.13. Monevs Held for Particular Bonds. The amounts held by the Trustee for payment of the interest, principal or redemption price due on any date with respect to particular Bonds shall, pending such payment, be set aside and held in trust by it for the Bondholders entitled to such payment and, for the purposes of this Indenture, such interest, principal or redemption price, after the due date of payment, shall no longer be considered to be unpaid. Section 4.14. Nonmesentment of Bonds. In the event any Bond shall not be presented for payment when the principal of such Bond becomes due, either at maturity or at the date fixed for redemption of such Bond or otherwise, if amounts sufficient to pay such Bond shall have been deposited with the Trustee for the benefit of the owner of the Bond and shall have remained unclaimed for two (2) years after such principal has become due and payable, such amounts shall, to the extent amounts are owed to the Credit Provider, as set forth in a written statement of the Credit Provider addressed to the Trustee, be paid to the Credit Provider, with any excess to be paid to the Borrower. Upon such payment, all liability of the Issuer and the Trustee to the holder of any Bond for the payment of such Bond shall forthwith cease, determine and be completely discharged, provided, however, that the Trustee, before being required to make any such payment to the Credit Provider or the Borrower, shall cause to be published once in a financial newspaper or journal of general circulation in New York, New York, notice that such moneys remain unclaimed and that, after a date specified in such notice, which shall not be less than thirty (30) days from the date of such publication, any unclaimed balance of such moneys then remaining will be paid to the Credit Provider or the Borrower. The cost of such publication shall be paid from the unclaimed amount held by the Trustee. The obligation of the Trustee under this Section 4.14 [4.15] to pay any such amounts to the Credit Provider or the Borrower shall be subject to any provisions of law applicable to the Trustee or to such amounts providing other requirements for disposition or escheat of unclaimed property. 52 ARTICLE 5 INVESTMENTS Section 5.1. Investment Limitations. Moneys held as part of any Fund or Account shall be invested and reinvested in Permitted Investments. Permitted Investments shall have maturities corresponding to, or shall be available for withdrawal without penalty no later than, the dates upon which such moneys will be needed for the purpose for which such moneys are held. Moneys on deposit in the (a) General Account and the Fees Account shall be invested only in investments described in paragraphs (i), (ii), (iii), (vii) and (viii) of the definition of Permitted Investments, (b) Redemption Account shall be invested only in investments described in paragraph (i) of the definition of Permitted Investments, (c) Credit Facility Account [and the Bond Purchase Fund] shall be held uninvested and (d) Costs of Issuance Fund shall, until transferred, disbursed or returned to the Borrower pursuant to Section 4.8, be invested only in investments described in paragraph (viii) of the definition of Permitted Investments. Permitted Investments shall be held by or under the control of the Trustee. All Investment Income from moneys held in all Funds and Accounts other than the Mortgage Loan Fund, the Rebate Fund and the Costs of Issuance Fund (other than as provided below) upon receipt shall be deposited into the General Account; Investment Income from moneys held in the Mortgage Loan Fund shall be retained in the Mortgage Loan Fund; Investment Income from moneys held in the Rebate Fund shall be retained in the Rebate Fund; Investment Income from moneys held in the Costs of Issuance Deposit Account of the Costs of Issuance Fund shall be retained in the Costs of Issuance Fund. Section 5.2. Trustee's Authoritv and Responsibilities. The Trustee is authorized and directed to cause to be sold and reduced to cash a sufficient amount of Permitted Investments whenever the cash balance is or will be insufficient to make a requested or required disbursement. The Trustee shall not be accountable for any depreciation in the value of any Permitted Investment or for any loss resulting from such sale. The Trustee may trade with itself and its affiliates in the purchase and sale of securities for investments, and may transact purchases and sales through its investment department or through its affiliates. The Trustee and its affiliates may act as principal, agent, sponsor, advisor or depository with respect to any investments. All Permitted Investments shall be made by the Trustee in its name, as Trustee, at the written direction of the Borrower, subject to the limitations contained in this Indenture. If no direction is provided to the Trustee, the Trustee will invest such moneys in investments described in paragraph (viii) of the definition of Permitted Investments. All investment of amounts deposited in any fund or account created by or pursuant to the this Indenture, or otherwise containing gross proceeds of the Bonds (within the meaning of the Code) should be acquired, disposed of, and valued (as of the date valuation is required by the Indenture or the Code) at Fair Market Value and investment of amounts deposited in any fund or account established hereunder that are subject to yield restriction under applicable provisions of the Code shall be valued at their present value within the meaning of the Code. The Trustee shall take such actions as shall be necessary to assure that Permitted Investments purchased by it under this Indenture are held pursuant to the terms of this Indenture and are subject to the trusts and security interests created by this Indenture. The Trustee shall furnish to the Issuer and the Borrower monthly statements detailing all investment activity of the Trustee with respect to the Funds and Accounts. The Issuer (and the Borrower by its execution of the Financing Agreement) acknowledges that to the extent regulations of the Comptroller of the Currency or other applicable regulatory authority grant the Issuer or the Borrower the right to receive brokerage confirmations of security transactions as they occur, the Issuer and the Borrower specifically waive receipt of such confirmations to the extent permitted by law. 53 ARTICLE 6 SECURITY Section 6.1. Securitv; Pledge - of Trust Estate; Compliance with Law. The Issuer covenants as set forth in this Section 6.1. Section 6.1(1) Issuer's Authority. The Issuer is duly authorized under the Constitution and Laws of the State, including the Act, to (a) duly authorize and issue the Bonds, (b) execute and deliver this Indenture, (c) enter into the Financing Agreement and the Regulatory Agreement, (d) assign its interest in the Financing Agreement (except the Reserved Rights) and (e) pledge and assign the Trust Estate in the manner and to the extent set forth in this Indenture for the benefit of (1) the Bondholders, to secure the payment of the principal of, premium, if any, and interest on the Bonds in accordance with the terms and provisions of this Indenture and the Bonds and (2) the Credit Provider to secure the payment of all amounts owing to the Credit Provider under the Financing Agreement and the Credit Facility Agreement. Section 6.1(2) Pledge of Trust Estate. The pledge and assignment of the Trust Estate pursuant to this Indenture shall attach and be valid and binding upon the execution and delivery of this Indenture by the Issuer and the Trustee, without any physical delivery of the Trust Estate or further act. Any and all interest in property acquired after the date of this Indenture of any kind or nature which is to become subject to the lien of this Indenture shall, without any further conveyance, assignment or act on the part of the Issuer or the Trustee, be subject to the lien of this Indenture as fully and completely as though specifically described in this Indenture, but nothing contained in this sentence shall be deemed to modify or change the obligations of the Issuer under Section 6.1(5). The lien of the pledge and security interest created by this Indenture shall be valid and binding and prior to the claims of any and all parties having claims of any kind in tort, contract or otherwise against the Issuer irrespective of whether such parties have notice of the lien. The Trust Estate is free and clear of any pledge, lien, charge or encumbrance other than the lien of this Indenture. Section 6.1(3) Valid Issuance of the Bonds. All actions on the part of the Issuer for the valid issuance of the Bonds and the execution and delivery of this Indenture have been duly and effectively taken, the Bonds are and will be valid, binding and enforceable obligations of the Issuer according to the terms of the Bonds and this Indenture, and the Bonds, together with all other indebtedness of the Issuer, are within all applicable debt limits. Section 6.1(43) Payment of Bonds. Subject to Section 6.3, the Issuer shall promptly pay or cause to be paid the principal of, premium, if any, and interest on the Bonds at the place, on the dates and in the manner provided in this Indenture and the Bonds. Section 6.1(5) Further Assurances. The Issuer will, to the extent permitted by law, execute, acknowledge and deliver such supplemental indentures and other instruments and documents, and perform such further acts, as the Trustee or the Credit Provider may reasonably require to perfect, and maintain perfected, the security interest in the Trust Estate or to better assure, transfer, convey, pledge, assign and confirm to the Trustee or the Credit Provider all of its interest in the property described in this Indenture and the Revenues and other amounts pledged by this Indenture for the purposes set forth in this Section 6.1. The Issuer will, at the sole expense of the Borrower, cooperate to the extent necessary with the Borrower, the Trustee and the Credit Provider (subject to Section 7.9) in their defenses of the Trust Estate against the claims and demands of all Persons. Section 6.2. Issuer's Negative - Covenants. 54 3\ Section 6.2(1) No Modification of Security. Without the prior written consent of the Trustee and the Credit Provider and without prior notification to the Rating Agency, the Issuer will not alter, mod* or cancel, or agree to alter, modify or cancel, any agreement which relates to or affects the Trust Estate. Section 6.2(2) No Additional Liens or Conveyances. The Issuer will not, without the prior written consent of the Credit Provider and without prior notification to and confirmation of the rating on the Bonds from the Rating Agency, create or suffer any lien or charge upon the Trust Estate prior to or on a parity with the pledge, security interest and lien created by this Indenture for (a) the benefit of the Bondholders for the payment of the principal of, premium, if any, and interest on the Bonds or (b) the benefit of the Credit Provider. Except as otherwise provided in this Indenture, the Issuer will not sell, convey, mortgage, encumber or otherwise dispose of any portion of the Trust Estate. Section 6.3. Indenture to the contrary: Limitations on Liabilitv. Notwithstanding any other provision of this (i) the obligations of the Issuer with respect to the Bonds are not general obligations of the Issuer but are special, limited obligations of the Issuer payable by the Issuer solely from the Security for the Bonds; (ii) nothing contained in the Bonds or in this Indenture shall be considered as assigning or pledging any funds or assets of the Issuer other than the Trust Estate; (iii) the Bonds shall not be a debt of the State the Issuer or of any other political subdivision of the State, and neither the State the Issuer nor any other political subdivision of the State shall be liable for the payment of the Bonds; (iv) neither the faith and credit of the Issuer, the State nor of any other political subdivision of the State are pledged to the payment of the principal or of interest on the Bonds; (v) no failure of the Issuer to comply with any term, condition, covenant or agreement in this Indenture or in any document executed by the Issuer in connection with the Mortgaged Property, or the issuance, sale and delivery of the Bonds shall subject the Issuer to liability for any claim for damages, costs or other charge except to the extent that the same can be paid or recovered from the Trust Estate; and (vi) the Issuer shall not be required to advance any moneys derived from any source other than the Trust Estate for any of the purposes of this Indenture, any of the other Bond Documents or any of the Mortgage Loan Documents, whether for the payment of the principal or redemption price of, or interest on, the Bonds, the payment of any fees or administrative expenses or otherwise. The Issuer and the Trustee acknowledge that (a) the obligations of Fannie Mae as the Credit Provider under the Credit Facility are not backed by the full faith and credit of the United States of America, but by the credit of Fannie Mae, a federally-chartered, stockholder owned corporation, and (b) payment of principal of, and interest on and premium, if any, on the Bonds is not guaranteed by Fannie Mae. Section 6.4. Enforcement. The Issuer agrees that the Trustee and, so long as a Credit Facility provided by Fannie Mae shall continue in effect, the Credit Provider, in its name or in 55 the name of the Issuer, may enforce against the Borrower or any Person any rights of the Issuer under the Bond Documents (other than the Reserved Rights) whether or not the Issuer is in default under this Indenture or under the Financing Agreement, but neither the Trustee nor the Credit Provider shall be deemed to have assumed any of the obligations of the Issuer under the Bond Documents. Section 6.5. Preservation of Revenues. The Issuer shall not take any action to interfere with or impair the pledge and assignment of the Trust Estate under this Indenture, or the Trustee's enforcement of any rights under this Indenture or under the Financing Agreement or the Regulatory Agreement without the prior written consent of the Trustee and the Credit Provider. The Trustee may give such written consent, and may itself take any such action or consent to an amendment or modification to the Financing Agreement, the Regulatory Agreement or the Credit Facility then in effect, only (a) with the prior written consent of the Credit Provider, (b) following receipt by the Trustee of written confirmation from the Rating Agency that the taking of such action or the execution and delivery of such amendment or modification will not adversely affect the rating then assigned to the Bonds by the Rating Agency, and (c) if the Trustee shall have received an opinion of Bond Counsel to the effect that such action or such amendment or modification will not affect adversely the validity of the Bonds or the exclusion from gross income, for federal income tax purposes, of the interest payable on the Bonds. Section 6.6. Reauest and Indemnification. If any consent or other action on the part of the Issuer is required in this or any other document, the Issuer shall have no obligation to act unless first requested to do so, and the Issuer shall have no obligation to expend time or money or to otherwise incur any liability unless indemnity satisfactory to the Issuer has been furnished to it. Section 6.7. Possession of the Mortgage -- Note and Securitv Instrument. True copies of the Security Instrument shall be delivered to and held by the Loan Servicer. The Credit Provider shall have custody of the original Mortgage Note, duly endorsed to the Trustee and the Credit Provider, as their interests may appear, and the recorded Security Instrument. Section 6.8. No Disposition of Mortgage -- Loan, Mortvage Note or Securitv Instrument; Exceuted Assignments; - Amendment; Substitution. Section 6.8(1) No Disposition of Mortgage Loan, Mortgage Note or Security Instrument; Excepted Assignments. Notwithstanding anything contained in this Indenture which may state or imply to the contrary, so long as a Wrongful Dishonor has not occurred or, if it has occurred, is not continuing, the Trustee shall not transfer its interest in the Mortgage Loan, the Mortgage Note or the Security Instrument or any interest in the Mortgage Loan, the Mortgage Note or the Security Instrument other than to or at the direction of the Credit Provider as provided in the Assignment or to a successor Trustee or as provided in Section 6.8(2) or release the Mortgage Loan from the lien of this Indenture without the Credit Provider's prior written consent. Section 6.8(2) Amendment; Substitution. Upon receipt of written direction from the Credit Provider, the Trustee shall consent to any amendment, modification, supplement or restatement of the Mortgage Note and/or the Security Instrument, or exchange the Mortgage Note and/or the Security Instrument for a new mortgage note and/or security instrument on the Mortgaged Property which may be executed by a person (the "New Borrower") other than the Borrower, provided that if the Credit Provider or its designee shall have acquired the Mortgaged Property through foreclosure, by accepting a deed in lieu of foreclosure or by comparable conversion of the Mortgage Loan, no approval from the Issuer shall be required. Except in the event of a transfer of the Mortgage Loan to the Credit Provider, prior to 56 consenting to a new mortgage note and/or security instrument, the Trustee shall have (a) received written evidence that the New Borrower has executed and recorded, as applicable, one or more documents, acceptable to the Issuer and the Credit Provider substantially in the forms of the Financing Agreement and the Regulatory Agreement (or executed and recorded one or more assumptions, acceptable to the Issuer, the Credit Provider and, so long as the Letter of Credit is in effect, the Construction Lender, of all of the applicable Borrower's obligations under the Financing Agreement and the Regulatory Agreement) and that the Credit Facility Agreement and the Credit Facility, if required, have been modified to be applicable to the new mortgage loan, (b) received from the Rating Agency written confirmation that the rating to be in effect with respect to the Bonds from and after delivery to the Trustee of the new mortgage note and security instrument and the modified Credit Facility Agreement and modified Credit Facility will not be lower than the rating then in effect for the Bonds, (c) received an Opinion of Bond Counsel to the effect that such exchange and modification, in and of itself, will not affect the excludability of the interest payable on the Bonds from gross income for federal income tax purposes and (d) received from the Issuer, the consent required by the Regulatory Agreement or the Financing Agreement, if any. In addition, if the substitution has resulted in an amendment of (or other modification to) the Credit Facility Agreement or the Credit Facility, the Trustee shall receive from the Credit Provider an Opinion of Counsel to the Credit Provider, who may be an employee of the Credit Provider, to the effect that the modified Credit Facility Agreement and Credit Facility are valid and binding obligations of the Credit Provider, subject to any applicable bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting the rights of creditors' generally, and general equitable principles. Prior to consenting to any amended, modified, supplemented or restated Mortgage Note or Security Instrument which changes the payment terms of the Mortgage Loan, the Trustee shall have received from the Rating Agency written confirmation that the rating to be in effect with respect to the Bonds from and after delivery to the Trustee of the amended, modified, supplemented or restated Mortgage Note or Security Instrument will not be lower than the rating then in effect for the Bonds. Section 6.8(2) Compliance with Assignment. The Trustee and the Issuer acknowledge the Trustee's obligation to assign its interest in the Security Instrument and the Mortgage Note to the Credit Provider and the control of the Mortgage Loan Rights by the Credit Provider under, and on the terms provided in, the Assignment. Section 6.9. Books, Records and Accounts. Section 6.9(1) Books, Records and Accounts. The Trustee, on behalf of the Issuer, shall keep and maintain, or cause to be kept and maintained, proper books, records and accounts, including the Bond Register, in which complete and accurate entries shall be made of all of its transactions relating to the Bonds, this Indenture, the Financing Agreement, the Regulatory Agreement, the Mortgage Loan, the Credit Facility, the Funds and Accounts, Permitted Investments and Investment Income, all of which shall, at all reasonable times, and upon reasonable prior notice, be subject to inspection and audit, at the expense of the Borrower, by the Issuer, the Credit Provider, the Borrower, the Loan Servicer and Bondholders owning not less than 25% in aggregate principal amount of Bonds then Outstanding or any of their accountants or agents duly authorized in writing, each of whom shall have the right, at its own expense, to make copies of any such books of record and accounts. Section 6.9(2) List of Bondholders. The Trustee will keep on file at the Principal Office of the Trustee a list of names and addresses of all Bondholders as shown on the Bond Register maintained by the Trustee as Bond Registrar which shall be available for inspection by any Bondholder or its attorney duly authorized in writing during normal business hours of the Trustee upon reasonable prior notice. 57 Section 6.10. Maintenance of Lien on Trust Estate. The Trustee will cause financing statements and continuation statements with respect to the Trust Estate described in this Indenture to be at all times filed in such manner and in such places, if any, as may be required by law. To the extent possible under applicable law, as in effect in the jurisdiction(s) in which the Trust Estate is located, the Trustee will maintain the priority of the security interest created by this Indenture in the Trust Estate as a first lien on the Trust Estate, and warrant, protect, preserve and defend its interest in the Trust Estate and the security interest of the Trustee and the Credit Provider in the Trust Estate and all rights of the Trustee and the Credit Provider under this Indenture against all actions, proceedings, claims and demands of all persons, and defend, preserve and protect all rights of the Bondholders and the Credit Provider under this Indenture against all claims and demands of all persons, all paid for solely from the Trust Estate. Section 6.11. Compliance with Rating Agencv Reauests. The Trustee shall comply with any reasonable request in writing by a Rating Agency for information in its possession regarding the Bonds which such Rating Agency requests in order to review its rating on the Bonds. Further, the Trustee shall comply with any reasonable request by the Issuer or Bondholders holding not less than 51% in aggregate principal amount of Bonds then Outstanding for information in its possession regarding the Bonds, the Mortgage Loan, the Credit Facility or the Mortgaged Property. Any expense incurred by the Trustee pursuant to this Section 6.11 shall be borne by the Borrower. Section 6.12. Tax Covenants. Section 6.12(1) Issuer's Covenants. The Issuer covenants to and for the benefit of the Bondholders that it will: (i) neither make or use nor cause to be made or used any investment or other use of the proceeds of the Bonds or the moneys and investments held in the Funds and Accounts which would cause the Bonds to be arbitrage bonds under Section 148 of the Code and the Regulations issued under Section 148 of the Code or which would otherwise cause the interest payable on the Bonds to be includable in gross income for federal income tax purposes; and (ii) enforce or cause to be enforced all obligations of the Borrower under the Regulatory Agreement in accordance with its terms and seek to cause the Borrower to correct any violation of the Regulatory Agreement within a reasonable period after any such violation is first discovered; (iii) not take or cause to be taken any other action or actions, or fail to take any action or actions, which would cause the interest payable on the Bonds to be includable in gross income for federal income tax purposes; (iv) at all times do and perform all acts and things permitted by law and necessary or desirable in order to assure that interest paid by the Issuer on the Bonds will be excluded from the gross income, for federal income tax purposes, of the Bondholders pursuant to Section 103 of the Code, except in the event where any such owner of Bonds is a "substantial user" of the facilities financed with the Bonds or a "related person" within the meaning of the Code; 58 3\23 (v) not take any action or permit or suffer any action to be taken if the result of the same would be to cause the Bonds to be "federally guaranteed" within the meaning of Section 149(b) of the Code and the Regulations; and (vi) require the Borrower to agree, pursuant to the terms and provisions of the Financing Agreement, not to commit any act and not to make any use of the proceeds of the Bonds, or any other moneys which may be deemed to be proceeds of the Bonds pursuant to the Code, which would cause the Bonds to be "arbitrage bonds" within the meaning of Section 148 of the Code, and to comply with the requirements of the Code throughout the term of the Bonds. In furtherance of the covenants in this Section 6.12, the Issuer and the Borrower shall execute, deliver and comply with the provisions of the Tax Certificate, which is by this reference incorporated into this Indenture and made a part of this Indenture as if set forth in this Indenture in full, and by its acceptance of this Indenture the Trustee acknowledges receipt of the Tax Certificate and acknowledges its incorporation into this Indenture by this reference. Section 6.12(2) Trustee's Covenants. The Trustee agrees that it will invest funds held under this Indenture in accordance with the terms of this Indenture and the Tax Certificate (this covenant shall extend throughout the term of the Bonds, to all Funds and Accounts created under this Indenture and all moneys on deposit to the credit of any Fund or Account). The Trustee covenants to and for the benefit of the Bondholders that, notwithstanding any other provisions of this Indenture or of any other instrument, it will not make or cause to be made any investment or other use of the moneys in the Funds or Accounts which would cause the Bonds to be classified as "arbitrage bonds" within the meaning of Sections 103(b) and 148 of the Code or would cause the interest on the Bonds to be includable in gross income for federal income tax purposes; provided that the Trustee shall be deemed to have complied with such requirements and shall have no liability to the extent it reasonably follows the written directions of the Borrower, the Issuer or the Rebate Analyst. This covenant shall extend, throughout the term of the Bonds, to all Funds created under this Indenture and all moneys on deposit to the credit of any Fund. Pursuant to this covenant, with respect to the investments of the Funds and Accounts under this Indenture, the Trustee obligates itself to comply throughout the term of the issue of the Bonds with the requirements of Sections 103(b) and 148 of the Code; provided that the Trustee shall be deemed to have complied with such requirements and shall have no liability to the extent it reasonably follows the written directions of the Borrower, the Issuer or the Rebate Analyst. The Trustee further covenants that should the Issuer or the Borrower file with the Trustee (it being understood that neither the Issuer nor the Borrower has an obligation to so file), or should the Trustee receive, an Opinion of Bond Counsel to the effect that any proposed investment or other use of proceeds of the Bonds would cause the Bonds to become "arbitrage bonds," then the Trustee will comply with any written instructions of the Borrower or Bond Counsel regarding such investment or use so as to prevent the Bonds from becoming "arbitrage bonds," and the Trustee will bear no liability to the Issuer, the Borrower, the Bondholders or the Credit Provider for investments made in accordance with such instructions. 59 ARTICLE 7 THE CREDIT FACILITY Section 7.1. Acceptance of the Credit Facility. On the Conversion Date, the Trustee shall accept the Credit Facility issued by the Credit Provider. The Trustee shall abide by and take all actions required of the Trustee under the Credit Facility in accordance with its terms in order to have monies available to make payments to Bondholders as required by this Indenture. Section 7.2. No Disposition - of Credit Facility. The Trustee shall not, without the prior written consent of the Registered Owners of all of the Bonds then Outstanding, transfer, assign or release the Credit Facility until the principal of and interest on the Bonds shall have been paid or duly provided for in accordance with the terms of this Indenture, except (a) to a successor Trustee or (b) to the Credit Provider upon expiration or other termination of the Credit Facility in accordance with its terms, including expiration on its stated expiration date or (c) upon payment under the Credit Facility of the full amount payable under the Credit Facility. If at any time during the term of the Credit Facility, a successor Trustee shall be appointed and qualified under this Indenture and the Credit Facility is not assignable or transferable to the successor Trustee, the resigning Trustee shall request the Credit Provider to deliver a new Credit Facility, substantially identical to the Credit Facility, to the successor Trustee. The resigning Trustee shall continue to serve as Trustee under this Indenture until such time as the new Credit Facility is delivered to the successor Trustee. If the resigning Trustee fails to make this request, the successor Trustee shall do so before accepting its appointment. Upon delivery of the new Credit Facility to the successor Trustee, the prior Credit Facility shall be returned to the Credit Provider and canceled, and the new Credit Facility shall thereafter be subject to all of the provisions of this Indenture relating to the Credit Facility, and shall be deemed for all purposes of this Indenture to be the Credit Facility then in effect. Section 7.3. Replacement - Credit Facility. At the request of the Credit Provider, the Trustee shall exchange the Credit Facility with the Credit Provider for a new Credit Facility (a "Replacement Credit Facility"), provided that such exchange shall not adversely affect the rating then in effect for the Bonds. Section 7.4. Advances Under the Credit Facilitv. Section 7.4(1) Presentation of Certificates; Application of Moneys. The Trustee shall present Certificates (as defined in the Credit Facility) to the Credit Provider as required by and in accordance with the Credit Facility in order to receive Advances under, and as and to the extent provided in and permitted by, and in the amounts available under, the Credit Facility. For purposes of determining the amount of any Advance, the Trustee shall, at the direction of the Credit Provider, first apply any amounts then on deposit in the Funds and Accounts (other than the Rebate Fund, the Costs of Issuance Fund and Fees Account) for such purposes. Section 7.4(2) Return of Payments Under the Credit Facility. In the event that the Trustee receives an Advance from the Credit Provider under the Credit Facility, and thereafter amounts are received by the Trustee from the Borrower, the Remarketing Agent or other source, which later received amounts are in payment of amounts satisfied by the Advance under the Credit Facility, then such later received amounts shall be promptly reimbursed to the Credit Provider to the extent of the amount so paid by the Credit Provider. Section 7.5. Enforcement of Credit Facilitv. The Trustee shall hold the Credit Facility and shall in its name enforce all rights of the Trustee and all obligations of the Credit Provider under the Credit Facility for the benefit of the Bondholders. 60 313 Section 7.6. Certain Notices to the Credit Provider. The Trustee shall promptly give written notice to the Credit Provider and the Loan Servicer of (a) an Act of Bankruptcy, (b) the making of any claim in connection with seeking the avoidance as a preferential transfer (a "Preference Claim") of any payment of principal of, or interest on, the Bonds, (c) the occurrence of any Event of Default known to it under this Indenture or under any of the other Bond Documents or of any Event of Default under the Security Instrument, or any event known to it which, with the passage of time or service of notice, or both, would constitute an Event of Default under this Indenture or under (and as defined in) the other Bond Documents or would constitute an Event of Default under the Security Instrument, specifying the nature and period of existence of such event and the actions being taken or proposed to be taken with respect to such event and (d) the receipt of any prepayment, in whole or in part, with respect to the Mortgage Loan. Section 7.7. Certain Rights of the Credit Provider. Each Bondholder, by its purchase of Bonds, the Trustee and the Issuer agree that the Credit Provider may at any time during the continuation of an insolvency proceeding of the Issuer or the Borrower (an "Insolvency Proceeding") direct all matters relating to the Bonds in any such Insolvency Proceeding, including, without limitation, (a) all matters relating to any Preference Claim or the lifting of the automatic stay, (b) the direction of any appeal of any order relating to any Preference Claim or to the lifting of the automatic stay and (c) the posting of any surety, supersedeas or performance bond pending any such appeal. The Credit Provider shall have the right to contest, directly or indirectly (e.g. through the Trustee) any Preference Claim or the imposition of the automatic stay. The Trustee shall promptly notify the Credit Provider of any demand for recovery of a payment. The Trustee agrees to contest any attempted recovery or stay or to seek to lift or modify the automatic stay at the written direction of the Credit Provider, as well as to cease such actions or settle any claim or contest in accordance with written instructions from the Credit Provider, provided that the Trustee is indemnified to the reasonable satisfaction of the Trustee by the Credit Provider for all expenses to which it may be put and against any liability, except liability which is adjudicated to have resulted from its own negligence or willful misconduct, by reason of any action so taken. Such indemnification shall not be required if the Trustee fails to timely notify the Credit Provider, as required by the preceding sentence, and such failure is prejudicial to the Credit Provider. In addition, and without intending to limit the foregoing, the Credit Provider shall be subrogated to the rights of the Issuer, the Trustee and the Bondholders in any Insolvency Proceeding to the extent it has performed its payment obligations under the Credit Facility, including, but not limited to, any rights of any party to an adversary proceeding with respect to any court order issued in connection with any such Insolvency Proceeding and rights pertaining to the filing of a proof of claim, voting on a reorganization plan and rights to payment under any of the above. Section 7.8. Limitations on Rights of Credit Provider. Notwithstanding anything contained in this Indenture to the contrary, all provisions of this Indenture regarding consents, approvals, directions, waivers, appointments, requests or other actions by the Credit Provider shall be deemed not to require or permit such consents, approvals, directions, waivers, appointments, requests or other actions and shall be read as if the Credit Provider were not mentioned in such provisions if a Wrongful Dishonor has occurred, but only for so long as the Wrongful Dishonor is continuing, provided, however, that the Credit Provider's right to all notices under the Bond Documents and to the payment of amounts due to the Credit Provider pursuant to the terms of the Bond Documents shall continue in full force and effect. The foregoing shall not affect any other rights of the Credit Provider. Section 7.9. References to Credit Provider When No Credit Facilitv Is In Effect. All provisions of this Indenture relating to the rights of the Credit Provider shall be of no force or 61 effect if there is no Credit Facility in effect and there are no Purchased Bonds or Bonds in which the Credit Provider has a security interest pursuant to the Pledge Agreement and all amounts owing to the Credit Provider under the Credit Facility Agreement have been paid. In such event, all references to the Credit Provider shall have no force or effect. 62 ARTICLE 8 DISCHARGE OF LIEN Section 8.1. Discharge of Lien and Securitv Interest. Section 8.1(1) Discharge. Upon satisfaction of the conditions precedent set out in Section 8.1(2), the Trustee shall (a) execute and deliver to the Issuer such instruments in writing prepared by the Issuer or its counsel and provided to the Trustee and the Credit Provider as shall be required to cancel and discharge this Indenture and the pledge and assignment of the Trust Estate, (b) reconvey, assign and deliver to the Issuer so much of the Trust Estate as may be in its possession or subject to its control (except for (1) moneys and Government Obligations held for the purpose of paying Bonds and (2) moneys and Permitted Investments held in the Rebate Fund for payment to the United States Government), who shall, in turn, convey, assign and deliver the remaining Trust Estate to the Borrower, and (c) return the Credit Facility to the Credit Provider. Section 8.1(2) Conditions to Discharge. The conditions precedent to the cancellation and discharge of this Indenture and the other acts described in Section 8.1(1) are (a) payment in full of the Bonds, (b) payment of the Trustee's Annual Fee and the Trustee's ordinary costs and expenses under this Indenture, (c) receipt by the Trustee of a written statement from the Credit Provider stating that all obligations owed to the Credit Provider under the Credit Facility Agreement and the Mortgage Loan Documents have been fully paid, (d) receipt by the Trustee of a written statement from the Construction Lender stating that all amounts owed to the Construction Lender in respect of the Letter of Credit have been fully paid, (e) payment of all Extraordinary Items, (f) receipt by the Trustee of a written statement from the Issuer stating that all amounts owed to the Issuer in respect of Reserved Rights have been fully paid, (g) receipt by the Trustee of an Opinion of Counsel, at the expense of the Borrower, to the effect that the Credit Provider has no further obligation under the Credit Facility and (h) receipt by the Trustee of an Opinion of Counsel, at the expense of the Borrower, stating that all conditions precedent to the satisfaction and discharge of this Indenture have been satisfied. Section 8.1(3) Survival of Rights and Powers. The rights and powers granted to the Trustee with respect to the payment, transfer and exchange of Bonds and the Reserved Rights of the Issuer shall survive the cancellation and discharge of this Indenture. Section 8.2. Pavment of Outstanding Amounts. If the Bonds have been paid in full, but any one or more of the other conditions precedent set out in Section 8.1(2) are not satisfied because an amount has not been paid, the Trustee shall, prior to cancellation and discharge of this Indenture, pay over, assign and deliver to the persons listed below, in the strict order set out below, the amounts required to satisfy those conditions precedent: Section 8.2(1) The Trustee's Annual Fee and Ordinary Costs and Expenses. If any portion of the Trustee's Annual Fee currently due and unpaid or ordinary costs and expenses of the Trustee remain unpaid at the time of discharge, the Trustee shall pay over, assign and deliver to itself so much of (and not to exceed) the Trust Estate as shall be necessary to fully pay such unpaid amounts. No Extraordinary Items shall be included under this Section 8.2(1). Section 8.2(2) The Credit Provider. If the Trustee receives a written statement from the Credit Provider stating that moneys are owed to the Credit Provider under the Credit Facility Agreement or the Mortgage Loan Documents, including obligations in respect of reimbursement of funds advanced by the Credit Provider to the Trustee for application to the payment of Remarketing Expenses, the Trustee shall pay over, assign and deliver to the Credit 63 Provider so much of (and not to exceed) the remaining Trust Estate as shall be necessary to fully pay all amounts due and owing to the Credit Provider, as determined by the Credit Provider, in its sole and absolute discretion. The reimbursement from the Trust Estate of amounts advanced by the Credit Provider for application to the payment of Remarketing Expenses shall be made with interest at a rate equal to the Activity Rate as provided in the Reimbursement Agreement, from the date or dates of such advances through the date of such reimbursement (the Trustee shall be authorized to rely on the written statement of the Credit Provider as to the amount of such advances and interest accrued on such advances). Section 8.2(3) Trustee. If any Extraordinary Items have not been paid to the Trustee, the Trustee shall pay over, assign and deliver to itself so much of (and not to exceed) the remaining Trust Estate as shall be necessary to fully pay all amounts owing to the Trustee for Extraordinary Items. Section 8.2(4) Issuer. If the Trustee receives a written statement from the Issuer stating that moneys are owed to the Issuer in respect of the Reserved Rights, the Trustee shall pay over, assign and deliver to the Issuer so much of (and not to exceed) the remaining Trust Estate as shall be necessary to fully pay all amounts owing to the Issuer in respect of the Reserved Rights. Section 8.3. Defeasance. Section 8.3(1) Provision for Payment of Bonds. Any Bond shall be deemed to have been paid within the meaning of Section 8.1 if: (i) there has been irrevocably deposited with the Trustee either (A) sufficient Available Moneys or (B) Government Obligations, which are not subject to early redemption and which are purchased with Available Moneys, of such maturities and interest payment dates and bearing such interest as will, without further investment or reinvestment of either the principal amount of such Government Obligations or the interest earnings on Government Obligations (the earnings to be held in trust also), be sufficient, together with any Available Moneys deposited pursuant to this paragraph, in each case as verified by a written report of an independent certified public accountant, for the payment on their respective maturity dates, or redemption dates prior to maturity, of the principal of such Bonds and redemption premium, if any, and interest to accrue on such Bonds to such maturity or redemption dates, provided, that the Trustee has received, at the expense of the Borrower (a) an Opinion of Counsel rendered by bankruptcy counsel that such Available Moneys or Government Obligations purchased with Available Moneys are not subject to avoidance under Section 547 or 544 and are not subject to an automatic stay pursuant to Section 362 of the Bankruptcy Code or any successor statute, and, as such, are not recoverable under Section 550(a) of the Bankruptcy Code or other applicable insolvency law, should there be a petition by or against the Borrower, any general partner of the Borrower or the Issuer under the Bankruptcy Code or any other bankruptcy act, and (b) an Opinion of Bond Counsel to the effect that such deposit with the Trustee and consequent defeasance of the Bonds does not adversely affect the excludability of the interest payable on the Bonds from gross income for federal income tax purposes; (ii) all Third Party Fees due or to become due have been paid or sufficient additional moneys to make the required payments have been irrevocably deposited with the Trustee; and (iii) for any such Bonds to be redeemed on any date prior to their maturity, the Trustee has received in form satisfactory to it irrevocable instructions to redeem such 64 Bonds on a date on which the Bonds are subject to redemption, and either evidence satisfactory to the Trustee that all redemption notices required by this Indenture have been given or irrevocable power authorizing the Trustee to give such redemption notices. The Trustee shall redeem the Bonds specified by such irrevocable instructions on the date specified by such irrevocable instructions. Section 8.3(2) Defeased Bonds No Longer Outstanding. At such time as a Bond shall be deemed to be paid under this Indenture, it shall no longer be secured by or entitled to the benefits of this Indenture, except for the purposes of payment in accordance with the terms of this Indenture. Section 8.3(3) Investment Limitations Not Applicable. Limitations elsewhere specified in this Indenture regarding the investment of moneys held by the Trustee, other than with respect to the Tax Certificate, shall not be construed to prevent the depositing and holding of the obligations described in paragraph (i)(B) of Section 8.3(1) for the purpose of providing for the defeasance of the lien of this Indenture as to Bonds which have not yet become due and payable. All income from all Government Obligations in the hands of the Trustee pursuant to this Section 8.3 which has been identified by an independent certified public accountant as not required for the payment of the Bonds and interest on such income with respect to which such moneys have been so deposited shall be deposited with the Trustee as and when realized and collected for use and application as are other moneys deposited with the Trustee in the Revenue Fund. Section 8.3(4) Particular Bonds. Notwithstanding any other provision of this Indenture to the contrary, all moneys or Government Obligations set aside and held in trust pursuant to the provisions of this Article VI11 for the payment of Bonds (including accrued interest on such Bonds) shall be applied to and used solely for the payment of the particular Bonds (including interest on such Bonds) with respect to which such moneys or Government Obligations have been so set aside in trust. 65 33a ARTICLE 9 DEFAULT PROVISIONS AND REMEDIES Section 9.1. Events of Default; Preliminarv Notice. Section 9.1(1) Events of Default. Each of the following shall constitute an Event of Default: (i) default in the payment of any interest due on any Bond (other than a Purchased Bond) on any Interest Payment Date or any other date when and as the same becomes due; (ii) default in the payment of the principal of any Bond (other than a Purchased Bond) when and as the same becomes due, whether at the stated maturity of the Bond or upon any redemption of the Bond; (iii) written notice to the Trustee from the Credit Provider of a default by the Issuer in the observance or performance of any covenant, agreement, warranty or representation on the part of the Issuer included in this Indenture or in the Bonds (other than an Event of Default set forth in subsection (i) or (ii) above) and the continuance of such default for a period of 30 days after the Trustee receives such notice; or (iv) an Act of Bankruptcy. Section 9.1(2) Preliminary Notice. The Trustee will immediately notify the Issuer, the Loan Servicer, , the Borrower and the Credit Provider after the Trustee obtains knowledge or receives notice of the occurrence of an Event of Default or an event which would become an Event of Default with the passage of time or the giving of notice, or both, identifying the paragraph in Section 9.1(1) under which the Event of Default has occurred or may occur. Section 9.1(3) Non-Default and Prohibition of Mandatory Redemption Upon Event of Taxability. The occurrence of any event (a "Tax Event") which results in the interest payable on the Bonds being includable for federal income tax purposes, in the gross income of the Bondholders, including, but not limited to, any violation of any provision of the Regulatory Agreement or any of the other Bond Documents, shall not (a) constitute an Event of Default under this Indenture, the Bonds or any of the other Bond Documents, or permit any party (other than the Credit Provider) to accelerate, or require acceleration of, the Mortgage Loan or the Bonds, or give rise to a mandatory redemption of the Bonds, unless the Credit Provider, in its sole and absolute discretion, provides written notice to the Trustee that such Tax Event constitutes an Event of Default under the Security Instrument and, by cross default, a default under the Financing Agreement, or (b) give rise to the payment to the Bondholders of any amount, denoted as "supplemental interest," "additional interest," "penalty interest," "damages," "liquidated damages" or otherwise, in addition to the amounts payable to the owners of the Bonds prior to the occurrence of the Tax Event. Nothing contained in this Section 9.1(3) shall be deemed to amend or modify the terms of the Mortgage Loan Documents. . Promptly upon determining that a Tax Event has occurred, the Issuer or the Trustee, by notice in writing to the Credit Provider, the Loan Servicer, all Registered Owners of the Bonds and the Remarketing Agent, shall state that a Tax Event has occurred and whether the Tax Event is cured, curable within a reasonable period or incurable. Notwithstanding the availability of the remedy of specific performance to cure a Tax Event that is curable within a reasonable period, neither the Issuer nor the Trustee shall have, and each of them acknowledges that, except at the direction of the Credit Provider, they shall not have, upon the occurrence of a Tax Event, any right or 66 3a'3 obligation to cause or direct acceleration of the Bonds or the Mortgage Loan, to enforce the Mortgage Note or to foreclose the Security Instrument, to accept a deed to the Mortgaged Property in lieu of foreclosure, or to effect any other comparable conversion of the Mortgage Loan. Section 9.2. Remedies; Ribts of Bondholders. Section 9.2(1) Acceleration. Upon: (i) the occurrence of the Event of Default described in paragraph (i) or (ii) of Section 9.1(1), the Trustee may, and shall upon the written request of Bondholders owning not less than 51% in aggregate principal mount of Bonds then Outstanding, by written notice to the Issuer, the Borrower, the Credit Provider and the Loan Servicer declare the principal of all Bonds then Outstanding (if not then due and payable) and the interest accrued, and to accrue, on the Outstanding Bonds to the date of such declaration immediately due and payable; or (ii) the occurrence of an Event of Default described in paragraph (iii) or (iv) of Section 9.1(1), the Trustee may, upon receiving the prior written consent of the Credit Provider, and shall, upon the written direction of the Credit Provider, by written notice to the Issuer, the Borrower, the Credit Provider and the Loan Servicer, declare the principal of all Bonds then Outstanding (if not then due and payable) and the interest accrued, and to accrue, on the Outstanding Bonds to the date of such declaration immediately due and payable. Upon any such declaration of acceleration, the Trustee shall (a) give immediate notice to the Credit Provider and request an Advance under the Credit Facility pursuant to Section 7.4, (b) exercise such rights as it may have under the Mortgage Note to declare all payments under the Mortgage Note to be immediately due and payable and (c) give the notice required by Section 9.2(2). Section 9.2(2) Notice. Upon any decision to accelerate payment of the Bonds, the Trustee shall notify the Bondholders of the declaration of acceleration, that interest on the Bonds will cease to accrue upon such declaration, and that payment of such Bonds will be made upon presentment of the Bonds at the Principal Office of the Trustee not earlier than fifteen (15) days following the date of acceleration. Such notice shall be sent by registered mail, overnight delivery service or other secure means, postage or charges prepaid, or, at the Trustee's option, may be given by Electronic Means to each Registered Owner of Bonds at such Registered Owner's last address appearing in the Bond Register. Any defect in or failure to give notice of such declaration shall not affect the validity of such declaration. Section 9.3. Other Remedies. Subject to Section 9.9(3), upon the occurrence and continuance of an Event of Default, the Trustee may, with or without taking action under Section 9.2, but only with the prior written consent of the Credit Provider, and shall, at the direction of the Credit Provider if the Event of Default occurs under paragraph (iii) or (iv) of Section 9.1(1), pursue any of the following remedies: (i) an action in mandamus or other suit, action or proceeding at law or in equity (a) to enforce the payment of the principal of, premium, if any, or interest on the Bonds then Outstanding, (b) for the specific performance of any covenant or agreement contained in this Indenture or in the Financing Agreement or in the Regulatory Agreement or (c) to require the Issuer to carry out any other covenant or agreement with Bondholders and to perform its duties under the Act; 67 32'2 (ii) the liquidation of the Trust Estate pledged under this Indenture (subject to the provisions of Article VIII); or (iii) an action or suit in equity, to enjoin any acts or things which may be unlawful or in violation of the rights of the Bondholders and to execute any other papers and documents and do and perform any and all such acts and things as may be necessary or advisable in the opinion of the Trustee in order to have the respective claims of the Bondholders against the Issuer allowed in any bankruptcy or other proceeding. Subject to the provisions of Section 9.9 and the requirement, if any, that the Credit Provider consent in writing to the exercise by the Trustee of any such available remedy, upon the occurrence and continuance of an Event of Default, the Trustee shall exercise such of the rights and powers conferred by this Section 9.3 as the Trustee, being advised by counsel, shall deem most effective to enforce and protect the interests of the Bondholders and the Credit Provider. Section 9.4. Preservation of Security and Remedies if Wrongful Dishonor Occurs; Rihts of Bondholders. Upon the occurrence and during the continuance of a Wrongful Dishonor, the Trustee may proceed, and upon the written request of the holders of not less than 25% of the aggregate principal amount of the Bonds Outstanding and the receipt of indemnity reasonably satisfactory to the Trustee, shall proceed, to protect and enforce its rights and the rights of the Bondholders under this Indenture by such suits, actions or special proceedings in equity or at law, or by proceedings in the office of any board or officer having jurisdiction, whether for the specific performance of any covenant or agreement contained in this Indenture or the Financing Agreement, or in aid of the execution of any power granted in this Indenture, or in the Financing Agreement or by the Act, or for the enforcement of any legal or equitable right or remedy, as the Trustee, being advised by counsel, shall deem most effective to protect and enforce such rights or to perform any of its duties under this Indenture. Section 9.5. Remedies Not Exclusive. Subject to the provisions of Section 9.9, no right or remedy conferred upon or reserved to the Trustee (or to the Bondholders) by the terms of this Indenture is intended to be exclusive of any other right or remedy, but each and every such right and remedy shall be cumulative and shall be in addition to any other right or remedy given to the Trustee or to the Bondholders under this Indenture or under the Financing Agreement, the Regulatory Agreement or the Credit Facility or now or hereafter existing at law or in equity. Section 9.6. Waiver. To the extent not precluded by law, the Trustee, upon notice to and with the prior written consent of the Credit Provider (unless a Wrongful Dishonor has occurred and is continuing) may waive any Event of Default under this Indenture and its consequences and, if the Trustee has accelerated payment of the Bonds, rescind the declaration of acceleration (unless precluded by Section 9.2(1) or unless clause (b) following shall be applicable) and shall do so upon the written request of (a) the Credit Provider or (b) Bondholders owning not less than 51% in aggregate principal amount of Bonds then Outstanding, provided, however, that there shall be no such waiver or rescission unless the principal and interest on the Bonds in arrears (without regard to the acceleration), together with interest at the applicable rate or rates of interest borne by the Bonds on such overdue principal and, to the extent permitted by law, on such overdue interest, shall have been paid or provided for by the Borrower or by the Credit Provider and all fees and expenses of the Trustee shall have been paid or provided for by the Borrower or the Credit Provider. In the case of any such waiver, the Issuer, the Borrower, the Trustee and the Bondholders shall be restored to their former positions and rights under this 68 Indenture. The Trustee may not waive any Event of Default under this Indenture unless, after the waiver, the Credit Facility will remain in effect in an amount equal to the aggregate principal amount of the Bonds outstanding (other than Purchased Bonds) plus the Interest Requirement, provided, however, that such waiver will be permitted if (a) the Issuer consents to the waiver, (b) the Rating Agency then rating the Bonds is notified and the Trustee gives written notice to the Bondholders that the ratings on the Bonds may be reduced or withdrawn upon the occurrence of such waiver, and (c) 100% of the Bondholders consent to the waiver. Section 9.7. Limited Effect of Waiver. No waiver of any Event of Default, whether by the Trustee or by the Bondholders, shall extend to or shall affect any subsequent Event of Default or shall impair any rights or remedies consequent to such Event of Default. Section 9.8. Delav or Omission. No delay or omission to exercise any right or remedy provided in this Indenture upon any Event of Default shall impair any such right or remedy or shall be construed to be a waiver of any such Event of Default or acquiescence in it and every such right and remedy may be exercised from time to time as often as may be deemed expedient. Section 9.9. Rights - of the Credit Provider and the Bondholders To Direct Proceedings; - Rights - and Limitations Amlicable to Bondholders, Issuer and Trustee. Section 9.9(1) Rights to Direct Proceedings. Notwithstanding anything contained in this Indenture to the contrary, the Credit Provider itself or Bondholders owning not less than 51% in aggregate principal amount of Bonds then Outstanding, but only with the prior written consent of the Credit Provider, shall have the right, at any time, by an instrument or instruments in writing executed and delivered to the Trustee, to direct the method and place of conducting all proceedings to be taken in connection with the enforcement of the terms and conditions of this Indenture or any other proceedings under this Indenture, provided that such direction shall not be otherwise than in accordance with the provisions of law and of this Indenture, and provided that the Trustee shall be indemnified to its satisfaction (except for actions required under Section 9.2(1) relating to requesting an Advance under the Credit Facility and actions required under Section 9.2(2)). Section 9.9(2) Limitations on Bondholders' Rights. No Bondholder shall have the right to enforce the provisions of this Indenture, the Financing Agreement or any Mortgage Loan Document, or to institute any proceeding in equity or at law for the enforcement of this Indenture or the Financing Agreement, or to take any action with respect to an Event of Default under this Indenture or an "Event of Default" under (and as defined in) the Financing Agreement, or to institute, appear in or defend any suit or other proceeding with respect to this Indenture, the Financing Agreement or any Mortgage Loan Document upon an Event of Default unless (a) such Bondholder has given the Trustee, the Issuer, the Credit Provider, the Loan Servicer and the Borrower written notice of the Event of Default, (b) the holders of not less than 51% in aggregate principal amount of Bonds then Outstanding shall have requested the Trustee in writing to institute such proceeding, (c) the Trustee shall have been afforded a reasonable opportunity to exercise its powers or to institute such proceeding, (d) the Trustee has been offered reasonable indemnity, where required, and (e) the Trustee has thereafter failed or refused to exercise such powers or to institute such proceeding within a reasonable period of time. Except as provided in this Section 9.9(2), no Bondholder shall have any right in any manner whatever by his or her action to affect, disturb or prejudice the pledge of Revenues or of any other moneys, funds or securities under this Indenture. No Bondholder shall have the right, directly or indirectly, individually or as a group, to seek to enforce, collect amounts available under, or otherwise realize on, the Credit Facility. 69 3ab Section 9.9(3) Non-Interference and Non-Impairment of Mortgage Loan. Notwithstanding anything contained in this Indenture to the contrary, so long as the Credit Facility remains in effect and a Wrongful Dishonor has not occurred or, if it has occurred is not continuing, neither the Issuer, the Trustee nor any person under their control nor the Bondholders shall, without the prior written consent of the Credit Provider, exercise, directly or indirectly, any remedy or direct any proceeding under the Bond Documents or with respect to the Mortgage Loan or, directly or indirectly: (i) initiate or take any action which may have the effect, directly or indirectly, of (a) impairing the ability of the Borrower to timely pay the principal of, interest on, or other amounts due and payable under, the Mortgage Loan Documents or (b) impairing or defeating the validity or priority of the lien created by the Security Instrument; (ii) interfere with or attempt to influence the exercise by the Credit Provider of its rights under the Mortgage Loan Documents, including, but not limited to, the Credit Provider's remedial rights under the Mortgage Loan Documents upon the occurrence of an Event of Default by the Borrower under the Security Instrument; or (iii) upon the occurrence of an Event of Default under the Security Instrument, take any action to accelerate or otherwise enforce payment or seek other remedies with respect to the Mortgage Loan. provided that, subject to the provisions of the foregoing paragraphs (i) through (iii), this Section 9.9(3) shall not prohibit the Issuer's right to enforce its Reserved Rights, and provided, further, that the Issuer or the Trustee, as the case may be, may (a) enforce rights under the Credit Facility (so long as the Credit Facility is in effect), (b) enforce the tax covenants set forth in this Indenture and the Financing Agreement and (c) enforce rights of specific performance under the Financing Agreement and the Regulatory Agreement, except that neither the Issuer nor the Trustee shall seek damages or any monetary recovery under the Financing Agreement or the Regulatory Agreement. Section 9.10. Discontinuance of Proceedings. - Prior to a demand for payment under the Credit Facility in case the Trustee has proceeded to enforce any right under this Indenture by the appointment of a receiver or otherwise, and such proceedings have been discontinued or abandoned for any reason, or have been determined adversely, then and in every such case the Issuer, the Credit Provider and the Trustee shall be restored to their former positions and rights under this Indenture, and all rights, remedies, powers, duties and obligations of the Issuer, the Trustee and the Credit Provider shall continue as if no such proceedings had been taken, subject to the limits of any adverse determination. Section 9.11. Action bv Trustee. All rights of action under this Indenture or upon any of the Bonds enforceable by the Trustee may be enforced by the Trustee without the possession of any of the Bonds, or the production of the Bonds at the trial or other proceedings relative to such suit, action or proceeding, and any such suit, action or proceeding instituted by the Trustee may be brought in its name for the ratable benefit of the Bondholders, without the necessity of joining any Bondholder as a party, and for the benefit of the Credit Provider. In any action, suit or other proceeding by the Trustee, the Trustee shall be paid fees, counsel fees and expenses in accordance with Section 10.3. Section 9.12. Application of Moneys. Amounts derived from payments under the Credit Facility shall be deposited into the Credit Facility Account and applied solely to pay the principal of and interest on the Bonds and shall not be applied to pay any fees or expenses or 70 advances of the Trustee or the Issuer (except to the extent such fees are payable out of the Fees Account from transfers to the Fees Account from the General Account), including amounts in respect of indemnification. All other moneys received by the Trustee pursuant to any action taken under this Article IX and all moneys on deposit in the Funds and Accounts under this Indenture (other than the Rebate Fund, the Costs of Issuance Fund and the Fees Account) shall be deposited into the General Account after payment of the ordinary costs and expenses of the Trustee. The balance of such moneys, less such amounts as the Trustee determines may be needed for possible use in paying future fees and expenses and for the preservation and management of the Mortgaged Property (as identified by the Credit Provider), shall be applied as set out in the following subsections. Section 9.12(1) Principal on Bonds Not Due and Payable. Unless the principal of all Bonds shall have become or been declared due and payable, all such moneys shall be applied: First - to the payment of amounts, if any, payable to the United States pursuant to Section 4.9; Second - to the payment of all interest then due on the Bonds, in the order of the maturity of such interest and, if the amount available shall not be sufficient to pay in full said amount, then to the payment ratably of the amounts due, without any discrimination or privilege; Third - to the payment of the unpaid principal of any of the Bonds which shall have become due (other than Bonds matured or called for redemption for the payment of which moneys are held pursuant to the provisions of this Indenture), in the order of their due dates upon which they became due, with interest on such Bonds from the respective dates upon which they became due at the rate or rates borne by the Bonds, to the extent permitted by law, and, if the amount available shall not be sufficient to pay in full Bonds due on any particular date, together with such interest, then to the payment ratably, according to the amount of principal due on such date, to the persons entitled to such payment without any discrimination or privilege; Fourth - to the payment of amounts owed to the Credit Provider under the Credit Facility Agreement and the Mortgage Loan Documents, as specified to the Trustee in writing by the Credit Provider and then to any unpaid amounts due to the Trustee for Extraordinary Items, for this purpose including the costs and expenses of any proceedings resulting in the collection of such moneys and of advances incurred or made by the Trustee; Section 9.12(2) Principal on Bonds Declared Due and Payable. If the principal of all the Bonds has become or been declared due and payable, all such moneys shall be applied first, to the payment of amounts, if any, payable to the United States pursuant to Section 4.9; second, to the payment of the principal and interest then due and unpaid upon the Bonds, without preference or priority of principal over interest or of interest over principal, or of any installment of interest over any other installment of interest, or of any Bond over any other Bond, ratably according to the amounts due respectively for principal and interest to the persons entitled to payment, until all such principal and interest has been paid; third, to pay the Credit Provider amounts owed to it under the Credit Facility Agreement and the Mortgage Loan Documents, as specified to the Trustee in writing by the Credit Provider; and fourth, to the Borrower (but only if all amounts due the Trustee, the Issuer and the Construction Lender have been paid, otherwise to first pay such amounts in the priority set forth in Section 8.2). 71 Section 9.12(3) Acceleration Rescinded. If the principal of all the Bonds has been declared due and payable, and if such declaration is thereafter rescinded under this Article IX, then, in the event that the principal of all the Bonds shall later become or be declared due and payable, the moneys shall be applied in accordance with Section 9.12(2). Section 9.12(4) General. Whenever moneys are to be applied pursuant to this Section 9.12, such moneys shall be applied at such times, and from time to time, as the Trustee determines, having due regard for the amount of such moneys available for application, the likelihood of additional moneys becoming available for such application in the future, and potential expenses relating to the exercise of any remedy or right conferred on the Trustee by this Indenture. Whenever the Trustee applies such moneys, it shall fix the date (which shall be an Interest Payment Date unless it deems an earlier date more suitable) upon which such application is to be made, and upon such date interest on the amounts of principal to be paid on such date shall cease to 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, and shall not be required to make payment to the owner of any Bond until such Bond is presented to the Trustee for appropriate endorsement or for cancellation if fully paid. Whenever the principal of and interest on all Bonds have been paid in full under the provisions of this Section 9.12 and all other conditions set out in Section 8.1 have been satisfied, any balance remaining in the Funds and Accounts shall be paid as provided in Section 8.1. 72 ARTICLE 10 THE TRUSTEE Section 10.1. Amointment of Trustee; Duties. The Trustee is appointed, and agrees to act in such capacity and to perform the duties of the Trustee under the Financing Agreement, the Assignment, the Regulatory Agreement and this Indenture, but only upon and subject to the following express terms and conditions set forth in the following paragraphs of this Section 10.1. 10.1(1) The Trustee may execute any of its trusts or powers under this Indenture and perform any of its duties by or through attorneys, agents or receivers, and shall be entitled to advice of counsel concerning all matters of trust under this Indenture and the duties under this Indenture, and may in all cases pay such reasonable compensation and shall be entitled to reimbursement from the Borrower for all such compensation paid to such attorneys, agents and receivers. The Trustee may act upon the opinion or advice of counsel, accountants, or such other professionals as the Trustee deems necessary and selected by it in the exercise of reasonable care. The Trustee shall not be responsible for any loss or damage resulting from any action or nonaction based on its good faith reliance upon such opinion or advice which is not contrary to the express terms of this Indenture, any of the other Bond Documents or the Mortgage Loan Documents. 10.1(2) Except as otherwise specifically provided in this Indenture, the Trustee shall not be responsible for insuring the Mortgaged Property or for the sufficiency of any insurance, or for collecting any insurance moneys, or for the validity of this Indenture or of any supplements to this Indenture or instruments of further assurance, or for the sufficiency of the security for the Bonds issued under this Indenture or intended to be secured by this Indenture, or for the value of or title to the Mortgaged Property or otherwise as to the maintenance of the Trust Estate, but the Trustee may require (but shall be under no duty to require) of the Borrower full information and advice as to the performance of the covenants, conditions and agreements aforesaid as to the condition of the Mortgaged Property. 10.1(3) The Trustee shall not be accountable for the use of any Bonds authenticated or delivered under this Indenture after such Bonds shall have been delivered in accordance with instructions of the Issuer, or for the use by the Borrower of the proceeds of the Mortgage Loan, or for the use or application of any moneys received by the Trustee, except to the extent that the Trustee is obligated to disburse, invest and pay moneys under and in the manner provided in this Indenture. The Trustee may become the owner of Bonds secured by this Indenture with the same rights as any other Bondholder. 10.1(4) The Trustee shall be protected in acting upon any Opinion of Counsel, Opinion of Bond Counsel, Cash Flow Projection and Verification Report, and upon any notice, request, consent, direction, requisition, certificate, order, affidavit, letter, telegram or other paper or document believed to be genuine and correct and purportedly signed or sent by the proper person or persons and which is not contrary to the express terms of this Indenture, any of the other Bond Documents or the Mortgage Loan Documents. Any action taken by the Trustee pursuant to this Indenture upon the request or authority or consent of any person who at the time of making such request or giving such authority or consent is the owner of any Bond as shown on the Bond Register shall be conclusive and binding upon all future owners or holders of the same Bonds and upon Bonds issued in exchange therefor or in place of such Bonds. 10.1(5) The permissive right of the Trustee to do things enumerated in this Indenture or in the other Bond Documents to which the Trustee is a party shall not be construed as duties 73 until specifically undertaken by the Trustee. Prior to an Event of Default, the Trustee shall only be responsible for the performance of the duties expressly set forth in this Indenture and in the other Bond Documents to which it is a party and shall not be answerable for other than its negligence or willful misconduct in the performance of those express duties. 10.1(6) The Trustee shall not be personally liable for any debts contracted or for damages to persons or to personal property injured or damaged, or for salaries or nonfulfillment of contracts, relating to the Mortgaged Property. 10.1(7) The Trustee shall not be required to give any bond or surety in respect of the execution of its trusts and powers or otherwise in respect of the premises. 10.1(8) Before taking any action requested or required under this Indenture (except for requesting Advances under the Credit Facility) the Trustee may require reasonably satisfactory security or an indemnity bond for the reimbursement of all expenses to which it may be put and to protect it against all liability, except liability which is adjudicated to have resulted from its own negligence or bad faith by reason of any action so taken. 10.1(9) Before taking any action requested by a Bondholder or Bondholders under or pursuant to Article IX (except for requesting Advances under the Credit Facility), the Trustee may require reasonably satisfactory security or an indemnity bond from such Bondholder or Bondholders for the reimbursement of all expenses to which it may be put and to protect it against all liability, except liability which is adjudicated to have resulted from its own negligence or bad faith by reason of any such action so taken. 10.1(10) All moneys received by the Trustee, until used or applied or invested as provided in this Indenture, shall be held as special trust funds for the purposes specified in this Indenture and for the benefit and security of the holders of the Bonds, the Credit Provider and the Persons to whom the Third Party Fees are owed as provided in this Indenture. 10.1(11) The Trustee shall not be bound to ascertain or inquire as to the performance of the obligations of the Borrower under the Financing Agreement or the Regulatory Agreement or the Issuer under this Indenture or the Regulatory Agreement, and shall not be deemed to have, or required to take, notice of default under this Indenture except any default under paragraphs (i) or (ii) of Sections 9.1(1) or in the event of written notification of such default by the Credit Provider, the Loan Servicer, any party to the Financing Agreement or the holders of not less than 25 % of the principal amount of Bonds Outstanding. The Trustee may nevertheless require the Issuer and the Borrower to furnish information regarding performance of their respective obligations under the Financing Agreement, the Regulatory Agreement and this Indenture, but is not obligated to do so. 10.1(12) The Trustee shall, during the existence of any Event of Default (which has not been cured), exercise such of the rights vested in it by this Indenture, the Financing Agreement and the Regulatory Agreement, and use the same degree of care and skill in their exercise, as a reasonable person would exercise or use under the circumstances in the conduct of such person's own affairs. The foregoing shall not limit the Trustee's obligations under Article VI1 or Section 9.2(1). 10.1(13) The Trustee shall, if the Bonds are then rated by a Rating Agency, give notice by mail to that Rating Agency at its address promptly upon the occurrence of any of the following: 74 (a) the appointment of any successor trustee or separate trustee or co-trustee to serve under this Indenture; (b) any modifications, amendments, supplements or revisions to this Indenture, the Financing Agreement, the Credit Facility or any Mortgage Loan Document; (c) the Conversion Date; (d) the termination of the Credit Facility; (e) an Event of Default under this Indenture; (f) a redemption or defeasance of the Bonds in whole or in part (other than any mandatory sinking fund redemption); (g) a purchase of the Bonds pursuant to Section 3.9(1); (h) any other information reasonably requested by the Rating Agency; (i) execution by the Trustee of an investment agreement; (j) any change in the provider of an investment agreement; or (k) any mandatory tender of the Bonds. Notwithstanding the foregoing, it is expressly understood and agreed that failure to provide any such notice to any Rating Agency or any defect in any such notice will not affect the validity of any action with respect to which notice is to be given or the effectiveness of any such action. 10.1(14) The Trustee shall give prompt written notice to the Loan Servicer of the non- payment of any fee or expense payable under the Financing Agreement. 10.1(15) The Trustee is authorized and directed by the Issuer to execute or accept and acknowledge, as applicable, in its capacity as Trustee the Financing Agreement, the Assignment, the Regulatory Agreement and any financing statements. 10.1(16) Except for information provided by the Trustee, the Trustee shall have no responsibility for any information, statement, or recital in any official statement, offering memorandum or any other disclosure material prepared or distributed with respect to the Bonds. 10.1(17) No provision of this Indenture or any other Bond Document or any Mortgage Loan Document shall require the Trustee to risk or advance its own funds or otherwise incur any financial liability in the performance of its duties or the exercise of its rights under this Indenture. 10.1(18) The immunities extended to the Trustee shall extend to its directors, officers, employees and agents. 75 33? 10.1(19) The Trustee shall not be liable for any action taken or not taken by it in accordance with the direction of the Credit Provider or Bondholders pursuant to this Indenture unless the Trustee is negligent or engages in willful misconduct. 10.1(20) The Trustee shall not be responsible for the actions or omissions of the Loan Servicer and shall have no duty or responsibility to monitor the performance of the Loan Servicer . Section 10.2. Ouantification. The Trustee represents and warrants to the Issuer that it is a national banking association, having a combined capital stock, surplus and undivided profits aggregating at least $50,000,000. Section 10.3. Fees; Expenses. The Trustee shall be entitled to payment from the Borrower for the Trustee's Annual Fee. The Trustee shall be entitled to payment and/or reimbursement from the Borrower for its ordinary costs and expenses reasonably incurred in connection with its services under this Indenture (including, for the Trustee, under the Financing Agreement and the Regulatory Agreement). In the event that it should become necessary that the Trustee perform extraordinary services, it shall be entitled to Extraordinary Items, provided that if such Extraordinary Items are incurred as a result of the negligence or willful misconduct of the Trustee, it shall not be entitled to compensation or reimbursement for such services or expenses. The Borrower's failure to pay amounts owed to the Trustee shall not excuse the performance of its obligations under this Indenture and under the other Bond Documents. The Trustee recognizes that all fees, charges and other compensation to which it may be entitled under this Indenture are required to be paid by the Borrower under the Financing Agreement, and, accordingly, the Trustee agrees that except for moneys that the Issuer may derive from the Borrower for purposes of the foregoing, the Issuer shall not be liable for any such fees, charges and other compensation. Notwithstanding anything in this Indenture to the contrary, the Trustee shall not be entitled to payment and/or reimbursement from any of the amounts held in any of the funds or accounts of this Indenture other than the Fees Account. Section 10.4. Merger; Consolidation. Any corporation or association into which the Trustee may be converted or merged, or with which it may be consolidated, or to which it may sell or transfer its corporate trust business and assets as a whole or substantially as a whole, or any corporation or association resulting from any such conversion, sale, merger, consolidation or transfer to which the Trustee is a party, provided such corporation or association otherwise qualifies under Section 10.9, shall be and become the successor Trustee under this Indenture, vested with title to the Trust Estate and any other assets held under this Indenture and having all the trusts, powers, discretions, rights, duties, immunities and privileges as its predecessor, without the execution or filing of any instrument or any further act, deed or conveyance on the part of the Issuer (other than the provision of notice to the Issuer, the Credit Provider and the Loan Servicer). Section 10.5. Intervention in Litigation. - In any judicial proceedings with respect to the Bonds to which the Issuer is a party the Trustee may intervene on behalf of Bondholders or the Credit Provider (with the prior written consent of the Credit Provider), and shall, subject to Section 10.1 (9), intervene if requested in writing by the Credit Provider or by Bondholders owning not less than 51% in aggregate principal amount of Bonds then Outstanding and with the consent of the Credit Provider. Section 10.6. Resignation - of Trustee. The Trustee may resign only upon giving 60 days prior written notice to the Issuer, the Credit Provider, the Loan Servicer, the Borrower and to each Registered Owner of Bonds then outstanding as shown on the Bond Register. Notwithstanding such notice, such resignation shall take effect only upon the appointment of a 76 333 successor Trustee in accordance with Section 10.8 and the acceptance of such appointment by such successor Trustee. Section 10.7. Removal of Trustee. The Trustee may be removed at any time, upon 30 days prior written notice to the Trustee, (a) by the Issuer, with the prior written consent of the Credit Provider, (b) by an instrument or concurrent instruments in writing delivered to the Issuer, the Credit Provider, the Loan Servicer, the Trustee and the Borrower, signed by the owners of not less than 51% in aggregate principal amount of Bonds then Outstanding, and approved by the Credit Provider with the consent of the Issuer, which written instrument shall designate a successor trustee, or (c) by the Credit Provider. Such removal shall not be effective until a successor Trustee satisfying the requirements of Section 10.9 is appointed and has accepted its appointment. Section 10.8. Amointment of Successor Trustee. Upon the resignation or removal of the Trustee, a successor Trustee shall be appointed by the Issuer with the prior written consent of the Credit Provider, provided that if the Issuer is then in default under any Bond Document or any Mortgage Loan Document or if an event has occurred and is continuing which, with notice or the passage of time or both, would constitute such a default, such appointment shall be made by the Credit Provider. If, in the case of resignation or removal of the Trustee, no successor is appointed within 30 days after the notice of resignation or within 30 days after removal, as the case may be, then, in the case of a resignation, the resigning Trustee shall appoint a successor with the prior written consent of the Issuer and the Credit Provider or apply to a court of competent jurisdiction for the appointment of a successor Trustee and, in the case of a removal, the Issuer shall have the right to appoint a successor Trustee or to apply to a court of competent jurisdiction for the appointment of a successor Trustee. Section 10.9. Qualifications of Successor Trustee. Any successor Trustee (a) shall be a bank or trust company organized under the laws of the United States of America or any state of the United States of America, having (or its parent having) a combined capital stock, surplus and undivided profits aggregating at least $50,000,000, and (b) shall accept in writing its duties and responsibilities under this Indenture, the Financing Agreement, the Assignment and the Regulatory Agreement. Such written acceptance shall be filed with the Issuer, the Credit Provider, the Loan Servicer and the Borrower. The successor Trustee shall give notice of such succession by first-class mail, postage prepaid, to each Bondholder at the address of such Bondholder shown on the Bond Register. Upon appointment of a successor Trustee, the resigning or removed Trustee, as the case may be, shall assign all of its right, title and interest in the Security, including its right, title and interest in the Credit Facility and this Indenture, to the successor Trustee. Section 10.10. Transfer of Rights and ProPertv to Successor Trustee. Upon the execution of the written acceptance provided for in Section 10.9, the successor Trustee shall, without any further act, deed or conveyance, become fully vested with all moneys, estates, properties, rights, powers, duties and obligations of the predecessor Trustee, with like effect as if named in this Indenture as such Trustee, but the former Trustee shall nevertheless, on the written request of the Issuer, the Credit Provider or the successor Trustee, execute, acknowledge and deliver such instruments of conveyance and further assurance and do such other things as may be reasonably required for more fully and certainly vesting and confirming in the successor Trustee all the right, title and interest of the predecessor Trustee in and to any properties held by it under this Indenture, and shall pay over, assign and deliver to the successor Trustee any money or other property subject to the trusts and conditions set forth in this Indenture. Should any deed, conveyance or instrument in writing from the Issuer be required by the successor Trustee for more fully and certainly vesting in and confirming to the successor Trustee any such moneys, estates, properties, rights, powers and duties, any and all such deeds, conveyances and 77 instruments in writing, shall, on request, and as may be authorized by law, be executed, acknowledged and delivered by the Issuer. Section 10.11. Instruments of Bondholders. Any instrument required by this Indenture to be executed by Bondholders may be in any number of writings of similar tenor and may be executed by Bondholders in person or by agents appointed in writing. Proof of the execution of any such instrument or of the writing appointing any such agent and of the ownership of Bonds shall be sufficient for any of the purposes of this Indenture if given by a certificate of any officer in any jurisdiction who by law has power to take acknowledgments within such jurisdiction that the person signing such instrument acknowledged before him the execution of such instrument. The Trustee may rely on such an instrument of Bondholders unless and until the Trustee receives written notice that the original of such instrument is no longer valid. In the event that the Trustee shall receive conflicting directions from two groups of Bondholders, each with combined holdings of not less than 25% in aggregate principal amount of all Bonds then Outstanding, the directions given by the group of Bondholders which hold the largest percentage of Bonds Outstanding shall be controlling and the Trustee shall follow such directions as elsewhere required in this Indenture. Section 10.12. Power To AuDoint Co-Trustees and Seuarate Trustees. Section 10.12(1) Appointment of Co-Trustees. At any time or times, for the purpose of meeting any legal requirements of any jurisdiction in which any part of the Mortgaged Property may at the time be located, the Issuer (at the request of the Borrower, unless the Borrower is in default) shall have the power, subject to the approval of the Credit Provider, to appoint one or more persons approved by the Trustee either to act as co-trustee or co-trustees jointly with the Trustee of all or any part of the Mortgaged Property, or to act as separate trustee or separate co- trustees of all or any part of the Mortgaged Property, and to vest in such person or persons, in such capacity, such title to the Mortgaged Property or any part of it, and/or such rights, powers, duties, trusts or obligations as the Issuer and the Trustee may consider necessary or desirable (including, if appropriate, the duties of the Bond Registrar), subject to the remaining provisions of this Section 10.12(1). Upon the request of the Trustee or of Bondholders owning not less than 51% in aggregate principal amount of Bonds then Outstanding, the Issuer shall join with the Trustee in the execution, delivery and performance of all instruments and agreements necessary or proper to effect such appointment. If the Issuer has not joined in such appointment within 30 days after the receipt by it of a request so to do, or in case an Event of Default has occurred and be continuing, subject to the Credit Provider's right to approve, the Trustee alone shall have the power to make such appointment. The Issuer shall execute, acknowledge and deliver all such instruments as may be required by any such co-trustee or separate trustee for more fully confirming such title, rights, powers, trusts, duties and obligations to such co-trustee or separate trustee. Every co-trustee or separate trustee shall, to the extent permitted by law or any applicable contract, be appointed subject to the following terms: (i) All rights, powers, trusts, duties and obligations conferred or imposed upon the trustees shall be conferred or imposed upon and exercised or performed by the Trustee, or by the Trustee and such co-trustee, or separate trustee, jointly, as shall be provided in the instrument appointing such co-trustee or separate trustee, except to the extent that, under the law of any jurisdiction in which any particular act or acts are to be performed, the Trustee shall be incompetent or unqualified to perform such act or acts, in which event such act or acts shall be performed by such co-trustee or separate trustee. (ii) Any request in writing by the Trustee to any co-trustee or separate trustee to take or to refrain from taking any action under this Indenture shall be sufficient 78 warrant for the taking, or the refraining from taking, of such action by such co-trustee or separate trustee. (iii) Any co-trustee or separate trustee to the extent permitted by law may delegate to the Trustee the exercise of any right, power, trust, duty or obligation, discretionary or otherwise. (iv) The Trustee at any time, by an instrument in writing, with the concurrence of the Issuer evidenced by a resolution, may accept the resignation of or remove any co-trustee or separate trustee appointed under this Section 10.12(1), and, in case an Event of Default has occurred and is continuing, the Trustee shall have power to accept the resignation of, or remove, any such co-trustee or separate trustee without the concurrence of the Issuer. Upon the request of the Trustee, the Issuer shall join with the Trustee in the execution, delivery and performance of all instruments and agreements necessary or proper to effectuate such resignation or removal; a successor to any co- trustee or separate trustee so resigned or removed may be appointed in the manner provided in this Section 10.12(1). (v) No trustee under this Indenture shall be personally liable by reason of any act or omission of any co-trustee or separate trustee under this Indenture. (vi) Any demand, request, direction, appointment, removal, notice, consent, waiver or other action in writing executed by any Bondholder and delivered to the Trustee shall be deemed to have been delivered to each such co-trustee or separate trustee. (vii) Any moneys, papers, securities or other items of personal property received by any such co-trustee or separate trustee under this Indenture shall forthwith, so far as may be permitted by law, be turned over to the Trustee. Upon the acceptance in writing of appointment by any such co-trustee or separate trustee, the co-trustee or separate trustee shall be vested with the pledge and assignment of the Security and with such rights, powers, duties, trusts or obligations as shall be specified in the instrument of appointment, jointly with the Trustee (except insofar as local law makes it necessary for any such co-trustee or separate trustee to act alone), subject to all the terms of this Indenture. Every such acceptance shall be filed with the Trustee, the Issuer, the Credit Provider, the Loan Servicer and the Borrower. Section 10.12(2) Effect of Death, Incapacity, Resignation or Removal of Co-Trustee or Separate Trustee. In case any co-trustee or separate trustee dies, becomes incapable of acting, resigns or is removed, the pledge and assignment of the Security and all rights, powers, trusts, duties and obligations of the co-trustee or separate trustee shall, so far as permitted by law, vest in and be exercised by the Trustee unless and until a successor co-trustee or separate trustee is appointed in the same manner as provided for with respect to the appointment of a successor Trustee pursuant to Section 10.8. Section 10.12(3) Approval of the Issuer. Notwithstanding anything else to the contrary in this Article X, no successor trustee or any co-trustee or separate trustee shall assume its duties under this Indenture without the prior written approval of the Issuer (unless the Issuer is in default under this Indenture, in which case a successor trustee, co-trustee or separate trustee may be appointed by the Trustee without the consent of the Issuer, but with the prior written consent of the Credit Provider). 79 Section 10.13. Filing of Financing Statements. From time to time, the Trustee shall file or record or cause to be filed or recorded all financing statements which are required to be filed or recorded in order fully to protect and preserve the security interests relating to the priority of the Mortgage Loan and the Trust Estate, and the rights and powers of the Issuer, the Trustee and the Credit Provider in connection with such security interests, including, but not limited to, all continuation statements for the purpose of continuing without lapse the effectiveness of (a) those financing statements which have been filed at or prior to the Closing Date in connection with the security for the Bonds related to the Trust Estate pursuant to the authority of the UCC, and (b) any previously filed continuation statements which have been filed as required by this Indenture. The Issuer shall sign, and the Trustee or its designee shall obtain from the Borrower, the Loan Servicer or the Credit Provider, all such financing statements as may be required for the purposes specified in the preceding sentence. Upon the filing of any such financing statement the Trustee shall immediately notify the Issuer, the Borrower, the Loan Servicer and the Credit Provider that the same has been accomplished. If direction for filing is given by the Loan Servicer or the Credit Provider, the Trustee shall file all financing statements in accordance with such directions. Section 10.14. Servicing; the Mortgage -- Loan. The Issuer and the Trustee acknowledge that on and after the Conversion Date, the Loan Servicer, as servicer of the Mortgage Loan, will be responsible to the Credit Provider for the ongoing servicing and administering of the Mortgage Loan, but that the Credit Provider, in its discretion, may contract with another servicer designated by the Credit Provider to perform such functions for the Credit Provider. Any servicing contracts or arrangements by the Credit Provider with such loan servicer for servicing the Mortgage Loan shall constitute a contractual obligation only between the Credit Provider and such loan servicer and neither the Trustee nor the Issuer will be deemed to be a party to such arrangements nor have any claim, right, duty, obligation or liability with respect to the servicing of the Mortgage Loan. Section 10.15. Disclosure Agreement. The Borrower and the Trustee shall enter into a Disclosure Agreement to provide for the continuing disclosure of information about the Bonds, the Borrower and other matters as specifically provided for in such agreement pursuant to Rule 15~2-12 of the Securities and Exchange Commission. The Trustee is authorized and directed to enter into the Disclosure Agreement and to make information public as provided in the Disclosure Agreement. Under the Disclosure Agreement, the Trustee shall act as the agent of the Borrower and not as the agent of the Issuer. The consent of the Issuer shall be required to each amendment to, or modification of, the Disclosure Agreement, which consent shall not be unreasonably withheld. The duties and obligations of the Trustee under the Disclosure Agreement shall be as set forth in the Disclosure Agreement, and the Trustee shall be responsible only for the express duties and obligations set forth in the Disclosure Agreement. The fees and expenses of the Trustee related to the Disclosure Agreement shall be the responsibility of and be paid by the Borrower. A default under any Disclosure Agreement shall not be a default under this Indenture, the Financing Agreement, any of the other Bond Documents or any of the Mortgage Loan Documents. However, the Trustee, at the written request of any underwriter of the Bonds required to comply with Securities and Exchange Commission Rule 15c-2-12(b)(5) or the holders of at least 25% aggregate principal amount of Outstanding Bonds, shall, but only to the extent indemnified to its reasonable satisfaction by any Bondholder or Beneficial Owner, may take such actions as may be necessary and appropriate, including seeking mandamus or specific performance by court order, to cause the Borrower to comply with its obligations under Section 7.2(12) of the Financing Agreement. 80 337 ARTICLE 11 SUPPLEMENTAL INDENTURES; AMENDMENTS Section 11 .l. Supplemental - Indentures Not Requiring; Bondholder Consent. The Issuer and the Trustee, without the consent of or notice to any of the Bondholders, may enter into an indenture or indentures supplemental to this Indenture for one or more of the following purposes: (i) to cure any ambiguity or to correct or supplement any provision contained in this Indenture or in any supplemental indenture which may be defective or inconsistent with any other provision contained in this Indenture or in any supplemental indenture; (ii) of the Trustee, such amendment, modification or supplement is not materially adverse to the interests of the Bondholders; (iii) to grant to or confer upon the Trustee for the benefit of the Bondholders any additional rights, remedies, powers or authority that may lawfully be granted to or conferred upon the Bondholders or the Trustee, or to grant or pledge to the Trustee for the benefit of the Bondholders any additional security other than that granted or pledged under this Indenture; (iv) to modify, amend or supplement this Indenture or any supplemental indenture in such manner as to permit the qualification of this Indenture or such supplemental indenture under the Trust Indenture Act of 1939, as amended, or any similar federal statute then in effect, or to permit the qualification of the Bonds for sale under the securities laws of any of the States of the United States; (v) to appoint a successor trustee, separate trustee or co-trustee, or a separate Bond Registrar in the manner provided in Article X; (vi) to make any change requested by the Credit Provider which, in the judgment of the Trustee, is not materially adverse to the interests of the Bondholders, including, but not limited to, provision of a Credit Facility other than or in substitution for the Credit Facility then in effect, provided that the provision of such other Credit Facility does not adversely affect the rating then in effect for the Bonds; (vii) to make any change in this Indenture or in the terms of the Bonds necessary or desirable in order to maintain the rating of "AAA" and/or "Aaa" awarded to the Bonds by the Rating Agency or to otherwise comply with the requirements of any Rating Agency then rating the Bonds; (viii) to comply with the Code and the regulations and rulings issued with respect to the Code, to the extent determined as necessary or desirable in the Opinion of Bond Counsel; (ix) to implement any secondary market disclosure, required under applicable law with respect to the Bonds, the Issuer, the Borrower or the Mortgaged Property; or (x) to mod* the terms of this Indenture or the Bonds to be effective as of a Remarketing Date if a supplemental indenture is executed and delivered at least 30 days 81 3353 prior to such Remarketing Date and notice of the execution and delivery together with a copy of the supplemental indenture or a summary of the provisions of the supplemental indenture is given to all Bondholders and to the Rating Agency not later than the time notice of remarketing of Bonds is gwen to Bondholders pursuant to Section 2.17(1); (xi) to change any of the time periods for provision of notice relating to: (a) the remarketing of Bonds and (b) the determination of the interest rate on the Bonds; (xii) to change or modify any provision of this Indenture in connection with the remarketing of Bonds following any mandatory tender of the Bonds pursuant to Section 2.17 but only upon the condition that such change is effective only after mandatory purchase; or] (xiii) in connection with any other change in this Indenture which, in the judgment of the Trustee, is not materially adverse to the interests of the Bondholders. If the Trustee has received written confirmation from the Rating Agency to the effect that such supplemental indenture will not result in the suspension, withdrawal or reduction of the then current rating on the Bonds and all conditions precedent in this Section 11.1 and in Sections 11.7 and 11.8 have been satisfied, the Trustee shall join the Issuer in the execution of any such supplemental indenture. The Trustee shall promptly furnish a copy of any such supplemental indenture to the Credit Provider, the Loan Servicer and the Borrower. Section 11.2. Supplemental Indentures Reauiring; Bondholder Consent. Exclusive of supplemental indentures covered by Section 11.1 and subject to the terms and provisions contained in this Section, the Issuer, in its sole discretion, and the Trustee may, with the consent of Bondholders owning 51% or more in aggregate principal amount of Bonds then Outstanding, from time to time, execute indentures supplemental to this Indenture for the purpose of modifying, altering, amending, adding to or rescinding, in any particular, any of the terms or provisions contained in this Indenture or in any supplemental indenture, provided that nothing in this Section 11.2 shall permit, or be construed as permitting: (i) an extension of the maturity of the principal of or interest on, or the mandatory redemption date of, any Bond, without the consent of the owners of all of the Bonds then Outstanding; (ii) a reduction in the principal amount of, or the rate of interest on, any Bond, without the consent of the owner of such Bond; (iii) a preference or priority of any Bond or Bonds over any other Bond or Bonds, without the consent of the owners of all such Bonds; (iv) the creation of a lien prior to or on parity with the lien of this Indenture, without the consent of the owners of all of the Bonds then Outstanding; (v) a change in the percentage of Bondholders necessary to waive an Event of Default or otherwise approve matters requiring Bondholder approval under this Indenture, including consent to any supplemental indenture, without the consent of the owners of all the Bonds then Outstanding; (vi) a transfer, assignment or release of the Credit Facility (or modification of the provisions of this Indenture governing such transfer, assignment or release), other than as permitted by this Indenture, the Assignment or the Credit Facility; 82 (vi) a reduction in the aggregate principal amount of the Bonds required for consent to such supplemental indenture, without the consent of the holders of all of the Bonds then Outstanding; (viii) the creation of any lien other than a lien ratably securing all of the Bonds at any time Outstanding under this Indenture, without the consent of the holders of all of the Bonds then Outstanding; or (ix) the amendment of this Section 11.2, without the consent of the holders of all of the Bonds then Outstanding. The giving of notice to and consent of the Bondholders to any such supplemental indenture shall be obtained as provided in Section 11.6. When requested by the Issuer or the Borrower, and if all conditions precedent under this Section 11.2 and Sections 11.7 and 11.8 have been satisfied, the Trustee shall join the Issuer in the execution of any such supplemental indenture. The Trustee shall promptly furnish a copy of any such supplemental indenture to the Credit Provider, the Remarketing Agent, the Loan Servicer and the Borrower. Section 11.3. Amendments to Financing: -- Am-eement Not Reauiring: Bondholder Consent. The Issuer and the Trustee, without the consent of or notice to any of the Bondholders, (a) may enter into or permit any amendment of the Financing Agreement and (b) shall, at the direction of the Credit Provider, enter into any amendment of the Financing Agreement, for one or more of the following purposes: (i) to cure any ambiguity or to correct or supplement any provision contained in the Financing Agreement which may be defective or inconsistent with any other provision of the Financing Agreement; (ii) to make such other provisions with regard to matters or questions arising under the Financing Agreement which are not materially adverse to the interests of the Bondholders; (iii) to amend, modify or supplement the Financing Agreement in any respect if, in the judgment of the Trustee, such amendment, modification or supplement is not materially adverse to the interests of the Bondholders; (iv) to grant to or confer upon the Issuer or the Trustee for the benefit of the Bondholders any additional rights, remedies, powers or authority that may lawfully be so granted or conferred, or to grant or pledge to the Issuer or the Trustee for the benefit of the Bondholders any additional security; (v) to make any change requested by the Credit Provider which, in the judgment of the Trustee, is not materially adverse to the interests of the Bondholders; (vi) to comply with the requirements of any Rating Agency then rating the Bonds; (vii) to comply with regulations or rulings issued with respect to the Code, to the extent determined as necessary or desirable in the opinion of Bond Counsel; (viii) to permit the Borrower to enter into a modification of any Mortgage Loan Document on terms approved by the Credit Provider, provided that there has first been 83 delivered to the Trustee (a) written evidence of such approval and the approval by the Credit Provider of the proposed form of amendment and any other documents relating to the amendment and (b) written evidence from the Rating Agency that such modifications and any related changes to the terms of the financing will not adversely affect the rating then applicable to the Bonds; or (ix) in connection with any other change which, in the judgment of the Trustee, is not materially adverse to the interests of the Bondholders; provided that if the Trustee has received written confirmation from the Rating Agency to the effect that such amendment to the Financing Agreement will not result in the suspension, withdrawal or reduction of the then current rating on the Bonds and all conditions precedent in this Section 11.3 and in Sections 11.7 and 11.8 have been satisfied, the Trustee shall join the Issuer and the Borrower in the execution of any such amendment. The Trustee shall promptly furnish a copy of any such amendment to the Financing Agreement to the Issuer, the Credit Provider, the Remarketing Agent, the Loan Servicer and the Borrower. Section 11.4. Amendments to Financing Agreement Reauiring Bondholder Consent. Except as provided in Section 11.3, the Issuer and the Trustee shall not enter into any other modification or amendment ,of the Financing Agreement, nor shall any such modification or amendment become effective, without the written consent of the owners of not less than 51% in aggregate principal amount of Bonds then Outstanding, such consent to be obtained in accordance with Section 11.6. No such amendment may, without the consent of the owners of all the Outstanding Bonds, reduce the amounts or delay the payments on the Mortgage Loan under the Financing Agreement, provided that any such amounts may be reduced without such consent solely to the extent that such reduction (a) results from a partial redemption from other than sinking fund installments or (b) represents a reduction in any fees payable from such amounts (including, but not limited to, a reduction in Set Rate Interest). The Trustee shall provide a copy of any such modification or amendment to the Issuer, the Credit Provider, the Remarketing Agent, the Loan Servicer and the Borrower. Section 11.5. Amendments, Changes and Modifications to the Credit Facilitv and the Regulatorv - Aseement. Section 11.5(1) The Credit Facility. The Trustee may, without notice to or the consent of the owners of the Bonds, accept any amendment to the Credit Facility (a) in connection with any change in the Credit Facility, including a revised Mortgage Loan Payment Amortization Schedule to the Credit Facility as a result of a partial prepayment and re-amortization of the Mortgage Loan or otherwise or (b) as may be required for purposes of curing any ambiguity, formal defect or omission which is not materially adverse to the interests of the Bondholders or which does not prejudice in any material respect the interests of the Bondholders. Except for such amendments, the Credit Facility may be amended only with the written consent of the owners of not less than 51% in aggregate principal amount of Bonds then Outstanding, except that, without the written consent of the owners of all Outstanding Bonds, no amendment may be made to the Credit Facility which would reduce the amounts required to be paid under the Credit Facility or change the time for payment of such amounts; provided that any such amounts may be reduced without such consent solely to the extent that such reduction represents a written agreement to reduce fees payable from such amounts. Section 11.5(2) The Regulatory Agreement. Subject to the provisions of Section 11.7 and Section 11.8, the Borrower, the Trustee and the Issuer may enter into any amendment or modification of the Regulatory Agreement without the consent of the owners of the Bonds, provided that the Borrower shall furnish to the Trustee and the Issuer (a) an Opinion of Bond 84 34 I Counsel to the effect that such amendment or modification of the Regulatory Agreement will not adversely affect the exclusion of interest on the Bonds from gross income for federal income tax purposes and (b) the written consent of the Credit Provider. Section 11.6. Notice to and Consent of Bondholders. If consent of the Bondholders is required under the terms of this Indenture for any supplement, amendment or modification to this Indenture, the Financing Agreement, the Regulatory Agreement or the Credit Facility, or for any other similar purpose, the Trustee shall cause notice of the proposed execution of the supplement, amendment or modification to be given by first class mail to the Bondholders. Such notice shall briefly set forth the nature of the proposed supplement, amendment or modification, and shall state that copies of any such supplement, amendment or modification are on file at the Principal Office of the Trustee for inspection by the Bondholders. If, within 30 days or such longer period as shall be prescribed by the Trustee following the mailing of such notice, the holders of not less than the required percentage of all Bonds then Outstanding, by instruments filed with the Trustee, shall have consented to the supplement, amendment or modification, then the Trustee may execute such supplement, amendment or modification, and the consent of the Bondholders shall be conclusively presumed. The consent of the holder of any Bond shall be binding on any transferee and successor transferees of such Bond. Any other notice required to be delivered to Bondholders pursuant to this Indenture shall be given, or caused to be given, by the Trustee by first class mail. Section 11.7. Reauired Amrovals. No amendment, supplement, change or modification may be made to any Bond Document, Mortgage Loan Document or any other document executed and delivered in connection with the Bonds without the prior written consent of the Credit Provider. Anything in this Indenture to the contrary notwithstanding, a supplement or amendment or other document described under this Article XI which affects any rights or obligations of the Borrower shall not become effective unless and until the Borrower (if the Borrower is not then in default under any Bond Document or any Mortgage Loan Document and if no event shall have occurred which, with notice or the passage of time or both, would constitute such a default shall have occurred and be continuing) has consented in writing to the execution of such supplemental indenture, amendment or other document. The Trustee shall not be required to enter into any supplement or amendment or other document described under this Article XI which is, in the judgment of the Trustee, to the prejudice of the Bondholders or the Trustee. Section 11.8. ODinions of Counsel. Subject to the provisions of Section 10.1, the Trustee may obtain, at the Borrower's expense, and shall be fully protected in relying upon, an Opinion of Counsel as conclusive evidence that any supplement or amendment to this Indenture, the Financing Agreement, the Regulatory Agreement or the Credit Facility at the time in effect is authorized and permitted by this Indenture and, if applicable, is not materially adverse to the interests of the Bondholders. No supplement or amendment with respect to this Indenture, the Financing Agreement, the Regulatory Agreement or the Credit Facility at the time in effect shall be effective until the Issuer and the Trustee shall have received an Opinion of Bond Counsel to the effect that such supplement or amendment will not adversely affect the exclusion from gross income, for federal income tax purposes, of the interest payable on the Bonds. Such Opinion of Bond Counsel shall be addressed to, or a reliance letter shall be delivered to, the Credit Provider. Section 11.9. Notation of Modification on Bonds; Preparation of New Bonds. Bonds authenticated and delivered after the execution of any supplemental indenture pursuant to the provisions of this Article XI may bear a notation, in form approved by the Trustee and the Issuer as to any matter provided for in such supplemental indenture, and if such supplemental indenture shall so provide, new Bonds, so modified as to conform, in the opinion of the Trustee 85 312 and the Issuer, to any modification of this Indenture contained in any such supplemental indenture, may be prepared by the Issuer, authenticated by the Trustee and delivered without cost to the Bondholders, upon surrender for cancellation of such Bonds in equal aggregate principal amounts. 86 ARTICLE 12 MISCELLANEOUS Section 12.1. Consents, Etc., of Bondholders. Any consent, request, direction, approval, objection or other instrument required by this Indenture to be signed and executed by the Bondholders may be in any number of concurrent writings of similar tenor and may be signed or executed by any Bondholder in person or by an authorized agent appointed in writing. Proof of the execution of any such consent, request, direction, approval, objection or other instrument or of the writing appointing any such agent and of the ownership of Bonds, if made in the following manner, shall be sufficient for any of the purposes of this Indenture, and shall be conclusive in favor of the Trustee with regard to any action taken by it under such consent, request, direction, approval, objection or other instrument: (i) the fact and date of the execution by any person of any such request, consent, direction, approval, objection or other instrument may be proved by the certificate of any officer in any jurisdiction who by law has power to take acknowledgments within such jurisdiction that the person signing such writing acknowledged before such officer its execution, or by an affidavit of any witness to such execution; and (ii) the fact of ownership of Bonds and the amount or amounts, numbers or other identification of Bonds, and the date of owning the same shall be proved by the Bond Register. Section 12.2. Limitation of Rights. With the exception of rights expressly conferred in this Indenture, nothing expressed or mentioned in or to be implied from this Indenture or the Bonds is intended or shall be construed to give to any Person other than the Issuer, the Trustee, the Bondholders, the Credit Provider, the Loan Servicer and the Borrower any legal or equitable right, remedy or claim under or in respect of this Indenture or any covenants, conditions and provisions contained in this Indenture. This Indenture and all of the covenants, conditions and provisions in this Indenture are intended to be for the sole and exclusive benefit of the parties to this Indenture, the Bondholders, the Credit Provider and the Borrower as provided in this Indenture. The Credit Provider is a third party beneficiary of this Indenture with the right to enforce its provisions. Section 12.3. Severability. If any provision of this Indenture is held to be in conflict with any applicable constitution or statute or rule of law, or is otherwise held to be unenforceable for any reason, such circumstance shall not have the effect of rendering the provision in question inoperative or unenforceable in any other part or circumstance, or of rendering any other provision or provisions contained in this Indenture invalid, inoperative or unenforceable to any extent whatsoever. The invalidity of any one or more phrases, sentences, clauses or Sections of this Indenture shall not affect the remaining portions of this Indenture. Section 12.4. Notices. Unless otherwise specified in this Indenture, it shall be sufficient service or giving of any notice, request, certificate, demand or other communication if the same shall be sent by (and all notices required to be given by mail shall be given by) first-class registered or certified mail, postage prepaid, return receipt requested, or by private courier service which provides evidence of delivery, or sent by telecopy or other Electronic Means which produces evidence of transmission, confirmed by first-class mail, and in each case shall be deemed to have been given on the date evidenced by the postal or courier receipt or other written evidence of delivery or electronic transmission. Unless a different address is given by any party as provided in this Section 12.4, all such communications shall be addressed as follows: 87 The Issuer: The Trustee and Tender Agent: The Remarketing Agent: The Borrower: with a copy to: To the Rating Agencies: To the Credit Provider: City of Carlsbad 1200 Carlsbad Village Drive Carlsbad, CA 92008 Attention: Wells Fargo Bank, National Association 707 Wilshire Boulevard, 17th Floor Los Angeles, CA 90071 Attention: Corporate Trust Service Red Capital Markets, Inc. 150 East Gay Street, 22nd Floor Columbus, Ohio 43215 Attention: Remarketing Desk Facsimile: (614) 857-1605 CIC Calavera, L.P. c/o Chelsea Investment Corporation 215 South Highway 101, Suite 200 Solano Beach, CA 92075 Attention: Wallace C. Dieckman SCDC, LLC c/o Red Capital Markets, Inc. 150 East Gay Street, 22nd Floor Columbus, Ohio 43215 Standard & Poor's Rating Services 55 Water Street 38th Floor New York, NY 10041 Attention: Public Finance Surveillance Group Telephone: (212) 438-2054 Facsimile: (212) 438-2157 Moody's Investor Services 99 Church Street New York, NY 10007 Attention: Fully Supported Group Telephone: (212) 553-4441 Facsimile: (212) 553-4090 Fannie Mae 3900 Wisconsin Avenue, NW Drawer AM Washington, D.C. 20016-2899 Attention: Director, Multifamily Asset Management Telephone: (202) 752-2854 Facsimile: (202) 752-3542 RE: Housing Revenue Bonds (Mariposa Apartments) 2003 Series A/Red Mortgage Capital, Inc. $5,185,000 City of Carlsbad Mulbfamily 88 3% with a copy to: Fannie Mae 3900 Wisconsin Avenue, NW Drawer AM Washington, D.C. 20016-2899 Attention: Vice President, Multifamily Services Telephone: (202) 752-7869 Facsimile: (202) 752-8369 RE: Housing Revenue Bonds (Mariposa Apartments) 2003 Series A/Red Mortgage Capital, Inc. $5,185,000 City of Carlsbad Multifamily [For courier to all Fannie Mae addresses use 4000 Wisconsin Avenue, N.W. and delete Drawer AM] with a copy to: O'Melveny & Myers LLP 400 South Hope Street Los Angeles, California 90071-2899 Attention: Telephone: (213) 430- Facsimile: (213) 430-6407 [provided, however, that any notice required to be delivered to the Credit Provider pursuant to Section 2.17(1)(1) will also be sent to: Fannie Mae 3900 Wisconsin Avenue, N.W. Washington, DC 20016-2899 Attention: Director, Fiscal Agency Relations and Treasury Backoffice Telephone: (202) 752-7916 Facsimile: (202) 752-6087] RE: Housing Revenue Bonds (Mariposa Apartments) 2003 Series A/Red Mortgage Capital, Inc. $5,185,000 City of Carlsbad Multifamily To the Loan Servicer: Copies of all notices given to the Credit Provider and copies of copies of all notices given to Credit Provider shall be given concurrently to the Loan Servicer. Copies of all notices, requests, certificates, demands or other communications required under this Indenture that are not otherwise required to be given to the Construction Lender shall be given to the Construction Lender as and when otherwise required to be given under this Indenture. The Issuer, the Trustee, the Borrower, the Credit Provider, the Loan Servicer and the Construction Lender, by notice given under this Indenture, may designate any different addresses to which subsequent notices, certificates, requests, demands or other communications shall be sent, but no notice directed to any one such entity (except for the Credit Provider) shall be required to be sent to more than two addresses. All approvals required under this Indenture shall be given in writing. Section 12.5. Action Reauired to be taken on a Non-Business Dav. In any case where any Bond Payment Date, any Remarketing Date or any date on which action is required to be taken or on which payments are required to be made in connection with a remarketing of Bonds 89 shall be a day other than a Business Day, then any action required to be taken or any payment required to be made on such date need not be taken or made on such date, but may be taken or made on the next succeeding Business Day with the same force and effect as if made or taken on the date otherwise provided for in this Indenture and, in the case of any payment date, no interest shall accrue for the period on and after such date. Section 12.6. Binding Effect. This Indenture shall from and after the Closing Date be binding upon the Issuer and the Trustee and their respective successors and assigns, subject, however, to the limitations contained in this Indenture. Section 12.7. Governing: Law. This Indenture shall be governed by and interpreted in accordance with internal laws of the State without regard to conflicts of laws principles. Section 12.8. No Personal Liabilitv; No Recourse. No recourse under or upon any obligation, covenant, warranty or agreement contained in this Indenture or in any Bond, or under any judgment obtained against the Issuer, or the enforcement of any assessment, or any legal or equitable proceedings by virtue of any constitution or statute or otherwise, or under any circumstances under or independent of this Indenture, shall be had against the governing body of the Issuer or any of the members, officers, agents or employees of the Issuer, as such, past, present or future of the Issuer, either directly or through the Issuer or otherwise, for the payment for or to the Issuer or any receiver of the Issuer, or for or to the owner of any Bond, or otherwise, of any sum that may be due and unpaid by the Issuer upon any such Bond. Any and all personal liability of every nature whether at common law or in equity or by statute or by constitution or otherwise of the governing body of the Issuer or of any such member, officer, agent or employee, as such, by reason of any act of omission on his or her part or otherwise, for the payment for or to the owner of any Bond or otherwise of any sum that may remain due and unpaid upon the Bonds secured by this Indenture or any of them is, by the acceptance of such Bond, expressly waived and released as a condition of and in consideration for the execution of this Indenture and the issuance of the Bonds. Anything in this Indenture to the contrary notwithstanding, it is expressly understood by the parties to this Indenture that (a) the Issuer may rely exclusively on the truth and accuracy of any certificate, opinion, notice or other instrument furnished to the Issuer by the Trustee or any Bondholder as to the existence of any fact or state of affairs, (b) the Issuer shall not be under any obligation under this Indenture to perform any record keeping or to provide any legal services, it being understood that such services shall be performed or caused to be performed by the Trustee or by the Bondholders and (c) none of the provisions of this Indenture shall require the Issuer to expend or risk its own funds or otherwise to incur financial liability in the performance of any of its duties or in the exercise of any of its rights or powers under this Indenture, unless it shall first have been adequately indemnified to its satisfaction against any costs, expenses and liability which it may incur as a result of taking such action. No recourse for the payment of any part of the principal of, premium, if any, or interest on the Bonds or for the satisfaction of any liability arising from, founded upon or existing by reason of the issuance, purchase or ownership of the Bonds shall be had against the governing body of the Issuer] or any officer, member, agent or employee of the Issuer, as such, all such liability being expressly released and waived as a condition of and as a part of the consideration for the execution of this Indenture and the issuance of the Bonds. No covenant, stipulation, obligation or agreement of the Issuer contained in this Indenture shall be deemed to be a covenant, stipulation, obligation or agreement of any present or future member, officer, agent or employee of the Issuer or the governing body of the Issuer] in other than that person's official capacity. No member, officer, agent or employee of the Issuer shall be individually or personally liable for the payment of the principal or redemption price of or interest on the Bonds or be subject to any personal liability or accountability by reason of the issuance of the Bonds. 90 3v 7 Section 12.9. Cautions. The captions or headings in this Indenture are for convenience only and in no way define, limit or describe the scope or intent of any provisions of this Indenture. Section 12.10. Countemarts. This Indenture may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. Section 12.11 Qualified Proiect Costs. The Borrower has covenanted in the Financing Agreement that the proceeds of the Bonds shall be used exclusively to pay costs which (i) are (A) capital expenditures (as defined in Treasury Regulation Section 1.150-1(a)) and (B) not made for the acquisition of existing property, to the extent prohibited in Section 147(d) of the Code, and (ii) are made exclusively with respect to a “qualified residential rental project” within the meaning of Section 142(d) of the Code and that for the greatest number of buildings the proceeds of the Bonds shall be deemed allocated on a pro rata basis to each building in the Project and the land on which it is located so that each building and the land on which it is located will have been financed 50% or more by the proceeds of the Bonds for the purpose of complying with Section 42(h)(4)(B) of the Code. Notwithstanding anything in the foregoing to the contrary, such covenant is made for the benefit of the Borrower and its partners and neither the Trustee nor the Issuer shall have any obligation to enforce this statement nor shall they incur any liability to any person, including without limitation, the Borrower, the partners of the Borrower, any other affiliate of the Borrower or the holders of the Bonds for any failure to meet the intent expressed in the foregoing covenant. 91 The Issuer has caused this Indenture to be executed in its name and on its behalf by its duly authorized officer, and the Trustee has caused this Indenture to be executed in its name by its duly authorized officer, all as of the date set forth above. CITY OF CARLSBAD WELLS FARGO BANK, NATIONAL ASSOCIATION RV. 92 EXHIBIT A [FORM OF BOND] CITY OF CARLSBAD MULTIFAMILY HOUSING REVENUE BONDS (MARIPOSA APARTMENTS) 2003 SERIES A No. CUSP Dated: Maturity Date: Interest Rate: % per annum Payment Dates: Commencing: REGISTERED OWNER CEDE & CO. 1 PRINCIPAL AMOUNT: DOLLARS ($ Unless this Bond is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC"), to the Trustee for registration, transfer, exchange or payment, and any Bond issued is registered in the name of Cede & Co. or in the name of such other entity as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE OF THIS BOND FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the Registered Owner of this Bond, Cede & Co., has an interest in this Bond. Capitalized terms used in this Bond but not defined in this Bond shall have the meanings given to those terms in the Indenture. FOR VALUE RECEIVED, the CITY OF CARLSBAD (the "Issuer"), a municipal corporation organized and existing under the laws of the State of California (the "State"), promises to pay to the registered owner identified above or registered assigns (subject to prior redemption as provided in the Indenture (as defined below)), on the Maturity Date set forth above, the Principal Amount set forth above, and to pay interest on the Principal Amount from the Interest Payment Date (being each June 1 and December 1, commencing December 1,2003) next preceding the date of authentication of this Bond, provided that if the date of authentication is an Interest Payment Date for which interest has been paid or is after the Record Date (being the 15th day of the month prior to an Interest Payment Date), but prior to the next Interest Payment Date, this Bond shall bear interest from such Interest Payment Date, provided further that if the date of authentication is prior to the Record Date for the first Interest Payment Date, this Bond shall bear interest from the Dated Date of this Bond. Interest shall be calculated on the basis of a 360-day year consisting of twelve 30-day months. If at the time of authentication of this Bond, interest on this Bond is in default, this Bond will bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment, or if no interest has theretofore been paid on this Bond, from the Dated Date of this Bond. The Bonds (as defined below) are issued as registered bonds without coupons in denominations of $5,000 or any integral multiple of $5,000. The principal of, premium, if any, and the interest on this Bond are payable in lawful money of the United States of America to the person in whose name this Bond is registered at the close of business on the Bond Register on the applicable Record Date. Payment of the: (i) interest on this Bond will be made to the Registered Owner of this Bond (as determined at the close of business on the Record Date next preceding the applicable Interest Payment Date) by check mailed by first class mail, postage prepaid, on the Interest Payment Date to the address of such Registered Owner as it appears on the Bond Register maintained by the Trustee as Bond Registrar, or to such other address as may be furnished in writing by the Registered Owner to the Trustee prior to the applicable Record Date; and (ii) principal amount of this Bond and premium, if any, together with interest payable on any Bond Payment Date other than a regularly scheduled Interest Payment Date, will be made by check only upon presentation and surrender of this Bond on or after its maturity date or date fixed for purchase or redemption at the office of the Trustee designated by the Trustee for that purpose; provided, however, that payment of principal of, premium, if any, and interest on this Bond on any Bond Payment Date will be made by wire transfer to any account within the United States of America designated by the Registered Owner if such Registered Owner owns $1,000,000 or more in aggregate principal amount of Bonds and if a written request for wire transfer is delivered to the Trustee by such Registered Owner not less than five days prior to the applicable Bond Payment Date and if such Registered Owner otherwise complies with the reasonable requirements of the Trustee (such request may specify that it is effective with respect to all succeeding payments of principal, premium, if any, and interest and will be so effective unless and until rescinded in writing by the Registered Owner at least five days prior to the Record Date for the Bond Payment Date to which such rescission is designated to apply). Notwithstanding the foregoing, so long as this Bond is subject to the Book-Entry System, payments of the principal of and interest on this Bond will be made in accordance with the rules, regulations and procedures established by the Securities Depository in connection with the Book-Entry System. If interest on this Bond is in default, the Trustee will, prior to the payment of interest, establish a special record date (the "Special Record Date") for such payment, which Special Record Date will be not more than fifteen (15) nor less than ten (10) days prior to the date of the proposed payment. Payment of such defaulted interest will then be made by check or wire transfer, as permitted above, mailed or remitted to the person in whose name this Bond is registered on the Special Record Date at the address or account of such person shown on the Bond Register. Upon final payment of the principal of and interest on this Bond, it shall be surrendered to the Trustee for cancellation. The term "Bond Payment Date" means any (a) Interest Payment Date, (b) other date on which interest is payable, including any Redemption Date, each Maturity Date and the date of acceleration of the Bonds and (c) date on which principal of the Bonds is payable. THE BONDS ARE SPECIAL, LIMITED OBLIGATIONS OF THE ISSUER, PAYABLE SOLELY OUT OF THE REVENUES, RECEIPTS AND OTHER MONEYS PLEDGED THEREFOR UNDER THE INDENTURE. THE BONDS ARE NOT A DEBT OF THE STATE, THE ISSUER OR OF ANY OTHER POLITICAL SUBDIVISION OF THE STATE, AND NEITHER THE STATE, THE ISSUER NOR ANY OTHER POLITICAL SUBDIVISION OF THE STATE IS LIABLE FOR THE PAYMENT OF THE BONDS. NEITHER THE FAITH AND CREDIT OF THE STATE, THE ISSUER NOR OF ANY OTHER POLITICAL SUBDIVISION OF THE STATE ARE PLEDGED TO THE PAYMENT OF THE PRINCIPAL OR OF INTEREST ON THE BONDS. This Bond is one of a duly authorized issue of bonds of the Issuer designated as its City of Carlsbad Multifamily Housing Revenue Bonds (Mariposa Apartments) 2003 Series A (the "Bonds"). The Bonds are issued pursuant to and in compliance with the Chapter 7 of Part 5 of Division 31 of the California Health and Safety Code] and a resolution duly adopted by the Issuer. The Net Bond Proceeds will be used to fund the Mortgage Loan to CIC Calavera, L.P. (the "Borrower"), a California limited partnership, to provide financing for the acquisition, construction and equipping of a multifamily housing facility (the "Mortgaged Property") to be located in the City of Carlsbad, California to be owned by the Borrower. The Mortgage Loan originally will be in the amount of $5,185,000 and, will be made pursuant to a Financing Agreement (the "Financing Agreement"), dated as of June 1,2003, by and among the Issuer, the Trustee and the Borrower. The Bonds are issued under and are equally and ratably secured as to principal, premium, if any, and interest by a Trust Indenture (the "Indenture"), dated as of June 1, 2003, between the Issuer and the Trustee, to which Indenture and all indentures supplemental to such Indenture (copies of which are on file at the Principal Office of the Trustee) reference is made for a description of the Trust Estate under the Indenture, the nature and extent of the security, the terms and conditions upon which the Bonds are issued and secured, and the rights of the owners of the Bonds. Fannie Mae ("Fannie Mae" or the "Credit Provider") provides credit enhancement for the Mortgage Loan and, if Conversion occurs, liquidity support for the Bonds Outstanding on each Remarketing Date so long as the Credit Facility remains in effect, pursuant to, and subject to the limitations of, a Credit Enhancement Instrument (Stand-By), dated as of the Conversion Date, issued by the Credit Provider to the Trustee. The Mortgage Loan is (a) being made pursuant to and in accordance with the Financing Agreement, in accordance with the requirements of the Credit Provider and subject to the terms and conditions of the Fannie Mae Commitment, (b) originated by the Issuer, (c) evidenced by the Mortgage Note, (d) secured by the Mortgage and (e) otherwise documented, evidenced and secured by the other Mortgage Loan Documents. The Bonds are secured by, among other property comprising the Trust Estate and the security for the Bonds, the following: (a) the Mortgage Loan, (b) the Credit Provider's credit enhancement of the Mortgage Loan and liquidity support for Bonds Outstanding on each Remarketing Date so long as the Credit Facility is in effect, pursuant to the Credit Facility, (c) the Net Bond Proceeds, to the extent not disbursed to the Borrower, (d) the Revenues and any other moneys received by the Trustee for the payment of the principal of and interest on the Bonds, (e) amounts otherwise on deposit in the Funds and Accounts (other than moneys on deposit from time to time, the Rebate Fund, the Costs of Issuance Deposit Account of the Costs of Issuance Fund and the Fees Account) and (f) Investment Income (excluding Investment Income earned on amounts on deposit in the Rebate Fund and Investment Income earned on amounts on deposit in the Costs of Issuance Deposit Account of the Costs of Issuance Fund). PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, AND INTEREST ON, THE BONDS IS NOT GUARANTEED BY FANNIE MAE. FANNIE MAE'S SOLE OBLIGATION WITH RESPECT TO THE MORTGAGE LOAN WILL BE CONTAINED IN THE CREDIT FACILITY, SO LONG AS IT IS IN EFFECT. THE OBLIGATIONS OF FANNIE MAE ARE NOT BACKED BY THE FULL FAITH AND CREDIT OF THE UNITED STATES OF AMERICA, BUT CORPORATION. FANNIE MAE HAS NO OBLIGATION, DIRECTLY OR INDIRECTLY, TO PURCHASE ANY OF THE BONDS. BY THE CREDIT OF FANNIE MAE, A FEDERALLY CHARTERED, STOCKHOLDER-OWNED Establishment of Interest Rate in Connection with Remarketing. The interest rate on the Bonds is, on each Remarketing Date, to, but not including, the earlier of the next succeeding Remarketing Date, maturity date or redemption date, subject to adjustment to a new interest rate, such adjusted interest rate to be the Remarketing Rate established by the Remarketing Agent in accordance with the Indenture. The establishment of the Remarketing Rate and the Remarketing Period in the manner set forth in the Indenture shall be conclusive and binding for the Trustee, the Issuer and the Bondholders. THE OWNER OF THIS BOND IS REQUIRED TO TENDER THIS BOND TO THE TRUSTEE FOR MANDATORY PURCHASE ON THE INITIAL REMARKETING DATE AND ON EACH SUCCEEDING REMARKETING DATE, IF ANY, AT A PURCHASE PRICE EQUAL TO 100% OF THE OUTSTANDING PRINCIPAL BALANCE OF THIS BOND PLUS, IF SUCH REMARKETING DATE IS OTHER THAN AN INTEREST PAYMENT DATE, ACCRUED INTEREST ON THIS BOND FROM THE PRECEDING INTEREST PAYMENT DATE TO WHICH INTEREST HAS BEEN PAID. THE INDENTURE REQUIRES THAT THE TRUSTEE GIVE NOTICE BY MAIL TO EACH REGISTERED OWNER OF AN OUTSTANDING BOND NOT LESS THAN 30 DAYS PRIOR TO THE INITIAL REMARKETING DATE AND EACH SUCCEEDING REMARKETING DATE, IF ANY, THAT THE BONDS ARE REQUIRED TO BE TENDERED FOR PURCHASE ON THE REMARKETING DATE. SUCH NOTICE WILL CONTAIN INSTRUCTIONS FOR DELIVERY OF BONDS FOR PURCHASE ON THE REMARKETING DATE. ANY BOND NOT TENDERED ON A REMARKETING DATE WILL BE DEEMED TO HAVE BEEN TENDERED FOR PURCHASE AND WILL CEASE TO BEAR INTEREST ON AND AFTER THE DATE OF PURCHASE OF SUCH BOND AS PROVIDED IN THE INDENTURE. The Bonds are subject to optional and mandatory redemption in whole or in part, on the dates, under the terms and conditions and at the redemption prices set forth in the Indenture, all of the provisions of which are, by this reference, incorporated into this Bond. Notice of redemption will be given in the manner set forth in the Indenture. Registration; Transfer and Exchange. The Trustee is the Bond Registrar for the Bonds and will keep the Bond Register for the registration of the Bonds and for the registration of transfer of Bonds. Subject to the express limitations contained in the Indenture, any Bondholder or its attorney duly authorized in writing may transfer title to a Bond on the Bond Register kept by the Trustee, upon surrender of the Bond at the office of the Trustee designated by the Trustee for that purpose, together with a written instrument of transfer (in substantially the form of assignment, including signature guarantee, attached to the Bond) satisfactory to the Trustee executed by the Bondholder or its attorney duly authorized in writing, and upon surrender for registration of transfer of any Bond, the Issuer will execute and the Trustee will authenticate and deliver in the name of the transferee or transferees a new Bond or Bonds of the same aggregate principal amount, rate of interest, maturity, series and tenor as the Bond surrendered and of any Authorized Denomination. Transfers of an interest in the Bonds will be in principal amounts equal to any Authorized Denomination. Subject to the express limitations contained in the Indenture, Bonds may be exchanged upon surrender of such Bonds at the office of the Trustee designated by the Trustee for that purpose together with a written instrument of transfer (in substantially the form of assignment, including signature guarantee, attached to the Bond) satisfactory to the Trustee, executed by the Bondholder or its attorney duly authorized in writing, for an equal aggregate principal amount of Bonds of the same aggregate principal amount, rate of interest, maturity, series and tenor as the Bonds being exchanged and of any Authorized Denomination. The Issuer will execute and the Trustee will authenticate and deliver Bonds which the Bondholder making the exchange is entitled to receive, bearing numbers not contemporaneously then outstanding. The Trustee is not required to register any transfer or exchange of any Bond (or portion of any Bond) called for redemption. Registrations of transfers or exchanges of Bonds will be without charge to the Bondholders, but any taxes or other governmental charges required to be paid with respect to a transfer or exchange must be paid by any Bondholder requesting the registration of transfer or exchange as a condition precedent to the exercise of such privilege. Any service charge made by the Trustee for any such registration, transfer or exchange will be paid by the Borrower. Ownership of Bond. The person in whose name this Bond is registered on the Bond Register will be deemed and regarded as the absolute owner of this Bond for all purposes, and payment of or on account of either principal or interest will be made only to or upon the order of such person or its attorney duly authorized in writing, but such registration may be changed as provided in the Indenture. Acceleration. Under certain circumstances as described in the Indenture, the principal of all of the Bonds may be declared due and payable in the manner and with the effect provided in the Indenture. Immediately following any such declaration of acceleration, the Trustee will mail notice of such declaration by registered mail, overnight delivery service or other secure means, or by Electronic Means, to each registered owner of Bonds at such registered owner's last address appearing on the Bond Register. Any defect in or failure to give such notice of such declaration will not affect the validity of such declaration. Waiver. The Indenture contains provisions permitting the Trustee to waive compliance with certain provisions of the Indenture and their consequences. Amendments. The Indenture permits, with certain exceptions provided in the Indenture, supplements to the Indenture and amendments to the Financing Agreement with the consent of the registered owners of fifty-one percent (51%) or more in aggregate principal amount of Bonds then Outstanding which are affected by such supplement or amendment. The Indenture also permits supplements to the Indenture and amendments to the Financing Agreement and other documents without requiring the consent of any Bondholders in certain specifically described instances. Limitations on Enforcement. The Registered Owner of this Bond will have no right to enforce the provisions of the Indenture or the Financing Agreement, or to institute any proceeding in equity or at law for the enforcement of the Indenture or the Financing Agreement, or to take any action with respect to an event of default under the Indenture or the Financing Agreement, or to institute, appear in or defend any suit or other proceeding with respect to the Indenture or the Financing Agreement upon an event of default, except under certain limited circumstances provided in the Indenture. Consent. The Registered Owner of this Bond, by acceptance of this Bond, consents to all of the terms and provisions of the Indenture and the Financing Agreement. Exculpation. No recourse shall be had for the payment of the principal of or the interest on this Bond, or for any claim based on this Bond, or otherwise in respect of this Bond, or based on or in respect of the Indenture or any supplemental indenture, against the general credit of the Issuer or against any member, officer, employee or agent, as such, past, present or future, of the Issuer or any successor, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance of this Bond and as part of the consideration for the issue of this Bond, expressly waived and released. NO MEMBER, OFFICER, AGENT, EMPLOYEE OR ATTORNEY OF THE ISSUER, INCLUDING ANY PERSON EXECUTING THE INDENTURE OR THE BONDS, SHALL BE LIABLE PERSONALLY ON THE BONDS OR FOR ANY REASON RELATING TO THE ISSUANCE OF THE BONDS. NO RECOURSE SHALL BE HAD FOR THE PAYMENT OF THE PRINCIPAL OF OR THE INTEREST ON THE BONDS, OR FOR ANY CLAIM BASED ON THE BONDS, OR OTHERWISE IN RESPECT OF THE BONDS, OR BASED ON OR IN RESPECT OF THE INDENTURE OR ANY SUPPLEMENTAL INDENTURE, AGAINST ANY MEMBER, OFFICER, EMPLOYEE OR AGENT, AS SUCH, OF THE ISSUER OR ANY SUCCESSOR, WHETHER BY VIRTUE OF ANY CONSTITUTION, STATUTE OR RULE OF LAW, OR BY THE ENFORCEMENT OF ANY ASSESSMENT OR PENALTY OR OTHERWISE, ALL SUCH LIABILITY BEING, BY THE ACCEPTANCE OF THIS BOND AND AS PART OF THE CONSIDERATION FOR THE ISSUE OF THE BONDS, EXPRESSLY WAIVED AND RELEASED. It is certified, recited and declared that all acts, conditions and things required to exist, happen and be performed precedent to and in the execution and delivery of the Indenture and the issuance of this Bond do exist, have happened and have been performed in due time, form and manner as required by law and that the issuance of this Bond, together with all other obligations of the Issuer, does not exceed or violate any constitutional or statutory limitation. This Bond shall not be entitled to any benefit under the Indenture or become valid or obligatory for any purpose until such Bond shall have been authenticated by the certificate of the Trustee endorsed on it. The Issuer has caused this bond to be duly executed in its name by the facsimile under its official seal, or a facsimile, and attested by the signature of its facsimile signature of its City Clerk all as of June 1,2003. CITY OF CARLSBAD TITLE Attest: 3-55 City Clerk CERTIFICATE OF AUTHENTICATION This Bond is one of the Bonds of the issue described in the within-mentioned Indenture. WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee By: Authorized Signatory Authentication Date: FOR VALUE RECEIVED, the undersigned sells, assigns and transfers unto all rights thereunder and hereby irrevocably constitutes and appoints to transfer the within- mentioned Bond on the books kept for registration thereof with full power of substitution in the Premises. the within Bond and Please insert social security or other identifying number of assignee: Dated: NOTICE: The signature to this Assignment must correspond with the name as it appears upon the face of the within bond in every particular, without alteration or enlargement or any change whatever. Signature Guaranteed: