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HomeMy WebLinkAbout2003-05-20; City Council; 17176 Exhibit 5; Multi-Family Housing Revenue Bonds- Exhibit 5 BOND PURCHASE AGREEMENT June 4,2003 City of Carlsbad 1200 Carlsbad Village Drive Carlsbad, CA 92008 AB 17,176 s-20-0 3 KUTAK ROCK LLP DRAFT 4/28/03 CIC Calavera, L.P. c/o Chelsea Investment Corporation 21 5 South Highway 101, Suite 200 Solana Beach, CA 92075 $ $ City of Carlsbad Multifamily Housing Revenue Bonds (Mariposa Apartments) 2003 Series A City of Carlsbad Multifamily Housing Revenue Bonds (Mariposa Apartments) 2003 Series B Ladies and Gentlemen: Red Capital Markets, Inc. (the “Underwriter”) hereby offers to enter into this Bond Purchase Agreement (this “Bond Purchase Agreement”) with the City of Carlsbad (the “Issuer”) and CIC Calavera, L.P., a California limited partnership (the “Borrower”), solely with respect to the Bonds (as defined below), subject to acceptance at or prior to 5:OO p.m., Pacific time, on the date hereof. The Issuer is authorized to issue the above-captioned 2003 Series A Bonds (the “Series A Bonds”) and the above-captioned 2003 Series B Bonds (the “Series B Bonds” and, together with the Series A ,Bonds, the “Bonds”), in accordance with the provisions of Chapter 7 of Part 5 of Division 3 1 of the California Health and Safety Code, as amended (the “Act”), and pursuant to a 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 (the “Bond Resolution”). The Bonds will be issued pursuant to a Trust Indenture, dated as of June 1, 2003 (the “Initial Indenture”), between the Issuer and Wells Fargo Bank, National Association, as trustee (the “Trustee”). The Bonds are being issued to provide hnding for a Mortgage Loan (the “Mortgage Loan”) to be made by the Issuer to the Borrower. The Borrower will apply the proceeds of the Mortgage Loan to finance the costs of acquiring, constructing and equipping a senior rental housing development known as the Mariposa Apartments located in Carlsbad, California (the “Project”). The Mortgage Loan will be made pursuant to a Financing Agreement, dated as of the date of the Indenture (the “Initial Financing Agreement”), by and among the Issuer, the Trustee and the Borrower. To secure the Bonds initially, the Borrower will cause to be delivered to the Trustee an irrevocable direct-pay letter of credit (the “Initial Credit Facility”) issued by Provident Bank (“Provident Bank” or the “Initial Credit Provider”). The payment of draws under the Initial Credit Facility itself will initially be secured by a standby letter of credit (the “Initial Standby Credit Facility”) issued by the Federal Home Loan Bank of Cincinnati (“FHLB” or the “Initial Standby Credit Provider”). Upon the satisfaction of certain conditions including, but not limited to, completion of acquisition, construction and equipping of the Project and the achievement of a specified level of 01 -480787. I occupancy from the leasing of units in the Project (the “Conditions to Loan Conversion”), the Mortgage Loan will convert (“Loan Conversion”) and the following actions will take place. After Loan Conversion, if it occurs, Fannie Mae (“Fannie Mae” or the “Permanent Credit Provider”) will provide credit enhancement for the Mortgage Loan, pursuant to, and subject to the limitations of, a Stand By Credit Enhancement Instrument, dated as of the Closing Date (the “Permanent Credit Facility”) provided by the Permanent Credit Provider to the Trustee. [The Permanent Credit Facility will also provide liquidity support for the Series A Bonds Outstanding on the Initial Series A Remarketing Date.] After Loan Conversion, if it occurs, the Mortgage Loan will be evidenced by a Multifamily Note (the “Mortgage Note”). In connection with Loan Conversion, if it occurs, the Initial Indenture and the Initial Financing Agreement will be automatically replaced by (a) the Trust Indenture dated as of the date of the Initial Indenture (the “Permanent Indenture”), by and between the Issuer and the Trustee, relating to the Permanent Credit Facility and (b) the Financing Agreement dated as of the date of the Initial Indenture (the “Permanent Financing Agreement”), by and among the Issuer, the Trustee, and the Borrower relating to the Permanent Credit Facility, respectively. Following Loan Conversion, the Initial Indenture and the Initial Financing Agreement will be of no further force or effect. References herein to the Indenture, the Financing Agreement, the Reimbursement Agreement, the Credit Facility and the Credit Provider will be references to the Initial Indenture, the Initial Financing Agreement, the Initial Reimbursement Agreement, the Initial Credit Facility and the Initial Credit Provider, respectively, or the Permanent Indenture, the Permanent Financing Agreement, the Permanent Reimbursement Agreement, the Permanent Credit Facility and the Permanent Credit Provider, respectively, as appropriate. In order to assure compliance with the applicable provisions of the Code and applicable laws, the Borrower, the Trustee and the Issuer have entered into a Regulatory Agreement and Declaration of Restrictive Covenants, dated as of the date of the Indenture (the “Regulatory Agreement”), which requires that certain of the residential rental units in the Project be occupied by persons and families of low income. The terms not otherwise defined herein will have the meaning ascribed to them in the appropriate Indenture. Section 1. Purchase, Sale and Delivery of Bonds. On the basis of the representations, warranties and agreements contained herein, but subject to the terms and conditions herein set forth, the Underwriter hereby agrees to purchase from the Issuer for reoffering to the public, and the Issuer hereby agrees to sell to the Underwriter for such purpose on June 12,2003 (the “Closing Date”), all (but not less than all) of the Bonds (maturing on the dates, in the principal amounts, at the rates and at the prices set forth in Schedule I hereto). The purchase price of the Bonds shall be paid by the Underwriter by wire transfer in federal funds. Upon the delivery of the Bonds, the Borrower agrees to pay to the Underwriter, as compensation for services hereunder, a fee (the “Gross Underwriter’s Fee”) in an amount equal to % of the original principal amount of the Bonds, plus the amount listed under the heading “EXPENSES TO BE PAID BY UNDERWRITER’ in Schedule I1 hereto (the “Expense Reimbursement”), from which amount the Underwriter will pay certain expenses listed under the heading “EXPENSES TO BE PAID BY UNDERWRITER’ in Schedule I1 hereto. The Gross Underwriter’s Fee and the Expense Reimbursement shall be due and payable in immediately available funds upon the 01-480787.1 2 delivery of the Bonds, solely and exclusively from the proceeds of the Bonds or hnds provided by the Borrower. The Borrower will deliver to the Trustee, not later than 1O:OO a.m., Pacific time, on the Closing Date, a sum certain, which sum is the amount required to pay all costs required to be paid in order to close the sale of the Bonds on the Closing Date, less the proceeds of the Bonds to be applied to such costs. Section2. Bond Documents. On or prior to the Closing Date, the Underwriter shall have received the following: (a) the final Official Statement relating to the Bonds (the “Official Statement”); (b) the Initial Indenture, duly executed by the Issuer and the Trustee; (c) Borrower; the Initial Financing Agreement, duly executed by the Issuer, the Trustee and the (d) the Regulatory Agreement, duly executed by the Issuer, the Borrower, and the Trustee; (e) the Continuing Disclosure Agreement, dated as of the date of the Initial Indenture (the “Disclosure Agreement”), duly executed by the Borrower and the Trustee; (0 the Assignment and Intercreditor Agreement, dated as of the date of the Initial Indenture (the “Initial Assignment”) by and among the Issuer, the Trustee and the Initial Credit Provider and acknowledged, accepted and agreed to by the Borrower; (g) the Reimbursement Agreement dated as of the date of the Initial Indenture (the “Initial Reimbursement Agreement”) by and between the Borrower and the Initial Credit Provider; (h) the Multifamily Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing (the “Initial Security Instrument”) from the Borrower in favor of the Issuer; and (i) the Initial Credit Facility issued by the Initial Credit Provider; (i) the Initial Standby Credit Facility issued by the Initial Standby Credit Provider; (k) the Permanent Indenture, duly executed by the Issuer and the Trustee; (1) and the Borrower; the Permanent Financing Agreement, duly executed by the Issuer, the Trustee (m) the Assignment and Intercreditor Agreement, dated as of the date of the Initial Indenture (the “Permanent Assignment”) by and among the Issuer, the Trustee and Fannie Mae and acknowledged, accepted and agreed to by the Borrower; (n) the Reimbursement Agreement dated as of the date of the Initial Indenture (the “Initial Reimbursement Agreement”) by and between the Borrower and the Permanent Credit Provider; 01-480787.1 3 (0) the Permanent Credit Facility issued by Fannie Mae; (p) the Multifamily Note dated as of the date of the Initial Indenture (the “Mortgage Note”) executed by the Borrower (9) the Multifamily Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing (the “Permanent Security Instrument”) from the Borrower in favor of the Issuer; and (r) a certified copy or copies of the Bond Resolution, as supplemented and amended, authorizing the issuance of the Bonds and the execution of the Indenture, the Financing Agreement, the Regulatory Agreement, the Intercreditor Agreement and the sale of the Bonds to the Underwriter. The above-described documents, together with this Bond Purchase Agreement and the Bonds, shall hereafter be known collectively as the “Bond Documents.” Section3. Offering and Authorization. The Borrower has caused to be delivered to the Underwriter copies of the Official Statement, approved for distribution by the Bond Resolution, signed on behalf of the Issuer and the Borrower by duly authorized officers of the Issuer and the Borrower, respectively. The Issuer and the Borrower hereby ratify, approve and authorize the use by the Underwriter, prior to the date hereof, in connection with the offer and sale of the Bonds, of the Official Statement, the Bond Documents and all other documents, certificates or statements hished by the Issuer and the Borrower to the Underwriter in connection with the transactions contemplated by the Official Statement and the Bond Documents. The Underwriter agrees that it will not confirm the sale of any Bonds unless the settlement of such sale is accompanied by or preceded by the delivery of a copy of the final Official Statement The Issuer and the Borrower acknowledge that the Underwriter is required to comply with the requirements of Rule 15~2-12 of the Securities and Exchange Commission (the “Rule”) in connection with the offer and sale of the Bonds and each agrees to cooperate (at the cost and expense of the Borrower) with the Underwriter so as to enable the Underwriter to comply with the Rule. To this end: (a) The Issuer has delivered to the Underwriter the preliminary official statement relating to the Bonds (the “Preliminary Official Statement”) that the Issuer and the Borrower, collectively, hereby deem final as of its date, except for the omission of no more than the following information: the offering price(s), interest rate(s), selling compensation, aggregate principal amount, principal amount per maturity, delivery dates, ratings, other terms of the Bonds depending on such matters and the identity of the Underwriter (collectively, the “Permitted Omissions”). (b) If, during the period from the date hereof to and including the earlier of (i) the date 90 days from the end of the underwriting period (such date of the end of the underwriting period to be specified in writing by the Underwriter to the Issuer and the Borrower) and (ii) the date as of which the Official Statement is available to any person from a nationally recognized municipal securities information repository, but in no case less than 25 days following the end of the underwriting period (such date to be specified in writing by the Underwriter to the Issuer and the Borrower), any event occurs as a result of which the Official Statement for the Bonds as then 01-480787.1 4 amended or supplemented might include an untrue statement of material fact, or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, the Issuer, if such event relates to the information included in the Official Statement under the captions “THE ISSUER” and “NO LITIGATION-The Issuer” or the Borrower, if such event relates to other information in the Official Statement, shall promptly notify the Underwriter thereof and shall (in either case, at the expense of the Borrower), upon the request of the Underwriter, prepare and deliver to the Underwriter as many copies of an amendment or supplement which will correct such statement or omission as the Underwriter may reasonably request. (c) On or before the date which is seven business days after the date hereof (or such earlier date as is necessary to accompany any confirmation that requests payment for a Bond), the Issuer agrees to deliver or cause to be delivered to the Underwriter, at the expense of the Borrower, as many copies of the Official Statement as the Underwriter may reasonably request. After the Closing Date, (a) the Issuer shall not adopt any amendment of or supplement to the Official Statement to which, after having been furnished with a copy, the Underwriter shall reasonably object in writing and (b) if any event relating to or affecting the Issuer, the Credit Provider or the Borrower shall occur as a result of which it is necessary, in the opinion of the Underwriter, to amend or supplement the Official Statement in order to make the Official Statement not misleading in the light of the circumstances existing at the time it is delivered to the Underwriter, the Issuer shall cause to be forthwith prepared and brnished to the Underwriter (at the expense of the Borrower, but in no event at the expense of the Issuer) a reasonable number of copies of an amendment of or supplement to the Official Statement (in form and substance satisfactory to the Underwriter) that will amend or supplement the Official Statement so that it will not contain an untrue statement of material fact or omit to state a material fact necessary in order to make. the statements therein, in the light of the circumstances existing at the time it is delivered to the Underwriter, not misleading. Section 4. Representations and Warranties of the Issuer. The Issuer represents and warrants as of the date hereof to the Underwriter as follows: (a) The Issuer is a municipal corporation under the laws of the State of California, duly organized and validly existing with full legal right, power and authority (i) to enter into the Bond Documents to which it is a party (the “Issuer Documents”), (ii) to issue, sell and deliver the Bonds as provided herein, (iii) to finance the acquisition and construction of the Project and certain costs associated with the issuance of the Bonds, and (iv) to carry out the transactions on the part of the Issuer described in the Issuer Documents, as they may be amended or supplemented from time to time by the Issuer. (b) The Bond Resolution has been duly adopted by the Issuer, has not been amended, modified or repealed and is in full force and effect on the date hereof. The Issuer has the full legal right, power and authority to execute and deliver the Issuer Documents and to carry out its obligations thereunder. The execution, delivery and performance of the Issuer Documents have been duly authorized by the Issuer and, as of the date of the Closing Date (assuming the due authorization, execution and delivery of such documents by the other respective parties thereto where necessary), each of the Issuer Documents will be the duly authorized legal, valid and binding obligation of the Issuer, enforceable against the Issuer in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting the rights of creditors generally and general equitable principles. 0 1-480787.1 5 (c) The Bonds have been issued in order to provide financing for the acquisition and construction of the Project and certain costs associated with the issuance of the Bonds. (d) When duly authenticated by the Trustee and delivered to and paid for by the Underwriter on the date of the Closing Date in accordance with the provisions of this Bond Purchase Agreement, the Bonds will have been duly authorized, executed, issued and delivered and will constitute legal, valid and binding limited obligations of the Issuer in conformity with the laws of the State, including the Act, will be entitled to the benefit and security of the Indenture, and will be enforceable against the Issuer in accordance with their terms, subject to bankruptcy, insolveney, reorganization, moratorium and other similar laws affecting the rights of creditors generally and general equitable principles. (e) To the knowledge of the Issuer, neither the Issuer’s execution and delivery of the Issuer Documents, the consummation of the transactions on its part contemplated thereby, nor the fulfillment of or’ compliance with the terms, conditions or provisions of the Issuer Documents conflicts in any material respect with or results in a material breach of any of the terms, conditions or provisions of any agreement, instrument, judgment, order or decree to which the Issuer is now a party or by which it is bound or constitutes a material default under any of the foregoing. (f) Except as otherwise provided in the Indenture, the Issuer has not created and will not create any debt, lien or charge upon the Revenues, and has not made and will not make any pledge or assignment of or create any encumbrance thereon, other than the pledge and assignment thereof under the Indenture. (g) To the knowledge of the Issuer, the Issuer has complied and will comply with all material provisions of the Act applicable to the Bonds and the transactions contemplated by the Issuer Documents. (h) To the knowledge of the Issuer, no litigation or administrative action of any nature has been served on the Issuer and is now pending (i) seeking to restrain or enjoin the execution and delivery of the Issuer Documents or in any manner questioning the proceedings or authority relating thereto or otherwise affecting the validity of the Bonds or (ii)as to the existence or authority of the Issuer or that of its present or former council members or officers. (i) The Issuer, at the expense of the Borrower, will furnish such information, execute such instruments and take such other action in cooperation with the Underwriter as the Underwriter may reasonably request in writing in order for the Underwriter (i) to qualify the Bonds for offer and sale under the Blue Sky or other securities laws and regulations of such states and other jurisdictions of the United States as the Underwriter may designate and (ii) to determine the eligibility of the Bonds for investment under the laws of such states and other jurisdictions; provided, however, that in no event shall the Issuer be required to take any action which would subject it to general or unlimited service of process in any jurisdiction in which it is not now so subject. (j) The information contained in the Official Statement under the captions “THE ISSUER’ and “NO LITIGATION-The Issuer,” at the time of the Issuer’s acceptance hereof, and (unless the Official Statement is amended or supplemented pursuant to Section 3 hereof) at all times subsequent thereto, up to and including the date of the Closing Date, is true and correct in all material respects and such information does not contain any untrue or misleading statement 01-480787.1 6 of material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. The execution and delivery of this Bond Purchase Agreement by the Issuer shall constitute a representation to the Underwriter that the representations and warranties contained in this Section 4 are true as of the date hereof. Section 5. Representations, Warranties and Covenants of the Borrower. The Borrower represents and warrants to, and covenants with, the Issuer and the Underwriter as follows: (a) The statements and information under the headings “THE BORROWER AND THE PROJECT” and “NO LITIGATION-The Borrower” in the Official Statement, on the date thereof, and are, on the date hereof, true and correct and did not, on the date thereof, and does not, on the date hereof, contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements under such headings, in light of the circumstances under which they were made, not misleading. The Borrower hereby ratifies and authorizes the use by the Underwriter of the Official Statement in connection with the offering, sale and distribution of the Bonds. (b) The Borrower is a limited partnership duly formed and validly existing under the laws of the State of California and has now the capacity to transact business in the State of California. The Borrower has the requisite legal right, power and authority to acquire and own its property (including, without limitation, the Project) to cany on its business as contemplated to be conducted by the Bond Documents to which it is a party (the “Borrower Documents”) and to execute, deliver and perform its obligations under the Borrower Documents. (c) The Borrower Documents, when duly executed and delivered by the Borrower and the other parties thereto, and all other documents to be delivered by the Borrower in connection with the consummation of the transactions contemplated by the Borrower Documents, will constitute valid, legal and binding obligations of the Borrower, and to the Borrower’s knowledge are enforceable in accordance with their terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally. (d) The execution, delivery and performance of the Borrower Documents and all other documents to be delivered and actions to be taken by the Borrower in connection with the consummation of the transactions contemplated by the Borrower Documents, including, without limitation, the authorization of the use of the Official Statement by the Underwriter in connection with the offering, sale and distribution of the Bonds, have all been duly authorized by all necessary action on the part of the Borrower. (e) The execution, delivery and performance of the Borrower Documents and all other documents to be delivered by the Borrower in connection with the consummation of the transactions contemplated by the Borrower Documents will not conflict with, or constitute a material breach of or default under, the Borrower’s organizational documents or any indenture, mortgage, deed of trust, lease, note, commitment, agreement or other instrument or obligation to which the Borrower is a party or by which the Borrower or any of its property is bound or under any law, rule, regulation, judgment, order or decree to which the Borrower is subject or by which the Borrower or any ofits property is bound. 01-480787.1 7 (f) There is no action, suit, proceeding, inquiry or investigation by or before any governmental agency, public board or body pending or, to the best of the knowledge of the Borrower, threatened against the Borrower (nor to the best of its knowledge is there any basis therefor), which (i) affects or seeks to enjoin, prohibit or restrain the issuance, sale or delivery of the Bonds or the use of the Official Statement or the execution and delivery of the Borrower Documents, (ii) affects or questions the validity or enforceability of the Borrower Documents, (iii) questions the tax-exempt status of the Bonds or the completeness or accuracy of the Official Statement or (iv) questions the power or authority of the Borrower to own or operate the Project or to execute, deliver or perform its obligations under the Borrower Documents. (g) Any certificate signed by an authorized representative of the Borrower and delivered to the Underwriter or the Issuer shall be deemed to be a representation and warranty by the Borrower to the Underwriter or the Issuer, as applicable, as to the statements made therein. (h) All permits, licenses and other authorizations necessary for the acquisition, ownership and operation of the Project in the manner contemplated by the Borrower Documents have been or to the best knowledge of the Borrower, will be obtained, and said ownership and operation are not in conflict with any zoning or similar ordinance applicable to the Project. (i) The Borrower (i) will not knowingly take any action or permit any person it controls to take action that would violate the provisions hereof or which would adversely affect the exclusion of interest on the Bonds from gross income for federal income tax purposes, and, if it should take or permit any such action, it will take all lawful actions to rescind such action promptly upon having knowledge thereof, (ii) will not fail to take any action that is required in order to preserve the exclusion from gross income of the interest on the Bonds for federal income tax purposes under Section 103 of the Code and (iii) will take such action or actions as it can take including amending the Borrower Documents, as may be necessary, in the opinion of bond counsel acceptable to the Issuer and the Trustee, to comply fully with all applicable rules, rulings, policies, procedures, regulations or other official statements promulgated by the Department of the Treasury or the Internal Revenue Service pertaining to the Bonds. (j) The Borrower will not take or omit to take, as may be applicable, any action which would in any way cause the proceeds of the Bonds to be applied in a manner contrary to the requirements of the Borrower Documents. (k) Whether or not the sale of the Bonds by the Issuer to the Underwriter is consummated, the Issuer shall not have any obligation to pay any costs or expenses incident to the performance of the obligations of the Issuer or the Underwriter under this Bond Purchase Agreement. All costs and expenses to effect the authorization, preparation, issuance, sale and delivery of the Bonds, including, without limitation, the preparation, printing, execution and delivery of the Preliminary Official Statement and the Official Statement (together with any amendments thereof and supplements thereto) and the Bond Documents, any rating agency fees, the fees and expenses of Bond Counsel, the Initial Credit Provider’s Counsel, the Initial Standby Credit Provider’s Counsel, Fannie Mae’s Counsel, Loan Servicer’s Counsel, Trustee’s Counsel and Underwriter’s Counsel and the expenses incurred in qualifying the Bonds for sale under the securities laws of various jurisdictions and of preparing the “blue sky” memorandum, shall be paid out of the sources provided therefor in the Bond Documents. 01-480787.1 8 (1) The Borrower has executed and delivered, or will prior to the Closing Date execute and'deliver, the Borrower Documents and shall perform all its obligations under each of the Borrower Documents. (m) The Borrower has performed and shall continue to perform any and all obligations incurred pursuant to the Borrower Documents. Section 6. Conditions to Obligations of the Underwriter. The obligation of the Underwriter to purchase and pay for the Bonds and the obligation of the Issuer to sell the Bonds shall be subject to the following conditions precedent: (a) The representations and warranties of the Borrower and the Issuer herein and the representations and warranties made in each of the Bond Documents by the respective parties thereto shall be true, correct and complete on the date hereof and on the Closing Date, as if made on the Closing Date, and each such party to the Bond Documents shall deliver a certificate to such effect. The Issuer shall have performed all of its obligations hereunder and the statements made on behalf of the Issuer hereunder shall be true and correct on the date hereof and on the Closing Date, as if made on the Closing Date, and the Issuer shall deliver a certificate to such effect. The Official Statement (as the same may be amended or supplemented with the written approval of the Underwriter) on the dates thereof and on the Closing Date shall be true, correct and complete in all material respects and shall not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements contained therein, in light of the circumstances under which they were made, not misleading. (b) Except as may have been agreed to by the Underwriter, as of the Closing Date, each of the Bond Documents, the Bond Resolution and all other official action of the Issuer relating thereto shall be in full force and effect and shall not have been amended, modified or supplemented, and except as may have been agreed to by the Underwriter the Official Statement shall not have been amended or supplemented. (c) The Issuer shall have received the approving opinion of Jones Hall, A Professional Law Corporation, Bond Counsel, in the form attached as Appendix F to the Official Statement, and the Underwriter shall have also received said opinion or received a letter from said firm, dated the Closing Date and addressed to the Underwriter, to the effect that the Underwriter may rely upon such firm's opinion as if it were addressed to the Underwriter, and the Underwriter shall have received the supplemental opinion of Bond Counsel, dated the Closing Date and addressed to the Underwriter substantially in the form set forth in Exhibit A hereto. (d) No default or event of default (as defined in any of the Bond Documents) shall have occurred and be continuing, and no event shall have occurred and be continuing which, with the lapse of time or the giving of notice or both, would constitute such a default or event of default. (e) No material adverse change shall have occurred, nor shall any development involving a prospective material and adverse change in, or affecting the affairs, business, financial condition, results of operations, prospects or properties (including the Project) of, either the Issuer or the Borrower have occurred. 01-480787.1 9 (0 On or prior to the Closing Date, all actions required to be taken as of the Closing Date in connection with the Bonds, the Bond Resolution and the Bond Documents by the Issuer and the Borrower shall have been taken, and the Issuer and the Borrower shall each have performed and complied with all agreements, covenants and conditions required to be performed or complied with by the Bond Resolution and the Bond Documents, and each party shall deliver a certificate to such effect insofar as the foregoing actions, agreements, covenants and conditions apply to each such party, and each of such agreements shall be in full force and effect and shall not have been amended, modified or supplemented, except as has been agreed to in writing by the Underwriter. (g) Each of the Bond Documents shall have been executed and delivered by each of the respective parties thereto, all such documents in forms exhibited to the Underwriter on the date hereof with only such changes as the Underwriter may approve as evidenced by their payments for the Bonds, and each of the Bond Documents shall be in full force and effect. (h) None of the events referred to in Section 7 of this Bond Purchase Agreement shall have occurred, unless waived in writing by the Underwriter. (i) The Underwriter shall have received a certificate, dated the Closing Date and signed on behalf of the Issuer, to the effect that: (1) to the knowledge of the person signing the certificate, no litigation before any court is pending with respect to which the Issuer has been served with process or is known to be threatened in any way affecting the existence or powers of the Issuer, or seeking to restrain or enjoin the issuance, sale or delivery of the Bonds or collection or pledge of Revenues pledged under the Indenture to pay the principal of and interest on the Bonds, or the pledge thereof, or in any way contesting or affecting the validity or enforceability of the Issuer Documents, or the proceedings of the Issuer or its authority with respect to, the Issuer Documents; (2) the information in the Official Statement under the headings “THE ISSUER’ and “NO LITIGATION-The Issuer” does not contain any untrue or misleading statement of a material fact or omit to state any material fact necessary to make the statements under such headings, in the light of the circumstances under which they were made, not misleading; and (3) all approvals, consents, authorizations, elections and orders of or filings or registrations with any governmental authority, board, agency or commission having jurisdiction which constitutes a condition precedent to the performance by the Issuer of its obligations under the Issuer Documents have been obtained and are in full force and effect. 0’) The Underwriter shall have received an opinion of Counsel to the Borrower substantially in the form set forth in Exhibit B hereto. (k) The Underwriter shall have received written evidence that Standard& Poor’s Credit Markets Services, a Division of The McGraw-Hill Companies, Inc. (the “Rating Agency”) has issued a rating of “AAA” with respect to the Bonds, and as of the Closing Date, the rating shall not have been withdrawn or lowered. 01-480787.1 10 (1) The Underwriter shall have received a certificate of the Borrower to the effect that: (i) Except as disclosed in the Official Statement, the Borrower has not received notice of any pending, nor to the Borrower’s actual knowledge is there any threatened, action, suit, proceeding, inquiry or investigation against the Borrower, at law or in equity, by or before any court, public board or body, nor to the Borrower’s actual knowledge is there any basis therefor, affecting the existence of the Borrower or the titles of its officials to their respective offices, or seeking to prohibit, restrain or enjoin the execution and delivery of the Borrower Documents, or in any way materially adversely affecting or questioning (a) the use of the Official Statement, (c) the validity or enforceability of the Bonds, any proceedings of the Borrower taken with respect to the Borrower Documents, (d) the tax-exempt status of the interest on the Bonds, (e) the accuracy or completeness of the Official Statement, (f) the execution and delivery by the Borrower of the Borrower Documents, or (g) the power of the Borrower to carry out the transactions on its part contemplated by the Borrower Documents; (ii) the statements and information under the headings “THE BORROWER AND THE PROJECT” and “NO LITIGATION-The Borrower” in the Official Statement, on the date thereof, and are, on the date hereof, true and correct and did not, on the date thereof, and does not, on the date hereof, contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements under such headings, in light of the circumstances under which they were made, not misleading; and (iii) the Borrower has complied with all the covenants and satisfied all the conditions to be performed or satisfied by the Borrower on or prior to the Closing Date, and the representations and warranties of the Borrower contained in the Borrower Documents are true, correct and complete as of the Closing Date, and the Borrower has the requisite legal right, power and authority to enter into and carry out the transactions contemplated by the Borrower Documents. (m) The Underwriter shall have received an opinion of counsel to the Trustee substantially in the form set forth in Exhibit C hereto. (n) The Underwriter shall have received a certificate, dated the Closing Date and signed by an authorized officer of the Trustee, to the effect that (i) he or she is an authorized officer of the Trustee; (ii) the Bond Documents to which the Trustee is a party (the “Trustee Documents”) have been duly executed and delivered by the Trustee; (iii) the Trustee has all necessary corporate and trust powers required to carry out the trust created by the Indenture; (iv) to the best of his or her knowledge, the acceptance by the Trustee of the duties and obligations of the Trustee under the Trustee Documents and compliance with the provisions thereof will not conflict with or constitute a breach of or default under any law, administrative regulation, consent, decree or any agreement or other instrument to which the Trustee is subject or by which the Trustee is bound; (v) the Trustee has duly authenticated the Bonds, and the person signing the certificate of authentication on each Bond has been duly authorized to do so; (vi) all approvals, consents and orders of any governmental authority or agency having jurisdiction in the matter which would constitute a condition precedent to the performance by the Trustee of its duties and obligations under the Trustee Documents have been obtained and are in full force and effect (except that no opinion is expressed with respect to federal or state securities laws); and (vii) to 01 -480787.1 11 the best of his or her knowledge, no litigation is pending or threatened in any way arising from its fiduciary duties contesting or affecting the existence of powers (including trust powers) or the Trustee’s ability to fulfill its duties and obligations under the Trustee Documents. (0) The Underwriter shall have received a certificate of the Issuer and the Borrower, dated the Closing Date, with respect to the facts, estimates and circumstances and reasonable expectations pertaining to Section 148 of the Code to support the conclusion that none of the Bonds will be an “arbitrage bond.” (p) The Underwriter shall have received a certificate from the Initial Credit Provider, dated the Closing Date, to the effect that the information set forth in the Official Statement under the heading “THE CREDIT PROVIDERS-Credit Providers Prior to Loan Conversion-Initial Credit Provider” is true and correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements under such heading, in light of the circumstances under which they were made, not misleading. (9) The Underwriter shall have received a certificate from the Initial Standby Credit Provider, dated the Closing Date, to the effect that the information set forth in the Official Statement under the heading “THE CREDIT PROVIDERS-Credit Providers Prior to Loan Conversion-Initial Standby Credit Provider” and in Appendix I thereto is true and correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements under such heading and in such Appendix, in light of the circumstances under which they were made, not misleading. (r) The Underwriter shall have received a certificate from Fannie Mae, dated the Closing Date, to the effect that the information set forth in the Official Statement under the heading “THE CREDIT PROVIDERS-Credit Provider After Loan Conversion-Permanent Credit Provider” is accurate. (s) The Underwriter and the Trustee shall have received the opinion of counsel to the Initial Credit Bank substantially in the form set forth in Exhibit D hereto. (t) The Underwriter and the Trustee shall have received the opinion of counsel to the Initial Standby Credit Bank substantially in the form set forth in Exhibit E hereto. (u) The Trustee shall have received the opinion of the Legal Department of Fannie Mae substantially in the form set forth in Exhibit F hereto. (v) The Underwriter shall have received a letter from Fannie Mae’s special counsel substantially in the form attached hereto as Exhibit G. (w) The Underwriter shall have received an opinion of its counsel substantially in the form attached hereto as Exhibit H. (x) There shall have been delivered the Final Cash Flows from the Underwriter and the Verification Report from the Verification Agent (as such terms are defined in the Official Statement). 0 1-480787.1 12 (y) The Underwriter shall have received the Borrower’s Rule 15~2-12 Certificate signed by the Borrower in the form attached hereto as Exhibit I. (2) The Underwriter and the Trustee shall have received the opinion of counsel to the Issuer substantially in the form set forth in Exhibit J hereto. (aa) The Underwriter shall have received such additional legal opinions, certificates, proceedings, instruments and other documents as the Underwriter or Bond Counsel may reasonably request. If any condition in this Section is not satisfied on or prior to the Closing Date, this Bond Purchase Agreement may be terminated by the Underwriter by notice in writing or by facsimile to the Borrower and the Issuer, as applicable. If the obligations of the Underwriter shall be terminated for any reason permitted by this Bond Purchase Agreement, neither the Underwriter nor the Issuer shall be under further obligation hereunder except for any continuing obligations of the Borrower to pay certain expenses as hereunder provided. The Underwriter may waive in writing compliance with any one or more of the foregoing conditions or extend the time for its or their performance. All of the legal opinions, certificates, proceedings, instruments and other documents mentioned above or elsewhere in this Bond Purchase Agreement shall be deemed to be in compliance with the provisions hereof if, but only if, they are in form and substance satisfactory to the Underwriter and the Issuer. Section 7. Termination. The Underwriter may terminate its respective obligations to purchase the Bonds by written notice to the Issuer if at any time subsequent to the date hereof and on or prior to the Closing Date: (a) (i) Legislation shall have been enacted by the Congress, or recommended to the Congress for passage by the President of the United States or the Department of the Treasury of the United States or the Internal Revenue Service or any member of the United States Congress, or favorably reported for passage to either House of the Congress by any Committee of such House to which such legislation has been referred for consideration, or (ii) a decision shall have been rendered by a court established under Article III of the Constitution of the United States, or the United States Tax Court, or (iii) an order, ruling, regulation or communication (including a press release) shall have been issued by the Department of the Treasury of the United States or the Internal Revenue Service, in each case referred to in clauses (i), (ii) and (iii), with the purpose or effect, and reasonable likelihood, directly or indirectly, of causing interest on the Bonds to be included in gross income for purposes of federal income taxation. (b) Legislation shall have been enacted or a decision by a court of the United States shall be rendered or any action taken by the Securities and Exchange Commission which, in the opinion of counsel to the Underwriter, has the effect of requiring the offer or sale of the Bonds to be registered under the Securities Act of 1933, as amended, or the Indenture to be qualified under the Trust Indenture Act of 1939, as amended, or any event shall have occurred that, in the judgment of the Underwriter, makes untrue or incorrect in any material respect any statement or information contained in the Official Statement or that, in the judgment of the Underwriter should be reflected therein in order to make the statements contained therein not misleading in any material respect. 3 70 01 -480787.1 13 (c) In the judgment of the Underwriter, the market price of the Bonds is adversely affected because (A) additional material restrictions not in force as of the date hereof shall have been imposed upon trading in securities generally by any governmental authority; (B) a general banking moratorium shall have been established by federal, New York or California authorities; or (C) a war involving the United States of America shall have been declared, or any other national or international calamity shall have occurred, or any conflict involving the armed forces of the United States of America shall have escalated to such a magnitude as to materially affect the ability of the Underwriter to market the Bonds; (ii) any litigation shall be instituted, pending or threatened to restrain or enjoin the issuance or sale of the Bonds or in any way contesting or affecting any authority or security for or the validity of the Bonds, or the existence or powers of the Issuer; or (iii) legislation shall have been introduced in or enacted by the Legislature of the State of California that would, in the reasonable judgment of the Underwriter materially adversely affect the security for the Bonds. (d) There shall have occurred any change that, in the reasonable judgment of the Underwriter, makes unreasonable or unreliable any of the assumptions upon which (i) yield on the Bonds for purposes of compliance with the Code, (ii) payment of debt service on the Bonds, or (iii) the basis for the exclusion from gross income for federal income tax purposes of interest on the Bonds, is predicated. (e) There shall have occurred any outbreak or material escalation of hostilities or other calamity or crisis, the effect of which on the financial markets of the United States is such as to make it, in the reasonable opinion of the Underwriter, impractical to market the Bonds or to enforce commitments for the purchase of the Bonds. (0 The occurrence, in the judgment of the Underwriter, of a material adverse change in the capital markets which makes the sale of the Bonds or financing contemplated by the Indenture and the Bonds impractical or which makes it inadvisable to proceed with such sale or financing on the terms, in the manner and on the basis contemplated hereby. Section 8. Indemnification. (a) The Borrower agrees to pay, defend, protect, indemnify, save and hold harmless the Issuer, the Underwriter and each affiliate, member, officer, director, official, employee and agent of the Issuer and the Underwriter, and each person, if any, who controls any of the foregoing within the meaning of Section 15 of the Securities Act of 1933, as amended, or Section 20 of the Securities Exchange Act of 1934, as amended (each an “Indemnified Party” and all collectively referred to herein as the “Indemnified Parties”), against any and all liabilities, losses, damages, costs, expenses (including attorneys’ fees), causes of action (whether in contract, tort or otherwise), suits, claims, demands and judgments of any kind, character and nature (collectively referred to herein as the “Liabilities”) caused by or directly or indirectly arising from or in any way relating to (i) the Bonds, the Project, the Mortgage Loan, the Financing Agreement, the Security Instrument, the Indenture, the Continuing Disclosure Agreement, this Bond Purchase Agreement or any document related to the Bonds, the Project, the Mortgage Loan (the “Transaction Documents”) or any transaction or agreement, written or oral, pertaining to the foregoing, or (ii) any untrue or misleading statement or alleged untrue or alleged misleading statement contained or alleged omission from the Preliminary Official Statement or the Official Statement pertaining to the Borrower, the Manager or the Project necessary to be stated therein in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. (b) The Borrower also agrees to pay, defend, protect, indemnify, save and hold harmless the Underwriter and each affiliate, member, officer, director, official, employee and agent of the Underwriter 01-480787.1 14 37 \ from and against the Liabilities directly or indirectly arising from or relating to (i) any errors or omissions of any nature whatsoever contained in any legal proceedings or other official representation or inducement made by the Issuer pertaining to the Bonds and (ii) any fraud or misrepresentations or omissions contained in the proceedings of the Issuer relating to the issuance of the Bonds or pertaining to the financial condition of the Borrower. (c) Any Indemnified Party shall notify the Borrower of the existence of any Liability to which this indemnification obligation would apply and shall give to the Borrower an opportunity to defend the same at the Borrower’s expense and with counsel satisfactory to the Indemnified Party, provided that the Indemnified Party shall at all times also have the right to fully participate in the defense. If there may be legal defenses available to the Indemnified Party which are different from or in addition to those available to the Borrower or if the Borrower shall, after this notice and within a period of time necessary to preserve any and all defenses to any claim asserted, fail to assume the defense or to employ counsel for that purpose satisfactory to the Indemnified Party, the Indemnified Party shall have the right, but not the obligation, to undertake the defense of, and, with the approval of the Borrower, to compromise or settle the claim or other matter on behalf of, for the account of, and at the risk of, the Borrower. (d) In order to provide for just and equitable contribution in circumstances in which the indemnity provided for in paragraph (a) or (b) of this Section is for any reason held to be unavailable, the Borrower and the Indemnified Party shall contribute proportionately to the aggregate Liabilities to which the Borrower and the Indemnified Party may be subject, so that the Indemnified Party is responsible for that portion represented by the percentage that the fees paid by the Borrower to the Indemnified Party in connection with the issuance and administration of the Bonds bears to the aggregate offering price of the Bonds, with the Borrower responsible for the balance; provided, however, that in no case shall the Indemnified Party be responsible for any amount in excess of the fees paid by the Borrower to the Indemnified Party in connection with the issuance and administration of the Bonds. (e) The Indemnified Parties, other than the Issuer and the Underwriter, shall be considered to be third party beneficiaries of this Bond Purchase Agreement for purposes of this Section. The provisions of this Section will be in addition to all liability which the Borrower may otherwise have and shall survive any termination of this Bond Purchase Agreement, the offering and sale of the Bonds and the payment or provisions for payment of the Bonds. Section 9. Expenses. The Underwriter shall pay its own expenses relating to the offering, sale and purchase of the Bonds. All other expenses relating to the issuance of the Bonds, including, but not limited to, the fees and expenses 1 isted in Section 5(k) hereof shall be paid by the Borrower. NOTWITHSTANDING ANY OTHER PROVISIONS HEREOF TO THE CONTRARY, UNDER NO CIRCUMSTANCES SHALL THE ISSUER BE OBLIGATED TO PAY ANY OF THE EXPENSES OF THE TRANSACTION HEREIN CONTEMPLATED, EXCEPT FROM FUNDS PROVIDED TO THE ISSUER BY THE BORROWER OR ANOTHER PARTY TO THE TRANSACTION. Section 10. Transfer of Project. The Underwriter hereby agrees and understand that, in connection with any sale or transfer of the Project in accordance with the Bond Documents and Borrower Documents which shall have been approved in writing by the necessary parties shall constitute a release in whole or in part (as the case may be) of the Borrower of obligations arising under this Bond Purchase Agreement, including but not limited to the obligations under Section 8 hereof, provided that such release 01-480787.1 15 shall be conditioned upon and limited to the extent that a successor in interest of the Borrower expressly assumes in a writing, in the form satisfactory to the Underwriter, the Borrower’s obligations hereunder. Section 11. Notices. Any notice or other communication to be given to the Issuer or the Borrower under this Bond Purchase Agreement may be given by delivering the same in writing to the Issuer or the Borrower at their respective addresses on the first page hereof, any notice or other communication to be given to the Underwriter under this Bond Purchase Agreement may be given by delivering the same in writing to Red Capital Markets, Inc., Suite 930, 500 Newport Center Drive, Newport Beach, California 92660, Attention: Mr. Anthony D. Cinquini,. Section 12. Successors. This Bond Purchase Agreement is made solely for the benefit of the Issuer, the Underwriter and the Borrower (including their successors or assigns, provided the words “successors” and “assigns” shall not include the purchaser of any of the Bonds from or through the Underwriter by reason of such purchasers) and no other person shall acquire or have any right hereunder or by virtue hereof (other than pursuant to Section 10 hereof). The representations, warranties and agreements contained herein shall remain operative and in full force and effect and shall survive delivery of and payment for the Bonds hereunder, regardless of any investigation made by or on behalf of the Underwri ter. Section 13. Survival of Certain Representations and Warranties. All agreements, covenants, representations and warranties and all other statements of the Issuer and its officials and officers and the Borrower set forth in or made pursuant to this Bond Purchase Agreement shall remain in full force and effect, regardless of any investigation, or statement as to the results thereof made by or on behalf of the Underwriter, and shall survive the Closing Date and the delivery of and payment for the Bonds. Section 14. Governing Law. This Bond Purchase Agreement shall be governed by the laws of the State of California. Section 15. Counterparts. This Bond Purchase Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. 01-480787.1 3 73 16 01 -480787.1 [Underwriter’s Signature Page to Bond Purchase Agreement] RED CAPITAL MARKETS, INC. BY Its Senior Managing Director s-I [Issuer’s Signature Page to Bond Purchase Agreement] CITY OF CARLSBAD BY Its 37s 01-480787.1 s -2 [Borrower’s Signature Page to Bond Purchase Agreement] CIC CALAVERA, L.P., a California limited partnership By Pacific Southwest Community Development Corporation, a nonprofit public benefit corporation Its Managing General Partner BY Brian F. Biber, Executive Director By CIC Calavera Hills, LLC, a California Its Co-General Partner limited liability company BY James J. Schmid, Managing Member 37b 01 -480787.1 s-3 SCHEDULE I MATURITIES, PRINCIPAL AND INTEREST RATES Series A Bonds $ - % Term Series A Bonds due , Price: -% (Price includes accrued interest from June 1,2003) [(The Series A Bonds are subject to mandatory tender for purchase on )] Series B Bonds % Term Series B Bonds due , Price: -% - $ (Price includes accrued interest from June 1,2003) (The Series B Bonds are subject to mandatory tender for purchase on June 1,2005) 0 1-480787.1 SCHEDULE I1 GROSS UNDERWRITER’S FEE Gross Underwriter’s Fee to Underwriter* $ *From such amount, the Underwriter will pay the following additional nonaccountable costs and expenses of issuing and selling the Bonds (to the extent that such additional costs vary from the estimates thereof, the Underwriter will be responsible to cover such variance from its Gross Underwriter’s Fee): EXPENSES TO BE PAID BY UNDERWRITER Bond Clearance charges, MSRB, BMA and CUSIP 01-480787.1 s-2 $ 257% EXHIBIT A FORM OF SUPPLEMENTAL OPINION OF BOND COUNSEL [CLOSING DATE] [ISSUER] [UNDERWRITER] [BOND CAPTION] [After appropriate introductory language, the opinion shall state substantially as follows:] Based on the foregoing, we are of the opinion, as of the date hereof, as follows: 1. The Issuer Documents have been duly authorized, executed and delivered by the Issuer, and, assuming due authorization, execution and delivery by the other respective parties thereto, constitute legal, valid and binding agreements of the Issuer enforceable against the Issuer in accordance with their respective terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws of general applicability affecting the enforcement of creditors’ rights and to general principles of equity, regardless of whether such enforceability is considered in equity or in law; 2. The Bonds are not subject to the registration requirements of the Securities Act of 1933, as amended, and the Indenture is exempt from qualification under the Trust Indenture Act of 1939, as amended; and 3. The Bonds, the Indenture, the Financing Agreement and the Regulatory Agreement conform as to form and tenor to the descriptions thereof contained in the Official Statement relating to the Bonds (the “Official Statement”), and the statements contained in the Official Statement under the captions “THE BONDS” (other than under the heading “Book-Entry Only System”), “SECURITY FOR THE BONDS” (other than under the headings “Security for the Bonds Prior to Loan Conversion-Credit Facility-General,” “-Investment Agreement” and “Security for the Bonds After Loan Conversion- Credit Facility-General”), “TAX MATTERS,” and in Appendices A-1, A-2, B-1, B-2, C, D-1, D-2 and F thereto summarize the material provisions of the Bonds, the Initial Indenture, the Initial Financing Agreement, the Regulatory Agreement, the Permanent Indenture, the Permanent Financing Agreement, and our bond opinion concerning certain tax matters relating to the Bonds, and insofar as such statements expressly summarize the provisions of the Bonds, the Initial Indenture, the Initial Financing Agreement, the Regulatory Agreement, the Permanent Indenture, the Permanent Financing Agreement, and our bond opinion concerning certain tax matters relating to the Bonds, such statements are accurate in all material respects. This opinion letter is fiunished by us solely for your benefit in satisfaction of the requirements of the Bond Purchase Agreement. No one other than you may rely upon this opinion letter without or express prior written consent. 01 -480787.1 Respectfully submitted, 37aI EXHIBIT B FORM OF OPINION OF BORROWER’S COUNSEL [CLOSING DATE] [IS SUER] [UNDERWRITER] [BOND CAPTION] [After appropriate introductory language, the opinion shall state substantially as follows:] We are of the opinion, as of the date hereof, as follows: 1. The Borrower is a validly organized and existing limited partnership under the laws of the State of California and qualified to do business and in good standing in the State of California. 2. The Borrower has full legal right, power and authohty (i) to enter into and to carry out and consummate the transactions contemplated by the Borrower Documents. 3. By all necessary action, the Borrower has duly authorized and adopted the Borrower Documents, and approved the execution and delivery of the Borrower Documents, the performance by the Borrower of its obligations under the Borrower Documents and otherwise in connection with the issuance of the Bonds and the consummation by the Borrower of all other transactions contemplated by the Indenture and the Borrower Documents in connection with the issuance of the Bonds. 4. The Borrower Documents have been duly executed and delivered by the Borrower and, assuming the due authorization, execution and delivery of the Borrower Documents by the respective other parties thereto where necessary, constitute legal, valid and binding obligations of the Borrower enforceable in accordance with their respective terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws of general applicability affecting the enforcement of creditors’ rights and to general principles of equity, regardless of whether such enforceability is considered in equity or in law. 5. To the best of our knowledge after due and diligent inquiry, as of the Closing Date, the Borrower is not in any material respect in violation of, breach of or default under any applicable constitutional provision or law of any state or of the United States, or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Borrower or any of its activities, properties or assets, or any indenture, mortgage, deed of trust, resolution, note agreement (including, without limitation, the Borrower Documents) or other agreement or instrument to which the Borrower is a party or by which the Borrower or any of its property or assets is bound, and no event has occurred and is continuing which with the passage of time or the giving of notice, or both, would constitute such a default or event of default under any such instruments; and the execution and delivery of the Bonds and the Borrower Documents, and compliance with the provisions on the Borrower’s part contained therein, do not and will not conflict with, or constitute on the part of the Borrower a violation of, breach of or default under, any applicable constitutional provision or law of any state or of the United States, or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the 01 -480787.1 Borrower or any of its activities, properties or assets, or any indenture, mortgage, deed of trust, resolution, note agreement or other agreement or instrument to which the Borrower is a party or by which the Borrower or any of its property or assets is bound, nor will any such execution, delivery or compliance result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of the property or assets of the Borrower or under the terms of any such law, regulation or instrument, except as provided by the Bonds or the Borrower Documents. 6. To the best of our knowledge after due and diligent inquiry, as of the Closing Date, all consents, approvals, authorizations, and orders of or filings or registrations with any governmental authority, board, agency or commission of any state or of the United States having jurisdiction required in connection with, or the absence of which would materially adversely affect, the execution and delivery by the Borrower of the Borrower Documents or the performance by the Borrower of its obligations thereunder have been obtained or made and are in full force and effect. 7. To the best of our knowledge after due and diligent inquiry, as of the Closing Date, there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any judicial or administrative court or governmental agency or body, state, federal or other, pending or, to the best of our knowledge, threatened against the Borrower, affecting the existence of the Borrower or the titles of its officers to their respective offices, or contesting or affecting as to the Borrower the validity or enforceability of the Act, the Bonds, any Borrower Document or the execution and delivery or adoption by the Borrower of any Borrower Document, or in any way contesting or challenging the completeness or accuracy of the Official Statement or the powers of the Borrower or its authority with respect to the Borrower Documents or the consummation of the transactions contemplated thereby; nor, to the best of our knowledge, is there any basis for any such action, suit, proceeding, inquiry or investigation, wherein an unfavorable decision, ruling or finding would materially adversely affect the financial condition or operations of the Borrower or the validity of the authorization, execution, delivery or performance by the Borrower of any Borrower Document. Very truly yours, 01 -480787.1 B-2 EXHIBIT C OPINION OF TRUSTEE'S COUNSEL [CLOSING DATE] [ISSUER] [UNDERWRITER] [BOND CAPTION] [After appropriate introductory language, the opinion shall state substantially as follows:] Based upon and subject to the foregoing, we are of the opinion that: 1. The Trustee is a validly existing national banking association, organized and in good standing under the laws of the United States, and is duly qualified to exercise trust powers in the State of California. 2. The Trustee has taken all corporate action necessary to assume the duties and obligations of Trustee under the Indenture and to authorize in such capacity @e execution and delivery of the Trustee Documents. 3. The Trustee is eligible to act as trustee under the Indenture. 4. Assuming the due, valid, binding authorization, execution and delivery of the other parties thereto, the Trustee Documents, when executed, will be the valid, legal and binding obligations of Trustee in its capacity as Trustee under the Indenture enforceable in accordance with their terns, except as enforcement may be limited by bankruptcy, reorganization, receivership, insolvency, moratorium or other laws affecting the rights and remedies of creditors generally and by the effect of general principles of equity, including without limitation, concepts of materiality, reasonableness, good faith and fair dealing, and the possible unavailability of specific performance or injunctive relief, whether applied by a court of law or equity. This opinion letter is delivered as of its date and without any undertaking to advise you of any changes of la'w or fact that occur after the date of this opinion letter even though the changes may affect the legal analysis or conclusion in this opinion letter. This opinion may be relied upon by you only in connection with the transaction described in the initial paragraph of this opinion letter and may not be used or relied upon by you for any other purpose or by any other person for any purpose whatsoever without, in each instance, our prior written consent. 01-480787.1 Very truly yours, EXHIBIT D [Letterhead of Counsel to the Initial Credit Provider] [TRUSTEE] [CLOSING DATE] [UNDERWRITER] [BOND CAPTION] [After appropriate introductory language, the opinion shall state substantially as follows:] (a) The Credit Provider is a banking corporation duly organized, validly existing and in good standing under the laws of the State of Ohio. (b) The Credit Provider has full right, power and authority (i) to enter into, execute and deliver the Bond Documents to which it is a party (the “Credit Provider Documents”) and to perform its duties and obligations thereunder; and (ii) to carry on its business as currently being conducted and as contemplated to be conducted by the Credit Provider Documents. (c) The Credit Provider Documents have been duly authorized, executed and delivered by the Credit Provider, and constitute the legal, valid and binding obligations of the Credit Provider, enforceable against the Credit Provider in accordance with their respective terms, subject to the limitations set forth above. (d) The execution and delivery by the Credit Provider of the Credit Provider Documents, the performance of the obligations of the Credit Provider thereunder will not conflict with (i) any (A) contractual or legal restriction or obligation, or (B) court or regulatory order, binding on or affecting the Credit Provider, or (ii)any restriction contained in the Credit Provider’s articles of incorporation or bylaws. (e) The Credit Facility is exempt from the registration requirements of the Securities Act of 1933, as amended. (f) No authorization or approval or other action by, and no notice to or filing with any governmental authority or regulatory body is required for the due execution, delivery and performance by the Credit Provider of its obligations under the Credit Provider Documents. (g) I am not aware of any order or decree of any court or any order, regulation or demand of any government authority binding on the Credit Provider, a default under which might materially adversely affect the operation of the Credit Provider. (h) There is no pending, nor am I aware of any threatened, action, suit, proceeding, inquiry or investigation before any court, public board or regulatory agency, against or affecting the Credit Provider, in which an unfavorable decision, ruling or finding would adversely affect the Credit Provider’s powers, existence or the validity and enforceability of the Bonds or the 01-480787.1 Credit Provider Documents, or affect or seek to prohibit, restrain or enjoin the issuance, sale or delivery of the Bonds or the use of the Official Statement, or which might result in any material adverse change in the business condition (financial or otherwise) or operation of the Credit Provider, or which might adversely affect the Credit Provider’s ability to perform its obligations under the Credit Provider Documents, or question the tax-exempt status of the Bonds or the accuracy or completeness of the Official Statement. (i) The Credit Facility and the Reimbursement Agreement conform to the descriptions thereof contained in the Official Statement and the statements contained in the Official Statement in Appendices E-1 (under the heading “FORM OF INITIAL CREDIT FACILITY”) and H-1 present a fair and accurate summary of such documents. This opinion is rendered to you in connection with the issuance of the Credit Facility by the Credit Provider, and is intended solely for your use in connection therewith. It is not to be relied upon in any other context, nor is it to be relied upon by any other person or entity, for any other reasons whatsoever. Very truly yours, 0 1-480787.1 D-2 38 Y EXHIBIT E [TRUSTEE] [Letterhead of Counsel to the Initial Standby Credit Provider] [CLOSING DATE] [UNDERWRITER] [BOND CAPTION] [After appropriate introductory language, the opinion shall state substantially as follows:] (a) The Initial Standby Credit Facility constitutes the legal, valid and binding obligation of the FHLB enforceable against it (to the extent of the FHLB’s stated liability thereunder) in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, liquidation, moratorium, receivership or similar laws affecting the rights of creditors generally or by principles of equity, as such laws and principles may be applied in the event of the bankruptcy, insolvency, reorganization, receivership or liquidation of the FHLB or in the event of a moratorium applicable to the FHLB. (b) The FHLB is a Federal Home Loan Bank organized and existing under the Federal Home Loan Bank Act (12 U.S.C. Section 1422, et seq.). (c) The Initial Standby Credit Facility qualifies as an obligation which a Federal Home Loan Bank is permitted to issue under the Federal Home Loan Bank Act and the rules, regulations and guidelines promulgated thereunder. 01480787.1 EXHIBIT F [Letterhead of General Counsel to Fannie Mae] [TRUSTEE] [After appropriat [CLOSING DATE] [BOND CAPTION] introductory language, the opinion shall stat I am of the opinion, as of the date hereof, as follows: subst antially s follows:] 1. Fannie Mae has been duly organized under the Federal National Mortgage Association Charter Act, as amended, 12 U.S.C. 1716 et seq., and is a corporation organized and existing under the laws of the United States; 2. Fannie Mae has full right, power and authority necessary to execute, deliver and perform its obligations under the Credit Enhancement Instrument (Stand-By); 3. the Credit Enhancement Instrument (Stand-By) has been duly authorized, executed and delivered by Fannie Mae and constitutes a valid and binding obligation of Fannie Mae, enforceable in accordance with its terms, subject to any applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general applicability relating to or affecting creditor’s rights from time to time in effect as such laws would be applied in the event of a bankruptcy, insolvency, reorganization, moratorium or general principles of equity, whether applied by a court of law or of equity; similar occurrence affecting Fannie Mae and to the exercise of judicial discretion in accordance with * 4. neither the consummation of the transact ions contemplated by the Credit Enhancement Instrument (Stand-By) nor the fulfillment by Fannie Mae of or compliance by Fannie Mae with the terms and conditions thereof conflicts with or results in a breach of any of the terms, conditions or provisions of any agreement or instrument of which I am aware and to which Fannie Mae is now a party or by which it is bound, which breach or conflict would prohibit Fannie Mae from consummating the transactions contemplated by the Credit Enhancement Instrument (Stand-By) or the fulfillment by Fannie Mae of or compliance by Fannie Mae with the terms and conditions thereof; and 5. there is no action or suit instituted against Fannie Mae before any court which is now pending, or any cease and desist order or other order of a similar nature, temporary or permanent, of any federal or state authority, which action, suit or order would have the effect of preventing or hindering in any material respect the performance by Fannie Mae of its duties under the Credit Enhancement Instrument (Stand-By) or which in any material respect (a) affects or seeks to prohibit, restrain or enjoin the execution and delivery of the Credit Enhancement Instrument (Stand-By), (b) affects the validity or enforceability of the Credit Enhancement Instrument (Stand-By) or (c) challenges the power or authority of Fannie Mae to carry out the transactions contemplated by the Credit Enhancement Instrument ( Stand-B y) . 01-480787.1 I express no opinion on the perfection or priority of any lien or security interest described in the Credit Enhancement Instrument (Stand-By). My opinion is rendered only to, and may be relied upon only by, the addressees. My opinion herein is limited to the laws of the District of Columbia and of the United States of America, and to the extent they are applicable, and I express no opinion as to the applicability of the laws of any other jurisdiction. Sincere1 y, 387 01-480787.1 F-2 EXHIBIT G [Letterhead of Outside Counsel to Fannie Mae] [CLOSING DATE] [UNDERWRITER] [BOND CAPTION] The copy of the Permanent Credit Facility attached to the Official Statement is in all material respects a true and correct copy of the Permanent Credit Facility executed by Fannie Mae in connection with the issuance of the above-captioned Bonds. No material changes have been made to the document prior to Fannie Mae’s execution and delivery of the Permanent Credit Facility. Very truly yours, 0 1-480787.1 EXHIBIT H [Letterhead of Underwri ter’s Counsel] [CLOSING DATE] Red Capital Markets, Inc. Newport Beach, CA [BOND CAPTION] We have acted as counsel to Red Capital Markets, Inc. (the “Underwriter”) in connection with the issuance of the above-captioned bonds (the “Bonds”), issued pursuant to a Trust Indenture dated as of June 1, 2003 (the “Indenture”) between the City of Carlsbad (the “Issuer”) and Wells Fargo Bank, National Association, as trustee (the “Trustee”). As such counsel, we have reviewed such records, certificates, opinions and documents as we have deemed necessary or appropriate for the purpose of this opinion. Upon the basis of such examination, we are of the opinion that under the existing laws, the Bonds may be offered and sold without registration under the Securities Act of 1933, as amended, and the Indenture is not required to be qualified under the Trust Indenture Act of 1939, as amended. In connection with the preparation of the Official Statement (the “Offering Document”) used in connection with the initial issuance and sale of the Bonds on the date hereof, we have reviewed generally information furnished to us by, and have participated in conferences with, representatives of the Issuer; Jones Hall, A Professional Law Corporation, Bond Counsel; Provident Bank (the “Initial Credit Provider”); , the Initial Credit Provider’s Counsel; the Federal Home Loan Bank of Cincinnati (the “Initial Standby Credit Provider”); the Initial Standby Credit Provider’s in-house counsel; Fannie Mae; O’Melveny & Myers LLP, Fannie Mae’s outside counsel; CIC Calavera, L.P., a California limited partnership (the “Borrower”); Pillsbury Winthrop LLP, Borrower’s counsel; the Trustee; and the Underwriter. We also have reviewed the documents relating to the Bonds described in the Offering Document and other documents and records relating to the issuance and sale of the Bonds. In addition, we have relied upon certificates of officials of the Issuer, the Borrower, the Initial Credit Provider, the Initial Standby Credit Provider, Fannie Mae, an opinion from Bond Counsel, an opinion from counsel to the Initial Credit Provider, an opinion from counsel to the Initial Standby Credit Provider and a letter from Fannie Mae’s outside counsel. However, we have not independently verified any factual matters in connection with or apart from the aforementioned review and conferences and, accordingly, we do not express any view or belief as to matters that might have been disclosed by independent verification. Although we have made no independent investigation or verification of the accuracy, correctness, fairness or completeness of, and do not assume any responsibility for, the information included in the Offering Document (subject to the qualifications set forth herein), no information came to the attention of the attorneys in our firm rendering legal services in connection with the issuance of the Bonds which causes us to believe that the Offering Document (except for the financial statement, financial, statistical and numerical information, forecasts, estimates, assumptions and expressions of opinion, as to which we express no view), as of its date contained, or as of the date of this opinion contains, any untrue statement of a material fact or omitted to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. Respectfully submitted, 01-480787.1 EXHIBIT I BORROWER’S RULE 15~2-12 CERTIFICATE [BOND CAPTION] The undersigned hereby certifies and represents to Red Capital Markets, Inc. (the “Underwriter”) that he/she is authorized to execute and deliver this certificate on behalf of CIC Calavera; L.P., a California limited partnership (the “Borrower”), and hereby further certify to the Underwriter as follows: (a) This Certificate is delivered to enable the Underwriter to comply with Securities and Exchange Commission Rule 15~2-12 under the Securities Exchange Act of 1934 (the “Rule”) in connection with the issuance and sale of the above-captioned bonds (the “Bonds”). (b) In connection with the issuance and sale of the Bonds, there has been prepared a Preliminary Official Statement dated May 29, 2003, setting forth information concerning the Bonds and the Borrower (the “Preliminary Official Statement”). (c) As used herein, “Permitted Omissions” shall mean the offering price(s), interest rate(s), accreted values, yield to maturity, selling compensation, aggregate principal amount, principal amount per maturity, delivery dates, ratings and other terms of the Bonds depending on such matters and the identity of the underwriter(s), all with respect to the issuance and sale of the Bonds. (d) the Preliminary Official Statement is, as of the date thereof, deemed final within the meaning of the Rule, except for Permitted Omissions. (e) The sections of the Preliminary Official Statement entitled “CONTINUING DISCLOSURE” and “APPENDIX G-FORM OF CONTINUING DISCLOSURE AGREEMENT” describes the agreement the Borrower expects to make for the benefit of the Bondholders in the Continuing Disclosure Agreement dated as of June 1, 2003 by and between the Borrower and Wells Fargo Bank, National Association, in its capacity as trustee and dissemination agent by which the Borrower will undertake to provide continuing disclosure in accordance with the Rule. Dated: May 29,2003 [Remainder of Page Left Blank Intentionally] 01-480787.1 [Signature Page to Borrower’s Rule 15~2-12 Certificate] IN WITNESS WHEREOF, I have hereunto set my hand as of the date set forth above. CIC CALAVERA, L.P., a California limited partnership By Pacific Southwest Community Development Corporation, a nonprofit public benefit corporation Its Managing General Partner BY Brian F. Biber, Executive Director By CIC Calavera Hills, LLC, a California Its Co-General Partner limited liability company BY James J. Schmid, Managing Member 01-480787.1 1-2 EXHIBIT J [Letterhead of Counsel to the Issuer] [CLOSING DATE] [TRUSTEE] [UNDERWRITER] [BOND CAPTION] [After appropriate introductory language, the opinion shall state substantially as follows:] 1. The Issuer is a municipal corporation duly organized and validly existing under the laws of the State of California. 2. The Bond Resolution approving and authorizing the execution and delivery of the Issuer Documents and the Bonds was duly adopted at a meeting of the governing body of the Issuer which was called and held pursuant to law and with all public notice required by law and at which a quorum was present and acting throughout. 3. The Issuer Documents have been duly executed and delivered by the Issuer and (assuming due authorization, execution and delivery by and validity against the other parties thereto) are valid and binding agreements of the Issuer. 4. To the best of my knowledge, no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, regulatory agency, public board or body has been served upon the Issuer and is pending or is otherwise known to be threatened in any way affecting the existence of the Issuer, or the titles of the Issuer’s officials to their respective offices, or seeking to restrain or to enjoin the issuance, sale or delivery of the Bonds or the application of the proceeds thereof in accordance with the Indenture, or the collection or application of the Revenues (as defined in the Indenture) to pay the principal of and interest on the Bonds, or in any way contesting or affecting the validity or enforceability of the Issuer Documents or any action of the Issuer contemplated by any of said documents, or in any way contesting the completeness or accuracy of the Official Statement or the powers of the Issuer or its authority with respect to the Issuer Documents or any action on the part of the Issuer contemplated by any of said documents, nor to my knowledge is there any basis therefor. Very truly yours, 01480787.1