HomeMy WebLinkAbout2003-05-20; City Council; 17177; Multi-Family Housing Revenue BondsCITY OF CARLSBAD - AGENDA BILL
17,177 AB#
MTG. 5/20/02
DEPT. H/RED
TITLE: AUTHORIZATION TO SELL, ISSUE AND DELIVER
NOT TO EXCEED $20,000,000 FOR THE CONSTRUCTION OF
THE GREENS AFFORDABLE APARTMENT PROJECT AND
APPROVAL OF RELATED DOCUMENTS
MULTI-FAMILY HOUSING REVENUE BONDS IN AN AMOUNT
DEPT. HD. *
CITY ATTY.
CITY MGR.
RECOMMENDED ACTION:
That the City Council ADOPT Resolution No. AUTHORIZING the sale, issuance and delivery of
multi-family housing revenue bonds in an amount not to exceed $20,000,000 for the construction of the
Villages of La Costa - The Greens Affordable Apartment Project within the City of Carlsbad and
APPROVING the related Loan Agreement, Regulatory Agreement, Indenture of Trust, Bond Purchase
Agreement, and other related documents.
2003-131
ITEM EXPLANATION
Proiect DescriDtion
The Greens Affordable Apartments are a 180-unit affordable apartment project that was approved by the
City Council in June of 2002 (SDP 01-17). The project will satisfy a portion of the lnclusionary Housing
Ordinance requirements for the Villages of La Costa Master Plan.
The project will be located on a vacant lot at the northwest corner of the future intersection of Alga Road
and Estrella de Mar Road. The development consists of seven residential structures and a 5,200 square
foot recreation and community building. The proposed development includes one, two, three and four
bedroom units. Of the 180 units, 53 units (30% of the project) will be affordable to households earning 50%
of the San Diego County Area Median Income (AMI}, 125 units (70%) will be affordable to households
earning 60% of AMI, and there will be two manager units.
Financial Assistance
In July of 2002, the City Council approved a loan for the subject project in the amount of $2,070,000, or
$1 1,500 per unit, from the Housing Trust Fund. The Council also declared its intent to issue tax-exempt
multi-family revenue bonds in an amount not to exceed $20,000,000 to further assist the project financing.
Prior to the issuance and sale of the bonds, the City Council must first review and approve the governing
documents. The bond issuing process and the governing documents are discussed in further detail below.
Bond Issuance
Prior to issuing tax-exempt multi-family revenue bonds, the City must first receive a bond allocation from the California Debt Limit Allocation Committee (CDLAC). In March 2003, CDLAC granted the City's
requested $20,000,000 bond allocation. As a condition of the bond allocation, CDLAC requires that the
bonds be issued no later than 90 days after the allocation (June 24, 2003). All parties related to the project
have been working diligently to develop the attached bond documents and process them in order to meet
the CDLAC deadline. If the City Council approves the issuance of the bonds and the attached documents,
it is anticipated that the issuance will occur on or before June 24, 2003.
Bond Documents
On July 9, 2002, the City Council adopted an Inducement Resolution that expressed the City's intent to
issue the above described bonds. However, before the bonds can be sold, the City Council must adopt the
attached Issuance Resolution. The Resolution will authorize the actual sale and issuance of the bonds
and approve the related regulatory documents.
PAGE 2 OF AGENDA BILL NO. 17 177
The sale of the bonds has been structured as a public placement transaction. The City of Carlsbad will be
the bond issuer, individuals and financial institutions will be the ultimate Bond Owners. The bonds will be
“credit enhanced” by a letter of credit from Citibank. The letter of credit will guarantee payments of
principal and interest in the event of a default of the borrower. By virtue of the credit enhancement, the
bonds will receive a AA rating from Standard & Poor’s Ratings Services.
The proceeds of the bonds will be lent to the Borrower, Dove Family Housing Associates, LP, an entity
comprised of Community Housing Works and Mercy Housing. The regulatory agreements for this
transaction are attached as Exhibits 2, 3, 4 and 5 for City Council’s review. The documents have been
prepared by the law firm of Jones Hall, the City’s bond counsel for this transaction. In addition to being reviewed by staff, all of the documents related to this transaction have been reviewed by the City’s financial
advisor, CSG Advisors. The Council is being asked to approve, in substantially the form presented, the
Loan Agreement] Regulatory Agreement] lndenture of Trust, and Bond Purchase Agreement which are
described below:
7. Loan Agreement - states the terms and conditions relating to the repayment of the bond proceeds to
the bond owner(s). The document must be executed by the City, the Borrower, and the Trustee (Wells
Fargo Bank, National Association) prior to the sale and issuance of the bonds.
2. Regulatory Agreement Declaration of Restrictive Covenants - records the terms of affordability and
the operation requirements for the project for the 30-year term of the bonds. The document must be
executed by the City, the Borrower, and the Trustee prior to the sale and issuance of the bonds.
3. lndenture of Trust - grants authority from the City to the Trustee to accept and disburse the bond
proceeds. This document also stipulates the Trustee’s role in insuring that the bonds maintain their tax-
exempt status and provides for the redemption of the bonds. This document must be executed by the
City and Trustee prior to the sale and issuance of the bonds.
4. Bond Purchase Agreement - states the terms and conditions under which the City will issue the
bonds and the Bond Underwriter (Red Capital Markets, Inc.) will purchase and re-market the bonds in
this transaction. This document must be executed by the City, the Borrower and the Bond Underwriter
prior to the sale and issuance of the Bonds.
In addition to the above described Bond Documents, there are additional documents related to the
transaction to which the City must execute. These documents include intercreditor agreements with other
parties lending amounts to the Borrower in connection with the construction of the project, and certain
certificates, agreements or documents necessary to further the purpose hereof. However, these
documents do not create any obligation or liability of the City other than with respect to the revenues and
assets derived from the proceeds of the Bonds, but do not obligate the City in any manner. These
documents, which have been reviewed by the City Attorney, CSG and the City’s bond counsel, are
attached as Exhibit 6 of this report.
ENVIRONMENTAL REVIEW
A Negative Declaration was approved by the City Council for the Site Development Plan (SDP 01 -1 7) on
June 18, 2002. No further environmental review is required as part of the approval of the subject bond
issuance.
17,177 PAGE 3 OF AGENDA BILL NO.
FISCAL IMPACT
The sale of the bonds and the assumption of the obligations by Dove Family Housing Partnership does not
impose a fiscal obligation on the City of Carlsbad. The City is not obligated in any way to repay the bonds.
With respect to City staff costs, the applicant has made an initial deposit of $20,000 to cover staff time, the
costs of the City’s financial advisor and bond counsel. If the City’s costs exceed the amount of the deposit,
the remainder of the costs will be repaid from the bond proceeds. In addition, the City will receive an
annual fee equal to one eighth of one percent (.125%) of the total bond issuance ($25,000) for the 30-year
term of the bond to recover staff costs associated with project monitoring. Therefore, there will be no fiscal
impact to the City resulting from the issuance of the bonds.
EXHIBITS
1.
2.
3.
4.
5.
6.
7.
City Council Resolution No. 2003-131 , authorizing the issuance of Multi-Family Housing Revenue
Bonds and the loan of the proceeds thereof, for the Villages of La Costa - The Greens Affordable
Apartment Project and approving other related documents and actions.
Loan Agreement
Regulatory Agreement and Declaration of Restrictive Covenants
Indenture of Trust
Bond Purchase Agreement
Financing Documents
Vicinity Map **NOTE: Exhibits 2-7 are on file in the City Clerk’s Office**
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CITY COUNCIL RESOLUTION NO. 2003-131
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF CARLSBAD AUTHORIZING THE ISSUANCE OF
MULTIFAMILY HOUSING REVENUE BONDS AND THE
LOAN OF THE PROCEEDS THEREOF FOR THE
FINANCING OF THE GREENS APARTMENTS AND
APPROVING OTHER RELATED DOCUMENTS AND
ACTIONS
APPLICANT: DOVE FAMILY HOUSING ASSOCIATES, LP
CASE NO: SDP 01-17
WHEREAS, Chapter 7 of Part 5 of Division 31 (commencing with Section 52075) of the
Health and Safety Code of the State of California (the "Act") authorizes cities to incur
indebtedness for the purpose of financing the acquisition, construction and development of
multifamily rental housing facilities;
WHEREAS, the City Council hereby finds and declares that it is necessary, essential and
a public purpose for the City of Carlsbad (the "City") to engage in a program (the "Program") of
issuing revenue bonds of the City to finance the acquisition, construction and development of
multifamily rental housing, and has determined to borrow money for such purpose by the
issuance of revenue bonds as authorized by the Act;
WHEREAS, the City Council hereby finds and declares that this resolution is being
idopted pursuant to the powers granted by the Act;
WHEREAS, Dove Family Housing Associates, a California limited partnership (the
'Borrower"), has requested that the City issue and sell the Bonds (hereinafter defined) for the
iurpose of financing the acquisition, construction and development of a multifamily rental
lousing development to be known as The Greens Apartments to be located in the City (the
'Project"); and
WHEREAS, all conditions, things and acts required to exist, to have happened and to
lave been performed precedent to and in the issuance of the Bonds and the implementation of the
'rogram as contemplated by this resolution and the documents referred to herein exist, have
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CC Resolution No. 2003-131
Page 2
happened and have been performed in due time, form and manner as required by t,,e laws of the
State of California, including the Act.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF CARLSBAD THAT:
1.
2.
The City Council hereby finds and declares that the above recitals are true and correct.
Pursuant to the Act and the Indenture (hereinafter defined), revenue bonds of the City,
designated as “City of Carlsbad Variable Rate Demand Multifamily Housing Revenue Bonds
(The Greens Apartments) 2003 Series A” in an aggregate principal amount not to exceed
$20,000,000 (the “Bonds”) are hereby authorized to be issued. The Bonds shall be executed by
the manual or facsimile signature of the Mayor, City Manager or Finance Director of the City (the
“Designated Officers”) and attested by the manual or facsimile signature of the City Clerk, in the
form set forth in and otherwise in accordance with the Indenture (as hereinafter defined).
3. The following documents with respect to the Bonds (the “Bond Documents”) between
and/or among the City and the institution’s named therein, in the forms on the file with the City
Clerk, are hereby approved:
(a) the trust indenture (the “Indenture”) between the City and Wells Fargo
Bank, National Association (the “Trustee”);
the loan agreement (the “Loan Agreement”) among the City, the Trustee
and the Borrower; (b)
(c) the regulatory agreement declaration of restrictive covenants (the
“Regulatory Agreement”) among the City, the Trustee and the Borrower;
and
the bond purchase agreement (the “Purchase Contract”) among the City,
the Borrower and Red Capital Markets, Inc.
(d)
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CC Resolution No. 2003-131
Page 3
The Designated Officers, or their designee, is hereby authorized and directed, for and in
the name and on behalf of the City, to execute and deliver the Bond Documents, and the City
Clerk, or its designee, is hereby authorized and directed to attest the Designated Officer’s (or its
designee’s) signature, if required, in said forms with such additions thereto or changes therein as
are recommended or approved by the Designated Officers upon consultation with bond counsel
and the City Attorney, including such additions or changes as are necessary or advisable in
accordance with Section 6 hereof, the approval of such additions or changes to be conclusively
widenced by the execution and delivery by the City of the Bond Documents.
The date, maturity dates, interest rate or rates, interest payment dates, denominations,
Form, registration privileges, manner of execution, place of payment, terms of redemption and
ither terms of the Bonds shall be as provided in the Indenture as finally executed.
4. A preliminary official statement relating to the Bonds (the “Preliminary Official
statement”), in substantially the form on file with the City Clerk is hereby approved. The
Iesignated Officers, or their designee, are hereby authorized, for and in the name and on behalf
If the Authority, to bring to final form a Preliminary Official Statement (the “Official Statement”)
ipon sale of the Bonds and to execute the Official Statement in said form, with such additions
hereto or changes therein as are recommended or approved by such officers upon consultation
vith bond counsel to the Authority , the approval of such additions or changes to be conclusively
widenced by the execution and delivery by the Authority of the Official Statement. The
Jndenvriter is hereby authorized to distribute copies of the Preliminary Official Statement to
iersons who may be interested in the purchase of the Bonds and are directed to deliver copies of
he Official Statement to all actual purchasers of the Bonds.
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CC Resolution No. 2003-131
Page 4
5. The Bonds, when executed, shall be delivered to the Trustee for authentication. The
Trustee is hereby requested and directed to authenticate the Bonds by executing the Trustee's
certificate of authentication and registration appearing thereon, and to deliver the Bonds, when
duly executed and authenticated, to the purchasers thereof in accordance with written instructions
executed on behalf of the City by the Designated Officers, or their designee, which instructions
such officer (or their designee) are hereby authorized and directed, for and in the name and on
behalf of the City, to execute and deliver to the Trustee. Such instructions shall provide for the
delivery of the Bonds in accordance with the Purchase Contract, upon payment of the applicable
purchase price therefore.
6. All actions heretofore taken by the officers and agents of the City with respect to the
establishment of the Program and the sale and issuance of the Bonds are hereby approved,
:onfirmed and ratified, and the proper officers of the City, including the Designated Officers, or
their designees, are hereby authorized and directed, for and in the name and on behalf of the City,
:o do any and all things and take any and all actions and execute and deliver any and all
:ertificates, agreements and other documents which they, or any of them, may deem necessary or
advisable in order to consummate the lawful issuance and delivery of the Bonds in accordance
with this Resolution and resolutions heretofore adopted by the City in order to carry out the
Program, including but not limited to those certificates, agreements and other documents
lescribed in the Indenture, the Loan Agreement, the Regulatory Agreement, the Purchase
zontract and the other documents herein approved, including, but not limited to any intercreditor
igreements with other parties lending amounts to the Borrower in connection with the acquisition
and construction of the Project, and any certificates, agreements or documents as may be
necessary to further the purpose hereof, but which shall not create any obligation or liability of
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the City other than with respect to the revenues and assets derived from the proceeds of the
Bonds.
7. This Resolution shall take effect immediately upon its adoption.
PASSED, APPROVED, AND ADOPTED at a regular meeting of the City Council of
the City of Carlsbad, California, held on the 2# day of Mav, 2003, by the following vote,
to wit:
4TTEST:
AYES: Council Members Lewis, Hall, Packard
NOES: None
ABSENT: Council Members Finnila and Kulchin
ABSTAIN: None
CLAUDE A. LEWIS, Mayor
>ORRAINE M. WOOD, City Clerk
SEAL)
32 Resolution No. 2003-131
'age 5
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13061-11 JH:TADams
Exhibit 2
H6 17,177 5-- 20-0 3 LOAN AGREEMENT
Among
CITY OF CARLSBAD, as Issuer
and
WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee
and
DOVE FAMILY HOUSING ASSOCIATES,
a California limited partnership
Dated as of June 1,2003
Relating to
$20,000,000
CITY OF CARLSBAD MULTIFAMILY HOUSING REVENUE BONDS
THE GREENS APARTMENTS)
2003 SERIES A
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TABLE OF CONTENTS
Section 1.1. Section 1.2.
Section 2.1. Section 2.2. Section 2.3.
Section 3.1.
Section 3.2. Section 3.3. Section 3.4.
Section 4.1. Section 4.2. Section 4.3. Section 4.4. Section 4.5.
Section 5.1. Section 5.2. Section 5.3. Section 5.4. Section 5.5. Section 5.6. Section 5.7. Section 5.8. Section 5.9. Section 5.10. Section 5.10.
Section 6.1. Section 6.2. Section 6.3.
Section 7.1. Section 7.2. Section 7.3. Section 7.4.
ARTICLE I
DEFINITIONS AND CONSTRUCTION Definition of Terms ...................................................................................................................... 2 Rules of Construction .................................................................................................................. 2
ARTICLE II
GENERAL REPRESENTATIONS AND AGREEMENTS Representations and Agreements of the Issuer ...................................................................... 3 Representations and Agreements of the Trustee ................................................................... 3 Representations and Agreements of the Borrower ................................................................ 4
ARTICLE lTI
ISSUANCE OF THE BONDS; FINANCING OF THE PROJECT Agreement to Issue Bonds; Application of Bond Proceeds .................................................. 8 Disbursements from the Project Fund ...................................................................................... 8 Establishment of Final Funding Date ....................................................................................... 8 Investment of Moneys; Arbitrage ............................................................................................. 9
ARTICLE IV
LOAN OF PROCEEDS; PAYMENT PROVISIONS Loan of Bond Proceeds .............................................................................................................. 10
Unconditional Obligation ......................................................................................................... 11
Assignment of Issuer's Rights .................................................................................................. 11 Non-Recourse Obligation of Borrower .................................................................................. 12
Loan Repayment and Payment of Other Amounts ............................................................. 10
ARTICLE V
SPECIAL COVENANTS AND AGREEMENTS Right of Access to the Project and Records ........................................................................... 14 Maintenance of Existence; Assignments ................................................................................ 14 Statement of Compliance; Notice of Certain Events ........................................................... 15 Insurance; Taxes and Charges; Maintenance and Repair ................................................... 15 Additional Instruments. Replacement Deed of Trust ......................................................... 16
Regulatory Agreement .............................................................................................................. 18
Continuing Disclosure ............................................................................................................... 19
Tax-Exempt Status of Bonds .................................................................................................... 16
Letter of Credit ............................................................................................................................ 18 Indenture ..................................................................................................................................... 19
Control of Borrower and Credit Bank ..................................................................................... 19
ARTICLE VI
DAMAGE. DESTRUCTION AND CONDEMNATION;
USE OF PROCEEDS Obligation to Continue Payments ........................................................................................... 21 Application of Net Proceeds .................................................................................................... 21 Insufficiency of Net Proceeds .................................................................................................. 21
ARTICLE VI1
EVENTS OF DEFAULT AND REMEDIES Events of Default ........................................................................................................................ 22
Remedies on Default .................................................................................................................. 23
Agreement to Pay Attorneys' Fees and Expenses ................................................................ 24 No Remedy Exclusive ............................................................................................................... 24
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Section 7.5. No Additional Waiver Implied by One Waiver ................................................................... 24
ARTICLE VII
PREPAYMENT
Section 8.1. Section 8.2.
Section 8.3.
Prepayment of Lo an ................................................................................................................... 25 Redemption of Bonds Upon Prepayment .............................................................................. 25 Amount of Prepayment ............................................................................................................ 25
ARTICLE IX
LIMITATION ON LIABILITY OF ISSUER; EXPENSES;
INDEMNIFICATION
Section 9.1.
Section 9.3. Indemnification .......................................................................................................................... 27
Limitation on Liability of Issuer .............................................................................................. 27 Section 9.2. Expenses ....................................................................................................................................... 27
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.
ARTICLE X MISCELLANEOUS Notices .......................................................................................................................................... 29 Severability .................................................................................................................................. 29 Execution of Counterparts ........................................................................................................ 29 Amendments, Changes and Modifications; Waivers and Consents ................................ 29
Governing Law ........................................................................................................................... 29 Authorized Representatives ..................................................................................................... 29 Term of the Agreement ............................................................................................................. 30 Binding Effect; Third Party Beneficiary ................................................................................. 30 Capacity of Trustee .................................................................................................................... 30 References to Bank; Other Documents ................................................................................... 30
EXHIBIT A DESCRIPTION OF THE PROPERTY ................................................................................... A-1
EXHIBIT B FORM OF REQUISITION REQUISIITION FOR FUNDS .................................................. E1
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LOAN AGREEMENT
THIS LOAN AGREEMENT (this "Agreement"), dated as of June 1,2003, by and among
the CITY OF CARLSBAD, a municipal corporation, duly organized and existing under the laws
of the State of California (the "Issuer"), WELLS FARGO BANK, NATIONAL ASSOCIATION, as trustee (the "Trustee") under that certain Indenture of even date herewith, by and between
the Issuer and the Trustee (the "Indenture"), and DOVE FAMILY HOUSING ASSOCIATES, a California limited partnership (the "Borrower"),
WIT N E S S E TH:
RECITALS
WHEREAS, the Issuer is authorized by Chapter 7 of Part 5 of Division 31 of the Health
and Safety Code of the State of California (the "Act") to issue revenue bonds for the purpose of
financing, among other things, the acquisition, construction and development of multifamily
rental housing and for the provision of capital improvements in connection therewith and determined necessary thereto; and
WHEREAS, the Borrower has requested the assistance of the Issuer in financing the acquisition, construction and development of a multifamily rental housing development known
as The Greens Apartments, located in the City of Carlsbad, California, as more particularly
described in Exhibit A hereto (the "Project"), and as a condition to such financial assistance the Borrower has agreed to enter into a Regulatory Agreement and Declaration of Restrictive Covenants of even date herewith (the "Regulatory Agreement") setting forth certain restrictions
with respect to the Project; and
WHEREAS, the Issuer has determined to assist in the financing of the Project by issuing
its Variable Rate Demand Multifamily Housing Revenue Bonds (The Greens Apartments) 2003
Series A in the principal amount of $20,000,000 (the "Bonds"), pursuant to the Indenture and the
Act, and making a loan to the Borrower in the amount of the sum of such principal amounts (the "Loan"), upon the terms and conditions set forth herein;
NOW THEREFORE, in consideration of the premises and the respective representations
and covenants herein contained, the parties hereto agree as follows:
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ARTICLE I
DEFINITIONS AND CONSTRUCTION
Section 1.1. Definition of Terms Unless the context otherwise requires, the capitalized
terms used in this Agreement shall have the meanings specified in Section 1.01 of the Indenture
or in the Regulatory Agreement.
Section 1.2. Rules of Construction. (a)The singular form of any word used herein,
including the terms defined in Section 1.01 of the Indenture, shall include the plural, and vice
versa. The use herein of a word of any gender shall include correlative words of all genders.
(b) Unless otherwise specified, references to Articles, Sections and other
subdivisions of this Agreement are to the designated Articles, Sections and other subdivisions of this Agreement as originally executed. The words "hereof," "herein," "hereunder" and
words of similar import refer to this Agreement as a whole.
(c) The headings or titles of the several articles and sections, and the table of contents appended to copies hereof, shall be solely for convenience of reference and shall not affect the meaning, construction or effect of the provisions hereof.
(d) The parties hereto acknowledge that each of the parties to this Agreement and its respective counsel have participated in the drafting and revision of the Issuer Documents.
Accordingly, the parties agree that the Issuer shall not be deemed to be the drafting party of the
Issuer Documents for purposes of any rule of construction which disfavors the drafting party.
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ARTICLE I1
GENERAL REPRESENTATIONS AND AGREEMENTS
Section 2.1. Remesentations and APreements of the Issuer. The Issuer represents,
warrants and covenants as follows:
(a) The Issuer is a municipal corporation, duly organized and existing under the laws of the State. Under the provisions of the Act, the Issuer has the power to enter into the
transactions on its part contemplated by this Agreement and the other Issuer Documents and to
carry out its obligations hereunder and thereunder. The financing of the Project constitutes and
will constitute a permissible public purpose under the Act. By proper action, the Issuer has
authorized the execution, delivery and due performance of the Issuer Documents.
(b) Neither the execution and delivery of the Bonds, the Issuer Documents, nor the Issuer's compliance with the terms, conditions or provisions on the part of the Issuer in the
Bonds and the Issuer Documents, to the best knowledge of the Issuer, conflicts in any material respect with or results in a material breach of any of the terms, conditions or provisions of the
Constitution or any statute of the State, or 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 by the Issuer under any of the foregoing.
(c) 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.
(d) The Issuer has complied, and will comply, with all material provisions of the Act
to be complied with by the Issuer applicable to the Bonds and the transactions contemplated by the Issuer Documents.
(e) The Bonds are being issued under the Indenture, and are secured by the Indenture, pursuant to which the Issuer's interest in this Agreement (other than its Reserved Rights) is pledged and assigned to the Trustee. The Issuer covenants that it has not pledged and will not pledge or assign its interest in this Agreement other than to the Trustee and the
Bank, to the extent of its interest therein, under the Indenture.
(f) No litigation or administrative action of any nature has been served on it and is
now pending (i) seeking to restrain or enjoin the execution and delivery of the Bonds or any
Issuer Document, 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 members or officers and, to the knowledge of the Issuer, none of
the foregoing are threatened.
The Issuer makes no representation or warranty that the Project will be adequate or sufficient for the purposes of the Borrower.
Section 2.2. Representations - and Aereements of the Trustee. The Trustee makes the following representations and agreements as the basis for its undertakings herein contained:
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(a) The Trustee is a national banking association in good standing under the laws of the State. The Trustee is duly authorized to exercise trust powers and to execute the trust
created by the Indenture and is qualified to act as Trustee under the Indenture.
(b) The Trustee has all corporate power and authority necessary (i) to execute and
deliver this Agreement, the Regulatory Agreement and the Indenture, (ii) to perform its obligations under this Agreement, the Regulatory Agreement and the Indenture and (iii) to consummate the transactions contemplated by this Agreement, the Regulatory Agreement and the Indenture.
(c) The Trustee has taken all actions necessary to authorize the execution and delivery of, the performance by the Trustee of its obligations under, and the consummation of
the transactions contemplated by, this Agreement, the Regulatory Agreement and the
Indenture.
(d) The execution and delivery of this Agreement and compliance with its terms, conditions and provisions will not conflict with or result in a breach of any of the terms, conditions or provisions of the articles of incorporation or bylaws of the Trustee or any agreement or instrument to which it is a party or by which it is bound, or any law or regulation
or any administrative decree or order to which it is subject, or constitute a default there-under,
in each case in any manner that would materially adversely impact its ability to perform its
duties hereunder or under the Indenture.
(e) The Trustee is not in default with respect to any order or decree of any court or
any order, regulation or demand of any federal, state, municipal or governmental agency, which default will materially adversely impair its ability to perform its obligations under this
Agreement.
(f) The Trustee is not a party to or bound by any agreement or instrument or subject to any charter or any other corporate restriction of any judgment, order, writ, injunction, decree, law or regulation which now or in the future may materially and adversely affect the ability of the Trustee to perform its obligations under this Agreement or which requires the consent of any third person to the execution of this Agreement or the consummation of the transactions contemplated hereby.
(g) No litigation has been served on the Trustee or, to the best knowledge of the Trustee, threatened against the Trustee with respect to this Agreement or the consummation of the transactions contemplated hereby.
Section 2.3. Representations and Aereements of the Borrower. The Borrower makes the
following representations and agreements as the basis for the Borrower's undertakings herein
contained:
(a) The Borrower is a California limited partnership duly formed under the laws of
the State, is in good standing in the State, has the power and authority to own its properties and
assets and to carry on its business as now conducted and as contemplated to be conducted, and has the power to enter into and has duly authorized, by proper action, the execution and
delivery of this Agreement and all other documents contemplated hereby to be executed by it,
including, without limitation, the Regulatory Agreement and the Reimbursement Agreement.
(b) Neither the execution and delivery of this Agreement or any other document in connection with the financing of the Project, the consummation of the transactions
contemplated hereby and thereby, nor the fulfillment of or compliance with the terms and
4
conditions hereof and thereof, conflicts with or results in a breach of any of the terms, conditions or provisions of the Borrower's organizational agreement or of any agreement or instrument to which it is now a party or by which it is bound, or constitutes a default (with due notice or the passage of time or both) under any of the foregoing, or results in the creation or imposition of any prohibited lien, charge or encumbrance whatsoever upon any of the property
or assets of it under the terms of any instrument or agreement to which it is now a party or by
which it is bound.
(c) The Project is located wholly within the City of Carlsbad, California.
(d) The Borrower has and shall have title to the Project sufficient to carry out the purposes of this Agreement, and such title shall be in and remain in the Borrower, except as permitted by Section 5.2 hereof and the Regulatory Agreement.
(e) There is no action, suit, proceeding, inquiry or investigation by or before any court, governmental agency, public board or body pending or, to the best of the Borrower's knowledge, threatened against it (nor is there any basis therefor), which (i) affects or seeks to prohibit, restrain or enjoin the issuance, sale or delivery of the Bonds or the execution or
delivery of this Agreement, the Regulatory Agreement or any related documents, (ii) affects or
questions the validity or enforceability of the Bonds, the Indenture, this Agreement, the
Regulatory Agreement, or any related documents, (iii) questions the tax status of the Bonds or
(iv) questions its power or authority to perform its obligations under this Agreement, the
Regulatory Agreement, or any related documents, or its powers to own, acquire, construct,
equip or operate the Project.
(f) There is no action, suit or proceeding at law or in equity or by or before any
governmental instrumentality or other agency now pending, or, to its knowledge, threatened
against or affecting it or any of its properties or rights, which, if adversely determined, would
materially impair its right to carry on business substantially as now conducted or as now
contemplated to be conducted, or would materially adversely affect its financial condition. It is
not in material default in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any material agreement or instrument to which it is a
party-
(8) It is not in default under any order or decree of any court or any order, regulation or demand of any federal, state, municipal or governmental agency or any document, instrument or commitment to which it is a party or to which it or any of its property
is subject, in any manner material to the transactions contemplated by this Agreement.
(h) The operation of the Project in the manner presently contemplated and as
described herein will not conflict with any zoning, water or air pollution or other ordinance,
order, law or regulation applicable thereto.
(i) It has filed or caused to be filed all federal, state and local tax returns that are required to be filed, and has paid or caused to be paid all taxes as shown on said returns or on any assessment received by it, to the extent that such taxes have become due.
(j) No officer or other official of the Issuer has any ownership interest whatsoever in the Project or, to the knowledge of the Borrower, in the transactions contemplated by this Agreement.
5
(k) The Project consists of a residential rental project comprising similarly constructed units containing separate and complete facilities for living, sleeping, eating, cooking and sanitation or substantially related and subordinate facilities.
(1) The Borrower currently intends to hold the Project for its own account, and has
no current plans to sell and has not entered into any agreement to sell the Project.
(m) The Borrower acknowledges, represents and warrants that it understands the nature and structure of the transactions relating to the financing of the Project; that it is familiar with the provisions of all of the documents and instruments relating to such financing to which
it or the Issuer is a party or of which it is a beneficiary; that it understands the risks inherent in such transactions, including, without limitation, the risk of loss of the Project; and that it has not
relied on the Issuer for any guidance or expertise in analyzing the financial or other
consequences of the transactions contemplated by this Agreement and the Indenture or
otherwise relied on the Issuer in any manner.
(n) The Borrower has not received any notice that it is not in compliance with all
provisions of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended ("CERCLA"); the Resource Conservation and Recovery Act; the Superfund Amendments and Reauthorization Act of 1986; the Toxic Substances Control Act and all environmental laws of the State (the "Environmental Laws"), or with any rules, regulations and
administrative orders of any governmental agency, or with any judgments, decrees or orders of
any court of competent jurisdiction with respect thereto; and the Borrower has not received any assessment, notice (primary or secondary) of liability or financial responsibility, and no notice
of any action, claim or proceeding to determine such liability or responsibility, or the amount
thereof, or to impose civil penalties with respect to a site listed on any federal or state listing of
sites containing or believed to contain "hazardous materials" (as defined in the Environmental
Law), nor has the Borrower received notification that any hazardous substances (as defined
under CERCLA) that it has disposed of have been found in any site at which any governmental
agency is conducting an investigation or other proceeding under any Environmental Law.
(0) The average maturity of the Bonds does not exceed 120% of the average reasonably expected economic life of the facilities of the Project financed with the proceeds of the Bonds.
(p) 149(b) Of the Code. The Bonds are not and shall not be "federally guaranteed" as defined in Section
(4) In the event the Loan proceeds are not sufficient to complete the financing of the
Project and the payment of all costs of issuing the Bonds, the Borrower will furnish all
additional moneys necessary to complete the financing of the Project and the payment of all costs of issuing the Bonds.
(r) All of the proceeds of the Loan shall be used to finance the acquisition, construction and development of the Project, and such construction and development shall be completed by the Final Funding Date.
(s) The Borrower shall make no changes to the Project or to the operation thereof which would affect the qualification of the Project under the Act or impair the Tax-exempt status of the interest on the Bonds. The Borrower intents to utilize the Project as required by the Regulatory Agreement.
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(t) Not in excess of two percent (2%) of the proceeds of the aggregate of the original
principal amount of the Bonds will be used to pay Costs of Issuance.
(u) The information contained in the official statement with respect to the Bonds,
insofar as such information relates to the Borrower and the Project, is accurate in all material
respects and does not contain any untrue statement of a material fact or omit to state a material fact pertaining to the Borrower and the Project required to be stated therein or necessary to
make the statements made therein, in light of the circumstances under which they were made, not misleading.
(v) The Borrower has contacted all "related persons" thereof (within the meaning of Section 147(a) of the Code), and neither it nor any of them shall, at any time, pursuant to any arrangement, formal or informal, acquire any Bond, except as required under the Reimbursement Agreement.
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ARTICLE I11
ISSUANCE OF THE BONDS; FINANCING OF THE PROJECT
Section 3.1. Agreement to Issue Bonds; Application of Bond Proceeds. To provide funds to finance the Project as provided in Section 4.1 hereof, the Issuer agrees that it will issue under
the Indenture, sell and cause to be delivered to the purchasers thereof, the Bonds, bearing
interest at the rates and payable as to principal and interest at the times as set forth in the
Indenture. The Issuer will thereupon deposit the proceeds received from the sale of the Bonds
in the Project Fund as provided in the Indenture.
Section 3.2. Disbursements from the Proiect Fund. Pursuant to and upon the conditions
set forth in the Indenture, the Trustee shall disburse the funds in the Project Fund to fund the
Loan. The Borrower shall request the Trustee to disburse moneys in the Project Fund only by means of requisitions executed by an Authorized Borrower Representative and approved to by an Authorized Bank Representative, in the forms attached hereto as Exhibit B and incorporated
herein by reference, and Attachment I to Exhibit F of the Reimbursement Agreement. The Borrower shall provide the Issuer with copies of the requisition and all other materials and information presented to the Bank at the same time that such materials and information are presented to the Bank. Notwithstanding the foregoing, amounts on deposit in the Project Fund
may only be used as set forth in Section 3.03 of the Indenture.
In the event that moneys in the Project Fund available for payment of the Costs of the
Project should be insufficient to pay such Costs in full, the Issuer shall be under no obligation to provide for payment of any costs of completing the Project in excess of the moneys available for such purpose in the Project Fund. The Issuer makes no express or implied warranty that the moneys deposited in the Project Fund and available for payment of the Costs of the Project, under the provisions of this Agreement, will be sufficient to pay all the amounts which may be incurred for such Costs. The Borrower agrees that if, after exhaustion of the moneys in the Project Fund, the Borrower should pay or cause to be paid any portion of the Cost of the Project pursuant to the provisions of this Section, it shall not be entitled to any reimbursement therefor from the Issuer, from the Trustee or from the holders of any of the Bonds, nor shall it be entitled
to any diminution of the amounts payable under Section 4.2 hereof. The Borrower further
agrees to spend additional moneys for payment of any Costs of the Project necessary to comply
with the covenants and representations set forth in the Tax Certificate and to complete the
Project.
The Borrower covenants that not less than 95 percent of the face amount of the Bonds, plus accrued interest and premium (if any) paid on the purchase of the Bonds by the original
purchaser from the Issuer will be paid for Qualified Project Costs.
Section 3.3. Establishment of Final Funding Date. The Borrower shall evidence the Final
Funding Date by providing a certificate to the Trustee and the Issuer, signed by the Authorized
Borrower Representative and approved by the Bank, stating the total Cost of the Project and
further stating that construction and development of the Project has been completed
substantially in accordance with the plans and specifications therefor. Such certificate shall
direct the Trustee to transfer amounts remaining on deposit in the Project Fund not used to pay,
or reimburse the Borrower for payment of, Costs of the Project to the Redemption Account to be
used for the redemption of Bond pursuant to Section 4.01(1) of the Indenture. The foregoing
certificate evidencing the Final Funding Date shall be delivered to the Trustee not later than three years after the Closing Date unless the Borrower delivers to the Trustee a Certificate of the Issuer (consented to in writing by the Bank) approving an extension of such date, accompanied
8
by an opinion of Bond Counsel to the effect that such extension is not likely to result in interest on the Bonds being included in gross income for federal income tax purposes.
Section 3.4. Investment of Monevs; Arbitrage. Upon written direction of the Borrower, approved in writing by the Bank, any moneys in any fund or account (except the Rebate Fund)
held by the Trustee shall be invested or reinvested by the Trustee in Investment Securities as
provided in the Indenture, and the Borrower hereby approves such provisions of the Indenture
and directs the Trustee to make such investments, subject to the covenants of Section 5.6(b) hereof. The Borrower and the Issuer hereby agree and acknowledge that any moneys held in the Project Fund shall be invested only in Investment Securities that will not result in the Borrower violating the covenants of Section 5.6(b) hereof.
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20
ARTICLE IV
LOAN OF PROCEEDS; PAYMENT PROVISIONS
Section 4.1. Loan of Bond Proceeds. The Issuer agrees, upon the terms of this
Agreement and satisfaction of the conditions set forth below, to make the Loan to the Borrower
in an amount equal to the aggregate principal amount of the Bonds, for the purpose of financing the Project. Pursuant to said covenant and agreement, the Issuer will issue the Bonds upon the terms and conditions contained in this Agreement and the Indenture and will cause the
proceeds of the Bonds to be applied by the Trustee as provided in Article I11 of the Indenture
and Section 3.2 hereof; provided that no moneys shall be disbursed from the Project Fund until
the following conditions have been met:
(a) The Borrower shall have provided to the Trustee one or more requisitions prepared in accordance with Section 3.2 of this Agreement for payment of the Costs of the Project from moneys on deposit in the Project Fund pursuant to Section 3.03 of the Indenture;
(b) The Regulatory Agreement and the Deed of Trust shall have been filed for
recording in the Official Records of the County of San Diego, and the Trustee and the Issuer
shall have received satisfactory evidence of such recordings; and
(c) The Trustee shall have been provided with the original Letter of Credit at the time of the issuance of the Bonds.
(d) For the purpose of establishing that any instrument required to be recorded in
this Section has been so recorded, the Trustee is hereby authorized to rely conclusively on the oral or written advice of the title company to which any such instrument has been delivered for recording.
Section 4.2. Loan Repavment and Pavment of Other Amounts.
(a) The Borrower hereby acknowledges its indebtedness to the Issuer hereunder and
agrees to repay, or cause to have repaid, the Loan in the amounts and at the times necessary to enable the Trustee, on behalf of the Issuer, to pay when due all principal, interest and premium,
if any, payable with respect to the Bonds when due, whether at maturity or by redemption or
acceleration or otherwise. The Issuer hereby agrees that the Borrower's repayment obligations hereunder shall be reduced from time to time by any amounts drawn under the Letter of Credit. The Borrower hereby agrees to cause the Letter of Credit to be delivered to the Trustee in accordance with the terms of the Reimbursement Agreement and Section 5.8 hereof.
(b) The Borrower agrees: (1) to pay to the Trustee from time to time reasonable
compensation for all services rendered by it under the Indenture and the other agreements
relating to the Bonds to which the Trustee is a party; (2) except as otherwise expressly provided
in the Indenture or such other agreements, to reimburse each of the Trustee, the Tender Agent
and Paying Agent upon its respective request for all reasonable expenses, disbursements and advances (including reasonable counsel fees) incurred or made by the Trustee, the Tender Agent and Paying Agent in accordance with any provision of the Indenture or other agreements to which the Trustee, the Tender Agent and Paying Agent, respectively, is a party or pursuant to which it is obligated to act (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence or willful misconduct; (3) to indemnify the Trustee, the Tender Agent and Paying Agent for, and hold each of them harmless against, any loss, liability
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3-1
or expense incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of their respective obligations under the Indenture or any other agreement relating to the Bonds to which the Trustee, the Tender Agent and Paying Agent is a party, including the costs and expenses of defending itself or investigating against any claim or liability in connection with the exercise or performance of any of its powers or duties
thereunder; (4) to pay any fee of any Rating Agency then rating the Bonds to review or confirm
any existing rating on the Bonds; and (5) to pay any other amounts referred to in Section 8.06 of
the Indenture.
(c) The Borrower also agrees to pay to the Issuer (i) an initial financing fee of
$50,000, which shall be paid on or before the Closing Date, (ii) the Issuer's annual project
monitoring fee in an amount equal to 1/8th of one percent of the original principal amount of
the Bonds, payable as provided in Section 17 of the Regulatory Agreement, and (iii) within
thirty (30) days after receipt of request for payment thereof, all reasonable out-of-pocket expenses of the Issuer (not including salaries and wages of Issuer employees) related to the Project and the financing thereof which are not otherwise required to be paid by the Borrower under the terms of this Agreement and are not paid from the Cost of Issuance Fund under the Indenture, including, without limitation, legal fees and expenses incurred in connection with the interpretation, performance, enforcement or amendment of any documents relating to the
Project or the Bonds. Further, the Borrower agrees that if the Loan is prepaid in accordance
with Article VIII hereof, it shall prepay, in full, to the extent allowed under the Code, the annual
fees due the Issuer for the remaining term of the Regulatory Agreement, unless the Loan is
prepaid with the proceeds of refunding bonds issued by the Issuer.
(d) The Borrower also agrees to pay any fees and other costs required to be incurred
in connection with the calculation of the Rebate Requirement (as defined in the Tax Certificate)
and otherwise in order to comply with the Tax Certificate.
(e) The Borrower also agrees to pay, or cause to be paid, the fees and expenses of the
Remarketing Agent.
Section 4.3. Unconditional Obligation. - The obligations of the Borrower to make the
payments required by Section 4.2 hereof and to perform and observe the other agreements on
its part contained herein shall be absolute and unconditional, irrespective of any defense or any
rights of set-off, recoupment or counterclaim it might otherwise have against the Issuer or the Trustee, and during the term of this Agreement, the Borrower shall pay absolutely net the payments required hereunder, free of any deductions and without abatement, diminution or
set-off. Until such time as the principal of, premium, if any, and interest on the Bonds shall
have been fully paid, or provision for the payment thereof shall have been made as required by
the Indenture, the Borrower (i) will not suspend or discontinue any payments provided for in
Section 4.2 hereof; (ii) will perform and observe all of its other covenants contained in this
Agreement; and (iii) except as provided in Article VI11 hereof, will not terminate this Agreement
for any cause, including, without limitation, the occurrence of any act or circumstances that may
constitute failure of consideration, destruction of or damage to the Project, commercial frustration of purpose, any change in the tax or other laws of the United States of America or of
the State or any political subdivision or either of these, or any failure of the Issuer or the Trustee to perform and observe any covenant, whether express or implied, or any duty, liability or obligation arising out of or connected with this Agreement or the Indenture, except to the extent permitted by this Agreement or the Indenture.
Section 4.4. Assimment - of Issuer's Rights. As security for the payment of the Bonds, the
Issuer in the Indenture assigns to the Trustee certain of the Issuer's rights under this Agreement,
including the right to receive payments hereunder (except for any deposits to the Rebate Fund
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and the right of the Issuer to certain payments, if any, with respect to fees, expenses and indemnification under Sections 4.2(c), 7.3, 9.2 and 9.3 hereof), and the Issuer hereby directs the
Borrower to make the payments required hereunder (except such payments for the Issuer’s fees,
expenses and indemnification) directly to the Trustee. The Borrower hereby assents to such
assignment and agrees to make payments directly to the Trustee without defense or set-off by
reason of any dispute between the Borrower and the Issuer or the Trustee. By virtue of such
assignment, the Trustee shall have the right to enforce the obligations of the Borrower to the
Issuer hereunder.
Section 4.5. Non-Recourse Obligation of Borrower. The Borrower shall only be liable
upon the indebtedness evidenced by this Agreement, or sums or amounts to accrue or to
become payable hereunder or under the Deed of Trust or either of them, to the full extent (but only to the extent) of the security granted under the Deed of Trust or the Indenture. If default occurs in the timely and prompt payment of all or any part of said indebtedness, sums or
amounts, any judicial proceedings or enforcement of the remedies under this Agreement and
the Deed of Trust against the Borrower shall be limited to the preservation, enforcement and
foreclosure or any thereof, of the liens, estates, assignments, titles, rights and security interests
now or at any time hereafter acquired in such security and no judgment, attachment, execution
or other writ of process shall be sought, issued or levied upon the assets, property or funds of
the Borrower other than the properties, rights, estates and interests of the Borrower as are
identified as security in the Deed of Trust or the Indenture. In the event of a foreclosure or
other disposition as provided for in the Deed of Trust or the Indenture of such liens, estates, assignments, titles, rights and security interests, whether by judicial proceedings or the exercise of the power of sale, no judgment for the deficiency of such indebtedness, sums and amounts
shall be sought or obtained against the Borrower. The Deed of Trust shall have no force and
effect until recorded and filed in the real property records of the County of San Diego.
Notwithstanding the foregoing provisions of this Section 4.5, nothing herein contained
shall limit or restrict the ability of the Issuer or the Trustee to seek or obtain a judgment against
the Borrower for (i) the Issuer’s or the Trustee’s fees, expenses and indemnification or (ii)
damages caused by the Borrower as a consequence of the occurrence of any of the events set
forth below (collectively, ”Recourse Events”):
(a) fraud or any material misrepresentation made by the Borrower or any partner, officer, agent or employee of the Borrower in any material writing or contained in any of the provisions of this Agreement, the Deed of Trust or any related document;
(b) material breach of any covenant contained herein or in the Deed of Trust relating
to the failure by the Borrower to pay, satisfy and discharge all general and special city, county
and state taxes or special assessments or encumbrances, charges and liens that are or may be prior to or superior to the lien of the Deed of Trust, provided that any such damages for which the Borrower may be liable under this provision shall be limited to damages relating to the issuance of the Bonds, the making of the Loan and the transactions related thereto, but shall not include any damages relating to any assessment of the Issuer.
(c) misapplication of (1) proceeds paid under any insurance policies by reason of
damage, loss or destruction to any portion of the Project to the full extent that such proceeds are
payable or should be payable to the Trustee under the terms of the Deed of Trust; or (2)
proceeds or awards resulting from the condemnation or other taking in lieu of condemnation,
relating to any portion of the Project to the full extent of any such proceeds or awards which are
payable or should be paid to the Trustee under the terms of the Deed of Trust;
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23
(d) failure by the Borrower to cause to be maintained upon the Project such
insurance coverages as are required under the Deed of Trust, unless such insurance coverage is
not maintained as a consequence of the exercise by the Issuer or the Trustee of its right to demand from the Borrower all rents, income, issues and profits from the Project as set forth hereinbelow, provided that in such event the Borrower shall give the Issuer and the Trustee
timely notice of its inability to maintain such insurance;
(e) the occurrence of acts or omissions of the Borrower that result in waste to or of
the Project;
(f) failure by the Borrower to remit to the Trustee promptly upon demand therefor all rents, income, issues and profits from the Project and deposits for security purposes,
received in connection with leases or tenant improvements, or otherwise delivered by
occupants of the Project to the Borrower, but solely to the extent of such failure;
(8) the incurrence of any expenses, damages, or liabilities including, without
limitation, all reasonable attorneys' fees, whether incurred by the Issuer or the Trustee prior to or following foreclosure of the Deed of Trust and whether the Issuer or the Trustee shall be in the status of a lienholder or an Owner of the Project following foreclosure, directly or indirectly arising out of or attributable to use, generation, storage, release, threatened release, discharge, disposal, or presence on, under, or about the Project prior to or during Borrower's ownership of
the Project, of any materials, wastes, or substances defined or classified as hazardous or toxic
under any federal, state or local laws, regulations or otherwise resulting from the breach by the
Borrower of the covenants contained in paragraph 13 of the Rider to the Deed of Trust; and
(h) any failure by the Borrower to comply with Sections 4.2(b), 4.2(c) or 9.3 of this
Agreement.
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ARTICLE V
SPECIAL COVENANTS AND AGREEMENTS
Section 5.1. Right of Access to the Proiect and Records. The Borrower agrees that during
the term of this Agreement the Issuer, the Trustee and the duly authorized agents of either of
them shall have the right at all reasonable times and upon reasonable notice during normal
business hours to enter upon the site of the Project to examine and inspect the Project and to have access to the books and records of the Borrower with respect to the Project.
Section 5.2. Maintenance of Existence; Assiments. -
(a) The Borrower agrees that during the term of this Agreement it will remain in
good standing and qualified to do business in the State, that it will maintain its existence, will
not dissolve or otherwise dispose of all or substantially all of its assets and will not combine or consolidate with or merge into another entity or permit one or more other entities to consolidate with or merge into it; provided, however, that the Borrower may combine, consolidate with, or merge into another entity existing under the laws of one of the states of the United States, or permit one or more other entities to consolidate with or merge into it, or sell or otherwise
transfer to another entity all or substantially all of its assets as an entirety and thereafter dissolve, provided that the surviving, resulting or transferee entity, as the case may be, (i)
assumes and agrees in writing to pay and perform all of the obligations of the Borrower
hereunder, and (ii) qualifies to do business in the State if such qualification is legally required;
and provided further that the Borrower shall have obtained the written approval of the Bank.
(b) The rights and obligations of the Borrower under this Agreement may be assigned by the Borrower to any person in whole, in connection with any conveyance of the Project permitted by Section 10 of the Regulatory Agreement; provided that (i) the assignee shall assume in writing the obligations of the Borrower hereunder to the extent of the interest assigned, and a copy of such instrument of assumption shall be delivered to the Issuer and the Trustee within ten (10) days after the execution thereof; (ii) the Borrower shall have obtained the
written consent of the Issuer and the Bank; and (iii) the Borrower shall remain liable for its
obligations hereunder to the extent of any interest not so assigned.
(c) The rights and obligations of the Borrower under this Agreement may also be
assigned by the Borrower to any person in whole or in part, subject, however, to each of the
following conditions:
(i) No assignment other than pursuant to subsection (a) or (b) of this Section
shall relieve the Borrower from primary liability for any of its obligations hereunder,
and in the event of any assignment not pursuant to subsection (a) or (b) of this Section
the Borrower shall continue to remain primarily liable for the payments specified in
Section 4.2 hereof and for performance and observance of the other agreements on its
part herein provided to be performed and observed by it.
(ii) Any assignment from the Borrower shall retain for the Borrower such
rights and interests as will permit it to perform its obligations under this Agreement,
and any assignee from the Borrower shall assume the obligations of the Borrower
hereunder to the extent of the interest assigned.
(iii) The Borrower shall, within thirty (30) days after delivery thereof, furnish or cause to be furnished to the Issuer, the Trustee and the Bank a true and complete copy
14
of each such assignment together with an instrument of assumption and the written consent of the Bank to such assignment.
(d) The removal of either Community Housing Works or Mercy Housing West, as general partner of the Borrower in accordance with the Partnership Agreement shall not
constitute a violation of this Section 5.2. Further, the transfer of the Limited Partner's
partnership interest in the Borrower and the admission of a successor limited partner shall not
constitute a violation of this Section 5.2. Additionally, in the event the Issuer is required to
approve, for any reason, the admission of a successor limited partner or the amendment of the
Partnership Agreement in connection therewith, the Issuer's approval shall not be unreasonably withheld.
Section 5.3. Statement of Comuliance; Notice of Certain Events.
(a) The Borrower will deliver to the Issuer and the Trustee (with a copy to the Bank), within 60 days after the end of each calendar year, a written statement signed by an Authorized Borrower Representative stating, as to the signer thereof, that (1) a review of the activities of the
Borrower during such year and of performance under this Agreement has been made under
their supervision, and (2) to the best of the knowledge of such Authorized Borrower
Representative, based on such review, the Borrower has fulfilled all its obligations throughout
such year, or, if there has been a default in the fulfillment of any such obligation, specifying
each such default known to such Authorized Borrower Representative and the nature and
status thereof.
(b) The Borrower hereby covenants to notify the Issuer and the Trustee (with a copy to the Bank) in writing of the occurrence of any Event of Default hereunder or any event which,
with the passage of time or service of notice, or both, would constitute an Event of Default
hereunder, specifying the nature and period of existence of such event and the actions being
taken or proposed to be taken with respect thereto. Such notice shall be given promptly, and in
no event less than ten (10) Business Days after the Borrower receives notice or knowledge of the
occurrence of any such event. The Borrower further agrees that it will give prompt written
notice to the Trustee, with a copy to the Bank, if insurance proceeds or condemnation awards
are received with respect to the Project and are not used to repair or replace the Project, which
notice shall state the amount of such proceeds or award.
Section 5.4. Insurance; Taxes and Charnes; Maintenance and Reuair. The Borrower
agrees to insure the Project or cause the Project to be insured during the term of this Agreement for such amounts and for such occurrences as are required under the Deed of Trust, naming the Trustee as a co-insured. The Borrower further agrees to provide to the Issuer and the Trustee not later than October 1 of each year a Written Certificate of the Borrower stating that the
insurance then in effect satisfies the condition required under the Deed of Trust; and to notify
the Issuer and the Trustee, by certified mail, immediately upon cancellation or material
alteration of such insurance. The Trustee shall have no obligation to investigate, monitor or
review, and makes no representation as to, the existence or sufficiency of the insurance on the
Project.
The Borrower will pay or cause to be paid, during the term of this Agreement, before the same respectively become delinquent, (a) all taxes and governmental charges of any kind whatsoever that may at any time be lawfully assessed or levied against or with respect to the Project or any part thereof, including, without limiting the generality of the foregoing, all ad valorem taxes levied against the Project and any other taxes levied upon the Project which, if not paid, will become a charge on the receipts from the Project prior to or on a parity with the
charge thereon and the pledge or assignment thereof to be created and made in the Indenture,
15
or a lien against the Project or any interest therein or the revenues derived therefrom or
hereunder; (b) all utility and other charges incurred by the Borrower in the operation,
maintenance, use, occupancy and upkeep of the Project; (c) all assessments and charges lawfully
made by any governmental body for public improvements that may be secured by a lien on the
Project. Notwithstanding the foregoing, the Borrower may contest any such taxes, assessments
and other charges, and, in the event of any such contest, may permit the taxes, assessments or other charges so contested to remain unpaid during the period of such contest and any appeal therefrom in accordance with the Deed of Trust.
The Borrower further agrees to maintain the Project, or cause the Project to be
maintained, during the term of this Agreement (i) in a reasonably safe condition and (ii) in good
repair and in good operating condition, ordinary wear and tear excepted, making from time to time all necessary repairs thereto and renewals and replacements thereof. In addition, subsequent to the completion of the Project, the Borrower may modify, alter or make
improvements to the Project from time to time as the Borrower, in its discretion, determines but
subject to the approval of the Bank and as shall be permitted by the Act and the Regulatory
Agreement, the costs of which remodeling, modifications and improvements shall be paid from
the funds of the Borrower, and the same shall be the property of the Borrower and be included
under the terms of this Agreement, the Deed of Trust and the Bank Deed of Trust as part of the
Project; provided, however, that when completed such remodeling, modifications and improvements shall not interfere with the operation of the Project or in any way damage the
Project; and provided further that the Project, as remodeled, improved or altered, upon completion of such remodeling, modifications and improvements made pursuant to this Section shall be of a value not less than the value of the Project immediately prior to the making of such modifications and improvements. The Borrower will not permit any mechanic's or other lien to be established or remain against the Project for labor or materials furnished in connection with
any remodeling, modifications, improvements, repairs, renewals or replacements so made by
the Borrower except as permitted in the Deed of Trust.
Section 5.5. Additional Instruments, Replacement Deed of Trust. The Borrower hereby
covenants to execute and deliver such additional instruments and to perform such additional
acts as may be necessary, in the opinion of the Issuer or the Trustee, to carry out the intent
hereof or to perfect or give further assurances of any of the rights granted or provided for
herein or contemplated hereby.
If the Deed of Trust is foreclosed, without causing the Bonds to be redeemed in
connection therewith, the Issuer and the Trustee shall cause the successor to the Borrower
hereunder to execute, deliver and cause to be properly recorded a replacement Deed of Trust in
substantially the same form as the original Deed of Trust.
Section 5.6. Tax-Exempt Status of Bonds. (a) It is the intention of the Issuer and the
Borrower that interest on the Bonds shall be and remain excludable from gross income for
federal income tax purposes, and to that end the covenants and agreements of the Issuer and
the Borrower in this Section and in Sections 2.1,2.3,3.1 and 3.2 are for the benefit of the Trustee on behalf of and for each and every holder of the Bonds. The Borrower covenants and agrees that it will take or cause to be taken all such actions as are necessary within its power to be taken so that interest on the Bonds shall be and remain excludable from gross income for federal income tax purposes, and more specifically agrees as hereinafter provided.
(b) The Borrower covenants and agrees that it will not use or permit the use of any
of the funds provided by the Issuer hereunder or any other funds of the Borrower, directly or
indirectly, or direct the Trustee to invest any funds held by it hereunder or under the Indenture,
in such manner as would, or enter into, or allow any Related Person to enter into, any
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arrangement, formal or informal, for the purchase of any Bonds that would, or take or omit to
take any other action that would, to the knowledge of the Borrower, cause any Bond to be an
”arbitrage bond” within the meaning of Section 148 of the Code or ”federally guaranteed”
within the meaning of Section 149(b) of the Code and applicable regulations promulgated from
time to time thereunder.
(c) In the event that at any time the Borrower is of the opinion or is otherwise aware that for purposes of this Section 5.6 or Section 6.06 of the Indenture it is necessary to restrict or to limit the yield on the investment of any moneys held by the Trustee under the Indenture, the Borrower shall notify the Issuer and provide a copy of such notice to the Bank, and the Trustee
shall comply with the written instructions of the Issuer pursuant to Section 6.06(b) of the
Indenture.
(d) The Borrower specifically covenants to comply with the covenants and
procedures set forth in Section 5.06 of the Indenture and the Tax Certificate and to deposit in the
Rebate Fund such amounts as may be necessary to increase the amount on deposit in the Rebate
Fund to the Rebate Requirement. Additionally, the Borrower shall retain a rebate analyst who
shall calculate the amount of rebatable arbitrage annually for the first five years after the
issuance of the Bonds and then every five years thereafter.
(e) Notwithstanding any provisions of this Section 5.6, if the Issuer shall provide to
the Trustee an opinion of Bond Counsel that any specified action required under this Section 5.6 or Section 6.06 of the Indenture is no longer required or that some further or different action is required to maintain the Tax-exempt status of interest on the Bonds, the Trustee, the Issuer and the Borrower may conclusively rely on such opinion in complying with the requirements of this Section and Section 6.06 of the Indenture and be protected in so doing, and the covenants
hereunder shall be deemed to be modified to that extent.
(f) The Borrower further agrees that it shall not discriminate on the basis of race,
creed, color, sex or national origin in the lease, use or occupancy of the Project or in connection with the employment or application for employment of persons for the acquisition,
construction, operation and management of the Project.
(8) The Borrower further warrants and covenants that it has not executed and will
not execute any other agreement, or any amendment or supplement to any other agreement, with provisions materially contradictory to, or in materially opposition to, the provisions hereof, of the Indenture and of the Regulatory Agreement, and that in any event, the requirements of this Agreement, the Regulatory Agreement and the Indenture are paramount
and controlling as to the rights and obligations herein set forth and supersede any other
requirements in conflict herewith and therewith, except the provisions of the Intercreditor
Agreement shall control all matters covered thereby.
(h) The Borrower shall assure that the proceeds of the Bonds are used in a manner
such that the Bonds will satisfy the requirements of Section 142(d) of the Code relating to qualified residential rental projects.
(i) The Borrower shall take any and all actions necessary to assure compliance with Section 148(f) of the Code, relating to the rebate of excess investment earnings, if any, to the
federal government, to the extent that such section is applicable to the Bonds.
(j) The Borrower covenants that not less than 95% of the amounts disbursed from
the Project Fund will be used to pay Qualified Project Costs.
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(k) The Borrower covenants that less than twenty-five percent (25%) of the proceeds of the Bonds shall be used, directly or indirectly, for the acquisition of land.
(1) The Borrower covenants that no proceeds of the Bonds shall be used for the acquisition of any tangible property or an interest therein, other than land or an interest in land,
unless the first use of such property is pursuant to such acquisition; provided, however, that
this limitation shall not apply with respect to any building (and the equipment therefor) if
rehabilitation expenditures (as defined in Section 146(d) of the Code) with respect to such
building equal or exceed 15 percent of the portion of the cost of acquiring such building (and equipment) financed with Proceeds; and provided, further, that this limitation shall not apply
with respect to any structure other than a building if rehabilitation expenditures with respect to
such structure equal or exceed 100 percent of the portion of the cost of acquiring such structure
financed with the Proceeds.
(m) The Borrower covenants that no proceeds of the Bonds shall be used directly or indirectly to provide any airplane, skybox or other private luxury box, health club facility, facility used for gambling or store the principal business of which is the sale of alcoholic beverages for consumption off premises.
Section 5.7. Rewlatorv Aseement. In order to maintain the exclusion from gross
income for federal income tax purposes of interest on the Bonds and to assure compliance with
the Act and other laws of the State, and certain additional requirements of the Issuer, the
Borrower hereby agrees that it shall, concurrently with or before the execution and delivery of
the Bonds, execute and deliver and cause to be recorded in the official records of The County of
San Diego, the Regulatory Agreement, and hereby covenants to observe and perform its
obligations thereunder.
Section 5.8. Letter of Credit. At all times there shall be provided and continuously
available to the Trustee, as beneficiary, an irrevocable Letter of Credit (whether in the form of a
letter of credit or any other credit instrument) meeting the requirements of this Section. The Borrower shall have the right at any time during a Weekly Interest Rate Period (including the
first day thereof), whether or not in connection with the pending expiration of any then outstanding Letter of Credit, or on the first day of a Term Interest Rate Period, to provide to the
Trustee an Alternate Letter of Credit that meets the requirements of this Section, and the
Trustee has been directed pursuant to Section 5.04 of the Indenture to accept any such Alternate
Letter of Credit. Other than as provided above, the Borrower shall not have the right to provide
to the Trustee an Alternate Letter of Credit during a Term Interest Rate Period. For purposes of
this Section only, except as otherwise indicated, each Letter of Credit shall be deemed to include any instrument that directly or indirectly guarantees performance under such Letter of Credit.
The following requirements shall apply to any Letter of Credit provided hereunder:
(i) The Letter of Credit initially provided shall be effective from no later than
the Closing Date, and any Alternate Letter of Credit shall be for a term commencing not
later than the expiration date of the term of the prior Letter of Credit.
(ii) Except for its term, each Alternate Letter of Credit shall have substantially
the same material provisions as the Letter of Credit delivered on the Closing Date,
including, without limitation, provisions permitting drawings thereunder to pay amounts due on the Bonds on the scheduled dates for payment of such amounts or upon redemption or acceleration and to pay the purchase price of Bonds tendered for purchase as provided in Section 2.04 of the Indenture, and providing for reinstatement, with appropriate conditions, of the amount thereof upon any drawing thereunder to pay
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interest on or purchase price of the Bonds and shall be in a form reasonably acceptable
to the Issuer.
(iii) Each Letter of Credit (in this case not including any guarantee) shall be
issued by a national banking association organized under the National Banking Act, or
any successor law, or a banking corporation organized under the laws of any state of the United States, or a savings association or corporation or savings bank organized under
the laws of the United States or any state thereof, or a branch or agency of a foreign
banking corporation or association licensed in one of the states of the United States, or any other issuer acceptable to the Issuer.
(iv) Each Letter of Credit delivered to the Trustee (other than the Letter of Credit initially provided, including any renewal or extension thereof) must be accompanied by (i) an opinion of Bond Counsel to the effect that delivery of the Letter of
Credit complies with the provisions of this Agreement and the Indenture, and will not
cause the interest on the Bonds to lose their Tax-exempt status; and (ii) one or more
Opinions of Counsel to the effect, singly or together, that the Letter of Credit is a valid
and binding obligation of the Bank, enforceable against the Bank in accordance with its
terms, except as limited by applicable reorganization, insolvency, liquidation,
readjustment of debt, moratorium or other similar laws affecting the enforcement of the rights of creditors generally as such laws may be applied in the event of a reorganization, insolvency, liquidation, readjustment of debt or other similar proceeding of or moratorium applicable to the Bank and by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).
(v) Each Alternate Letter of Credit delivered to the Trustee shall be accompanied by a written statement from the Rating Agency, to the effect that (i) if the Bonds are in a Weekly Interest Rate Period the prospective rating on the Bonds will be at least “A-1“ or if the effective date of the Alternate Letter of Credit will be on the first day of a new Term Interest Rate Period, the prospective rating of the Bonds will be at least
“AA‘ (or its equivalent), unless waived by the Issuer, and in no event less than “A“ and
(ii) if the Bonds are in a Term Interest Rate Period, stating that the delivery of the
Alternate Letter of Credit will not, in and of itself, result in a lowering or withdrawal of
the rating on the Bonds.
Section 5.9. Indenture. The Borrower hereby agrees to all of the terms and provisions of
the Indenture and accepts each of its obligations thereunder. The Borrower hereby approves the initial appointment under the Indenture of the Trustee, the Remarketing Agent and the Tender Agent for the Bonds. The Borrower hereby agrees that it will not, and will cause each partner and guarantor of the Borrower not to, purchase any Bonds from the Remarketing Agent
(except for the purposes of Section 4.07 of the Indenture).
Section 5.10. Continuing: Disclosure. The Borrower hereby covenants and agrees, upon
an adjustment of interest on the Bonds to a Term Interest Rate pursuant to Section 2.03(D) of the Indenture, to comply with the continuing disclosure requirements promulgated under S.E.C. Rule 15~2-12, as it may from time to time hereafter be amended or supplemented, and to incur all costs associated with such continuing disclosure requirements. Notwithstanding any other provision of this Agreement, failure of the Borrower to comply with such requirements shall not be considered an Event of Default hereunder or under the Indenture.
Section 5.11. Control of Borrower and Credit Bank. The Borrower represents that the Credit Bank does not control, either directly or indirectly, through one or more intermediaries,
the Borrower and the Borrower does not control, either directly or indirectly, through one or
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more intermediates, the Credit Bank. "Control" for this purpose has the meaning given to such term in Section 2(a)(a) of the Investment Company Act of 1940. The Borrower will give notice
to the Trustee and the Remarketing Agent of any transaction that would result in the Borrower controlling or being controlled by the Credit Bank at least forty-five (45) days prior to the date of consummation of such transaction. The Trustee will give such notice to the Bondholders within ten (10) days of receipt thereof.
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ARTICLE VI
DAMAGE, DESTRUCTION AND CONDEMNATION;
USE OF PROCEEDS
Section 6.1. Obligation to Continue Pavments. If prior to full payment of the Bonds (or provision for payment thereof in accordance with the provisions of the Indenture) the Project or any portion thereof is destroyed (in whole or in part) or is damaged by fire or other casualty, or title to, or the temporary use of, the Project or any portion thereof shall be taken under the exercise of the power of eminent domain by any governmental body or by any person, firm or
corporation acting under governmental authority, the Borrower shall nevertheless be obligated
to continue to pay the amounts specified in Article IV hereof, to the extent not prepaid in
accordance with Article VIII hereof.
Section 6.2. Application of Net Proceeds. The Net Proceeds, if any, of any insurance or
condemnation awards resulting from the damage, destruction or condemnation of the Project or any portion thereof shall be applied in one or more of the following ways at the election of the
Borrower, approved by the Bank (which approved shall not be unreasonably withheld or
delayed) and subject to any conditions set forth in the Deed of Trust and the Intercreditor
Agreement by written notice to the Issuer and the Trustee (with a copy to the Bank):
(a) The prompt repair, restoration, relocation, modification or improvement of the
Project to enable the Project to accomplish as nearly as practicable the same function as the
Project was designed to accomplish prior to such damage or destruction or exercise of such
power of eminent domain.
(b) Prepayment of all or a portion of the Loan, subject to and in accordance with Article VI11 hereof, and redemption of Bonds; provided that no part of the Net Proceeds may be applied for such purpose unless (1) the entire amount of the Loan is so prepaid and all of the
outstanding Bonds are to be redeemed in accordance with the Indenture, or (2) in the event that only a portion of the Loan is so prepaid, the Borrower shall furnish to the Issuer and the Trustee a certificate of the Authorized Borrower Representative acceptable to the Issuer and the Trustee stating (i) that the portion of the Project that was damaged or destroyed by such casualty or was taken by such condemnation proceedings is not essential to the Borrower's use or possession of the Project or (ii) that the Project has been repaired, replaced, restored, relocated, modified or improved to enable the Project to accomplish as nearly as practicable the same function as the
Project was designed to accomplish prior to such damage or destruction or the taking by such
condemnation proceedings.
Section 6.3. Insufficiencv of Net Proceeds. If the Project is to be repaired, restored, relocated, modified or improved pursuant to Section 6.2 hereof, and if the Net Proceeds are insufficient to pay in full the cost of such repair, restoration, relocation, modification or improvement, the Borrower will nonetheless complete the work or cause the work to be completed and will pay or cause to be paid any cost in excess of the amount of the Net Proceeds in accordance with such procedures, if any, as may be established by the Bank.
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ARTICLE VI1
EVENTS OF DEFAULT AND REMEDIES
Section 7.1. Events of Default. Any one of the following which occurs and continues
shall constitute an Event of Default under this Agreement:
(a) the occurrence of an Event of Default described in subsection (b) below or the
occurrence of a Determination of Taxability (an "Acceleration Default");
(b) failure by the Borrower to pay any amounts required to be paid under this Agreement at the times specified herein, provided that any such delinquency relating to
payments due pursuant to Section 4.2(b), (c), (d) or (e) shall not be deemed an Event of Default
until notice of such nonpayment is given to the Limited Partner and the nonpayment continues
for 15 days after the delivery of such notice;
(c) failure by the Borrower to observe and perform any other covenant, condition or agreement on its part required to be observed or performed by this Agreement, which continues for a period of thirty (30) days after written notice specifying such failure and requesting that it be remedied, given to the Borrower, the Limited Partner and the Bank by the Issuer or the Trustee, unless the Issuer and the Trustee shall, with the consent of the Bank, agree in writing to an extension of such time prior to its expiration; provided, however, that if the failure stated in the notice cannot be corrected within such period, but is correctable, the Issuer and the Trustee, with the consent of the Bank, will not unreasonably withhold their consent to
an extension of such time if corrective action is instituted within such period and diligently
pursued until the default is corrected or (ii) that if the Borrower has not cured such default
within such day period, the Limited Partner shall have an additional 30 days to cure such
default; provided, further, notwithstanding the cure periods provided herein, the Issuer and the
Trustee shall have the right to cause the recording of a Notice of Default and Election to Sell
under the Deed of Trust upon the occurrence of any failure as provided herein and an cure
periods set forth herein shall run concurrently with any cure periods required under applicable
law.
(d) the making of any representation or warranty by the Borrower in this Agreement
or in any document executed in connection with this Agreement which is false or misleading in
any material respect when made;
(e) (i) the occurrence of any event which is an event of default under the
Reimbursement Agreement, and receipt by the Trustee from the Bank of notice of such default
and a request that it be treated as an Event of Default hereunder, or (ii) receipt by the Trustee of
a notice of nonreinstatement of the interest amount of the Letter of Credit from the Bank; or
(f) an Act of Bankruptcy.
The provisions of subsection (c) of this Section, except under Section 5.6 hereof, are
subject to the limitation that the Borrower shall not be deemed in default, if and so long as the Borrower is unable to carry out its agreements hereunder by reason of strikes, lockouts or other
industrial disturbances; acts of public enemies; orders of any kind of the government of the
United States or of the State or any of their departments, agencies, or officials, or any civil or military authority; insurrections, terrorist acts, riots, epidemics, landslides, lightning,
earthquake, hurricanes, storms, floods, washouts, droughts or other natural phenomena; arrests; restraint of government and people; civil disturbances; fire; explosions; breakage or
accident to machinery, transmission pipes or canals; partial or entire failure of utilities; or any
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other cause or event not reasonably within the control of the Borrower; it being agreed that the settlement of strikes, lockouts and other industrial disturbances shall be entirely within the
discretion of the Borrower, and the Borrower shall not be required to make settlement of strikes,
lockouts and other industrial disturbances by acceding to the demands of the opposing party or parties when such course is, in the judgment of the Borrower, unfavorable to the Borrower.
This limitation shall not apply to any default except under subsection (c) of this Section.
Section 7.2. Remedies on Default. (a) Whenever any Event of Default shall have
occurred and shall continue, after giving notice to the Bank and subject to the right of the Bank
to cure any such default, provided, however, that the Bank shall not be obligated to cure any
default, the Issuer and the Trustee, as applicable, may take any one or more of the following remedial steps:
(i) The Trustee, upon the occurrence of (i) an Acceleration Default, (ii) an
Event of Default described in Section 7.l(e), or (iii) at the request or with the consent of the Bank, any other Event of Default hereunder, by written notice to the Borrower (with a copy to the Bank), shall immediately declare the unpaid balance of the Loan to be
immediately due and payable.
(ii) The Issuer and the Trustee may have access to and may inspect, examine and make copies of the books and records and any and all accounts, data and federal income tax and other tax returns of the Borrower.
(iii) The Issuer or the Trustee, after notice to the Bank, may take whatever
action at law or in equity as may be necessary or desirable to collect the payments and
other amounts then due and thereafter to become due or to enforce performance and
observance of any obligation, agreement or covenant of the Borrower under this
Agreement.
(iv) Subject to the Intercreditor Agreement, the Trustee may, after notice to
the Bank, institute any action or proceeding at law or in equity for the collection of any
sums due and unpaid, and may prosecute any such action or proceeding to judgment or
final decree, and may enforce any such judgment or final decree against the Borrower
and collect in the manner provided by law the moneys adjudged or decreed to be payable; provided that, notwithstanding anything herein or in the Intercreditor
Agreement, the Trustee and the Issuer may institute any action or proceeding at law, or
in equity for the collection of its fees, expenses and indemnification.
(b) In case the Trustee or the Issuer shall have proceeded to enforce its rights under
this Agreement and such proceedings shall have been discontinued or abandoned for any
reason or shall have been determined adversely to the Trustee or the Issuer, then, and in every
such case, the Borrower, the Trustee and the Issuer shall be restored respectively to their several
positions and rights hereunder, and all rights, remedies and powers of the Borrower, the
Trustee and the Issuer shall continue as though no such action had been taken.
(c) The Trustee, upon the occurrence of an Event of Default described in Section
7.l(f), shall be entitled and empowered, by intervention in such proceedings or otherwise, to file and prove a claim or claims for the whole amount owing and unpaid pursuant to this
Agreement and, in case of any judicial proceedings, to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee
allowed in such judicial proceedings relative to the Borrower, its creditors or its property, and to collect and receive any moneys or other property payable or deliverable on any such claims,
and to distribute such amounts as provided in the Indenture after the deduction of its charges
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and expenses to the extent permitted by the Indenture. Any receiver, assignee or trustee in bankruptcy or reorganization is hereby authorized to make such payments to the Trustee, and to pay to the Trustee any reasonable amount due it for compensation and expenses, including expenses and fees of counsel incurred by it up to the date of such distribution to the extent
permitted by the Indenture.
(d) Notwithstanding any other provisions hereof, the Limited Partner shall have the right, but not the obligation, to cure any Event of Default hereunder during the time periods set forth herein.
Section 7.3. Ameement to Pav Attorneys’ Fees and Expenses. In the event the Borrower should default under any of the provisions of this Agreement and the Issuer or the Trustee
should employ attorneys or incur other expenses for the collection of the payments due under
this Agreement or the enforcement of performance or observance of any obligation or
agreement on the part of the Borrower herein contained, the Borrower agrees to pay to the
Issuer or the Trustee the reasonable fees of such attorneys and such other expenses so incurred by the Issuer or the Trustee. When the Trustee incurs expenses or renders services in
connection with an Event of Default in connection with bankruptcy or reorganization, the expenses (including reasonable fees and expenses of its counsel) and the compensation for the services in connection therewith are intended to constitute expense of administration under any applicable bankruptcy law.
Section 7.4. No Remedv Exclusive. No remedy herein conferred upon or reserved to the Issuer or the Trustee is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement or now or hereafter existing at law or in equity or by statute. No
delay or omission to exercise any right or power accruing upon any default shall impair any
such right or power or shall be construed to be a waiver thereof, but any such right and power
may be exercised from time to time and as often as may be deemed expedient. In order to
entitle the Issuer or the Trustee to exercise any remedy reserved to it in this Article, it shall not
be necessary to give any notice, other than such notice as may be herein expressly required or
required by law to be given. Such rights and remedies as are given the Issuer hereunder shall
also extend to the Trustee, and the Trustee and the holders of the Bonds shall be deemed third
party beneficiaries of all covenants and agreements herein contained.
Section 7.5. No Additional Waiver Imulied bv One Waiver. In the event any agreement
or covenant contained in this Agreement should be breached by the Borrower and thereafter waived by the Issuer or the Trustee, with the consent of the Bank, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other breach hereunder, including any other breach of the same agreement or covenant.
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ARTICLE VI1
PREPAYMENT
Section 8.1. Preuavment of Loan. The Loan shall not be prepaid except as provided in
this Section. The Borrower shall be permitted or required to prepay, or shall be deemed to have prepaid, the Loan, in whole or in part, and the principal amount thereof shall be reduced
accordingly, in an amount equal to the principal amount of Bonds redeemed on the date of such
redemption, and only from Available Moneys as follows:
(a) The Borrower shall (i) be required to prepay the Loan from the amount of any excess proceeds in accordance with Section 4.01(1) of the Indenture or (ii) subject to the terms of
the Intercreditor Agreement, be required to prepay the Loan from any Net Proceeds of any
insurance or condemnation award that is not otherwise used to repair or replace the Project
pursuant to Section 6.2 hereof in accordance with Section 4.01(3) of the Indenture.
(b) The Borrower shall be required to prepay the full remaining balance of the Loan,
upon the occurrence of (i) an Acceleration Default, (ii) an Event of Default described in Section
7.l(e) hereof, (iii) the acceleration of the Loan pursuant to Section 7.2 hereof, or (iv) upon the
Bank's request for, or consent to, the acceleration of the Loan following any other Event of Default hereunder pursuant to said Section 7.2.
(c) The Borrower shall be required to prepay the full remaining balance of the Loan on any date on which the Bonds are subject to mandatory redemption in connection with
Section 4.01(2) of the Indenture.
(d) The Borrower shall be permitted to prepay the Loan with Available Moneys as
provided in Section 4.01(5) and 4.01(6) of the Indenture, provided that if the source of Available Moneys is to be a draw on the Letter of Credit, such prepayment shall be subject to the consent
of the Bank. Such consent shall be deemed to have been made with respect to the redemptions
contemplated by and scheduled pursuant to Section 10.25 of the Reimbursement Agreement
and shall continue unless and until the Bank provides written notice terminating such optional
prepayments.
Section 8.2. Redemption of Bonds Uuon Preuavment. Upon any prepayment of the
Loan as provided in Section 8.1, the Trustee is required by the Indenture to call all or part of the
Bonds for redemption and to draw upon the Letter of Credit in the respective amounts set forth
in the applicable paragraph of Section 4.01 of the Indenture.
Section 8.3. Amount of Preuavment. In the event of any prepayment pursuant to Section 8.1, the amount of the Loan deemed to be prepaid shall be equal to the principal amount of Bonds redeemed as described in Section 8.2. In the case of prepayment of the Loan in full, the Borrower shall pay to the Trustee an amount sufficient, together with other funds held by
the Trustee and available for such purpose, to pay the redemption price of all of the Bonds and
all reasonable and necessary fees and expenses of the Issuer, the Trustee and any Paying Agent
accrued and to accrue through final payment of the Bonds and all other liabilities of the
Borrower accrued and to accrue under this Agreement, and shall pay to the Issuer any amount
required by Section 4.2(c). In the case of partial prepayment of the Loan, the Borrower shall pay
or cause to be paid to the Trustee an amount sufficient, together with other funds held by the Trustee and available for such purpose, to pay the redemption price of the Bonds to be redeemed and the expenses of redemption of the Bonds to be redeemed upon such prepayment.
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The Borrower agrees that it will not voluntarily prepay the Loan or any part thereof, except in amounts sufficient to redeem Bonds in Authorized Denominations, and to pay any applicable redemption premium and accrued interest to the redemption date.
26
37
ARTICLE IX
LIMITATION ON LIABILITY OF ISSUER; EXPENSES; INDEMNIFICATION
Section 9.1. Limitation on Liabilitv of Issuer. The Issuer shall not be obligated to pay the
principal of, or premium, if any, or interest on the Bonds, except from Revenues, but excluding
any amounts on deposit in the Rebate Fund. The Borrower hereby acknowledges that the
Issuer's sole source of moneys to repay the Bonds and to pay expenses related thereto will be
provided by the payments made by the Borrower pursuant to this Agreement, together with
other Revenues, including drawings under the Letter of Credit or investment income on certain funds and accounts (except the Rebate Fund) held by the Trustee under the Indenture.
Any obligation or liability of the Issuer created by or arising out of this Agreement
(including, without limitation, any liability created by or arising out of the representations,
warranties or covenants set forth herein or otherwise) shall not impose a debt or pecuniary
liability upon the Issuer or a charge upon its general credit, but shall be payable solely out of the
Revenues. Neither the issuance of the Bonds nor the delivery of this Agreement shall, directly
or indirectly, or contingently, obligate the Issuer to make any appropriation for their payment.
The Bonds do not constitute a debt or liability of the Issuer or the State or any political
subdivision thereof for which the faith and credit of the Issuer or the State or any political
subdivision thereof is pledged. No breach of any pledge, obligation or agreement of the Issuer
hereunder may impose any pecuniary liability upon the Issuer, the State or any of its
subdivisions, or any charge upon their general credit or against the taxing power of the Issuer
or the State.
Section 9.2. ExDenses. The Borrower covenants and agrees to pay and to indemnify the Issuer and the Trustee against all costs and charges, including reasonable fees and disbursements of attorneys, accountants, consultants and other experts, incurred in good faith
in connection with this Agreement, the Bonds or the Indenture.
Section 9.3. Indemnification. To the fullest extent permitted by law, the Borrower agrees to indemnify, hold harmless and defend the Issuer, the Trustee and the Tender Agent, and each of their respective officers, members, directors, officials, employees, attorneys and agents, (collectively, the "Indemnified Parties"), against any and all losses, damages, claims, actions, liabilities, costs and expenses of any conceivable nature, kind or character (including, without limitation, reasonable attorneys' fees, litigation and court costs, amounts paid in settlement and amounts paid to discharge judgments) to which the Indemnified Parties, or any
of them, may become subject under federal or state securities laws or any other statutory law or
at common law or otherwise, arising out of or based upon or in any way relating to:
(9 the Issuer Documents or the execution or amendment thereof or in
connection with transactions contemplated thereby, including the sale, resale or remarketing of the Bonds;
(ii) any act or omission of the Borrower or any of its agents, contractors, servants, employees or licensees in connection with the Loan or the Project, the operation of the Project, or the condition, environmental or otherwise, occupancy, use, possession, conduct or management of work done in or about, or from the planning, design, acquisition, construction or development of the Project or any part thereof;
(iii) any lien or charge upon payments by the Borrower to the Issuer and the
Trustee hereunder, or any taxes (including, without limitation, all ad valorem taxes and
27
sales taxes), assessments, impositions and other charges imposed on the Issuer or the Trustee in respect of any portion of the Project;
(iv) any violation of any environmental law, rule or regulation with respect
to, or the release of any toxic substance from, the Project or any part thereof;
(v) the defeasance and/or redemption, in whole or in part, of the Bonds;
(vi) any untrue statement or misleading statement or alleged untrue statement or alleged misleading statement of a material fact by the Borrower contained in any offering statement or document for the Bonds or any of the documents relating to the Bonds to which the Borrower is a party, or any omission or alleged omission from
any offering statement or document for the Bonds of any material fact necessary to be
stated therein in order to make the statements made therein by the Borrower, in the light
of the circumstances under which they were made, not misleading;
(vii) the Trustee's acceptance or administration of the trust of the Indenture, or
the exercise or performance of any of its powers or duties thereunder or under any of the documents relating to the Bonds to which it is a party (including the costs and
expenses of enforcing this right of indemnification);
except (a) in the case of the foregoing indemnification of the Trustee or the Tender Agent or any of their respective officers, members, directors, officials, employees, attorneys and agents, to the extent such damages are caused by the negligence or willful misconduct of such Indemnified Party; or (b) in the case of the foregoing indemnification of the Issuer, or any of its officers, directors, officials, employees, attorneys and agents, to the extent such damages are
caused by the willful misconduct of such Indemnified Party. In the event that any action or proceeding is brought against any Indemnified Party with respect to which indemnity may be sought hereunder, the Borrower, upon written notice from the Indemnified Party, shall assume
the investigation and defense thereof, including the employment of counsel selected by the
Indemnified Party, and shall assume the payment of all expenses related thereto, with full
power to litigate, compromise or settle the same in its sole discretion; provided that the
Indemnified Party shall have the right to review and approve or disapprove any such
compromise or settlement. Each Indemnified Party shall have the right to employ separate
counsel in any such action or proceeding and participate in the investigation and defense
thereof, and the Borrower shall pay the reasonable fees and expenses of such separate counsel;
provided, however, that such Indemnified Party may only employ separate counsel at the
expense of the Borrower if in its reasonable judgment a conflict of interest exists by reason of
common representation or if all parties commonly represented do not agree as to the action (or inaction) of counsel.
Notwithstanding any transfer of the Project to another Borrower in accordance with the provisions of this Agreement, the Borrower shall remain obligated to indemnify each Indemnified Party pursuant to this Section if such subsequent Borrower fails to indemnify any
party entitled to be indemnified hereunder, unless such Indemnified Party has consented to
such transfer and to the assignment of the rights and obligations of the Borrower hereunder.
The rights of any persons to indemnity hereunder and their respective rights to payment
of fees and reimbursement of expenses pursuant to Sections 4.2, 7.3 and 9.2 hereof shall survive
the final payment or defeasance of the Bonds and in the case of the Trustee any resignation or
removal. The provisions of this Section shall survive the termination of this Agreement.
28
ARTICLE X
MISCELLANEOUS
Section 10.1. Notices. All notices, certificates or other communications shall be deemed sufficiently given (a) on the third day following the day on which the same have been mailed by first class mail, postage prepaid, or (b) upon having been transmitted by telecopy, on the day of receipt of such telecopy as evidenced by the time shown on such transmission confirmation, in each case properly addressed to the Issuer, the Borrower, the Limited Partner, the Trustee or the
Bank at the respective addresses or telecopy numbers provided in Section 11.08 of the
Indenture. Any telecopy or other electronic transmission confirmation 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. Any notice delivered to the Borrower hereunder or under the Indenture shall also be delivered to the Limited Partner.
A duplicate copy of each notice, certificate or other communication given hereunder by
either the Issuer or the Borrower shall also be given to the Trustee and the Bank. A duplicate
copy of each notice, certificate or other communication given hereunder either by the Bank or
the Borrower shall also be given to the Trustee and the Issuer. Failure to provide any such
duplicate notice pursuant to either of the foregoing sentences, 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 thereto. The Issuer, the
Borrower, the Trustee and the Bank may, by notice given hereunder, designate any different
addresses to which subsequent notices, certificates or other communications shall be sent.
Section 10.2. Severability. If any provision of this Agreement shall be held or deemed to be, or shall in fact be, illegal, inoperative or unenforceable, the same shall not affect any other provision or provisions herein contained or render the same invalid, inoperative, or unenforceable to any extent whatever.
Section 10.3. Execution of Counteruarts. This 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; provided, however, that for purposes of perfecting a security interest in this
Agreement by the Trustee under Article 9 of the California Uniform Commercial Code, only the
counterpart delivered, pledged, and assigned to the Trustee shall be deemed the original.
Section 10.4. Amendments, Changes - and Modifications; Waivers and Consents. Except
as otherwise provided in this Agreement or Section 9.05 of the Indenture, subsequent to the initial issuance of Bonds and prior to their payment in full, or provision for such payment
having been made as provided in the Indenture, this Agreement may be effectively amended,
changed, modified, altered or terminated only by written instrument executed by the parties
hereto and only with the prior written consent of the Trustee and the Bank.
Any waiver of, or consent to, any condition under this Agreement must be expressly
made in writing.
Section 10.5. Governine; Law. This Agreement shall be governed exclusively by and
construed in accordance with the applicable laws of the State.
Section 10.6. Authorized Representatives. Whenever under the provisions of this Agreement the approval of the Borrower or the Issuer or the Bank is required for any action, and whenever the Borrower or the Issuer or the Bank is required to deliver any notice or other
29
writing, such approval or such notice or other writing shall be given, respectively, on behalf of the Borrower by the Authorized Borrower Representative and on behalf of the Issuer by the
Authorized Issuer Representative and on behalf of the Bank by the Authorized Bank
Representative, and the Issuer, the Trustee, the Bank and the Borrower shall be authorized to
act on any such approval or notice or other writing and none of the parties hereto nor the Bank
shall have any complaint against the other or against the Trustee as a result of any such action
taken.
Section 10.7. Term of the Am-eement. This Agreement shall be in full force and effect from the date of its execution and shall continue in effect so long as any of the Bonds are
outstanding or the Trustee holds any moneys under the Indenture, whichever is later. The provisions of Section 9.3 and all representations, certifications and covenants by the Borrower as
to all matters affecting the tax status of the Bonds shall survive the termination of this Agreement.
Section 10.8. Binding Effect; Third Partv Beneficiarv. This Agreement shall inure to the benefit of and shall be binding upon the Issuer, the Trustee, the Borrower and their respective
successors and assigns; subject, however, to the limitations contained in Section 5.2 hereof. The
Bank is intended to be a third party beneficiary of this Agreement to the extent the provisions
hereof are expressly for the benefit of the Bank.
Section 10.9. CaDacitv of Trustee. The Trustee is entering into this Loan Agreement solely in its capacity as Trustee under the Indenture and the duties, powers and liabilities of the Trustee in acting hereunder shall be subject to the provisions of the Indenture, including, without limitation, the provisions of Article VIII thereof. The Trustee shall be responsible only for the duties of the Trustee expressly set forth herein.
Section 10.10. References to Bank; Other Documents. All provisions hereof regarding consents, approvals, directions, waivers, appointments, requests or other actions by the 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 Bank were not mentioned
therein (a) during any period during which there is a payment default under the Letter of
Credit, or (b) after the Letter of Credit shall at any time for any reason cease to be valid and
binding on the Bank, or shall be declared to be null and void by final judgment of a court of
competent jurisdiction, or after the Letter of Credit has been rescinded, repudiated or
terminated; provided, however, that the payment of amounts due (including without limitation
all indemnity payments) to the Bank pursuant to the terms hereof shall continue in full force and effect. The foregoing shall not affect any other rights of the Bank.
The 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 Reimbursement Agreement or any other document to which the 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.
30
IN WITNESS WHEREOF, the Issuer has caused this Agreement to be executed in its
name by a duly authorized officer, the Trustee has caused this Agreement to be executed in its
name by its duly authorized officer, and the Borrower has caused this Agreement to be executed in its name by its authorized representative, all as of the date first above written
CITY OF CARLSBAD
WELLS FARGO BANK, NATIONAL
ASSOCATION, as Trustee
By: Authorized Signatory
DOVE FAMILY HOUSING ASSOCIATES, a
California limited partnership
By: Community Housing Works, a General
Partner
By:
By: Mercy Housing West, a General
Partner
By:
[Execution Page of Loan Agreement dated as of June 1,20031
43
EXHIBIT A
DESCRIPTION OF THE PROTECT
THE PROJECT REFERRED TO HEREIN IS SITUATED ON THE REAL PROPERTY
LOCATED IN THE CITY OF CARLSBAD, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, AS DESCRIBED IN EXHIBIT A TO THE REGULATORY AGREEMENT AND
ALL STRUCTURES AND IMPROVEMENTS THEREON.
A-l
EXHIBIT B
[FORM OF
REUUISITION FOR FUNDS1
To: Wells Fargo Bank, National Association, as Trustee
From:
Re: THE GREENS APARTMENTS
Requisition No.
The undersigned (the "Borrower") hereby requests payment, from the Project Fund for
the Project identified above, the total amount shown below to the order of the payee named
below, as payment or reimbursement for costs incurred or expenditures made in connection
with said Project. The payee(s), the purpose and the amount of the disbursement requested are
as follows:
Payee Purpose Amount
Total $
The undersigned hereby certifies as follows:
1. Upon the disbursement of all amounts to be disbursed from the Project Fund, at
least 95% of the sum of all such payments requisitioned by or for the account of the Borrower
from the Project Fund shall be allocated to costs, that: (i) were paid or incurred by or on account
of the Borrower or any Related Person on or after the 60th day prior to the Inducement Date; (ii)
are chargeable to the capital account for the residential units of the Project or would be so
chargeable either with a proper election by the Borrower or but for a proper election by the
Borrower to deduct such costs, within the meaning of Treasury Regulation 1.103-S(a)(l); (iii) if any portion of the Project is being rehabilitated by a Related Person of the Borrower (whether as
a general contractor or a subcontractor), include only the actual out-of-pocket costs incurred by
such Related Person in rehabilitating the Project (or any portion thereof) and not, for example, intercompany profits resulting from members of an affiliated group (within the meaning of Section 1504 of the Code) participating in the acquisition, construction and development of the Project or payments received by such Related Person due to early completion of the Project (or any portion thereof); (iv) do not constitute Costs of Issuance or leasing commissions, costs of
B-1
advertising for the Project or other costs related to the rental of units in the Project or
management fees for the management and operation of the Project after the Funding Date; and
(v) are used to finance residential rental property described in Section 1.103-8(b) of the Treasury
Regulations.
The obligation mentioned herein has been properly incurred and is a proper
charge against the Project Fund, and was necessary in connection with the acquisition, construction and development of the Project. None of the items for which payment is requested has been reimbursed previously from the Project Fund, and none of the payments herein
requested will result in a breach of the representations and agreements in Section 2.2 of the
Loan Agreement relating to the Project.
2.
Dated:
DOVE FAMILY HOUSING ASSOCIATES, a California limited partnership
By: Community Housing Works, a General Partner
By: Mercy Housing Work, a General Partner
By:
Approved as to amount of request only:
CITIBANK (WEST), FSB
Authorized Bank Representative
E2
13061-11 JH:TADams
RECORDING REQUESTED BY AND WHEN RECORDED RETURN TO:
JONES HALL, A PROFESSIONAL LAW CORPORATION 650 California Street, 18th Floor San Francisco, California 94108 Attention: Thomas A. Downey
Exhibit 3
. REGULATORY AGREEMENT
AND DECLARATION OF RESTRICTIVE COVENANTS
By and Among
CITY OF CARLSBAD,
as Issuer
and
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Trustee
and
DOVE FAMILY HOUSING ASSOCIATES,
as Borrower
Dated as of June 1,2003
Relating to
$20,000,000
City of Carlsbad
Variable Rate Demand
Multifamily Housing Revenue Bonds
(The Greens Apartments)
2003 Series A
47
TABLE OF CONTENTS
Section 1 .
Section 2 .
Section 3 .
Section 4 .
Section 4A .
Section 5 .
Section 6 .
Section 7 .
Section 8 .
Section 9 .
Section 10 .
Section 11 .
Section 12 .
Section 13 .
Section 14 .
Section 15 .
Section 16 .
Section 17 .
Section 18 .
Section 19 .
Section 20 .
Section 21 .
Section 22 .
Section 23 .
Section 24 .
Section 25 .
Section 26 .
Section 25 .
Exhibit A
Exhibit B
Exhibit C
Exhibit D
Exhibit E
Exhibit F
Definitions and Interpretation .............................................................................. 2
Acquisition and Construction of the Project ............................................................ 6
Residential Rental Property ................................................................................. 7
Very Low Income Tenants ...................................................................................... 8
Additional Requirement of the Issuer .................................................................. 11
Modification of Special Tax Covenants ............................................................... 13
Tax Status of the Bonds ...................................................................................... 13
Indemnification ................................................................................................. 14
Considera tion .................................................................................................... 16
Reliance ............................................................................................................ 16
Sale or Transfer of the Project ............................................................................. 16
Term .................................................................................................................. 17
Covenants to Run With the Land ........................................................................ 18
Burden and Benefit ............................................................................................. 18
Uniformity; Common Plan .................................................................................. 18
Enforcement ....................................................................................................... 18
Recording and Filing .......................................................................................... 19
Payment of Fees ................................................................................................. 19
Amendments ...................................................................................................... 20
Notice ............................................................................................................... 20
Governing Law ................................................................................................... 19
Severability ...................................................................................................... 21
Multiple Counterparts ........................................................................................ 21
Compliance by Borrower ..................................................................................... 21
Estoppel Certificates ......................................................................................... 21
Third-party Beneficiary .................................................................................... 21
Trustee Acting Solely in Such Capacity ............................................................... 21
Limited Liability .............................................................................................. 21
Legal Description of Land
Form of Income Computation and Certification
Form of Completion Certificate
Form of Certificate of Continuing Program Compliance
Form of Certificate of Compliance (CDLAC Resolution)
CDLAC Resolution
REGULATORY AGREEMENT AND DECLARATION OF
RESTRICTIVE COVENANTS
THIS REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE
COVENANTS (the "Regulatory Agreement"), made and entered into as of June 1, 2003, by and
among City of Carlsbad, a municipal corporation organized and existing under the laws of the
State of California (together with any successor to its rights, duties and obligations, the
"Issuer"), Wells Fargo Bank, National Association, duly authorized to accept and execute trusts
of the type contemplated by the Indenture (as hereinafter defined), with a corporate trust office
in Los Angeles, California, as Trustee (the "Trustee"), and Dove Family Housing Associates, a
California limited partnership (the "Borrower"), owner of the land described in Exhibit A
attached hereto.
WITNESSETH:
WHEREAS, the Legislature of the State of California has authorized cities to issue
bonds in accordance with Chapter 7 of Part 5 of Division 31 of the Health and Safety Code
(the "Act") to finance the acquisition, , construction and development of multifamily rental
housing for families and individuals of low or moderate income; and
WHEREAS, the Issuer is a public body corporate and politic (within the meaning of that
term in the Regulations of the Department of Treasury and the rulings of the Internal Revenue
Service prescribed and promulgated pursuant to Section 103 of the Internal Revenue Code of
1986, as amended (the "Code"); and
WHEREAS, on May 20, 2003 the Issuer adopted a resolution (the "Resolution")
authorizing the issuance of revenue bonds in connection with the financing of the acquisition
and construction of a multifamily residential rental housing project located in the City of Carlsbad to be commonly known as The Greens Apartments (the "Project") which housing project shall be subject to the terms and provisions hereof; and
WHEREAS, in furtherance of the purposes of the Act and the Resolution and as a part of the Issuer's plan of financing residential housing, the Issuer has issued $20,000,000 aggregate principal amount of its revenue bonds designated "City of Carlsbad Variable Rate Demand Multifamily Housing Revenue Bonds (The Greens Apartments) 2003 Series A' (the "Bonds"), the proceeds of which will be used to fund a mortgage loan to the Borrower (the "Mortgage Loan") ; and
WHEREAS, the Issuer, the Trustee and the Borrower have entered into a Loan Agreement, dated the date hereof (the "Agreement"), providing for the terms and conditions under which the Mortgage Loan will be made to the Borrower to finance the acquisition, construction and development of the Project; and
WHEREAS, the Issuer hereby certifies that all things necessary to make the Bonds, when issued as provided in the Indenture, the valid, binding, and limited obligations of the Issuer according to the import thereof, and to constitute the Indenture a valid assignment of the amountspledged to the payment of the principal of, and premium, if any, and interest on the Bonds have been done and performed, and the creation, execution, and delivery of the Indenture and the execution and issuance of the Bonds, subject to the terms thereof, in all respects have been duly authorized; and
WHEREAS, the Code and the regulations and rulings promulgated with respect thereto
and the Act prescribe that the use and operation of the Project be restricted in certain respects
and in order to ensure that the Project will be constructed, used and operated in accordance with the Code and the Act, the Issuer, the Trustee and the Borrower have determined to enter
into this Regulatory Agreement in order to set forth certain terms and conditions relating to the
acquisition and construction of the Project (as hereinafter defined);
NOW, THEREFORE, in consideration of the mutual covenants and undertakings set
forth herein, and other good and valuable consideration, the receipt and sufficiency of which
hereby are acknowledged, the Issuer, the Trustee and the Borrower hereby agree as follows:
Section 1. Definitions and Intemretation. Terms not otherwise defined herein shall have
the meaning assigned to them in the Indenture. The following terms shall have the respective
meanings assigned to them in this Section 1 unless the context in which they are used clearly requires otherwise:
"Act" - Chapter 7 of Part 5 of Division 31 of the Health and Safety Code of the State of California as now in effect and as it may from time to time hereafter be amended or
supplemented.
"Adjusted Income" - The adjusted income of all persons who intend to reside in one
residential unit, calculated in the manner determined by the Secretary of the Treasury pursuant
to Section 142(d)(2)(B) of the Code.
"Affiliated Party" - (1) a Person whose relationship with the Borrower would result in a
disallowance of losses under Section 267 or 707(b) of the Code or (2) a Person who together
with the Borrower are members of the same controlled group of corporations (as defined in
Section 1563(a) of the Code, except that "more than 50 percent" shall be substituted for "at
least 80 percent" each place it appears therein), (3) a partnership and each of its partners (and
their spouses and minor children) whose relationship with the Borrower would result in a disallowance of losses under Section 267 or 707(b) of the Code and (4) an S corporation and each of its shareholders (and their spouses and minor children) whose relationship with the Borrower would result in a disallowance of losses under Section 267 or 707(b) of the Code.
"Agreement" or "Loan Agreement" - The Loan Agreement entered into by the Borrower, the Trustee and the Issuer pursuant to which the Mortgage Loan is made.
"Area" - The primary metropolitan statistical area in which the Project is located as
"Bond Counsel'' - An attorney or a firm of attorneys of nationally recognized standing m matters pertaining to the tax status of interest on bonds issued by states and their political subdivisions, who is selected by the Issuer, and duly admitted to the practice of law before the highest court of any state of the United States of America or the District of Columbia.
"Bond Issuance Date" - The date of the delivery of the Bonds, being June -I 2003.
determined by the United States Department of Housing and Urban Development.
"Bonds" - City of Carlsbad Variable Rate Demand Multifamily Housing Revenue Bonds (The Greens Apartments) 2003 Series A issued in the original aggregate principal amount of
$20,000,000.
"Borrower" - Dove Family Housing Associates, a California limited partnership, and its
successors and assigns.
"CDLAC" - The California Debt Limit Allocation Committee.
2
"Certificate of Continuing Program Compliance" - The certificate with respect to the Project to be filed by the Borrower with the Issuer and the Program Administrator which shall be substantially in the form attached to this Regulatory Agreement as Exhibit D.
"Code" - 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 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 successor provision.
"Completion Certificate" - The certificate of completion of the acquisition and
construction of the Project required to be delivered to the Issuer and the Trustee by the Borrower
pursuant to Section 2 of this Regulatory Agreement, which shall be substantially in the form
attached to this Regulatory Agreement as Exhibit C.
"Completion Date" - The date of the completion of the acquisition and construction of
the Project, as that date shall be certified as provided in Section 2 of this Regulatory Agreement.
"Costs of Issuance" - (a) the fees, costs and expenses of (1) the Issuer, the Issuer's
counsel and the Issuer's financial advisor, if any, (2) the Underwriter (including discounts to the
Underwriter or other purchasers of the Bonds (other than original issue discount) incurred in the
issuance and sale of the Bonds) and the Underwriter's counsel, (3) Bond Counsel, (4) the Trustee and the Trustee's counsel, (5) the Lender and the Lender's counsel, (6) the Borrower's counsel and the Borrower's financial advisor, if any, and (7) the Rating Agency, (b) costs of printing the offering documents relating to the sale of the Bonds and (c) all other fees, costs and expenses directly associated with the authorization, issuance, sale and delivery of the Bonds, including, without limitation, printing costs, costs of reproducing documents, filing and
recording fees, and any fees, costs and expenses required to be paid to the Lender in
connection with the Mortgage Loan.
"County" - The County of San Diego, California.
"Credit Agreement" - The Reimbursement Agreement, dated as of June 1, 2003, by and
"Credit Bank"- The term Credit Bank shall have the meaning assigned to such term m
among Citibank (West), FSB and the Borrower.
the Indenture.
"Facilities" - The buildings, structures and other improvements to be acquired and
rehabilitated on the Site, and all fixtures and other property owned by the Borrower and
located on, or used in connection with, such buildings, structures and other improvements
constituting the Project.
"Indenture" - The Indenture of Trust, dated as of the date hereof, between the Issuer and
the Trustee, pursuant to which the Bonds have been issued, as amended or supplemented from
time to time.
"Inducement Date" - July 9,2002, the date of adoption of the Inducement Resolution.
"Inducement Resolution" - The resolution adopted by the Issuer on the Inducement Date,
indicating its intention to issue the Bonds.
"Issuer" - The City of Carlsbad and its successors and assigns.
3
"Median Income for the Area" - The median income for the Area as most recently
"Mortgage Loan" - The mortgage loan to be made by the Issuer to the Borrower to
determined by the Secretary of Treasury pursuant to Section 142(d)(2)(B) of the Code.
provide financing for the acquisition and construction of the Project.
"Program Administrator" - A governmental agency, a financial institution, a certified
public accountant, an apartment management firm, a mortgage insurance company or other
business entity performing similar duties or otherwise experienced in the administration of
restrictions on bond financed multifamily housing projects which shall initially be the Issuer
and, at the Issuer's election, any other person or entity appointed by the Issuer who shall enter
into an administration agreement in a forrn acceptable to the Issuer and the Program
Administrator.
"Project" - The Facilities and the Site.
"Project Costs" - With respect to the Project, the costs chargeable to the Project m
accordance with generally accepted accounting principles, including, without limitation, the cost
of acquisition, construction, reconstruction, restoration, repair, alteration, improvement and
extension of any building, structure, facility or other improvement; stored materials for
construction 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 Project or in connection therewith; financing costs, including, but not limited to, the Costs of Issuance, engineerhg and inspection costs; fees paid to the developer of the Project; organization, administrative, insurance, legal, operating, letter of credit and other expenses of the Borrower actually incurred prior to and during acquisition or construction; and all such other expenses as may be necessary or incidental to the financing, acquisition, construction or completion of the Project or any part of it, including, but not limited to, the amount of interest expense incurred with respect to the Mortgage Loan incurred prior to the Completion Date; insurance premiums payable by the Borrower and taxes and other governmental charges levied on the Project.
"Qualified Project Costs" means costs paid with respect to the Project that meet each of the following requirements: (i) the costs are properly chargeable to capital account (or would be
so chargeable with a proper election by the Borrower or but for a proper election by the
Borrower to deduct such costs) in accordance with general Federal income tax principles and m
accordance with United States Treasury Regulations §1.103-8(a)( l), provided, however, that
only such portion of interest accrued during construction of the Project (in the case of construction, with respect to vacated units only) shall be eligible to be 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 date of completion of the Project
shall not be a Qualified Project Cost; and provided still further that if any portion of the Project
is being constructed or rehabilitated by an Affiliate (whether as a general contractor or a
subcontractor), Qualified Project Costs shall include only (A) the actual out-of-pocket costs
incurred by such Affiliate in constructing the Project (or any portion thereof), (B) any reasonable
fees for supervisory services actually rendered by the Affiliate, and (C) any overhead expenses
incurred by the Affiliate which 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 Affiliate due to early completion of the Project (or any
portion thereof); (ii) the costs are paid with respect to a qualified residential rental project or
projects within the meaning of Section 142(d) of the Code, (iii) the costs are paid after the earlier of 60 days prior to the date of a declaration of "official intent" to reimburse costs paid
4
with respect to the Project (within the meaning of 51.150-2 of the United States Treasury Regulations) or the date of issue of the Bonds, and (iv) if the Project Costs were previously paid and are to be reimbursed with proceeds of the Bonds such costs were (A) costs of issuance of the Bonds, (B) preliminary capital expenditures (within the meaning of United States Treasury Regulations §1.150-2(f)(2)) with respect to the Project (such as architectural, engineering and soil testing services) incurred before commencement of acquisition or construction of the Project that do not exceed twenty percent (20%) of the issue price of the Bonds (as defined in United States Treasury Regulations §1.148-1), or (C) were capital expenditures with respect to the Project that are reimbursed no later than eighteen (18) months after the later of the date the expenditure was paid or the date the Project is placed in service (but no later than three (3) years after the expenditure is paid).
"Qualified Project Period' - The period beginning on the Bond Issuance Date and ending on the later of (a) the date which is 55 years after the Bond Issuance Date, (b) the first day on whichno tax exempt bonds with respect to the Project are Outstanding, or (c) the date on which any assistance provided with respect to the Project under Section 8 of the United States Housing Act of 1937 terminates.
"Registered Owner" or "owner" - When used with respect to the Bonds, the owner of a Bond then outstanding under the Indenture as shown on the registration books maintained by the Trustee pursuant to the Indenture.
"Regulations" - The income tax regulations promulgated or proposed by the United
"Regulatory Agreement" - This Regulatory Agreement and Declaration of Restrictive
"Reimbursement Obligations" - The obligations of the Borrower as set forth and defined
States Department of the Treasury pursuant to the Code from time to time.
Covenants, together with any amendments hereto or supplements hereof.
in the Credit Agreement.
"Second Deed of Trust" - The Second Deed of Trust, Absolute Assignment of Rents,
Security Agreement and Fixture Filing, dated as of June 1, 2003, executed by the Borrower for
the benefit of the Credit Bank, which secures the Reimbursement Obligations.
"Site" - The parcel or parcels of real property described in Exhibit "A', which is attached hereto and by this reference incorporated herein, and all rights and appurtenances thereunto appertaining.
"State" - State of California.
"Tax Certificate" - means the Certificate As To Arbitrage, dated the Bond Issuance Date, executed and delivered by the Issuer and the Borrower, together with the Certificate Regarding Use of Proceeds, dated the Bond Issuance Date, executed and delivered by the Borrower.
"Trustee" - Wells Fargo Bank, National Association, or any successor trustee appointed in accordance with the terms of the Indenture.
"Very Low Income Tenants" - Individuals or families with an Adjusted Income which does not exceed sixty percent (60%) of the Median Income for the Area, adjusted for household size. In no event, however, will the occupants of a residential unit be considered to be Very Low Income Tenants if all the occupants are students, as defined in Section 151(c)(4) of the Code, as such may be amended, no one of which is entitled to file a joint federal income tax return. Currently, Section 151(c)(4) defines a student as an individual enrolled as a full-time
5
5-3
student during each of 5 calendar months during the calendar year in which occupancy of the unit begins at an educational organization which normally maintains a regular faculty and curridum and normally has a regularly enrolled body of students in attendance or is an
individual pursuing a full-time course of institutional on-farm training under the supervision of
an accredited agent of such an educational organization or of a state or political subdivision
thereof.
"Very Low Income Units" - The dwelling units in the Project designated for occupancy by
Very Low Income Tenants pursuant to Section 4(a) of this Regulatory Agreement.
Unless the context clearly requires otherwise, as used in this Regulatory Agreement, words of the masculine, feminine or neuter gender shall be construed to include each other gender when appropriate and words of the singular number shall be construed to include the plural number, and vice versa, when appropriate. This Regulatory Agreement and all the terms and provisions hereof shall be construed to effectuate the purposes set forth herein and to
sustain the validity hereof.
The defined terms used in the preamble and recitals of this Regulatory Agreement have
been included for convenience of reference only, and the meaning, construction and
interpretation of all defined terms shall be determined by reference to this Section 1
notwithstanding any contrary definition in the preamble or recitals hereof. The titles and
headings of the sections of this Regulatory Agreement have been inserted for convenience of
reference only, and are not to be considered a part hereof and shall not in any way modify or
restrict any of the terms or provisions hereof or be considered or given any effect in construing this Regulatory Agreement or any provisions hereof or in ascertaining intent, if any question of intent shall arise.
Section 2. Acauisition and Construction of the Project. The Borrower hereby represents, as of the date hereof, and covenants, warrants and agrees as follows:
(a) The Borrower has incurred, or will incur within six months after the Bond Issuance Date, a substantial binding obligation to commence the acquisition and construction of the Project, pursuant to which the Borrower is or will be obligated to expend at least the lesser of (i) 2-1/2 percent of the principal amount of the Bonds or
(ii) $100,000.
(b) The Borrower's reasonable expectations respecting the total cost of the acquisition and construction of the Project and the disbursement of Bond proceeds are accurately set forth in the Borrower's Certificate Regarding Use of Proceeds which has been delivered to the Issuer.
(c) The Borrower will proceed with due diligence to complete the acquisition and construction of the Project and expects to expend the full amount of the proceeds of the Mortgage Loan for Project Costs prior to June 1,2006.
(d) The statements made in the various certificates delivered by the Borrower to the Issuer or the Trustee are true and correct.
(e) On the Completion Date, the Borrower will submit to the Issuer and the Trustee, a duly executed and completed Completion Certificate.
Money on deposit in any fund or account in connection with the Bonds,
whether or not such money was derived from other sources, shall not be used by or
under the direction of the Borrower, in a manner which would cause the Bonds to be
(f)
6
"arbitrage bonds" within the meaning of Section 148 of the Code, and the Borrower specifically agrees that the investment of money in any such fund shall be restricted as
may be necessary to prevent the Bonds from being "arbitrage bonds" under the Code.
(g) The Borrower (and any person related to it within the meaning of Section
147(a)(2) of the Code) will not take or omit to take, as is applicable, any
action if such action or omission would in any way cause the proceeds
from the sale of the Bonds to be applied in a manner contrary to the requirements of the Indenture, the Agreement or this Regulatory
Agreement.
(h) On the date on which ten percent (10%) of the units in the Project are first
rented to tenants, the Borrower will submit to the Issuer, the Bondholder Representative,
the Construction Lender (if the Construction Letter of Credit is still in effect) and the Trustee, a duly executed and completed Certificate as to Commencement of Qualified Project Period, in the form of Exhibit E hereto.
(i) On or concurrently with the final draw by the Borrower of amounts in the Mortgage Loan Fund established under the Indenture (the "Loan Fund'), the expenditure of such draw when added to all previous disbursements from the Loan Fund established under the Indenture will result in not less than 95 percent of all disbursements from the Loan Fund representing Bond proceeds having been used to pay or reimburse the Borrower for Qualified Project Costs and less than 25 percent of all disbursements from the Loan Fund representing Bond proceeds having been used to pay for the acquisition of land or any interest therein.
Section 3. Residential Rental Property. The Borrower hereby acknowledges and agrees that the Project will be owned, managed and operated as a "qualified residential rental project" (within the meaning of Section 142(d) of the Code) until the expiration of the Qualified Project
Period. To that end, and for the term of this Regulatory Agreement, the Borrower hereby
represents, as of the date hereof, and covenants, warrants and agrees as follows:
(a) The Project is being acquired and constructed for the purpose of
providing multifamily residential rental property, and the Borrower shall own, manage
and operate the Project as a project to provide multifamily residential rental property
comprised of a building or structure or several interrelated buildings or structures,
together with any functionally related and subordinate facilities, and no other facilities,
in accordance with applicable provisions of Section 142(d) of the Code and Section 1.103-8(b) of the Regulations, and the Act, and in accordance with such requirements as
may be imposed thereby on the Project from time to time.
All of the dwelling units in the Project will be similarly constructed units,
and, to the extent required by the Code and the Regulations, each dwelling unit in the
Project will contain complete separate and distinct facilities for living, sleeping, eating,
cooking and sanitation for a single person or a family, including a sleeping area, bathing
and sanitation facilities and cooking facilities equipped with a cooking range,
refrigerator and sink.
(b)
(c) None of the dwelling units in the Project will at any time be utilized on a
transient basis, or will ever be used as a hotel, motel, dormitory, fraternity house,
sorority house, rooming house, nursing home, hospital, sanitarium, rest home, retirement house or trailer court or park.
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55
(d) No part of the Project will at any time be owned by a cooperative housing
corporation, nor shall the Borrower take any steps in connection with a conversion to
such ownership or uses. Other than obtaining a final subdivision map on the Project
and a Final Subdivision Public Report from the California Department of Real Estate,
the Borrower shall not take any steps in connection with a conversion of the Project to a
condominium ownership except with the prior written approving opinion of Bond
Counsel that the interest on the Bonds will not become taxable thereby under Section
103 of the Code.
(e) All of the dwelling units will be available for rental on a continuous basis to members of the general public and the Borrower will not give preference to any particular class or group in renting the dwelling units in the Project, except to the extent that dwelling units are required to be leased or rented to Very Low Income Tenants.
The Site consists of a parcel or parcels that are contiguous except for the interposition of a road, street or stream, and all of the Facilities will comprise a single geographically and functionally integrated project for residential rental property, as evidenced by the ownership, management, accounting and operation of the Project.
(f)
(g) No dwelling unit in the Project shall be occupied by the Borrower unless the Project contains five or more dwelling units, in which case one unit may be occupied by the Borrower or by persons related to or affiliated with the Borrower such as a resident manager or maintenance personnel.
(h) Should involuntary noncompliance with the provisions of Section 1.103-
8(b) of the Regulations be caused by fire, seizure, requisition, foreclosure, transfer of title by deed in lieu of foreclosure, change in a federal law or an action of a federal agency after the Bond Issuance Date which prevents the Issuer from enforcing the requirements
of the Regulations, or condemnation or similar event, the Borrower covenants that,
within a "reasonable period" determined in accordance with the Regulations, it will either cause the Bonds to be paid or discharged within the meaning of the Indenture or apply any proceeds received as a result of any of the preceding events to reconstruct the Project to meet the requirements of Section 142(d) of the Code and the Regulations.
(i) The Borrower shall not discriminate on the basis of race, creed, color, sex,
source of income (e.g. TANF, SSI), physical disability, age, national origin, marital status or any other basis as may be prohibited by Federal or State fair housing laws in the rental, lease, use or occupancy of the Project or in connection with the employment or
application for employment of persons for the operation and management of the Project.
Section 4. Verv Low Income Tenants. Pursuant to the requirements of the Issuer and Section 142(d) of the Code and applicable provisions of the Act, the Borrower hereby represents, as of the date hereof, and warrants, covenants and agrees as follows:
(a) During the Qualified Project Period:
(1) Not less than forty percent (40%) of the completed units in the Project
shall be designated as Very Low Income Units which are occupied, or held vacant for
occupancy and shall be continuously occupied by Very Low Income Tenants. All of the
Very Low Income Units shall be generally distributed in terms of location and number of
bedrooms throughout the Project. The Very Low Income Units shall be of comparable
quality and offer a range of sizes and nurnber of bedrooms comparable to those units which are available to other tenants.
8
(2) The monthly rent paid by the persons occupying the Very Low Income
Units (excluding any supplemental rental assistance from the State, the federal government, or any other public agency to those persons or on behalf of those units)
shall not exceed one-twelfth of the amount obtained by multiplying 30% times 60% of
the Median Income for the Area.
(3) Very Low Income Units shall remain available on a priority basis for
occupancy by Very Low Income Tenants. A unit occupied by a Very Low Income Tenant who at the commencement of the occupancy is a Very Low Income Tenant shall
be treated as occupied by a Very Low Income Tenant until a recertification of such tenant's income in accordance with Section 4(c) below demonstrates that such tenant no longer qualifies as a Very Low Income Tenant and thereafter any residential unit in the
Project is occupied by a new resident other than a Very Low Income Tenant. Moreover, a unit previously occupied by a Very Low Income Tenant and then vacated shall be considered occupied by a Very Low Income Tenant until reoccupied, other than for a temporary period, at which time the character of the unit shall be redetermined. In no event shall such temporary period exceed thirty-one (31) days.
Following the expiration or termination of the Qualified Project Period, except in the event of foreclosure and redemption of the Bonds, deed in lieu of the foreclosure, eminent domain, or action of a federal agency preventing enforcement, Very Low Income Units required to be reserved for occupancy pursuant to subparagraph (a) shall remain available to the Very Low Income Tenant occupying a Very Low Income Unit at the date of expiration or termination of the Qualified Project Period, at a rent not greater than the amount set forth by subparagraph (a)(2), until the earliest of any of the following occur:
The Very Low Income Tenant's income exceeds 140 percent of the
(4)
(i) maximum eligible income specified in the definition of Very Low Income Tenant.
(ii) The Very Low Income Tenant voluntarily moves or is evicted for
"good cause". "Good cause" for the purposes of this section, means the
nonpayment of rent or allegation of facts necessary to prove major, or repeated minor, violations of material provisions of the occupancy agreement which
detrimentally affect the health and safety of other persons or the structure, the
fiscal integrity of the Project or the purposes or special program of the Project.
(iii) The Borrower pays the relocation assistance and benefits to tenants as provided in subdivision (b) of Section 7264 of the Government Code
of the State of California.
(5) During the three years prior to expiration of the Qualified Project Period,
the Borrower shall continue to make available to Very Low Income Tenants, Very Low
Income Units that have been vacated to the same extent the Very Low Income Units are
made available to noneligble households.
(6) Subparagraph (3) hereof shall not be construed to require the Issuer to
monitor the Borrower's compliance with the provisions of subparagraph (3) hereof.
(b) Immediately prior to a Very Low Income Tenant's occupancy of a Very Low
Income Unit, the Borrower will obtain, or caused to be obtained, and maintain, or cause to be
maintained, on file an Income Computation and Certification form from each Very Low Income Tenant occupying a Very Low Income Unit, dated immediately prior to the initial occupancy of such Very Low Income Tenant in the Project. In addition, the Borrower will provide, or cause to
9
be provided, such further information as may be required in the future by the State of California, the Issuer and by the Act, Section 142(d) of the Code and the Regulations, as the same may be amended from time to time, or in such other form and manner as may be required by applicable rules, rulings, policies, procedures or other official statements now or hereafter promulgated, proposed or made by the Department of the Treasury or the Internal Revenue Service with respect to obligations issued under Section 142(d) of the Code. The Borrower shall vedy, or cause to be verified, that the income provided by an applicant is accurate by taking the following steps as a part of the verification process: (1) obtain a federal income tax return for the most recent tax year, (2) obtain a written verification of income and employment from applicant's current employer, (3) if an applicant is unemployed or did not file a tax return for the previous calendar year, obtain other verification of such applicant's income satisfactory to the Program Administrator or (4) such other information as may be requested by the Program
Administrator.
Copies of the most recent Income Computation and Certifications for Very Low Income
Tenants commencing or continuing occupancy of a Very Low Income Unit shall be attached
prior to the Completion Date to the quarterly report to be filed with the Program Administrator
within 10 days of the last day of each quarter during the Qualified Project Period, and
subsequent to the Completion Date, to the annual report to be filed with the Program Administrator within 10 days of the last day of the month of June during the Qualified Project Period.
(c) hediatelyprior to the first anniversary date of the occupancy of a Very Low Income Unit by one or more Very Low Income Tenants, and on each anniversary date thereafter, the Borrower shall recertdy, or cause to be recertified, the income of the occupants of such Very Low Income Unit by obtaining a completed Income Computation and Certification based upon the current income of each occupant of the unit. In the event the recertification demonstrates that such household's income exceeds 140% of the income at which such household would quahfy as Very Low Income Tenants, such household will no longer quahfy as a Very Low Income Tenant and the Borrower will rent the next available unit of comparable or smaller size to one or more Very Low Income Tenants and will not rent any unit to tenants who are not
Very Low Income Tenants until at least forty percent (40%) of the units are again occupied by
Very Low Income Tenants. No tenant in the Project shall be denied continued occupancy in the
Project because, after occupancy, such tenant's household income increases such that the income
for such household will no longer qualify such household as Very Low Income Tenants. An
"available" unit is one that is unoccupied by a tenant.
Upon the commencement of the Qualified Project Period, within ten days of the
last day of each quarter during the term of this Regulatory Agreement, the Borrower shall advise
the Issuer and the Program Administrator of the status of the occupancy of the Project by delivering to such parties a Certificate of Continuing Program Compliance.
(d)
(e) The Borrower will maintain or cause to be maintained, complete and accurate
records pertaining to the Very Low Income Units, and will pennit any duly authorized
representative of the Issuer, the Trustee, CDLAC, the Department of the Treasury or the
Internal Revenue Service to inspect the books and records of the Borrower pertaining to the
Project, including those records pertaining to the occupancy of the Very Low Income Units.
(f) The Borrower will prepare and submit to the Issuer and the Program
Administrator, if any, within thirty days after each anniversary of the Completion Date, a
Certificate of Continuing Program Compliance executed by the Borrower stating (i) the
percentage of the dwelling units of the Project which were occupied or deemed occupied,
pursuant to subsection (a) hereof, by Very Low Income Tenants during such period, and (ii) that
either (A) no unremedied default has occurred under this Regulatory Agreement or (B) a default
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5-8
has occurred, in which event the certificate shall describe the nature of the default and set forth the measures being taken by the Borrower to remedy such default. The Borrower shall submit to the Secretary of the Treasury annually on June 1st of each year, or such other date as is required by the Secretary, a certification that the Project continues to meet the requirements of Section 142(d) of the Code, and shall provide a copy of such certification to the Issuer and the Progrm Administrator, if any.
(g) The Borrower shall accept as tenants on the same basis as all other prospective
tenants, persons who are recipients of federal certificates or vouchers for rent subsidies
pursuant to the existing program under Section 8 of the United States Housing Act of 1937, or
its successor. The Borrower shall not apply selection criteria to Section 8 certificate or voucher
holders that are more burdensome than criteria applied to all other prospective tenants. The
Borrower shall not collect any additional fees or payments from a Very Low Income Tenant
except security deposits or other deposits required of all tenants. The Borrower shall not collect
security deposits or other deposits from Section 8 certificate or voucher holders in excess of that
allowed under the Section 8 Program. The Borrower shall not discriminate against Very Low
Income Tenant applicants on the basis of source of income (i.e., TANF or SSI), and the Borrower
shall consider a prospective tenant's previous rent history of at least one year as evidence of the
ability to pay the applicable rent (ability to pay shall be demonstrated if a Very Low Income Tenant can show that the same percentage or more of the tenant's income has been paid for rent
in the past as will be required to be paid for the rent applicable to the Very Low Income Unit to
be occupied provided that such Very Low Income Tenant's expenses have not materially
increased).
(h) Each lease pertaining to a Very Low Income Unit shall contain a provision to the
effect that the Borrower has relied on the income certification and supporting information
supplied by the Very Low Income Tenant in determining qualification for occupancy of the Very
Low Income Unit, and that any material misstatement in such certification (whether or not intentional) will be cause for immediate termination of such lease. Each lease will also contain a provision that failure to cooperate with the annual recertification process reasonably instituted by the Borrower pursuant to Section 4(c) above may at the option of the Borrower disquahfy the unit as a Very Low Income Unit or provide grounds for termination of the lease.
(i) The acquisition, construction and operation of the Project and the financing thereof is and shall be in compliance with the conditions set forth in Exhibit A to the CDLAC Resolution No. 03-37 adopted on March 26,2003 (the "CDLAC Resolution"), which conditions are incorporated herein by reference and are made a part hereof; provided, however, neither the Issuer nor the Program Administrator shall be required to monitor the Borrower's compliance with the provisions of this paragraph (i). The Borrower shall prepare and submit to CDLAC annually within 10 days of each June 1, commencing June 1,2004, a Certificate of Compliance in substantially the form attached hereto as Exhibit E, executed by an authorized representative of the Borrower.
Section 4A. Additional Requirements of the Issuer. In addition to the requirements set forth above and to the extent not prohibited thereby, the Borrower hereby agrees during the Qualified Project Period to comply with each of the requirements of the Issuer set forth in this Section 4A, as follows:
(a) The Borrower will pay the Issuer all of the amounts required by Section 4.2 of the Agreement, and will indenuufy the Issuer and the Trustee as provided in Section
9.1 of the Agreement.
The Borrower will make the units reserved pursuant to Section 4(a) available, on a priority basis, to the extent permitted by law, to households comprised (b)
11
of persons whom the Issuer has informed the Borrower have been displaced by the Issuer or its political subdivisions from other housing developments located in the City of Carlsbad. The Borrower shall not discriminate against tenant applicants on the basis of source of income (i.e., TANF or SSI), and the Borrower shall consider a prospective tenant’s previous rent history of at least one year as evidence of such tenant’s ability to pay the applicable rent for the unit be occupied (ability to pay shall be demonstrated if the tenant can show that the tenant has paid on time the same
percentage or more of the tenant’s income for rent as the tenant would be required to
pay for the rent (applicable to the unit to be occupied); provided that such tenant
paid the same percentage or more of such tenant’s income for rent as such tenant will
be paying under the proposed lease. The Borrower may consider such factors as it
deems important when reviewing and approving a tenant’s application for occupancy
and an existing tenant‘s continued occupancy.
(c) All tenant lists, applications and waiting lists relating to the Project shall at all times be kept separate and identifiable from any other business of the Borrower
and shall be maintained as required by the Issuer in reasonable condition for proper audit and subject to examination during business hours by representatives of the City
of Carlsbad (including the Program Administrator).
(d) The Borrower shall submit to the Issuer, (i) not later than the close of each
calendar quarter, a statistical report to the Issuer, in the form set forth as Exhibit D
hereto, or such other comparable form as may be prescribed by the Issuer, setting forth
the information called for therein, and (ii) within fifteen (15) days after receipt of a written request, any other information or completed forms requested by the Issuer in order to comply with reporting requirements of the Internal Revenue Service or the
State of California.
(e) Each of the requirements of Section 2, 3 and 4 hereof is incorporated as a specific requirement of the Issuer, whether or not required by California or federal law, and shall be in force for the Qualified Project Period.
(f) The Borrower acknowledges that the Issuer may appoint a Program Administrator (other than the Issuer) to act as its agent to administer this Regulatory Agreement and to monitor performance by the Borrower of the terms, provisions and requirements hereof. In such event, the Borrower shall comply with any reasonable request by the Issuer to deliver to any such Project Administrator, in addition to or instead of the Issuer, any reports, notices or other documents required to be delivered pursuant hereto, and to make the Project and the books and records with respect thereto available for inspection by the Project Administrator as an agent of the Issuer.
(g) Any of the foregoing requirements of the Issuer may be expressly waived by the Issuer in writing, but (i) no waiver by the Issuer of any requirement of this Section 4A shall, or shall be deemed to, extend to or affect any other provision of this Regulatory Agreement except to the extent the Issuer and the Trustee have received an opinion of Bond Counsel to the effect that any such provision is not required by the Act and may be waived without adversely affecting the exclusion from gross income of
interest on the Bonds for federal income tax purposes; and (ii) any requirement of this
Section 4A shall be void and of no force and effect if the Issuer, the Trustee and the
Borrower receive a written opinion of Bond Counsel to the effect that compliance with
any such requirement would cause interest on the Bonds to cease to be excludable from
gross income for federal income tax purposes or to the effect that compliance with
such requirement would be in conflict with the Act or any other applicable state or
federal law.
12
Section 5. Tax Status of the Bonds. The Borrower and the Issuer each hereby represents,
as of the date hereof, and warrants, covenants and agrees that:
(a) It will not knowingly take or permit, or omit to take or cause to be taken, as is appropriate, any action that would adversely affect the exclusion from gross income of interest on the Bonds for federal income tax purposes or the exemption from California personal income taxation of the interest on the Bonds and, if it should take or permit, or omit to take or cause to be taken, any such action, it will take all lawful actions necessary to rescind or correct such actions or omissions promptly upon obtaining knowledge thereof;
(b) It will take such action or actions as may be necessary, in the written opinion of
Bond Counsel filed with the Issuer, the Trustee and the Borrower, to comply fully with the Act
and all applicable rules, rulings, policies, procedures, Regulations or other official statements promulgated, proposed or made by the Department of the Treasury or the Internal Revenue Service pertaining to obligations issued under Section 142(d) of the Code to the extent necessary to maintain the exclusion from gross income for federal income tax purposes of interest on the Bonds; and
(c) It will file of record such documents and take such other steps as are necessary, in the written opinion of Bond Counsel filed with the Issuer, the Trustee and the Borrower, in order to insure that the requirements and restrictions of this Regulatory Agreement will be binding upon all owners of the Project, including, but not limited to, the execution and recordation of this Regulatory Agreement in the real property records of the County.
The Borrower hereby covenants to include the requirements and restrictions contained m this Regulatory Agreement in any document (other than any leases to individual occupants of units in the Project) transferring any interest in the Project to another person to the end that such transferee has notice of, and is bound by, such restrictions, and to obtain the agreement
from any transferee to abide by all requirements and restrictions of this Regulatory Agreement
during the term of this Agreement.
Section 6. Modification of SFecial Tax Covenants. The Borrower, the Trustee and the Issuer hereby agree as follows:
(a) To the extent any amendments to the Act, the Regulations or the Code shall, in the written opinion of Bond Counsel filed with the Issuer, the Trustee and the Borrower, impose
requirements upon the ownership or operation of the Project more restrictive than those
imposed by this Regulatory Agreement which must be complied with in order to maintain the
exclusion from gross income for federal income tax purposes of interest on the Bonds, this
Regulatory Agreement shall be deemed to be automatically amended to impose such additional
or more restrictive requirements.
(b) To the extent any amendments to the Act, the Regulations or the Code shall, in
the written opinion of Bond Counsel filed with the Issuer, the Trustee and the Borrower, impose
requirements upon the ownership or operation of the Project less restrictive than imposed by this Regulatory Agreement, this Regulatory Agreement may be amended or modified to provide
such less restrictive requirements but only by written amendment approved and signed by the
Issuer, the Trustee and the Borrower and approved by the written opinion of Bond Counsel that
such amendment will not affect the exclusion from gross income for federal income tax purposes
of interest on the Bonds.
(c) The Borrower, the Issuer and, if applicable, the Trustee shall execute, deliver and,
if applicable, file of record any and all documents and instruments, necessary to effectuate the
13
intent of this Section 6, and each of the Borrower and the Issuer hereby appoints the Trustee as
its true and lawful attorney-in-fact to execute, deliver and, if applicable, file of record on behalf
of the Borrower or the Issuer, as is applicable, any such document or instrument (in such form
as may be approved in writing by Bond Counsel) if either the Borrower or the Issuer defaults in
the performance of its obligations under this subsection (c); provided, however, that the Trustee
shall take no action under this subsection (c) without first n0-g the Borrower or the Issuer,
or both of them, as is applicable, unless directed in writing by the Issuer or the Borrower and
without first providing the Borrower or the Issuer, or both, as is applicable, an opportunity to
comply with the requirements of this Section 6.
Section 7. Indemnification.
(a) The Borrower releases the Issuer and its program participants from, and covenants and agrees that the Issuer and its program participants shall not be liable for, and covenants and agrees, to the fullest extent permitted by law, to inderruufy and hold harmless the Issuer and its officers, employees, governing members, directors, officials, its program participants, attorneys and agents (the ”Indemnified Parties”) from and against, any and all losses, actions, claims, damages, liabilities, costs or expenses, of every conceivable kind, character and nature whatsoever (including, without limitations, reasonable attorney’s fees, litigation and court costs, amounts paid in settlement and amounts paid to discharge judgments) to which the Indemnified Parties, or any of them, may become subject under any statutory law (including federal or state securities laws) or at common law or otherwise, arising out of, resulting from or in any way connected with:
(i) the Indenture, the Loan Agreement and this Regulatory Agreement or the execution or amendment thereof or in connection with transactions contemplated thereby, including the issuance, sale, resale or remarketing of the Bonds;
(ii) any act or omission of the Borrower or any of its agents, contractors,
servants, employees or licensees in connection with the Mortgage Loan or the Project, the
operation o the Project, or the condition, environmental or otherwise, occupany, use,
possession, conduct or management of work done in or about, or from the planning,
design, acquisition, installation or construction of, the Project or any part thereof;
(iii) any lien or charge upon payments by the Borrower to the Issuer, or any
taxes (including, without limitation, all ad valorem taxes and sales taxes), assessments,
impositions and other charges imposed on the Issuer in respect of any portion of the
Project;
(iv) any violation of any environmental law, rule or regulation with respect to,
the defeasance and/or redemption, in whole or in part, of the Bonds;
or the release of any toxic substance from, the Project or any part thereof;
(v)
(vi) any untrue statement or misleading statement or alleged untrue statement
or alleged misleading statement of a material fact by the Borrower contained in any offering statement or disclosure or continuing disclosure document for the Bonds or any
of the documents relating to the Bonds to which the Borrower is a party, or any omission or alleged omission from any offering statement or disclosure or continuing disclosure document for the Bonds of any material fact necessary to be stated therein in order to make the statements made therein by the Borrower, in the light of the circumstances under which they were made, not misleading; and
14
(vii) any declaration of taxability of interest on the Bonds, or allegations (or regulatory inquiry that interest on the Bonds is taxable, for federal tax purposes.
except, to the extent such damages are caused by the willful misconduct of such Indemnified
Party. In the event that any action or proceeding is brought against any Indemnified Party with
respect to which indemnity may be sought hereunder, the Borrower, upon written notice from
the Indemnified Party, shall assume the investigation and defense thereof, including the
employment of counsel selected by the Indemnified Party, and shall assume the payment of all
expenses related thereto, with full power to litigate, compromise or settle the same in its sole
discretion; provided that the Indemnified Party shall have the right to review and approve or disapprove any such compromise or settlement. Each Indemnified Party shall have the right to employ separate counsel in any such action or proceeding and participate in the investigation and defense thereof, and the Borrower shall pay the reasonable fees and expenses of such separate counsel; provided, however, that such Indemnified Party may only employ separate counsel at the expense of the Borrower if in the judgment of such Indemnified Party a conflict of interest exists by reason of common representation or if all parties commonly represented do not agree as to the action (or inaction) of counsel.
Notwithstanding any transfer of the Project to another owner in accordance with the provisions of this Agreement, the Borrower shall remain obligated to indemmfy each Indemnified Party pursuant to this Section if such subsequent owner fails to indemntfy any party entitled to be indemnified hereunder, unless such Indemnified Party has consented to such transfer and to the assignment of the rights and obligations of the Borrower hereunder.
(b) The rights of any persons to indemnity hereunder and rights to payment of fees
and reimbursement of expenses pursuant to Section 17 hereof shall survive the final payment or
defeasance of the Bonds. The provisions of this Section shall survive the termination of this Agreement.
(c) The Borrower releases the Trustee from, and covenants and agrees that the Trustee shall not be liable for, and covenants and agrees, to the extent permitted by law, to indemmfy and hold harmless the Trustee and its officers, employees and agents from and against any and all losses, claims, damages, liabilities or expenses, of every conceivable kind, character and nature whatsoever arising out of, resulting from or in any way connected with (1) the Project, or the conditions, occupancy, use, possession, conduct or management of, or work done in or about, or from the acquisition of the Project or any part thereof; (2) the issuance of any Bonds or any certifications or representations made by the Borrower in connection therewith and the carrying out by the Borrower of any of the transactions contemplated by the Bonds and this Agreement; (3) the Trustee's acceptance or administration of the trusts under the Indenture, or the exercise or performance of any of its powers or duties under the Indenture, the Agreement, this Regulatory Agreement or any other related document; or (4) with respect to the Borrower or the Project, any untrue statement or alleged untrue statement of any material fact or omission or alleged omission to state a material fact necessary to make the statements made, in the light of the circumstances under which they were made, not misleading, in any official statement or other offering circular utilized by the Issuer or any underwriter or placement agent in connection with the sale of any Bonds; provided that such indemnity shall not be required for damages that result from negligence or willful misconduct on the part of the party seeking such indemnity. The Borrower further covenants and agrees, to the extent permitted by law, to pay or to reimburse the Trustee and its officers, employees and agents for any and all costs, reasonable attorneys' fees, liabilities or expenses incurred in connection with investigating, defending against or otherwise in connection with any such losses, claims, damages, liabilities, expenses or actions, except to the extent that the same arise out of the
negligence or willful misconduct of the party claiming such payment or reimbursement. The
15
provisions of this Section shall survive the retirement of the Bonds and the resignation or removal of the Trustee.
Section 8. Consideration. The Issuer has issued the Bonds to provide funds to make the Mortgage Loan to finance the Project, all for the purpose, among others, of inducing the Borrower to acquire, construct, equip and operate the Project. In consideration of the issuance of the Bonds by the Issuer, the Borrower has entered into this Regulatory Agreement and has agreed to restrict the uses to which the Project can be put on the terms and conditions set forth herein.
Section 9. Reliance. The Issuer and the Borrower hereby recognize and agree that the representations, warranties, covenants and agreements set forth herein may be relied upon by all persons interested in the legality and validity of the Bonds, and in the exclusion from gross income for federal income tax purposes and the exemption from California personal income taxation of the interest on the Bonds. In performing their duties and obligations hereunder, the Issuer and the Trustee may rely upon statements and certificates of the Borrower and Very Low Income Tenants, and upon audits of the books and records of the Borrower pertaining to the Project. In addition, the Issuer and the Trustee may consult with counsel, and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by the Issuer or the Trustee hereunder in good faith and in conformity with
such opinion. In determining whether any default or lack of compliance by the Borrower exists
under this Regulatory Agreement, the Trustee shall not be required to conduct any investigation
into or review of the operations or records of the Borrower and may rely solely on any notice or
certificate delivered to the Trustee by the Borrower or the Issuer with respect to the occurrence
or absence of a default.
Section 10. Sale or Transfer of the Project. The Borrower intends to hold the Project for its own account, has no current plans to sell, transfer or otherwise dispose of the Project, and hereby covenants and agrees not to sell, transfer or otherwise dispose of the Project, or any
portion thereof (other than for individual tenant use as contemplated hereunder), without obtaining the prior consent of the Issuer, which consent shall not be unreasonably withheld, and of the Credit Bank, which consent may be withheld in accordance with the provisions of the Credit Agreement, so long as the following criteria are met, and upon receipt by the Issuer and the Trustee of (i) reasonable evidence satisfactory to the Issuer that the Borrower's purchaser or transferee has assumed in writing and in full, the Borrower's duties and obligations under this Regulatory Agreement, acknowledgment of which shall be provided to the Borrower at its request, (ii) an opinion of counsel of the transferee that the transferee has duly assumed the
obligations of the Borrower under this Regulatory Agreement and that such obligations and this Regulatory Agreement are binding on the transferee, (iii) the Issuer receives evidence acceptable to the Issuer that either (A) the purchaser or assignee has experience in the ownership, operation and management of rental housing projects such as the Project without any record of material violations of discrimination restrictions or other state or federal laws or regulations applicable to such projects, or (B) the purchaser or assignee agrees to retain a property management firm with the experience and record described in subparagraph (A) above or if the purchaser or assignee does not have management experience, the Issuer will or will cause the Program Administrator to provide on-site training in program compliance if the Issuer determines such training is necessary, (iv) no event of default exists under any of the Mortgage Loan Documents, this Regulatory Agreement or the Agreement at the time of transfer or any such default shall be cured prior to or concurrently with the transfer, and payment of all fees and expenses of the Issuer and the Trustee are current, and (v) an opinion of Bond Counsel to the effect that such sale will not cause interest on any Bond to become includable in the gross income of the recipients thereof for federal income tax purposes. It is hereby expressly stipulated and agreed that any sale, transfer or other disposition of the Project in violation of this Section 10 shall be
null, void and without effect, shall cause a reversion of title to the Borrower, and shall be
16
ineffective to relieve the Borrower of its obligations under this Regulatory Agreement. Nothing in this Section 10 shall affect any provision of any other document or instrument between the Borrower and any other party which requires the Borrower to obtain the prior written consent of such other party in order to sell, transfer or otherwise dispose of the Project. Not less than 90 days prior to consummating any sale, transfer or disposition of any interest in the Project, the Borrower shall deliver to the Issuer and the Trustee a notice in writing explaining the nature of the proposed transfer. The Borrower shall not syndicate the Project, except a syndication in connection with the sale of low-income tax credits with respect to the Project pursuant to the Code, without the prior written approval of the Issuer; provided, however, that the Issuer shall not withhold such approval if the Issuer determines that such syndication meets the requirements of the Act or any successor provision. The Issuer shall make such determination upon receipt of an opinion of counsel for the Borrower acceptable to the Issuer to the effect that (i) the terms and conditions of the syndication do not reduce or limit any of the requirements of the Act or regulations adopted or documents executed pursuant to the Act, (ii) no requirements of the Issuer shall be subordinated to the syndication agreement and (iii) the syndication shall
not result in the provision of fewer assisted units, or the reduction of any benefits or services,
than were in existence prior to the syndication agreement. The sale and transfer of the
Borrower’s limited partnership interests are expressly excluded from the provisions of this
Section 10. Any written consent to a sale or transfer obtained from the Issuer shall constitute conclusive evidence that the sale or transfer is not a violation of the transfer provisions of this Regulatory Agreement.
Section 11. Term. Subject to the following paragraph of this Section 11, this Regulatory Agreement and all and several of the terms hereof shall become effective upon its execution and delivery and shall remain in full force and effect during the Qualified Project Period, it being expressly agreed and understood that the provisions hereof are intended to survive the retirement of the Bonds and expiration of the Indenture and the Agreement. Notwithstanding
any other provisions of this Regulatory Agreement to the contrary, this entire Regulatory Agreement, or any of the provisions or sections hereof, may be terminated upon agreement by the Issuer, the Trustee and the Borrower subject to compliance with any of the provisions
contained in this Regulatory Agreement only if there shall have been received an opinion of
Bond Counsel that such termination will not adversely affect the exclusion from gross income of
interest on the Bonds for federal income tax purposes or the exemption from State personal
income taxation of the interest on the Bonds. The Borrower shall provide notice of any
termination of this Regulatory Agreement to the Trustee.
The terms of this Regulatory Agreement to the contrary notwithstanding, this Regulatory Agreement, and all and several of the terms hereof, shall terminate and be of no further force and effect in the event of a foreclosure or delivery of a deed in lieu of foreclosure whereby a third party shall take possession of the Project or involuntary non-compliance with the provisions of this Regulatory Agreement caused by fire, seizure, requisition, change in a federal law or an action of a federal agency after the date hereof which prevents the Issuer and the Trustee from enforcing the provisions hereof or condemnation or a similar event and, in each case, the payment in full and retirement of the Bonds theretofore or within a reasonable period thereafter; provided, however, that the preceding provisions of this sentence shall cease to apply and the restrictions contained herein shall be reinstated if, at any time subsequent to the termination of such provisions as the result of the foreclosure or the delivery of a deed in lieu of foreclosure or a similar event, the Borrower or any related person to it (within the meaning of Section 1.103-10(e) of the Regulations) obtains an ownership interest in the Project for Federal income tax purposes. Upon the termination of the terms of this Regulatory Agreement, the parties hereto agree to execute, deliver and record appropriate instruments of release and discharge of the terms hereof; provided, however, that the execution and delivery of such instruments shall not be necessary or a prerequisite to the termination of this Regulatory Agreement in accordance with its terms.
17
Section 12. Covenants to Run With the Land. The Borrower hereby subjects the Project
(including the Site) to the covenants, reservations and restrictions set forth in this Regulatory
Agreement. The Issuer and the Borrower hereby declare their express intent that the covenants,
reservations and restrictions set forth herein shall be deemed covenants running with the land
and shall pass to and be binding upon the Borrower's successors in title to the Project;
provided, however, that on the termination of this Regulatory Agreement said covenants,
reservations and restrictions shall expire. Each and every contract, deed or other instrument
hereafter executed covering or conveying the Project or any portion thereof shall conclusively be
held to have been executed, delivered and accepted subject to such covenants, reservations and
restrictions, regardless of whether such covenants, reservations and restrictions are set forth in
such contract, deed or other instruments. No breach of any of the provisions of this Regulatory
Agreement shall defeat or render invalid the lien of the Mortgage or any mortgage with respect
to the Project executed by the Borrower.
Section 13. Burden and Benefit. The Issuer and the Borrower hereby declare their
understanding and intent that the burden of the covenants set forth herein touch and concern
the land in that the Borrower's legal interest in the Project is rendered less valuable thereby. The
Issuer and the Borrower hereby further declare their understanding and intent that the benefit of
such covenants touch and concern the land by enhancing and increasing the enjoyment and use
of the Project by Very Low Income Tenants, the intended beneficiaries of such covenants,
reservations and restrictions, and by furthering the public purposes for which the Bonds were
issued.
Section 14. Uniformitv; Common Plan. The covenants, reservations and restrictions hereof shall apply uniformly to the entire Project in order to establish and carry out a common plan for the use, Project and improvement of the Site.
Section 15. Enforcement. If the Borrower defaults in the performance or observance of
any covenant, agreement or obligation of the Borrower set forth in this Regulatory Agreement,
and if such default remains uncured for a period of 60 days after notice thereof shall have been
given by the Issuer or the Trustee to the Borrower and the Credit Bank, if any, (provided,
however, that the Issuer may at its sole option extend such period if the Borrower provides the
Issuer with an opinion of Bond Counsel to the effect that such extension will not adversely
affect the exclusion from gross income for federal income tax purposes of interest on the
Bonds), then the Trustee, subject to the provisions of Section 9 hereof and to the extent directed
by and acting on behalf of the Issuer, shall declare an "Event of Default" to have occurred
hereunder, and, subject to the provisions of the Indenture, may take any one or more of the
following steps:
by mandamus or other suit, action or proceeding at law or in equity, require the Borrower to perform its obligations and covenants hereunder or enjoin any acts or things which may be unlawful or in violation of the rights of the Issuer or the Trustee hereunder;
(i)
(ii) have access to and inspect, examine and make copies of all of the books
and records of the Borrower pertaining to the Project; or
(iii) take such other action at law or in equity as may appear necessary or desirable to enforce the obligations, covenants and agreements of the Borrower hereunder.
The Trustee shall have the right, in accordance with this Section 15 and the provisions of the Indenture, without the consent or approval of the Issuer, to exercise any or all of the rights
18
or remedies of the Issuer hereunder; provided that prior to taking any such act the Trustee shall
give the Issuer written notice of its intended action. All reasonable fees, costs and expenses of
the Trustee incurred in taking any action pursuant to this Section 15 shall be the sole
responsibility of the Borrower.
After the Indenture has been discharged, or if the Trustee fails to act under this Section
15, the Issuer may act on its own behalf to declare an "Event of Default" to have occurred and
to take any one or more of the steps specified hereinabove to the same extent and with the same
effect as if taken by the Trustee.
Section 16. Recording and Filing. The Borrower shall cause this Regulatory Agreement
and all amendments and supplements hereto and thereto, to be recorded and filed, prior to the recording of the Mortgage and the disbursement of the Mortgage Loan in the real property records of the County and in such other places as the Issuer or the Trustee may reasonably request. The Borrower shall pay all fees and charges incurred in connection with any such recording.
Section 17. Pavment of Fees. Notwithstanding any prepayment of the Mortgage Loan and notwithstanding'a discharge of the Indenture, throughout the term of this Regulatory Agreement, the Borrower shall continue to pay to the Issuer its administrative fee described below and in the event of default, to the Issuer and to the Trustee reasonable compensation for any services rendered by either of them hereunder and reimbursement for all expenses
reasonably incurred by either of them in connection therewith.
The Borrower shall pay to the Issuer as set forth in the Agreement, on or before the
Bond Issuance Date its initial financing fee in the amount of $50,000. Thereafter, an annual
administrative fee shall be paid to the Issuer, in an annual administration fee to
$ , payable in equal semiannual installments on each June 1 and December 1
in advance, commencing on the Bond Issuance Date for the period from the Bond Issuance Date
to November 30, 2003. The fee of the Issuer referenced in this section shall in no way limit
amounts payable by the Borrower under Section 7 hereof, or arising in connection with the
Issuer's or Trustee's enforcement of the provisions of this Regulatory Agreement.
In the event that the Bonds are prepaid in full prior to the end of the term of this
Regulatory Agreement, the Issuer's fee for the remainder of the term of this Regulatory
Agreement, at the option of the Issuer, shall be paid by the Borrower (i) at the time of the
prepayment of the last of the Bonds and shall be a lump sum amount equal to the present value
(based on a discount rate equal to the yield on the Bonds, as determined by the Issuer at the
time of prepayment) of the Issuer's fee for the number of years remaining under this Regulatory
Agreement or (ii) annually on June 1 of each year from amounts placed in escrow at the time the
Bonds are prepaid in full, which amounts plus any projected earnings thereon are, to the
satisfaction of the Issuer, sufficient to pay the remaining administrative fees of the Issuer.
In case any action at law or in equity, including an action for declaratory relief, is brought against the Borrower to enforce the provisions of this Regulatory Agreement, the Borrower agrees to pay reasonable attorney's fees and other reasonable expenses incurred by the Issuer, the Trustee and/or the Program Administrator in connection with such action.
Section 18. Governing Law. This Regulatory Agreement shall be governed by the laws of the State of California. Except as expressly provided herein and in the Agreement, the Trustee's rights, duties and obligations hereunder are governed in their entirety by the terms and provisions of the Indenture.
19
Section 19. Amendments. Except as provided in Section 6(a) hereof, this Regulatory Agreement shall be amended only by a written instrument executed by the parties hereto or their successors in title, and duly recorded in the real property records of the County. The parties hereto acknowledge that for so long as the Bonds are outstanding the owners of the
Bonds are third party beneficiaries to this Regulatory Agreement.
Section 20. Notice. All notices, certificates or other communications shall be sufficiently
given and (except for notices to the Trustee, which shall be deemed given only when actually
received by the Trustee) shall be deemed given on the date personally delivered or on the second
day following the date on which the same have been mailed by first class mail, postage prepaid,
addressed as follows:
Issuer: City of Carlsbad
1200 Carlsbad Village Drive
Carlsbad, CA 92008
Attention: City Manager Facsimile: (760) 720-9461
The Trustee: Wells Fargo Bank, National Association
700 Wilshire Boulevard, 17th Floor
Los Angeles, CA 90017 Attention: Corporate Trust Services Telephone: (213) 614-3353 Facsimile: (213) 6143355 Borrower:
With a copy to:
With a copy to:
The Credit Bank
Dove Family Housing Associates, c/o Community Housing Works
1820 S. Escondido Boulevard, Suite 101 Escondido, CA 92025 Attention: Telephone: (760) 432-6878
Mercy Housing California
500 South Main Street, Suite 110 Orange, CA 92868 Attention: Dara Kove
Mercy Housing, Inc. 601 East 18th Avenue, Suite 150
Denver, CO 80203 Attention: Portfolio Risk Management
Citibank, N.A., c/o Citicorp North America, Inc.
3800 Citibank Center Building F, First Floor
Tampa, FL 33610
Attention: Standby Unit
Facsimile: (813) 604-7187
Any of the foregoing parties may, by notice given hereunder, designate any further or
different addresses to which subsequent notices, certificates, documents or other
communications shall be sent.
20
Section 21. Severability. If any provision of this Regulatory Agreement shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the remaining portions hereof
shall not in any way be affected or impaired thereby.
This Regulatory Agreement may be executed m multiple counterparts, all of which shall constitute one and the same instrument, and each of which shall be deemed to be an original.
Section 22. Multiule Countemarts.
Section 23. Trustee Acting: Solelv in Such CaDacitv. In accepting its obligations
hereunder, the Trustee acts solely-as &tee for the benefit'of the registered owners of the
Bonds, and not in its individual capacity; and the Trustee shall be liable to any persons,
including, without limitation, the Issuer and the Borrower, seeking payment from the Trustee for any liability arising by reason of the transactions contemplated hereby only to the extent set
forth in Article X of the Indenture.
The Trustee shall act as specifically provided herein and no implied duties or obligations shall be read into this Regulatory Agreement against the Trustee. The Trustee is entering into this Regulatory Agreement solely in its capacity as Trustee under the Indenture and not in its individual, corporate or personal capacity and except as specifically provided herein, nothing herein shall be construed as imposing any duties or obligations upon the Trustee beyond those contained in the Indenture. The duties, powers and liabilities of the Trustee in acting hereunder shall be subject to the provisions of the Indenture, including, without limitation, the provisions of Article VI11 thereof.
After the date on which no Bonds remain outstanding, as provided in the Indenture, the Trustee shall no longer have any duties or responsibilities under this Regulatory Agreement and all references to the Trustee in this Regulatory Agreement shall be deemed references to the Issuer.
Section 24. Comuliance bv Borrower. The Trustee shall not be responsible for monitoring
or verrfylng compliance by the Borrower with its obligations under this Regulatory Agreement.
Section 25. Limited Liabilitv. All obligations of the Issuer incurred hereunder shall be
limited obligations, payable solely and only from Bond proceeds and other amounts derived by the Issuer from the Loan or otherwise under the Agreement.
Section 26. Estouuel Certificates. The Issuer and the Trustee agree, upon the reasonable
request of the Borrow6;or its successor in interest, to promptly execute and deliver to the
Borrower (with a copy to the Credit Bank, if the Letter of Credit is still in effect) or its successor
in interest or to any potential or actual purchaser, mortgagor or encumbrance of the Project, a
written certificate stating, if the same be true, that the Issuer and the Trustee have no knowledge
of any violation or default of the Borrower of any of its covenants hereunder, or if there are such
violations or defaults, the nature of the same.
Section 27. Third-Partv Beneficiary. The parties to the Regulatory Agreement recognize
and agree that the terms of &e Regulatory Agreement and the enforcement of those terms are
entered into for the benefit of various parties, including CDLAC. CDLAC shall accordingly
have contractual rights in this Regulatory Agreement and CDLAC shall be entitled (but not
obligated) to enforce the terms of the CDLAC Resolution. In addition, CDLAC is intended to
be and shall be a third-party beneficiary of this Regulatory Agreement. Notwithstanding the
above, any enforcement of the terms and provisions of the CDLAC Resolution by CDLAC shall
be subject to the terms, conditions and limitations otherwise applicable to the enforcement of remedies under this Regulatory Agreement and shall not adversely affect the interests of the owners of the Bonds.
21
22
IN WITNESS WHEREOF, the Issuer, the Trustee and the Borrower have executed this
Regulatory Agreement by duly authorized representatives, all as of the date first written
hereinabove.
CITY OF CARLSBAD, as Issuer
By:
WELLS FARGO BANK, NATIONAL
ASSOCATION, as Trustee
By:
Authorized Signatory
DOVE FAMILY HOUSING ASSOCIATES,
a California limited partnership
By:
Its: Managing General Partner
By:
By:
Its: Administrative General Partner
By:
23
STATE OF CALIFORNIA )
COUNTY OF )
) ss.
On this - day of , A before me, the undersigned, a Notary Public in and for said State, personally appeared and , personally known to me or proved to me on the basis of satisfactory evidence to be the persons whose names are subscribed to the
foregoing instrument as the Chairperson and Secretary, respectively, of the City of Carlsbad,
and acknowledged to me that the City of Carlsbad executed it.
WITNESS my hand and official seal.
Notary Public
24
STATE OF CALIFORNIA )
COUNTY OF )
) ss.
On this day of , ,before me, the undersigned, a Notary Public in and for said State, personally appeared , personally known to me or
proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to
the foregoing instrument as the of , the Trustee that
executed the foregoing instrument, and acknowledged to me that said Trustee executed the
same pursuant to its bylaws or a resolution of its board of directors.
WITNESS my hand and official seal.
Notary Public
25
73
STATE OF CALIFORNIA )
COUNTY OF )
) ss.
on this day of , ,before me, the undersigned, a Notary Public in and for
, a California limited partnership, personally known to me or proved to
me on the basis of satisfactory evidence to be the person whose name is subscribed to the foregoing instrument as the general partner of the Borrower, that executed the foregoing instrument, and acknowledged to me that he executed the same for the purposes and consideration therein expressed, in the capacity therein stated, and as the act and deed of said partnership.
said State, personally appeared , _____--I---------- I
WITNESS my hand and official seal.
Notary Public
26
7 Y
EXHIBIT A
LEGAL DESCRIPTION OF LAND
The land referred to herein is situated in the State of California, County of San Diego, City of Carlsbad described as follows:
A-1
7s
EXHIBIT B
INCOME COMPUTATION AND CERTIFICATION
NOTE TO APARTMENT OWNER: This form is designed to assist you in computing Annual Income in accordance with the method set forth in the Department of Housing and Urban Project ('"U"') Regulations (24 CFR 813). You should make certain that this form is at all times up to date with the HUD Regulations.
Re: [Address of Apartment Building]
I/We, the undersigned state that I/we have read and answered fully, frankly and
personally each of the following questions for all persons who are to occupy the unit being
applied for in the above apartment project. Listed below are the names of all persons who
intend to reside in the unit:
Monthly
Gross
Names of Members to Social Security Head of Household Number Amount of
Income Computation
The total anticipated income, calculated in accordance with the provisions of this
Certification, of all persons over the age of 18 years listed above for the 12-month period
beginning the date that I/we plan to move into a unit is $
Included in the total anticipated income listed above are:
(a) all wages and salaries, overtime pay, commissions, fees, tips and bonuses and other
compensation for personal services, before payroll deductions;
B-1
(b) the net income from the operation of a business or profession or from the rental of
real or personal property (without deducting expenditures for business expansion or
amortization of capital indebtedness or any allowance for depreciation of capital assets),
(c) interest and dividends (including income from assets excluded below);
(d) the full amount of periodic payments received from social security, annuities,
insurance policies, retirement funds, pensions, disability or death benefits and other similar
types of periodic receipts, including any lump sum payment for the delayed start of a periodic
payment;
(e) payments in lieu of earnings, such as unemployment and disability compensation, workmen's compensation and severance pay;
(f) the maximum amount of public assistance available to the above persons other than the amount of any assistance specifically designated for shelter and utilities;
(g) periodic and determinable allowances, such as alimony and child support payments
(h) all regular pay, special pay and allowances of a member of the Armed Forces
and regular contributions and gdts received from persons not residing in the dwelling;
(whether or not living in the dwelling) who is the head of the household or spouse; and
(i) any earned income tax credit to the extent that it exceeds income tax liability.
Excluded from such anticipated income are:
(a) casual, sporadic or irregular gifts;
(b) amounts which are specifically for or in reimbursement of medical expenses;
(c) lump sum additions to family assets, such as inheritances, insurance payments (including payments under health and accident insurance and workmen's compensation),
capital gains and settlement for personal or property losses;
(d) amounts of educational scholarships paid directly to the student or the educational
institution, and amounts paid by the govemt to a veteran for use in meeting the costs of
tuition, fees, books and equipment. Any amounts of such scholarships or payments to veterans
not used for the above purposes are to be included in income;
fire;
(e) special pay to a household member who is away from home and exposed to hostile
(f) relocation payments under Title 11 of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970;
(8) foster child care payments;
(h) the value of coupon allotments for the purchase of food pursuant to the Food Stamp
Act of 1977;
(i) payments to volunteers under the Domestic Volunteer Service Act of 1973;
B-2
77
(j) payments received under the Alaska Native Claims Settlement Act;
(k) income derived from certain submarginal land of the United States that is held in trust for certain Indian tribes;
(i) payments or allowances made under the Department of Health and Human Services'
Low-Income Home Energy Assistance Program;
(m) payments received from the Job Training Partnership Act;
(n) income derived from the disposition of funds of the Grand River Band of Ottawa Indians; and
(0) the first $2,000.00 of per capita shares received from judgment funds awarded by the Indian Claims Commission or the Court of Claims.
Do the persons whose income or contributions are included in item 6 above:
have savings, stocks, bonds, equity in real property or other form of capital investment (excluding the values of necessary items of personal property such as furniture and automobiles and interests in Indian trust land); or
have they disposed of any assets (other than at a foreclosure or Credit Bankruptcy sale) during the last two years at less than fair market value?
If the answer to (a) or (b) above is yes, does the combined total value of all such assets owned or disposed of by all such persons total more than $5,000?
(d) If the answer to (c) above is yes, state:
(1) the amount of income expected to be derived from such assets in the 12-month
period beginning on the date of initial occupancy in the unit that you propose to rent:
(2) the amount of such income, if any, that was included in item 6 above:
Are all of the individuals who propose to reside in the unit full-time students*?
No - Yes
B-3
(a) *A full-time student is an individual enrolled as a full-time student during each of 5 calendar months during the calendar year in which occupancy of the unit begins at an educational organization which normally maintains a regular faculty and curridum and normally has a regularly enrolled body of students in attendance and is not an individual pursuing a full-time course of institutional or farm training under the supervision of an accredited agent of such an educational organization or of a state or political subdivision thereof.
(b) If the answer to 8(a) is yes, is at least 1 of the proposed occupants of the unit a husband and wife entitled to file a joint federal income tax return?
9. Neither myself nor any other occupant of the unit I/we propose to rent is the owner
of the rental housing project in which the unit is located (hereinafter the "Borrower"), has any
family relationship to the Borrower; or owns directly or indirectly any interest in the Borrower.
For purposes of this paragraph, indirect ownership by an individual shall mean ownership by a family member, ownership by a corporation, partnership, estate or trust in proportion to the
ownership or beneficial interest in such corporation, partnership, estate or trustee held by the
individual or a family member; and ownership, direct or indirect, by a partner of the individual.
10. This certificate is made with the knowledge that it will be relied upon by the
Borrower to determine maximum income for eligibility to occupy the unit, and I/we declare that
all information set forth herein is true, correct and complete and based upon information I/we
deem reliable and that the statement of total anticipated income contained in paragraph 6 is
reasonable and based upon such investigation as the undersigned deemed necessary.
11. I/we will assist the Borrower in obtaining any information or documents required to vedy the statements made herein, including either an income verification from my/our present employer(s) or copies of federal tax returns for the immediately preceding calendar year.
12. I/we acknowledge that I/we have been advised that the making of any
misrepresentation or misstatement in this declaration will constitute a material breach of
my/our agreement with the Borrower to lease the unit and will entitle the Borrower to prevent
or terminate my/our occupancy of the unit by institution of an action for ejection or other
appropriate proceedings.
13. Housing Issuer Statistical Information (Optional - will be used for reporting
purposes only)
Race (Head of Household) White Black Asian
Hispanic Native American Other
Physical Disability
Yes No
B-4
I/we declare under penalty of perjury that the foregoing is true and correct.
Executed this day of in the County of , California.
Applicant
Applicant
B-5
Signature of all persons over the age of 18 years listed in number 2 above required]
FOR COMPLETION BY APARTMENT OWNER ONLY
LCalculation of eligible income:
(a) Enter amount entered for entire household in 6 above:
$- -- (b) If answer to 7(c) above is yes, enter the total amount entered in 7(d)(l), subtract from that figure the amount entered in 7(d)(2) and enter the remaining balance
14:
(2)-Multiply the amount entered in 7(d)(l) times the current passbook savings rate to
determine what the total annual earnings on the amount in 7(d) would be if invested in
passbook savings ($ ), subtract from that figure the amount entered in 7(d)(2)
and enter the remaining balance ($
(3) Enter at right the greater of the amount calculated under (1) or (2) above:
$ -------
(4)-TOTAL ELIGIBLE INCOME (Line 1.a plus line l.b(3):
(5) The amount entered in l(c):
(6) -Qualifies the applicant(s) as a Low-Income Tenant(s).
- Does not qualify the applicant(s) as a Low-Income Tenant(s).
(6) Number of apartment unit assigned: Bedroom Size: Rent:
$ ---------
- Tenant-Paid Utilities:
Water Gas Electric Trash Other (list Type)
(7) Was this apartment unit last occupied for a period of 31 consecutive days by persons whose aggregate anticipated annual income as certified in the above manner upon their
initial occupancy of the apartment unit qualified them as Low-Income Tenants?
No - Yes
(8) Method used to verify applicant@) income:
Employer income verification.
Social Security Administration verification
Department of Social Services verification
Copies of tax returns.
B-6
Other ( 1
Manager
INCOME VERIFICATION (for employed persons)
The undersigned employee has applied for a rental unit located in a project financed under the City of Carlsbad Multifamily Housing Program for persons of low income. Every income statement of a prospective tenant must be stringently verified. Please indicate below the employee's current annual income from wages, overtime, bonuses, commissions or any other form of compensation received on a regular basis.
Annual wages
Overtime
Bonuses
Commissions
Total current income
I hereby certify that the statements above are true and complete to the best of my knowledge.
Date:
Signature: Title:
I hereby grant you permission to disclose my income to in order that they may determine my income eligibility for rental of an apartment located in their project which has been financed under the City of Carlsbad Multifamily Housing Program.
Date: Signature
B-7
Please send form to:
INCOME VERIFICATION
(for Social Security recipients)
TO: SOCIAL SECURITY ADMINISTRATION
Ladies and Gentlemen:
I have applied for a rental unit located in a project financed under the City of Carlsbad Multifamily Housing Program for persons of very low income. Every income statement of a
prospective tenant must be stringently verified. In connection with my application for a rental unit, I hereby give my consent to release to the
specific information requested below.
Date: Signature
Social Security No.: Name (Print):
Address (Print):
Monthly Benefits Began/ Will Begin:
Social Security Benefit Amount: $ 0 ther Benefit (s) : Medicare Deduction:$ Are benefits expected to change? No Yes
If Yes, please state date and amount
If recipient is not receiving full benefit amount, please indicate reason and date recipient
Reason: Date of Resumption: Amount:$
Amount:$
Date: of change: Amount: $
will start receiving full benefit amount:
Date:
Signature: Name (Print):
Title:
Telephone:
B-8
83
Please send form to:
INCOME VERIFICATION (for Department Social Services recipients)
TO: CALIFORNIA DEPARTMENT OF SOCIAL SERVICES
Ladies and Gentlemen:
I am receiving assistance through your office. I have applied for a rental unit located in a project financed under the City of Carlsbad Multifamily Housing Program for persons of very low income. Every income statement of a prospective tenant must be stringently verified. In connection with my application for a rental unit, I hereby authorize the Department of Social Services to release to the specific information requested below:
Date:
Signature
Caseload Number: Name (Print): Case Number: Case Worker
1. Number of persons included in budget:
2. Total monthly budget $ (a) Amount of grant $ Date aid last began:
(b) Other income and source:
(c) Is other income included in total budget? No Yes
3. Please speclfy type of aid:
(TANF, FR, Food Stamps, ANB, Medical, Etc.)
4. If recipient is not receiving full grant, please indicate reason:
Overpayment due to client's failure to report other income
Computation error
Other--
Date when full grant will resume:
Date:
B-9
Case Worker's Signature:
Telephone: District Office:
Your very early response will be appreciated.
Please return form to:
INCOME VERIFICATION
(for self-employed persons)
I hereby attach copies of my individual federal and state income tax returns for the immediately preceding calendar year and cerbfy that the information shown in such income tax
returns is true and complete to the best of my knowledge.
Date: Signature
B-10
EXHIBIT C
COMPLETION CERTIFICATE
The undersigned hereby certifies that all portions of the Project to be rehabilitated have
been rehabilitated and available either for occupancy or use by tenants in the Project as of
Dove Family Housing Associates, a
California limited partnership
Authorized Borrower Representative
The undersigned hereby certifies that:
the aggregate amount disbursed on the Loan to date is $ I
all amounts disbursed on the Loan have been applied to pay or reimburse the
undersigned for the payment of Project Costs and none of the amounts disbursed on the Loan
have been applied to pay or reimburse any party for the payment of costs or expenses other
than Project Costs; and
at least 95 percent of the amounts disbursed on the Loan have been applied to pay or
reimburse the Borrower for the payment of Qualified Project Costs (as that term is used in the Regulatory Agreement) and less than 25 percent of the amount initially deposited in the Program Fund established pursuant to the Indenture exclusive of amounts therein applied to pay the costs of issuing the Bonds, have been applied to pay or reimburse the Borrower for the cost of acquiring land.
Dove Family Housing Associates, a California limited partnership
By:
Its: Managing General Partner
By:
By:
Its: Administrative General Partner
By: , Manager
c-1
The undersigned hereby certdy that to date $ has been disbursed on
the Loan.
WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee
c-2
EXHIBITD
CERTIFICATE OF CONTINUING PROGRAM COMPLIANCE
The undersigned, being of Dove Family Housing Associates, a California limited partnership (the "Borrower") has read and is thoroughly familiar with the provisions of the various documents associated with the Borrower's
participation in the City of Carlsbad (the "Issuer") Multifamily Housing Program, such
documents including:
1. the Regulatory Agreement and Declaration of Restrictive Covenants dated as of June
1,2003 among the Borrower, the Issuer and Wells Fargo Bank, National Association, as trustee
(the Trustee); and
2. the Loan Agreement dated as of June 1,2003 among the Borrower, the Issuer and the
Trustee.
As of the date of this Certificate, the following percentages of completed residential units in the Project (i) are occupied by Very Low-Income Tenants (as such term is defined in the Regulatory Agreement) or (ii) are currently vacant and being held available for such occupancy
and have been so held continuously since the date a Very Low-Income Tenant vacated such
unit; as indicated:
(Occupied by Very Low-Income Tenants: YO; Unit Nos.
Held vacant for occupancy continuously since last occupied by Very Low-Income Tenant: YO; Unit Nos.
Vacant Units:
Yo; Unit NOS.
The undersigned hereby certifies that the Borrower is not in default under any of the
terms and provisions of the above documents.
Date:
Dove Family Housing Associates, a
California limited partnership
By: Its:
By: Its:
Managing General Partner
By:
Administrative General Partner
By:
D-1
EXHIBITE
FORM OF CERTIFICATE OF COMPLIANCE [CDLAC RESOLUTION]
CERTIFICATE OF CDLAC PROGRAM COMPLIANCE
Witnesseth that on this - day of , 20- the undersigned, having borrowed
certain funds from the City of Carlsbad (the "Issuer") for the purpose of financing a multifamily
rental housing development (the "Project") located in the City of Carlsbad, California, does hereby cerbfy that:
[The Borrower is in compliance with the CDLAC Resolution (as defined in the
Regulatory Agreement relating to the Project).] [The Borrower is not in compliance with
Condition No. - of the CDLAC Conditions. The following measures are being taken to
1.
remedy such noncompliance .I
2. The representations set forth herein are true and correct to the best of the
undersigned's knowledge and belief.
Date: DOVE FAMILY HOUSING ASSOCIATES,
a California limited partnership
Borrower
E-1
Exhibit 4 ':
13061-11 JHz:TADams
AB 171 177
INDENTURE OF TRUST s--m-o 3
Between
CITY OF CARLSBAD,
as Issuer
and
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Trustee
Dated as of June 1,2003
relating to
$20,000,000
CITY OF CARLSBAD
VARIABLE RATE DEMAND
MULTIFAMILY HOUSING REVENUE BONDS
(THE GREENS APARTMENTS)
2003 Series A
TABLE OF CONTENTS
ARTICLE I
DEFINlTtONS; CONTENT OF CERTIFICATES AND OPINIONS Section 1.01. Definitions ...................................................................................................................................... 3 Section 1.02. Content of Certificates and Opinions ...................................................................................... 15 Section 1.03. Interpretation ............................................................................................................................... 15
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 2.10. Section 2.11.
ARTICLE II
THE BONDS Authorization of Bonds ............................................................................................................. 17 General Terms of the Bonds ...................................................................................................... 17 Interest Rates ............................................................................................................................... 17 Demand Purchase of Bonds ...................................................................................................... 20 Execution of Bonds ..................................................................................................................... 21 Transfer of Bonds ........................................................................................................................ 21 Exchange of Bonds ...................................................................................................................... 21 Bond Register ............................................................................................................................... 21 Temporary Bonds ....................................................................................................................... 22 Bonds Mutilated, Lost, Destroyed or Stolen .......................................................................... 22 Book-Entry Only System ........................................................................................................... 22
ARTICLE III
ISSUANCE OF BONDS; PROJECT FUND Section 3.01. Section 3.02.
Section 3.03. Section 3.04. Section 3.05.
Issuance of the Bonds; Application of Proceeds ................................................................... 25 Establishment of Costs of Issuance Fund; Use of Moneys in the Costs of Issuance Fund .............................................................................................................................................. 25 Establishment of Project Fund; Use of Moneys in Project Fund ........................................ 26 Retention of Requisitions .......................................................................................................... 26 Funding of Project ...................................................................................................................... 26
Section 4.01. Section 4.02. Section 4.03. Section 4.04. Section 4.05. Section 4.06. Section 4.07. Section 4.08.
ARTICLE IV
REDEMPTION AND PURCHASE OF BONDS Terms of Redemption ................................................................................................................. 27 Selection of Bonds for Redemption ......................................................................................... 29 Notice of Redemption ................................................................................................................ 29 Partial Redemption of Bonds .................................................................................................... 30 Effect of Redemption .................................................................................................................. 30 Mandatory Tender for Purchase of Bonds ............................................................................. 30 Purchase and Remarketing of Bonds ...................................................................................... 31 Purchase in Lieu of Redemption .............................................................................................. 35
ARTICLE V
REVENUES; FUNDS AND ACCOUNTS; PAYMENT OF
PRINCIPAL AND INTEREST Section 5.01. Section 5.02. Section 5.03. Section 5.04. Section 5.05. Section 5.06. Section 5.07.
Pledge and Assignment; Establishment of Revenue Fund ................................................. 37 Allocation of Revenues .............................................................................................................. 37 Priority of Moneys in Revenue Fund ...................................................................................... 38
Letter of Credit ............................................................................................................................ 39 Investment of Moneys ............................................................................................................... 39 Rebate Fund ................................................................................................................................. 41 Issuer Fee ...................................................................................................................................... 42
ARTICLE VI
PARTICULAR COVENANTS Section 6.01. Punctual Payment ....................................................................................................................... 43
i
Section 6.02.
Section 6.03. Section 6.04. Section 6.05.
Section 6.06.
Section 6.07.
Section 6.08. Section 6.09. Section 6.10.
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 8.01. Section 8.02. Section 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 9.01. Section 9.02. Section 9.03. Section 9.04. Section 9.05.
Section 10.01.
Extension of Payment of Bonds ............................................................................................... 43
Against Encumbrances .............................................................................................................. 43
Power to Issue Bonds and Make Pledge and Assignment .................................................. 43 Accounting Records and Reports ............................................................................................ 43
Tax Covenants ............................................................................................................................. 44
Enforcement of Obligations ...................................................................................................... 44
Waiver of Laws ........................................................................................................................... 44 Further Assurances ..................................................................................................................... 45
Continuing Disclosure ............................................................................................................... 45
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES OF BONDHOLDERS Events of Default; Acceleration; Waiver of Default ............................................................. 46 Institution of Legal Proceedings by Trustee .......................................................................... 47
Application of Revenues and Other Funds After Default .................................................. 48 Trustee to Represent Bondholders .......................................................................................... 49
Absolute Obligation of Issuer ................................................................................................... 50
Right of Bank and Bondholders to Direct Proceedings ....................................................... 49 Limitation on Bondholders' Right to Sue ............................................................................... 50
Termination of Proceedings ...................................................................................................... 50 Remedies Not Exclusive ............................................................................................................ 50 No Waiver of Default ................................................................................................................. 51
ARTICLE VIII
TRUSTEE. THE PAYING AGENT. THE BOND REGISTRAR. THE
TENDER AGENT. AND THE REMARKETING AGENT Duties. Immunities and Liabilities of Trustee ....................................................................... 52 Merger or Consolidation ........................................................................................................... 55 Liability of Trustee ...................................................................................................................... 55 Right of Trustee to Rely on Documents .................................................................................. 56 Preservation and Inspection of Documents ........................................................................... 57 Compensation and Indemnification ........................................................................................ 57 Paying Agent ............................................................................................................................... 57 Notices to Rating Issuer ............................................................................................................. 57 Duties of Remarketing Agent ................................................................................................... 57 Eligibility of Remarketing Agent; Replacement ................................................................... 58
Duties of Tender Agent ............................................................................................................. 58 Eligibility of Tender Agent; Replacement .............................................................................. 58 Compensation of Tender Agent ............................................................................................... 59 Appointment and Duties of Bond Registrar .......................................................................... 59 Eligibility of Bond Registrar ..................................................................................................... 59 Bond Registrar's Performance of Duties ................................................................................ 59
Compensation of Remarketing Agent .................................................................................... 58
Replacement of Bond Registrar ................................................................................................ 59
ARTICLE IX
MODIFICATION OR AMENDMENT OF THE INDENTURE
AND RELATED DOCUMENTS
Amendments Permitted ............................................................................................................ 61 Effect of Supplemental Indenture ............................................................................................ 62
Endorsement of Bonds; Preparation of New Bonds ............................................................ 62
Amendment of Particular Bonds ............................................................................................. 63 Amendment of Loan Agreement and Other Issuer Documents ........................................ 63
ARTICLE X
DEFEASANCE Discharge of Indenture .............................................................................................................. 64
.. 11
Section 10.02. Section 10.03.
Section 1 1.01. 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.
Section 11.15.
Discharge of Liability on Bonds ............................................................................................... 64 Deposit of Money or Securities with Trustee ........................................................................ 65
ARTICLE XI MISCELLANEOUS Liability of Issuer Limited to Revenues .................................................................................. 66 Successor Is Deemed Included in All References to Predecessor ...................................... 66 Limitation of Ri&ts to Parties and Bondholders ................................................................. 66 Waiver of Notice ......................................................................................................................... 66 Destruction of Bonds .................................................................................................................. 66 Severability of Invalid Provisions ............................................................................................ 66 Governing Law ............................................................................................................................ 67 Notices .......................................................................................................................................... 67
Evidence of Rights of Bondholders ......................................................................................... 68
Disqualified Bonds ..................................................................................................................... 69
Money Held for Particular Bonds ............................................................................................ 69 Funds and Accounts ................................................................................................................... 69 Waiver of Personal Liability ..................................................................................................... 70 References to the Bank; Other Documents; Third Party Beneficiary ................................ 70 Execution in Several Counterparts .......................................................................................... 70
EXHIBIT A . FORM OF BOND
EXHIBIT B . FORM OF INVESTOR LETTER
EXHIBIT C . FORM OF WRITTEN REQUISITION FOR COSTS OF ISSUANCE FUND EXHIBIT D . REDEMPTION SCHEDULE
A-1
B-1 C-1 D-1
... 111
93
INDENTURE OF TRUST
THIS INDENTURE, made and entered into as of the first day of June, 2003, by and
between the CITY OF CARLSBAD, a municipal corporation, duly organized and existing under the laws of the State of California (the "Issuer"), and WELLS FARGO BANK, NATIONAL
ASSOCIATION, a national banking association organized and existing under and by virtue of the laws of California having a corporate trust office in Los Angeles California, and being
qualified to accept and administer the trusts hereby created (the "Trustee");
WIT N E S S E T H:
WHEREAS, the Issuer is authorized and empowered by the Act (hereinafter defined) to
issue bonds for the purpose of, among other things, financing the acquisition, construction and development of multifamily rental housing; and
WHEREAS, in furtherance of the purposes of the Act, the Issuer proposes to finance the acquisition, construction and development of a 178-unit multifamily rental housing development to be located within the City of Carlsbad, California to be known as The Greens Apartments (the "Project");
WHEREAS, the Issuer has duly entered into a loan agreement of even date herewith (the
"Loan Agreement") with the Borrower and the Trustee specifying the terms and conditions
under which it will issue bonds and loan the proceeds thereof to the Borrower for the financing
of the Project;
WHEREAS, pursuant to and in accordance with the Act, the Issuer has authorized and
undertaken to issue $20,000,000 aggregate principal amount of its Variable Rate Demand Multifamily Housing Revenue Bonds(The Greens Apartments) 2003 Series A (the "Bonds")
pursuant to this Indenture in order to provide the funds necessary to finance the Project; and
WHEREAS, the Bonds are initially enhanced by an irrevocable direct pay letter of credit issued by Citibank, N.A., (the "Credit Bank"); 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;
WHEREAS, the Issuer has determined that all conditions, things and acts required by
the Act and by all other laws of the State of California to exist, to have happened and to have
been performed precedent to and in connection with the issuance of the Bonds do 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 determined that 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, 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;
-1-
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 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 considerations, the receipt whereof is hereby acknowledged, the Issuer covenants and agrees with the Trustee, for the equal and proportionate benefit of the respective holders from time to time of the Bonds, as follows:
-2-
ARTICLE I
DEFINITIONS; CONTENT OF CERTIFICATES AND OPINIONS
Section 1.01. Definitions. Unless the context otherwise requires, the terms defined in this Article shall, for all purposes of this Indenture and of any indenture supplemental hereto and of any certificate, opinion or other document herein mentioned, have the meanings herein
specified, to be equally applicable to both the singular and plural forms of any of the terms
herein defined.
"Acceleration Default" means an Event of Default described in Section 7.l(a) of the Loan
Agreement.
"Act" means Chapter 7 of Part 5 of Division 31 of the Health and Safety Code of the
State of California, as now in effect and as it may from time to time hereafter be amended and supplemented.
"Act of Bankruptcy" means, as to the Borrower, any of the following: (a) the
commencement by the Borrower of a voluntary case under the federal bankruptcy laws, as now
in effect or hereafter amended, or any other applicable federal or state bankruptcy, insolvency
or similar laws; (b) the filing of a petition with a court having jurisdiction over the Borrower to
commence an involuntary case against the Borrower under the federal bankruptcy laws, as now
in effect or hereafter amended, or any other applicable federal or state bankruptcy, insolvency or similar laws, and such petition is not discharged within 60 days of the filing thereof; (c) the
Borrower shall admit in writing its inability to pay its debts generally as they become due; (d) a
receiver, trustee or liquidator of the Borrower shall be appointed in any proceeding brought
against the Borrower; (e) assignment by the Borrower of all or substantially all of its assets for
the benefit of its creditors; or (f) the entry by the Borrower into an agreement of composition
with its creditors.
"Additional Payments" means the payments required to be made by the Borrower
pursuant to Section 4.2 (b) through (e) of the Loan Agreement.
"Alternate Letter of Credit" means an alternate irrevocable letter of credit or similar credit facility delivered to the Trustee pursuant to Section5.8 of the Loan Agreement, and
meeting the requirements of said Section 5.8. The extension of the expiration date of a Letter of Credit shall not be deemed to be the provision of an Alternate Letter of Credit.
"Approving Opinion" means an opinion of Bond Counsel that an action being taken
(i) is authorized by the Act and this Indenture, and (ii) will not adversely affect the exclusion of
interest on the Bonds from gross income for Federal income tax purposes.
"Authorized Issuer Representative" means the Mayor, City Manager or Finance Director
of the Issuer, or any other person designated to act in such capacity by a Certificate of the Issuer
containing the specimen signature of such person, which certificate may designate an alternate
or alternates.
"Authorized Bank Representative" means 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 Bank by any
officer of the Bank, which certificate may designate an alternate or alternates.
-3-
”Authorized Borrower Representative” means any person or persons at the time
designated to act on behalf of the Borrower by a written certificate signed by the Borrower, furnished to the Trustee, the Bank and the Issuer, containing the specimen signature of each
such person.
“Authorized Denomination” means (i) during any Weekly Interest Rate Period, $100,000 or any integral multiple of $5,000 above such amount and (ii) during any Term Interest Rate Period, $5,000 or any integral multiple thereof.
”Available Moneys” means (1) moneys derived from drawings under the Letter of
Credit that are not commingled with any other moneys, (2) moneys held by the Trustee (other
than in the Rebate Fund or the Unclaimed Moneys Account) and subject to a first-priority
perfected lien under the Indenture for a period of at least 123 days and not commingled with
any moneys so held for less than said period and during which period no petition in bankruptcy was filed by or against, and no receivership, insolvency, assignment for the benefit
of creditors or other similar proceeding has been commenced by or against, the Borrower or the general partner of the Borrower unless such petition or proceeding was dismissed and all applicable appeal periods have expired without an appeal having been filed, and the investment earnings thereon, that are not commingled with any other moneys, (3) any moneys as to which an opinion of nationally-recognized counsel experienced in bankruptcy matters is delivered to the Trustee, the Bank and the Rating Agency to the effect that the payment of such moneys to the holders of the Bonds would not constitute transfers avoidable under 11 U.S.C.
9547(b) and recoverable from the holders of the Bonds under 11 U.S.C. §550(a) should the Issuer or the Borrower be the debtor in a case under the Bankruptcy Code or (4) proceeds of the
remarketing of the Bonds pursuant to the provisions of this Indenture.
”Bank” means Citibank (West), FSB, and any other commercial bank, savings bank or
association or other financial institution issuing or causing the issuance of a Letter of Credit
then in effect and party to a Reimbursement Agreement.
“Bank Purchased Bonds” means Bonds purchased in lieu of redemption in accordance
with Section 4.08 of this Indenture, until such Bonds have been remarketed with a Letter of
Credit in effect with respect thereto in accordance with the terms of this Indenture.
“Bank Rate” means the rate established by the Reimbursement Agreement, which shall be paid on Bank Purchased Bonds and Pledged Bonds.
”Beneficial Owners” means those individuals, partnerships, corporations or other entities for whom the Direct Participants have caused DTC to hold Book-Entry Bonds.
”Bond” or ”Bonds” means the City of Carlsbad Variable Rate Demand Multifamily Housing Revenue Bonds, (The Greens Apartments) 2003 Series A, in the aggregate principal
amount of $20,000,000.
”Bond Counsel” means any attorney at law or firm of attorneys of nationally recognized
standing in matters pertaining to the federal tax exemption of interest on bonds issued by states
and political subdivisions, selected by the Issuer and reasonably acceptable to the Bank, and
duly admitted to practice law before the highest court of any state of the United States of America, but shall not include counsel for the Borrower.
”Bond Payment Date” means any Interest Payment Date and any other date on which the principal of, premium, if any, or interest on the Bonds is to be paid to the Owners thereof, whether upon redemption, at maturity or upon acceleration of maturity of the Bonds.
-4-
??
"Bond Registrar'' or "Registrar" means the entity or entities performing the duties of the Bond Registrar pursuant to Section 2.08.
"Book-Entry Bonds" means the Bonds registered in the name of the nominee of DTC, or
any successor securities depository for the Bonds, as the registered owner thereof pursuant to
the terms and provisions of Section 2.11 hereof.
"Borrower" means Dove Family Housing Associates, a California limited partnership,
or any entity which is the surviving, resulting or transferee entity in any merger, consolidation or transfer of assets permitted under Section 5.2 of the Loan Agreement and also means, unless
the context otherwise requires, an assignee of the Loan Agreement as permitted by Section 5.2
of the Loan Agreement.
"Business Day" shall mean any day other than (i) a Saturday or Sunday, (ii) a day on
which commercial banks in New York, New York, or the city or cities in which the Principal
Corporate Trust Office of the Trustee or the Tender Agent or the office of the Credit Bank at which demands for payment under the Letter of Credit are to be presented are authorized or required by law to close or (iii) a day on which the New York Stock Exchange is closed.
"Closing Date" means the date of initial issuance and delivery of the Bonds.
"Code" means the Internal Revenue Code of 1986 and the Regulations thereunder, or
any successor thereto. Reference to any particular Code section shall, in the event of such
successor Code, be deemed to be reference to the successor to such Code section.
"Costs of Issuance" means all items of expense directly or indirectly payable by, or reimbursable to the Issuer or the Borrower and related to the authorization, issuance, sale and delivery of the Bonds, including but not limited to the costs of preparation and reproduction of documents, printing expenses, filing and recording fees, underwriting fees and expenses, initial fees and charges of the Trustee including fees and charges of its counsel, including in-house counsel, legal fees and charges, fees and disbursements of consultants and professionals, rating
agency fees, fees and expenses of the Bank and the Credit Bank, including legal fees of counsel to the Bank and the Credit Bank, fees and charges for preparation, execution and safekeeping of
the Bonds and any other cost, charge or fee in connection with the original issuance of the
Bonds which constitutes a "cost of issuance" within the meaning of Section 147(g) of the Code.
"Costs of Issuance Fund" means the fund by that name established pursuant to Section 3.02.
"Costs" or "Costs of the Project" means and shall be deemed to include all of the costs of
acquiring, rehabilitating, developing, and equipping the Project, to the extent permitted by the
Act and the Code, incurred not earlier than 60 days prior to the Inducement Date, including, if
appropriate, but not limited to the payment or reimbursement to (or to the order of) the
Borrower of the following:
(a) (i) the initial or acceptance fee and first year annual fee of the Trustee, the
Tender Agent and any paying agent and the fees and expenses (including reasonable
counsel fees) of the Authority, the Trustee, the Tender Agent, the Remarketing Agent and any paying agent during the period of the construction of the Project; (ii) legal, underwriting, financial consulting, rating agency and accounting fees and expenses and printing and engraving costs incurred in connection with the authorization, sale and issuance of the Bonds, the execution of the Indenture and the preparation of all other
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documents in connection therewith; and (iii) all fees, costs and expenses incurred with respect to the preparation of the Agreement, this Indenture, the Bonds, the Regulatory Agreement, the Official Statement with respect to the Bonds and all other documents in
connection therewith; provided that Bond proceeds used to pay or reimburse costs
described in this paragraph (a) shall not exceed two percent (2%) of the face amount of
the Bonds.
(b) the fees of the Bank and the Credit Bank and their counsel attributable to
the cost of providing the Letter of Credit during the period of the construction of the
Project.
(c) such amounts, if any, as shall be necessary to reimburse the Borrower in full for all advances and payments made by it in connection with (i) the preparation of
plans and specifications for the Project (including any preliminary study or planning of the Project or any aspect thereof) and (ii) the construction of the Project.
(d) labor, services, materials and supplies used by or furnished to the
Borrower to improve the site and to construct the Project, as provided in the plans,
specifications and work orders therefor; payment of the costs of acquiring, constructing,
rehabilitating and installing utility services or other related facilities; payment of the
costs of acquiring all real and personal property deemed necessary to construct the Project; and payment of the miscellaneous expenses incidental to any of the foregoing items.
(e) the fees, if any, of architects, engineers, financial consultants, legal counsel and supervisors expended in connection with the construction of the Project.
(f) during the period of the construction of the Project, the premiums of all
title insurance and other insurance required to be taken out and maintained with respect
to any part of the Project to the extent such amounts are not paid by any contractor
which constructs or installs any portion of the Project.
(8) taxes, assessments and other charges, if any, that may become payable
during the period of the construction of the Project with respect to the Project, or
reimbursement thereof, if paid by the Borrower.
(h) expenses incurred in seeking to enforce any remedy against any contractor or subcontractor in respect of any default under a contract relating to the acquisition or construction of the Project.
(i) interest required to be paid on the Bonds during the period of the
construction of the Project, including reimbursement of amounts drawn under the Letter of Credit to pay such interest.
(j) any other costs permitted by the Act and the Code.
"Credit Bank" means Citibank, N.A., and any other commercial bank, savings bank or association or other financial institution issuing a Letter of Credit then in effect.
"Deed of Trust" shall mean the deed of trust securing the obligations of the Borrower under the Loan Agreement, as such deed of trust may be originally executed or as from time to
time supplemented and amended.
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"Determination of Taxability" means, with respect to the Bonds only, (a) a determination
by the Commissioner or any District Director of the Internal Revenue Service, (b) a private ruling or Technical Advice Memorandum issued by the National Office of the Internal Revenue Service
in which the Issuer and the Borrower were afforded the opportunity to participate, (c) a determination by any court of competent jurisdiction, (d) the enactment of legislation or (e) receipt
by the Trustee, at the request of the Issuer and either the Borrower or the Bank, of an opinion of
Bond Counsel, in each case to the effect that the interest on the Bonds is includable in gross income
for federal income tax purposes of the owners thereof or any former owner thereof, other than an
owner who is a "substantial user" (as such term is defined in Section 147(a) of the Code) of the Project or a Related Person; provided, however, that no such Determination of Taxability under clause (a) or (c) shall be deemed to have occurred if the Issuer is contesting such determination, has
elected to contest such determination in good faith and is proceeding with all applicable dispatch
to prosecute such contest until the earliest of (i) a final determination from which no appeal may be
taken with respect to such determination, (ii) abandonment of such appeal by the Issuer, or (iii) one
year from the date of initial determination.
"Direct Participants" means those broker-dealers, banks and other financial institutions
from time to time for which DTC holds the Bonds as securities depository.
"DTC" means The Depository Trust Company, New York, New York, a limited purpose
trust company organized under the New York Banking Law, or any successor securities
depositary for the Bonds.
"Event of Default" means any of the events specified in Section 7.01 of this Indenture.
"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.
"Final Funding Date" means the date on which the Borrower provides to the Trustee
and the Bank a certificate pursuant to Section3.05 and in accordance with Section3.3 of the
Loan Agreement, which date shall not be later than 1, 200- unless a later date is
agreed to in writing by the Bank.
"Fiscal Year'' means the period beginning on January 1 of each year and ending on the
last day of the next succeeding December, or any other twelve-month, or fifty-two week, period
hereafter selected and designated in writing to the Trustee and the Bank by the Borrower as the official fiscal year period of the Borrower.
"Holder" or "Bondholder," or "Owner," whenever used herein with respect to a Bond, means the person in whose name such Bond is registered.
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”Indenture” means this Indenture of Trust, as originally executed or as it may from time
to time be supplemented, modified or amended by any Supplemental Indenture.
”Inducement Date” means July 9,2002.
“Information Services” means Financial Information, Incorporated’s ”Daily Called Bond
Service,” 30 Montgomery Street, 10th Floor, Jersey City, New Jersey 07302, Attention: Editor;
Mergent/FIS, Inc., 5250 77 Center Drive, Suite. 150, Charlotte, NC 28217, Attention: Municipal
News Report, and Kenny S&P, 55 Water Street, 45th Floor, New York, New York 10041,
Attention: Notification Department; or, in accordance with then-current guidelines of the
Securities and Exchange Commission, such other services providing information with respect to called bonds, or no such services, as the Issuer may indicate in a certificate of the Issuer
delivered to the Trustee.
“Intercreditor Agreement” shall mean the Intercreditor Agreement of even date herewith
among the Issuer, the Trustee and the Bank, and in the event any Alternate Letter of Credit is
delivered, an agreement serving the same function.
”Interest Account” means the account by that name in the Revenue Fund established
pursuant to Section 5.02.
“Interest Payment Date” means (i) during a Weekly Interest Rate Period, the first Business Day of each month, commencing on July 1,2003, and (ii) during a Term Interest Rate
Period, each June 1 and December 1, and (iii) to the extent not an Interest Payment Date
pursuant to (i) or (ii), the first day of an Interest Rate Period.
”Interest Period” shall mean the period from and including any Interest Payment Date
to and including the day immediately preceding the next following Interest Payment Date,
except that the first Interest Period shall be the period from and including the Closing Date of the Bonds to and including the day immediately preceding the first Interest Payment Date.
”Interest Rate Period” shall mean either a Weekly Interest Rate Period or a Term Interest Rate Period.
“Investment Securities“ shall mean any of the following obligations if and to the extent
that, at the time of making the investment, they are permitted by law:
(1) Direct obligations of, or obligations the interest on and principal of which
are unconditionally guaranteed by, the United States of America, including obligations issued or held in book-entry form on the books of the Department of the Treasury of the United States of America and including any receipt, certificate or any other evidence of an ownership interest in such an obligation or in specified portions thereof (which may consist of specified portions of interest thereon);
(2) Obligations issued by the Resolution Funding Corporation, the Student Loan Marketing Association, Fannie Mae, the Federal Home Loan Bank Board, the Federal Farm Credit Bank or the Federal Home Loan Mortgage Association, or
obligations, participation’s or other instruments or issued by, or fully guaranteed as to
interest and principal by, the Government National Mortgage Association (excluding
stripped mortgage backed securities which are valued at greater than par on the unpaid
principal);
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(3) Bills of exchange or time drafts drawn on and accepted by a commercial
bank, otherwise known as bankers acceptances, which are eligible for purchase through
a bank that is a member of the Federal Reserve System and which are drawn on any
commercial bank the short-term obligations of which commercial bank are rated in the
highest letter and numerical rating category as provided by the Rating Agency;
provided, that purchases of eligible bankers' acceptances may not exceed two hundred
seventy (270) days' maturity;
(4) Commercial paper of "prime" quality of the highest rating category as provided by the Rating Agency, which commercial paper is limited to issuing
corporations that are organized and operating within the United States of America and
that have total assets in excess of five hundred million dollars ($500,000,000) and that
have an "AA" or higher rating for the issuer's unsecured debentures, other than
commercial paper, as provided by each of the Rating Agencies; provided, that purchases of eligible commercial paper may not exceed one hundred eighty (180) days' maturity nor represent more than ten percent (10%) of the outstanding commercial paper of any issuing corporation; or medium-term notes with a maximum maturity of five (5) years
that are subject to the credit qualifications listed above;
(5) Negotiable and non-negotiable certificates of deposit or bank notes issued
by a state or national bank (including the Trustee and its affiliates) or a state-licensed
bank of a foreign bank that have maturities of not more than three hundred sixty-five
(365) days and that are fully insured by the Federal Deposit Insurance Corporation or the short term obligations of which state or national bank (including the Trustee and its affiliates) or state-licensed branch of a foreign bank are rated no lower than "AA" or "A-
1+" (or the equivalent);
(6) Any repurchase agreement or reverse repurchase agreement of any
securities enumerated in subdivisions (1) and (2) of this definition with any state or
national bank or government bond dealer reporting to, trading with, and recognized as
a primary dealer by the Federal Reserve Bank of New York, and with respect to which
repurchase agreement or reverse repurchase agreement, it is either: (A) with any
institution which has debt rated no lower than "AA' or "A-l+" (or the equivalent) or
whose commercial paper is rated no lower than "A-l+" (or the equivalent); (B) with any
corporation or other entity that falls under the jurisdiction of the Federal Bankruptcy Code; provided, that (1) the term of such repurchase agreement or reverse repurchase
agreement is less than one (1) year or due on demand; (2) a third party acting solely as
agent has possession of the collateral; (3) the market value of the collateral (as
determined at least once every seven (7) days) exceeds the principal amount of the
repurchase agreement or reverse repurchase agreement plus accrued interest and the
market value of the collateral is maintained at levels acceptable to the Rating Agency; (4)
failure to maintain the requisite collateral levels will require an immediate liquidation of
collateral; and (5) the repurchase agreement or reverse repurchase agreement securities
are free and clear of any third-party lien or claim; or (C) with financial institutions
insured by the Federal Deposit Insurance Corporation or any broker-dealer with "retail
customers" that falls under the jurisdiction of the Securities Investors Protection
Corporation; provided, that (1) the market value of the collateral (as determined at least once every seven (7) days) exceeds the principal amount of the repurchase agreement or
reverse repurchase agreement plus accrued interest and the market value of the collateral is maintained at levels acceptable to the Rating Agency; (2) a third party acting solely as agent has possession of the collateral; (3) the agent has a perfected first priority security interest in the collateral; (4) the collateral is free and clear of third-party liens and, in the case of a Securities Investors Protection Corporation broker, was not acquired
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pursuant to repurchase agreement or reverse repurchase agreement; and (5) failure to maintain the requisite collateral percentage will require an immediate liquidation of the collateral; and with respect to any reverse repurchase agreement, the investment is solely done to supplement the income normally received from such securities;
(7) Certificates, notes, warrants, bonds or other evidence of indebtedness of
the State of California or any local agency therein which are rated in the highest short-
term rating category or within one of the two highest long-term rating categories by the Rating Agency (excluding securities that do not have a fixed par value and/or the terms
of which do not provide a fixed dollar amount at the maturity or call date);
(8) For amounts less than one hundred thousand dollars ($100,000), interest-
bearing demand or time deposits (including certificates of deposit) in a state or national
bank (including the-Trustee and its affiliates) fully insured by the Federal Deposit Insurance Corporation; provided, that not greater than one hundred thousand dollars ($100,000) in the aggregate shall be deposited in any one such financial institution;
(9) Investments in units of a money-market fund that is rated in the highest letter and numerical rating category by the Rating Agency, including funds for which the Trustee and its affiliates provide investment advisory or other management services;
(10) Upon prior notification to the Rating Agency, and upon the approval of
the Bank, investment agreements with entities that meet and maintain the following credit and collateral requirements: (A), they are initially rated "Aa2" or "AA' or better (or its equivalent); (B) if the credit quality reaches "Aa3" of "AA-" or its equivalent the provider (1) will respond with adequate collaterization within ten (10) Business Days, (2) will value assets weekly, and (3) will present collateral at one hundred two percent (102%) on US. Government Treasury securities and one hundred five percent (105%) on U.S. Government Agency securities; (C) the provider must maintain minimum credit quality of "A2" or "A" or its equivalent; and (D) the investment agreement must be subject to termination at the option of the Issuer or the Bank if credit ratings reach "AT' or "A-" or its equivalent; and
(11) Other obligations approved in writing by the Bank and the Issuer.
"Issuer" means the City of Carlsbad, a municipal corporation, duly organized and existing under the laws of the State of California.
"Issuer Documents" shall mean this Indenture, the Loan Agreement, the Regulatory
Agreement, the Deed of Trust, the Intercreditor Agreement and the Tax Certificate (to the extent of the certifications of the Issuer).
"Letter of Credit" means (i) initially, that certain Letter of Credit issued by the Credit
Bank, naming the Trustee as beneficiary and delivered on the Closing Date, or any extension or
renewal thereof, and (ii) in the event of delivery of an Alternate Letter of Credit, such Alternate
Letter of Credit.
"Letter of Credit Account" means the account by the name established pursuant to Section 5.03.
"Limited Partner" means NEF Assignment Corporation, as nominee, an Illinois corporation.
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"Loan" shall mean the loan made by the Issuer to the Borrower pursuant to the Loan Agreement for the purpose of financing the Project.
"Loan Agreement" or "Agreement" means that certain Loan Agreement among the Issuer, the Trustee and the Borrower, dated as of June 1,2003, as originally executed and as it
may from time to time be supplemented, modified or amended in accordance with the terms
thereof and of this Indenture.
"Loan Default Event" means any one or more of the events specified in Section 7.1 of the
Loan Agreement.
"Loan Repayments" means the payments so designated and required to be made by the
Borrower pursuant to Section 4.2(a) of the Loan Agreement.
"Maximum Rate" shall mean twelve percent (12%) per annum, or such other rate
determined by the Issuer with the consent of the Bank, provided that if such other rate is greater than twelve percent (12%) per annum the maximum amount covered by the Letter of Credit
must be increased to such higher amount as is necessary to cover interest on the Bonds at such
higher rate for the applicable period.
"Moody's'' means Moody's Investors Service, and its successors and assigns.
"Net Proceeds" means the proceeds from insurance or from actual or threatened condemnation or eminent domain action with respect to the Project, less any costs reasonably expended by the Borrower to receive such proceeds.
"Opinion of Counsel" means a written opinion of counsel, who may be counsel for the
Issuer or Bond Counsel or counsel for the Trustee or other counsel. If and to the extent required by the provisions of Section 1.02, each Opinion of Counsel shall include the statements
provided for in Section 1.02.
"Outstanding," when used as of any particular time with reference to Bonds, means
(subject to the provisions of Section 11.10) all Bonds theretofore, or thereupon being,
authenticated and delivered by the Trustee under this Indenture except (1) Bonds theretofore
cancelled by the Trustee or surrendered to the Trustee for cancellation; (2) Bonds with respect to
which liability of the Issuer shall have been discharged in accordance with Section 10.02,
including Bonds (or portions of Bonds) referred to in Section 11.10; (3) Bonds for the transfer or exchange of or in lieu of or in substitution for which other Bonds shall have been authenticated and delivered by the Trustee pursuant to this Indenture; and (4)Bonds which are deemed
tendered but not delivered pursuant to Section 2.04(B) or 4.07(A)(3).
"Partnership Agreement" means that certain Amended and Restated Limited
Partnership Agreement dated as of June 1,2003, as it may be amended from time to time.
"Paying Agent" means the paying agent described in Section 8.07 hereof.
"Person" means an individual, corporation, firm, association, partnership, trust, or other
legal entity or group of entities, including a governmental entity or any agency or political
subdivision thereof.
"Pledged Bonds" shall have the meaning ascribed thereto in Section 4.07(C)(2).
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"Principal Account" means the account by that name in the Revenue Fund established
pursuant to Section 5.02.
"Principal Corporate Trust Office" shall mean with respect to the Trustee, the office of
the Trustee at , Attention: Corporate Trust Department, or such other or additional offices as may be specified to the Issuer by the Trustee
in writing, and with respect to the Tender Agent or the Bond Registrar, the office of the Tender Agent or the Bond Registrar, as applicable, at which at any particular time its corporate trust
business shall be principally administered.
"Project" means the multifamily rental housing development located on the real
property site described in Exhibit A to the Regulatory Agreement, consisting of those facilities,
including real property, structures, buildings, fixtures or equipment situated thereon, as may at
any time exist, the construction of which facilities is to be financed, in whole or in part, from the proceeds of the sale of the Bonds or the proceeds of any payment by the Owner pursuant to the Loan Agreement, and any 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 the facilities described in Exhibit A to the Loan Agreement, except such portions of
the real property site and the facilities related to commercial uses.
"Project Fund" means the fund by that name established pursuant to Section 3.03.
"Purchase Date" shall mean the date on which any Bond is required to be purchased
pursuant to Section 2.04(A), 4.06 or 4.08 of this Indenture.
"Purchase Price" shall mean that amount equal to 100% of the principal amount of any Bond purchased pursuant to Section2.04, 4.06 or 4.08 of this Indenture, plus accrued and
unpaid interest thereon to but not including the Purchase Date or the date on which such Bond
is deemed purchased in accordance with Section 2.04, plus, in the case of a mandatory tender for purchase in connection with an adjustment to a Weekly Interest Rate Period described in
Section 2.03(C)(II)(b), the premium, if any, that would be paid if the Bonds were being
redeemed on the date of the mandatory tender for purchase.
"Qualified Project Costs" means costs paid with respect to the Project that are (i)
properly chargeable to capital account (or would be so chargeable with a proper election by the Borrower or but for a proper election by the Borrower to deduct such costs) in accordance with general Federal income tax principles and in accordance with United States Treasury Regulations Section 1.103-8(a)(l), (ii) are paid with respect to a qualified residential rental project or projects within the meaning of Section 142(d) of the Code, (iii) are paid after the earlier of 60 days prior to the date of a resolution of the Issuer to reimburse costs of the Project with proceeds of Bonds or the date of issue of the Bonds, and (iv) if the Project Costs were
previously paid and are to be reimbursed with proceeds of the Bonds such costs were (A) costs
of issuance of the Bonds, (B) preliminary capital expenditures (within the meaning of United
States Treasury Regulations Section 1.150-2(f)(2)) with respect to the Project (such as architectural, engineering and soil testing services) incurred before commencement of
acquisition or construction of the Project that do not exceed twenty percent (20%) of the issue
price of the Bonds (as defined in United States Treasury Regulations Section 1.148-l), or (C) were capital expenditures with respect to the Project that are paid on the date the Project is
placed in service (but no later than three (3) years after the expenditure is paid).
"Rating Agency" means S&P, for so long as S&P maintains a rating on the Bonds, or any other nationally recognized securities rating agency, including Moody's, designated in writing to the Trustee by the Issuer, with the consent of the Bank, as a Rating Agency hereunder.
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”Rebate Fund” means the fund by that name created pursuant to Section 5.06.
”Record Date” shall mean, during a Weekly Interest Rate Period, the Business Day
immediately preceding the applicable Interest Payment Date, and, during any Term Interest
Rate Period, the fifteenth day of the month prior to an Interest Payment Date.
“Redemption Account” means the account by that name established pursuant to
Section 5.02.
“Regulatory Agreement” means the Regulatory Agreement and Declaration of
Restrictive Covenants, dated as of June 1,2003, among the Issuer, the Trustee and the Borrower.
“Reimbursement Agreement” means the Reimbursement Agreement, dated as of June 1,
2003, between the Borrower and the Bank, and any other agreement entered into in connection
with the issuance of any Alternate Letter of Credit and serving the same function.
“Related Person” shall mean a “related person” as defined in Section 147(a)(2) of the
Code.
”Remarketing Agent” shall mean with respect to the Bonds, Red Capital Markets, Inc.
and its successors in such capacity under this Indenture.
“Remarketing Agreement” shall mean the Remarketing Agreement dated as of June 1,
2003, among the Borrower, the Bank and the Remarketing Agent or the agreement or
instrument pursuant to which a successor to the Remarketing Agent shall perform its services.
“Reserved Rights” shall mean those certain rights of the Issuer under the Loan
Agreement to indemnification and to payment or reimbursement of fees and expenses of the
Issuer, its right to enforce the Regulatory Agreement and the Loan Agreement pursuant to the terms of such agreements, its right to inspect and audit the books, records and premises of the Borrower and of 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 and the rules of the Issuer, if any), its right to receive notices and to grant or withhold consents or waivers under the Loan Agreement and this Indenture, and its right to amend this Indenture and the Loan Agreement in accordance with the provisions hereof and
thereof.
”Revenue Fund” means the fund by that name established pursuant to Section 5.01.
”Revenues” means all amounts received by the Issuer or the Trustee for the account of the Issuer pursuant or with respect to the Loan Agreement or the Letter of Credit, including, without limiting the generality of the foregoing, Loan Repayments (including both timely and
delinquent payments, any late charges, and paid from whatever source), prepayments, and all interest, profits or other income derived from the investment of amounts in any fund or account established pursuant to this Indenture, but not including any Additional Payments or any
moneys paid for deposit into the Rebate Fund.
”S&P” means Standard & Poor’s Ratings Services, a Division of The McGraw-Hill
Companies, Inc., and its successors and assigns.
”Securities Depositaries” means The Depository Trust Company, 711 Stewart Avenue,
Garden City, New York 11530, Fax-(516) 227-4039 or 4190; or, in accordance with then-current
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guidelines of the Securities and Exchange Commission, such other securities depositaries, or no
such depositaries, as the Issuer may indicate in a certificate of the Issuer delivered to the
Trustee.
“State” means the State of California.
”Supplemental Indenture’’ means any indenture hereafter duly authorized and entered into between the Issuer and the Trustee, supplementing, modlfylng or amending this Indenture; but only if and to the extent that such Supplemental Indenture is specifically authorized under
this Indenture.
”Tax Certificate” means the Certificate As To Arbitrage of the Issuer, dated the Closing
Date together with all Exhibits thereto, as amended, supplemented or otherwise modified from
time to time, together with the Certificate Regarding Use of Proceeds of the Borrower dated the Closing Date.
”Tax-exempt” means, with respect to interest on any obligations of a state or local
government, including the Bonds, that such interest is excluded from gross income for federal
income tax purposes (other than in the case of a holder of any Bonds who is a substantial user of
the Project or a related person within the meaning of Section 147(a) of the Code) whether or not
such interest is includable as an item of tax preference or otherwise includable directly or
indirectly for purposes of calculating tax liabilities, including any alternative minimum tax or
environmental tax, under the Code.
”Tender Agent” shall mean the Trustee, or any successor tender agent appointed pursuant to Section 8.13 hereof.
”Term Interest Rate” shall mean a non-variable interest rate on the Bonds established in accordance with Section 2.03(D) hereof.
“Term Interest Rate Period” shall mean each period during which a Term Interest Rate is
in effect.
”Trustee” means Wells Fargo Bank! National Association, a national banking association
organized and existing under and by virtue of the laws of the United States of America having a
corporate trust office in Los Angeles, California, or its successor as Trustee hereunder as
provided in Section 8.01.
”Unclaimed Moneys Account” means the account by that name established pursuant to
Section 4.07(G).
”Weekly Interest Rate” shall mean a variable interest rate on the Bonds established
weekly in accordance with Section 2.03(C) hereof.
”Weekly Interest Rate Period” shall mean each period during which Weekly Interest
Rates are in effect.
”Written Certificate,’’ ”Written Statement,” ”Written Request,” ”Written Requisition,”
and ”Written Order” of the Issuer or the Borrower mean, respectively, a written certificate,
statement, request, requisition or order signed in the name of the Issuer by an Authorized Issuer
Representative, or in the name of the Borrower by an Authorized Borrower Representative.
Any such instrument and supporting opinions or representations, if any, may, but need not, be
combined in a single instrument with any other instrument, opinion or representation, and the
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two so combined shall be read and construed as a single instrument. If and to the extent required by Section 1.02, each such instrument shall include the statements provided for in Section 1.02.
Section 1.02. Content of Certificates and O~inions. Every certificate or opinion provided
for in this Indenture with respect to compliance with any provision hereof shall include (1) a
statement that the Person making or giving such certificate or opinion has read such provision
and the definitions herein relating thereto; (2) a brief statement as to the nature and scope of the
examination or investigation upon which the certificate or opinion is based; (3) a statement that,
in the opinion of such Person, such Person has made or caused to be made such examination or
investigation as is necessary to enable such Person to express an informed opinion with respect to the subject matter referred to in the instrument to which such Person's signature is affixed;
(4) a statement of the assumptions upon which such certificate or opinion is based, and that such assumptions are reasonable; and (5) a statement as to whether, in the opinion of such Person, such provision has been complied with.
Any such certificate or opinion made or given by an Authorized Issuer Representative
or Authorized Borrower Representative may be based, insofar as it relates to legal, accounting or primary matter of the business of either of them, upon a certificate or opinion of or representation by counsel, an accountant or a management consultant, unless such representative knows, or in the exercise of reasonable care should have known, that the certificate, opinion or representation with respect to the matters upon which such certificate or statement may be based, as aforesaid, is erroneous. Any such certificate or opinion made or given by counsel, an accountant or a management consultant may be based, insofar as it relates to factual matters (with respect to which information is in the possession of the Issuer or the Borrower, as the case may be) upon a certificate or opinion of or representation by an officer of the Issuer or the Borrower, unless such counsel, accountant or management consultant knows,
or in the exercise of reasonable care should have known, that the certificate or opinion or
representation with respect to the matters upon which such Person's certificate or opinion or
representation may be based, as aforesaid, is erroneous. The same officer of the Issuer or the
Borrower, or the same counsel or accountant or management consultant, as the case may be,
need not certify to all of the matters required to be certified under any provision of this
Indenture, but different officers, counsel, accountants or management consultants may certify to
different matters, respectively.
Section 1.03. Intemretation.
(A) Unless the context otherwise indicates, words expressed in the singular shall include the plural and vice versa and the use of the neuter, masculine, or feminine gender is for convenience only and shall be deemed to mean and include the neuter, masculine or feminine gender, as appropriate.
(B) Headings of articles and sections herein and the table of contents hereof are
solely for convenience of reference, do not constitute a part hereof and shall not affect the
meaning, construction or effect hereof.
(C) All references herein to "Articles," "Sections" and other subdivisions are to the
corresponding Articles, Sections or subdivisions of this Indenture; the words "herein," "hereof,"
"hereby," "hereunder" and other words of similar import refer to this Indenture as a whole and
not to any particular Article, Section or subdivision hereof.
(D) The parties hereto acknowledge that each such party and its respective counsel have participated in the drafting and revision of this Indenture. Accordingly, the parties agree
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that any rule of construction which disfavors the drafting party shall not apply in the interpretation of this Indenture or any amendment or supplement or exhibit hereto or thereto.
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ARTICLE I1
THE BONDS
Section 2.01. Authorization of Bonds. There shall be issued under and secured by this
Indenture a series of Bonds to be designated "City of Carlsbad Variable Rate Demand Multifamily Housing Revenue Bonds (The Greens Apartments) 2003 Series A" in the aggregate principal amount of $20,000,000.
Section 2.02. General Terms of the Bonds. The Bonds shall be dated the Closing Date
and shall mature (subject to prior redemption or acceleration) on April 1,2036. The Bonds shall bear interest on the unpaid principal amount thereof as set forth in Section2.03; provided,
however, that in no event shall the rate of interest on any Bond exceed at any time the
Maximum Rate.
The Bonds shall be issuable only in Authorized Denominations. The Bonds shall be
issued in substantially the form set forth in Exhibit A of this Indenture with such variations,
insertions or omissions for the Bonds as are appropriate and not inconsistent therewith and shall conform generally to the rules and regulations of any governmental authority or usage or requirement of law with respect thereto. The Bonds shall be numbered from one upward and may bear such additional letters, numbers, legends or designations as the Bond Registrar determines are desirable. The Bonds may be printed, lithographed or typewritten.
Section 2.03. Interest Rates.
(A) The Bonds shall bear interest from and including the date of authentication and delivery thereof until payment of the principal or redemption price thereof shall have been made or provided for in accordance with the provisions of this Indenture, whether at maturity,
upon redemption or otherwise. Interest on the Bonds with respect to the immediately
preceding Interest Period shall be paid as provided below, provided that if any Interest
Payment Date is not a Business Day, such interest (and any principal due) shall be mailed or
wired pursuant to this Section 2.03 on the next succeeding Business Day and no interest shall
accrue from the date when due. During a Weekly Interest Rate Period, interest on the Bonds
shall be computed upon the basis of a 365/366-day year for the number of days actually
elapsed. During any Term Interest Rate Period, interest on the Bonds shall be computed upon
the basis of a 360-day year, consisting of twelve 30-day months.
Payment of the interest on any Bond shall be made on each Interest Payment Date to the
person appearing on the bond registration books of the Bond Registrar as the Owner thereof on the Record Date, such interest to be paid by the Paying Agent (i) to such Owner by check mailed by first class mail on the Interest Payment Date, to such Owner's address as it appears
on the registration books or at such other address as has been furnished to the Bond Registrar in writing by such Owner not later than the Record Date, or (ii) upon written request at least three
Business Days prior to the applicable Record Date, to the Owner of Bonds aggregating not less
than $1,000,000 in principal amount, by wire transfer in immediately available funds to an
account maintained in the United States as such Owner shall specify in its written notice;
except, in each case, that if and to the extent that there shall be a default in the payment of the
interest due on such Interest Payment Date, such defaulted interest shall be paid to the Owner
in whose name any such Bonds are registered at the close of business on the fifth Business Day
next preceding the date of payment of such defaulted interest. Both the principal of and
premium, if any, on the Bonds shall be payable upon surrender thereof in lawful money of the
United States of America at the Principal Corporate Trust Office of the Trustee.
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(B) In the manner hereinafter provided, the term of the Bonds will be divided into
consecutive Interest Rate Periods, during each of which the Bonds shall bear interest at a
Weekly Interest Rate or a Term Interest Rate. The initial Interest Rate Period for the Bonds shall
be a Weekly Interest Rate Period.
(I) Determination of Weeklv Interest Rate. During a Weekly Interest Rate Period, the Bonds shall bear interest at a Weekly Interest Rate, which shall be determined by the Remarketing Agent not later than 5:OO p.m., New York City time, on the Wednesday of each week during such Weekly Interest Rate Period
(provided that if such Wednesday is not a Business Day, the Weekly Interest Rate shall be determined by 5:OO p.m., New York City time, on the following Business
Day), for the period commencing on the Thursday of such week; provided,
however, that the Weekly Interest Rate for a Weekly Interest Rate Period
succeeding a Term Interest Rate Period shall be determined not later than the
Business Day next preceding the effective date of such Weekly Interest Rate Period. The Weekly Interest Rate for the Bonds shall be the rate determined by the Remarketing Agent (on the basis of examination of obligations comparable to the Bonds known to the Remarketing Agent to have been priced or traded under then prevailing market conditions) to be the minimum interest rate which, if borne by the Bonds, would enable the Remarketing Agent to sell the Bonds on such day at a price equal to the principal amount thereof plus accrued interest; provided, however, that if for any reason a Weekly Interest Rate for the Bonds cannot be determined, the Weekly Interest Rate for the next succeeding week shall remain the same as the then-existing rate. The first Weekly Interest Rate
determined for each Weekly Interest Rate Period shall apply to the period
commencing on the first day of such Weekly Interest Rate Period and ending on
the next succeeding Tuesday. Thereafter, each Weekly Interest Rate shall apply
to the period commencing on a Thursday and ending on the next succeeding
Wednesday, unless the Weekly Interest Rate Period shall end on a day other than
Wednesday, in which event the last Weekly Interest Rate for such Weekly
Interest Rate Period shall apply to the period commencing on the Thursday
preceding the last day of such Weekly Interest Rate Period and ending on such
last day.
(C)
(11) Adiustment to Weeklv Interest Rate Period. The Borrower, by
written direction to the Trustee and the Remarketing Agent, and with notice to the Issuer and the prior written consent of the Bank, accompanied by an Approving Opinion, may elect to adjust a Term Interest Rate Period for the Bonds to a Weekly Interest Rate Period. Such direction shall speclfy the effective date of such adjustment to a Weekly Interest Rate Period, which shall be (a) the
Interest Payment Date which is the day next succeeding the last day of the then current Term Interest Rate Period (or the Business Day next succeeding such
Interest Payment Date if not a Business Day) not less than 45 days following the
date of receipt by the Trustee of such direction, or (b) any date on which the Bonds may be optionally redeemed pursuant to Section 4.01(6) not less than 45
days following the date of receipt by the Trustee of such direction. If the
Borrower desires to adjust to a Weekly Interest Rate Period prior to the end of an
existing Term Interest Rate Period, and a premium would be required for such
adjustment pursuant to Section 4.01(6) of this Indenture, such premium must be
(i) covered by the Letter of Credit or (ii) Available Moneys.
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It I
(111) Notice of Adiustment to Weeklv Interest Rate Period. The Trustee shall give notice by mail of an adjustment to a Weekly Interest Rate Period to the
Owners of the Bonds, the Bank and the Borrower not less than 30 days prior to
the effective date of such Weekly Interest Rate Period. Such notice shall state (1) that the interest rate on the Bonds will be adjusted to a Weekly Interest Rate, (2) the effective date of such Weekly Interest Rate Period, (3) that the Bonds will be purchased on such effective date pursuant to Section 4.06 of this Indenture, (4) the procedures for purchase of the Bonds and (5) the ratings that are expected to
be assigned to the Bonds on such date.
(D) (I) Determination of Term Interest Rate. During each Term Interest
Rate Period, the Bonds shall bear interest at a Term Interest Rate, which shall be determined by the Remarketing Agent not later than 4:OO p.m., New York City
time, on any Business Day not less than one day preceding the first day of such Term Interest Rate Period. The Term Interest Rate shall be the rate determined
by the Remarketing Agent (on the basis of examination of obligations
comparable to the Bonds known to the Remarketing Agent to have been priced
or traded under then prevailing market conditions) to be the minimum interest rate which, if borne by the Bonds, would enable the Remarketing Agent to sell the Bonds on such Business Day at a price equal to the principal amount thereof; provided, however, that if for any reason the Term Interest Rate cannot be determined for any Term Interest Rate Period, the interest rate on the Bonds shall
convert to a Weekly Interest Rate.
(11) Adiustment to and Continuation of Term Interest Rate Period.
The Borrower, by written direction to the Trustee and the Remarketing Agent,
and with notice to the Issuer and the prior written consent of the Bank,
accompanied by an Approving Opinion, may elect that the Interest Rate Period
for the Bonds shall be a Term Interest Rate Period, and shall determine the
duration of the Term Interest Rate Period (which may be any period of at least one year, provided it ends on a day immediately preceding an Interest Payment Date applicable to the Term Interest Period, or the period of time remaining to the final maturity of the Bonds). Such direction (a) shall specify the effective date of such Term Interest Rate Period, which shall be (1) an Interest Payment Date not less than 45 days following the date of receipt by the Trustee of such direction, (2) the Interest Payment Date which is the day next succeeding the last
day of the then current Term Interest Rate Period (or the Business Day next
succeeding such Interest Payment Date if the adjustment is from a Term Interest
Rate Period and such Interest Payment Date is not a Business Day) not less than
45 days following the date of receipt by the Trustee of such direction, or (3) any
date on which the Bonds may be optionally redeemed pursuant to Section 4.01(6)
not less than 45 days following the date of receipt by the Trustee of such direction; and (b) shall specify the last day of such Term Interest Rate Period. If, at least 45 days prior to the last day of any Term Interest Rate Period, the Borrower shall not have elected that the Bonds bear interest at a Weekly Interest Rate or a Term Interest Rate during the next succeeding Interest Rate Period, the next succeeding Interest Rate Period shall be a Term Interest Rate Period of the same duration as the immediately preceding Term Interest Rate Period.
Notwithstanding anything else provided in this Section 2.03(D)(II), the Borrower
may not adjust to a Term Interest Rate Period unless (i) the Letter of Credit has
been modified to provide interest coverage sufficient to maintain the rating on
the Bonds (with the short-term rating being the applicable rating if one is being
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maintained on the Bonds) and (ii) the remaining term of the Letter of Credit is at
least equal to the length of such Term Interest Rate Period.
(III) Notice of Adiustment to Term Interest Rate Period. The Trustee
shall give notice by mail of each Term Interest Rate Period to the Owners of the Bonds, the Bank and the Borrower not less than 30 days prior to the effective date
of such Term Interest Rate Period. Such notice shall state (1) that the interest rate
on the Bonds will be adjusted to or continue to be a Term Interest Rate, (2) the
effective date of such Term Interest Rate Period, (3) that the Bonds shall be
purchased on such effective date pursuant to Section 4.06 of the Indenture, (4)
the procedures for purchase of the Bonds and (5) the ratings that are expected to be assigned to the Bonds on such date.
(E) The determination of the interest rate on the Bonds by the Remarketing Agent
shall be conclusive and binding upon the Owners of the Bonds, the Issuer, the Borrower, the
Tender Agent, the Bank and the Trustee.
(F) 2.04,4.01 and 4.06.
The Bonds shall be subject to redemption and purchase as provided in Sections
Section 2.04. Demand Purchase of Bonds.
(A) During any Weekly Interest Rate Period, any Bond or portions thereof in
Authorized Denominations shall be purchased at the option of the Owner thereof, or with
respect to Book-Entry Bonds, at the option of the Direct Participant with an ownership interest
in Book-Entry Bonds, on any Business Day, at a price of 100% of the principal amount thereof,
plus accrued interest to the Purchase Date, upon (i) delivery to the Trustee, if the Bonds are
Book-Entry Bonds, or otherwise to the Tender Agent, at its Principal Corporate Trust Office of
an irrevocable notice in writing (a "Tender Notice") by 4:OO p.m., New York City time, on any
Business Day, which states the name of the registered Owner of such Bond or the Direct Participant for such Bond, as applicable, payment instructions with respect to the Purchase Price of such Bond, the principal amount of such Bond and the date on which the same shall be
purchased (which date shall be a Business Day not prior to the seventh day next succeeding the date of the delivery of such notice to the Tender Agent), and (ii) if the Bonds are not Book-Entry
Bonds, delivery of such Bond to the Tender Agent at its Principal Corporate Trust Office,
accompanied by an instrument of transfer thereof, in form satisfactory to the Tender Agent,
executed in blank by the Owner thereof with the signature guaranteed in accordance with the
guidelines set forth by one of the nationally recognized medallion signature programs, at or
prior to 12:30 p.m., New York City time, on the date specified in such notice; or if the Bonds are
Book-Entry Bonds, upon confirmation by DTC to the Trustee that a Direct Participant with respect to Book-Entry Bonds being purchased pursuant to this Section 2.04 has an ownership
interest in such Book-Entry Bond at least equal to the amount specified in such Tender Notice,
the transfer on the registration books of DTC of the beneficial ownership interest in such Book-
Entry Bond tendered for purchase to the account of the Trustee, or to the account of a Direct
Participant acting on behalf of the Trustee.
(B) If moneys sufficient to pay the Purchase Price of Bonds to be purchased pursuant
to Section 2.04(A) shall be held by the Trustee or the Tender Agent on the date such Bonds are
to be purchased, any Bonds to be so purchased that are not delivered by the Owners thereof to the Tender Agent or transferred on the registration books of DTC, as applicable, on the
specified purchase date will be deemed to have been delivered for purchase, or transferred on
the registration books of DTC, as applicable, on such date and to have been purchased. The former Owners of such Bonds, or Direct Participants with respect to Book-Entry Bonds, will
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thereafter have no rights with respect to such Bonds except to receive payment of the Purchase
Price therefor upon surrender of such Bonds to the Tender Agent or the transfer on the registration books of DTC of the beneficial interest in such Book-Entry Bonds.
Section 2.05. Execution of Bonds. The Bonds shall be executed in the name and on behalf
of the Issuer with the manual or facsimile signature of any Member of the Commission of the Issuer and attested by the manual or facsimile signature of the Secretary of the Issuer or
authorized deputy thereof. The Bonds shall then be delivered to the Trustee or the Tender
Agent for authentication. In case any of the officers who shall have signed or attested any of the
Bonds shall cease to be such officer or officers of the Issuer before the Bonds so signed or
attested shall have been authenticated or delivered by the Trustee or the Tender Agent or issued by the Issuer, such Bonds may nevertheless be authenticated, delivered and issued and, upon such authentication, delivery and issue, shall be as binding upon the Issuer as though those
who signed and attested the same had continued to be such officers of the Issuer, and also any
Bonds may be signed and attested on behalf of the Issuer by such persons as at the actual date
of execution of such Bonds shall be the proper officers of the Issuer although at the nominal
date of such Bonds any such person shall not have been such officer of the Issuer.
Only such of the Bonds as shall bear thereon a certificate of authentication substantially
in the form set forth in Exhibit A, with the manual signature of the Trustee or the Tender Agent,
as authenticating agent, shall be valid or obligatory for any purpose or entitled to the benefits of
this Indenture, and such certificate of the Trustee or Tender Agent shall be conclusive evidence
that the Bonds so authenticated have been duly executed, authenticated and delivered
hereunder and are entitled to the benefits of this Indenture.
Section 2.06. Transfer of Bonds. Subject to the provisions of Section 4.08 with respect to
Bank Purchased Bonds, any Bond may, in accordance with its terms, be transferred, upon the
books required to be kept pursuant to the provisions of Section 2.08, by the person in whose
name it is registered, in person or by such person’s duly authorized attorney, upon surrender of
such registered Bond for cancellation, accompanied by delivery of a written instrument of transfer, duly executed in a form approved by the Trustee. Transfer of a Bond shall not be permitted by the Trustee after the Record Date prior to the next succeeding Interest Payment Date or after any notice of redemption for such Bonds has been issued and prior to such redemption.
Whenever any Bond or Bonds shall be surrendered for transfer, the Issuer shall execute
and the Trustee or Tender Agent shall authenticate and deliver a new Bond or Bonds for a like
aggregate principal amount in an Authorized Denomination. The Trustee or Tender Agent
shall require the Bondholder requesting such transfer to pay any tax or other governmental
charge that to its knowledge is required to be paid with respect to such transfer.
Section 2.07. Exchange of Bonds. Bonds may be exchanged, prior to the Record Date, at the Principal Corporate Trust Office of the Trustee, for a like aggregate principal amount of
Bonds of other Authorized Denominations. The Trustee shall require the Bondholder requesting such exchange to pay any tax or other governmental charge that to its knowledge is
required to be paid with respect to such exchange.
Section 2.08. Bond Renister. - The Trustee, as Bond Registrar, will keep or cause to be
kept at its Principal Corporate Trust Office sufficient books for the registration and transfer of the Bonds, which shall, upon reasonable notice, be open to inspection during regular business
hours by the Issuer; and, upon presentation for such purpose, the Trustee shall, under such
reasonable regulations as it may prescribe, register or transfer or cause to be registered or
transferred, on such books, Bonds as hereinbefore provided.
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Section 2.09. Temporarv Bonds. The Bonds may be issued in temporary form
exchangeable for definitive Bonds when ready for delivery. Any temporary Bond may be
printed, lithographed or typewritten, shall be in an Authorized Denomination, shall be in fully
registered form without coupons 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 by the Trustee or the Tender Agent as authenticating agent upon the same conditions and in substantially the same manner as the definitive Bonds. If the Issuer issues
temporary Bonds it will execute and deliver definitive Bonds for the Bonds as promptly
thereafter as practicable, and thereupon the temporary Bonds may be surrendered, for
cancellation, in exchange therefor at the Principal Corporate Trust 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 in 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 2.10. Bonds Mutilated, Lost, Destroved 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 in exchange and substitution
for the Bond so mutilated, but only upon surrender to the Trustee of the Bond so mutilated.
Every mutilated Bond so surrendered to the Trustee shall be cancelled by it and upon request delivered to the Issuer. If any Bond shall be lost, destroyed or stolen, evidence of such loss,
destruction or theft may be submitted to the Trustee and, if such evidence be satisfactory to it and indemnity satisfactory to it 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 in lieu of and in substitution for the Bond so lost, destroyed or stolen (or if any such Bond shall have matured or shall be about to mature, instead of issuing a substitute Bond, the Trustee may
pay the same without surrender thereof). The Issuer may require payment by the Holder of a
sum not exceeding the actual cost of preparing each new Bond issued under this Section and of
the expenses which may be incurred by the Issuer and the Trustee. Any Bond issued under the
provisions of this Section in lieu of any Bond alleged to be lost, destroyed or stolen shall
constitute the same contractual obligation on the part of the Issuer as the original Bonds,
whether or not the Bond so alleged to be lost, destroyed or stolen be at any time enforceable by
anyone, and shall be entitled to the benefits of this Indenture with all other Bonds secured by
this Indenture.
Section 2.11. Book-Entry Onlv Svstem.
(A) Except as otherwise provided in subsections (B) and (C) of this Section 2.11, the
Bonds initially authenticated and delivered hereunder shall be registered in the name of Cede &
Co., as nominee of DTC, or such other nominee as DTC shall request. Payments of interest on,
principal of and any premium on the Bonds shall be made to the account of Cede & Co. on each payment date for principal or interest on the Bonds at the address indicated for Cede & Co. in the registration books maintained by the Bond Registrar 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 the Direct Participants and the ownership interests of Beneficial Owners will be recorded through book entries on the records of the Direct Participants.
(B) The Bonds shall be initially issued in the form of a separate single authenticated
fully registered Bond in the principal amount of $20,000,000. With respect to Bonds so registered in the name of Cede & Co., the Issuer, the Trustee and the Tender Agent shall have
no responsibility or obligation to any Direct Participant (with the exception of the right of Direct
Participants to demand purchase of Bonds pursuant to Section 2.04 hereof) or to any Beneficial
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Owner of such Bonds. Without limiting the immediately preceding sentence, the Issuer, the
Trustee and the Tender Agent shall have no responsibility or obligation with respect to (i) the
accuracy of the records of DTC, Cede & Co. 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
interest on, the Bonds or (iv) any consent given or other action taken by DTC as Holder of the
Bonds. The Issuer, the Trustee and the Tender Agent may treat DTC as, and deem DTC to be, the absolute Holder of each Bond for all purposes whatsoever (with the exception of the right of
Direct Participants to demand purchase of Bonds pursuant to Section 2.04 hereof) including (but
not limited to) (i) payment of the principal or redemption price of, and interest on, each such
Bond, (ii) giving notices of conversion 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 book-entry 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 &
Co., and subject to the transfer provisions hereof, the word “Cede & Co.” in this Indenture shall
refer to such new nominee of DTC.
(1) 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.
(2) The Issuer, in its sole discretion and without the consent of any other
person, may terminate, upon provision of notice to the Trustee and the Tender Agent,
the services of DTC with respect to the Bonds if the Issuer determines that the
continuation of the system of book-entry only transfers through DTC (or a successor
securities depositary) 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 fifty percent (50%) of the aggregate principal amount of the then Outstanding Bonds to the effect, that: (i) DTC is unable to discharge its responsibilities with respect to such Bonds, or (ii) 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 & Co., as nominee of DTC, is not in the best interest of the Beneficial
Owners of such Bonds.
(D) Upon the discontinuance or termination of the services of DTC with respect to
the Bonds pursuant to subsection (C) above after which no substitute Securities Depositary 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 Bond Registrar in the name of Cede & Co. as nominee of DTC. In such event, the Issuer
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shall issue and the Trustee shall transfer and exchange Bond certificates as requested by DTC or
Direct Participants of like principal amount 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 & Co., 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 letters of the Issuer and the Trustee executed and delivered to DTC prior to the
issuance of the Bonds (collectively, the ”Letter of Representations”).
(F) In connection with any notice or other communication to be provided to
Bondholders 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 Bondholders, the Issuer, the Tender Agent
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 fifteen (15) calendar days in advance of
such record date to the extent possible.
Notwithstanding any provision herein to the contrary, the Issuer and the Trustee
may agree to allow DTC, or its nominee, Cede & Co., 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.
(G)
(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 Tender Agent in connection with a mandatory tender pursuant to Section 4.06 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
Trustee, or a Direct Participant acting on behalf of such Trustee.
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ARTICLE I11
ISSUANCE OF BONDS; PROJECT FUND
Section 3.01. Issuance of the Bonds; Application of Proceeds.
(A) 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 $20,000,000, and shall
deliver them 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 delivered
to the Trustee each of the following:
(1) a certified resolution of the governing board 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, as identified therein;
(2)
(3) the Letter of Credit;
original executed counterparts of this Indenture and the Loan Agreement;
(4) 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; and
(5) evidence of the recording of the Regulatory Agreement, the Deed of Trust
and the Second Deed of Trust (as defined in the Reimbursement Agreement) which may
be received orally from the title insurance company, with written confirmation to follow.
(B) The proceeds of the Bonds, in the total amount of $ , received
by the Trustee on behalf of the Issuer, shall be deposited by the Trustee into the Project Fund.
Section 3.02. Establishment of Costs of Issuance Fund; Use of Moneys in the Costs of Issuance Fund. There is hereby created and established with the Trustee the "The Greens
Apartments Costs of Issuance Fund" (the "Costs of Issuance Fund"). The moneys in the Costs of Issuance Fund shall be held by the Trustee in trust and applied to the payment of Costs of Issuance. Before each payment is made from the Cost of Issuance Fund by the Trustee, there shall be filed with the Trustee, a Written Requisition (in the form attached hereto as Exhibit C) signed by an Authorized Borrower Representative, stating with respect to each payment to be
made: (i) the requisition number; (ii) the name and address of the person to whom payment is
due (which may be the Borrower if the payment is to reimburse the Borrower for amounts
previously paid); (iii) the purpose for which the payment is to be made; (iv) the amount to be
paid; (v) that each obligation mentioned therein has been properly incurred and is a proper
charge against the Cost of Issuance Fund; and (vi) that none of the items for which payment is
requested has been previously paid or reimbursed from the Cost of Issuance Fund.
Any moneys remaining in the Costs of Issuance Fund on August 31, 2003, and determined by the Issuer not to be needed to pay Costs of Issuance shall be transferred to the Bank as reimbursement for amounts drawn under the Letter of Credit or for deposit in the Redemption Account as directed by the Bank. Thereafter, the Costs of Issuance Fund shall then be closed.
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1/53
Section 3.03. Establishment of Proiect Fund; Use of Moneys in Proiect Fund. There is
hereby created and established with the Trustee the "The Greens Apartments Project Fund" (the "Project Fund"). The Trustee shall make payments from the Project Fund to pay the Costs of
the Project only upon (i) satisfaction of the conditions set forth in Section 4.1 of the Loan
Agreement and (ii) receipt by the Trustee of a Written Requisition of the Borrower (each, a
"Funding Requisition") in the forms set forth as Exhibit B to the Loan Agreement and
Attachment I to Exhibit F of the Reimbursement Agreement (upon which the Trustee, the Bank
and the Issuer shall rely and shall be protected in relying) signed by an Authorized Borrower Representative, and approved in writing by the Bank, conforming to the requirements of
Section 3.2 of the Loan Agreement and Attachment I to Exhibit F of the Reimbursement Agreement. Execution by an Authorized Borrower Representative of the requisition shall be conclusive evidence that the Borrower has provided the information required under Section 3.2
of the Loan Agreement and execution by an Authorized Bank Representative shall be
conclusive evidence that the Bank approves the amount of the Requisition, but the Bank shall
not be deemed to have made any representation as to the accuracy of such information. The
Trustee shall have no duty or obligation to verify the contents of any requisition delivered to it
hereunder. If such requisition is not received by the Trustee on or before the date that is three years after the Closing Date, unless the Borrower delivers to the Trustee certificates of the Issuer and the Bank approving an extension of such date, accompanied by an opinion of Bond Counsel to the effect that such extension will not result in interest on the Bonds being included in gross income for federal income tax purposes, the Trustee shall transfer the moneys on deposit in the
Project Fund to the Redemption Account and redeem Bonds pursuant to Section 4.01(1) of this Indenture. When no moneys remain in the Project Fund, such Funds shall be closed.
If an Event of Default occurs and the maturity of the Bonds is accelerated, the Trustee
will, at the written direction of the Bank or with the prior written consent of the Bank, to the
extent necessary, use moneys in the Project Fund to make payments on the Bonds or, to the extent such payments were made by a drawing under the Letter of Credit, to reimburse the
Bank for such drawings under the Letter of Credit.
Section 3.04. Retention of Requisitions. For seven years from the date of the discharge of this Indenture, the Trustee shall retain in its possession all requisitions received by it subject to the inspection of the Issuer, its agents and representatives, the Borrower, the Bank and the , Owners and their representatives at all reasonable times.
Section 3.05. Funding - of Proiect. Upon the Final Funding Date, the Trustee shall be
furnished with the certificate of an Authorized Borrower Representative approved in writing by
the Bank (as described in Section 3.3 of the Loan Agreement). Thereupon, upon written
direction of the Borrower as required by Section 4.1 of the Loan Agreement and with the prior written consent of the Bank, any balance in the Project Fund not used to pay Costs of the Project
shall be transferred to the Redemption Account and applied to the redemption of Bonds
pursuant to Section 4.01(1) of this Indenture.
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ARTICLE IV
REDEMPTION AND PURCHASE OF BONDS
Section 4.01. Terms of Redemption. The Bonds are subject to redemption if and to the
extent the Borrower is entitled to make and makes, or is required to make, a prepayment pursuant to Article VIII of the Loan Agreement. All such prepayments shall be deposited in the
Redemption Account. The Issuer shall not call the Bonds for optional redemption, and the Trustee shall not give notice of any such redemption, unless the Borrower has so directed such
redemption and the Trustee has received (i) the Bank's prior written consent to such optional
redemption if required pursuant to Section 8.l(d) of the Loan Agreement and (ii) payment has
been made of all required installments of the Borrower's obligations under the Loan
Agreement.
The Bonds shall be redeemed (with Available Moneys in the priority set forth in Section
5.03) upon the following terms:
(1) Mandatorv Redemption to the Extent of Excess Proceeds. The Bonds shall be
subject to redemption in part on the earliest practicable Interest Payment Date for which notice
of redemption may be given after the earlier of the Final Funding Date or the date three years
after the Closing Date (unless such three year date is extended in accordance with Section 3.3 of
the Loan Agreement), at a price equal to the principal amount of Bonds redeemed plus interest
accrued thereon to the date fixed for redemption, without premium, in a principal amount as
nearly equal as possible to, but not more than, the amount transferred by the Trustee from the
Project Fund to the Redemption Account of the Revenue Fund following the earlier of the Final Funding Date or the date three years (or such later date as provided herein) after the Closing
Date, as provided in Section 3.03.
(2) Mandatorv Redemption Upon Failure to Renew or Replace the Letter of Credit.
The Bonds shall be redeemed in whole, at a redemption price equal to 100% of the principal amount thereof plus accrued interest to the redemption date, without premium, in the event
that (i) the Letter of Credit is not renewed or a notice of expected delivery of an Alternate Letter
of Credit is not delivered to the Trustee at least thirty (30) days prior to the scheduled expiration
of the Letter of Credit; or (ii) such Alternate Letter of Credit is not actually delivered on a
Business Day at least ten (10) days prior to such expiration date. Any such redemption shall
occur no later than five (5) calendar days prior to the scheduled expiration of the Letter of Credit.
(3) Redemption Upon Occurrence of Extraordinarv Events. The Bonds may be redeemed in whole or in part, on any Interest Payment Date during a Weekly Interest Rate
Period or on any date during a Term Interest Rate Period at a redemption price equal to the
principal amount thereof, without premium, plus accrued interest to the date of redemption,
upon receipt by the Trustee of a written notice from the Bank and the Borrower pursuant to
Section 6.2 of the Loan Agreement.
(4) Redemption Upon Default Under the Loan Agreement or Reimbursement
Agreement. The Bonds shall be subject to redemption in whole at a price equal to the principal
amount of Bonds redeemed plus interest accrued thereon to the date fixed for redemption, without premium, (i) at the written request or with the prior written consent of the Bank following either any Event of Default under the Loan Agreement, other than an Acceleration
Default, or an event of default under the Reimbursement Agreement, or (ii) upon an Acceleration Default; provided, that the Bonds shall not be subject to redemption under this
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Section if the Event of Default under the Loan Agreement consists solely of failure of the
Borrower to reimburse the principal amount of a draw on the Letter of Credit to pay principal of the Bonds in connection with a purchase of such Bonds in lieu of redemption pursuant to 4.08
hereof. Any such redemption shall occur on the first Business Day for which notice of
redemption may be given in accordance with Section 4.03.
(5) Optional Redemption during Weeklv Interest Rate Period. On any Interest Payment Date during a Weekly Interest Rate Period and on the first day of any Term Interest
Rate Period, the Bonds may be redeemed by the Trustee, at the option of the Issuer, but only upon the request of the Borrower pursuant to Section 8.l(d) of the Loan Agreement, and with
the prior written consent of the Bank, in whole or in part, at a redemption price equal to the
principal amount thereof, without premium. Such request and consent shall be deemed to have
been given and made with respect to the redemptions contemplated and scheduled pursuant to
Section 10.25 of the Reimbursement Agreement (which are set forth in Exhibit D hereto) and shall continue unless and until the Bank provides written notice terminating such optional redemptions.
(6) ODtional Redemption durinE - Term Interest Rate Period. During any Term
Interest Rate Period, the Bonds also shall be subject to redemption in whole or in part, at the
option of the Issuer, but only upon the request of the Borrower pursuant to Section 8.l(d) of the
Loan Agreement and with the prior written consent of the Bank, at the times (measured from
the first day of the applicable Term Interest Rate Period), and at the redemption prices (expressed as percentages of principal amount) set forth below, plus accrued interest, if any, to the redemption date:
Length of Term Interest Rate Period or Length of Time to
Maturity
Greater than 17 years
Greater than 10 and less than
or equal to 17 years
Greater than 8 and less than or equal to 10 years
Greater than 6 and less than
or equal to 8 years
Greater than 4 and less than
or equal to 6 years
Greater than 3 and less than or equal to 4 years
Redemption - Dates and Prices
At any time on or after the 10th anniversary of the
commencement date of such Interest Rate Period at 101%
declining 1/20/, annually to 100%.
At any time on or after the 5th anniversary of the
commencement date of such Interest Rate Period at 101% declining 1 / 2% annually to 100%.
At any time on or after the 5th anniversary of the commencement date of such Interest Rate Period at 101%
declining 1/2'/0 annually to 100%.
At any time on or after the 3rd anniversary of the
commencement date of such Interest Rate Period at 101%
declining 1/2Y0 annually to 100%.
At any time on or after the 2nd anniversary of the
commencement date of such Interest Rate Period at 101% declining 1/2% annually to 100%.
At any time on or after the 2nd anniversary of the commencement date of such Interest Rate Period at 100-
1/2Y0 declining 1/20/, annually to 100%.
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Greater than 2 and less than
or equal to 3 years
At any time on or after the 1st anniversary of the
commencement date of such Interest Rate Period at 100-
1/2% declining 1/20/, annually to 100%.
Greater than 1 and less than
or equal to 2 years
Less than or equal to 1 year
At any time on or after the 1st anniversary of the commencement date of such Interest Rate Period at 100°/~.
On the Interest Payment Date which is at least six months
after the commencement date of such Interest Rate Period
at 100%.
If the Bonds are to be adjusted to a Weekly Interest Rate Period pursuant to, and in accordance with, Section2.03(C)(II) before the end of a Term Interest Rate Period, the Issuer shall be required to pay the Owners of the Bonds, as a portion of the Purchase Price of the
Bonds, but solely from Available Moneys provided by or on behalf of the Borrower, the
premium, as stated above, that would apply if the Bonds were redeemed on the date of such
adjustment.
Section 4.02. Selection of Bonds for RedemDtion. Whenever provision is made in this
Indenture for the redemption of less than all of the Bonds, the Trustee shall select the Bonds to
be redeemed from all Bonds or such given portion thereof not previously called for redemption
by lot in any manner that the Trustee in its sole discretion shall deem appropriate and fair;
provided that, so long as moneys are available therefor in the Revenue Fund or the Project Fund
from sources other than a drawing on the Letter of Credit, the Trustee shall, first, redeem outstanding Bank Purchased Bonds and, second, Pledged Bonds, prior to redeeming other Bonds; and provided, further, that all Bonds remaining Outstanding shall be in Authorized Denominations.
Section 4.03. Notice of RedemDtion.
(A) Notice of redemption shall be mailed to the respective registered Holders of any
Bonds designated for redemption, at their addresses on the registration books maintained by
the Trustee, not less than thirty (30) days nor more than sixty (60) days before such redemption
date; or, in the case of a redemption pursuant to Sections 4.01(2)(i), 4.01(3) and 4.01(5), such
notice shall be given on a Business Day not less than fifteen (15) calendar days prior to the
redemption date; provided that the date fixed for such redemption pursuant to Section 4.01(4) shall not be more than five days after receipt by the Trustee of a request from the Bank that the
Bonds be redeemed in accordance with Section 4.01(4), or, in the case of a redemption pursuant
to Section 4.01(2)(ii) notice shall be given on a Business Day not less than three (3) calendar days
prior to the redemption date. Each notice of redemption shall state the redemption date, the
place or places of redemption, if less than all of the Bonds are to be redeemed, the distinctive
number of the Bonds to be redeemed, and in the case of Bonds to be redeemed in part only, the
respective portions of the principal amount thereof to be redeemed. Each such notice shall also
state that on said date there will become due and payable on each of said Bonds the principal
thereof or of said specified portion of the principal thereof in the case of a Bond to be redeemed
in part only, and that from and after such redemption date interest thereon shall cease to accrue,
and shall require that such Bonds be then surrendered. Neither failure to receive such notice
nor any defect therein shall affect the sufficiency of such redemption. For a redemption under Section 4.01(6) with premium, no notice may be given unless (1) the Borrower has previously deposited or cause to be deposited Available Moneys in the amount of premium with the Trustee, or (2) the Letter of Credit will cover the premium, or such notice shall otherwise state that it is rescindable as provided below in (D). The notice of redemption may be withdrawn by
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the Trustee in the case of a redemption under Section 4.01(2) if an Alternate Letter of Credit is
actually delivered to the Trustee.
(B) Notice of redemption of Bonds shall be given by the Trustee for and on behalf of
the Issuer at the expense of the Borrower.
(C) At the same time that it sends notice of redemption to Owners of Bonds, the Trustee shall also send a copy of the notice by first class mail or by overnight delivery to the
Tender Agent, the Remarketing Agent, the Securities Depositaries and an Information Service.
Failure to provide notice to the Tender Agent, the Securities Depositaries or an Information
Service shall not affect the validity of proceedings for the redemption of Bonds.
In the event that a notice of redemption is being given for an optional redemption pursuant to Section 4.01(5), which redemption is occurring due to a current refunding of the Bonds, such notice of redemption shall state, at the direction of the Issuer, that the redemption is conditioned on the issuance and delivery of such refunding bonds, and shall further state, at
the direction of the Issuer, that in the event that such refunding bonds are not issued and
delivered, such redemption notice shall be automatically rescinded and shall be null and void.
Section 4.04. Partial Redemption of Bonds. Upon surrender of any Bond redeemed in
part only, the Issuer shall execute and the Trustee or the Tender Agent as authenticating agent shall authenticate and deliver to the Owner thereof, at the expense of the Issuer, a new Bond or
Bonds of Authorized Denominations equal in aggregate principal amount to the unredeemed portion of the Bond surrendered.
Section 4.05. Effect of Redemption. Notice of redemption having been duly given as
aforesaid, and moneys for payment of the redemption price of, together with interest accrued to
the date fixed for redemption on, the Bonds (or portions thereof) so called for redemption being held by the Trustee, on the redemption date designated in such notice, the Bonds (or portions thereof) so called for redemption shall become due and payable, interest on the Bonds so called for redemption shall cease to accrue, said Bonds (or portions thereof) shall cease to be entitled to any benefit or security under this Indenture, and the Holders of said Bonds shall have no rights
in respect thereof, except to receive payment of said principal and interest accrued to the date fixed for redemption from such moneys held by the Trustee for such purpose, and such moneys
shall be pledged to such payment.
Section 4.06. Mandatorv Tender for Purchase of Bonds.
(1) On the first day of each Interest Rate Period, and (2) on the effective date of an
Alternate Letter of Credit (each a "Purchase Date"), the Owner or Direct Participant of any Bond shall tender such Bond for purchase as provided below and such Bond shall be purchased
or deemed purchased as provided in Section 4.07(A)(3) hereof at a Purchase Price equal to the principal amount thereof plus accrued and unpaid interest thereon, plus any premium required
pursuant Section 4.01(6) hereof. Subject to Section 4.07(G) hereof, payment of the Purchase
Price of such Bond shall be made by 2:30 p.m., New York City time, on the Purchase Date, in the
same manner as payment of interest on the Bonds, to the Owner of record or Direct Participant
with respect to Book-Entry Bonds. If the Bonds are not Book-Entry Bonds, the Owner shall
deliver such Bonds not later than 12:30 p.m., New York City time, on the Purchase Date to the
Tender Agent at its Principal Corporate Trust Office, accompanied by an instrument of transfer thereof, in form satisfactory to the Tender Agent, with the signature guaranteed in accordance with the guidelines set forth by one of the nationally recognized medallion signature programs.
If the Bonds are Book-Entry Bonds, the tendering Direct Participant shall transfer on the registration books of DTC the beneficial ownership interests in such Bonds tendered for
purchase to the account of the Trustee or a Direct Participant acting on behalf of the Trustee. The Trustee shall give the Owners of the Bonds not less than fifteen (15) days prior written notice of the mandatory tender provided for pursuant to this Section 4.06.
Section 4.07. Purchase and Remarketing of Bonds.
(A) Notice of Bonds Delivered for Purchase. Whenever the Bonds are Book-Entry
Bonds, all references in this Section 4.07 to the Tender Agent shall instead mean the Trustee, as
the context may require.
(1) As soon as practicable, the Tender Agent shall give telephonic,
telegraphic or telecopier notice, promptly confirmed in writing, to the Trustee,
specifying the principal amount of Bonds required to be tendered for purchase in
accordance with Section 4.06 or tendered pursuant to Section 2.04(A). The Trustee shall
promptly supply the same notice to the Remarketing Agent and the Bank.
(2) The Tender Agent shall purchase, but only from the sources listed below, Bonds required to be purchased in accordance with Section 4.06 or tendered pursuant to Section 2.04(A) from the Owners thereof by 2:30 p.m., New York City time, on the date such Bonds are required to be purchased at the Purchase Price provided in Section 4.06
or Section 2.04(A). Funds for the payment of such Purchase Price shall be derived from
the following sources in the order of priority indicated:
(a) the proceeds of the sale of the Bonds (but only such remarketing
proceeds as are received from purchasers of the Bonds pursuant to
Section4.07(B) hereof) furnished to the Tender Agent or the Trustee, as
applicable, by the Remarketing Agent; provided, however that such proceeds
shall not have been derived from the Issuer, the Borrower, or any general partner
or guarantor thereof;
(b) moneys furnished to the Tender Agent representing the proceeds
of a draw under the Letter of Credit; and
(c) moneys provided by the Borrower, with amounts qualifying as Available Moneys to be applied prior to the application of amounts not so quallfying.
(3) The provisions of this Section 4.07(A)(3) shall not apply at any time that the Bonds are Book-Entry Bonds. With respect to any Bonds tendered for purchase or required to be tendered for purchase as to which sufficient funds to accomplish such purchase are available to the Tender Agent at the respective times at which payment of
the Purchase Price is to be made as provided herein:
(a) Such Bonds shall be deemed purchased for all purposes of this Indenture, irrespective of whether or not such Bonds shall have been presented to the Tender Agent, and the former Owner or Owners of such Bonds shall have no claim thereon, under this Indenture or otherwise for any amount other than the Purchase Price thereof and such Bonds shall no longer be deemed to be
Outstanding for purposes of this Indenture and the Bond Registrar shall so note on the Bond Register for the Bonds.
(b) Subject to Section 4.07(G) hereof, in the event that any Bonds shall not be presented to the Tender Agent, the Tender Agent shall segregate and hold
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the moneys for the Purchase Price of such Bonds in trust, uninvested for the benefit of the former Owners of such Bonds, who shall, except as provided in the following sentences, thereafter be restricted exclusively to such moneys for the
satisfaction of any claim for the Purchase Price of such Bonds.
(c) In the event that any Bonds shall not be presented to the Tender
Agent at the time specified in Section4.06 or Section2.04(A) (each an
"Undelivered Bond"), then the Issuer shall execute and deliver to the Tender
Agent for authentication a new Bond or Bonds, as the case may be, in an aggregate principal amount equal to the principal amount of the Undelivered
Bonds bearing a number or numbers not contemporaneously outstanding. Every
Bond authenticated and delivered as provided in the preceding sentence shall be
entitled to all the benefits of this Indenture equally and proportionately with any
and all other Bonds duly issued hereunder. The Tender Agent shall maintain a
record of any Undelivered Bonds, together with the names and addresses of the
former Owners thereof.
(d) In case any Bonds which have been deemed purchased as provided in Section 4.07(A)(3)(a) hereof are delivered to the Tender Agent subsequent to the date and time specified for such delivery for payment of the Purchase Price thereof at its Principal Corporate Trust Office, accompanied by an instrument of transfer thereof, in form satisfactory to the Tender Agent, executed
in blank by the Owner thereof with the signature of such Owner guaranteed in
accordance with the guidelines set forth by one of the nationally recognized
medallion signature programs on any Business Day, the Tender Agent shall
(subject to Section 4.07(G)) pay the Purchase Price of such Bond to the Owner no
later than 12:OO noon, New York City time, on the next succeeding Business Day.
Any such Bond so delivered to the Tender Agent shall be cancelled and
delivered to the Trustee.
(B) RemarketinE - of Bonds; Notice of Interest Rates.
(1) The Remarketing Agent shall determine the rate of interest to be borne by
the Bonds as provided in Section2.03 hereof and shall furnish to the Trustee and the Tender Agent in a timely manner all information necessary for the Tender Agent and the Trustee, with a copy to the Bank, to carry out their respective duties hereunder,
including, but not limited to, the interest rates applicable to all Bonds.
(2) The Remarketing Agent shall periodically inform the Trustee, the Bank
and DTC pursuant to the Letter of Representations described in Section2.11(E), if so
requested, of the rate of interest borne by the Bonds from time to time.
(3) The Remarketing Agent shall use its best efforts to sell any Bonds
tendered for purchase to new purchasers at a price equal to the principal amount of such
Bonds plus interest accrued thereon. Not later than 4:OO p.m. (New York time) on the
Business Day before the Purchase Date, the Remarketing Agent shall in writing notify the Trustee, the Bank and the Tender Agent of the amount of Bonds that have been remarketed as of such time and are to be purchased on the Purchase Date. By 12:30 p.m. (New York time) on the Purchase Date, the Tender Agent shall in writing update such notification to inform the Trustee and the Bank of the actual amount of remarketing proceeds on hand.
(C) Deliverv of Remarketed Bonds.
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(1) The Trustee and the Tender Agent each shall hold all Bonds delivered to
them in trust for the benefit of the respective Owners which shall have so delivered such
Bonds or for the Direct Participants who have transferred their interests in the Book- Entry Bonds 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 Owners or Direct Participants. The Trustee and the Tender Agent (or after five days, as provided in Section4.07(G), the Trustee) each shall hold all moneys for the purchase of Bonds, including any moneys representing the premium, if any, to be paid in connection with the purchase of Bonds (which shall be held separate and apart from other moneys held
for the purchase of Bonds), in trust in non-commingled funds for the benefit of the
person or entity which shall have so delivered such moneys until Bonds purchased with
such moneys shall have been delivered to or for the account of such person or entity.
Neither the Issuer, the Borrower, nor any partner of the Borrower shall have any right, title, or interest in or to any moneys held by the Trustee, the Tender Agent or the Remarketing Agent, or pursuant to Section 4.07(G). Bonds purchased with moneys described in Section 4.07(A)(2)(a) or 4.07(A)(2)(b) hereof, including without limitation
Bonds issued in place of such Bonds pursuant to Section 4.07(A)(3)(c), shall be registered as directed by the Trustee (from instructions received from the Remarketing Agent) and made available to the Remarketing Agent by 1:30 p.m., New York City time, or transferred on the registration books of DTC on the date of such purchase or the date the ownership interest shall be transferred to the new Direct Participants on the books of
DTC, against payment in immediately available funds or evidence of immediately
available funds in the form of a federal reserve wire number. The Tender Agent shall
notify the Trustee of each Bond registered and delivered pursuant to subsection (C)(1) or (C)(2), and, in the case of delivery of Bonds in place of Pledged Bonds pursuant to
subsection (C)(2), the Tender Agent shall also notify the Trustee of the reinstatement of
the Letter of Credit.
(2) Bonds purchased with moneys obtained by a drawing on the Letter of
Credit ("Pledged Bonds"), including without limitation Bonds issued in place of such
Bonds pursuant to Section4.07(A)(3)(c) hereof, shall be held by the Tender Agent or
registered in the name of the Bank on the registration books of DTC, with respect to
Book-Entry Bonds. The proceeds of any remarketing of Pledged Bonds shall be
delivered to the Trustee and transferred to the Bank. Upon receipt by the Trustee of funds representing the proceeds of the remarketing of Pledged Bonds, Bonds in place of
such Pledged Bonds so purchased shall be made available for pick-up by the
Remarketing Agent for subsequent delivery to the purchasers thereof, or the ownership
interest shall be transferred to the new Direct Participants on the books of DTC. Prior to
or simultaneously with such delivery, the proceeds of such remarketing shall have been
or shall be delivered to the Trustee and transferred to the Bank, and the Trustee and the
Tender Agent shall have received written confirmation from the Bank of the
reinstatement of the Letter of Credit.
(3) In the event that the Remarketing Agent is able to remarket any Bonds required to be purchased pursuant to Section 2.04(A) and 4.06 hereof after the time on
which the Remarketing Agent is required to provide its first notice to the Trustee and the Tender Agent as specified in Section 4.07(B)(3), the Remarketing Agent shall give or
cause the Trustee or Tender Agent, as applicable, to give notice in the manner and
containing the details set forth in this Section4.07, as soon as practicable after such remarketing, but in no event later than 11:30 a.m., New York City time, (8:30 a.m.
California time) on the Purchase Date and the Bonds shall be registered in the names of
the purchasers thereof made available to the Remarketing Agent as soon as practicable
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thereafter on such date or the next succeeding Business Day or transferred on the
registration books of DTC to the account of Direct Participants furnished to the Trustee or Tender Agent, as applicable, by the Remarketing Agent.
(4) If any Bond is tendered after a notice of redemption for such Bond has been given, the Remarketing Agent will give the redemption notice to any purchaser of
such Bond or to DTC if a Book-Entry Bond and the purchaser (including a Direct
Participant) shall acknowledge receipt of such redemption notice.
(D) Draws Upon the Letter of Credit. The Trustee shall draw on the Letter of Credit
in an amount necessary and in sufficient time (including on the Business Day prior to the date
funds are required for purchase if such a draw is required to receive sufficient amounts for such
purchase on a timely basis on the date of purchase) so as to provide to the Trustee or the Tender
Agent, as the case may be, the balance of the funds needed to purchase tendered Bonds. The Trustee shall take into account remarketing proceeds actually received from the Remarketing Agent by the Trustee or the Tender Agent, as applicable, pursuant to Section 4.07(E). If applicable, the Trustee shall transfer or cause to be transferred to the Tender Agent any moneys
drawn under the Letter of Credit for payment of the tendered Bonds. If the Trustee has drawn
on the Letter of Credit, and receives notice from the Tender Agent of remarketing proceeds
actually received, the Trustee shall so notify the Bank to modify its draw request or, if unable to
do so, shall return such excess to the Bank. Such moneys shall be used only to pay the Purchase Price as provided herein, and if not so used shall be promptly returned to the Bank. In the
event of a draw on the Letter of Credit due to a mandatory tender for purchase in connection with the delivery of an Alternate Letter of Credit, the Trustee shall draw on the Letter of Credit being replaced (and not on the Alternate Letter of Credit).
(E) Delivery of Proceeds of Sale. The proceeds of the remarketing of any Bonds received by the Remarketing Agent shall be transferred by the Remarketing Agent to the Tender Agent or the Trustee, as applicable, no later than 12:30 p.m., New York City time, on the Purchase Date and, upon receipt thereof, the Tender Agent or the Trustee, as applicable, shall
immediately apply such proceeds to the payment of the Purchase Price of Bonds to the Owners or Beneficial Owners thereof pursuant to Section 4.07(A)(2)(a), or, in the case of the remarketing of Bonds which constitute Pledged Bonds, as provided in Section 4.07(C)(2). In making
payments to the Bank, the Trustee may conclusively assume that the Bank has not been repaid
from any other sources. To the extent that the Bank is repaid with proceeds of the sale of
Pledged Bonds by the Remarketing Agent, new Bonds shall be registered and delivered (or
ownership interests transferred) as provided in Section 4.07(C)(2).
(F) No Sales After Default. Notwithstanding anything in this Indenture to the
contrary, if there shall have occurred and be continuing an Event of Default as described in
Section 7.01(a) or (b), there shall be no sales of Bonds pursuant to subparagraph (B)(3) of this Section 4.07.
(G) Unclaimed Monevs. The Tender Agent shall, at the end of the fifth Business Day
after the Purchase Date, transfer all funds then held on hand by virtue of the fact that Bonds
deemed tendered on such date were not presented for purchase to the Tender Agent in
accordance with the provisions of 4.07(A) to the Trustee to be held in a segregated account for
the Bonds to be designated the "Unclaimed Moneys Account" and to hold the same in trust
uninvested, for the payment of the Purchase Price thereof to the former Owners of such Bonds
as required by the provisions of Section 4.07(A). Upon receipt of funds from the Trustee, the
Tender Agent shall pay such Purchase Price from such amounts by check of the Tender Agent
made payable to the party entitled to such payment as soon as practicable after such party
surrenders the Bond or Bonds so deemed purchased to the Tender Agent. Any such moneys so
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I 27
held in trust by the Tender Agent shall be held uninvested until paid to the person entitled thereto or paid to the Trustee as provided in this Section 4.07(G).
(H) Conditions to Remarketing upon Expiration of Letter of Credit. If a notice to
renew the Letter of Credit or to provide an Alternate Letter of Credit in accordance with
Section 5.8 of the Loan Agreement shall not be delivered by the Borrower to the Trustee prior to
the 40th day before the scheduled expiration date of the Letter of Credit, then the Bonds shall
not be remarketed after the 10th day prior to such expiration date.
(I) Notices Upon Deliverv of Alternate Letter of Credit. Whenever the Borrower has
delivered to the Trustee notice of expected delivery of an Alternate Letter of Credit pursuant to Section 5.8 of the Loan Agreement, the Trustee shall mail a notice to all Holders of the Bonds stating: (i) the name of the issuer of the Alternate Letter of Credit, (ii) the date on which the
Alternate Letter of Credit will become effective, (iii) the rating expected to apply to the Bonds
after the Alternate Letter of Credit is delivered, (iv) disclosure relating to the provider of the
Alternate Letter of Credit in form and substance satisfactory to the Issuer and the Remarketing
Agent, and (v) notice that the Bonds will be subject to mandatory tender for purchase on the
date of delivery of the Alternate Letter of Credit, and information on where such Bonds are to be delivered. Such notice shall be mailed at least fifteen (15) days prior to the effective date of
the Alternate Letter of Credit.
Section 4.08. Purchase in Lieu of Redemption. Notwithstanding anything to the contrary provided in this Article IV or elsewhere in this Indenture, if the Bonds shall become subject to redemption in whole pursuant to Section 4.01(2) or Section 4.01(4) hereof, the Bonds shall either
(a) be redeemed in accordance with said Sections, or (b) be purchased in lieu of redemption pursuant to this Section if the Bank shall have given written notice to the Trustee, with a copy to the Remarketing Agent, not later than 12:OO noon, California time, on or before the third
Business Day immediately preceding the date otherwise scheduled for such redemption to the
effect that the Bank desires that the Bonds be purchased and not redeemed. If such a notice is
given by the Bank, then (1) such date otherwise scheduled for redemption shall be the Purchase
Date for all purposes hereof, (2) the Bonds shall not be redeemed but shall be purchased at the
Purchase Price on such Purchase Date in the name of the Bank, for the account of the Bank, by a
drawing on the Letter of Credit, and shall be delivered to and held by the Bank, and (3) after the consummation of the purchase of the Bonds in accordance with this subsection, the rights of the holders of the Bonds and the benefits and security of this Indenture shall not be deemed to be adversely affected by the giving of any notice of redemption pursuant to Section 4.03 hereof. Notwithstanding any other provision of this Indenture or the Bonds, Bank Purchased Bonds shall
bear interest at the Bank Rate.
The holders of the Bonds shall deliver to the Tender Agent the Bonds and the other
documents required to be so delivered pursuant to this Section on or prior to the Purchase Date.
Anything to the contrary contained elsewhere in this Indenture notwithstanding, Bank Purchased Bonds shall not be subject to tender for purchase or be remarketed by the
Remarketing Agent to the public until there shall have been delivered to the Trustee a Letter of Credit satisfying the requirements of this Indenture; provided, however, that for all purposes of this Indenture, and notwithstanding any provision to the contrary contained herein, no Letter of
Credit shall be required to be delivered so long as none of the Bonds are remarketed to the public. In addition to the ability of the Borrower to provide a Letter of Credit, the Bank may provide a Letter of Credit and may give to the Trustee notice of the delivery of such Letter of Credit at any time that Bank Purchased Bonds are Outstanding.
Until the Bonds are so remarketed, they shall be held only as one Bond registered either in the name of the Bank or in the name of another single holder who executes and delivers to
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the Trustee and the Issuer an investor letter in the form set forth in Exhibit B hereto; provided that the Trustee shall not so register the Bonds in the name of the Bank or any other transferee unless the Trustee shall have received such investor letter and either shall have confirmed that the same is in the form set forth in Exhibit B, without any modification thereto, or shall have received the Issuer's acknowledgment that the form of investor letter delivered to the Trustee is
acceptable to the Issuer; provided that the Bank shall not be required to deliver such investor
letter. The Bank and any transferee shall deliver to the Issuer and the Trustee a certificate to the
effect that, except as identified in such certificate, no documents (other than the investor letter)
have been or are expected to be executed by the Bank or the transferee in connection with such transfer of the Bonds and, if any such other documents have been or are expected to be executed, there shall be delivered to the Issuer and the Trustee an opinion of Bond Counsel to the effect that the execution, delivery and operation of such documents will not adversely affect the exclusion of interest on the Bonds from gross income for federal income tax purposes.
Whether the Bonds are registered in the name of Bank, in the name of another entity holding on
behalf of Bank or another single holder as provided above, no sale of the Bonds or any interest
therein may occur without the written consent of the Issuer unless the Letter of Credit is
reinstated or an Alternate Letter of Credit is delivered. The Trustee shall deliver copies of any
such investor letter, certificates and opinion to the Remarketing Agent.
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ARTICLE V
REVENUES; FUNDS AND ACCOUNTS; PAYMENT OF PRINCIPAL AND
INTEREST
Section 5.01. Pledge and Assimment; Establishment of Revenue Fund.
(A) Subject only to the provisions of this Indenture permitting the application thereof
for the purposes and on the terms and conditions set forth herein, all of the Revenues and any
other amounts (including proceeds of the sale of Bonds) held in any fund or account established
pursuant to this Indenture (except to the extent provided in Section 5.06 with respect to the Rebate Fund and moneys to be used to pay the Purchase Price of Bonds and the account described in Section 4.07(G)) are hereby pledged to secure the payment of the principal of and
interest on the Bonds in accordance with their terms and the provisions of this Indenture and thereafter to secure the obligations owed to the Bank arising under the Reimbursement
Agreement to the extent of its interest in such Revenues. Said pledge shall constitute a lien on
and security interest in such assets and shall attach, be perfected and be valid and binding from
and after delivery of the Bonds, without any physical delivery thereof or further act.
(B) The Trustee shall establish and maintain a fund separate from any other fund
established and maintained hereunder designated as the ”The Greens Apartments Revenue
Fund” (herein called the ”Revenue Fund”). The Issuer hereby transfers in trust, and assigns to
the Trustee, for the benefit of the Holders from time to time of the Bonds, and the Bank, to the
extent of its interest therein, all of the Revenues and other assets pledged in subsection (A) of
this Section and all of the right, title and interest of the Issuer in the Loan Agreement (except for
its Reserved Rights). The Trustee shall be entitled to and shall collect and receive all of the Revenues, and any Revenues collected or received by the Issuer 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 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 Loan Agreement, the Deed of Trust (consistent with the Intercreditor 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.
(C) All Revenues (except Revenues derived from interest earnings on moneys in the
Costs of Issuance Fund, the Rebate Fund and the Project Fund) shall be promptly deposited by the Trustee upon receipt thereof in a special fund designated as the Revenue Fund, which the Trustee shall establish, maintain and hold in trust, except Revenues received by the Trustee and
required to be deposited in the Redemption Account (including payments made by the Borrower pursuant to Section of the Reimbursement Agreement) shall be promptly deposited in the Redemption Account. All Revenues deposited with the Trustee shall be held, disbursed, allocated and applied by the Trustee only as provided in this Indenture.
Section 5.02. Allocation of Revenues. On or before any date on which interest or principal (whether at maturity, or by redemption or acceleration) is due, the Trustee shall
transfer funds from the Revenue Fund, subject to Section 5.03, and deposit into the following
respective accounts (each of which the Trustee shall establish and maintain within the Revenue Fund), the following amounts, in the following order of priority, the requirements of each such
account (including the making up of any deficiencies in any such account resulting from lack of Revenues sufficient to make any earlier required deposit) at the time of deposit to be satisfied before any transfer is made to any account subsequent in priority:
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m: to the Interest Account, the aggregate amount of interest becoming due and payable on the next succeeding Interest Payment Date on all Bonds then Outstanding, until the
balance in said account is equal to said aggregate amount of interest.
Second: to the Principal Account, the amount paid by the Borrower, if any, designated as or attributable to principal on the Bonds in the most recent Loan Repayment equal to the aggregate amount of principal due on the next principal payment date.
Third: to the Redemption Account, the aggregate amount of principal and premium, if
any, next coming due by acceleration or redemption as permitted or required under Article IV hereof.
Section 5.03. Prioritv of Monevs in Revenue Fund.
(A) Funds for the payment of the principal or redemption price of and interest on the Bonds shall be derived from the following sources in the order of priority indicated in each of
the accounts in the Revenue Fund:
(i) moneys paid into the Letter of Credit Account of the Revenue Fund from
a draw by the Trustee under the Letter of Credit (provided that no moneys from the Letter of Credit Account shall be used to pay principal or interest on any Bonds held by
the Bank or the Borrower);
(ii) moneys paid into the Revenue Fund pursuant to SectionlO.Ol(b) and proceeds from the investment thereof that constitute Available Moneys;
(iii) any other moneys (other than from draws on the Letter of Credit)
deposited in the Revenue Fund and proceeds from the investment thereof which
constitute Available Moneys; and
(iv) any other moneys paid into the Revenue Fund and deposited in the
Revenue Fund and proceeds from the investment thereof which are not Available
Moneys.
The Trustee shall create within the Revenue Fund a separate account called the ”Letter
of Credit Account,” into which all moneys drawn under the Letter of Credit (other than to pay
the Purchase Price of the Bonds) shall be deposited and disbursed. Neither the Borrower, any
partner of the Borrower, nor the Issuer shall have any right, title, or interest in or to the Letter of
Credit Account. The Letter of Credit Account shall be established and maintained by the Trustee and held in trust apart from all other moneys and securities held under this Indenture or otherwise, and over which the Trustee shall have the exclusive and sole right of withdrawal for the exclusive benefit of the Holders of the Bonds with respect to which such drawing was
made.
The Trustee may establish within the Interest Account, the Principal Account and the
Redemption Account one or more subaccounts to facilitate the calculation of the aging of
moneys deposited with the Trustee until they become Available Moneys. Under no conditions
shall any moneys described in clause (iv) above ever be used to pay the Purchase Price of Bonds
tendered but not remarketed pursuant to Section 2.04 or 4.06.
(B) The Trustee shall draw moneys under the Letter of Credit in accordance with the terms thereof in an amount necessary to make timely payments of principal of and interest on
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the Bonds, other than Bonds owned by or for the account of the Borrower or the Bank, when due whether at maturity, redemption, acceleration, an Interest Payment Date, or otherwise. In addition, the Trustee shall draw moneys under the Letter of Credit in accordance with the terms thereof to the extent necessary to make timely payments required to be made pursuant to, and in accordance with, Sections 2.04,4.06 and 4.07 hereof, other than for Bonds owned by or for the account of the Borrower or the Bank. The Trustee shall draw moneys under the Letter of Credit
pursuant to this subparagraph prior to the transfer or disbursement of moneys from any other
fund or account under this Indenture.
(C) Immediately after a draw under the Letter of Credit (which has been honored), the Trustee shall reimburse the Bank for the amount of such drawing using moneys, if any,
contained in:
(i) the Interest Account, if the drawing was to pay interest or principal on
the Bonds;
(ii) the Bonds; and/or
the Principal Account, if the drawing was to pay interest or principal on
(iii) the Redemption Account, if the drawing was to redeem Bonds.
Section 5.04. Letter of Credit.
(A) The Trustee shall hold and maintain the Letter of Credit for the benefit of the Bondholders until the Letter of Credit expires in accordance with its terms. The Trustee shall diligently enforce all terms, covenants and conditions of the Letter of Credit, including drawing on the Letter of Credit as required (including on the Business Day prior to the day money is needed pursuant to the terms of this Indenture if so required by its terms) to provide for all payments of debt service or Purchase Price of Bonds on a timely basis, and the provisions relating to the payment of draws on, and reinstatement of amounts that may be drawn under, the Letter of Credit, and will not consent to, agree to or permit any amendment or modification of the Letter of Credit that would materially adversely affect the rights or security of the
Holders of the Bonds. If at any time during the term of the Letter of Credit any successor
Trustee shall be appointed and qualified under this Indenture, the resigning or removed
Trustee shall request that the Credit Bank transfer the Letter of Credit to the successor Trustee.
If the resigning or removed Trustee fails to make this request, the successor Trustee shall do so
before accepting appointment.
(B) If at any time there shall have been delivered to the Trustee an Alternate Letter of Credit pursuant to and in accordance with Section 5.8 of the Loan Agreement, then the Trustee shall accept such Alternate Letter of Credit or other credit facility and promptly surrender the
previously held Letter of Credit to the Credit Bank, in accordance with the terms of such Letter
of Credit, for cancellation. If at any time there shall cease to be any Bonds Outstanding
hereunder, the Trustee shall promptly surrender the Letter of Credit to the Credit Bank, in
accordance with the terms of the Letter of Credit, for cancellation. The Trustee shall comply
with the procedures set forth in the Letter of Credit relating to the termination thereof.
Section 5.05. Investment of Monevs. Except as otherwise provided herein, all moneys in any of the funds or accounts established pursuant to this Indenture shall be invested by the Trustee as directed by Written Request of the Borrower, approved in writing by the Bank, solely in Investment Securities. The Borrower shall not direct the Trustee to invest any funds in anything other than Investment Securities. Notwithstanding any other provision herein, in the absence of written investment instructions delivered to the Trustee by noon of the Business Day
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preceding the day when investments are to be made, the Trustee is directed to invest available
funds in the Investment Securities listed in clause (9) of the definition thereof. The Trustee shall
not be liable for any consequences resulting from any investments made pursuant to the
preceding sentence.
Investment Securities may be purchased at such prices as the Trustee may in its discretion determine or as may be directed by Written Request of the Borrower, approved by the Bank, provided that, except as hereinafter 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 the 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 (which calculation shall be the responsibility of the
Borrower). Investments in funds or accounts (or portions thereof) that are subject to a yield
restriction under applicable provisions of the Code shall be valued, by the Issuer or the Borrower, at their present value (within the meaning of Section 148 of the Code). All
Investment Securities shall be acquired subject to any limitations set forth in the Tax Certificate,
the limitations as to maturities hereinafter in this Section set forth and such additional
limitations or requirements consistent with the foregoing as may be established by Written
Request of the Borrower.
Moneys in all funds and accounts shall be invested in Investment Securities maturing
not later than the date on which it is estimated that such moneys will be required for the
purposes specified in this Indenture. Notwithstanding anything else in this Section 5.05,
moneys in the Letter of Credit Account created in Section 5.03, amounts received from draws on
the Letter of Credit to pay the Purchase Price of the Bonds, remarketing proceeds and the Unclaimed Moneys Account shall be held uninvested, and any other moneys held for the
payment of particular Bonds shall be held uninvested or, if invested, shall be solely invested in
Investment Securities described in clause (i) of the definition thereof, rated in the highest rating
category applicable to such investments (or mutual funds consisting solely of such type of
investments, which are rated by the Rating Issuer in its highest rating category) and which
mature not later than the date on which it is estimated that such moneys will be required to pay
the Bonds (but in any event maturing in not more than thirty days).
All interest, profits and other income received from the investment of moneys in any
fund or account established pursuant to this Indenture shall be deposited in the Revenue Fund, except with respect to the Costs of Issuance Fund, the Rebate Fund and the Project Fund, which shall be deposited in the Fund that generated such earnings; except that after October 30,2004,
if the Project Fund has not been closed, investment earnings derived from such Fund shall be
deposited in the Rebate Fund. Notwithstanding anything to the contrary contained in this
paragraph, an amount of interest received with respect to any Investment Security equal to the
amount of accrued interest, if any, paid as part of the Purchase Price of such Investment
Security shall be credited to the fund from which such accrued interest was paid.
For the purpose of determining the amount in any fund, all Investment Securities credited to such fund shall be valued at the lesser of cost or market value plus, prior to the first payment of interest following purchase, the amount of accrued interest, if any, paid as a part of
the purchase price.
Subject to Section 6.06, investments in any and all funds and accounts (other than the Letter of Credit Account in the Revenue Fund, the Rebate Fund, Available Moneys, moneys
being aged to become Available Moneys, remarketing proceeds, or moneys held for payment of
particular Bonds, including moneys held in the Unclaimed Moneys Account) may be
commingled for purposes of making, holding and disposing of investments, notwithstanding
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provisions herein for transfer to or holding in particular funds and accounts amounts received
or held by the Trustee hereunder, provided that the Trustee shall at all times account for such investments strictly in accordance with the funds and accounts to which they are credited and
otherwise as provided in this Indenture. The Trustee may purchase from or sell to itself or any
affiliate, as principal or agent, in the making or disposing of any investment. The Trustee may
sell or present for redemption any Investment Securities so purchased whenever it shall be necessary to provide moneys to meet any required payment, transfer, withdrawal or
disbursement from the fund to which such Investment Security is credited, and the Trustee shall not be liable or responsible for any loss resulting from such investment. To the extent that Investment Securities purchased hereunder are registrable securities, such investments shall be
registered in the name of the Trustee.
Section 5.06. Rebate Fund.
(a) The Trustee shall establish and maintain a fund separate from any other fund
established and maintained hereunder designated as the ”The Greens Apartments Rebate Fund” (herein called the ”Rebate Fund”). Within the Rebate Fund, the Trustee shall maintain such accounts as it is instructed by the Borrower as shall be necessary in order to comply with the terms and requirements of the Tax Certificate. Subject to the transfer provisions provided in paragraph (e) below, all money at any time deposited in the Rebate Fund shall be held by the
Trustee in trust, to the extent required to satisfy the Rebate Requirement (as defined in the Tax Certificate), for payment to the federal government of the United States of America, and no
other person shall have any rights in or claim to such money. All amounts deposited into or on
deposit in the Rebate Fund shall be governed by this Section 5.06, by Section 6.06 hereof and by
the Tax Certificate (which is incorporated herein by reference). The Trustee shall be deemed
conclusively to have complied with such provisions if it follows the directions of the Borrower,
including supplying all necessary information in the manner provided in the Tax Certificate,
shall not be required to take any actions thereunder in the absence of written directions by the
Borrower, and shall have no liability or responsibility to enforce compliance by the Borrower or
the Issuer with the terms of the Tax Certificate.
(b) Upon the Borrower’s written direction, an amount shall be deposited to the
Rebate Fund by the Trustee from deposits by the Borrower if and to the extent required, so that the balance of the amount on deposit thereto shall be equal to the amount of rebate to be paid to
the United States of America. Computations of such rebate amount shall be prepared at the expense of the Borrower in accordance with the Tax Certificate.
(c) The Trustee shall have no obligation to rebate any amounts required to be
rebated pursuant to this Section 5.06 other than from moneys held in the funds and accounts created under this Indenture (other than the Letter of Credit Account, Available Moneys, moneys being aged to become Available Moneys, remarketing proceeds or moneys held for
payment of particular Bonds, including moneys held in the Unclaimed Moneys Account) or
from other moneys provided to it by or on behalf of the Borrower.
(d) The Trustee shall invest all amounts held in the Rebate Fund in Investment
Securities as instructed in writing by the Borrower, subject to the restrictions set forth in the Tax
Certificate and Section 6.06 of this Indenture. Money shall not be transferred from the Rebate
Fund except as provided in paragraph (e) below.
(e) The Trustee shall remit part or all of the balances in the Rebate Fund to the
United States of America, as directed in writing by the Borrower. In addition, the Trustee will deposit moneys into or transfer moneys out of the Rebate Fund from or into such accounts or funds (other than the Letter of Credit Account in the Revenue Fund, Available Moneys, moneys
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being aged to become Available Moneys, remarketing proceeds, or moneys held for payment of
particular Bonds, including moneys held in the Unclaimed Moneys Account) as directed by written directions from the Borrower, with the consent of the Issuer and the Bank. Any funds
remaining in the Rebate Fund after redemption or payment of all of the Bonds and payment
and satisfaction of any amount of rebate to be paid, or provision made therefor satisfactory to
the Trustee shall be withdrawn and remitted to the Borrower upon the Borrower's written
request after having first paid any unreimbursed amounts owing to the Bank and then having
paid or made provisions for payment to the Issuer and the Trustee of any amounts due under
the Loan Agreement or this Indenture.
(f) Notwithstanding any other provision of this Indenture, including in particular
Article X hereof, the obligation to remit the rebate amounts to the United States of America and to comply with all other requirements of this Section 5.06, Section 6.06 hereof and the Tax
Certificate shall survive the defeasance or payment in full of the Bonds.
Section 5.07. Issuer Fee. On or prior to the date which is thirty days prior to the date the
Issuer's annual fee pursuant to Section 17 of the Regulatory Agreement and Section 4.2(c)(ii) of
the Loan Agreement is due in each year, the Trustee shall send a notice to the Borrower with a copy to the Issuer to the effect that such fee is due and payable and setting forth the date on
which it is payable.
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I35
ARTICLE VI
PARTICULAR COVENANTS
Section 6.01. Punctual Pavment. The Issuer shall punctually pay or cause to be paid the
principal, premium, if any, and interest to become due in respect of all the Bonds, in strict conformity with the terms of the Bonds and of this Indenture, according to the true intent and meaning thereof, but only out of Revenues and other assets pledged for such payment as provided in this Indenture. When and as paid in full, all Bonds, if any, shall be delivered to the Trustee, shall forthwith be cancelled and shall thereafter be redelivered to the Issuer.
Section 6.02. Extension of Pavment of Bonds. The Issuer shall not directly or indirectly
extend or assent to the extension of the maturity of any of the Bonds or the time of payment of
any claims for interest by the purchase or funding of such Bonds or claims for interest or by any
other arrangement and in case the maturity of any of the Bonds or the time of payment of any such claims for interest shall be extended, such Bonds or claims for interest shall not be entitled, in case of any default hereunder, to the benefits of this Indenture, except subject to the prior payment in full of the principal of all of the Bonds then Outstanding and of all claims for interest thereon which shall not have been so extended. Nothing in this Section shall be deemed to limit the right of the Issuer to issue bonds for the purpose of refunding any Outstanding Bonds, and such issuance shall not be deemed to constitute an extension of maturity of Bonds.
Section 6.03. Against Encumbrances. The Issuer shall not create, or permit the creation
of, any pledge, lien, charge or other encumbrance upon the Revenues and other assets pledged
or assigned under this Indenture while any of the Bonds are Outstanding, except the pledge and assignment created by this Indenture. Subject to this limitation, the Issuer expressly
reserves the right to enter into one or more other indentures for any of its corporate purposes,
including other programs under the Act, and reserves the right to issue other obligations for
such purposes.
Section 6.04. Power to Issue Bonds and Make Pledge and Assignment. The Issuer is
duly authorized pursuant to law to issue the Bonds and to enter into this Indenture and to
pledge and assign the Revenues and other assets purported to be pledged and assigned,
respectively, under this Indenture in the manner and to the extent provided in this Indenture.
The Bonds and the provisions of this Indenture are and will be the legal, valid and binding
limited obligations of the Issuer in accordance with their terms, and the Issuer and Trustee shall
at all times, to the extent permitted by law, defend, preserve and protect said pledge and assignment of Revenues and other assets and all the rights of the Bondholders under this Indenture against all claims and demands of all persons whomsoever, subject to the limitations set forth in Article VIII relating to the Trustee.
Section 6.05. Accounting - Records and Reports. The Trustee shall keep or cause to be
kept proper books of record and account in which complete and correct entries shall be made of all transactions relating to the receipt, investment, disbursement, allocation and application of
the Revenues and the proceeds of the Bonds. Such records shall speclfy the account or fund to
which each investment (or portion thereof) held by the Trustee is to be allocated and shall set
forth, in the case of each Investment Security, (a) its purchase price, (b) identifying information,
including par amount, coupon rate, and payment dates, (c) the amount received at maturity or
its sale price, as the case may be, (d) the amounts and dates of any payments made with respect
thereto, and (e) such documentation as is required to be retained by the Trustee as evidence to establish any requirements set forth in the Tax Certificate. Such records shall be open to
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inspection by any Holder and the Bank at any reasonable time during regular business hours on
reasonable notice.
Section 6.06. Tax Covenants.
(A) The Issuer and the Borrower shall assure that the proceeds of the Bonds are used in a manner such that the Bonds will satisfy the requirements of Section 142(d) of the Code relating to qualified residential rental projects.
(B) The Issuer shall not take any action or permit or suffer any action to be taken if
the result of the same would be to cause any of the Bonds to be "federally guaranteed" within the meaning of Section 149(b) of the Code.
(C) The Issuer and the Trustee hereby agree to comply with Section 148(f) of the Code, relating to rebate of excess investment earnings, if any, to the federal government, to the extent that such section is applicable to the Bonds; provided that the Trustee shall be deemed to comply with such requirements and shall have no liability to the extent it follows the written
directions of the Issuer or the rebate analyst. This covenant shall survive payment in full or
defeasance of the Bonds.
(D) The Issuer shall not take, or permit or suffer to be taken by the Trustee or
otherwise, any action with respect to the proceeds of the Bonds which, if such action had been
reasonably expected to have been taken, or had been deliberately and intentionally taken, on
the date of issuance of the Bonds would have caused the Bonds to be "arbitrage bonds" within
the meaning of Section 148 of the Code.
(E) The Issuer shall take all actions necessary to assure the exclusion of interest on the Bonds from the gross income of the owners of the Bonds to the same extent as such interest
is permitted to be excluded from gross income under the Code as in effect on the date of issuance of the Bonds.
(F) The Issuer covenants that, from the proceeds of the Bonds and investment
earnings thereon, an amount not in excess of two percent (2%) of the proceeds of the Bonds will
be used for costs of issuance of the Bonds, all within the meaning of Section 147(g)(l) of the
Code. For this purpose, if the fees of the original purchaser of the Bonds are retained as a
discount on the purchase of the Bonds, such retention shall be deemed to be an expenditure of
proceeds of the Bonds for said fees.
(G) Notwithstanding any provision of this Section, if the Borrower shall provide to
the Trustee, the Bank and the Issuer an opinion of Bond Counsel that any action required under Section 5.06 or this Section 6.06 is no longer required, or that some further action is required to
maintain the Tax-exempt status of interest on the Bonds, the Trustee and the Issuer may rely
conclusively on such opinion in complying with the requirements of this Section, and the
covenants contained herein shall be deemed to be modified to that extent.
Section 6.07. Enforcement of Obligations. The Trustee shall promptly collect all amounts
due from the Borrower pursuant to the Loan Agreement, shall perform all duties imposed upon
it pursuant to the Loan Agreement and shall diligently enforce, and take all steps, actions and
proceedings reasonably necessary for the enforcement of all of the rights of the Issuer and all of the obligations of the Borrower.
Section 6.08. Waiver of Laws. The Issuer shall not at any time insist upon or plead in any manner whatsoever, or claim or take the benefit or advantage of, any stay or extension law
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137
now or at any time hereafter in force that may affect the covenants and agreements contained in this Indenture or in the Bonds, and all benefit or advantage of any such law or laws is hereby expressly waived by the Issuer to the extent permitted by law.
Section 6.09. Further Assurances. The Issuer will make, execute and deliver any and all
such further indentures, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Indenture and for the better assuring and confirming unto the Holders of the Bonds of the rights and benefits provided in this Indenture.
Section 6.10. Continuing: Disclosure. The Issuer and the Trustee acknowledge that
pursuant to Section 5.10 of the Loan Agreement, the Borrower shall, upon the adjustment to a
Term Interest Rate on the Bonds pursuant to Section 2.03(D), undertake the continuing
disclosure requirements promulgated under S.E.C. Rule 15c2-12, as it may from time to time
hereafter be amended or supplemented, and the Issuer shall have no liability to the holders or
beneficial owners of the Bonds or any other person with respect to such disclosure matters. Notwithstanding any other provision of this Indenture, failure of the Borrower to comply with
the requirements of S.E.C. Rule 15~2-12, as it may from time to time hereafter be amended or
supplemented, shall not be considered an Event of Default hereunder or under the Loan
Agreement.
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ARTICLE VI1
EVENTS OF DEFAULT AND REMEDIES OF BONDHOLDERS
Section 7.01. Events of Default; Acceleration; Waiver of Default. Each of the following events shall constitute an ”Event of Default’’ hereunder:
(a) default in the due and punctual payment of the principal or Purchase Price 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;
(b) default in the due and punctual payment of any installment of interest on any Bond, when and as such interest installment shall become due and payable; or
(c) 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 sixty (60) days after written notice thereof, specifying
such default and requiring the same to be remedied, shall have been given to the Issuer, the
Bank, and the Borrower by the Trustee, or to the Issuer, the Bank, the Borrower and the Trustee
by the holders of not less than sixty-six and two-thirds percent (66-2/3%) in aggregate principal amount of the Bonds at the time Outstanding.
No default specified in (c) above shall constitute an Event of Default unless the Issuer and the Borrower or the 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 or the Borrower within the applicable period and diligently pursued. With regard to any alleged default, notice of which is given to the Borrower and the Bank under the provisions of
this Section, the Issuer hereby grants the Borrower or the Bank full authority for the account of
the Issuer to perform any covenant or obligation the non-performance 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; provided the Bank shall not be obligated to take any
action under this Section 7.01.
During the continuance of an Event of Default, subject to the Intercreditor Agreement, the Trustee may, and upon the written request of the Holders of not less than sixty-six and two- thirds percent (66-2/3%) in aggregate principal amount of the Bonds at the time Outstanding, the Trustee shall, immediately upon such request, by notice in writing to the Issuer, the Borrower, and the Bank, 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 the Trustee
shall immediately draw upon any then existing Letter of Credit in accordance with the terms
thereof and apply the amount so drawn to pay the principal of and interest on the Bonds so
declared to be due and payable. Interest on the Bonds shall cease to accrue as of the date of acceleration. The Trustee shall notify the Bondholders of the date of acceleration and the cessation of accrual of interest on the Bonds in the same manner as for a notice of redemption.
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 judgment or decree for the payment of the moneys due shall have been obtained or entered as
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34
hereinafter provided, and before the Letter of Credit has been drawn upon in accordance with
its terms and honored, there shall have been deposited with the Trustee a sum sufficient to pay
(with Available Moneys) 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 as provided in the Loan Agreement, and the reasonable expenses of the Trustee, 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 in every such case, the holders of at least a majority in aggregate principal amount of the Bonds then Outstanding, by written notice to the Issuer and to the Trustee, 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. Notwithstanding any other provision of this Indenture, the Trustee may not exercise any remedy in the event of a default under Section 7.01
without the prior written consent of the Bank, so long as the Letter of Credit is in effect and the
Bank has not wrongfully failed to make a payment thereunder. The Trustee may exercise any
and all remedies under the Indenture and the Loan Agreement (except acceleration or
foreclosure of the Deed of Trust) to collect any fees, expenses and indemnification from the Borrower without obtaining the consent of the Bank.
Notwithstanding the foregoing, so long as there is no Letter of Credit in effect hereunder, there shall never occur an Event of Default pursuant to subparagraphs (a) or (b) of this Section. If there is an Event of Default under the Loan Agreement while there is no Letter of Credit in effect hereunder, the owners of Bonds shall be entitled to direct the Trustee to accelerate the amount due thereunder and to cause a mandatory redemption of all Outstanding Bonds pursuant to Section 4.01(4) hereof at any time during the continuation of such Event of Default under the Loan Agreement. Upon such mandatory redemption of the Bonds, all Outstanding Bonds shall be redeemed as follows: upon such redemption date, all of the Bonds
shall cease to bear interest and the owners of Bonds shall have no further rights hereunder or
under the Bonds, 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 Bonds 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 while there is no Letter of Credit in effect, the owners of Bonds hereby consent to the provisions for mandatory redemption as described above, and upon the completion of such redemption the owners of Bonds shall no longer look to the Issuer to receive payment of any principal of or interest on the Bonds or any other sums that may be
due with respect to the Bonds, but shall look solely to the funds and other assets pledged to the
owners of Bonds hereunder.
Notwithstanding any other provision hereof, the Trustee may not exercise any remedy in the case of an Event of Default under Section 7.01 without the written consent of the Bank so
long as the Letter of Credit is in effect and the Credit Bank has not wrongfully failed to make a
payment thereunder. The Trustee may exercise any and all remedies under the Loan Agreement (other than acceleration of the Loan) to collect any fees, expenses and indemnification from the Borrower without obtaining the consent of the Bank.
Section 7.02. Institution of Led ProceedinPs bv Trustee. If one or more of the Events of Default shall happen and be continuing, the Trustee in its discretion may, and upon the written request of the holders of not less than sixty-six and two-thirds percent (66-2/3%) in aggregate
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principal amount of the Bonds then Outstanding and upon being indemnified to its satisfaction therefor shall, proceed to protect or enforce its rights or the rights of the holders of Bonds under the Act or under this Indenture or the Loan Agreement 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.
Section 7.03. Auulication of Revenues and Other Funds After Default. If an Event of Default shall occur and be continuing, all Revenues and any other funds then held or thereafter
received by the Trustee under any of the provisions of this Indenture (subject to Sections 5.06, 6.06 and 11.11) shall be applied by the Trustee as follows and in the following order:
(1) To the payment of any expenses necessary in the opinion of the Trustee to
protect the interests of the Holders of the Bonds and payment of reasonable fees, charges and
expenses (including those previously outstanding) of the Trustee (including reasonable fees and
disbursements of its counsel) incurred in and about the performance of its powers and duties under this Indenture, the Loan Agreement, the Regulatory Agreement and the Deed of Trust;
(2) To the payment of the principal of and interest then due on the Bonds (upon
presentation of the Bonds to be paid, and stamping thereon of the payment if only partially
paid, or surrender thereof if fully paid) subject to the provisions of this Indenture (including
Section 6.02), as follows:
(i) Unless the principal of all of the Bonds shall have become or have been
declared due and payable,
&&: To the payment to the persons entitled thereto of all installments of
interest then due on the Bonds (other than Bonds registered in the name of the
Borrower which are not Pledged Bonds) in the order of the maturity of such
installments, and, if the amount available shall not be sufficient to pay in full any
installment or installments maturing on the same date, then to the payment
thereof ratably, according to the amounts due thereon, to the persons entitled thereto, without any discrimination or preference; and
Second: To the payment to the persons entitled thereto of the unpaid principal of any Bonds (other than Bonds registered in the name of the Borrower which are not Pledged Bonds) which shall have become due, whether at maturity or by call for redemption, with interest on the overdue principal at the rate borne by the respective Bonds, and, if the amount available shall not be sufficient to pay in full all the Bonds, together with such interest, then to the payment thereof
ratably, according to the amounts of principal due on such date to the persons
entitled thereto, without any discrimination or preference.
Third: To the payment of obligations of the Borrower to the Issuer and
the Trustee, if any, under the Loan Agreement.
Fourth: To the payment of obligations of the Borrower to the Bank under
the Reimbursement Agreement.
(ii) If the principal of all of the Bonds shall have become or have been
declared due and payable, first to the payment of the principal and interest then due and unpaid upon the Bonds, with interest on the overdue principal at the rate borne by the
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Bonds, and, if the amount available shall not be sufficient to pay in full the whole amount so due and unpaid, then to the payment thereof ratably, 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,
according to the amounts due respectively for principal and interest, to the persons
entitled thereto without any discrimination or preference, second to the payment of
obligations of the Borrower to the Issuer and the Trustee under the Loan Agreement,
and third to the Bank under the Reimbursement Agreement;
provided, however, that neither moneys derived from drawings under the Letter of Credit, Available Moneys, moneys being aged to become Available Moneys, moneys set aside to pay principal or interest on any particular Bonds, nor the proceeds from remarketing of the Bonds shall be used to pay anything other than principal or interest on, or Purchase Price of the
Bonds, as otherwise provided herein.
Section 7.04. Trustee to Remesent Bondholders. The Trustee is hereby irrevocably appointed (and the successive respective Holders of the Bonds, by taking and holding the same,
shall be conclusively deemed to have so appointed the Trustee) as trustee and true and lawful attorney-in-fact of the Holders of the Bonds for the purpose of exercising and prosecuting on their behalf such rights and remedies as may be available to such Holders under the provisions
of the Bonds, this Indenture, the Loan Agreement, the Act and applicable provisions of any
other law. Upon the occurrence and continuance of an Event of Default or other occasion
giving rise to a right in the Trustee to represent the Bondholders, the Trustee in its discretion
may, and upon the written request of the Holders of not less than sixty-six and two-thirds
percent (66-2/3%) in aggregate principal amount of the Bonds then Outstanding, and upon
being indemnified to its satisfaction therefor, shall, proceed to protect or enforce its rights or the
rights of such Holders by such appropriate action, suit, mandamus or other proceedings as it
shall deem most effectual to protect and enforce any such right, at law or in equity, either for the specific performance of any covenant or agreement contained herein, or in aid of the execution of any power herein granted, or for the enforcement of any other appropriate legal or equitable right or remedy vested in the Trustee or in such Holders under this Indenture, the Loan Agreement, the Act or any other law; and upon instituting such proceeding, the Trustee shall be entitled, as a matter of right, to the appointment of a receiver of the Revenues and other assets pledged under this Indenture, pending such proceedings. Notwithstanding the foregoing, so long as the Letter of Credit is in full force and effect and has not been dishonored, the Trustee shall not exercise any such rights (other than to draw on the Letter of Credit)
without the prior written consent of the Bank. All rights of action under this Indenture or the
Bonds or otherwise may be prosecuted and enforced by the Trustee without the possession of
any of the Bonds or the production thereof in any proceeding relating thereto, and any such
suit, action or proceeding instituted by the Trustee shall be brought in the name of the Trustee
for the benefit and protection of all the Holders of such Bonds, subject to the provisions of this
Indenture (including Section 6.02).
Section 7.05. Rirrht of Bank and Bondholders to Direct Proceedinm. Anything in this Indenture to the contrary notwithstanding, the Bank, and the Holders of a 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 the Trustee shall have the right to decline to follow any such direction which in
the opinion of the Trustee could subject the Trustee to personal liability or would be unjustly
prejudicial to Bondholders not parties to such direction, it being understood however that
(subject to Section 8.01) the Trustee shall have no duty to ascertain whether or not such actions
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or forebearances are unduly prejudicial to such Bondholders, or for which it has not been
provided adequate indemnity. In the event of conflict between the directions of the Bank and
those of the registered owners with respect to an Event of Default, the directions of the Bank
shall prevail so long as the Bank is not in default under the Letter of Credit.
Section 7.06. Limitation on Bondholders’ Right to Sue. No Holder of any Bond shall
have the right to institute any suit, action or proceeding at law or in equity, for the protection or
enforcement of any right or remedy under this Indenture, the Loan Agreement, the Act or any
other applicable law with respect to such Bond, unless (1) such Holder shall have given to the Trustee written notice of the occurrence of an Event of Default; (2) the Holders of not less than sixty-six and two-thirds percent (66-2/3%) in aggregate principal amount of the Bonds then Outstanding shall have made written request upon the Trustee to exercise the powers hereinbefore granted or to institute such suit, action or proceeding in its own name; (3) such Holder or said Holders shall have tendered to the Trustee reasonable indemnity against the
costs, expenses and liabilities to be incurred in compliance with such request; and (4) the
Trustee shall have refused or omitted to comply with such request for a period of sixty (60) days
after such written request shall have been received by, and said tender of indemnity shall have
been made to, the Trustee.
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 or under law; 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 affect, disturb or prejudice the security of this Indenture or the rights of any other Holders of Bonds, or to enforce
any right under this Indenture, the Loan Agreement, the Act or other applicable law with respect to the Bonds, except in the manner herein provided, and that all proceedings at law or in equity to enforce any such right shall be instituted, had and maintained in the manner herein
provided and for the benefit and protection of all Holders of the Outstanding Bonds, subject to
the provisions of this Indenture (including Section 6.02).
Section 7.07. Absolute Obliqation of Issuer. Nothing in Section7.06 or in any other
provision of this Indenture, or in the Bonds, contained shall affect or impair the obligation of the
Issuer, which is absolute and unconditional, to pay the principal of and interest on the Bonds to the respective Holders of the Bonds at their respective dates of maturity, or upon call for redemption, as herein provided, but only out of the Revenues and other assets herein pledged therefor, or affect or impair the right of such Holders, which is also absolute and unconditional, to enforce such payment by virtue of the contract embodied in the Bonds.
Section 7.08. Termination of Proceedinvs. In case any proceedings taken by the Trustee
or any one or more Bondholders on account of any Event of Default shall have been
discontinued or abandoned for any reason or shall have been determined adversely to the
Trustee or the Bondholders, then in every such case the Issuer, the Bank, the Trustee and the
Bondholders, subject to any determination in such proceedings, shall be restored to their former
positions and rights hereunder, severally and respectively, and all rights, remedies, powers and
duties of the Issuer, the Bank, the Trustee and the Bondholders shall continue as though no such
proceedings had been taken.
Section 7.09. Remedies Not Exclusive. No remedy herein conferred upon or reserved to the Trustee, the Bank, or to the Holders of the Bonds is intended to be exclusive of any other remedy or remedies, and each and every such remedy, to the extent permitted by law, shall be cumulative and in addition to any other remedy given hereunder or now or hereafter existing at law or in equity or otherwise.
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Section 7.10. No Waiver of Default. No delay or omission of the Trustee or of any Holder
of the Bonds to exercise any right or power arising upon the occurrence of any default shall
impair any such right or power or shall be construed to be a waiver of any such default or an
acquiescence therein; and every power and remedy given by this Indenture to the Trustee or to
the Holders of the Bonds may be exercised from time to time and as often as may be deemed
expedient.
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ARTICLE VI11
THE TRUSTEE, THE PAYING AGENT, THE BOND REGISTRAR, THE TENDER AGENT, AND THE REMARKETING AGENT
Section 8.01. Duties. Immunities and Liabilities of Trustee.
(A) The Trustee and the Registrar 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. 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 prudent persons would exercise or use under the circumstances in the conduct of their own affairs.
No provision of this Indenture shall be construed to relieve the Trustee or the Registrar
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,
(1) the duties and obligations of the Trustee and the Registrar, as the
case may be, shall be determined solely by the express provisions of this
Indenture, the Trustee and Registrar, as the case may be, 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 the Registrar, as the case may be; and
(2) in the absence of bad faith on the part of the Trustee or the Registrar, as the case may be, the Trustee or Registrar, as the case may be, may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificate or opinion furnished to the Trustee or the Registrar, as the case may be, conforming to the requirements of this Indenture; but in the case of any such certificate or opinion which by any provision hereof is specifically required to be furnished to the Trustee or the Registrar, as the case may be, shall be under a duty to examine the same to determine whether or not it conforms to the requirements of this Indenture; and
(b) At all times, regardless of whether or not any Event of Default shall exist,
(1) the Trustee and the Registrar shall not be liable for any error of judgment
made in good faith by a responsible officer or officers of the Trustee or the Registrar
unless it shall be proved that the Trustee or the Registrar, as the case may be, was negligent in ascertaining the pertinent facts;
(2) neither the Trustee nor the Registrar shall be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the holders of not less than a majority, or such larger 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 Registrar, or exercising any trust or power conferred upon the Trustee or
the Registrar under this Indenture.
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None of the provisions contained in this Indenture shall require the Trustee or Registrar
to expend or risk their own funds or otherwise incur individual financial liability in the performance of any of their duties or in the exercise of any of their rights or powers other than to notify the Issuer that they intend to take no particular action or to notify the Bondholders that they will take no action. All indemnifications and releases from liability granted herein to the
Trustee shall extend to the directors, officers, employees and agents of the Trustee.
(B) So long as no Event of Default has occurred and is continuing under this
Indenture, the Issuer may remove the Trustee at any time and shall remove the Trustee if at any time the Trustee shall cease to be eligible in accordance with subsection (E) of this Section, or shall become incapable of acting, or shall be adjudged bankrupt or insolvent, or a receiver of the Trustee or its property shall be appointed, or any public officer shall take control or charge of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation; and, upon an Event of Default, the Issuer shall remove the Trustee if requested to
do so by an instrument or concurrent instruments in writing signed by the Holders of not less
than a majority in aggregate principal amount of the Bonds then Outstanding (or their attorneys
duly authorized in writing). In each case the Issuer shall give written notice of such removal to
the Trustee, and thereupon shall appoint, with the consent of the Bank, a successor Trustee by an instrument in writing.
(C) The Trustee may at any time resign by giving written notice of such resignation to the Issuer and by giving the Bondholders notice of such resignation by mail at the addresses shown on the registration books maintained by the Trustee. Upon receiving such notice of resignation, the Issuer shall promptly appoint, with the consent of the Bank, a successor Trustee by an instrument in writing. The Trustee shall not be relieved of its duties until such successor Trustee has accepted appointment.
(D) Any removal or resignation of the Trustee pursuant to (B) or (C) above and appointment of a successor Trustee shall only become effective upon acceptance of appointment
by the successor Trustee. If no successor Trustee shall have been appointed and have accepted
appointment within forty-five (45) days of giving notice of removal or notice of resignation as
aforesaid, the resigning Trustee or any Bondholder (on behalf of himself or herself and all other
Bondholders) may petition any court of competent jurisdiction for the appointment of a
successor Trustee, and such court may thereupon, after such notice (if any) as it may deem
proper, appoint such successor Trustee. Any successor Trustee appointed under this Indenture,
shall si- its acceptance of such appointment by executing and delivering to the Issuer and to
its predecessor Trustee a written acceptance thereof, and thereupon such successor Trustee, without any further act, deed or conveyance, shall become vested with all the moneys, estates,
properties, rights, powers, trusts, duties and obligations of such predecessor Trustee, with like effect as if originally named Trustee herein; but, nevertheless at the Written Request of the Issuer or the written request of the successor Trustee, such predecessor Trustee shall execute
and deliver any and all instruments of conveyance or further assurance and do such other
things as may reasonably be required for more fully and certainly vesting in and confirming to
such successor Trustee all the right, title and interest of such predecessor Trustee in and to any
property held by it under this Indenture and shall pay over, transfer, assign and deliver to the
successor Trustee any money or other property subject to the trusts and conditions herein set
forth. Upon the request of the successor Trustee, the Issuer shall execute and deliver any and all
instruments as may be reasonably required for more fully and certainly vesting in and
confirming to such successor Trustee all such moneys, estates, properties, rights, powers, trusts, duties and obligations. Upon acceptance of appointment by a successor Trustee as provided in
this subsection, the Issuer shall mail a notice of the succession of such Trustee to the trusts
hereunder to each rating Issuer which is then rating the Bonds, to the Bondholders at the addresses shown on the registration books maintained by the Trustee, and to the Bank. If the
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Issuer fails to mail such notice within fifteen (15) days after acceptance of appointment by the
successor Trustee, the successor Trustee shall cause such notice to be mailed at the expense of the Issuer.
(E) Any Trustee appointed under the provisions of this Section in succession to the
Trustee shall be a trust company or bank having the powers of a trust company, having (or in
the case of a bank or trust company included in a bank holding company system, the related
bank holding company having) a combined capital and surplus of at least seventy-five million
dollars ($75,000,000), and subject to supervision or examination by federal or state authority. If such bank or trust company publishes a report of condition at least annually, pursuant to law or
to the requirements of any supervising or examining authority above referred to, then for the
purpose of this subsection the combined capital and surplus of such bank or trust company
shall be deemed to be its combined capital and surplus as set forth in its most recent report of
condition so published. In case at any time the Trustee shall cease to be eligible in accordance
with the provisions of this subsection (E), the Trustee shall resign immediately in the manner
and with the effect specified in this Section.
(F) The Trustee is not responsible for effecting, maintaining or renewing any policies of insurance or for any representations regarding the sufficiency of any policy of insurance.
(G) The Trustee is not responsible for filing financing or continuation statements,
except it may upon the written request of the Issuer or the Borrower.
(H) Subject to the provisions of Section 10.03, 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. Any interest allowed on any such moneys shall be deposited in the fund or
account to which such moneys are credited. Any moneys held by the Trustee may be deposited
by it in its banking department or that of any affiliate and invested as provided herein.
(I) The Trustee shall not be obligated to file claims or proofs of loss in the case of insurance, or to pay taxes or assessments.
(J) The Trustee is authorized and directed to execute in its capacity as Trustee the
Regulatory Agreement, the Loan Agreement and the Intercreditor Agreement.
(K) 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 circumstances present at the Project relating to the presence, use, management, disposal of,
or contamination by any environmentally hazardous materials or substances of any kind whatsoever. With the prior written consent of the Bank, the Trustee may use funds held under this Indenture, other than amounts on deposit in the Letter of Credit Account or the Rebate Fund, and amounts held for the redemption or purchase of Bonds hereunder (including draws on the Letter of Credit to pay the Purchase Price of the Bonds, remarketing proceeds and any
other amounts made available to pay the purchase price of the Bonds), to pay the fees and
expenses of an environmental auditor in determining the existence and extent of any
contamination, and the expense or obligations resulting from environmental liability and
cleanup prior to or in connection with initiating foreclosure proceedings on the Project under
the Deed of Trust. The Trustee shall not be required to apply any of its own funds for such
purposes, and, as to the Trustee, only assets held in a fiduciary capacity by the Trustee
hereunder will be available for any required remediation of hazardous substances.
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Section 8.02. Merger or Consolidation. Any company into which the Trustee may be merged or converted or with which it may be consolidated or any company resulting from any
merger, conversion or consolidation to which it shall be a party or any company to which the
Trustee may sell or transfer all or substantially all of its corporate trust business, provided such company shall be eligible under subsection (E) of Section 8.01, shall be the successor to such Trustee without the execution or filing of any paper or any further act, anything herein to the
contrary notwithstanding.
Section 8.03. Liability of Trustee.
(A) The recitals of facts herein and in the Bonds contained shall be taken as
statements of the Issuer, and the Trustee shall assume no responsibility for the correctness of the
same, or make any representations as to the legality, validity or sufficiency of this Indenture, the Loan Agreement or of the Bonds or any other document or instrument relating thereto. In
addition, the Trustee shall assume no responsibility with respect to this Indenture, the Loan
Agreement or Bonds other than in connection with the duties or obligations assigned to or
imposed upon the Trustee herein or in the Bonds. The Trustee shall, however, be responsible
for its representations contained in its certificate of authentication on the Bonds. The Trustee
shall not be liable in connection with the performance of its duties hereunder, except for its own
negligence or willful misconduct. The Trustee may become the owner of Bonds with the same rights it would have if it were not Trustee and, to the extent permitted by law, may act as depositary for and permit any of its officers or directors to act as a member of, or in any other capacity with respect to, any committee formed to protect the rights of Bondholders, whether or not such committee shall represent the Holders of a majority in principal amount of the Bonds then Outstanding.
The Trustee may execute any of the trusts or powers set forth herein and perform the
duties required of it hereunder by or through attorneys, agents, or receivers, and, before the
Trustee acts or refrains from acting, shall be entitled to the advice of counsel concerning all
matters of trusts and its duties herein, and the Trustee shall not be answerable for the default or
misconduct of any such attorney, agent (other than employees of the Trustee) or receiver
selected by it with reasonable care. The Remarketing Agent shall not be deemed an agent of the
Trustee for any purpose and the Trustee shall not be responsible for compliance of the
Remarketing Agent as to its obligations under this Indenture or in connection with the transactions contemplated herein.
(B) The Trustee shall not be liable for any error of judgment made in good faith by a
responsible officer, unless it shall be proved that the Trustee was negligent in ascertaining the
pertinent facts.
(C) The Trustee shall not be liable with respect to any action taken or omitted to be
taken by it in good faith in accordance with the direction of the Holders of not less than a
majority 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.
(D) The Trustee shall be under no obligation to exercise any of the rights or powers
vested in it by this Indenture at the request, order or direction of any of the Bondholders pursuant to the provisions of this Indenture unless such Bondholders shall have offered to the
Trustee security or indemnity reasonable to it against the costs, expenses and liabilities which
may be incurred therein or thereby; provided, however, that the Trustee shall not be entitled to
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any security or indemnity from any party with respect to its obligations and duties to enforce the terms and provisions of the Letter of Credit and the acceleration of the Bonds hereunder.
(E) The Trustee shall not be liable for any action taken by it in good faith and
believed by it to be authorized or within the discretion or rights or powers conferred upon it by
this Indenture.
(F) The Trustee shall not be deemed to have knowledge of any default or Event of
Default hereunder unless and until it shall have actual knowledge thereof, or shall have received written notice thereof, at its Principal Corporate Trust Office. Except as otherwise
expressly provided herein, the Trustee shall not be bound to ascertain or inquire as to the
performance or observance of any of the terms, conditions, covenants or agreements herein or
of any of the documents executed in connection with the Bonds, or as to the existence of a
default or Event of Default thereunder. The Trustee shall not be responsible for the validity or effectiveness of any collateral given to or held by it. As used herein the term ”actual
knowledge” means the actual fact or statement of knowing, without any duty to make any
investigation with regard thereto.
(G) No provision of this Indenture shall require the Trustee to expend or risk its own
funds or otherwise incur any financial liability in the performance of any of its duties
hereunder, or in the exercise of its rights or powers, if it shall have reasonable grounds for
believing that payment for such funds or adequate indemnity against such risk or liability is not
reasonably assured to it. The Trustee shall, however, in any case make drawings under the Letter of Credit, pay principal or purchase price of or interest on the Bonds as it becomes due and accelerate the Bonds as required by the Indenture, notwithstanding anything to the
contrary herein.
(H) The Trustee shall have no responsibility, opinion or liability with respect to any
information statement or recital found in any Official Statement or other disclosure material,
prepared or distributed with respect to the issuance of such Bonds, except for information
provided in writing by the Trustee.
Section 8.04. Riqht - of Trustee to Relv on Documents. The Trustee shall be protected in
acting upon any notice, resolution, request, consent, order, certificate, report, opinion, bond,
requisition, statement or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties. In particular, the Trustee shall be entitled to
rely upon a Borrower’s Certificate to the effect that no Act of Bankruptcy has occurred. Before the Trustee acts or refrains from acting, it may consult with counsel, who may be counsel of or to the Issuer or the Borrower, with regard to legal questions, and the 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 therewith.
The Trustee shall not be bound to recognize any person as the Holder of a Bond unless
and until such Bond is submitted for inspection, if required, and such person’s title thereto is
satisfactorily established, if disputed.
Whenever in the administration of the trusts imposed upon it by 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 be deemed to be conclusively proved and established by a Certificate of the Issuer, and such Certificate shall be full warrant to the Trustee for any action taken or suffered in good faith under the provisions of this Indenture in reliance upon such
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Certificate, but in its discretion the Trustee may, in lieu thereof, accept other evidence of such
matter or may require such additional evidence as to it may deem reasonable.
Section 8.05. Preservation and Insuection of Documents. All documents received by the Trustee under the provisions of this Indenture shall be retained in its possession and shall be
subject at all reasonable times to the inspection of the Issuer and any Bondholder and the Bank,
and their agents and representatives duly authorized in writing, at reasonable hours and under
reasonable conditions.
Section 8.06. Comvensation and Indemnification. The Borrower has covenanted and
shall pay to the Trustee from time to time reasonable compensation for all services rendered under this Indenture, and also all reasonable expenses, charges, legal and consulting fees and other disbursements and those of its attorneys, agents and employees, incurred in and about the
performance of its powers and duties under this Indenture, and the Trustee shall have a lien
therefor on any and all funds (except the Rebate Fund, moneys held for the payment of
particular bonds, remarketing proceeds, any moneys derived from the Letter of Credit,
Available Moneys, and moneys being aged to become Available Moneys) at any time held by it
under this Indenture which lien shall be prior and superior to the lien of the Holders of the
Bonds. The Borrower has further covenanted and agreed to indemnify and save the Trustee harmless against any loss, expense and liabilities which it may incur arising out of or in the
exercise and performance of its powers and duties hereunder, including the costs and expenses of defending against or investigating any claim of liability, but excluding liabilities which are
due to the Trustee’s negligence or willful misconduct. The obligations of the Borrower acknowledged in this Section shall survive resignation or removal of the Trustee under this Indenture and payment of the Bonds and discharge of this Indenture.
Section 8.07. Paving: Agent. - The Trustee, with the written approval of the Issuer and the
Bank, may appoint and at all times have a Paying Agent in such cities as the Trustee deems
desirable, 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 credit arrangements with such Paying
Agent as may be necessary to assure, to the extent of the moneys held by the Trustee for such
payment, the prompt payment of the principal of, and interest (and premium, if any) on, the
Bonds presented at either place of payment. The Trustee will not be responsible for the failure
of the Bank or any other party to make funds available to the Trustee or Paying Agent. The
Trustee is the initial Paying Agent.
Section 8.08. Notices to Rating - Issuer. The Trustee shall provide the Rating Issuer, with copies to the Issuer and the Bank (but shall incur no liability for any failure to do so), with written notice upon the occurrence of: (i) the expiration, termination or substitution of the
Letter of Credit; (ii) the discharge of liability on any Bonds pursuant to Section 10.02; (iii) the
resignation or removal of the Trustee; (iv) acceptance of appointment as successor trustee
hereunder; (v) the redemption or purchase of all Bonds; or (vi) a material change in the
Indenture, the Loan Agreement, or the Letter of Credit, upon its receipt of written notice of any
such changes. The Trustee shall also notify any Rating Issuer of any material changes to any of the documents to which the Trustee is a party, upon its receipt of written notification of any
such changes.
Section 8.09. Duties of Remarketing Agent. The Issuer with the advice and consent of
the Bank (which consent shall not be unreasonably withheld), shall appoint the Remarketing Agent for the Bonds, subject to the conditions set forth in Section 8.10 hereof. The Remarketing Agent shall designate to the Trustee its principal office and signify its acceptance of the duties and obligations imposed on it hereunder by a written instrument of acceptance delivered to the Issuer and the Trustee under which the Remarketing Agent will agree to perform the
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obligations of the Remarketing Agent set forth herein and under which the Remarketing Agent
will agree to keep such books and records as shall be consistent with prudent industry practice and to make such books and records available for inspection by the Issuer, the Trustee, the Bank and the Borrower at all reasonable times. The Remarketing Agent shall set the interest rates on the Bonds and perform the other duties provided for in Section 2.03 and Section 4.07 and shall remarket Bonds as provided in Section 4.07. There may be separate Remarketing Agents for
these two functions. Subject to the terms of the Remarketing Agreement, the Remarketing
Agent may for its own account or as broker or agent for others deal in Bonds and may do
anything any other Owner may do to the same extent as if the Remarketing Agent were not
serving as such. The initial Remarketing Agent shall be Red Capital Markets, Inc. The Remarketing Agent shall hold all moneys delivered to it in connection with the remarketing of Bonds in trust in non-commingled funds for the benefit of the person or entity which has delivered such moneys until such moneys are delivered to the Trustee or the Tender Agent, as
applicable, as provided herein. The Remarketing Agent shall not sell Bonds to the Issuer, the
Borrower or any partner or any guarantor of the Borrower.
Section 8.10. E1ig;ibilitv of Remarketing Anent; Replacement. The Remarketing Agent
shall be a bank, trust company or member of the National Association of Securities Dealers, Inc. organized and doing business under the laws of the United States of America or any state or the District of Columbia. Any successor Remarketing Agent shall have a capitalization of at least
$15,000,000 as shown in its most recent published annual report.
The Remarketing Agent may resign by notifying the Issuer, the Trustee, the Tender Agent, the Borrower and the Bank at least 30 days before the effective date of such resignation.
The Issuer may, and upon a showing by the Bank of reasonable cause, shall remove the
Remarketing Agent upon 30 days’ written notice and with the advice and consent of the
Borrower and the Bank, which consent shall not be unreasonably withheld, appoint a successor
by notifying the Remarketing Agent, the Bank and the Trustee, provided such notice may be waived if the Remarketing Agent is unable or ceasing to perform its duties. No removal or
resignation shall be effective until the successor has delivered an acceptance of its appointment
to the Trustee.
Section 8.11. Compensation of Remarketing Agent. - The Remarketing Agent shall not be
entitled to any compensation from the Issuer or the Trustee but, rather, shall make separate
arrangements with the Borrower for its compensation.
Section 8.12. Duties of Tender Anent. The Tender Agent shall designate its principal office and signify its acceptance of all of the duties and obligations imposed upon it hereunder by a written instrument of acceptance delivered to the Issuer, the Trustee, the Bank and the
Remarketing Agent. The Tender Agent shall perform the duties provided for in this Indenture
and in exercising such duties shall be entitled to the same rights and immunities applicable to
the Trustee as set forth in this Indenture and shall not be liable for any action or omission to act
except for negligence or willful misconduct. Notwithstanding any provision in this Indenture
to the contrary, the Tender Agent shall not be responsible for any misconduct or negligence on the part of any agent, correspondent, attorney or receiver appointed with due care by it
hereunder. When acting as co-authenticating agent hereunder, the Tender Agent shall
promptly notify the Trustee in writing of transfers and exchanges of Bonds. Notwithstanding
the foregoing, the initial Tender Agent is the Trustee.
and doing business (or in the case of a
Section 8.13. Elinibilitv of Tender APent; Replacement. The Tender Agent and any successor to the Tender Agent shall be a bank with trust powers or a trust company organized under the laws of the United States of America or any state and shall have bank or trust company included in a bank holding iompany system, the
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related bank holding company shall have) a capitalization of at least $10,000,000 as shown in its
most recent published annual report and at all times when the Bonds are not Book-Entry Bonds
shall have an office or Issuer for servicing the Bonds in New York, New York.
The Tender Agent may resign by notifying the Issuer, the Trustee, the Bank, the
Remarketing Agent and the Owners at least 30 days before the effective date of such
resignation. The Trustee may remove the Tender Agent and appoint a successor by notifying
the Tender Agent, the Remarketing Agent, the Bank and the Issuer. No removal or resignation
of the Tender Agent shall be effective until the successor has delivered an acceptance of its appointment to the Trustee and the predecessor Tender Agent.
In the event of the resignation or removal of the Tender Agent, such Tender Agent shall
pay over, assign and deliver any moneys held by it as Tender Agent to its successor, or if there
is no successor, to the Trustee. In the event that for any reason there shall be a vacancy in the office of Tender Agent, the Trustee shall act as such Tender Agent to the extent it has operational capacity to perform such tasks.
Section 8.14. Compensation of Tender Agent. The Tender Agent shall not be entitled to any compensation from the Issuer, the Remarketing Agent or the Trustee but, rather, shall only be entitled to compensation from the Borrower. The Borrower shall transmit all payment of fees to the Trustee who shall, in turn, make payment to the Tender Agent.
Section 8.15. Appointment and Duties of Bond Registrar. The Issuer hereby designates
the Trustee as initial Bond Registrar.
The Bond Registrar shall not be entitled to any compensation from the Issuer, the Remarketing Agent, or the Trustee but, rather, shall only be entitled to compensation from the Borrower.
Section 8.16. Eligibilitv - of Bond Reeistrar. A Bond Registrar appointed pursuant to the Indenture shall be a corporation or trust company organized and doing business under the laws of the United States of America or any state or the District of Columbia, subject to supervision or examination by the United States, any state or the District of Columbia authority and having (or in the case of a bank or trust company included in a bank holding company system, the
related bank holding company shall have) a combined capital and surplus of at least $75,000,000
as set forth in its most recent published annual report of condition.
Section 8.17. Bond Re~strar’s - Performance of Duties. The Bond Registrar shall perform
the duties provided for in the Indenture and in exercising such duties shall be entitled to the
same rights and immunities applicable to the Trustee as set forth in this Indenture and shall not be liable for any action or omission to act except for negligence or willful misconduct.
Section 8.18. Reulacement of Bond Repistrar. The Bond Registrar may resign by
notifying the Issuer, the Trustee, the Bank and the Borrower at least 30 days before the effective date of such resignation. The Issuer, with the consent of the Borrower and the Bank, may remove the Bond Registrar and appoint a successor by notifying the Bond Registrar, the
Remarketing Agent, the Bank and the Trustee. No removal shall be effective until the successor
has delivered an acceptance of its appointment to the Trustee and the predecessor Bond
Registrar.
In the event of the resignation or removal of the Bond Registrar, such Bond Registrar
shall pay over, assign and deliver any moneys held by it as Bond Registrar to its successor, or if
there is no successor, to the Trustee. In the event that for any reason there shall be a vacancy in
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the office of Bond Registrar, the Trustee shall act as such Bond Registrar to the extent it has
operational capacity to perform such tasks.
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ARTICLE IX
MODIFICATION OR AMENDMENT OF THE INDENTURE AND RELATED
DOCUMENTS
Section 9.01. Amendments Permitted.
(A) This Indenture and the rights and obligations of the Issuer and of the Holders of
the Bonds and of the Trustee may be modified or amended from time to time and at any time by
an indenture or indentures supplemental hereto, which the Issuer and the Trustee may enter
into when the written consent of the Holders of sixty-six and two-thirds percent (66-2/3%) in
aggregate principal amount of all Bonds then Outstanding, and the Bank, shall have been filed
with the Trustee. No such modification or amendment shall (1) extend the fixed maturity of any Bond, or reduce the amount of principal thereof, or extend the time of payment, or change the method of computing the rate of interest thereon, or extend the time of payment of interest thereon, without the consent of the Holder of each Bond so affected, or (2) reduce the aforesaid
percentage of Bonds the consent of the Holders of which is required to effect any such
modification or amendment, or permit the creation of any lien on the Revenues and other assets pledged under this Indenture prior to or on a parity with the lien created by this Indenture, or
deprive the Holders of the Bonds of the lien created by this Indenture on such Revenues and
other assets (except as expressly provided in this Indenture), without the consent of the Holders
of all of the Bonds then Outstanding. It shall not be necessary for the consent of the
Bondholders to approve the particular form of any 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 this subsection (A), the Trustee shall mail a notice, setting forth in general terms the substance of such Supplemental Indenture, to each rating agency then rating the Bonds and the Holders of the Bonds at the address shown on the registration books of the Trustee. Any failure to give such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such Supplemental Indenture.
(B) This Indenture and the rights and obligations of the Issuer, the Trustee and the Holders of the Bonds may also be modified or amended from time to time and at any time, with the prior written consent of the Bank, by an indenture or indentures supplemental hereto, which the Issuer and the Trustee may enter into without the consent of any Bondholders, but
only to the extent permitted by law and after receipt of an opinion of counsel that the provisions
of such Supplemental Indenture shall not materially adversely affect the interests of the Holders
of the Bonds, including, without limitation, for any one or more of the following purposes:
(1) to add to the covenants and agreements of the Issuer in this Indenture
other covenants and agreements thereafter to be observed, to pledge or assign additional security for the Bonds (or any portion thereof), or to surrender any right or power herein
reserved to or conferred upon the Issuer;
(2) to make such provisions for the purpose of curing any ambiguity,
inconsistency or omission, or of curing or correcting any defective provision, contained in this Indenture, or in regard to matters or questions arising under this Indenture, as the Issuer may deem necessary or desirable and not inconsistent with this Indenture;
(3) to modify, amend or supplement this Indenture in such manner as to permit the qualification hereof under the Trust Indenture Act of 1939, as amended, or
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any similar federal statute hereafter in effect, and to add such other terms, conditions
and provisions as may be permitted by said act or similar federal statute;
(4) to conform to the terms and provisions of any Alternate Letter of Credit or to obtain a rating on the Bonds;
(5) to preserve the Tax-exempt status of the interest on the Bonds and the
status of interest on the Bonds as exempt from State of California personal income taxes;
or
(6) to modify, alter, amend or supplement this Indenture in any other respect, including amendments that would otherwise be described in Section 9.01(A)
hereof, (1) if such amendment will take effect on a Purchase Date following the purchase
of tendered 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 2.04
hereof.
The Trustee shall give notice of any such modification or amendment to each rating
Issuer then rating the Bonds.
(C) The Trustee may in its discretion, but shall not be obligated to, enter into any such Supplemental Indenture authorized by subsections (A) or (B) of this Section which
materially adversely affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise.
(D) Notwithstanding anything to the contrary herein, Exhibit D hereto may be amended without the consent of the Issuer, but upon the direction of the Bank with the written
acknowledgment of the Trustee.
Section 9.02. Effect of Suuulemental Indenture. Upon the execution of any Supplemental
Indenture pursuant to this Article, this Indenture shall 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 Bonds Outstanding shall thereafter be determined,
exercised and enforced hereunder subject in all respects to such modification and amendment,
and all the terms and conditions of any such Supplemental Indenture shall be deemed to be part
of the terms and conditions of this Indenture for any and all purposes.
Any such Supplemental Indenture shall comply with the terms of this Article IX, and the Trustee shall be entitled to receive and may conclusively rely on an Opinion of Counsel that the Supplemental Indenture complies with the provisions therein.
Section 9.03. Endorsement of Bonds; Preparation of New Bonds. Bonds delivered after the execution of any Supplemental Indenture pursuant to this Article may bear a notation by endorsement or otherwise in form approved by the Issuer as to any modification or amendment
provided for in such Supplemental Indenture, and, in that case, upon demand of the Holder of any Bond Outstanding at the time of such execution and presentation of such Holder’s Bond for
the purpose at the office of the Trustee or at such additional offices as the Trustee may select
and designate for that purpose, a suitable notation shall be made on such Bond. If the
Supplemental Indenture shall so provide, new Bonds so modified as to conform, in the opinion
of the Issuer, to any modification or amendment contained in such Supplemental Indenture,
shall be prepared and executed by the Issuer and authenticated by the Trustee or the Tender
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155
Agent, and upon demand of the Holders of any Bonds then Outstanding shall be exchanged at
the Principal Corporate Trust Office of the Trustee, without cost to any Bondholder, for Bonds
then Outstanding, upon surrender for cancellation of such Bonds, in equal aggregate principal
amounts of the same maturity.
Section 9.04. Amendment of Particular Bonds. The provisions of this Article shall not prevent any Bondholder from accepting any amendment as to the particular Bonds held by such Bondholder, provided that due notation thereof is made on such Bonds.
Section 9.05. Amendment of Loan Apreement and Other Issuer Documents.
(A) Neither the Issuer nor the Trustee shall amend, modify or terminate any of the
terms of the Loan Agreement, or consent to any such amendment, modification or termination,
without the consent of the Bank and only upon receiving (1) an Opinion of Counsel to the effect
that such amendment, modification or termination will not materially adversely affect the
interests of the Bondholders or the Tax-exempt status on interest on the Bonds, or result in any material impairment of the security hereby given for the payment of the Bonds, or (2) the written consent of the Holders of at least sixty-six and two-thirds percent (66-2/3%) in principal amount of the Bonds then Outstanding to such amendment, modification or termination; provided that no such amendment, modification or termination shall reduce the amount of
Loan Repayments to be made to the Issuer or the Trustee by the Borrower pursuant to the Loan Agreement, or extend the time for making such payments, without the written consent of all of
the Holders of the Bonds then Outstanding.
(B) The Issuer or the Trustee, as applicable, may amend, modify or terminate any of
the terms of the Regulatory Agreement or any other document relating to the security for the Bonds, without the consent of the Bondholders, but with the prior approval of the Bank, and
may amend, modify or terminate the Tax Certificate without the consent of the Bondholders, in
each case accordance with the provisions of such document to be amended, modified or
terminated.
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ARTICLE X
DEFEASANCE
Section 10.01. Discharge of Indenture. The Bonds may be paid by the Issuer in any of the following ways, provided that the Issuer also pays or causes to be paid any other sums payable
hereunder by the Issuer:
(a) by paying or causing to be paid with Available Moneys the principal of,
interest and premium, if any, on the Bonds, as and when the same become due and
payable;
(b) by depositing with the Trustee, in trust, at or before maturity, money or
securities in the necessary amount (as provided in Section 10.03) to pay or redeem with Available Moneys all Bonds then Outstanding; or
(c) by delivering to the Trustee, for cancellation by it, the Bonds then Outstanding.
If the Issuer shall also pay or cause to be paid all other sums payable hereunder by the
Issuer, and if, after payment of all amounts due to the Trustee under Section 8.06, the Trustee
has transferred any moneys remaining in any funds or accounts (other than the Rebate Fund or
moneys held for particular Bondholders) to the Bank as provided in Section4.5 of the Loan
Agreement, then and in that case, at the election of the Issuer (evidenced by a Certificate of the
Issuer, filed with the Trustee, signifying the intention of the Issuer to discharge all such
indebtedness and this Indenture), and notwithstanding that any Bonds shall not have been
surrendered for payment, this Indenture and the pledge of Revenues and other assets made
under this Indenture and all covenants, agreements and other obligations of the Issuer under
this Indenture shall cease, terminate, become void and be completely discharged and satisfied
except only as provided in Section 10.02. In such event, upon Written Request of the Issuer, the
Trustee shall cause an accounting for such period or periods as may be requested by the Issuer
to be prepared and filed with the Issuer and shall execute and deliver to the Issuer all such
instruments as may be necessary or desirable to evidence such discharge and satisfaction, and the Trustee shall pay over, transfer, assign or deliver to the Bank all moneys or securities or other property held by it pursuant to this Indenture which are not required for the payment or redemption of Bonds not theretofore surrendered for such payment or redemption. Notwithstanding any other provision of this Indenture or the Loan Agreement, under no circumstances shall any proceeds of a draw on the Letter of Credit or any remarketing proceeds be paid to the Issuer, the Borrower or any partner of the Borrower.
Section 10.02. Dischawe - of Liabilitv 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 10.03) to pay or redeem any Outstanding Bond (whether upon or prior to its maturity or
the redemption date of such Bond), provided that, if such Bond is to be redeemed prior to
maturity, 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, then all
liability of the Issuer in respect of such Bond shall cease, terminate and be completely discharged, except only that the Holder thereof shall thereafter be entitled to payment of the principal of and interest on such Bond by the Issuer, and the Issuer shall remain liable for such payment, but only out of such money or securities deposited with the Trustee as aforesaid for their payment, and such money and securities shall be pledged to such payment.
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The Issuer may at any time surrender to the Trustee for cancellation by it any Bonds previously issued and delivered, which the Issuer may have acquired in any manner
whatsoever, and such Bonds, upon such surrender and cancellation, shall be deemed to be paid
and retired.
Section 10.03. Deposit of Monev or Securities with Trustee. Whenever in this Indenture it is provided or permitted that there be deposited with or held in trust by the Trustee money or securities in the necessary amount to pay or redeem any Bonds, the money or securities to be deposited or held may include money or securities held by the Trustee in the funds and accounts established pursuant to this Indenture (exclusive of the Rebate Fund, the Unclaimed Moneys Account, the Letter of Credit Account in the Revenue Fund, remarketing proceeds, and moneys held for the payment of particular Bonds) and shall be:
(a) Available Moneys in an equal amount 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 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, the amount to be deposited or held shall be the principal amount or redemption price of such Bonds and
all unpaid interest thereon to the redemption date; or
(b) Investment Securities of the type described in clause (i) of the definition of Investment Securities in Section 1.01 hereof which are non-callable and purchased with Available Moneys, the principal of and interest on which when due will provide money sufficient (in the opinion of an independent certified public accountant) to pay the principal of, premium, if any, all unpaid interest to maturity, or to the redemption date, as the case may be, on the Bonds to be paid or redeemed, as such principal and interest become due, with maturities no longer than 30 days or as may be necessary to
make the required payment on the Bonds provided that, in the case of Bonds which 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;
provided, in each case, that the Trustee shall have been irrevocably instructed (by the
terms of this Indenture or by Written Request of the Issuer) to apply such money to the
payment of such principal and interest with respect to such Bonds.
Notwithstanding any other provision of this Indenture to the contrary, the provisions of
Sections 10.01,10.02 and 10.03 hereof pertaining to discharge of liability on the Bonds by providing for deposit with the Trustee of money or securities in the necessary amount to pay or redeem any Outstanding Bond shall apply only when a Term Interest Rate is in effect, and any such payment or redemption shall occur at the end of the then current Term Interest Rate
Period.
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ARTICLE XI
MISCELLANEOUS
Section 11.01. Liabilitv of Issuer Limited to Revenues. Notwithstanding anything in this Indenture or in the Bonds contained, the Issuer shall not be required to advance any moneys derived from any source other than the Revenues and other assets pledged under this Indenture 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. Nevertheless, the Issuer
may, in its sole discretion, advance for any of the purposes hereof any funds of the Issuer which
may be made available to it for such purposes.
Section 11.02. Successor Is Deemed Included in All References to Predecessor.
Whenever in this Indenture either the Issuer or the Trustee is named or referred to, such
reference shall be deemed to include the successors or assigns thereof, and all the covenants and
agreements in this Indenture contained by or on behalf of the Issuer or the Trustee shall bind
and inure to the benefit of the respective successors and assigns thereof whether so expressed or
not. 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, 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 of the State 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.
Section 11.03. Limitation of RiEhts - to Parties and Bondholders. 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 Tender Agent, the Remarketing Agent, the Bank,
the Borrower and the Holders of the Bonds, 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 Tender Agent, the Remarketing Agent,
the Bank, the Borrower and the Holders of the Bonds.
Section 11.04. 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 11.05. 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 deliver a certificate of such
destruction to the Issuer.
Section 11.06. Severabilitv of Invalid Provisions. If 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, then such provision or provisions shall be deemed severable from the remaining provisions contained in this Indenture and such invalidity, illegality or unenforceability shall not affect any other provision of this Indenture, and this Indenture shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein. The Issuer hereby declares that it would have entered into this Indenture and each and every other Section, paragraph, sentence, clause or phrase hereof and authorized the issuance of
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the Bonds pursuant thereto irrespective of the fact that any one or more Sections, paragraphs, sentences, clauses or phrases of this Indenture may be held illegal, invalid or unenforceable.
Section 11.07. Governing - Law. This Indenture shall be governed exclusively by and
construed in accordance with the applicable laws of the State.
Section 11.08. Notices. Notices shall be delivered to each Bondholder by first-class mail, postage prepaid, at the address set forth for such Bondholder on the registration books. Any notice to or demand upon the Trustee may be served or presented, and such demand may be made, at the Principal Corporate Trust Office of the Trustee, which at the date of adoption of
this Indenture is located at the following address:
Wells Fargo Bank, National Association
700 Wilshire Boulevard, 17th Floor
Los Angeles, CA 90017
Attention: Corporate Trust Services Telephone: (213) 6143353 Facsimile: (213) 6143355
or at such other address as may have been filed in writing by the Trustee with the Issuer.
Notices to or demands upon the Issuer, the Bank, the Borrower, the Remarketing Agent or the
Rating Issuer shall be given or served at the addresses set forth below, or such other addresses
as any of them might designate in writing to the others and the Trustee:
To the Issuer:
City of Carlsbad 1200 Carlsbad Village Drive Carlsbad, CA 92008 Attention: Facsimile: (760) 720-9461
To the Bank:
Citibank (West), FSB
4-44 S. Flower St., 29th F1.
Los Angeles, CA 90017 Attention: CCDE
Facsimile:(213) 623-5379
To the Credit Bank:
Citibank, N.A.,
c/o Citicorp North America, Inc. 3800 Citibank Center
Building F, First Floor
Tampa,FL 33610 Attention: Standby Unit
Facsimile: (813) 6047187
To the Borrower:
Dove Family Housing Associates
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c/o Community Housing Works 1820 S. Escondido Boulevard, Suite 101 Escondido, CA 92025
Attention:
Telephone: (760) 432-6878
With a copy to:
Mercy Housing California
500 South Main Street, Suite 110
Orange, CA 92868
Attention: Dara Kove
With a copy to:
Mercury Housing, Inc. 601 East 18th Avenue, Suite 150
Denver, CO 80203
Attention: Portfolio Risk Management
To the Limited Partner:
To the Remarketing Agent:
Red Capital Markets, Inc.
150 East Gay Street, 22nd Floor Columbus, OH 43215 Attention: Remarketing Desk Telephone: (614) 857-1601
Facsimile: (614) 857-1605
To the Rating Agency:
All notices, certificates of other communications shall be deemed sufficiently given (a) when received if given by first class mail or express mail or by courier or (b) upon having been transmitted by telecopy, on the day of receipt of such telecopy as evidenced by the time shown on such transmission, in each case properly addressed to the Issuer, the Borrower, the Trustee, the Bank or the Rating Issuer at the respective addresses or telecopy numbers provided below.
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. Any party sending a notice by telecopy shall also, after sending
such telecopy, deliver such notice by first class or express mail or courier. Notices provided by
other means than telecopy shall be deemed given when received.
Section 11.09. Evidence of Richts of Bondholders.
(a) Any request, consent or other instrument required or permitted by this Indenture to be signed and executed by Bondholders may be in any number of concurrent instruments of substantially similar tenor and shall be signed or executed by
such Bondholders in person or by an agent or agents duly appointed in writing. Proof
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of the execution of any such request, consent or other instrument or of a writing
appointing any such agent, or of the holding by any person of Bonds transferable by
delivery, 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 certificate of any notary public or other officer of any jurisdiction, authorized by the laws thereof to take
acknowledgments of deeds, certifying that the person signing such request, consent or
other instrument acknowledged to such notary public or other officer the execution
thereof, or by an affidavit of a witness of such execution duly sworn to before such
notary public or other officer.
(c) The ownership of registered Bonds shall be proved by the bond
registration books held by the Registrar. The Registrar, the Trustee and the Issuer may
conclusively assume that such ownership continues until written notice to the contrary is served upon the Trustee. 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 other instrument or writing of the Holder of any Bond shall
bind every future Holder of the same Bond and the Holder of every 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 accordance therewith or reliance thereon.
Section 11.10. Disaualified Bonds. 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 or held by or for the account of
the Issuer or the Borrower, or by any other 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 the Borrower or any other obligor on the Bonds, shall be disregarded and deemed not
to be Outstanding for the purpose of any such determination. Bonds so owned which have been pledged in good faith may be regarded as Outstanding for the purposes of this Section if the pledgee shall establish to the satisfaction of the Trustee the pledgee’s right to vote such Bonds and that the pledgee is not a person directly or indirectly controlling or controlled by, or under direct or indirect common control with, the Issuer or the Borrower or any other 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.
Section 11.11. Monev Held for Particular Bonds. The money held by the Trustee for the
payment of the interest, principal or premium due on any date with respect to particular Bonds (or portions of Bonds in the case of registered Bonds redeemed in part only) shall, on and after such date and pending such payment, be set aside on its books and held in trust by it
uninvested for the Holders of the Bonds entitled thereto.
Section 11.12. Funds and Accounts. The Trustee may establish such funds and accounts as are required hereunder or as it deems necessary or appropriate to perform its obligations hereunder. Any fund or account required by this Indenture to be established and maintained by the Trustee may be established and maintained in the accounting records of the Trustee either as a fund or an account, and may, for the purposes of such records, any audits thereof
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and any reports or statements with respect thereto, be treated either as a fund or as an account;
but all such records with respect to all such funds and accounts shall at all times be maintained in accordance with appropriate and accurate corporate trust accounting principles and with due
regard for the requirements of Section 6.05 and for the protection of the security of the Bonds and the rights of every Holder thereof. The Trustee shall provide statements describing the
activity of the funds and accounts held hereunder to the Borrower monthly and the Issuer
annually; provided that the Trustee shall not be obligated to provide an accounting for any
account that (a) has a balance of zero, and (b) has not had any activity since the last reporting
date.
Section 11.13. Waiver of Personal Liabilitv. No member, officer, agent or employee of
the Issuer, and no officer, official, agent or employee of the State of California or any
department, board or Issuer of the foregoing shall be individually or personally liable for the payment of the principal of or premium or interest on the Bonds or be subject to any personal liability or accountability by reason of the issuance thereof; but nothing herein contained shall
relieve any such member, officer, agent or employee from the performance of any official duty
provided by law or by this Indenture.
Section 11.14. References to the Bank; Other Documents; Third Party Beneficiary. (A) All
provisions hereof regarding consents, approvals, directions, waivers, appointments, requests or
other actions by the 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 Bank
were not mentioned therein (a) during any period during which there is a payment default under the Letter of Credit (i.e. failure of the Bank to pay a draft drawn in compliance with the terms of the Letter of Credit), or (b) after the Letter of Credit shall at any time for any reason cease to be valid and binding on the Bank, or shall be declared to be null and void by final judgment of a court of competent jurisdiction, or after the Letter of Credit has been rescinded,
repudiated or terminated, or after a receiver, conservator or liquidator has been appointed for
the Bank; provided, however, that the payment of amounts due (including without limitation
all indemnity payments) to the Bank pursuant to the terms hereof shall continue in full force
and effect. The foregoing shall not affect any other rights of the Bank.
(B) All provisions herein relating to the rights of the Bank shall be of no force and
effect if there is no Letter of Credit in effect and all amounts owing to the Bank under the
Reimbursement Agreement have been paid. In such event, all references to the Bank shall have no force or effect.
(C) The parties hereto agree that the Bank is intended to be, and is, a third party
beneficiary of this Indenture, subject to subsections (A) and (B) above.
Section 11.15. Execution in Several Counteruarts. 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.
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IN WITNESS WHEREOF, the City of Carlsbad has caused this Indenture to be signed in
its name by its and Wells Fargo Bank, National Association, as Trustee, in token of its acceptance of the trusts created hereunder, has caused this Indenture to be signed in its
corporate name by one of the officers thereunto duly authorized all as of the day and year first
above written.
CITY OF CARLSBAD
By:
Attest:
City Clerk
WELLS FARGO BANK, NATIONAL ASSOCIATION as Trustee
Authorized Signatory
[Execution Page of Indenture of Trust Dated as of June 1,20031
NO. R---
CITY OF CARLSBAD
MATURITY DATE
EXHIBIT A
FORM OF BOND
VARIABLE RATE DEMAND MULTIFAMILY HOUSING REVENUE BONDS
(THE GREENS APARTMENTS) 2003 SERIES A
DATED DATE INTEREST RATE CUSP
June 1,2036 Delivery Date Variable
Registered Owner:
Principal Amount:
The City of Carlsbad, a municipal corporation, duly organized and existing under the laws of the State of California (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 set forth above, the principal sum set forth above and to pay (but only out of Revenues as hereinafter provided) interest on the balance of said principal
amount from time to time remaining unpaid from and including the date hereof until payment
of said principal amount has been made or duly provided for, at the rates and on the dates
determined as described herein and in the Indenture (as hereinafter defined). If an Event of
Default (as defined in the Indenture) shall have occurred and be continuing, the interest rate on
the Bonds shall be the rate on the Bonds on the day prior to the occurrence of such Event of Default. The principal of and premium, if any, on this Bond are payable at final maturity,
acceleration or redemption in lawful money of the United States of America upon surrender
hereof at the principal corporate trust office of Wells Fargo Bank, National Association, in Los Angeles, California, as Trustee, or its successor in trust (the ”Trustee”). Payment of the interest
on any Bond shall be made on each Interest Payment Date (as hereinafter defined) to the person appearing on the bond registration books of the Bond Registrar as the Owner thereof on the Record Date, such interest to be paid by the Paying Agent (i) to such Owner by check or draft
mailed on the Interest Payment Date, to such Owner’s address as it appears on the registration
books or at such other address as has been furnished to the Bond Registrar as provided below,
in writing by such Owner not later than the Record Date or (ii) upon written request, at least
three Business Days prior to the applicable Record Date, to the Owner of Bonds aggregating not
less than $1,000,000 in principal amount, by wire transfer in immediately available funds at an account maintained in the United States at such wire address as such Owner shall specify in its written notice; except, in each case, that, if and to the extent that there shall be a default in the
payment of the interest due on such Interest Payment Date, such defaulted interest shall be paid to the Owner in whose name any such Bonds are registered at the close of business on the fifth to last Business Day next preceding the date of payment of such defaulted interest.
The Bonds are authorized to be issued pursuant to the provisions of Chapter 7 of Part 5
of Division31 of the Health and Safety Code of the State of California, as amended and
supplemented (the ”Act”). 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. Proceeds from the sale of the Bonds will be loaned by the Issuer to Dove
Family Housing Associates, a California limited partnership (the ”Borrower”) under the terms
of a Loan Agreement, dated as of June 1, 2003 (the ”Agreement”), among the Issuer, the
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Borrower and the Trustee. The Bonds are all issued under and secured by and entitled to the
benefits of an Indenture, dated as of June 1,2003 (the "Indenture") between the Issuer and the Trustee; all receipts of the Trustee credited under the provisions of the Indenture against such payments; all moneys drawn by the Trustee under the irrevocable Letter of Credit issued initially by Citibank, N.A. (the "Bank"), together with any Alternate Letter of Credit (as those
terms are defined in the Indenture) issued in substitution therefor in accordance with the
Indenture (the "Letter of Credit") in favor of the Trustee, issued at the request and for the
account of the Borrower; and any other moneys held by the Trustee under the Indenture for
such purpose (all of the foregoing, the "Revenues"), and there shall be no other recourse against
the Issuer or any property now or hereafter owned by it.
This Bond is one of a duly authorized issue of bonds of the Issuer designated as the
"City of Carlsbad Variable Rate Demand Multifamily Housing Revenue Bonds (The Greens
Apartments) 2003 Series A" (the "Bond" or "Bonds"), limited in aggregate principal amount to $20,000,000, and issued under and secured by the Indenture. 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 the Indenture and of the Loan Agreement the holder of this Bond, by
acceptance hereof, assents and agrees.
All terms not herein defined shall have the meanings ascribed to them in the Indenture.
The Bonds are issuable as fully registered bonds without coupons in denominations of
$100,000 or any multiple of $5,000 above that amount during a Weekly Interest Rate Period, or in denominations of $5,000 or any integral multiple thereof during any Term Interest Rate Period (herein "Authorized Denominations"). 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 Bond Registrar, initially located in Los Angeles, California, and at the office of the Tender Agent, initially the Trustee, for a like aggregate principal amount of
Bonds 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 Bond Registrar, and at
the office of the Tender Agent, initially 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, in an Authorized Denomination or Denominations, for the same aggregate principal amount, will be issued to the transferee in exchange therefor. The Issuer, the Trustee and the Bond Registrar may treat the registered owner hereof as the absolute owner hereof for all purposes, and the
Issuer, the Trustee and the Bond Registrar shall not be affected by any notice to the contrary.
Interest on the Bonds
The term of the Bonds will be divided into consecutive Interest Rate Periods, as
provided in the Indenture, during each of which the Bonds shall bear interest at the Weekly
Interest Rate or the Term Interest Rate. The initial Interest Rate Period shall be a Weekly
Interest Rate Period. The interest rate determination method may be subsequently changed
from time to time by the Borrower, without the consent of the Bondholders, as provided in the
Indenture. The Trustee shall give notice to Bondholders, as provided in the Indenture, prior to any change in the interest rate determination method.
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Interest on the Bonds with respect to the immediately preceding Interest Period (as defined in the Indenture) will be paid on each Interest Payment Date provided that if any Interest Payment Date is not a Business Day, such Interest (and any principal due) shall be
mailed or wired as provided above on the next succeeding Business Day and no interest shall accrue from the date when due. During a Weekly Interest Rate Period, interest shall be
computed on the basis of a 365/366-day year for the number of days actually elapsed. During a
Term Interest Rate Period, interest shall be computed upon the basis of a 360-day year consisting of twelve 30-day months. Interest on the Bonds shall bear interest from and including the Closing Date (as defined in the Indenture) until payment of the principal or redemption price thereof has been made or provided for, whether at maturity, upon
redemption or otherwise.
Interest Payment Date means (i) during a Weekly Interest Rate Period the first Business
Day of each month, commencing on July 1, 2003, (ii) June 1 and December 1 during a Term
Interest Rate Period and (iii) to the extent not an Interest Payment Date pursuant to (i) or (ii), the
first day of an Interest Rate Period.
Record Date means (i) during a Weekly Interest Rate Period, the last Business Day
before an Interest Payment Date and (ii) during a Term Interest Rate Period, the 15th day of the month prior to an Interest Payment Date.
Weeklv Interest Rate
During each Weekly Interest Rate Period, the Bonds shall bear interest at the Weekly Interest Rate, which shall be determined by the Remarketing Agent not later than 5:OO p.m., New York City time, on the Tuesday of each week during such Weekly Interest Rate Period (provided that if such Tuesday is not a Business Day, the Weekly Interest Rate shall be
determined by 5:OO p.m., New York City time, on the following Business Day) for the period
commencing on the Wednesday of such week; provided, however, that, the Weekly Interest
Rate for the Weekly Interest Rate Period succeeding such Term Interest Rate Period shall be
determined not later than the Business Day next preceding the effective date of such Weekly
Interest Rate Period. The Weekly Interest Rate shall be the rate determined by the Remarketing
Agent (on the basis of examination of obligations comparable to the Bonds known by the
Remarketing Agent to have been priced or traded under then prevailing market conditions) to
be the minimum interest rate which, if borne by the Bonds, would enable the Remarketing Agent to sell the Bonds on such day at a price equal to the principal amount thereof plus accrued interest; provided, however, that if for any reason the Weekly Interest Rate cannot be determined, the Weekly Interest Rate for the next succeeding week shall remain at the then- existing rate. The first Weekly Interest Rate determined for each Weekly Interest Rate Period shall apply to the period commencing on the first day of such Weekly Interest Rate Period and
ending on the next succeeding Tuesday. Thereafter, each Weekly Interest Rate shall apply to
the period commencing on Wednesday and ending on the next succeeding Tuesday, unless
such Weekly Interest Rate Period shall end on a day other than Tuesday, in which event the last
Weekly Interest Rate for such Weekly Interest Rate Period shall apply to the period commencing on the Wednesday preceding the last day of such Weekly Interest Rate Period and ending on such last day.
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16 7
Term Interest Rate
During each Term Interest Rate Period, the Bonds shall bear interest at the Term Interest
Rate, which shall be determined by the Remarketing Agent not later than 4:OO p.m., New York City time, on any Business Day preceding the first day of such Term Interest Rate Period. The
Term Interest Rate shall be the rate determined by the Remarketing Agent (on the basis of examination of obligations comparable to the Bonds known to the Remarketing Agent to have been priced or traded under then prevailing market conditions) to be the minimum interest rate which, if borne by the Bonds, would enable the Remarketing Agent to sell the Bonds on such
Business Day at a price equal to the principal amount thereof; provided, however, that if for any
reason the Term Interest Rate cannot be determined for any Term Interest Rate Period, the
interest rate on the Bonds shall convert to a Weekly Interest Rate.
THE FOREGOING PROVISIONS NOTWITHSTANDING, IN NO EVENT SHALL THE
INTEREST RATE BORNE BY THE BONDS AT ANY TIME EXCEED THE MAXIMUM RATE
(AS DEFINED IN THE INDENTURE).
Red Capital Markets, Inc., Inc. has been appointed as initial Remarketing Agent for the Bonds. The Remarketing Agent may be removed and replaced in accordance with the provisions of the Remarketing Agreement and the Indenture. The Trustee has been appointed
the Tender Agent.
Determination of the interest rate by the Remarketing Agent shall be conclusive and
binding upon the registered owners of the Bonds, the Issuer, the Borrower and the Trustee.
Demand Purchase of Bonds
During any Weekly Interest Rate Period, any Bond or portions thereof in Authorized
Denominations shall be purchased at the option of the Owner thereof, or with respect to Book-
Entry Bonds, at the option of the Direct Participant with an ownership interest in Book-Entry
Bonds, on any Business Day, at a price of 100% of the principal amount thereof, plus accrued
interest to the Purchase Date, upon (i) delivery to the Trustee, if the Bonds are Book-Entry
Bonds, or otherwise to the Tender Agent, at its corporate trust office of an irrevocable notice in
writing by 5:OO p.m., New York City time, on any Business Day, which states the name of the
registered Owner of such Bond or the Direct Participant for such Bond, as applicable, payment instructions with respect to the Purchase Price of such Bond, the principal amount of such Bond
and the date on which the same shall be redeemed or purchased, which date shall be a Business Day not prior to the seventh day next succeeding the date of the delivery of such notice to the Tender Agent, and (ii) (a) if the Bonds are not Book-Entry Bonds, delivery of such Bond to the
Tender Agent at its corporate trust office, accompanied by an instrument of transfer thereof, in
form satisfactory to the Tender Agent, executed in blank by the Owner thereof with the
signature guaranteed in accordance with the guidelines set forth by one of the nationally
recognized medallion signature programs, at or prior to 12:30 p.m., New York City time, on the
date specified in such notice, or (b) if the Bonds are Book-Entry Bonds, upon confirmation by DTC to the Trustee that a Direct Participant with respect to Book-Entry Bonds being purchased
has an ownership interest in such Book-Entry Bonds at least equal to the amount specified in
such Tender Notice, the transfer, on the registration books of DTC, of the beneficial ownership interest in such Book-Entry Bonds tendered for purchase to the account of the Trustee, or to the
account of a Direct Participant acting on behalf of such Trustee.
If moneys sufficient to pay the Purchase Price of Bonds to be purchased pursuant to the
previous paragraph or the paragraph headed "Mandatory Tender for Purchase of Bonds" below shall be held by the Trustee or the Tender Agent on the date such Bonds are to be purchased,
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any Bonds to be so purchased which are not delivered by the Owners thereof to the Tender
Agent or transferred on the registration books of DTC, as applicable, on the date specified for
purchase thereof will be deemed to have been delivered for purchase, or transferred on the
registration books of DTC, as applicable, on such date and to have been purchased. The former
Owners of such Bonds, or Direct Participants with respect to Book-Entry Bonds, will thereafter
have no rights with respect to such Bonds except to receive payment of the Purchase Price therefor upon surrender of such Bonds to the Tender Agent or the transfer, on the registration books of DTC, of the beneficial interest in such Book-Entry Bonds.
Mandatory Tender for Purchase of Bonds
On (i) the first day of each Interest Rate Period, or (ii) while the Bonds bear interest at a Weekly Interest Rate, on the effective date of any Alternate Letter of Credit (each hereafter a
"Purchase Date"), the Owner or Direct Participant of each Bond shall tender such Bond for
purchase as provided below and such Bond shall be purchased or deemed purchased as
provided in the Indenture at a Purchase Price equal to the principal amount thereof plus
accrued and unpaid interest thereon. Payment of the Purchase Price of such Bond shall be
made by 2:30 p.m., New York City time, in the same manner as payment of interest on the
Bonds, to the Owner of record, or Direct Participant with respect to Book-Entry Bonds, on the
Record Date. If the Bonds are not Book-Entry Bonds, the Owner shall deliver such Bonds no
later than 12:30 p.m., New York City time, on the Purchase Date to the Tender Agent at its
Principal Corporate Trust Office, accompanied by an instrument of transfer thereof, in form
satisfactory to the Tender Agent, with the signature guaranteed in accordance with the
guidelines set forth by one of the nationally recognized medallion signature programs. If the
Bonds are Book-Entry Bonds, the tendering Direct Participant shall transfer, on the registration books of DTC, the beneficial ownership interests in such Bonds tendered for purchase to the account of the Trustee or a Direct Participant acting on behalf of the Trustee.
Redemution of Bonds
The Bonds are subject to optional, mandatory and extraordinary redemption as set forth in the Indenture.
General Matters
The holder of this Bond shall have no right to institute any suit, action or proceeding at
law or in equity, for any remedy under or upon the Indenture or to enforce a drawing on the
Letter of Credit, except as provided in the Indenture.
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 agreement in the Indenture contained, against any past, present or future member, director, officer, employee or agent of the Issuer, or through the Issuer, or any successor to the Issuer, under any rule of law or equity, statute or constitution or by the enforcement of any assessment or penalty or otherwise, and all such liability of any such member, director, officer, employee or agent as such is hereby expressly waived and released as a condition of and in consideration for
the execution of the Indenture and the issuance of any of the Bonds.
Amendments Permitted
The Indenture contains provisions permitting the Issuer and the Trustee, with the
written consent of the Owners of not less than sixty-six and two-thirds percent (66-2/3%) in
aggregate principal amount of Bonds at the time outstanding and the Bank, to execute
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supplemental indentures, or add any provisions to, or change in any manner, or eliminate any
of the provisions of, the Indenture; provided, however, that no such supplemental indenture alteration or modification shall be made which will reduce the percentage of aggregate
principal amount of Bonds the consent of the Owners of which is required for any such
modification or alteration, or permit the creation by the Issuer of any lien prior to or on a parity
with the lien of the Indenture upon the Revenues and other funds and collateral pledged under
the Indenture or which will affect the times, amounts and currency of payment of the principal
or Purchase Price of, premium, if any, or interest on the Bonds or affect the rights, duties or
obligations of the Trustee, the Tender Agent, the Paying Agent or the Bond Registrar without the consent of the party affected thereby.
The Indenture also contains provisions permitting the Issuer and the Trustee to execute
supplemental indentures, without consent of the Owners of the Bonds, subject to certain
conditions as set forth in the Indenture.
The Indenture prescribes the manner in which it may be discharged and after which the
Bonds shall no longer be secured by or entitled to the benefits of the Indenture, except for the
purposes of transfer and exchange of Bonds and of payment of the principal of and premium, if any, and interest on the Bonds as the same become due and payable, including a provision that under certain circumstances the Bonds shall be deemed to be paid if certain securities, as
defined therein, maturing as to principal and interest in such amounts and at such times as to insure the availability of sufficient moneys to pay the principal of, premium, if any, and interest on the Bonds and all necessary and proper fees, compensation and expenses of the Trustee shall
have been deposited with the Trustee.
No member or officer of the Issuer, 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.
It is hereby certified 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.
Unless this Bond is presented by an authorized representative of The Depository Trust
Company, a New York corporation ("DTC"), to the Trustee for registration of transfer,
exchange, or payment, and any Bond issued is registered in the name of Cede & Co. or in such
other name 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 HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has
an interest herein.
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 signed by the Bond Registrar.
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IN WITNESS WHEREOF, the City of Carlsbad has caused this Bond to be executed in its
and name and on its behalf by the manual or facsimile signature of its
attested by the signature of its City Clerk, all as of the above date.
CITY OF CARLSBAD
By:
ATTEST
City Clerk
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[TRUSTEE'WTENDER AGENT'S] CERTIFICATE OF AUTHENTICATION
This is one of the Bonds described in the within mentioned Indenture.
Dated:
[Trustee/Tender Agent]
By: Authorized Signatory
ASSIGNMENT
For value received the undersigned do(es) hereby sell, assign and transfer unto
the within-mentioned Registered Bond and do(es) hereby irrevocably constitute and appoint -
attorney, to transfer the same on the books of the Bond Registrar with full power of substitution
in the premises.
Dated:
Note: The signature(s) to this Assignment must correspond with the name(s) as written on the face of the within Registered Bond in every particular, without alteration or enlargement or any change whatsoever.
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EXHIBIT B
FORM OF INVESTOR LETTER
[To be prepared on letterhead of Purchaser]
[Date]
City of Carlsbad
Sacramento, California
, California
Re: City of Carlsbad Variable Rate Demand Multifamily Housing Revenue Bonds-
{The Greens Apartments) 2003 Series A
Ladies and Gentlemen:
The undersigned (the "Purchaser") hereby acknowledges receipt as transferee, from the
previous owner thereof, of the above-referenced bonds (the "Bonds") in fully registered form and
in the aggregate prinapal amount of $20,000,000, constituting all of the Bonds currently outstanding. The Bonds have been checked, inspected and approved by the Purchaser.
The undersigned acknowledges that the Bonds were issued for the purpose of making a loan to assist in financing a certain multifamily rental housing development located in the City of Carlsbad, California (the "Project"), as more particularly described in that certain Loan Agreement, dated as of June 1,2003 (the "Loan Agreement"), by and among the City of Carlsbad
(the "Issuer"), Wells Fargo Bank, National Association, as trustee (the "Trustee") and Dove
Family Housing Associates, a California limited partnership (the "Borrower"). The undersigned
further acknowledges that the Bonds are secured by a certain Indenture dated as of June 1,2003
(the "Indenture"), between the Issuer and the Trustee, which creates a security interest in loan repayments made pursuant to the Loan Agreement for the benefit of the holders and owners of the Bonds, and by a first deed of trust and assignment of rents with respect to the Project (the "Deed of Trust"), which creates a security interest in the Project, subject to permitted
encumbrances, as provided therein, and subject to the terms of the Intercreditor Agreement (as defined in the Indenture). Terms not otherwise defined herein shall have the meanings
assigned thereto in the Indenture.
In connection with the sale of the Bonds to the Purchaser, the Purchaser hereby makes
the following representations upon which you may rely:
1. The Purchaser hereby certifies that it is (a) a bank as defined in Section 3(a)(2) of
the Securities Act of 1933, or a savings and loan association or other institution as defined in
Section 3(a)(5)(a) of that act whether acting in its individual or fiduciary capacity; or (b) a broker
or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934; or (c) an
insurance company as defined in Section 2(13) of that act; or (d)an investment company
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registered under the Investment Company Act of 1940 or a business development company as
defined in Section 2(a)(48) of that act.
2. The present intent of the Purchaser in acquiring the Bonds is for its own account as an investor, subject to the provisions of paragraph 12, and does not intend at this time to dispose of all or any part of the Bonds or any beneficial interest therein. Further, the Purchaser
is not acquiring the Bonds with a view to, or for resale in connection with, any distribution of
the Bonds or any beneficial interest therein. The Purchaser understands that it may need to
bear the risks of acquiring the Bonds for an indefinite time, since any sale prior to maturity may
not be possible due to unmarketability of the Bonds. The Purchaser agrees that it will not
exercise any right as a holder of Bonds to require the foreclosure of the Deed of Trust as a result
of a default consisting solely of a default under the Reimbursement Agreement providing for
the Letter of Credit previously in effect with respect to the Bonds; provided that nothing herein
shall preclude the Purchaser from exercising any or all of its rights and remedies under or
pursuant to any other agreement with the Borrower, including without limitation the
Reimbursement Agreement and any agreements granting security therefor.
3. The Purchaser understands that the Bonds have not been registered under the Securities Act of 1933, as amended (the "Act"). The Purchaser acknowledges that the Issuer requires that, if the Bonds are disposed of by it, current information, including all current financial statements with respect to the Project, which meets the disclosure requirements of any applicable state and federal securities laws then in effect, concerning the Bonds and the Project must be
furnished to any prospective purchaser, and that any disclosure document must be delivered to
the Issuer before the Bonds are offered for sale to any prospective purchaser, and further
acknowledges that any current exemption from registration of the Bonds does not affect or
diminish such requirements.
4. The Purchaser acknowledges that it is familiar with the conditions, financial and
otherwise, of the Borrower and understands that the Borrower may have no sigruficant assets other
than the Project. To the extent deemed appropriate in making its investment decision, the
Purchaser has discussed the Borrower's financial condition and the Borrower's current and
proposed business activities with the Borrower. The Purchaser further acknowledges that it has
such knowledge and experience in business matters that it is fully capable of evaluating the merits and risks of this investment and it is able to bear the economic risk of the investment. The Bonds are a security of the kind the Purchaser wishes to purchase and hold for investment, and the nature
and amount of the Bonds are consistent with other securities held by the Purchaser. The Purchaser
has been furnjshed such information and such documents as the Purchaser deems necessary to
make a decision to purchase the Bonds, including copies or forms of the Indenture, the Loan Agreement, the Deed of Trust and the Regulatory Agreement, dated as of June 1,2003, among the
Issuer, the Borrower and the Trustee, and certain other documents relating to the Bonds and the
Project, all of which documents the Purchaser has reviewed. Specifically, but without limitation,
the Purchaser has reviewed information about the Project and the property manager for the Project, as well as information about the risks relating to the Bonds, and the Purchaser understands that the Bonds involve a high degree of risk. Specifically, and without in any manner limiting the foregoing, the Purchaser understands and acknowledges that, among other risks, the Bonds are payable solely from revenues pledged under the Indenture. The Purchaser has made such inquiry
with respect to all of the foregoing as it believed to be desirable for its purposes.
5. The Purchaser has received from the Issuer no formal or informal offering or
disclosure document relating to the Bonds and has concluded that the receipt of one prior to the purchase of the Bonds is not required. It is acknowledged that no written information has been
provided by the Issuer, and that any written information furnished by any other party to the transaction may not fully disclose all information pertinent to the Bonds.
B-2
6. Except as disclosed to the Issuer, the Purchaser is not now and has never been controlled by, or under common control with, the Borrower. Ecept as disclosed to the Issuer, the
Borrower has never been and is not now controlled by the Purchaser. THE PURCHASER HAS
ENTERED INTO NO ARRANGEMENTS WITH THE BORROWER OR WITH ANY AFFILIATE
OF THE BORROWER IN CONNECTION WITH THE BONDS, OTHER THAN AS DISCLOSED
TO THE ISSUER. The Purchaser hereby agrees to deliver to the Issuer a copy of any agreement
between the Purchaser and the Borrower or any affiliate of the Borrower relating to the Bonds.
7. The Purchaser has authority to purchase the Bonds and to execute this letter and
any other instruments and documents required to be executed by the Purchaser in connection with
the purchase of the Bonds.
8. In entering into this transaction the Purchaser has not relied upon any representations or opinions made by the Issuer relating to the legal consequences or other aspects of the transactions, nor has it looked to, nor expected, the Issuer to undertake or require any credit investigation or due diligence reviews relating to the Borrower, its financial condition or business
operations, the Project (including the financing, acquisition, construction, operation or
management thereof), or any other matter pertaining to the merits or risks of the transaction, or the
adequacy of any collateral pledged to the Trustee to secure repayment of the Bonds. The
Purchaser understands and acknowledges that the obligations of the Borrower under the Loan
Agreement are not recourse obligations against the general assets of the Borrower, but are secured
only by the Project to the extent provided in the Deed of Trust.
9. The Purchaser understands that 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 or taxing district thereof, including, without limitation, the Issuer, that the Bonds will never represent or constitute a general obligation or a pledge of the faith and credit of the Issuer, or the State of California or any political subdivision thereof; that no right will exist to have taxes levied by the State of California or any political subdivision thereof for the payment of principal and interest on the Bonds; and that the liability of the Issuer with respect to the Bonds is subject to further limitations as set forth in the Bonds and the Indenture.
10. The purchaser has been informed that the Bonds have not been and will not be
registered or otherwise qualified for sale under the "Blue Sky" laws and regulations of any
jurisdiction, (ii) will not be listed on any stock or other securities exchange, and (iii) will carry no
rating from any rating service.
11. The Purchaser has obtained, from representatives of the Borrower and others, all
information regarding the Bonds that it has deemed relevant. The Purchaser has asked of the Borrower and all other relevant parties all the questions to which the Purchaser desired answers, and has had those questions satisfactorily answered. Neither the Borrower nor the Issuer nor any other relevant party has refused to disclose any information that Purchaser deems necessary or
appropriate to its decision to purchase the Bonds.
12. Although the Purchaser does not intend at this time to dispose of all or any part of
the Bonds or any beneficial interest therein, the Purchaser acknowledges that it has the right to sell
and transfer the Bonds, subject to the following requirements, except in the case of a transfer of the
Bonds upon a remarketing thereof pursuant to the terms of the Indenture while a Letter of Credit is in effect:
(a) The Purchaser will not sell or otherwise transfer any of the Bonds or any beneficial interest therein unless such transfer will not result in the transferee owning
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1-75
less than all of the Bonds and all beneficial interests therein, except with the prior
written approval of the Issuer;
(b) Prior to any transfer of the Bonds, the Purchaser shall deliver to the Issuer and the Trustee a certificate identifying any and all documents that have been executed
by the Purchaser and the Borrower or any affiliate of the Borrower with respect to the
Bonds; and
(c) The Purchaser will not sell or otherwise transfer any of the Bonds or any
beneficial interest therein without requiring the transferee to deliver to the Issuer and to the Trustee an investor's letter to the same effect as this Investor's Letter, including this paragraph 12, with no revisions except as may be approved in writing by the Issuer.
[PURCHASER]
By:
Name:
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EXHIBIT C
FORM OF WRITTEN REQUISITION FOR COSTS OF ISSUANCE FUND
$20,000,000 CITY OF CARLSBAD
MULTIFAMILY HOUSING REVENUE BONDS
(THE GREENS APARTMENTS)
2003 Series A
REQUISITION NO. 1 FOR DISBURSEMENT FROM COSTS OF ISSUANCE FUND
The undersigned hereby states and certifies:
that the undersigned is the of , a California , as General Partner of Dove Family Housing Associates, a California limited partnership, (the "Borrower"), and as such, is familiar with the facts herein certified and
is authorized and qualified to certify the same on behalf of the Borrower;
(ii) that the undersigned is an "Authorized Borrower Representative", as such term
is defined in that certain Indenture, dated as of June 1,2003 (the "Indenture"), by and between the Issuer and as trustee (the "Trustee");
(iii) that, pursuant to Section 3.02 of the Indenture, the Trustee is hereby authorized
to disburse this date from the Costs of Issuance Fund established pursuant to the Indenture (the
"Costs of Issuance Fund") to the payees designated on Schedule A attached hereto and by this
reference incorporated herein, an amount not to exceed the respective sum set forth opposite
each such designation, upon receipt of an invoice therefor, in payment or reimbursement of Costs of Issuance described on said Schedule A;
(iv) that each item to be paid pursuant to this requisition has been properly incurred,
is a proper charge against the Costs of Issuance Fund and has not been the subject of a prior requisition; and
(v) that attached hereto is a statement or invoice for each amount requested to be disbursed hereunder.
c-1
Capitalized terms used herein and not otherwise defined shall have the meanings
ascribed thereto in the Indenture.
Dated: June -I 2003 Dove Family Housing Associates, a
California limited partnership
By: Community Housing Works,
a General Partner
By: Mercy Housing West, a General Partner
By:
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SCHEDULE A
Pavee Name and Address Pumose of Obligation
c-3
Amount
EXHIBIT D
REDEMPTION SCHEDULE
[to come]
D-1
S
Exhibit 5
BOND PURCHASE AGREEMENT KUTAK ROCK LLP
DRAFT 05/08/2003
Ai3 13,177 $20,000,000
CITY OF CARLSBAD
VARIABLE RATE DEMAND MULTIFAMILY HOUSING REVENUE BONDS
(THE GREENS APARTMENTS), 2003 SERIES A 5 -30 -0 3
May 30,2003
City of Carlsbad
1200 Carlsbad Village Drive
Carlsbad, CA 92008
Dove Family Housing Associates, LP
‘/o Community Housing Works
1820 South Escondido Boulevard, Suite 101
Escondido, CA 92025
Ladies and Gentlemen:
Red Capital Markets, Inc. (the “Underwriter”) hereby offers to enter into this Bond Purchase
Agreement (the “Bond Purchase Agreement”) with the City of Carlsbad (the “Issuer”) and Dove Family
Housing Associates, LP, a California limited partnership (the “Borrower”). The offer is hereby made
subject to acceptance by the Issuer and the Borrower (by the execution and delivery of this Bond
Purchase Agreement to the Underwriter) on or before 5:OO p.m., Pacific Time, on the date hereof, and
upon such acceptance, this Bond Purchase Agreement shall be in full force and effect in accordance with
its terms and shall be binding upon the Issuer, the Borrower and the Underwriter.
The Borrower is entering into this Bond Purchase Agreement in order to induce the Issuer and the
Underwriter to enter into this Bond Purchase Agreement and to induce the Issuer to sell, and induce the
Underwriter to purchase, the above-captioned bonds (the “Bonds”) on the terms set forth herein. The
Borrower, by acceptance of the offer made herein, requests the Issuer to issue and the Underwriter to
purchase the Bonds.
The Bonds are issued pursuant to the provisions of the Act, the resolution of the Issuer approving
the issuance of the Bonds (the “Resolution”) and an Indenture of Trust, dated as of June 1, 2003 (the
“Indenture”), by and between the Issuer and , as trustee (the
“Trustee”). Capitalized terms used herein, but not defined herein, shall have the meanings assigned
thereto in the Indenture, unless the context otherwise requires. The Act, the Resolution and the Indenture
are collectively referred to herein as the “Authorizations.” The Bonds shall be issued in accordance with
the provisions of the Authorizations and secured as provided therein.
The Issuer will lend the proceeds of the sale of the Bonds (the “Loan”) to the Borrower pursuant
to a Loan Agreement dated as of the date of the Indenture (the “Loan Agreement”) by and among the
Issuer, the Trustee and the Borrower. The proceeds of the Loan will be applied to finance the acquisition,
construction and equipping of a 178-unit multifamily rental housing development located within the City
of Carlsbad, California (the “Project”).
The Project is required to be occupied in part by persons or families whose incomes satisfy
certain requirements of the Internal Revenue Code of 1986, as amended (the “Code”), the applicable
income tax regulations issued under the Code, the Act and the Issuer as set forth in a Regulatory
Agreement and Declaration of Restrictive Covenants, dated as of the date of the Indenture (the
“Regulatory Agreement”), by and among the Issuer, the Trustee and the Borrower.
The Borrower will enter into a Reimbursement Agreement dated as of the date of the Indenture
(the “Reimbursement Agreement”) with Citibank (West), FSB (the “Bank”), pursuant to which Citibank,
N.A. (the “Credit Bank”) will issue on or before the Closing Date of the Bonds to the Trustee for the
account of the Borrower, an irrevocable direct-pay letter of credit (the “Letter of Credit”). The
Reimbursement Agreement will provide for reimbursement by the Borrower to the Bank of drawings
under the Letter of Credit.
The Issuer, the Trustee and the Bank will enter into an Intercreditor Agreement dated as of the
date of the Indenture (the “Intercreditor Agreement”), pursuant to which, so long as the Credit Bank has
not failed to honor a properly presented draw on the Letter of Credit, the rights of the Issuer and Trustee
to take certain actions and pursue certain remedies is limited.
The Bonds, the Indenture, the Loan Agreement, the Regulatory Agreement, this Bond Purchase
Agreement, the Reimbursement Agreement, the Letter of Credit, the Intercreditor Agreement and all
other documents, agreements and undertakings executed and delivered in connection with the transactions
contemplated by the foregoing documents are herein referred to as the “Program Documents.”
Section 1. Purchase and Purchase Price. Under the terms and conditions and in reliance upon
the representations, warranties and agreements set forth herein, the Issuer agrees to execute and deliver
the Bonds, and the Underwriter agrees to purchase all (but not less than all) of the Bonds at an aggregate
purchase price equal to the initial principal amount of the Bonds (the “Purchase Price”). 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 I 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 I hereto. The Gross Underwriter’s Fee
and the Expense Reimbursement shall be due and payable in immediately available funds on the date of
the Closing, solely and exclusively from the proceeds of the Bonds or funds provided by the Borrower.
The Bonds shall bear interest at the rates, mature on the date and have such other terms as
provided therein and in the Indenture and described in the Official Statement prepared with respect to the
Bonds (the “Official Statement”).
Section2. Official Statement. The Borrower has caused to be delivered to the Underwriter
copies of the Official Statement, approved for distribution by the 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
Program Documents and all other documents, certificates or statements furnished by the Issuer and the
Borrower to the Underwriter in connection with the transactions contemplated by the Official Statement
and the Program 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.
In the event that the Bonds, or the remarketing of the Bonds, should become subject to the
continuing disclosure requirements of Rule 15~2-12 under the Securities Exchange Act of 1934 (the
2
“Rule”), the Borrower will furnish to the Underwriter all information reasonably required by the
Underwriter to comply with the Rule. To the extent necessary to comply with the Rule, if applicable, the
Issuer and the Borrower will notify the Underwriter if they become aware of any fact or event which
might or would cause the Official Statement, as then supplemented or amended, to contain any untrue
statement of a material fact or to omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, and the Issuer and the Borrower will cooperate with the
Underwriter by furnishing such information as is reasonably required to amend or supplement the Official
Statement, and prepare or file any other papers, in compliance with the Rule.
Section 3. Closing; Bonds. At 8:OO a.m., Pacific Time, June 2, 2003, or at such other time or on
such earlier or later date as the Underwriter, the Borrower and the Issuer mutually agree upon, the Issuer
will deliver or cause to be delivered to the Underwriter the Bonds in defmitive form, duly executed, and
authenticated together with the other documents hereinafter mentioned, and the Underwriter will accept
such delivery and pay the Purchase Price in federal funds payable to the order of the Trustee for the
account of the Issuer. Delivery of the Bonds shall be made through the facilities of The Depository Trust
Company in New York, New York and payment shall be made to the wire address provided by the
Trustee to the Underwriter. This payment and delivery shall be called the “Closing.” The Bonds shall be
in fully registered form, registered in the name of Cede & Co. and shall be in denominations of $100,000
or any integral multiple of $5,000 above such amount, except as otherwise provided in the Indenture. The
Bonds shall be made available to the Underwriter for checking at least one Business Day prior to the
Closing.
Section 4. Representations, Warranties and Covenants of the Issuer. The Issuer represents,
warrants and covenants to the Underwriter that:
(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
Program 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 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 (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.
(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 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,
insolvency, 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.
(8) 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 .
6) The information contained in the Official Statement under the captions “THE
ISSUER’ and “ABSENCE OF LITIGATION-The Issuer,” at the time of the Issuer’s acceptance
hereof, and (unless the Official Statement is amended or supplemented pursuant to Section7
hereof) at all times subsequent thereto, up to and including the date of the Closing, is true and
correct in all material respects and such information does not contain any untrue or misleading
statement 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.
4
Section 5. Representations, Warranties and Covenants of the Borrower. The Borrower
represents, warrants and covenants to the Issuer and the Underwriter that:
(a) The Borrower is, and will be at the date of Closing, a limited partnership duly
formed, validly existing and in good standing under the laws of the State and is duly qualified to
transact business in the State. The Borrower has full power and authority to own its property
(including, without limitation, the Project), to carry on its business as presently being conducted
and as contemplated to be conducted by the Program Documents to which it is a party (the
“Borrower Documents”) and to execute, deliver and perform its obligations under the Borrower
Documents.
(b) Both at the date of the Official Statement and at the date of Closing, the
statements and information in the Official Statement (as the same may be supplemented or
amended with the written approval of the Underwriter) under the headings “THE BORROWER
AND THE PROJECT” and “ABSENCE OF LITIGATION-The Borrower” do not contain any
untrue statement of material fact or omit to state any fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances under which such
statements were made, not misleading in any material respect.
(c) The execution, delivery and performance of the Borrower Documents and the
taking of any and all other actions and the execution, delivery and performance of all such
documents as may be required of it pursuant to the provisions of the Borrower Documents
including, without limitation, the authorization of the use by the Underwriter of the Official
Statement in connection with the offering, sale and distribution of the Bonds, have been duly
authorized by all necessary action on its part.
(d) The Borrower Documents have been duly executed and delivered by the
Borrower and when executed and delivered by the other parties hereto will constitute the legal,
valid and binding obligations of the Borrower, enforceable in accordance with their terms, except
as limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting
the rights of creditors generally.
(e) If at any time the Borrower becomes aware that any event shall have occurred
which might cause the Official Statement to contain any untrue statement of material fact or omit
to state any fact necessary to make the statements therein not misleading in any material respect,
the Borrower shall notify the Underwriter. In addition, the Borrower shall promptly advise the
Underwriter of the institution of any action, suit, proceeding, inquiry or investigation of which it
has any knowledge seeking to prohibit, restrain or otherwise affect the use of the Official
Statement in connection with the offering, sale or distribution of the Bonds. The Borrower
promptly shall furnish the Underwriter any information concerning the Borrower which the
Underwriter might reasonably request in connection with any amendment of or supplement to the
Official Statement.
(f) The execution, delivery and performance of the Borrower Documents and.the
consummation of the transactions contemplated thereby will not conflict with, or constitute a
breach of, or default under, the Borrower’s partnership agreement, 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 respective properties is bound, or
under any law, rule, regulation, judgment, order or decree to which the Borrower or any of its
respective properties are bound which breach might have a material adverse effect on the ability
of the Borrower to perform under the Borrower Documents. The Borrower is not now and never
5
has been in default under any order or decree of any court or any order, regulation or demand of
any federal, state, municipal or governmental agency or any document, instrument or
commitment to which the Borrower is subject or in the payment of the principal of, or premium
or interest on, or otherwise in default with respect to, any bonds, notes or other obligations which
it has issued, assumed or guaranteed, directly or indirectly, as to payment of principal, premium
or interest.
(8) To the Borrower’s knowledge, there is no action, suit, proceeding, inquiry or
investigation by or before any court, governmental agency, public board or body pending, or to
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 prohibit, restrain or enjoin
the issuance, sale or delivery of the Bonds or the issuance of the Letter of Credit or the use of the
Official Statement or the execution and delivery of the Borrower Documents, @)affects or
questions the validity or the enforceability of the Bonds, (iii) questions the completeness or
accuracy of the Official Statement or (iv) questions the power or authority of the Borrower to
carry out the transactions contemplated by the Borrower Documents or the power of the Borrower
to purchase, construct or operate the Project.
(h) To the Borrower’s knowledge, it has made or will timely make when required all
filings with and received all approvals, consents and orders of any governmental authority,
legislative body, board, agency or commission having jurisdiction which are necessary to permit
the Borrower to perform its obligations under the Borrower Documents, to carry out the
transactions contemplated by the Borrower Documents and to purchase, construct and equip the
Project .
(i) Any certificate signed for the Borrower by an authorized representative thereof
and delivered to the Underwriter or the Issuer in connection with the transactions contemplated
by the Borrower Documents shall be deemed to be a representation and warranty by the Borrower
to the Underwriter and Issuer as to the statements therein.
Section 6. Conditions to the Obligations of the Underwriter. The obligation of the
Underwriter to accept delivery of and pay for the Bonds on the Closing shall be subject, at the option of
the Underwriter, to the accuracy in all material respects of the representations, warranties and agreements
on the part of the Borrower and the Issuer contained herein as of the date hereof and as of the Closing, to
the accuracy in all material respects of the statements of the officers and other officials of the Trustee, the
Bank, the Credit Bank, the Borrower and the Issuer made in any certificates or other documents hrnished
pursuant to the provisions hereof or of the Program Documents, and to the performance by the Borrower
and the Issuer of its obligations, as applicable, to be performed hereunder and under the Program
Documents at or prior to the Closing and to the following additional conditions:
(a) At the Closing, the Bonds, the Program Documents and the Official Statement
shall have been duly authorized, executed and delivered by the respective parties thereto, in
substantially the forms heretofore submitted to the Underwriter with any such changes as shall
have been agreed to by the Underwriter, and said agreements shall not have been amended,
modified or supplemented, except as may have been agreed to by the Underwriter, and there shall
have been taken in connection therewith, with the issuance of the Bonds and with the transactions
contemplated thereby and by this Bond Purchase Agreement, all such actions as Jones Hall, A
Professional Law Corporation (“Bond Counsel”) shall deem to be necessary and appropriate.
(b) The representations and warranties of the Borrower and the Issuer contained in
the Program Documents shall be true and correct in all material respects on the date hereof and on
6
the Closing, as if made again on the Closing, and the Official Statement (as the same may be
supplemented or amended with the written approval of the Underwriter) shall not contain any
untrue statement of fact or omit to state any fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which such statements were made,
not misleading.
(c) Between the date hereof and the Closing, the market price or marketability, at the
initial offering prices set forth in the Official Statement, of the Bonds shall not have been
materially adversely affected, in the reasonable judgment of the Underwriter by reason of any of
the following:
(i) legislation enacted or introduced in the Congress or recommended for
passage by the House Ways and Means Committee, the Senate Finance Committee or the
President of the United States, or a decision rendered by a court established under
Article I11 of the Constitution of the United States, or an order, ruling, regulation (final,
temporary or proposed) or official statement issued or made:
(A) by or on behalf of the Treasury Department or the Internal
Revenue Service of the United States, by the President or other agency of the
federal government or members of the Congress with the purpose or effect,
directly or indirectly, of imposing federal income taxation upon the revenues to
be derived by the Issuer to pay the principal of and interest on the Bonds, or such
interest as would be received by the owners of the Bonds, or
(B) by or on behalf of the Securities and Exchange Commission, or
any other governmental agency having jurisdiction of the subject matter, to the
effect that obligations of the general character of the Bonds, or the Bonds,
including any or all underlying arrangements, are not exempt from registration
under the Securities Act of 1933, as amended or that the Indenture is not exempt
from qualification under the Trust Indenture Act of 1939, as amended;
(ii) the declaration of war or engagement in major military hostilities by the
United States or the occurrence of any other national emergency or calamity relating to
the effective operation of the government of, or the financial community in, the
United States;
(iii) the declaration of a general banking moratorium by federal, New York or
California authorities, or the general suspension of trading on any national securities
exchange;
(iv) the imposition by the New York Stock Exchange or other national
securities exchange, or any governmental authority, of any material restrictions not now
in force with respect to the Bonds or obligations of the general character of the Bonds or
securities generally, or the material increase of any such restrictions now in force,
including those relating to the extension of credit by, or the charge to the net capital
requirements of, underwriters;
(v) an order, decree or injunction of any court of competent jurisdiction, or
order, filing, regulation or official statement by the Securities and Exchange Commission,
or any other governmental agency having jurisdiction of the subject matter, issued or
made to the effect that the issuance, offering or sale of obligations of the general
7
character of the Bonds, or the issuance, offering or sale of the Bonds, including any or all
underlying obligations, as contemplated hereby or by the Official Statement, is or would
be in violation of the federal securities laws as amended and then in effect;
(vi) the withdrawal or downgrading of any rating of the Bonds by a national
rating agency or any rating of the Credit Bank by a nationally recognized rating service;
(vii) the occurrence of any adverse change of a material nature in the
business, financial condition, results of operation or properties of the Credit Bank or the
Borrower;
(viii) any event occurring, or information becoming known which, in the
reasonable judgment of the Underwriter, makes untrue in any material respect any
statement or information contained in the Official Statement, or has the effect that the
Official Statement contains any untrue statement of material fact or omits to state a
material fact required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading; or
(ix) 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.
(d) At or prior to the Closing, the Underwriter shall have received the following
documents, in each'case satisfactory in form and substance to the Underwriter:
(i) the Program Documents, duly executed and delivered by the respective
parties thereto, with such amendments, modifications or supplements as may have been
agreed to by the Underwriter and the Official Statement, duly executed by duly
authorized officers of the Issuer and the Borrower;
(ii) a final opinion, dated the date of the Closing, of Bond Counsel, in the
form attached as Appendix A to the Official Statement and addressed to the Issuer and
the Trustee, and a separate letter addressed to the Underwriter (or a comparable statement
in the supplemental opinion) to the effect that the final opinion may be relied upon by the
Underwriter to the same extent as if it had been addressed to it, together with
supplemental opinion dated the date of the Closing and addressed to the Underwriter
substantially in the form of Exhibit A hereto;
(iii) the opinion of counsel to the Credit Bank dated the date of the Closing
and addressed to the Rating Agency, the Trustee and the Underwriter, substantially in the
form of Exhibit B hereto;
(iv) the opinion of counsel to the Borrower dated the date of Closing and
addressed to the Issuer, the Bank and the Underwriter, substantially in the form of
Exhibit C hereto;
(v) the opinion of counsel to the Issuer dated the date of Closing and
addressed to the Underwriter, substantially in the form of Exhibit D hereto;
8
(vi) the opinion of counsel to the Underwriter, dated the date of Closing,
addressed to the Underwriter, substantially in the form of Exhibit E hereto;
(vii) a certificate of the Borrower, dated the date of Closing, signed by an
authorized representative of the Borrower, to the effect that:
(A) to the knowledge of the person signing the certificate, no
litigation before any court is pending with respect to which the Borrower has
been served with process or is known to be threatened in any way affecting the
existence or powers of the Borrower, 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
Borrower Documents, or the proceedings of the Borrower or its authority with
respect to, the Borrower Documents;
(B) the information in the Official Statement under the headings
“THE BORROWER AND THE PROJECT” and “ABSENCE OF
LITIGATION-The Borrower” 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
(C) 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 Borrower of its obligations under the Borrower Documents
have been obtained and are in full force and effect.
(viii) a certificate of the Trustee dated the date of Closing, signed by a duly
authorized officer of the Trustee, to the effect that:
(A) such officer is a duly authorized officer of the Trustee;
(B) the Trustee is a national banking association, in good standing
and qualified to do business in the State, is authorized to carry out corporate trust
powers and has all necessary power and authority to enter into and perform its
duties under the Program Documents to which it is a party (the “Trustee
Documents”) and upon the execution and delivery thereof by the Trustee, the
same shall constitute legally valid and binding obligations of the Trustee,
enforceable in accordance with their respective terms;
(C) the trusts, duties and obligations of the Trustee under the Trustee
Documents have been duly accepted by the Trustee;
(D) the Trustee is duly authorized to enter into the Trustee
Documents and to authenticate and deliver the Bonds to the Underwriter under
instruction by the Issuer pursuant to the terms of the Indenture, and the Trustee
Documents constitute the legally binding obligation of the Trustee in accordance
with its respective terms;
9
(E) to the best knowledge of such officer, the acceptance by the
Trustee of the duties and obligations under the Trustee Documents and the
execution and delivery of the Trustee Documents and compliance with provisions
thereof, will not conflict with, or constitute a breach of or default under, the
Trustee’s duties under said documents or any law, administrative regulation,
court decree, resolution, charter, bylaws or other agreement to which the Trustee
is subject or by which it is bound;
(F) the representations and agreements of the Trustee in’ the Trustee
Documents are true, complete and correct in all material respects as of the
Closing;
(G) to the best of such officer’s knowledge, no litigation has been
served on the Trustee or threatened (either in state or federal courts) against the
Trustee (1) to restrain or enjoin the execution or delivery of any of the Bonds or
the collection of Revenues (as defined in the Indenture) pledged under the
Indenture, or (2)in any way contesting or affecting any authority for the
authentication or delivery of the Bonds or the validity or enforceability of the
Bonds or the Indenture; and
(H) the Bonds have been validly authenticated, registered and
delivered by the Trustee;
(ix) the opinion of counsel to the Trustee, dated the date of Closing and
addressed to the Issuer, the Bank and the Underwriter, in the form and substance
satisfactory to the Underwriter and the Issuer;
(x) a certificate of the Issuer, dated the date of Closing, signed by an
authorized representative of the Issuer, to the effect that:
(A) 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;
(B) the information in the Official Statement under the headings
“THE ISSUER’ and “ABSENCE OF 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
(C) 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.
10
(xi) a certificate of the Credit Bank, dated the date of Closing, signed by an
authorized representative thereof, to the effect that such authorized representative has
examined the information set forth under the heading “THECREDIT BANK’ and
incorporated by reference under such heading in the Official Statement, and that such
information, taken as a whole, does not contain an untrue 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;
(xii) an arbitrage certificate of the Issuer and the Borrower dated the date of
the Closing, setting forth facts, estimates and circumstances (including covenants of the
Issuer and the Borrower) in existence on the date of Closing, sufficient to support the
conclusion that it is not expected that the proceeds of the Bonds will be used in a manner
that would cause the Bonds to be “arbitrage bonds” within the meaning of Section 143(g)
or Section 148 of the Internal Revenue Code 1986, as amended, and stating that to the
best of the knowledge and belief of such officers that the are no other facts, estimates or
circumstances that would adversely affect such expectations;
(xiii) evidence satisfactory to the Underwriter to the effect that the Bonds have
received a rating of at least “AA/A-l+” from Standard & Poor’s Ratings Services, a
Division of The McGraw-Hill Companies, Inc.; and
(xiv) such additional legal opinions, certificates, proceedings, instruments and
other documents as the Underwriter or Bond Counsel may reasonably request to evidence
compliance by the Borrower, the Bank, the Credit Bank, the Trustee and the Issuer with
legal requirements, the truth and accuracy, as of the Closing, of the representations of the
Borrower, the Issuer, the Credit Bank, the Bank and the Trustee, and the due performance
or satisfaction by the Borrower, the Issuer, the Credit Bank, the Bank and the Trustee at
or prior to such time of all agreements then to be performed and all conditions then to be
satisfied by the Borrower, the Issuer, the Credit Bank, the Bank and the Trustee.
Section 7. Amendment of Official Statement. After the Closing, (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 Bank, the Bank 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 furnished to the Underwriter (at the
expense of the Bank, 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 8. Obligations of Issuer. The Issuer’s obligations hereunder shall be subject to (a) there
being no order, decree, injunction, ruling or regulation of any court or the enactment of any legislation
with the purpose or effect of prohibiting the issuance, offering or sale of the Bonds, (b) receipt of the
documents listed in Section 6(d) above other than those documents delivered by the Issuer and those
documents specifically addressed solely to the Underwriter and (c) the performance by the Borrower and
the Underwriter of their obligations to be performed hereunder at or prior to the Closing.
11
Section 9. 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 loan of the proceeds of the Bonds, the
Loan Agreement, the Deed of Trust, the Indenture, this Bond Purchase Agreement or any
document related to the Bonds, the Project, the loan of the proceeds of the Bonds (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 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 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 9 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.
12
(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 9. The provisions of this Section 9 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 10. Expenses. Whether or not the sale of the Bonds by the Issuer to the Underwriter is
consummated, neither the Issuer nor the Underwriter shall be under any obligation to pay any costs or
expenses incident to the performance of the obligations of the Issuer or Borrower hereunder. All costs
and expenses to effect the authorization, preparation (including word processing and printing costs),
issuance, sale and delivery, as the case may be, of the Official Statement (together with any amendments
or supplements thereof), the Bonds, the Program Documents, Trustee’s fees and expenses, Trustee’s
counsel fees and disbursements, financial consultant fees and disbursements, the fees and disbursements
of Bond Counsel, the fees and expenses of Underwriter’s Counsel, fees and disbursements of counsel for
the Issuer, California Debt and Investment Advisory Commission (“CDIAC”) fees and the amount to be
paid to the Underwriter pursuant to Section 1 of this Bond Purchase Agreement, shall be paid by the
Borrower.
Section 11. Survival of Certain Representations and Obligations. The respective agreements,
covenants, representations, warranties and other statements of the Borrower and the Issuer and each of
their respective officials or officers set forth in or made pursuant to this Bond Purchase Agreement shall
remain in full force and effect, regardless of any investigation, or statements as to the results thereof,
made by or on behalf of the Underwriter and will survive delivery of and payment for the Bonds.
Section 12. Notices. Any notice or other communication hereunder shall be in writing, and, if
sent to the Underwriter, will be mailed, delivered or telecopied and confirmed to the Underwriter care of
Red Capital Markets, Inc., Suite 930, 500 Newport Center Drive, Newport Beach, California 92660,
Attention: Mr. Anthony D. Cinquini, and if sent to the Issuer or Borrower shall be mailed, delivered, or
telecopied and confirmed at its address respectively set forth above.
Section13. Governing Law. This Bond Purchase Agreement shall be governed by and
construed in accordance with the laws of the State of California, without giving effect to the principles of
conflict of laws in the State of California.
Section 14. 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.
Section 15. Successors. This Bond Purchase Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors, and no other person shall acquire or have any
right or obligation under or by virtue of this Bond Purchase Agreement.
[Remainder of Page Left Blank Intentionally]
13
[Underwriter’s Signature Page to Bond Purchase Agreement]
RED CAPITAL MARKETS, INC.
BY Its Senior Managing Director
14
[Issuer’s Signature Page to Bond Purchase Agreement]
CITY OF CARLSBAD
BY Its
15
[Borrower’s Signature Page to Bond Purchase Agreement]
DOVE FAMILY HOUSING ASSOCIATES, LP, a
California limited partnership
BY Its General Partner
BY Its
16
SCHEDULE I
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, CUSP [and OS printing] $
17
EXHIBIT A
FORM OF SUPPLEMENTAL OPINION OF BOND COUNSEL
[insert appropriate preamble paragraphs]
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 Loan 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,” “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS” (other than under
the heading “-The Letter of Credit”), “SUMMARY OF CERTAIN PROVISIONS OF THE
INDENTURE,” “SUMMARY OF CERTAIN PROVISIONS OF THE LOAN AGREEMENT,”
“SUMMARY OF CERTAIN PROVISIONS OF THE REGULATORY AGREEMENT,” “SELECETED
DEFINTIONS,” “TAX MATTERS,” and in Appendix A summarize the material provisions of the Bonds,
the Indenture, the Loan Agreement, the Regulatory 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 Indenture, the Loan Agreement, the Regulatory Agreement and our bond opinion
concerning tax matters relating to the Bonds, such statements are accurate in all material respects.
This opinion letter is furnished 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.
Respectfully submitted,
EXHIBIT B
FORM OF OPINION OF CREDIT BANK’S COUNSEL
[insert appropriate preamble paragraphs]
(a) The Credit Bank is a national banking association duly organized, validly existing and in
good standing under the laws of the United States of America.
(b) The Credit Bank has full right, power and authority to enter into, execute and deliver the
Letter of Credit and to perform its duties and obligations thereunder.
(c) The Letter of Credit has been duly authorized, executed and delivered by the Credit
Bank, and constitutes the legal, valid and binding obligations of the Credit Bank, enforceable against the
Credit Bank in accordance with its terms.
(d) The execution and delivery by the Credit Bank of the Letter of Credit, the performance of
the obligations of the Credit Bank 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 Bank, or
(ii) any restriction contained in the Credit Bank’s articles of incorporation or bylaws.
(e) 1933, as amended.
The Letter of Credit is exempt from the registration requirements of the Securities Act of
(0 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 Bank of its obligations under the Letter of Credit.
(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 Bank, a default under which might materially adversely
affect the operations of the Credit Bank.
(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 Bank, in
which an unfavorable decision, ruling or finding would adversely affect the Credit Bank’s powers,
existence or the validity and enforceability of the Letter of Credit, or which might result in any material
adverse change in the business condition (financial or otherwise) or operation of the Credit Bank, or
which might adversely affect the Credit Bank’s ability to perform its obligations under the Letter of
Credit.
(i) The Letter of Credit, the Reimbursement Agreement and the Intercreditor Agreement
conform to the descriptions thereof contained in the Official Statement under the captions “SECURITY
AND SOURCES OF PAYMENT FOR THE BONDS-The Letter of Credit,” “SUMMARY OF
CERTAIN PROVISIONS OF THE REIMBURSEMENT AGREEMENT,” “SUMMARY OF CERTAIN
LETTER OF CREDIT” and the statements contained in the Official Statement under such captions,
insofar as such statements contained under such captions purport to summarize provisions of the Letter of
Credit, the Reimbursement Agreement and the Intercreditor Agreement, present a fair and accurate
summary of such matters.
PROVISIONS OF THE INTERCREDITOR AGREEMENT” and “APPENDIX B-FORM OF THE
This opinion is rendered to you in connection with the issuance of the Letter of Credit by the
Credit Bank, and is intended solely for your use in connection therewith. It is not to be relied upon in any
other context, nor is it to be relied upon by any other person or entity, for any other reasons whatsoever.
Very truly yours,
B -2
EXHIBIT C
FORM OF OPINION OF BORROWER’S COUNSEL
[insert appropriate preamble paragraphs]
The Loan Agreement, the Regulatory Agreement, the Bond Purchase Agreement, the Deed of
Trust, the Remarketing Agreement and the Reimbursement Agreement are collectively referred to as the
“Borrower Documents.”
Based on the foregoing and the further qualifications stated below, it is our opinion, as of the date
hereof, that:
1. The Borrower is a limited partnership duly incorporated, validly organized and
existing, in good standing under the laws of, and qualified to transact business in, the State of
California.
2. The Borrower has all requisite power and authority to enter into the Borrower
Documents and to consummate the transactions contemplated thereby and otherwise to carry on
its activities and own its properties.
3. The Resolutions of the Board of Directors of the Borrower approving and
authorizing the execution and delivery by the Borrower of the Borrower Documents were duly
adopted at a meeting of the Board of Directors of the Borrower with all notice required by law
and at which a quorum was present and acting throughout.
4. The Borrower Documents have been duly and validly authorized, executed and
delivered by the Borrower and, assuming due authorization, execution and delivery thereof by the
other respective parties thereto, will constitute the legal, valid and binding agreements of the
Borrower, &forceable in accordance with their respective terms, except as enforceability may be
limited by bankruptcy, reorganization, insolvency and other similar laws affecting enforcement of
creditors’ rights generally and by the application of equitable principles if equitable remedies are
sought and except as the indemnification provisions may be limited by applicable securities laws
or by public policy.
5. To the best of our knowledge after due inquiry, no consent or approval of any
trustee or holder of any indebtedness of the Borrower, and no consent, permission, authorization,
order or license of or filing or registration with, any governmental authority, is necessary in
connection with the execution and delivery by the Borrower of the Borrower Documents, the
approval by the Borrower of the Official Statement or the consummation of any transaction by
the Borrower therein contemplated except as have been obtained or made and as are in full force
and effect and except such as may be required to acquire the Project which are expected to be
obtained in the ordinary course.
6. The execution and delivery of the Borrower Documents by the Borrower, and the
performance by the Borrower of its obligations thereunder, do not and will not (a) violate any
provisions of the Articles of Incorporation or Bylaws of the Borrower, (b) violate any law, rule or
regulation having applicability to the Borrower or any order, writ, judgment, injunction, decree,
determination or award to which the Borrower is a party and of which we are aware after
20 I
reasonable inquiry or (c) result in the breach of, or constitute a default under, any indenture or
loan agreement or any other material agreement, lease or instrument to which the Borrower is a
party and of which we are aware after reasonable inquiry.
7. We have no knowledge, after due investigation, of any pending or threatened
actions, suits, proceedings, inquiries or investigations, before or by any court, regulatory agency,
public board or body affecting the Borrower or its assets or operations which, if determined
adversely to the Borrower or its interests, would materially adversely affect the consummation of
the transactions contemplated by, or the validity of, the Borrower Documents or the financial
condition, assets or operations of the Borrower. We have no knowledge after due inquiry that the
Borrower is in default with respect to any order or decree of any court or any order, regulation or
demand of any federal, state, municipal or governmental agency, which default might have
consequences that would materially and adversely affect the consummation of the transactions
contemplated by the Borrower Documents, or the financial condition, assets, or operations of the
Borrower.
8. The execution and delivery of the Borrower Documents by the Borrower and
performance by the Borrower of its obligations thereunder will not conflict with or result in
breach of any of the terms, conditions or provisions of any agreement or instrument to which the
Borrower is a party, or constitute a default thereunder.
9. All tax returns (federal, state and local) required to be filed by or on behalf of the
Borrower have been filed, and all taxes shown thereon to be due, including interest and penalties,
except such, if any, as are being actively contested by the Borrower in good faith, have been paid
and adequate reserves have been made for the payment thereof. To the best of our knowledge,
there are no pending tax contests by the Borrower.
10. To the best of our knowledge after due inquiry and investigation, the Borrower
has complied with all statutes, regulations and other laws of all governmental authorities,
including environmental regulations, applicable to the Borrower or the Project.
1 1. To the best of our knowledge after due inquiry and investigation, the Borrower is
in compliance with all laws, statutes, ordinances, regulations, covenants, conditions and
restrictions affecting it or its operations and has not committed, suffered or permitted any act to
be done in violation of any law, ordinance or regulation except where such noncompliance or act
would not have a material adverse effect on the business, property or financial condition of the
Borrower.
12. Nothing has come to our attention that would indicate that the description of the
Borrower or the Project contained in the Official Statement contains an untrue statement of a
material fact or omits to state a material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
13. There are no legal or governmental proceedings pending or, to the best of our
knowledge, threatened against the Borrower that are required to be disclosed in the Official
Statement.
14. It is our opinion based upon due inquiry and investigation that no information
furnished by the Borrower in connection with the Borrower Documents includes any untrue
statement of a material fact or omits to state a material fact necessary in order to make the
c-2
statements made in such information, in the light of the circumstances in which they were made,
not misleading in any material respect.
c-3
EXHIBIT D
FORM OF OPINION OF ISSUER’S COUNSEL
[insert appropriate preamble paragraphs]
1. The Issuer is a municipal corporation duly organized and validly existing under the laws
of the State of California.
2. The 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,
EXHIBIT E
FORM OF OPINION OF UNDERWRITER’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 an Indenture of Trust dated as of
June 1, 2003 (the “Indenture”), between the City of Carlsbad (the “Issuer”) and , 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; Citibank, N.A. (the “Credit Bank”); Credit
Bank’s General Counsel and its special counsel, Proskauer Rose LLP; Dove Family Housing Associates,
LP, a California limited partnership (the “Borrower”); Gubb & Barshay 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 and the Credit Bank,
and opinion’s from Bond Counsel and the Credit Bank’s special 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,
a6
/7,/77
5-20 -03
RECORDING REQUESTED BY AND WHEN
RECORDED RETURN TO:
KENNETH KRUG, ESQ.
PROSKAUER ROSE LLP
2049 Century Park East, 32”d Floor Los Angeles, California 90067-3206
PI Space Above This Line For Recorder’s Use
ESTOPPEL CERTIFICATE AND AGREEMENT
THIS ESTOPPEL CERTIFICATE AND AGREEMENT (this “Agreement”) is
entered into as of 1,2003, by and between THE CITY OF CARLSBAD,
a municipal corporation (the “City”), and CITIBANK (WEST), FSB, a federal savings bank and
its successors and assigns (“Bank”).
RECITALS
A. The City and Real Estate Collateral Management Company, a Delaware
corporation (“RECMC”) have entered into that certain First Amended and Restated Affordable
Housing Agreement Imposing Restrictions on Real Property dated as of February 21,2003 (the
“Agreement”), in connection with an affordable multifamily apartment complex (the
“Development”) being developed on certain land in Carlsbad, California (the “Site”) sold by
RECMC to Dove Family Housing Associates, a California limited partnership (the
“Partnership”).
B. In connection with the financing of the Development, the Partnership has obtained
a loan in the original principal amount of $20,000,000 in connection with the issuance of bonds
by the City (the “Bond Loan”). The Bond Loan is secured by, among other things, a first lien
deed of trust on the site (the “Bond Deed of Trust”). The Bond Loan is being credit enhanced by
the Bank through the issuance of a letter of credit and the obligations of the Partnership to the
Bank in connection therewith are contained in a Reimbursement Agreement dated as of June 1,
2003. The Reimbursement Agreement is secured by, among other things, a second lien deed of
trust on the Site (the “Reimbursement Deed of Trust”).
C. In executing this Agreement, the City understands and acknowledges that the
Bank will be relying upon the information and the representations contained herein in agreeing to
issue the letter of credit for the benefit of the Partnership.
NOW THEREFORE, in consideration of the foregoing recitals, and for other good and
valuable consideration, the receipt and sufficient of which are hereby acknowledged, the City
certifies and the parties hereto agree as of the date of this Agreement as follows:
0403119497-001 LAWORD124435 VI
1. No Defaults. The City has not given any notice of default under the Agreement
and, to the best of City's knowledge, without independent investigation, no event or circumstance
presently exists which, with giving of notice or the passage of time, or both, would constitute a
default by RECMC or the Partnership under the Agreement.
2. City Approval. City has approved each of the marketing plan, form of rental
agreement, property management plan and form of regulatory agreement referred to in Section
3.6 of the Agreement. The Regulatory Agreement referred to in Section 3.6.4 of the Agreement
is the same Regulatory Agreement and Declaration of Restrictive Covenants to be recorded in
connection with the City Loan Agreement by and between the City and the Partnership.
3. Default by RECMC. No default by RECMC under the Agreement with respect to
any real property covered by the Agreement, other than the Site, shall affect in any way the
ability of the owner of the Site to construct the Development, nor shall such default impose a
lien, restriction or penalty of any kind on the Site or the owner of the Site.
4. Mortgagee Protection. Any rights of the City against the Site or the
Development, including any lien that the City may claim thereby, is expressly subordinate to the
lien of the Bond Deed of Trust and the Reimbursement Deed of Trust and such liens shall be
extinguished by the foreclosure of either of the Bond Deed of Trust or the Reimbursement Deed
of Trust. In addition, notwithstanding any of the provisions of the Agreement, including, without
limitation, Section 6 and Section 8, the purchaser of the Development at a foreclosure sale held
by the holder of the Bond Deed of Trust or the Reimbursement Deed of Trust shall take title to
the Development free and clear of any liens created in favor of the City by the Agreement and
shall not be liable to the City for any damages, expenses, costs or penalties arising pursuant to
the Agreement as a result of defaults occurring prior to the date such entity takes title to the
Development. Nothing in this section shall be construed to release any such party from any
obligations arising pursuant to the Agreement during its ownership of the Development.
5. Notice of Default. The City shall concurrently give the Bank at the following
address notice of any default under the Agreement given to any party:
Citibank (West), FSB
One Sansome Street, 26* Floor
San Francisco, CA 94104
Attn: Center for Community Development Enterprise
6. Governing Law. This Agreement shall be governed by and construed in
accordance with California law.
[Remainder of Page Intentionally Left Blank]
0403/19497-001 LAWORD124435 vl
2
NOW THEREFORE, the City has executed this Estoppel Certificate and Agreement as of
the date first set forth above.
CITY OF CARLSBAD
By:
Raymond R. Patchett
City Manager
0403119497-001 LAWORD124435 VI
J
RECORDING REQUESTED BY AND
AND WHEN RECORDED RETURN TO:
CITIBANK (WEST), FSB
One Sansome Street, 26th Floor
San Francisco, CA 94 104
ATTN: Center for Community Development Enterprise
&% J6
fi6 /7,,/77
5-20 a 3
INTERCREDITOR AGREEMENT
dated as of June 1,2003
by and among
CITY OF CARLSBAD
CJTIBANK (WEST), FSB
and
WELLS FARGO BANK, &&NATIONAL ASSOCIAT ION
as Trustee
Relating to:
$20,000,000
City of Carlsbad
Variable Rate Demand Multifamily Housing Revenue Bonds
(The Greens Apartments)
2003 Series A
5554119497-001 LAWORD/23527 VB
INTERCREDITOR AGREEMENT
THIS INTERCREDITOR AGREEMENT (this “Agreement”) is dated as of
June 1, 2003, by and among the CITY OF CARLSBAD, a municipal corporation, duly
organized and existing under its Charter and the laws of the State of California (the
“Issuer”), CITIBANK (WEST), FSB, a federal savings bank (the “Bank”), and WELLS
FARGO BANK, &NATIONAL ASSOC IATION, a national banking association, as
trustee under the Indenture, as defined below (the “Trustee”).
WITNESSETH:
WHEREAS, pursuant to an Indenture of Trust of even date herewith (the
“Indenture”) between the Issuer and the Trustee, the Issuer has issued its City of Carlsbad
Variable Rate Demand Multifamily Housing Revenue Bonds (The Greens Apartments)
2003 Series A, in the aggregate principal amount of $20,000,000 (the “Bonds”), and
pursuant to a Loan Agreement of even date herewith (the “Loan Agreement”) among the
Issuer, the Trustee and Dove Family Housing Associates, a California limited partnership
(the “Borrower”), the Issuer has agreed to lend to the Borrower the proceeds of the sale
of the Bonds (the “Loan”) to finance the construction of an apartment project upon
certain property purchased by the Borrower, located in the City of Carlsbad, State of
California, and more particularly described in Exhibit A attached hereto (the “Property”),
consisting of a 180-unit affordable housing development known as The Greens
Apartments, together with other on-site improvements (collectively, the “Improvements”;
and, together with Borrower’s ownership interest in the Property, the “Project”);
WHEREAS, the Loan will be evidenced by the Loan Agreement and
secured by (i) that certain Multifamily Deed of Trust, Assignment of
Rents, and Security Agreement, together with a Rider to Multifamilv Deed of Trust,
Assignment of Rents, and Security Agreementi encumbering the Project (collectively, the
“First Deed of Trust’); and (ii) certain other security documents executed by the
Borrower for the benefit of the Issuer or the Trustee. The Indenture, the Loan
Agreement, the First Deed of Trust, this Agreement, that certain Regulatory Agreement
and Declaration of Restrictive Covenants of even date herewith by and among the Issuer,
the Trustee and the Borrower (the “Regulatory Agreement”), and any and all other
documents executed by the Borrower and evidencing or securing the obligations of the
Borrower to repay the Loan are hereinafter collectively referred to as the “Issuer
Documents.” Pursuant to the Indenture, the Issuer has (except for the Issuer’s “Reserved
Rights”, as defined in the Indenture) assigned to the Trustee all of its rights under all of
the Issuer Documents;
’
WHEREAS, the Borrower has requested that the Bank provide an
irrevocable direct-pay letter of credit (the “Letter of Credit”) in the face amount of
$20, , ,20? 230,137, to be issued by Citibank, N.A., substantially in the form of
Exhibit A to that certain Reimbursement Agreement of even date herewith by and
5554119497-001 LAWORD123527 V#
between the Bank and the Borrower (the “Reimbursement Agreement”), to provide for
the payment of the principal of and interest on the Bonds, and the purchase price of the
Bonds tendered for purchase pursuant to the Indenture;
WHEREAS, the obligations of the Borrower to the Bank under the
Reimbursement Agreement to reimburse to the Bank the amount of drawings under the
Letter of Credit are secured by, among other things, (i) that certain Multifamily
Construction Deed of Trust, Assignment of Rents and Security Agreement, together with
a Rider to Multifamily Deed of Trust, Assignment of Rents and Security Agreement
encumbering the Project (collectively, the “Second Deed of Trust”), for the benefit of the
Bank; (ii) the other security documents identified in Section 2.12 of the Reimbursement
Agreement, and (iii) certain other security documents executed by the Borrower for the
benefit of the Bank. The Reimbursement Agreement, the Second Deed of Trust, and the
other documents evidencing, securing or pertaining to the Borrower’s obligations under
the Reimbursement Agreement or otherwise with respect to the Letter of Credit are
hereinafter collectively referred to as the “Bank Documents;” and
WHEREAS, as a condition to the execution and acceptance of the Bank
Documents and the Issuer Documents, the parties desire to enter into this Agreement with
respect to the exercise of certain rights, remedies and options by the respective parties
hereto under the Bank Documents and the Issuer Documents;
NOW, THEREFORE, the parties hereto covenant and agree as follows:
Section 1. Defined Terms. All undefined capitalized terms used herein
shall have the same meanings as are ascribed to such terms in the Indenture or the
Reimbursement Agreement, as may be applicable.
Section 2. Exercise of Rights of Bank under Issuer Documents and Bank
Documents. So long as (x) Citibank, N.A. shall not have wrongfully dishonored a
drawing properly presented under the Letter of Credit, (y) Citibank, N.A. is not the
subject of a receivership, conservatorship, liquidation or other similar proceeding, and
(z) either of the following statements is true and correct: (i) the Letter of Credit remains
in effect; or (ii) the Letter of Credit has expired or terminated in accordance with its terms
and amounts due from the Borrower under the Reimbursement Agreement remain due
and unpaid to the Bank, then:
(a) Upon the occurrence of an Event of Default under, and as
defined in, any of the Bank Documents (and after the expiration of all applicable
notice and cure periods thereunder), the Bank shall be permitted, and is hereby
authorized, to take any and all actions and to exercise any and all rights, remedies
and options which it may have under the terms of any Bank Document or at law or
in equity in respect of such Event of Default, including, without limitation, to
foreclose the Second Deed of Trust and sell the Project or any part thereof (or
5554/19497-001 LAWORD123527 V@
accept a deed thereof in lieu of foreclosure), and sell or otherwise realize upon the
property mortgaged, pledged or assigned to or for the benefit of the Bank under
the Bank Documents, all without objection or interference by the Issuer or the
Trustee; provided that (i) the liens of the First Deed of Trust and the other Issuer
Documents shall not be discharged or materially impaired thereby, (ii) nothing
contained herein shall affect the obligations of the Bank under the Letter of Credit
or require the Bank to cure any Event of Default or to perform any obligations of
the Borrower under the Issuer Documents, and (iii) any person taking title to the
Project upon foreclosure or deed in lieu of foreclosure under the Bank Documents
must comply with the Issuer Documents.
(b) Except as otherwise expressly permitted by paragraphs (c)
and (d) below with respect to default by the Borrower under the Regulatory
Agreement, neither the Issuer nor the Trustee shall, without the Bank’s prior
written consent, (i) take any action to declare the outstanding balance of the Bonds
or the Loan to be due or to foreclose the lien of the First Deed of Trust or to sell
the property covered thereby, or to enforce any other similar remedy against any
of the property described in the First Deed of Trust, or (ii) take any other action or
enforce any other remedy against the Borrower as a result of any default by the
Borrower under the Issuer Documents, except that each of the Issuer and the
Trustee may, provided that they do not resort to any security for the Loan or the
Bonds, enforce their respective rights and remedies against the Borrower (1) in the
case of the Issuer, for the payment of fees, expenses and all other amounts owed
by the Borrower to the Issuer and not assigned to the Trustee pursuant to the
Indenture, and (2) in the case of the Trustee, for the payment of fees, expenses and
all other amounts owed by the Borrower to the Trustee for its own account.
(c) If the Borrower defaults in the performance or observance of
any covenant, agreement or obligation of the Borrower set forth in the Regulatory
Agreement, and if such default remains uncured for a period of 60 days after the
Borrower and the Bank receive written notice from the Trustee or the Issuer
stating that a Regulatory Agreement default has occurred and specifying the nature
of such default, then the Issuer and the Trustee each shall thereafter have the right,
without the Bank’s consent, to declare the outstanding balance of the Bonds and
the Loan to be due pursuant to the Indenture and the Loan Agreement on account
of such default, and to call the Bonds for redemption in accordance with the
Indenture, unless the Trustee, prior to the end of such 60-day period, receives an
opinion of Bond Counsel to the effect that the failure to cure such default will not
have a material adverse effect on the exclusion of interest on the Bonds from gross
income for federal income tax purposes, and either
(i) action to cure such default is instituted within said 60-
day period and diligently pursued thereafter until such default is cured, or
555411 9497-001 LAWORD123527 ~3
(ii) if such default is not reasonably curable by the Bank
without first securing possession of the Project, the Bank (subject to
extension during any stay on account of the bankruptcy of the Borrower)
(A) institutes, within said 60-day period, foreclosure proceedings or other
action for the purpose of obtaining such possession, (B) thereafter
diligently pursues such proceedings until such possession is obtained, and
(C) diligently pursues action to cure such default after it obtains possession
of the Project, until such default is cured;
provided, however, that any extension, pursuant to paragraph (i) or (ii) above, .of
the period within which a Regulatory Agreement default must be cured shall be
effective only if and to the extent that, in the opinion of Bond Counsel delivered to
the Trustee and the Issuer, such extension will not materially adversely affect the
exclusion of interest on the Bonds from gross income for federal income tax
purposes; and provided further that the Trustee, upon five Business Days’ prior
written notice to the Bank following any such default under the Regulatory
Agreement, may reduce the 60-day period provided for above to such shorter
period of time as is specified in such notice (but in no event less than 15 Business
Days) if, and only if, the Trustee and the Issuer have been furnished with an
opinion of Bond Counsel to the effect that such reduction of such period is
necessary to preserve the exclusion of interest on the Bonds from gross income for
federal income tax purposes.
(d) In the event of a default under the Regulatory Agreement
which remains uncured after (i) written notice thereof to the Borrower and the
Bank and (ii) expiration of the applicable cure period set forth in the Regulatory
Agreement, nothing in this Section shall restrict or in any way limit the right of the
Issuer or the Trustee to take any action available under the Regulatory Agreement
or at law or in equity in order to enforce the terms of the Regulatory Agreement,
so long as, unless they are entitled to do so under the provisions of the foregoing
paragraph (c): (1) neither the Issuer nor the Trustee takes any action to declare the
outstanding balance of the Bonds to be due pursuant to the Indenture or the
outstanding balance of the Loan to be due under the Loan Agreement on account
of such default, and (2) neither the Trustee nor the Issuer takes any action to
foreclose any liens upon or security interests in, or to enforce any other similar
remedy against, any of the property described in the First Deed of Trust or other
security provided under the Issuer Documents or to enforce any other similar
remedy which would cause such liens or security interests to be discharged or
materially impaired thereby.
(e) Notwithstanding any provisions of First Deed of Trust or the
other Issuer Documents to the contrary, all Condemnation Proceeds and insurance
5554119497-001 LAWORD123527 v&j -4-
proceeds relating to the Project shall be applied in accordance with the provisions
of the Second Deed of Trust.
(f) Nothing in this Section shall restrict or in any way limit the
actions required to be taken by the Trustee or the Issuer under the Indenture in
connection with any purchase of Bonds, or the payment of interest thereon, or in
connection with any mandatory redemption of the Bonds at or prior to maturity, or
the application by the Trustee of any funds held under the Indenture or the Loan
Agreement, or the submission of any claim and the collection and application of
any funds paid to the Trustee under the Letter of Credit.
(8) The Issuer and the Trustee agree, subject to the provisions of
paragraph (h) below, that they will cooperate with the Bank (at the expense of the
Bank) in taking or refraining from taking (but excepting those actions the Issuer
and the Trustee are expressly permitted to take under paragraphs (c), (d) and (0 of
this Section) any and all action, including joining in such proceedings at law or in
equity and executing such documents as the Bank may request and direct in
writing, to enforce the obligations of the Borrower under the Issuer Documents
and/or the Bank Documents, and in order that the profits, revenues and other
income from the Project that are mortgaged, pledged or assigned to the Issuer and
the Trustee, and also to the Bank, shall be available, after the payment of any and
all costs and expenses incurred in the collection thereof, to pay any outstanding
and unpaid obligations of the Borrower under the Loan Agreement, subject to the
Bank’s rights of subrogation, and under the Reimbursement Agreement, in such
order and manner as the Bank shall determine.
(h) The Bank, in consideration for the agreements by the Issuer
and the Trustee to cooperate with the Bank and to exercise, or refrain from
exercising, certain rights, remedies and options under the Issuer Documents at the
request and direction of the Bank, hereby covenants and agrees to pay, and to
indemnify Issuer and Trustee against any and all costs, fees and expenses
(including reasonable attorneys’ fees and expenses) which may be incurred by the
Trustee or the Issuer in connection therewith; provided, however, that the Bank
shall not be obligated under this Agreement: (i) to pay any costs, fees or expenses
which the Trustee may suffer or incur by reason of the grossly negligent or willful
failure of the Trustee to perform the trusts and duties imposed upon it under the
Indenture, or (ii) to pay any costs, fees or expenses which the Issuer or the Trustee
may incur by reason of the Issuer’s or the Trustee’s exercise or failure to exercise
any power or discretion other than at the Bank’s direction, or (iii) to pay any costs,
fees or expenses which the Issuer or the Trustee may incur by reason of actions
taken at the request and direction of the Bank to the extent and only to the extent
that such actions were expressly required to be taken, in any event, by the Issuer or
the Trustee, as applicable, under the Issuer Documents.
5554119497-001 LAWORD123527 V% -5-
Section 3. Disbursement of Loan Proceeds. The Issuer and the Trustee
acknowledge that, in accordance with the Indenture and the Loan Agreement, no amounts
in the Project Fund and no amounts held by the Trustee which represent proceeds of
casualty insurance policies maintained with respect to the Project or proceeds of
condemnation awards made with respect to the Project shall be disbursed to or for the
account of the Borrower (unless otherwise expressly agreed to by the Bank in writing in
each specific instance) unless and until the Bank has approved in writing a funding
requisition submitted by the Borrower for such disbursement, and the Issuer and the
Trustee further acknowledge that the Bank shall not be obligated to approve any such
funding requisition unless all of the Bank’s disbursement conditions set forth in the
Reimbursement Agreement and the other Bank Documents are satisfied with respect to
the requested disbursement. The Issuer and the Trustee agree that in the event that the
Borrower submits to the Trustee a funding requisition in the form required by the Loan
Agreement and approved by the Bank in writing, the Trustee shall withdraw the amount
necessary to satisfy the funding requisition from any Project Fund investment and
disburse the amounts from the Project Fund as soon as practicable after the Trustee’s
receipt of the Bank-approved funding requisition. Neither the Trustee nor the Issuer shall
question or contest the Bank’s approval of any such fimding requisition, neither the
Trustee nor the Issuer shall require an independent inspection of the Project as a
condition to making a disbursement pursuant to a funding requisition approved by the
Bank, and neither the Trustee nor the Issuer shall require that the Borrower deliver to the
Trustee or the Issuer any receipted invoices, lien waivers or other backup documentation
in support of a funding requisition. In the event that the Trustee receives from the
Borrower a funding requisition in the form required by the Loan Agreement and
approved by the Bank in writing, the Trustee shall disburse the amount as directed in the
funding requisition.
Notwithstanding the foregoing, the provisions of the preceding paragraph
shall in no way alter the requirements for disbursement from the Project Fund contained
in Section 3.03 of the Indenture and Section 3.2 of the Loan Agreement. Neither the
Issuer nor the Trustee shall have any responsibility or obligation related to the application
by the Borrower or the Bank of any moneys disbursed from the Project Fund in
accordance with this Section 3, the Indenture and the Loan Agreement.
Section 4. Return of Letter of Credit. Upon receipt by the Trustee of a
letter of credit in substitution for the Letter of Credit in accordance with the Indenture
and the Loan Agreement, or upon the purchase of all of the Bonds (other than Pledged
Bonds) in lieu of redemption in accordance with the Indenture or upon the payment of
any drawing which, pursuant to the terms of the Letter of Credit, has the effect of
terminating the Letter of Credit, the Trustee agrees promptly to return to Citibank, N.A.
the Letter of Credit for cancellation in accordance with the Indenture. The Issuer hereby
irrevocably and unconditionally consents to any return of the Letter of Credit by the
Trustee to Citibank, N.A. in accordance with the Indenture.
5554/19497-001 LAWORD123527 V# -6-
Section 5. Notice of Default.
(a) The Issuer and the Trustee shall each give to the Bank a copy
of any notice or other communication given to the Borrower of or with respect to
an Event of Default (as defined in the applicable Issuer Documents) under any
Issuer Document or with respect to an event which, with notice or the lapse of
time or both, would constitute an Event of Default thereunder. Such copy shall be
given to the Bank in the same manner and at the same time as the corresponding
notice or communication is given to the Borrower under the applicable Issuer
Document(s) and before the Issuer and the Trustee, or before the Bank, shall
exercise any right or remedy granted to either under any Issuer Document(s). If an
Event of Default occurs for which no notice is required to be given to the
Borrower, the Issuer and the Trustee shall deliver a notice of the Event of Default
to the Bank immediately upon learning of its occurrence. Failure by the Issuer or
the Trustee to give such notice, however, will not vitiate the rights of either of
them to pursue their remedies respecting any such Event of Default, except that
neither the Issuer nor the Trustee shall take any action towards foreclosure upon
the First Deed of Trust without first notifying the Bank and providing to the Bank
any applicable cure period specified in Section 2 above.
(b) The Bank shall give to each of the Issuer and the Trustee a
copy of any notice or other communication given to the Borrower of or with
respect to an Event of Default (as defined in the applicable Bank Document) under
any Bank Document. Such copy shall be given to the Issuer and the Trustee in the
same manner and at the same time as the corresponding notice or communication
is given to the Borrower under the applicable Bank Document(s). If an Event of
Default occurs for which no notice is required to be given to the Borrower, the
Bank shall deliver a notice of the Event of Default to the Issuer and the Trustee
immediately upon learning of its occurrence. Failure by the Bank to give such
notice, however, will not vitiate the rights of the Bank to exercise its rights, or to
pursue its remedies, respecting any such Event of Default.
Section 6. Amendment of Documents.
(a) The Issuer and the Trustee agree that they will not enter into
any amendment, change or modification of any of the Issuer Documents without
the express prior written consent to such amendment, change or modification of
the other parties hereto and the consent of any other Person whose consent is
required by said document; provided, however, that each party agrees that it will
not unreasonably withhold its consent to any amendment, change or modification
requested by another party hereto if its interests and, in the case of the Trustee, the
interests of the holders from time to time of the Bonds (the “Bondholders”), are
not adversely affected thereby.
5554119497-001 LAWORD123527 va -7-
(b) The Bank agrees that it shall at no time amend, modify or
supplement, or consent to the amendment, modification or supplementing of, the
Bank Documents in any way which, in the opinion of Bond Counsel, would
adversely affect the exclusion of interest on the Bonds from gross income for
federal income tax purposes. Except as provided in the immediately preceding
sentence, no consent of the Issuer, the Trustee or any Bondholder shall be required
for any amendment, modification or supplement to any Bank Document.
Section 7. The Trustee’s Records. The Bank may at any reasonable time
during regular business hours, with reasonable prior notice, examine or copy any letter,
account, or other documentation or information in the possession or control of the Trustee
relating to or connected with the Project, the Bonds or payments under the Loan
Agreement, other than any such item which the Trustee asserts constitutes a privileged
item. Any expenses reasonably incurred by the Trustee in its compliance with this
Section 7 shall be paid by the Bank.
Section 8. Agreement for Benefit of Parties Hereto. Nothing in this
Agreement, express or implied, is intended or shall be construed to confer upon, or to
give to, any Person other than the parties hereto and their respective successors and
assigns, any right, remedy or claim under or by reason of this Agreement or any
covenant, condition or stipulation hereof; and the covenants, stipulations and agreements
contained in this Agreement are and shall be for the sole and exclusive benefit of the
parties hereto and their respective successors and assigns.
Section9. Severability. In case any one or more of the provisions
contained in this Agreement shall be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained herein shall not
in any way be affected or impaired thereby.
Section 10. Notices. All notices, certificates or other communications
hereunder shall be in writing and shall be delivered by hand, by telecopy or telegram, or
by registered or certified U.S. mail, return receipt requested (postage prepaid), to the
respective notice addresses set forth below or to such other addresses as the parties may
provide to one another in accordance with this Section. Such notices and other
communications shall, if sent by mail in accordance with this Section, be deemed given
two (2) Business Days after deposit in the U.S. mail, on the date sent if by telecopy, and
if sent by any other method, shall be effective only if and when received by the
addressee. Until otherwise so provided by the respective parties, all notices, certificates
and communications to each of them shall be addressed as follows:
5554119497-001 LAWORD123527 ~3 -8-
If to the Issuer: City of Carlsbad
Attention: Housing and Redevelopment Director
2965 Roosevelt Street, Suite B
Carlsbad, California 92008-23 89
*Wells Farpo
Bank. National Association
Corporate T rust Se rvices
707 Wilshire Boulevard
Los Anpeles. Ca lifornia 9001 7
Attention: Robert Schneider
If to the Bank: Citibank (West), FSB
One Sansome Street, 26th Floor
San Francisco, CA 94 104
Attention: Center for Community Development
Enterprise
Section 1 1. Successors and Assigns. Whenever in this Agreement any of
the parties hereto is named or referred to, the successors and assigns of such party shall
be deemed to be included and all covenants, promises and agreements in this Agreement
contained by and on behalf of the respective parties hereto shall bind and inure to the
benefit of the respective successors and assigns of such parties, whether so expressed or
not.
Section 12. Counterparts. This Agreement may be executed in any
number of counterparts, each executed counterpart constituting an original but all
counterparts together constituting only one instrument.
Section 13. Governing Law. It is the intention of the parties hereto that
this Agreement and the rights and obligations of the parties hereunder shall be governed
by and construed and enforced in accordance with the laws of the State of California,
without regard to principles of conflicts of law.
Section 14. No Impairments of Other Rights. Nothing in this Agreement
is intended or shall be construed to impair, diminish or otherwise adversely affect any
other rights the Bank may have or may obtain against the Borrower including, but not
limited to, the Bank’s rights as a pledgee or an owner of Bonds, in the event it shall be or
become a pledgee or an owner thereof, and the Bank’s rights of subrogation.
5554119497-001 LAWORD123527 v&J
Section 15. Letter of Credit Not to be Impaired: Remedies. No failure of
the Trustee or the Issuer to perform any undertakings or honor any agreements under this
Agreement shall affect the obligation of Citibank, N.A., under the Letter of Credit, but
the Bank shall have full right and power to enforce said undertakings, covenants and
agreements directly against the Trustee and the Issuer by suit for specific performance or,
subject to Section 19, claims for damages or a combination of the foregoing.
Section 16. Subrogation. The Issuer and the Trustee agree that the Bank
shall be subrogated to their rights and remedies under the Issuer Documents upon and to
the extent of the Bank’s payment of the principal of, or purchase price for, or interest on,
the Bonds, or the payment or performance of any obligation under the Issuer Documents,
and the Issuer and the Trustee agree to cooperate with the Bank (at the expense of the
Bank) in connection with the Bank’s enforcement of any of such rights and remedies and
agree not to take any actions that would prejudice the exercise of such rights of
subrogation.
Upon a drawing under the Letter of Credit to effectuate (i) a redemption in
whole of the Bonds (other than any Pledged Bonds) in accordance with Section 4.01 of
the Indenture, (ii) a payment in whole of the Bonds (other than any Pledged Bonds)
following an Event of Default (as defined in Section 7.01 of the Indenture) in accordance
with Section 7.01 of the Indenture, or (iii) a purchase in lieu of redemption of the Bonds
(other than any Pledged Bonds) in accordance with Section 4.08 of the Indenture, upon
payment in full of all amounts owing to the owners of the Bonds (except as to any
Pledged Bonds, which need not be so paid in full) under the Indenture, including all fees
and expenses of the Trustee and the Issuer, the Issuer and the Trustee shall assign and
transfer all right, title and interest that either of them has in the First Deed of Trust and all
funds and property held by either of them pursuant to the Loan Agreement and the
Indenture to the Bank, except for the Reserved Rights, including the right to receive fees,
expenses and indemnification and the rights of enforcement with respect to such fees,
expenses and indemnification thereunder.
It is understood and agreed by the parties that the Bank may, either directly
or through a receiver or other agent, (i) assume all obligations of the Borrower to the
Issuer and the Trustee under the Issuer Documents from and after the Bank’s initial date
of operation of the Project, and (ii) upon assuming such obligations and so long as the
Letter of Credit is in effect and no drawings thereunder have been wrongfully dishonored,
and all outstanding fees and expenses of the Trustee and the Issuer have been paid and
brought current, take over and operate the Project in compliance with the Regulatory
Agreement following any default by Borrower under the Reimbursement Agreement, the
Regulatory Agreement or the Loan Agreement, and nominate a substitute developer for
the Project who will upon consent of the Issuer (which consent shall be subject to the
provisions of Section 11 of the Regulatory Agreement) assume the obligations of the
Borrower under the Issuer Documents.
5554119497-001 LAWORD123527 V% -10-
Section 17. Interpretation. In interpreting the meaning of this Agreement:
(i) ”includes” and “including” shall not be limiting; (ii) ”or” shall not be exclusive; and
(iii) ”all” shall include “any,” and “any” shall include “all.” Except as otherwise
provided herein, references to any document or instrument referred to herein are to such
document or instrument as amended or supplemented from time to time with Bank’s
consent or as otherwise permitted by the Bank Documents. Headings herein are for
convenience only and shall not be relied upon in interpreting or enforcing this
Agreement.
Section 18. Liability of the Trustee. The Trustee agrees that it shall be
personally liable to compensate the Bank for any loss, cost, liability or expense
(including reasonable attorneys’ fees) incurred by Bank as a result of: (i) the Trustee’s
gross negligence or willful misconduct in holding money deposited with it for payment of
the Bonds; or (ii) any unauthorized modification or assignment of the Letter of Credit;
provided, however, that the Trustee shall not be deemed negligent in such matters so long
as it shall have acted in accordance with its duties and obligations specified under the
terms of the Indenture. The Trustee is entering into this Agreement solely in its capacity
as Trustee under the Indenture and all immunities, indemnities, limitations from liability
and protection afforded the Trustee thereunder shall apply to this Agreement (provided
that this sentence, in and of itself, shall not render the Bank liable to indemnify the
Trustee under the Indenture). The Trustee shall not be responsible for any duties or
obligations under this Agreement other than those expressly provided herein.
Section 19. Limited Liability of Issuer. The parties hereto agree that any
liability of the Issuer under this Agreement shall be limited to the Revenues (as defined in
and subject to the rights of the Bondholders as set forth in the Indenture), excluding any
proceeds of drawings under the Letter of Credit, and the Issuer’s interest in the Loan and
the First Deed of Trust to the extent not assigned to Trustee.
Section 20. Attorneys’ Fees. The prevailing party in any dispute resulting
in arbitration, litigation or other proceedings between or among any parties hereunder
shall be entitled to its costs and expenses for such proceedings including reasonable
attorneys’ fees.
5554119497-001 LAWORD123527 va -1 1-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and delivered by their respective officers thereunto duly authorized
as of the date first above written.
CITY OF CARLSBAD
BY. Name:
Title:
CITIBANK (WEST), FSB
By:
John Denton
Vice President
WELLS FARGO BANK, PkkNATIO NAL
ASSOCI ATION
as Trustee under the Indenture
By:
Name:
Title:
5554119497-001 LAWORD123527 v3 -12-
5554119497-001 LAWORD123527 va
EXHIBIT A
PROPERTY DESCRIPTION
[To Come]
A- 1
ACKNOWLEDGMENT
State of California 1
)
county of 1
On before me, 7
personally appeared ,a personally known to me -OR-
proved to me on the basis of satisfactory evidence to be the person(s) whose name(s)
idare subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their authorized capacity(ies), and that by hidher their
signature(s) on the instrument the person(s), or the entity upon behalf of which the
persons acted, executed the instrument.
Witness my hand and official seal.
Signature of the Notary
(Area above reserved for official seal)
5554/19497-001 LAWORD/23527 V@
ACKNOWLEDGMENT
State of California ) 1
County of )
On before me, 9
personally appeared ,D personally known to me -0R- 0 proved to me on the basis of satisfactory evidence to be the person(s) whose name(s)
idare subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their authorized capacity(ies), and that by hidher their
signature(s) on the instrument the person(s), or the entity upon behalf of which the
persons acted, executed the instrument.
Witness my hand and official seal.
(Area above reserved for official seal)
5554/19497-001 LAWORD123527 v&j
Signature of the Notary
ACKNOWLEDGMENT
State of California 1 1
County of )
On
personally 0 proved
before me, 9
appeared ,n personally known to me -0R-
to me on the basis of satisfactory evidence to be the person(s) whose name(s)
idare subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their authorized capacity(ies), and that by hidher their
signature(s) on the instrument the person(s), or the entity upon behalf of which the
persons acted, executed the instrument.
Witness my hand and official seal.
Signature of the Notary
(Area above reserved for official seal)
5554119497-001 LAWORD123527 VB
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