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HomeMy WebLinkAbout1994-09-06; Housing & Redevelopment Commission; 258 Exhibit 4; Family Housing Revenue Refunding BondsEXHIBIT 4 REDLINED 8/H/94 LOAN AGREEMENT By and Between CARLSBAD HOUSING AND REDEVELOPMENT COMMISSION and SEASCAPE APARTMENTS, INC., an Illinois corporation Dated as of September 1, 1994 2 $15115,ooo CARLSBAD HOUSING AND REDEVELOPMENT COMMISSION MULTIFAMILY HOUSING REVENUE REFUNDING BONDS, SERIES A OF 1994 (SEASCAPE VILLAGE PROJECT), Certain rights of the Carlsbad Housing and Redevelopment Commission (the “Commission “) in and to this Loan Agreement are being assigned to First Trust of California, National Association, as Trustee, as security for the above-referenced Bonds pursuant to an Indenture of Trust dated as of September 1, 1994 and securing the above-referenced Bonds. TABLE OF CONTENTS Page ARTICLE I DEFINITIONS AND EXHIBITS Section 1.1. Definition of Terms ................................ 1 Section 1.2. Exhibits ....................................... 1 ARTICLE II REPRESENTATIONS, WARRANTIES AND SPECIAL TAX COVENANTS Section 2.1. Express Warranties of the Commission; Exclusion of Other Warranties ..................................... 1 Section 2.2. General Representations, Warranties and Covenants of Owner ...... 3 Section 2.3. Operation of Project ............................... 5 Section 2.4. Modification and Termination of Tax Covenants .............. 5 Section 2.5. Release of Regulatory Agreement ....................... 6 Section 2.6. Authorized Owner Representative ....................... 6 ARTICLE III THE BONDS, BOND PROCEEDS, THE INDENTURE Section 3.1. Issuance of Bonds ................................. 6 Section 3.2. Bond Proceeds; Investments ........................... 6 Section 3.3. Indenture and the Escrow Agreement Approval ............... 7 ARTICLE IV THE LOAN, PREPAYMENTS, ASSIGNMENTS; ALTERNATE SECURITY; PURCHASE OF BONDS BY OWNER; LIQUIDITY FACILITY Section 4.1. Section 4.2. Section 4.3. Section 4.4. Section 4.5. Section 4.6. Section 4.7. Section 4.8. Section 4.9. Section 4.10. Section 4.11. Section 4.12. Section 4.13. Section 4.14. Loan by Commission ............................... 7 Note Payments; Other Payments ........................ 7 Credits on Note Payments ............................ 9 Prepayment Generally ............................. 10 Alternate Security ................................ 10 Amounts Required for Prepayment ..................... 10 Maximum Rate of Interest ........................... 11 Assignments to Trustee ............................ 11 Administrative Fees and Expenses; Other Expenses ........... 11 Insurance ..................................... 12 Purchase of Bonds Pursuant to Tenders and Purchase in Lieu of Redemption .................................... 12 Liquidity Facility; Alternate Liquidity Facility ............... 12 Payments Into the Tax and Insurance Reserve Account ......... 13 Payments Into Rebate Fund .......................... 13 PUBL:l77~_1(~D:l7481_3_TO:_17481_2)1091B2062.14 i OS/11194 ARTICLE V DEFEASANCE OF PRIOR INDENTURE; TRUSTEE SERVICES Section 5.1. Payment of Prior Bonds ............................ 13 Section 5.2. Payment for Extraordinary Services ..................... 13 ARTICLE VI SPECIAL COVENANT Section 6.1. Indemnification Covenant ........................... 14 Section 6.2. No Liability of Commission .......................... 15 Section 6.3. Further Assurances ............................... 15 ARTICLE VII BREACH OF COVENANTS, REMEDIES Section 7.1. Event of Default ................................. 16 Section 7.2. Remedies for Failure to Perform ....................... 16 Section 7.3. Discontinuance of Proceedings ........................ 17 Section 7.4. Remedies Cumulative .............................. 17 Section 7.5. Reimbursement of Expenses .......................... 18 Section 7.6. Remedies Subject to Applicable Law .................... 18 ARTICLE VIII MISCELLANEOUS Section 8.1. Section 8.2. Section 8.3. Section 8.4. Section 8.5. Section 8.6. Section 8.7. Section 8.8. Section 8.9. Section 8.10. Section 8.11. Section 8.12. Section 8.13. Amounts Remaining in Funds and Accounts ................ 18 Payments by Credit Facility Issuer ...................... 18 Amendments, Changes or Modifications to Agreement ......... 19 Payment ...................................... 19 Counterparts ................................... 19 Severability .................................... 19 Term of Agreement ............................... 19 Notice of Changes in Fact ........................... 19 Limited Recourse Provisions ......................... 20 Notices ...................................... 20 Applicable Law ................................. 21 Successors and Assigns ............................ 21 Rights of Credit Facility Issuer and Liquidity = Facilitv Issuer .... 21 Appendix A Definitions Exhibit A Description of Project Exhibit B Form of Secured Note 08/11/94 PARTIES This Loan Agreement dated as of September 1, 1994 (as amended or supplemented, the “Loan Agreement” or this “Agreement”), by and between the Carlsbad Housing and Redevelopment Commission, a public body corporate and politic organized and existing under the laws and Constitution of the State of California (herein, together with any successor to its rights, duties and obligations, referred to as the “Commission “), and Seascape Apartments, Inc., an Illinois corporation (together with its successors and assigns as owner of the hereinafter defined Project, the “Owner ‘7; RECITALS The parties acknowledge and confirm the Recitals lettered A through Y set forth in the Indenture of Trust of even date herewith between the Commission and First Trust of California, National Association, as trustee (the “Indenture”). The Commission and the Owner desire to enter into this Loan Agreement for the purposes and on the terms set forth herein and in the Indenture. Accordingly the Commission and the Owner, each in consideration of the representations, covenants and agreements of the other as set forth herein, mutually represent, covenant and agree as follows, to wit: ARTICLE I DEFINITIONS AND EXHIBITS Section 1.1. Definition of Terms. For all purposes of this Agreement, unless the context clearly requires otherwise, capitalized terms used herein shall have the meanings set forth in Appendix A to the Indenture. Section I. 2. Exhibits. All Exhibits to this Agreement referenced herein shall be deemed to be incorporated herein and made an integral part of this Agreement, whether or not such Exhibits are physically attached hereto. ARTICLE II REPRESENTATIONS, W ARRANTIES AND SPECIAL TAX COVENANTS Section 2.1. Express Warranties of the Commission; Exclusion of Other Warranties. The Commission makes the following representations, warranties and covenants as the basis for the undertakings on the part of the Owner herein contained: (a) The Commission is a public body corporate and politic, duly organ&d and validly existing under the laws and Constitution of the State of California. 08/l 1194 @I Under the Law and the Refunding Bond Act, the Commission has the power to enter into the transactions contemplated by the Commission Documents, including without limitation, the issuance and sale of the Bonds, and to carry out its obligations thereunder, and by proper action has duly authorized the issuance and sale of the Bonds, the execution and delivery of the Commission Documents, and the performance of all of the covenants and agreements of the Commission contained in the Commission Documents. Cc) The issuance of the Prior Bonds to obtain funds to provide financing for the Project for the benefit of the Developer was, and the issuance of the Bonds to refund, with other available money, the Prior Bonds is, intended to serve the public interest and will further the purposes of the Law, including among other purposes the assistance of persons of medium and low income in the City of Carlsbad to obtain decent, safe and sanitary housing. 00 The Commission will not take or permit, or omit to take or cause to be taken, any action within its control that would have an adverse effect on the exclusion of interest payable on the Bonds or the Prior Bonds from gross income for federal income tax purposes. (e) The Commission has complied with all of the provisions of the Constitution and laws of the State of California, including the Refunding Bond Act and the Law, has made all filings and obtained all authorizations and approvals and has full power and authority (as such are necessary) to enter into the Commission Documents and to issue the Bonds and to consummate all transactions contemplated by the Commission Documents and the Bonds, and to perform all of its obligations thereunder. (0 Neither the execution and delivery by the Commission of this Agreement or any other Commission Document or the issuance and sale of the Bonds nor the consummation by the Commission of the transactions contemplated by this Agreement or any other Commission Document conflicts with, will result in a breach of or default under or will (except with respect to the lien of the Indenture, the First Deed of Trust Documents and the Second Deed of Trust Documents) result in the imposition of any lien on any property of the Commission pursuant to the terms, conditions or provisions of any statute, order, rule, regulation, agreement or instrument to which the Commission is a party or by which it is bound. (g) Each of the Commission Documents has been duly authorized, executed and delivered by the Commission and each constitutes the legal, valid and binding obligation of the Commission enforceable against the Commission in accordance with its terms except as the enforceability thereof may be limited by general equitable principles, bankruptcy, insolvency, moratorium, reorganization or other laws affecting creditors’ rights generally, Upon the execution and delivery thereof, the Bonds will constitute valid and binding limited obligations of the Commission, enforceable in accordance with their respective terms, except as limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting the rights of creditors generally and to the application of equitable principles, to the exercise of judicial discretion in appropriate cases and to the limitations on legal remedies against public bodies. 00 No member, trustee, director, officer or official of the Commission has any interest (financial, employment or other) in the Owner or the transactions contemplated by this Agreement. PUBL:177~~1(RRD:17481~~~T0:~17481_2)109~B2062.14 2 08/l l/94 0) There are no actions, suits, proceedings, inquiries, or investigations pending for which the Commission has been served notice or, to the knowledge of the Commission, threatened against the Commission by or before any court, governmental agency or public board or body, which (i) affects or questions the existence or the territorial jurisdiction of the Commission or the legal authority of any official of the Commission to sign documents, (ii) affects or seeks to prohibit, restrain or enjoin the execution and delivery of any of the Commission Documents or the issuance, execution or delivery of the Bonds, (iii) affects or questions the validity or enforceability of any of the Commission Documents or the Bonds, (iv) questions the tax-exempt status of the Bonds; or (v) questions the power or authority of the Commission to perform its obligations under any of the Commission Documents or the Bonds or to carry out the transactions contemplated by the Commission Documents or the Bonds, with respect to, or affecting the power or ability of the Commission to enter into and deliver (or accept, as applicable), the Commission Documents and to issue the Bonds, or involving the validity or enforceability of the Prior Bonds or the Bonds or any of the Commission Documents, at law or in equity or before or by any court or governmental authority, except actions which, if adversely determined, would not materially adversely affect or impair the enforceability of, or the power or the ability of, the Commission to enter into, deliver (or accept, as applicable) and perform its obligations under the Bonds and Commission Documents. (i) The Commission acknowledges (based on the representations of the Surety and the Prior Trustee) that substantial and material defaults and events of default existed under the Prior Loan Agreement. 04 The Commission has not assigned and will not assign its interest in this Agreement, the Note or any other First Deed of Trust Documents, other than to the Trustee to secure payment of the Bonds; provided that the Commission’s rights to the payment of fees and expenses under 1 Sections 4.2(d), 6.1 and 7.5 and the Commission’s right to receive any notices, certificates, requests, requisitions or other communications hereunder shall not be assigned. (1) This Loan Agreement and the other Commission Documents have been duly executed and delivered by the Commission and constitute valid and binding obligations of the Commission, enforceable in accordance with their respective terms, except as limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting the rights of creditors generally. Upon the execution and delivery thereof, the Bonds will constitute valid and binding limited obligations of the Commission, enforceable in accordance with their respective terms, except as limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting the rights of creditors generally. Section 2.2. General Representations, Warranties and Covenunts of Owner. The Owner makes the following representations, warranties and covenants, which, together with the other representations and agreements of the Owner contained in this Agreement, are relied upon by the Commission and serve as a basis for the undertakings on the part of the Comrnission contained in this Agreement: (a) The Owner (i) is an Illinois corporation, validly organized and existing under the laws of the State of Illinois and is duly authorized and qualified to conduct business in the State; (ii) has full power and authority under its organizational documents and the laws of the PUBL:177~~1(RED:17481~3~T0:~17481~2)109~B2062.14 3 08/l 1194 State of Illinois to execute and deliver the Owner Documents, to be bound by the terms of the Indenture and to perform its obligations under the Owner Documents; and (iii) by proper action has duly authorized the execution and delivery of this Agreement and the other Owner Documents. (b) There are no actions, suits or proceedings pending for which the Owner has been served notice, or, to the best knowledge of the Owner, threatened against or affecting the Owner or the Project or the transactions contemplated by this Agreement and the other Owner Documents, at law or in equity or before any court or any officer or administrative agency, and the Owner is not a party to any contract or agreement (other than this Loan Agreement and the Regulatory Agreement) or subject to any organizational restriction or to any order, regulation, writ, injunction or decree of any court or governmental authority, or to any statute which would adversely affect in any material way (i) the properties, business or condition (financial or otherwise) of the Owner, (ii) the Project or (iii) the performance and observance by the Owner of the provisions of, and the consummation of any of the transactions contemplated by, this Loan Agreement, the Secured Note, the First Deed of Trust, the Second Deed of Trust Documents or any of the other First Deed of Trust Documents. (cl The Owner has no liabilities except those incurred in the ordinary course of business which are not delinquent or which are otherwise contemplated or permitted by this Loan Agreement and the other First Deed of Trust Documents. The Owner is not in default in the payment of any taxes levied or assessed against it or its assets. To the best of its knowledge, the Owner is not in default (i) under any applicable statute, rule, order or regulation of any governmental authority, or (ii) under this Loan Agreement or any of the other First Deed of Trust Documents, the Reimbursement Agreement or the Second Deed of Trust Documents or under any other agreement to which the Owner is a party which would adversely affect the transactions contemplated hereby. Cd) Neither the execution and delivery of this Loan Agreement or any of the other First Deed of Trust Documents, the Reimbursement Agreement or the Second Deed of Trust Documents nor the consummation of the transactions herein or therein contemplated nor compliance with the terms and provisions hereof or thereof, conflicts with or results or will result in a breach of any of the terms, conditions or provisions of the organizational documents of the Owner or any law, order, rule, regulation, writ, injunction or decree of any court or governmental authority or any agreement or instrument to or by which the Owner is a party or by which it or any of its properties is bound or constitutes or will constitute a default thereunder, or results or will result in the creation or imposition of any Lien of any nature whatsoever upon any of its property or assets pursuant to the terms of any such agreement or instrument except the Liens created by the First Deed of Trust Documents and the Second Deed of Trust Documents. (e) No author&ion, consent, approval, order, registration, declaration or withholding of objection on the part of, or filing of or with any governmental authority, not already obtained or made, is required for the execution and delivery of this Loan Agreement or any of the other First Deed of Trust Documents, the Reimbursement Agreement or the Second Deed of Trust Documents or the performance of the terms and provisions thereof by the Owner. (0 No portion of the Project will be used to provide a golf course, a country club, a massage parlor, a tennis club, a skating facility, a racquet sports facility, a hot ~~~~:17700~1(~~~:17481~3~~0:_17481~2)109~B2062.14 4 08/l l/94 tub, a suntan facility, a racetrack, a sky box or other private luxury box, a health club facility, a facility primarily used for gambling, a store the principal business of which is the sale of alcoholic beverages, or a facility the primary purpose of which is retail food and beverage services, automobile sales or service, or the provision of recreation or entertainment. No portion of the Project will be used for the acquisition of land for farming purposes or any interest therein. (g) This Loan Agreement, each of the other First Deed of Trust Documents and each of the Second Deed of Trust Documents have been duly executed and delivered by the Owner and constitute valid and binding obligations of the Owner enforceable in accordance with their respective terms, subject to bankruptcy, insolvency, moratorium and other similar laws affecting the rights of creditors generally and the usual principles of equity including those affecting rights of rescission. 00 Any certificate signed by the Owner and delivered pursuant to the Indenture, this Agreement, the Regulatory Agreement or otherwise in connection with the Project or the Bonds shall be deemed a representation and warranty by the Owner as to the statements made therein. (0 The Owner (i) intends to hold the Project for its own account, (ii) has no current plans to sell the Project (iii) has not entered into any agreement or otherwise binding commitment to sell the Project, (iv) recognizes that the refunding of the Prior Bonds may have independent significance apart from any future sale of the Project because of the net anticipated reduction in total debt service costs for the Project and (v) does not intend that the issuance of the Bonds and the refunding of the Prior Bonds constitute a formally separate step in a single prearranged transaction to reach the end result of the sale of the Project. (i) The Indenture has been submitted to the Owner for its examination; and the Owner acknowledges, by execution of this Agreement, that it has approved the Indenture and agrees that it will be bound by the terms thereof and, in particular, agrees to comply with the requirements of Section 5.8 of the Indenture, as amended from time to time. W 1 Based won information obtained bv the Owner, not less than 90% of the proceeds of the Prior Bonds (within the meaning of Section 103(b)(4)(A) of the 1954 Code and applicable Regulations) have been expended for Project Costs which constitute Qualified Project Costs. Section 2.3. Operation of Project. The Owner hereby represents and warrants that it shall operate the Project in accordance with the provisions of the Regulatory Agreement. Section 2.4. Mod@cation and Termination of Tax Covenants. GO Anything contained in this Agreement or in the Indenture to the contrary notwithstanding, the Commission, the Trustee (as assignee of the Commission’s interest herein under the Indenture) and the Owner hereby agree to amend this Agreement and the Regulatory Agreement to the extent required, in the opinion of Bond Counsel, in order for interest payable on the Bonds to be excluded from gross income for federal income tax purposes under Section 103(b)(4)(A) of the 1954 Code, and, to the extent applicable, the Code. The party 5 08111 I94 requesting such amendment shall notify the other parties to the applicable agreement and the Trustee of the proposed amendment, with a copy of such requested amendment to Bond Counsel and to the Credit Facility Issuer. After review of such proposed amendment, Bond Counsel shall render to the Trustee, the Commission, the Owner and the Credit Facility Issuer an opinion as to whether such proposed amendment is necessary in order to maintain the exclusion of interest payable on the Bonds from gross income for federal income tax purposes. The Owner shall pay an amount to Bond Counsel sufficient to reasonably compensate Bond Counsel for reviewing such proposed amendment and rendering such opinion. 0) Notwithstanding anything to the contrary contained in this Agreement, this Agreement shall not be amended in any manner which would have the effect of increasing or otherwise modifying the terms of the Owner’s payment obligations hereunder unless such amendment shall have been consented to in writing by the Owner and the Credit Facility Issuer. Section 2.5. Release of Regulatory Agreement. At the time all restrictions set forth in the Regulatory Agreement expire, the Commission and the Trustee agree to provide the Owner with a written release of the Regulatory Agreement in recordable form. Section 2.6. Authoriked Owner Representative. Prior to or concurrently with the sale of the Bonds, the Owner shall appoint an Authorized Representative for the purpose of taking all actions and making all certificates required to be taken and made by the Author&d Representative under the provisions of this Agreement, and may appoint one or more alternate Authorized Representatives to take any such action or make any such certificate if the same is not taken or made by the Author&d Representative. If no Person is serving as the Authorized Representative, a general partner of a partnership Owner or the chief executive officer of a corporate Owner shall be deemed to be the Authorized Representative. Whenever under the provisions of this Agreement the approval of the Owner is required or the Commission is required to take some action at the request of the Owner, such approval or such request shall be made by the Authorized Representative unless otherwise specified in this Agreement. The Commission or the Trustee shall be authorized to act on any such approval or request and the Owner shall have no complaint against the Commission or the Trustee as a result of any such action taken in conformity with such approval or request. ARTICLE III THE BONDS, BOND PROCEEDS, THE INDENTURE Section 3.1. Issuance of Bonds. Subject to the satisfaction of and compliance with all of the provisions, covenants and requirements of this Agreement, in order to provide funds to refund, with other available money, all of the outstanding Prior Bonds, the Commission has issued and delivered the Bonds to the purchaser or purchasers thereof in accordance with the Indenture. Section 3.2. Bond Proceeds; Investments. The proceeds of the sale of the Bonds together with all earnings from any investments thereof shall be held, invested, reinvested and disbursed solely for the purposes and subject to the limitations contained in the Indenture, the Escrow Agreement and this Agreement. PUBL:177~~1(RED:17481~3~T0:~17481~2)109~B2O62.14 6 08/l l/94 Section 3.3. Indenture and the Escrow Agreement Approval . The execution of this Agreement shall constitute conclusive evidence of approval of the Indenture and the Escrow Agreement by the Owner. Additionally, the Owner agrees, subject to the provisions of Section 8.10 hereof, that whenever the Indenture or the Escrow Agreement by its terms imposes a duty or obligation upon the Owner, such duty or obligation shall be binding upon the Owner to the same extent as if the Owner were an express party to the Indenture, as applicable, and the Owner hereby agrees to carry out and perform all of its obligations thereunder in accordance with the terms thereof. ARTICLE IV THE LOAN, PREPAYMENTS, ASSIGNMENTS; ALTERNATE SECURITY; PURCHASE OF BONDS BY OWNER; LIQUIDITY FACILITY Section 4. I. Loan by Commission. (a) The Owner and the Commission acknowledge and agree that pursuant to the Escrow Agreement, the outstanding Prior Bonds will be paid from the proceeds of the sale of the Bonds, a claim paid pursuant to the Prior Surety Bond, and other available moneys. 0) Concurrently with the authentication and delivery of the Bonds, the Owner has executed and delivered this Agreement and the Note to evidence the Owner’s obligation to make payments which are sufficient to make payments of the principal of, premium, if any, and interest on the Bonds when due. (cl Concurrently with the execution and delivery of this Agreement and the issuance of the Bonds, the Owner shall cause the Surety Bond and the Liquidity Surety Bond to be executed and delivered to the Trustee and shall execute and deliver all First Deed of Trust Documents, and have the same filed and recorded in the real estate records of the County where the Project is located. The Owner hereby agrees to carry out and perform all of its obligations under all First Deed of Trust Documents. Section 4.2. Note Payments; Other Payments. (a) The principal of, premium, if any, and interest on the Note shall be paid by or on behalf of the Owner by means of payments (the “Note Payments”) which, in the aggregate, shall be in an amount sufficient for the payment in full when due of the principal of, premium, if any, and interest on the Bonds from time to time outstanding under the Indenture, including (i) the total interest becoming due and payable on the Bonds on the respective dates of payment thereof, (ii) the total principal becoming due on the Bonds (whether at maturity, by redemption or acceleration or otherwise) and (iii) the redemption premium, if any, that shall be payable upon the redemption of Bonds prior to maturity. @I Note Payments shall be due and payable as provided in the Note, subject to the credits as and to the extent provided in Section 4.3 hereof and subject to the following: (1) Notwithstanding the provisions of the Note, when Bonds bear interest at a Daily Rate, a Weekly Rate or a Commercial Paper Rate, ~~~~:17700~1(~~~:17481~3~~0:~17481~2)109~ B2062.14 7 OS/l 1194 the Credit Facility Issuer, in its sole discretion, may by written notice to the Owner, the Commission and the Trustee, require the Owner to pay interest to the Trustee, not later than 9:00 a.m., Trustee Time, on a date which is five (5) Business Days prior to each Interest Payment Date, in an amount equal to the interest on the Bonds which will be due on such Interest Payment Date. The Owner covenants and agrees that, in all events, it is the Owner’s obligation to contact the Trustee for a determination of the amount of interest due on the Note and the Bonds prior to each Interest Payment Date in order to make timely monthly payments hereunder and under the Note. While the Bonds bear interest at a Daily Rate or a Weekly Rate, the Trustee shall endeavor to verify to the Owner orally or in writing the Trustee’s estimate of the amount of interest due on the Note and the Bonds at least seven (7) Business Days prior to each Interest Payment Date; however, the failure of the Trustee to so notify the Owner or to provide the Owner with the correct amount of interest due on the Note and the Bonds prior to each Interest Payment Date shall not excuse the Owner’s obligation to make timely payment of the full amount due hereunder or under the Note and shall not be a defense to any legal action brought against the Owner if the Owner makes an incorrect payment hereunder or under the Note. (2) Notwithstanding the terms and provisions of the Note, when Bonds bear interest at a Quarterly, Semi-Annual or Fixed Rate, the Credit Facility Issuer, in its sole discretion, may by written notice to the Commission, the Owner and the Trustee require the Owner to make monthly payments of principal of and interest on the Note. If the Credit Facility Issuer so elects, the Owner agrees to pay to the Trustee on the 15th day of each month an amount equal to l/6 (in a Fixed Rate Period or Semi-Annual Rate Period) or l/3 (in a Quarterly Rate Period) of the amount payable as interest on the Bonds on the following Interest Payment Date. Such monthly payments shall be appropriately adjusted for a short first Interest Period so that each monthly payment is equal. In all cases the last such monthly payment before an Interest Payment Date shall be sufficient to pay, with other available moneys, the principal of and interest on the Bonds due on such Interest Payment Date. The Credit Facility Issuer may, in its sole discretion by written notice to the Commission, the Owner and the Trustee, rescind its direction to require the Owner to make monthly payments during a Quarterly, Semi-annual or Fixed Rate Period. Prior to consenting to a change in the interest determination method to a Commercial Paper Rate pursuant to Section 3.3(f) of the Indenture, the Credit Facility Issuer may, in its sole discretion, require the Owner (with written notice to the Commission and the Trustee) to make monthly or other periodic payments similar to the foregoing and the Owner agrees to make such payments upon the written direction of the Credit Facility Issuer. Such requirement may be rescinded at a later date in the sole discretion of the Credit Facility Issuer. (4 Notwithstanding any provisions to the contrary in this Agreement, in the event the day on which any payment or other performance on the part of the Owner is scheduled ~~~~:17700~1(~~~:17481~3~T0:~17481~2)109~B2062.14 8 OS/l l/94 to occur under this Agreement is not a Business Day, then such payment or other performance by the Owner shall be required to occur on the immediately succeeding Business Day. 6-0 The Owner agrees to pay directly to the Trustee, the Commission, the Purchase Agent, the Paying Agent and the Remarketing Agent the reasonable fees, charges and expenses of the Trustee (other than the fees of the Trustee and the Commission which shall have been provided pursuant to Section 4.9 hereof), the Commission, the Purchase Agent, the Paying Agent and the Remarketing Agent, including, with the mior written consent of the Owner, the fees and expenses of any rebate consultant engaged by the Trustee or the Commission for the calculation of Rebatable Arbitrage under Section 5.8 of the Indenture, upon receipt of an invoice as and when the same become due, together with any and all reasonable costs, fees and expenses of the Remarketing Agent, the Commission, the Paying Agent, the Purchase Agent or the Trustee in connection with any remarketing of Bonds (and any other reasonable fees, costs and expenses incurred in connection with the remarketing of the Bonds, including the reasonable fees and expenses of legal counsel to any of the foregoing and the reasonable fees for obtaining opinions of Bond Counsel or other counsel and all printing costs for Bonds and offering materials). The Owner shall pay directly to the Liquidity 1 Facilitv Issuer the fees, charges and expenses of the Liquidity e Facilitv Issuer as and when the same become due, together with any and all costs, fees and expenses of the Liquidity 1 Facilitv Issuer in connection with any remarketing of Bonds (including the reasonable fees and expenses of legal counsel to the Liquidity fi Facilitv Issuer) and the fees and expenses of legal counsel to the Credit Facility Issuer in connection with any remarketing of Bonds. The Owner shall also pay directly to the Credit Facility 5 Issuer the fees, charges and expenses of the Credit Facility 2 Issuer as and when the same come due, together with the fees and expenses of legal counsel to the Credit Facility fi Issuer. 63 Subject to Section 8.9 hereof, the obligation of the Owner to make the payments required by this Section 4.2 and the Note shall be absolute and unconditional. Subject to Section 8.9 hereof and to the credits permitted in Section 4.3 hereof, the Owner will pay without abatement, diminution, postponement or deduction (whether for taxes or otherwise) all such amounts regardless of any cause or circumstance whatsoever, including, without limitation, any defense, setoff, recoupment or counterclaim which the Owner may have or assert against the Commission, Trustee, Credit Facility Issuer, the Liquidity 2. Facilitv Issuer, if any, any owner of a Bond or any other person. In the event the Owner shall fail to make any of the payments required in this Article IV, the payment so in default shall continue as an obligation of the Owner until the amount in default shall have been fully paid. Any payment to the Trustee under the Credit Facility or the Liquidity Facility shall not release or discharge the Owner from its obligation to make such payments hereunder unless the Trustee receives written notice from the Credit Facility Issuer that it has been reimbursed for such payment under the Reimbursement Agreement or written notice from the Liquidity 5 Facilitv Issuer that it has been reimbursed or otherwise elects to have such payment so credited. (0 In addition to the payments otherwise required hereunder, the Owner shall be obligated to make the payments required by Section 5.8 of the Indenture. Section 4.3. Credits on Note Payments. Notwithstanding any provision contained in this Agreement or in the Indenture to the contrary: OS/11194 60 Investment earnings on the Revenue Fund and money deposited in the Revenue Fund from earnings on invested funds which are to be deposited into the Revenue Fund in accordance with the provisions of the Indenture shall be credited against the obligations of the Owner to make Note Payments hereunder to the extent such amounts are applied to make payments on the Bonds. 09 The principal amount of Bonds purchased by the Owner and delivered to the Trustee for cancellation with the prior written consent of the Credit Facility Issuer shall be credited against the obligation of the Owner to pay the principal on the Note corresponding to the maturity date of the Bonds delivered to the Trustee and cancelled, provided in no event shall the Owner or any other Person have the right to deliver Bonds to the Trustee for cancellation without the prior written consent of the Credit Facility Issuer, and further provided that Bonds owned by or on behalf of the Credit Facility Issuer may be presented to the Trustee for cancellation, but solely at the option of the Credit Facility Issuer. Section 4.4. Prepayment Generally. No prepayment of the Note may be made except to the extent and in the manner expressly permitted by the Note. Upon receipt of written notice from the Owner that a deposit is being made by the Owner for the purpose of prepaying the Note and thereby affecting the redemption of the Bonds, the Trustee at the direction of the Owner, and subject to the provisions of the Indenture, shall redeem the Bonds as required by the redemption provisions of the Indenture. Section 4.5. Alternate Security. (4 The Owner agrees to provide a Credit Facility securing the Bonds so long as the Bonds are outstanding which Credit Facility complies with the provisions of Section 2.11 of the Indenture. At the times required by Section 2.1 l(c) or 2.1 l(d) of the Indenture, as applicable, the Owner shall, or if the Owner fails to do so the Credit Facility Issuer may (in its sole discretion), deliver to the Trustee the notice and accompanying documentation required by Section 2.1 l(c) of the Indenture to replace a Credit Facility which is expiring or the documentation required by Section 2.1 l(d) of the Indenture to extend a Credit Facility which is expiring. The Owner may at any time elect to replace the Credit Facility then in effect with an Alternate Security, provided that the Alternate Security satisfies the requirements of Section 2.11 of the Indenture. If the Owner elects to deliver an Alternate Security to replace a Credit Facility issued by a Credit Facility Issuer before the end of the term of the replaced Credit Facility, the Credit Facility Issuer must be indemnified or otherwise protected to its satisfaction against any claims that might be payable by it under the Credit Facility. @I The Owner shall also promptly pay an amount sufficient to pay all costs incurred by the Trustee, and, if applicable, the Liquidity 1 Facilitv Issuer and the Commission (including reasonable fees and expenses for its counsel and Bond Counsel) in connection with the substitution of such Alternate Security. Section 4.6. Amounts Required for Prepayment. The amount payable by the Owner hereunder upon any prepayment of the Note under Section 6 thereof shall include an amount of 10 OS/l l/94 money equal to the Administrative Expenses and redemption premium, if any, to accrue through the payment and redemption of the Bonds. Section 4.7. Maximum Rate of Interest. Notwithstanding any provision of this Agreement to the contrary, the Commission and the Owner hereby agree that in no event shall the interest contracted for, charged or received in connection with this Agreement or the Note (including any other costs or considerations that constitute interest under the laws of the State which are contracted for, charged or received pursuant to this Agreement) exceed the maximum rate of nonusurious interest allowed under the laws of the State or the United States as presently in effect (the “Maximum Legal Rate of Interest”) and to the extent an increase is allowable by such laws, but in no event shall any amount ever be paid or payable by the Owner greater than the amount contracted for herein; and in the event the maturity of the principal amount of the Note is accelerated pursuant to the terms of the Note or Article VII hereof, or prepaid in accordance with the provisions hereof requiring mandatory prepayment, then such amounts that constitute payments of interest on the Note and under this Agreement, together with any costs or considerations which constitute interest under the laws of the State, may never exceed an amount which would result in payment of interest at a rate in excess of the Maximum Legal Rate of Interest, whichever applicable laws permit the highest rate, as presently in effect and to the extent an increase is allowable by such laws; and excess interest, if any, provided for in this Agreement, or otherwise, shall be cancelled automatically as of the date of such acceleration or, if theretofore paid, shall be credited on the principal amount of the Note. Section 4.8. Assignments to Trustee. It is understood and agreed that all right, title and interest of the Commission in and to the Note, the other First Deed of Trust Documents and this Agreement (excepting the Reserved Rights of the Commission), are to be pledged and assigned by the Commission to the Trustee as security for the Bonds under and pursuant to the Indenture and the Assignment. The Owner consents to such assignments, transfers and pledges. The Commission directs the Owner, and the Owner agrees, to pay or cause to be paid to the Trustee at its principal corporate trust office all Note Payments when due pursuant to this Agreement. Section 4.9. Administrative Fees and Expenses; Other Expenses. The Owner hereby agrees to pay to the Trustee the amount necessary to pay the Administrative Expenses for deposit into the Administrative Expenses Account for payment of the Administrative Expenses prior to their due date. The Owner will obtain and deposit with the Trustee statements from each Person to be paid from the Administrative Expenses Account of the amount of the Administrative Expenses for which deposits are to be made. Any amount to be paid to such Persons from the Administrative Expenses Account not specifically provided for in the Indenture or this Agreement must be approved in writing by the Credit Facility Issuer. The Owner will pay all reasonable fees, expenses, advances, and other payments owing to the Credit Facility Issuer under the Credit Facility, the First Deed of Trust Documents as described therein or the Second Deed of Trust Documents as described therein, all reasonable fees, expenses, advances, and other payments owing to the Liquidity - Facilitv Issuer under the Liquidity Facility Agreement as described therein, and all reasonable fees and expenses owing to the Remarketing Agent under the Remarketing Agreement as described therein. ~~~~:17700~1(~!a:17481_30:_17481~2)109~B2062.14 11 OS/l l/94 Section 4. IO. Insurance. The Owner shall cause the Project to be insured to the extent required by the First Deed of Trust. Section 4. Il. Purchase of Bonds Pursuant to Tenders and Purchase in Lieu of Redemption. 60 The Owner hereby covenants and agrees to purchase or cause to be purchased all Bonds which have been tendered for purchase by their Holders pursuant to Section 4.5(a) of the Indenture to the extent that proceeds of the sale of such Bonds by the Remarketing Agent pursuant to Article IV of the Indenture are insufficient. Any and all Bonds purchased by or on behalf of the Owner pursuant to the preceding sentence shall be remarketed in accordance with the Indenture and shall not be canceled or applied as an early prepayment of the Note without, in each case, the prior written consent of the Credit Facility Issuer (which consent the Owner and the Commission acknowledge and agree may be given or withheld by the Credit Facility Issuer in its sole discretion without regard to any standard of reasonableness). The Trustee shall notify the Owner no later than two (2) Business Days preceding each Remarketing Date when Bonds are to be tendered by the Holders thereof of the Purchase Price of such Bonds. (b) The Owner hereby covenants and agrees to purchase or cause to be purchased all Bonds which have been tendered for purchase by their Holders pursuant to Section 4.5(b) of the Indenture to the extent that proceeds of the sale of such Bonds by the Remarketing Agent pursuant to Article IV of the Indenture are insufficient. The Owner shall deposit with the Trustee by 10:00 A.M. Trustee Time on any Remarketing Date on which Bonds are to be purchased pursuant to Section 4.5(b) of the Indenture an amount equal to the Purchase Price of Bonds to be purchased on such date. Any and all Bonds purchased by or on behalf of the Owner pursuant to this subsection may be cancelled or applied as an early prepayment of the Note on direction of the Owner, but shall not be remarketed in accordance with the Indenture without the prior written consent of the Credit Facility Issuer (which consent the Owner and the Commission acknowledge and agree may be given or withheld by the Credit Facility Issuer in its sole discretion without regard to any standard of reasonableness). Cc) The Owner hereby covenants and agrees to purchase or cause to be purchased all Bonds which are to be purchased in lieu of redemption pursuant to Section 4.5(c) of the Indenture. The Owner shall deposit with the Trustee by 10:00 A.M. Trustee Time on any date on which Bonds are to be purchased in lieu of redemption pursuant to Section 4.5(c) of the Indenture an amount equal to the Purchase Price of Bonds to be purchased on such date. Any and all Bonds purchased by or on behalf of the Owner pursuant to this subsection may be cancelled or applied as an early prepayment of the Note on the direction of the Owner, but shall not be remarketed in accordance with the Indenture without the prior written consent of the Credit Facility Issuer (which consent the Owner and the Commission acknowledge and agree may be given or withheld by the Credit Facility Issuer in its sole discretion without regard to any standard of reasonableness). Section 4.12. Liquidity Facility; Alter&e Liquidity Facility. (a) 0) The Owner agrees to provide a Liquidity Facility in accordance with this Section 4.12 and Section 2.12 of the Indenture providing for the payment of the PUBL:17700~1(RKD:17481~3~T0:~17481~2)109~~062.14 12 OS/l 1194 purchase price of Bonds tendered by their owners during any Short Term Rate Period. At the times required by Section 2.12(c) or 2,12(d) of the Indenture, as applicable, the Owner shall, or if the Owner fails to do so the Credit Facility Issuer may (in its sole discretion), deliver to the Trustee the notice and accompanying documentation required by Section 2.12(c) of the Indenture to replace a Liquidity Facility which is expiring or the documentation required by Section 2.12(d) of the Indenture to extend a Liquidity Facility which is expiring. (ii) The Owner shall have the right to replace a Liquidity Facility with an Alternate Liquidity Facility at any time, provided that the Alternate Liquidity Facility meets the requirements of Section 2.12 of the Indenture. 0)) Each Liquidity Facility must be approved in writing by the Credit Facility Issuer and must be a municipal bond insurance policy, bond purchase or standby funding agreement, letter of credit or Surety Bond which is acceptable to the Credit Facility Issuer in all respects and pursuant to which the Liquidity 2. Facilitv Issuer agrees to pay, in immediately available funds the amounts necessary to pay the purchase price of Bonds tendered pursuant to Section 4.5(a) of the Indenture and not remarketed pursuant to Article IV of the Indenture and must otherwise comply with the provisions of Section 2.12 of the Indenture. Section 4.13. Payments Into the Tax and Insurance Reserve Account. If required by the Credit Facility Issuer, the Owner shall make an initial payment and monthly payments into the Tax and Insurance Reserve Account in accordance with the provisions of Section 8 of the First Deed of Trust. Section 4.14. Payments Into Rebate Fund. The Owner agrees to comply with the covenants and procedures set forth in Section 5.8 of the Indenture and the Tax Certificate and to pay to the Trustee for deposit in the Rebate Fund such amounts as may be necessary to enable the Trustee to pay any Rebatable Arbitrage to the United States Government. ARTICLE V DEFEASANCE OF PRIOR INDENTURE; TRUSTEE SERVICES Section 5. I. Payment of Prior Bonds. If the money available from the proceeds of the sale of the Bonds together with any available money then on deposit with the Prior Trustee under the Prior Indenture shall not be sufficient to pay or provide for the payment of the Prior Bonds in accordance with Article XIII of the Prior Indenture, the Owner shall pay the amount of any deficiency to the Prior Trustee immediately upon demand. Section 5.2. Payment for Extraordinary Services. (a) The Owner hereby covenants and agrees to pay all reasonable fees of Bond Counsel in connection with rendering opinions after the issuance of the Bonds which are described in the Indenture and this Agreement. (b) If, upon or after the occurrence of any default or breach by the Owner hereunder or under any First Deed of Trust Document (regardless of whether it constitutes an Event of Default), the Commission or the Trustee shall incur Extraordinary Expenses for the 13 08/l 1194 enforcement of performance or observance of any obligation or agreement on the part of the Owner contained herein, or in any First Deed of Trust Document, the Owner will on demand therefore reimburse the Commission or the Trustee or both for, or pay directly, Extraordinary Expenses so incurred. ARTICLE VI SPECIAL COVENANT Section 6. I. Indemnzfication Covenunt. The Owner shall indemnify, hold harmless and defend the City, the Commission, the Prior fi Trustee, the Trustee and the respective officers, members, councilmembers, directors, officials and employees of each of them (collectively, the “Indemnified Parties”) to the maximum extent permitted by law against any and all losses, costs, damages, claims, actions, expenses and liabilities of whatever nature, kind or character (including, without limitation, attorneys’ fees of counsel reasonably acceptable to the Indemnified Party, litigation and court costs, amounts paid in settlement, and amounts paid to discharge judgments) directly or indirectly arising out of or related to any claim, suit, investigation, proceeding or action commenced or threatened, arising out of or related to (a) any default or alleged default under the Prior Loan Agreement or the Prior Reimbursement Agreement; (b) f the redemption of the Prior Bonds; (c) the issuance of the Bonds; or (d) any written statements or representations with respect to the Owner, the Project, the Prior Bonds or the Bonds made or given to the Commission, the Prior Trustee or the Trustee, or any underwriters or purchasers of any of the Bonds, by the Owner, or any of its agents or employees, including, but not limited to, statements or representations of fact, or financial information; provided, however, that this provision shall not require the Owner to indemnify the Prior Trustee or the Trustee from any claims, costs, fees, expenses or liabilities arising from the negligence or willful misconduct of the Prior Trustee or the Trustee. The indemnification provided herein shall apply whether any such claim, suit, investigation, proceeding or action complains of (a) any alleged interference with or breach of any existing contract between the Commission and the owners of the Prior Bonds, E (b) fi any other alleged wrongful act of the Indemnified Parties related to any default or alleged default under the Prior Reimbursement Agreementi or the redemption of the Prior Bonds, and regardless of whether the Indemnified Parties, or any agent thereof, made any investigation with respect to the facts relating to the Project which was financed with the Prior Bonds or the Developer or any affiliate thereof or the Prior Loan or the Prior Bonds for the purpose of determining whether the proceedings described in the preceding paragraph were appropriate. Upon the sale or transfer of the Project, the acquiring person or entity shall indemnify and hold harmless the Indemnified Parties as provided herein, and upon such indemnification, and only upon such indemnification, by the acquiring party, the Owner shall thereafter have no further liability hereunder except for claims arising from any act or omission of the Owner occurring while the Project was owned by the Owner. In the event that any claim, suit, investigation, action or proceeding is brought against an Indemnified Party, with respect to which indemnity may be sought hereunder, the Owner, upon receipt of written notice from an Indemnified Party, shall assume and have the right to direct the investigation, defense and settlement thereof, including the employment of counsel PU9L:17700~1(R?XD:17481~3~T0:~17481~2)109~B2062.14 14 08/11/94 acceptable to the Indemnified Party and the payment of all expenses; provided that the Indemnified Party shall have the right to review and approve or disapprove any compromise or settlement in connection with any such claim, suit, investigation, proceeding or action brought against such Indemnified Party or to which it is a party lurovided that the Indemnified Parties shall not unreasonablv withhold or delav this arwroval and shall not unreasonablv diSaDDrOVe anv comwomise or settlement). The Indemnified Parties also agree to CooDerate with the Owner in the Owner’s investigation. defense and/or settlement of anv such claim, suit. Droceeding or action. Any Indemnified Party shall have the right to employ separate counsel in any suit, investigation, action or proceeding and to participate in the defense thereof; but unless such separate counsel is employed with the approval and consent of the Owner, or pursuant to a court order, the Owner shall not be required to pay the fees and expenses of such separate counsel. The Owner also shall pay and discharge and shall indemnify and hold harmless the Commission and the Trustee from (x) any lien or charge upon payments by the Owner to the Commission and the Tr&tee hereunder and (y) any taxes (including, without limitation, all ad valorem taxes and sales taxes), assessments, impositions and other charges in respect of any portion of the Project. If any such claim is asserted, or any such lien or charge upon payments, or any such taxes, assessments, impositions or other charges, are sought to be imposed, the Commission or the Trustee shall give prompt notice to the Owner and the Owner shall have the sole right and duty to assume, and will assume, the defense thereof, with full power to litigate, compromise or settle the same in its sole discretion. The Commission represents and warrants to the Owner that it has no knowledge of a claim of the nature described in this Section 6.1 above having been filed in any court, tribunal or other body of competent jurisdiction or otherwise threatened. Section 6.2. No Liability of Commission. The Bonds, together with interest thereon, shall be limited obligations of the Commission giving rise to no pecuniary liability of the Commission nor any charge against its general credit, shall be payable solely from the revenues pledged therefor under the Indenture, and shall be a valid claim of the respective Holders only against the revenues pledged therefor. The Bonds shall not constitute an indebtedness, liability, general, special or moral obligation or a pledge or loan of the faith or credit or taxing power, within the meaning of any constitutional or statutory provisions, of the State or any political subdivision thereof, and neither the State nor any political subdivision thereof shall be liable thereon, and in no event shall the Bonds be payable out of any funds or properties other than the revenues pledged therefor. Section 6.3. Further Assurances. To the extent permitted by law, the Commission and the Owner each acknowledges that it will, from time to time, execute, acknowledge, and deliver, or cause to be executed, acknowledged and delivered, such supplements hereto and such further instruments as may be reasonably required or desirable for carrying out the intention of or facilitating the performance of this Agreement. 08/11/94 ARTICLE VII BREACH OF COVENANTS, REMEDIES Section 7. I. Event of Default. An Event of Default shall be deemed to have occurred under this Agreement if: (a> Any amount required to be paid by Section 4(a), 4(b) or 6(a) of the Note (taking into account any credits described in Section 4.3 hereof) or Section 4.2, 4.11(b) and (cl, 4.13 or 4.14 of this Loan Agreement is not paid to the Trustee by the Owner when due; or 0) The Owner shall fail to comply with the provisions of Section 4.5 or Section 4.12 hereof and the continuation of such failure for a period of 10 days or more; or Cc) The Owner shall fail to comply with or to perform any one or more of the covenants, conditions or agreements on its part to be observed or performed hereunder or in the Note (other than Section 4(a), 4(b) or 6(a) of the Note or Section 4.2, 4.5, 4.110~) and (cl, 4.12, 4.13 or 4.14 of this Loan Agreement), for a period of 30 days after written notice specifying such breach or failure and requesting that it be remedied is given to the Owner; provided, however, that in the event such breach or failure is such that it cannot be corrected within said 30-day period, the same shall not constitute an Event of Default hereunder if corrective action is instituted by the Owner within said 30-day period, is being diligently pursued and is corrected within 90 days after such notice; or (d) Any Event of Default under any of the other First Deed of Trust Documents shall occur and be continuing, but only if the Credit Facility Issuer in its sole discretion notifies the Trustee and the Commission in writing that such has occurred and that such is to constitute an Event of Default hereunder; or 6) Any Event of Default under the Reimbursement Agreement or any of the other Second Deed of Trust Documents shall occur and be continuing, but only if the Credit Facility Issuer in its sole discretion notifies the Trustee and the Commission in writing that such has occurred and that such is to constitute an Event of Default hereunder. Section 7.2. Remedies for Failure to Per$onn. (a) Subject to the terms and provisions of the Intercreditor Agreement, the Credit Facility Issuer shall have the sole right to declare an Event of Default hereunder and if such an Event of Default occurs hereunder and is continuing, then the Trustee may, with the written consent of the Credit Facility Issuer (except in the case of an Event of Default under the Indenture), and upon receipt of the written direction of the Credit Facility Issuer shall, declare the principal of the Note and all other Note Payments to be due and payable immediately, by a notice in writing to the Owner and the Commission, and upon any such declaration such principal shall become immediately due and payable. So long as no Event of Default has occurred and is continuing pursuant to Section 9.1 of the Indenture, any action by the Trustee or the Commission shall be taken only at the Credit Facility Issuer’s written direction. 0)) Upon the occurrence of an Event of Default specified in Section 7.1 hereof, if (i) there has been paid to or deposited with the Trustee a sum sufficient to pay all PU9L:177~~1(RED:17481~~~T0:~17481~2)109~%!062.14 16 08/l 1194 overdue principal of, premium, if any, and interest on the Bonds and any Administrative Expenses, Extraordinary Fees and Extraordinary Expenses of the Trustee and the Commission, (ii) such payment is made prior to the first to occur of the time notice of redemption of the Bonds is given by the Trustee under Section 4.3 of the Indenture or the Project is sold upon foreclosure of the First Deed of Trust, (iii) no Event of Default shall have occurred and be continuing under the Indenture and (iv) the Credit Facility Issuer consents to the rescission of such acceleration; then the acceleration of all amounts due under this Agreement shall be rescinded, and the parties shall be restored to the same position as though no such Event of Default had occurred. Cc) Upon the occurrence of an Event of Default specified in Section 7.1 above, the Trustee may, but only with the written consent of the Credit Facility Issuer (unless an Event of Default has occurred under Section 9.1 of the Indenture), and upon receipt of the written direction of the Credit Facility Issuer shall exercise one or more of the following remedies subject in all respects to the provisions relating thereto in the Indenture and the Intercreditor Agreement: (0 Through its duly authorized agents, have access to and inspect, examine and make copies of, the books, records and accounts of the Owner during normal business hours, upon reasonable notice; (ii) Petition a court of competent jurisdiction for the appointment of a receiver to take possession of and manage and operate the Project in conformity with the provisions of this Agreement and the Regulatory Agreement; _ (iii) Take whatever action at law or in equity may appear necessary or desirable to enforce observance or performance of any covenant, condition or agreement of the Owner under this Agreement, the Note and the First Deed of Trust Documents, and to collect the amounts then due and thereafter to become due consistent with the provisions of Section 8.9 of this Agreement and Sections 4(a) and 4(b) of the Note; or (iv) Exercise any remedy available under the First Deed of Trust Documents or at law or in equity. Section 7.3. Discontinuance of Proceedings. In case any proceeding taken by the Commission or the Trustee (or the Credit Facility Issuer in the exercise of its rights under the Intercreditor Agreement or any of the First Deed of Trust Documents) on account of any failure of the Owner to perform under this Agreement shall have been discontinued or determined adversely to the Commission or the Trustee (or the Credit Facility Issuer), then and in every case the Commission, the Trustee, the Owner and the Credit Facility Issuer shall be restored to their former positions and rights hereunder and under the other First Deed of Trust Documents and the Intercreditor Agreement, respectively, and all rights, remedies and powers of the Commission, the Trustee and the Credit Facility Issuer shall continue as though no such proceeding had been taken, except with respect to any final and binding determination rendered in such proceeding. Section 7.4. Remedies Czunulutive. Subject to Section 8.9, no remedy conferred upon or reserved to the Commission, the Trustee or the Credit Facility Issuer by this Agreement is intended to be exclusive of any other available remedy or remedies, but each and every such PU~~:17700~1(RED:17481~3~T0:_17481~2)109~B2062.14 17 08/l l/94 remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement, the other First Deed of Trust Documents and the Second Deed of Trust Documents or the Indenture or now or hereafter existing at law or in equity. No delay or omission to exercise any right or power accruing upon any failure of the Owner to perform under this Agreement shall impair any such right or power or shall be construed to be a waiver thereof. In order to entitle the Commission or the Trustee to exercise any remedy reserved to it in this Article, it shall not be necessary to give any notice other than as otherwise specified in this Agreement. Section 7.5. Reimbursement of Expenses. If, upon or after the occurrence of any default hereunder, the Commission or the Trustee or both subject to the terms and provisions of the Inter-creditor Agreement, shall employ attorneys or incur other expenses for the enforcement of performance or observance of any obligation or agreement on the part of the Owner contained herein, the Owner will on demand therefor pay, or reimburse the Commission or the Trustee or both for the payment of, the reasonable fees of such attorneys and such other reasonable expenses so incurred. Section 7.6, Remedies Subject to Applicable Law. All rights, remedies, and powers provided by this Article may be exercised only to the extent that the exercise thereof does not violate any applicable provisions of law, and all the provisions of this Article are intended to be subject to all applicable mandatory provisions of law which may be controlling in the premises and to be limited to the extent necessary so that they will not render this Agreement invalid, unenforceable, or not entitled to be recorded, registered, or filed under the provisions of any applicable law. ARTICLE VIII MISCELLANEOUS Section 8.1. Amounts Remaining in Funds and Accounts. Any amounts remaining in any fund or account established under the Indenture after payment of the Bonds in full including interest and premium, if any, thereon, or provision for payment thereof having been made in accordance with the provisions of the Indenture, and payment of all other reasonable and necessary obligations owing to the Commission, the Registrar, the Paying Agent, the Remarketing Agent, the Credit Facility Issuer, the Liquidity 2. Facilitv Issuer, if any, and the Trustee under this Agreement or the Indenture, shall be paid in accordance with Section 13.1 of the Indenture. Section 8.2. Payments by Credit Facility Issuer. The Credit Facility Issuer shall, to the extent of any payments made by it pursuant to the Credit Facility or otherwise, be subrogated to all rights of the Commission or its assigns (including, without limitation, the Trustee) as to all obligations of the Owner with respect to which such payments shall be made by the Credit Facility Issuer, but, so long as any of the Bonds remain Outstanding under the terms of the Indenture, such right of subrogation on the part of the Credit Facility Issuer shall be subordinate as provided in Section 2.7 of the Indenture to all rights and claims of the registered owners of Bonds (other than Excluded Bondholders) Outstanding from time to time under the Indenture to receive payments of principal, premium, if any, and interest which shall be or become due and payable on the Bonds at maturity or on any Interest Payment Date or Redemption Date and to PU9L:177~~1(RED:17481~3~~0:_17481~2)109~F32062.~4 18 08/l 1194 receive the purchase price for Bonds purchased in accordance with the Indenture. The Trustee and the Commission shall execute and deliver any instrument reasonably requested by the Credit Facility Issuer to evidence such subrogation, and the Trustee shall assign its rights in any obligations of the Owner with respect to which payment of the principal thereof (including purchase price), accrued interest thereon and other amounts with respect thereto is paid by the Credit Facility Issuer. Section 8.3. Amendments, Changes or ModiJications to Agreement. This Agreement may be amended, changed or modified only subject to the requirements for and limitations on such amendments, changes or modifications set forth in the Indenture. Section 8.4. Payment. At such time as the principal of, premium, if any, and interest on all Bonds Outstanding under the Indenture shall have been paid, or shall be deemed to be paid in accordance with the Indenture, and all other sums payable by the Owner under this Agreement and the Indenture shall have been paid, the obligations of the Owner hereunder and under the Note shall be deemed to be fully paid, and the Owner upon request is entitled to receive acknowledgment of such payment in full from the Trustee and the Commission. Section 8.5. Counterparts. This Agreement may be executed in any number of counterparts, each of which, when so executed and delivered, shall be an original; but such counterparts shall together constitute but one and the same Agreement, and, in making proof of this Agreement, it shall not be necessary to produce or account for more than one such counterpart. Section 8.6. Severability. If any clause, provision or section of this Agreement shall be held illegal or invalid by any court, the invalidity of such provisions or sections shall not affect any other provisions or sections hereof, and this Agreement shall be construed and enforced to the end that the transactions contemplated hereby be effected and the obligations contemplated hereby be enforced, as if such illegal or invalid clause, provision or section had not been contained herein. Section 8.7. Term of Agreement. This Agreement shall be in full force and effect from the date hereof and shall continue in effect until the last to occur of (a) the first date on which there are no Bonds Outstanding, or (b) the date which is 91 days after all payment obligations by the Owner under this Agreement have been paid in full, if during such 91 day period no Event of Bankruptcy shall have occurred as to the Owner, or (c) the first day on which the lien of the Indenture is discharged in accordance with the provisions of Section 13.1 of the Indenture. Section 8.8. Notice of Changes in Fact. Promptly after the Owner becomes aware of the same, the Owner will notify the Trustee, the Commission and the Credit Facility Issuer of (a) any change in any material fact or circumstance represented or warranted by the Owner in this Agreement or in connection with the issuance of the Bonds, and (b) any default, event or condition which, with notice or lapse of time or both, could become an Event of Default under this Agreement or the Indenture, specifying in each case, the nature thereof and what action the Owner has taken, is taking, and proposes to take with respect thereto. ~~9~:17700~1(~~~:17481_30:_17481~2)109~B2062.14 19 08/l 1194 Section 8.9. Limited Recourse Provisions. Notwithstanding any provisions of the Indenture, the Note, this Agreement jother than the Drovision of Section 6.1 of this T Aereement), the First Deed of rust or any other First Deed of Trust Document or any Second Deed of Trust Documents to the contrary, in any action commenced to enforce the obligations of the Owner created or arising hereunder the judgment shall not be enforceable personally against the Owner or its successors or assigns (or against any affiliate, subsidiary or corporate parent of the Owner), or against any assets of the Owner or its successors or assigns (or against the assets of any affiliate, subsidiary or corporate parent of the Owner), except for the Granted Property and all rents, issues, profits, proceeds, revenues, insurance proceeds and awards and other income from the Granted Property. Section 8. IO. Notices. Any notices or other communications required or permitted hereunder shall be sufficiently given if delivered personally or sent by registered or certified mail, return receipt requested, or by private courier service, postage prepaid: if to the Owner to: Seascape Apartments, Inc. c/o Continental Casualty Company CNA Plaza Chicago, Illinois 60685 Attention: Vice President with a copy to: Seascape Apartments, Inc. c/o Continental Casualty Company CNA Plaza Chicago, Illinois 60685 Attention: Corporate Secretary if to the Credit Facility Issuer to: Continental Casualty Company CNA Plaza Chicago, Illinois 60685 Attention: Senior Vice President/General Counsel with a copy to: Continental Casualty Company CNA Plaza Chicago, Illinois 60685 Attention: Corporate Secretary if to the Commission: Carlsbad Housing and Redevelopment Commission 2965 Roosevelt Road, Suite B Carlsbad, California 92008 Attention: Housing and Redevelopment Director if to the Trustee: First Trust of California, National Association 101 California Street, Suite 1150 San Francisco, California 94111 Attention: Multifamily Housing Group PU9L:1r]oo_1(RELX17481~3~T0:_17481~2)109~B2062.14 20 08111194 or at such other address as shall be furnished in writing by any such party to the others, and shall be deemed to have been given as of the date so delivered. A duplicate copy of each notice or communication given hereunder by the Commission or the Owner shall also be given to the Trustee, the Credit Facility Issuer and the Liquidity 1 Facilitv Issuer, if any. Section 8. II. Applicable Law. This Agreement and the rights and obligations of the respective parties hereunder shall be governed by and construed and enforced in accordance with the substantive laws of the State, without reference to the conflict of laws principles of the State. Section 8.12. Successors and Assigns. This Agreement is made for the sole protection of Owner, the Commission, the Credit Facility Issuer and Trustee, and each of their successors and assigns, and no other person shall have any right of action hereunder. Section 8.13. Rights of Credit Facility Issuer and Liquidity 1 Faditv Issuer. All rights of the Credit Facility Issuer or the Liquidity 2 Facilitv Issuer, respectively, to request, direct, consent or approve matters under this Loan Agreement shall be suspended for such period of time as the Credit Facility Issuer or the Liquidity 2 Facilitv Issuer, as applicable, remains in default under the Credit Facility or the Liquidity Facility, as applicable, or if the Credit Facility or the Liquidity Facility, as applicable, has been repudiated. PUBL:177OO~l(RELk17481~3~~0:~17481~2)109~B2O62.14 21 08/11/94 IN WITNESS WHEREOF, the Commission, the Owner and the Trustee have caused this Loan Agreement to be executed in their respective names and their seals, if any, to be hereunto affixed and attested by their duly author&d officers, all as of the date first above written. CARLSBAD HOUSING AND REDEVELOPMENT COMMISSION By: Chairman (S-1) Attest: Secretary SEASCAPE APARTMENTS, INC. By: Vice President Attest: Secretary 08/l 1194 DESCRIPTION OF PROJECT A 208-unit multifamily rental housing project known as Seascape Village and located generally east of Paseo de1 Norte between Caminito De Las 5 Ondas and Buttercup Lane in the City of Carlsbad, all as more particularly described as follow7 All that certain real property situated in the City of Carlsbad, County of San Diego, State of California, described as follows: Lots 100 and 101 of Carlsbad Tract No. 73-23, in the City of Carlsbad, County of San Diego, State of California, according to Map thereof No. 8081, filed in the Office of County Recorder of San Diego County, February 28, 1975. Excepting all crude, oil, petroleum, gas, brea, asphaltum and all kindred substances and other minerals in and under said land, but without the right to enter upon the surface of said land above a depth of 500.0 feet to explore for or extract same, as reserved in a Deed recorded August 27, 1969 as File No. 157186 and that Deed recorded August 27, 1969 as File No. 157190, both of Official Records. Also excepting all oil, oil rights, mineral rights, natural gas rights and other hydrocarbons by whatsoever name known, together with all geothermal steam and steam power that may be within or under the parcel of land hereinafter described, together with the perpetual right of drilling, mining, exploring and operating therefor and storing in and removing the same from said land, or any other land, including the right to whipstock or directionally drill and mine from lands other than those hereinafter described, oil or gas wells, tunnels and shafts into, through or across the subsurface of the land hereinafter described and to bottom such whipstocked or directionally drilled wells, tunnels and shafts under and beneath or beyond the exterior limits thereof, and to redrill, retunnel, equip, maintain, repair, deepen and operate such wells or mines, without however the right to drill, mine, store, explore and operate through or on the surface or the upper 500 feet of the subsurface of the land herein described. PU9L:177~~1(RED:17481~3~~0:~17481~2)109~B2062.14 A-l 08/l l/94 EXHIBIT B SECURED NOTE 2. $15.115.000 SeDtember 13, 19% For value received, Seascape Apartments, Inc., an Illinois corporation (together with its successors and assigns, the “Owner “), hereby promises to pay to the order of the Carlsbad Housing and Redevelopment Commission (the “Commission “), the principal sum of Fifteen Million 1 One Hundred Fifteen Thousand Dollars and No/100 Cents ~~$15.115300.00~ and to pay interest thereon from the date of this Note, all as hereinafter provided. Terms used in this Note and not otherwise defined herein shall have the meanings set forth in the Loan Agreement dated as of September 1, 1994 (as amended or supplemented from time to time, the “Loan Agreement”) between the Owner and the Commission. 1. Note Payments; Bonds. The principal of, premium, if any, and interest on this Note shall be paid by the Owner by means of payments which, in the aggregate, shall be in an amount sufficient for the payment in full when due of the principal of, premium, if any, and interest on the Carlsbad Housing and Redevelopment Commission Multifamily Housing Revenue Refunding Bonds, Series A of 1994 (Seascape Village Project) in the aggregate principal amount of 2 $15.115,000 (the “Bonds “) from time to time outstanding under the Indenture (defined below), including (i) the total interest becoming due and payable on the Bonds on the respective dates of payment thereof, (ii) the total principal becoming due on the Bonds (whether at maturity, by redemption or acceleration or otherwise) and (iii) the redemption premium, if any, that shall be payable upon the redemption of Bonds prior to maturity. Note Payments under this paragraph shall be reduced in each case to the extent of any credit provided in Section 4.3 of the Loan Agreement. Unless sooner paid, the entire unpaid principal balance of this Note shall be due and payable on December 1, fi 2005. 2. Interest Determinution. This Note shall bear interest at the same rates, for the same periods, and determined in the same manner from time to time as the Bonds, all as determined in accordance with the Indenture. When interest is payable at a Daily, Weekly, Monthly, Commercial Paper Rate, Liquidity Facility Rate or Credit Facility Rate, it will be computed on the basis of the actual number of days elapsed over a year of 365 days (366 in leap years), and when payable at a Quarterly, Semi-annual or Fixed Rate, on the basis of a 360-day year of twelve 30day months. Interest on overdue principal and, to the extent lawful, on overdue premium and interest will be payable on demand at the rate per annum then borne by this Note. 3. Interest Accrual. Interest will accrue on the unpaid portion of the principal of the Bonds from the last date to which interest was paid, or if no interest has been paid, from the date of the original issuance of the Bonds until the entire principal amount of the Bonds is paid. B-l 08l11194 4. Payment Installments. 6) Subject to the provisions of Section 4.2(b) of the Loan Agreement, interest and principal payments on this Note shall be due and payable in immediately available funds at the Principal Office of First Trust of California, National Association, as Trustee (herein, together with its successors and assigns, the “Trustee”) under the Indenture of Trust dated as of September 1, 1994 (as amended and supplemented from time to time, the “Indenture “) between the Commission and the Trustee, not later than 10:00 a.m., Trustee’s Time, on the same dates and in the same amounts principal and interest is due on the Bonds. The Owner covenants and agrees that it is the Owner’s obligation to contact the Trustee for a determination of the amount of interest due hereunder and on the Bonds prior to each Interest Payment Date in order to make timely monthly payments hereunder. While the Bonds bear interest at a Daily or a Weekly Rate, the Trustee shall endeavor to verify to the Owner orally or in writing the Trustee’s estimate of the amount of interest due on this Secured Note and the Bonds at least seven (7) Business Days prior to each Interest Payment Date; provided, however, the failure of the Trustee to so notify the Owner or to provide the Owner with the correct amount of interest due on this Secured Note and the Bonds prior to an Interest Payment Date shall not excuse the Owner’s obligation to make timely payment of the full amount due hereunder and shall not be a defense to any legal action brought against the Owner if the Owner makes an incorrect payment hereunder. (b) The Owner shall make all other payments when due in accordance with the provisions of the Loan Agreement. (cl Notwithstanding any provisions to the contrary in this Note, in the event the day on which any payment is scheduled to occur is not a Business Day, then such payment shall be required to occur on the immediately succeeding Business Day. (4 In no event shall the aggregate of the interest contracted for, charged or received hereon, plus any other amounts contracted for, charged or received in connection herewith which are deemed “interest” under the laws of the State and the United States of America, as applicable, in effect on the date hereof permitting the charging and collecting of the highest non-usurious interest rate hereon (hereinafter referred to as “Applicable Law “), ever exceed the maximum amount of non-usurious interest which could be lawfully charged hereon under Applicable Law, anything to the contrary herein, in the Loan Agreement, or in any other related agreement notwithstanding, and if any amount of interest taken or received by the holder of this Note shall be in excess of the maximum amount of deemed “interest” which, under Applicable Law, could lawfully have been collected hereon, then the excess shall be deemed to have been the result of a mathematical error by the Owner, the Trustee hereinafter referred to, and such holder and shall be credited on the principal amount of this Note or, if at the time insufficient principal remains unpaid, refunded promptly to the Owner. All interest and amounts paid or agreed to be paid in connection with the indebtedness evidenced hereby which under Applicable Law would be deemed “interest” shall, to the extent permitted by Applicable Law, be amortized, prorated, allocated, and spread throughout the full term hereof. 5. Obligations Absolute. Subject to Section 13 hereunder, the obligation of the Owner to make the payments required by this Note shall be absolute and unconditional. Subject to the credits as and to the extent provided in Section 4.3 of the Loan Agreement, the Owner will PU9L:177~~1(RED:17481~3~T0:~17481~2)109~B2062.14 B-2 08/11/94 pay without abatement, diminution, postponement or deduction (whether for taxes or otherwise) all such amounts regardless of any cause or circumstance whatsoever, including, without limitation, any defense, setoff, recoupment or counterclaim which the Owner may have or assert against the Commission, the Trustee, the Credit Facility Issuer, the Liquidity 1 Facilitv Issuer, if any, any Holder of a Bond or any other person. 6. Prepayments. This Note is prepayable only as provided and upon the terms set forth below: (a) Mandatory Prepayment upon Mandatory Redemption of Bonds. This Note shall be prepaid, as a whole or in part on any date on which and to the extent that the Bonds are subject to mandatory redemption pursuant to Section 4.1(c) of the Indenture. The prepayment price hereunder shall be equal to the redemption price set forth in Section 4.1(c) of the Indenture plus accrued interest on the Bonds to the date of redemption. Anything to the contrary in this Note notwithstanding, when this Note is subject to prepayment in connection with a redemption of Bonds pursuant to Section 4.1(c)(2), (3), (4) or (5) of the Indenture and such Bonds or any portion thereof are purchased in lieu of redemption, no prepayment of this Note will occur or be permitted to the extent that the Bonds are, in fact, purchased in lieu of redemption rather than redeemed. This Note shall only be prepaid to the extent and in the amount that Bonds are actually redeemed and cancelled. 0)) Optional Prepayment. This Note may be prepaid at the election of the Owner with the prior written consent of the Credit Facility Issuer, as a whole or in part on any date which the Bonds may be redeemed pursuant to Section 4.1(a) of the Indenture, but only upon compliance with Section 4.1(b) of the Indenture. The prepayment price hereunder shall be equal to the redemption price set forth in Section 4.1(a) of the Indenture and in the Bonds plus accrued interest on the Bonds to the date of redemption. (c) Extraordinary Prepayment. This Note may be prepaid in whole or in part, on any date on which the Bonds may be redeemed pursuant to Section 4.1(d) of the Indenture in accordance with the provisions of Section 4.1(d) of the Indenture. The prepayment price hereunder shall be equal to the redemption price set forth in Section 4.1 (d) of the Indenture plus accrued interest on the Bonds to the date of redemption. Cd) Optional and Mandatory Tender. The payment by the Owner of any portion of the Purchase Price of a Bond pursuant to Section 4.11 of the Loan Agreement shall not constitute a prepayment of this Note and shall not extinguish any portion of the debt represented by this Note, unless the purchased Bond is delivered to the Trustee for cancellation. 7. The Loan; Security. This Note is issued pursuant to the Loan Agreement and is issued in consideration of the Loan made thereunder and to evidence the obligations of the Owner to repay such Loan. It is intended by the Owner that the payments of principal of, premium, if any, and interest hereon will be sufficient at all times to enable the Commission to pay the principal of, premium, if any, and interest on, and the purchase price of, the Bonds when due. The payment of this Note and the performance of the Owner’s obligations under the Loan Agreement are secured by the First Deed of Trust Documents and otherwise as provided in the Indenture and Loan Agreement. 08111194 Reference is hereby made to the Loan Agreement, the First Deed of Trust Documents, the Second Deed of Trust Documents and the Indenture for a statement of the terms and provisions thereof. Reference is hereby made to the Loan Agreement for a complete statement of the terms and conditions under which the maturity or the principal installments of this Note may be accelerated. As more fully set forth in the Loan Agreement, the entire principal balance and all accrued interest on this Note may be declared to be immediately due and payable upon the occurrence of an Event of Default as therein defined. In such event, but subject to the Intercreditor Agreement, Section 40 of the First Deed of Trust and Section 13 hereof, the holder of this Note shall have the right to exercise various remedies including foreclosure of the First Deed of Trust and the other First Deed of Trust Documents and sale of any part or all of the Granted Property. 8. Payments to Trustee. All payments of principal, premium, if any, and interest on this Note shall be made to the holder of this Note at the principal office of the Trustee under the Indenture, in lawful money of the United States of America. 9. No Modzfimions; Owner Waiver. The granting, without notice, of any extension or extensions of time for payment of any sum or sums due hereunder, or under the Loan Agreement or the First Deed of Trust, or any of the other First Deed of Trust Documents or for the performance of any covenant, condition or agreement contained herein or therein, or the granting of any other indulgence, or the taking or releasing or subordinating of any security for the indebtedness evidenced hereby, or any other modification or amendment of this Note, the Loan Agreement, the First Deed of Trust or any First Deed of Trust Documents will in no way release or discharge the liability of the Owner on this Note and under the Loan Agreement, whether or not granted or done with the knowledge or consent of the Owner. The Owner and any other party (including, without restricting the foregoing, any endorsers, sureties and guarantors) hereafter liable for the indebtedness represented by this Note, hereby (a) waive presentment for payment, notice of dishonor, protest and notice of protest, and (b) agree that the time of payment of the indebtedness or any part thereof may be extended from time to time without modifying or releasing the lien of the First Deed of Trust or any other First Deed of Trust Document or the liability of the Owner or any other such parties hereunder and under the Loan Agreement. 10. Default; No Waiver. Subject to the Intercreditor Agreement, to Section 40 of the First Deed of Trust and to Section 13 hereof, in the event of any Event of Default under the Loan Agreement, the holder of this Note and the secured parties or beneficiaries under the First Deed of Trust or any of them may exercise any remedy or remedies, in any combination whatsoever, available by operation of law or under this Note, or the Loan Agreement, or the First Deed of Trust or any of the other First Deed of Trust Documents, and the holder of this Note and the secured parties or the beneficiaries under the First Deed of Trust shall be entitled to collect their respective costs of collection, including specifically (but without limitation) attorneys’ fees, and including costs incurred in participating in any insolvency proceeding or seeking relief from any stay in effect in any such proceeding. The holder of this Note and the secured parties or the beneficiaries under the First Deed of Trust shall not by any act or omission or commission be deemed to waive any of their respective rights or remedies hereunder or under any other First Deed of Trust Documents, PU9L:17700~1(RED:17481~~~TOz~17481~2)109~B2062.14 B-4 08/l 1194 unless such waiver be in writing and signed by the holder hereof and such secured parties or the beneficiaries, and then only to the extent specifically set forth therein. A waiver of one event shall not be construed as a continuing waiver or as a bar to or waiver of such rights with respect to a subsequent event. Time is of the essence hereof. 11. Governing Law. The Owner agrees that: (i) this instrument and the rights and obligations of all parties hereunder shall be governed by and construed under the substantive laws of the State of California, without reference to the conflict of laws principles of such state; (ii) the obligation evidenced by this Note is an exempted transaction under the Truth in Lending Act, 15 U.S.C. §1601, et seq.; (iii) the proceeds of the indebtedness evidenced by this Note will not be used for the purchase of registered equity securities within the purview of Regulation “U” issued by the Board of Governors of the Federal Reserve System; and (iv) upon the maturity date, the holder of this Note shall not have any obligation to refinance the indebtedness evidenced by this Note or to extend further credit to the Owner. 12. Successors. This Note shall bind the Owner and its successors and assigns, and the benefits hereof shah inure to the holder of the Note and the secured parties or the beneficiaries under the First Deed of Trust. 13. Limited Liability. Notwithstanding any provisions of this Note, the First Deed of Trust, the Loan Agreement or any other First Deed of Trust Document or any Second Deed of Trust Documents to the contrary, in any action commenced to enforce the obligations of the Owner created or arising hereunder the judgment shall not be enforceable personally against the Owner, its successors or assigns (or against any affiliate, subsidiary, or corporate parent of the Owner) or against any assets of the Owner or its successors or assigns (or against the assets of any affiliate, subsidiary or corporate parent of the Owner), except for the Granted Property and all rents, issues, profits, proceeds, revenues, insurance proceeds and awards and other income from the Granted Property. PUBL:177~~1(RED:17‘%1~~~T0:_17481_2)16’~B2062.14 B-5 0811 l/94 IN WITNESS WHEREOF, Seascape Apartments, Inc., has executed and delivered this Note on 2 SeDtember 13, 1994. SEASCAPE APARTMENTS, INC., an Illinois corporation BY Vice President Attest: Secretary 08/l l/94 The undersigned hereby assigns and transfers this Note to First Trust of California, National Association, and its successors and assigns as Trustee under the Indenture of Trust dated as of September 1, 1994, without recourse to the undersigned. CARLSBAD HOUSING AND REDEVELOPMENT COMMISSION BY Chairman Attest: BY Secretary PUBL:17700~1(RE0:17481~~~T0:~17481~2)109~B2062.14 B-7 OS/l 1194 ADMINISTRATION AGREEMENT By and Between CARLSBAD HOUSING AND REDEVELOPMENT COMMISSION Commission and FIRST TRUST OF CALIFORNIA, NATIONAL ASSOCIATION Program Administrator Relating to: $15,115,000 CARLSBAD HOUSING AND REDEVELOPMENT COMMISSION MULTIFAMILY HOUSING REVENUE REFUNDING BONDS SERIES A OF 1994 (SEASCAPE VILLAGE PROJECT) Dated as of September 1, 1994 ADMINISTRATION AGREEMENT THIS ADMINISTRATION AGREEMENT (“Administration Agreement”) is made and entered into as of September 1, 1994, by and between the Carlsbad Housing and Redevelopment Commission, a public body corporate and politic of the State of California (the “Commission”) and First Trust of California, National Association (the “Program Administrator”). WHEREAS, the Commission has heretofore issued its Multifamily Housing Revenue Bonds, Series 1985B (Seascape Village Project) (the “Prior Bonds”), in order to provide financing for a 208-unit multifamily rental project known as “Seascape Village” (the “Project”), and has issued its Multifamily Housing Revenue Refunding Bonds, Series A of 1994 (Seascape Village Project) to refund the Prior Bonds pursuant to an Indenture of Trust dated as of September 1, 1994 (the “Indenture”) between the Commission and First Trust of California, National Association, as trustee (the “Trustee”); and WHEREAS, the Commission has entered into an Amended and Restated Regulatory Agreement and Declaration of Restrictive Covenants dated as of September 1, 1994 (the “Regulatory Agreement”) with the Trustee and Seascape 1 Aoartments, Inc., an Illinois corporation (the “Owner”), which agreement, among other things, sets forth certain restrictions applicable to the multifamily rental units financed, which restrictions are intended to assure continuing compliance with the provisions of the Internal Revenue Code of 1954, as amended (the “1954 Code”); and WHEREAS, the Program Administrator represents that it has the necessary experience and expertise required to evaluate whether the Owner’s operation of the Project complies with the restrictions contained in the Regulatory Agreement; NOW, THEREFORE, in consideration of the premises and respective representations and covenants herein contained, the parties hereto agree as follows: ARTICLE I DEFINITIONS AND INTERPRETATION 1.1 Definitions of Terms. All capital&d terms used in this Administration Agreement and not otherwise defined herein shall have the respective meanings given to them in the Indenture and/or the Regulatory Agreement. 1.2 Article and Section Headings. The heading or titles of the several articles and sections hereof shall be solely for the convenience of reference and shall not affect the meaning, construction or effect of the provisions hereof. 1.3 Interuretation. The singular form of any word used herein, including terms defined in the Indenture and/or the Regulatory Agreement, shall include the plural and vice versa, if applicable. The use of a word of any gender shall include all genders, if applicable. ARTICLE II REPRESENTATIONS AND WARRANTIES 2.1 Reoresentations and Warranties of the Commission. The Commission makes the following representations and warranties: A. It is a public body corporate and politic, duly organized and existing under the Constitution and laws of the State. B. It has the power to enter into the transactions contemplated by this Administration Agreement and to carry out its obligations hereunder and to consummate all other transactions contemplated herein; and it has duly authorized the execution and delivery of this Administration Agreement. 2.2 Representations and Warranties of the Program Administrator. The Program Administrator makes the following representations and warranties: A. It is a national banking institution duly organized and validly existing under the laws of the United States of America. B. It has the power to execute and deliver this Administration Agreement and to carry out the transactions contemplated hereby; and it has duly authorized the execution, delivery and performance of this Administration Agreement. C. It is independent from and not under the domination of the Owner, does not have any substantial interest, direct or indirect, in the Owner, and is not an officer or employee of the Owner. D. It has received copies of the Indenture, the Loan Agreement and the Regulatory Agreement, and it is familiar with the terms and conditions thereof as the same relate to the Code, the Law and & Commission’s housing policy. ARTICLE III DUTIES AND COMPENSATION OF THE PROGRAM ADMINISTRATOR 3.1 For and on behalf of the Commission, the Program Administrator will Duties. perform the following duties in a reasonably careful and timely manner: PUBL: 18086-l (RED: 17676~2~TO:~17676~1)109 1 B2062.14 2 A. It will be familiar with and will give written notice to the Commission, the Trustee and the Owner within five days of any change in: 1. The Median Income for the Area as determined by the Secretary of the Treasury of the United States; 2. The maximum income at which households consisting of various numbers of persons may be determined to be Lower Income Tenants or Very Low Income Tenants under the terms of the Regulatory Agreement; and 3. The monthly rent which is determined to be the “Affordable Rent” under the terms of the Regulatory Agreement. B. Promptly following its receipt thereof, it will review the Income Certifications, Certificates of Continuing Program Compliance, and all other reports and certificates furnished to it pursuant to the Regulatory Agreement in order to determine that each such document is complete and to verify the internal accuracy of the calculations, and conclusions with respect to such calculations, set forth therein, including the conclusion that at least 20% of the units in the Project are being occupied by or being held vacant and available for occupancy by Lower-Income Tenants as specified by the terms of the Regulatory Agreement; and it will maintain such documents on file and open to the inspection by the Commission, the Trustee and the Owner during the term of the Regulatory Agreement. Each month during the Qualified Project Period, the Program Administrator shall tile with the Commission, the Owner and the Trustee a report in the form attached hereto as Exhibit A. C. Promptly upon determining that any report or certificate or other document submitted to it pursuant to the Regulatory Agreement demonstrates that the Project is not in compliance with the Code or the Law, or is inaccurate or incomplete the Program Administrator shall: 1. If the content of the report or inaccuracy or lack of completeness does not cause the Project to cease to meet the qualifications set forth in Sections 3 and 4 of the Regulatory Agreement, immediatelv give writteq notice of such noncompliance, inaccuracy or lack of completeness to the Owner and direct the Owner to correct or complete the same, as the case may be, within a reasonable period of time thereafter. 2. If the content of the report or the inaccuracy or lack of completeness does cause the Project to cease to meet the qualifications set forth in Sections 3 and 4 of the Regulatory Agreement, immediately give written notice of said fact to the Commission, the Trustee and the Owner. E. In the event that the Owner fails to file with the Program Administrator any report, certification or other document required pursuant to the Regulatory 2 Agreement within the time set forth in the Regulatory Agreement, the Program Administrator shall immediately give written notice of that fact to the Commission, the Trustee and the Owner. 3.2 Comoensation. For all services rendered pursuant hereto and all costs and expenses incurred hereunder the Program Administrator shall be paid the fee described in Exhibit B attached hereto. The fee of the Program Administrator shall be paid to the Program Administrator by the Owner. Neither the Commission nor the Trustee shall be liable to the Program Administrator for any amounts owed to it by the Owner. 3.3 The Program Administrator agrees to indemnify and hold harmless the Indemnity. Commission and its officers, agents, and employees, from and against (i) any and all claims arising from any act or omission of the Program Administrator in connection with the Program Administrator’s duties under this Agreement, and (ii) all reasonable costs, counsel fees, expenses or liabilities incurred in connection with any such claim or proceeding brought thereon. In the event that any action or proceeding is brought against the Commission or any of its officers, employees or agents, the Program Administrator, upon written notice from the indemnified party, shall assume the investigation and defense thereof, including the employment of counsel selected by the indemnified party to represent it and the payment of all expenses incurred by or on behalf of the indemnified party.. 3.4 Beneficiaries. The Surety, the Commission and the Owner are beneficiaries of the obligations of the Program Administrator under Section 3.1 hereof. ARTICLE IV TERM 4.1 Term of Agreement. Unless sooner terminated pursuant to the provisions of Section 4.2 and 4.3 hereof, this Administration Agreement shall remain in full force and effect for the term of the Regulatory Agreement. 4.2 Termination. In its sole discretion, the Commission may terminate this Administration Agreement upon giving the Program Administrator thirty days’ written notice of its intention to do so. 4.3 Resignation of Proeram Administrator. The Program Administrator may resign from its position and terminate this Administration Agreement upon giving the Commission thirty days’ written notice of its intention to do so, if the Commission shall fail to pay the Program Administrator the compensation due the Program Administrator hereunder within the time provided for herein and if such failure shall continue for said thirty day period. ARTICLE V MISCELLANEOUS PROVISIONS 5.1 Execution in Counterparts. This Administration Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, and such counterparts shall constitute but one and the same instrument. PUB~:18086~1(~~D:17676~2~~0:~17676_1)109.14 4 5.2 Business Davs. If any action is required to be taken hereunder on a date which falls on other than a Business Day, such action shall be taken on the next succeeding Business Day. 5.3 Governing Law. This Administration Agreement shall be construed in accordance with the laws of the State of California and the obligations, rights and remedies of the parties hereunder shall be determined in accordance with such laws. 5.4 Notices. All notices, certificates or other communications hereunder shall be sufficiently given and shall be deemed given when delivered or mailed by certified mail, postage prepaid, addressed to the appropriate Notice Address set forth in the Regulatory Agreement. The Notice Address of the Program Administrator is: First Trust of California, National Association 101 California Street, Suite 1150 San Francisco, CA 94111 Attention: Multifamily Housing Group IN WITNESS WHEREOF, the parties hereto have caused this Administration Agreement to be executed on their behalf by their duly author&d representatives, all as of the date hereinabove written. CARLSBAD HOUSING AND REDEVELOPMENT COMMISSION By: Chairman ATTEST: Secretary FIRST TRUST OF CALIFORNIA, NATIONAL ASSOCIATION By: Authorized Signatory ~~~~:18086~1(~~~:17676~2~T0:~17676~1)109~ B2062.14 6 EXHIBIT A MONTHLY REPORT OF PROGRAM ADMINISTRATOR The undersigned is serving as the Program Administrator for -1 SeascaDe Village (the “Project”) and hereby certifies as follows: 1. As Program Administrator, we have reviewed all Income Certifications received from the Owner with respect to the Project during the past month and have determined that: (a) the Owner has verified the income of each Lower-Income Tenant as required by Section 4(c) of the Regulatory Agreement; and (b) based upon the information set forth in the Income Certifications, at least 20% of the units in the Project are currently occupied by Lower-Income Tenants, including Very-Low Income Tenants, or are currently vacant and were last occupied by Lower-Income Tenants, including Very-Low Income Tenants. 2. The Owner has filed with us all reports and certifications required to be filed pursuant to the Regulatory Agreement within the time limits set forth therein. 3. Nothing has come to our attention which leads us to believe that the Owner is not, as of the date of this Certificate, in compliance with all of the requirements of the Regulatory Agreement. Dated: EXHIBIT B COMPENSATION OF PROGRAM ADMINISTRATOR A. The Program Administrator shall be paid an annual fee of $5,500, with the first annual fee paid on September 2 13, 1994, and on each September 1 .lJ thereafter. B. The Program Administrator shall be entitled to reasonable out-of-pocket expenses incurred or made pursuant to performing its duties under the Administration Agreement (including the reasonable compensation and expenses and disbursements of its in-house or outside counsel and of all persons not regularly in its employ), except any such expenses, disbursement or advance as may arise from its 1 negligence or bad faith. FWBL: 18086-l (RED: 17676~2~~0:~17676~1) 109 1 B2062.14 8