Loading...
The URL can be used to link to this page
Your browser does not support the video tag.
Home
My WebLink
About
VILLAGE PARTNERSHIP - 1986-08-18
� Ra a6-e3 . REQUEb i FOR CITY COUNCIL Oy� ,cam DM October 22, 1986 y rA Honorable Mayor and Ci¢y Council Members ..• Sub"bY: Charles W. Thom -on Cit • AdministratorY�`� PO Douglas N. La Belle, Deputy City Administrator/Redev l4�pment Sub DESIGNATION OF STATE ALLOCATION FOR VILLAGE PARTNERSHIP PROJECT BOND FINANCE Consis tt with Council Pol:cy7 D4 Yap [ I New Policy or Exception R6 Stetrn+rrint of Ime, Recommer:!-t:on, Analysis, Funding !ouew, Altaimative Actium, AlLechmentt: STATEMENT OF ISSUE: Previously the City Council has approved and authorized the sale of bonds to finance an elderly housing project known as The Village Partnership. Pursuant to the allocation system for the Private Purpose Bond Authority determined by the State of California, it is necessary for the City Council to adopt a Resolution designating the use of the State Allocation for this project. Such a Resolution is attach: d for the Council's consideration. RECOMMENDATION: Approve and authorize the City Clerk to execute the attached Resolution designating the Private Purpose Bond Authority for not to exceed $7,700,000 for the sale of variable rate %iulti-Family Housing Revenue Bonds for The Village Partnership Project 1986 Series "A". ANALYSIS: In Mny 1986 the City Council adopted an inducement R-�!,olution stating its intention to issue bonds to provide financing for the subject project. Subsequently on August 18, 1986 th. City Council conducted a TEFRA Hearing on this subject and at the conclusion of the Hearing adopted a Resolution authorizing the sale of the bonds and the execution of the Purchase Contract by the City Administrator. One step rerr,ains r,efore this financing may proceed. UrKler the Tax Reform Act of 19E6, the Federal Government has established new ceilings far the dollar amount of Private Purpose Bonds which may be sold in each state. The allocation of this authority 6 determined by the State Treasurer's Office. At its meeting of October 29, 1986, the :Mortgage Bond Allocation Committee (one of the Financing Authorities within the State Treasurer's Office) provided the necessary 7.7 million dollar allocation for The Village Partnership Project pursuant to an application previously filed by the city. An additional requirement under this year's allocation system is that the legislative body of the local jurisdiction selling bonds adopt a Resolution designating that the allocation received from, the MortgaRP Bond Aliccacion Committee be used for the r "A f ' specly— p,c,lect for which it wa3 �ra►nted. Such a Resolution is attac nr Council s consideration. rio 546 ' 1 '� r •r�" d RH 96•-93 Octoborr 22, 1936 Page Two TIn Village Partnership Project is an elderly housing project located at Springdale and Edinger and will contain 114 Units. The entitlements for this project were previously approved by ttz Planning Commission. The attached Resolution represents the last official act necessary by the city to consummate this financing. -The closing of the Bond Iasu!- `as been sch-duled for November 6 and 7, 1986. . I"UND(NG SCOURGE: Costs paid from bond proceeds. The standard one half of one percent City Issuance Fee will be aueswd. ($38, 00) ALTERNATIVES: Do not approve the attached Resolution. This will pre-empt the sale of these bonds as previously approved by the Council. ATTACHMENTS: Resolution No. III, - - C:.WT/DLB/SVK:t,w 7374r r `1 RESOLUTION NO. 5722 1 •„ �t 0 ' 1 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH DESIGNATING ALLOCATION FOR NOT TO LXCF:ED $7, 700, GOO PRINCIPAL AMOUNT OF VARIABLE RATE DEMAND MULTIFAMILY MOUSING REVENUF: BONDS ( MERCURY SAVINGS AND LOAN ASSOCIATION/ VILLAGE PARTNERSHIP PROJECT), 1986 SERIES A WHEREAS, the City of Huntington beach (the `City') proposes to issue its City of Huntington Beach Variable Rate Demana Multifamily Housing Revenue Bonds ('iercury Savings ana Loan Association/Village Partnership PPro)ecF), 1986 Series A (the "bonds"), in the aggregate principal amount of $7,700,000, under and Fursuant to Chd-'ter 71 Part 5 of Division 31 of the California Health ana Safety Code, as amenaed, in order to proviae financing to Village Partnership, a California general partnersi-ip, for the aCCIL2srtion ano construction of an approximately its --unit multitamily residential. rental j;ro3eCt to cue loch~en at 1617l Springae.le in rliie City; ana WHEREAS, the City has here)-ufore aw-horized and upprovea the i--suance of the Bond::; ana WhEREAS, the Tax Reforn, Act or 19b6 has imposed volume restrictions upon the issuance of bonds _such as *he bonds ana -uch restrictions are being administered in the State of California under the provisions of a Proclamation by the Governor of the State of California dated September 30, 1986 (the "Proclama`ion"); and WHEREAS, paragraph 6(b) of the Proclamation require: that the City prior to the issuance of the Bonds specifically cesigna:e to the bonds a portion of the Private Activity Bond Limit /as such 1. "��pp / l ! r • jo 1}' �yyF,.i � . r � - • r r rl��r J � r - • � ` � � 1 Y I u , i w term is defined in the Proclamation) available or expected to be available to the City; NOW, THEREFORE,, BE IT RESOLVED by the City Council of the City of Huntington Beach that the City hereby designates to the Bonds the Private Activity Bond Limit available or expocted to by available to the City in 19d6, such designation to become irrevocable upon the issuance of the Bonds to the extent of the amount thereof. This resolution shall take effeot from and after its adoption. PASSED AND ADOPTED by the City Council of the City of Huntington breach, California, at a regular meeting thereof held on the 3ra day of NoVe:aber, 19�61 by the following vote.: Mayor k`1"P.E'I' city Clerk REVIEWED AND APPROVED: • r�Y•YI.•Y4rRn•�rrr�� City Aaministr ator 2. isWPPC ;Ar L-q TO Pr,kr.;- toum or cm or fimmms 1, ALjC1.11 M. WEN7WOR'1'fi, the duly elected, qualified City Clirk of the City of Hunt4..ngton Preach, and ex-officio Clerk of the. City council of said City, do hereby certify that the whole number of mothers of the City Council of the City of Huntington Beach Is seven; that the foregoing resolution was pressed and adopted by the affirmative vote of more than a u&jority of all the members of said City Council at a reg-ilar �J meeting thereof held on the 3rd day of November 1986 , by the following vote: AYES: Councilmen: Kel 1 Y, , ,MacAl, i i stPr, Finley, Mand i cBailey, Green, Thomas W)ES : Councilmen - None ASSENT: Counc ln*n: City Clerk and cx-officio Cler'. of the Cit}' COUrlCii of the City of Huntington Sertrch, Call.fornia The foregoing instrument is a correct copy of the original on rife in this office. Attest.........1 ALMA M. YVEN NORTH City Cfr a ;ra EY cfficiu Clerk of the City Coun.i f the City of Huntinn ton Beach, Cal. By.... Deputy •. ; ��trG ,tt� rG �ui,,s� �,;,.e�t���`'-.s•.�� cr a� ." "y, �•.:+,,:,. _ p.,;,;,c Mt11rC�!'DY CACriw of the sveergos Cowl I+Nrtatn�4, lNvonbv A-61141 06106 29 5610•9m09'. 1991.:na A- 749.i 1. 01114 1 ! June, 1243 STATE. OF CALIFORNIA County of Oraive � None +I.�r+yr•r� w.«r I am a Citizen of the United Sialos and a resident of the County afor"aid. I am over the age of eighteen years, end not a party to or interested in the balow entitled matter. I am a principal Clark of the Orange Coast DAILY PILOT, with which is combined tho NEWS -PRESS, a neivopaper of g erwal circulation, printed and published in the City of Cost• Mims, County of 0mrige. 31mo of California, And that a NotifA of PUBLIC HEARING of which Copy sttached hereto is a true and comiAete Copy, was printed and published in the ^osta Mesa, f4mport fleath, Huntington Seach, Fountain Valley, Irvine, the South Coast communities and Lajuna BegCh issues of said newspaper for ONE TIME cortwwlive weeks to wit the issue(s) of August 5 . 198 6 198— , 198— _� �.. , 199__...- -- , 19 $ I declare, under penalty of perjury, that the foregoing is true and correct. &i C?AVd on _A119ust 5 at Cost Mesa, Call�6rnia. , �Sign$ture _� N �,•.,.r..,.��.,. 10t � �� soap wW : if1�t1- X1114WtCity = all � ft chi;" f=11r�t+ +aor�f a ��MlMlltl on 914tum drew aw Remo tnis � 1+1rt fn+- �ju L t lb"M A In tin iliilYrK �At to tom• c a 1 ,r00.w. Wd bonds roldty :a the owd nwdpG�lfAq W" 61 4 �to 154 off! 7r� .I.K a o . iftftQ*j 1 t of t7' � � j A! A Ora itaMMd 1fi OW tt�r- ' f" for of qP Tt1 e �Ir1�t t� f7 00=�M = 1h�li►t i#, 1� t�iirY Ono PROOF OF PUSLICATION P'r 10t � �� soap wW : if1�t1- X1114WtCity = all � ft chi;" f=11r�t+ +aor�f a ��MlMlltl on 914tum drew aw Remo tnis � 1+1rt fn+- �ju L t lb"M A In tin iliilYrK �At to tom• c a 1 ,r00.w. Wd bonds roldty :a the owd nwdpG�lfAq W" 61 4 �to 154 off! 7r� .I.K a o . iftftQ*j 1 t of t7' � � j A! A Ora itaMMd 1fi OW tt�r- ' f" for of qP Tt1 e �Ir1�t t� f7 00=�M = 1h�li►t i#, 1� t�iirY Ono PROOF OF PUSLICATION P'r 7T1 ' J F y I' + r i y e wrics OF PUBLIC HRARIKka a CITY Of HUNTINGTON filhCH VARIAWA RATE DXNAND MULTIFAMILY HOUSING REVENUE BONDS (MERCURY SAVINGS AND LOAN ASSOCIATION/VILLAGE PARTNERSHIP p 'ECT) NOTICE IS HEREBY GIVEN that can August 181 1986, at the hour of 7 s 30 p.m. or as soon as possible, in the Council Chambers, 2000 Main Street, Huntington Beach, California, 92648, the City Council of the City of Huntington Beach will hold a public hearing on the proposed issuance of the City's Variable Rate Demand Multifamily Housing Revenue Bonds (Mercury Savings and Loan Association/V-illage Partnership Project:), 1986 Series A in the aggregate amount not to' exceed t71700, D00. Said bonds relate to the proposed financing of a multifamily residential rental project to be owned by Village 5 Partnership, a California genoral partnership, consisting of approximately 114-units located in the City of Huntington Beach at 16171 Springdale. All interested persons are invited to attend said hearing and express their opinions for or against the proposal. Further information may be obtained from Stephen Kohler, Senior Redevelopment Specialist - (714) 536-5542. Dated: July 2f , 1986 HUNTI.•IGTON BEACH CITY COUNCIL By: Alicia M. Wentworth City Clerk Phone (714) 536--5405 mom I JNNfM �►iE p•►o d7 �A'III , plIY+1 NOTICE OF PUBLIC HEARING ary OFF U14TINGTON BEACH VARIMLE HATE DEMAND MULTIFAMILY MOUSING REVENUE BONDS 4MERCURY SAVINGS AND LOAN ASSOCIATIONNILLAGE PARTNERSHIP PAOJFCTj NOTICE IS HEREBY GIVEN that or, August W. 1966, at the hour of 7:30 p.m. or as soon thereafte► as possib+e, in the Council Chamfers, 2000 Main Street, Huntington Beach, California, 52648, 1ho C(1:y Coun' it of the City of Huntington Beach wdl hold a public hearing on the proposed issuance of the City's Variable Rate De(nand Multifamily Housing Revenue Bonds (Mercury Savings acid Loan AmciationiVllage Partnership Project), 1986 Series A in the aggregate amount not to exceed $7,700.000. Said bonds relate to the proposed financing of a multifamily residential rents: project to be owned by Village Partnvsnip, a Caiilorrwa general partnership, consisting of approximately 113-units lo,ated in the City of Huntington Beach at 16171 Sprinndnle. All Ir-terested pefsons are invited to attend said hearing and express their opinions for or against (ire proposal. Funtler information (nay be obtained (rant Stephen Kohler, Serncr j�evelcpment Specialist. r. r`'',� �y..',b • -~- w( •-�'-r Owed: August A, 1986 of HUNT IGTCN BEACH 11'.1w ce to bo publishW no! later August A, 1986 in a nuwsrapur of general clrculatioc, in the City cif sunthiglon Beachl k mom r •' MMICE OF P'CT3LIC HEARIN ". CITY OF HUNT 1 NG'TON SCACH VARIARLE RATE DEMAND MUL'T I FAMI LY HOUSING REVENUE BONDS (MERCURY 'ShVI NGS AND LOAN ASSOC IATION/VXLLAC;E PARTNERSHIP PItWECT) NOTICE IS 9ERESY G'�VEN that, on August 19, 1986, at the hour of 7t30 p.m. or as soon asp possible, in the Counct.l Chambers, 2000 Main :.treet, Huntington Beach, California, 92648, they City Council of the City o f Huntington Beach will 'hold a pub l i hearing on the proposed issuance of the City's Variable :fate Demand Multifz,mily Housing Revenue Bondza (Mercury Savings and Loan Association/Village Partnership Project), 1986 Series A in the aggregate amount not to exceed $7,700,000. Said bonds relate to the proposed financing of a multifamily residential rental proje<�t; to be owned by Village Partnership, a Cali`ornia general partnership, consisting of approximately 114-units located in the City of Huntington Beach at 16171 Springdale. N11 interested persons are invited to attend said hearing oral express their opinions for or against the Dropoaal. Further information may be obtained from Stachen Kohler, Redevelopment Specialist - (7.L4) 536-5542. Dated: July 27. 1986 HUNTI.TGTON BEACH CITY COUNCII, 9y t Alicia ;A. Wentworth City Ci.erk Phone (714) 536-3405 NOTICE OF PUBLIC MAIN CITY OF WNTINGTON BZACH VARIABLE RATE DEMAM MULTIFAMILY HOUSING REVEW-tZ BONDS (MZSCU Y SAVINGS AND IY,OAN ASSOCIATION/VILLAGE PARTNERSHIP PRWECT) NOTI vE 15 9ERSBY GIVEN that on August 18, 1986, at the: hour of V 7:30 p.m. or as soon as possible, in the Council Chambers, 2000 Main Street, Huntington Beach, California, 92648, the City Council of the City of Huntington Beach will hold a public hearing on the proposed t issuance of the City's Variable Rate Demand Multifamily Housing Revenue Bonds (Mercury Savings and Loan Association/Village Partnership Project), 1986 Serias A in the aggregate amount not to exceed $7,700,000. Said bonds relate to the proposed financing of a multifamily residential rental project to be owned by Village Partnership, a California general partnership, consisting of approximately 114-units located in the City of Huntington ?each at. 16171 Springdale. All interested persons are invited to attend said hearing and express their opinions fov or against the proposal. Further information may be obtained from Stephen *.Kohler, seni-�r Redevelopment Specialist - (714) 536-55•12. Dated: July 27, 1986 HUNTI`TGTON BEACH CIT;.' COUNCIL By: A1iCia M. Wentworth City Clerk Phone (714) 536-5405 • 1 i RESOLUTION NO. 5700 t RESOLUTION OF HE CITY COUNCIL Of THE CITY OF HTINTINGTON BEACH AUTHORIZING SALE OF NOT TO EXCEED 471700, 000 PRINCIPAL AMOUNT OF VARIABLE RATE DEMAND MULTIFAMILY HOUSING REVENUE BONDS (MERCURY SAVINGS AND LOAN ASSOCIATION/VILLAGE PARTNERSHIP PROJECT), 1986 SERIES A, APPROVING RELATED DOCUMENT; AID OFFICIAL STATEMENT APPROVING BOND COUNSEL AGREEMENT AND AUTHORIZING OFFICIAL ACTION WHEREAS, the City of Huntington Beach (the 'City') proposes to issue its City of Huntington Beach Variable Rate Demand Multifamily Housing Revenue Bonds (Mercury Savings and Loan Association/Village Partnership Project), 1986 Series A (the *Bonds'), in the aggregate principal amount of $7,700,000, under and pursuant to Chapter 7, Part 5 of Division 33 of the California Health and Safety Code, as amended, in order to provide financing to Village Partnership, a California general partnership (the *Developer') for the acquisition and construction of an approximately 113-unit multifamily residential rental project: to be located at 163.71 Springdale (the 'Project') in the City; and The Developer is an affiliate of The Villages West, Inc., the entity named in the City's inducement resolution no. 5661, passed and adopted on May 19, 1986; id The Bonds are to be issued under and pursuant to an Indenture of Trust (the "Indenture'), dated as of August 1, 1986, between the City and Seattle -First Nati.)nal Rank, as trustee (the *Truistee"%, and prior to their a version to a fixed interest rate, the Bonds are to be remarketed pursuant to a TENH Service and Remarketing Agreement, dated as of August 1, 1986, among the City, the Developer, Bankers Trust company and Mercury Savings and Loan 1. 1 Association (the "AAsociation. ); and ,. Pursuant to the terms of a proposed Regulatory Agreement and Declaration of Restrictive Covenants dated as of August 1, 1986, among the City, the Association, the Trustee and the Developer (the '"Regulatory Agreement"), at least 254 of the ,d�gelling units in the Project are required to be leased or rented to persons or families of low or moderate income (of which at least 104 are to be leased or rented to persons or families of very low income); and The proceeds of the Bonds are to be loaned to the Developer under a Loan Origination and Servicing Agreement dated as of August 11 1986, by and among the City, the Trustee, the Association and the Developer (the "Loan Agreement") pursuant to which the City has agreed to lend the proceeds of the Bonds to the Developer to enable the Developer to finance the Project; and The obligations of the Developer' under, the Loan Agreement are t.o be secured in part by a letter oL credit issued by the Association; and The City Council has heretofore called and conducted a public hearing on the issuance of the Bonds as required by Section 103(k) of the Internal Revenue code of 1954, as amended; and Bancroft, Garcia & Lavell, Inc. and Bankers Trust Company, as underwriters (the "Underwriters') intend to submit an offer to pruchase the Bonds; and The City approves of sail transactions in the public intareac of the City; NOW, TdEt�EFt�f�E, BE IT RESOLVED by the City Council of the City of Huntington Beach as follows: 2. jI A . r, 7 'M1 SECTION 1. Findings and Declarations. The City Council hor*by finds and ericlar+es that the financing of the project f rom the proc**ds of the Bonds as herein described servcs the public purposes of assisting persons and families of low and moderate income and very low income within the City to afford the casts of decent, safe and sanitary housing. The City council further hereby finds and declares that this resolution is adopted pursulant to the powers granted by Fart 5 of Division 31 of the Califarniu Health and Safety Code, as amended, and, in particular, Chapter 7 thereof. SECTION 2. issuance and Bale of ponds. The City Council hereby authorizes the issuance of the Bonds pursuant to and in accordance with the terms and provisions of ;she indenture, all of which terms and provisions are incorporated herein by reference. The ;ponds are hereby authorized to be sold to the Underwriters, pursuant to and in accordance with the terms of an agreement (the 'Bond Purchase Agreement') in substantially the form on file with the City Clerk, by and among the City, -.he Developer and the Jnderwriters. The City Administrator is hereby authorized and directed to approve the terms of and accept an offer to purchase the Bonds which is acceptable to the City Administrator, and to execute the Bond Purchase Agreement for and in the name and on behalf of the City; provided that the Bonds shall be sold to the Underwriters for a price not less than ,ninety-five percent (95%) of the part amount thereof. SECTION 3. Indenture. 'the indenture, in substantially the form presrnte� to the City Council at this meeting, together with any additions thereto or changes therein deemed necessar!,T or advisable by the City Administrator upon the advicr� of bond 3. i counsel # is hereby approved. The City administrator and the City Cloak are hereby authorized and directed to execute and deliver the Indenture for ano in the name and on behalf of the City. SECTION 4. Loan Agreement:. The Loan Agreement, in substantially the form presented to the City Coanci.l at this meeting, together with any additions thereto or changes therein. deemed Necessary or advisable Ly the City Administrator upon the advice of bond counsel, is hereby approved. The City Administrator and the City C`lerk are hereby authorized and directed to execute and dali.ver the Loan Agreement for an in the name and on behalf of the Ci't%'. SECTION R. Regulatory Agreement, The Regulatury h9reement, in substantially 4he form presented to 4he Cite Council at This meeting, together with any additions thereto or changes therein deemed necessary or advisable by the City Administrator upon the advice of bond cuunsel, is hereby approved. The Ci�y IAdministrator and the City Clerk are 'hereby authorized and directed to Pxecute and deliver to the Regulatory Agreement for and in the name and on behalf of the City. SECTION6. Remarketing Agreement. The Remarketing Agreement, in substantially the form presented to the City Council at th .neeting f together with any additions thereto or changes therein deemed necessary or advisable by the City Adr-rinistrator upon the advice of band counsels is hereby approved. The City Administ.r.uttor and the City Clerk re herby authorized and directed to execute and deliver the Remark 2t:ing %agreement for and in Lhe name and can Delialf (if the City. SECTION 7. Otf icial Staten;en•4. The final official 4. L 4tetement relating to the Bands, to be dated as of the date of the Band Purcbas* Agreement, substantially in the forts presented at ... this meeting, is hereby approved and the City Administrator of the City is hereby authorized and directed to execute said official statement for an in the name and on behalf of the City, and to approve airy additions to or changes in the form of sPid official statement as the Ca.ty Administrator may deem necessary or advisable, such approval to be conclusively evidenced by the execution of said official statement, as so added to or changed. The Underwriters are hereby authorized to distribute copies of said official ;statement (as so added to or changed) in connection with its reoffering and resale of the Bonds. Distribution by the t.cnderwriters of the p;:elimin,ary off icial statement relating to the Bonds is hereby, confirmed and ratified. SECTION 8. Employment of Bond Counsel. That certain agreement for bond counsel services between the City and Jones stall Hill fi White. A professional Law Co;:poration, as bond counsel, is hereby approved and the City Administrator and the City Clerk are hereby authorized to execute and deliver said agreement. for and in the name nnd on beh-alf of the City. SECTION 9. Official Action. All actions heretofore taken by the officers and agents of the city with resUact to the sale and issuance of the Bonds are hereby approved, confirmed and ratiiied, and the Mayor, the C-;.y Clerk, the Fir►ance Director, the city Administrator, :he City Attorney$" the Principal 'Redevelopment Specialist, t-.he Director of Admin:st raitivc Set:vir:es and ar.y Ind all i other officers of the City are hereby authorized and directs.-d, for and in the name and can behalf of the City,, to do any and all things 5. 1 and Itake any and all actions relating to the execution and delivery of any an4 all certificates, requisitions, agreements and other documer.5tn, including but not limited to those described in the Bond Purchase Agrreement, which they, or any of them, may deem necessary or advisable in order to consummate the lawful issuance and delivery of the Bands in accordance with the Bond Purchase Agreement, the Indenture and this resolution. Section J.U. Effective Date. This resolution shah, take effect from and after its adoption. PASSE?". AND ADOPTED by the City Council. of the City of Huntington Beach at a regular meeting thereof held on this �19th day o.f W—August �r 1966. ...�,r... Mayor - - --- ATTEST: APPROVED AS TO FORM: J r • City Eorney REVIEWED I,AD APPROVED: IN I!,?aE 1�.. ty Adminl strator W 6. ri 7N1QA.T'PIA ministrator �r ,i:iA+e+rr�•; Y•rrakb".•ec l "•.' i C,fyY+i �. , r , r ,.. �,.�,'R . fie. �700 _ STATE (WCL cam a ,t t ern or Owimm 29ArM ' 1. ALICIA M. liizRIgidtyUR, tiie duly elected, getalified City Clerk of the City of Huntington Beach, and ex-officio Clerk of the City Caalacil of raid City, do hereby certify that the whole number of where of the City Council of the City of Huntington Beach is heve•n; that the foregoing reepolutiom was passed and adopted by the of f irmat , ve vote of more than a majority of all the members of said City Council at a regular meting thereof held can the �18t:h day. of August 19 86 , by the following .,ote: AYES: C.oustncilmtu: MacAllister, Finley, Miandic, Bailey, Green NOES: Counc• i' Men : Thomas ABSENT: Counc i l meti : • Kelly --- Cary Clerk and ex-offieiu Clerk of the. City Council of the Cite of liuntinFtcn Beach, Calif o-. xvi i Ir death: RESOLUTION NO. 5701 A RESOLUTION OF THE CITY COUNCIL OP THE CITY OF HUNTINGTON BEACH GIVING PUBLIC APPROVAL FOR THE ISSUANCE OF BONDS FOR VILLAGE PARTNERSHIP, A CALIFORNIA GENERAL PKRTNERSHIP Be it resolved by the Council of the City of Huntington WHEREAS, the City of Huntington beach (the '"City") proposes to isjue its Multifamily Housing Revenue Bonds (Mercury Savings and Loan Association/Village PartneKship Project), 1986 Series A, in the aggregate principal amount of not more than $7, 700, 001), and to enter: irito a Doan Agreement to lend the proceeds thereof to Village Partnership, a California general partnership for the purpose of financing the acquisition end improvement of an approximately 113--unit multifamily residenti.al rental facility (the "Project:") to be located at 16171 Sp.i.ngdale in the City of Huntington Beach. Section 103 (k) of the Internal Reve nue Code of 1954, as amended, require-s that the City Council shall approve, after public hearing following reasonable public notice, the issuance of bands by the City for such purpose. This Council is the applicable elected representative of the City, and it has duly called and conducted a hearing on said financing notice of which has been given in accordance with said Section 103(k), and all personn requesting to be heard have been heard, W NOWR THEREFORE, the City Council of the City of Huntington Beach hereby finds, determines and declares that the Loan Agreement, the Project and the issuarkr-, of bonds by the city 1. 1 I Y 7.7 I" in an aggr"ato principal amount not to exceed O, 700, 000 for the s• financing therefor be and are hereby approved. c a: PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a regular meeting thereof held on the 18th day of August s 1986. ATTEST: 1 t y� C . e t f. ..�.....____,..1.,.. O REVIEWED AND APPROVED: �...w y...r .,,►rr k " I rit�+,�...�r. city Administrator w 2. 4 Manor APPROVED AS TO FORM: .�' V f,City Attorney INITIATED XHD APPMV ooe Ffluty .Y R . nistrator I V,1" M. Res. 5701 ITATZ air CALVOMMi C M 0 QUOU ' CUT aW 9MMM 1 Is ALICxA M. WLiRZVOUR9 the duly electee, qualified City Clerk of the City of H mt ington btat;", and ear -off is io Clerk of the City Council of *aid City, du hereby certify that the whole number of hers of the City Council of the City of Huntington beach is seven; that the foregoing resolution was passed and adopted by the affirmative vote of more than a majority of all the members of said City Council at a regular teeecting thereof held can the 18t.h clay. of ,. August 19 86 _,, by the following vote: AYES: Coanc ilsn n: MacAllister, Finley, Mandic, Dailey. Green, Mrs: Councilmen: Tt'+r3me: ADSEW : Councilmen: Ke11y-....4��� .Iil•M.w�+..wwY4Y.WIr�M1 !� ___ ��,,,l��y,�yy,Y,�,w ��. ww.M.. City Clerk and ex•-off.ir_" o Clerk of tht City Council of the City of Huntingtcm Beach, Ctlifoniia w A REQUES i FOR CITY COUNCIL ACTION R H 86-6 3 - Daft _ t%ugusr, 4. I -Sao Wmaw to: Memorable Mayor and City Council Members APPROVED nor CITY COur►� •,1L. •� �. .- _........... r... 19 ..... eiW by: Charles 4'. Thompson, City Administrator Douglas N. LaBelle, Deputy City Administrator/Rcdeh1pow by: ,7''�i,j;Y Subject: TAX EQUITY AND FISCAL RECOVERY ACT HEARING AND APPROVAL OF DOCUMENTS FOR TAX EXEMPT FINANCING FOR :14 UNIT APARTMENTS: "THE VILLAGwS" � . 1"7aU ,S Consistent with Council Policy? Yes [) Now Poiicy or Exception ,� 0/ Statement of !%ue, Reoornff endution, Anslys's Funding Sources, Alternative Actions, Attachments: w I�f STA I'7WENT OF ISSUE: On May 19, 1936, the City Council approved an inducement resolution to provide flax exempt financing; for the subject project. Since that time, staff has worked with the developer, the Underwriter, and Bond Counsel to prepare the documents necessary to conclude this financing. The authorizing resolutions for this financing are presented herewith for the Council's consideration. RECOh1Mt;NDATION: Approve and authorize the City Clerk to execute the attached resolutions which approve the provision of $7.7 million in tax exempt financing for The Villages project, authorizes the appropriate city officials to execute the financing, documents (including; the Purchase Contract), and establish#,s a policy that this project will provide twenty -.live percent of its units to lower income households. ANALYSIS: As part of the city's on -going tax exempt finance program for multi -family housing, "The Villages" project was induced by a resolut ion of the City Council on hlay 19, 1936, for a Vnancing not -to -exceed $+8 million. Since that time, staff has worked with t-.e developer, Bond Counsel, and the Underwiters to prepare the documents necessary to conclude this financing. The resolutions that will approve these documents arid authorize the sale of the bonds are transmitted herewith for the Council's consideration. 111'he Villages" project is located at the corner of Springdale and Edinger, is comprised of 114 units, and will be exclusively for senior citizens. Entitlements for the project were approved by the Planning; Commission on April 12 1936, and the developer anticipates that r_onszrtiction would Commence shortly after the successful closing of this bond issue. The issue is scheduled to close as early as the end of August. This; could be the first multi -family fin, rncing closed in the state of California under the provisions of the Tax Refcrm Act (as its provisions are now anticipated) and new state law that requires that the Issuer determine if the project shalt provide affordable housing; u��its as either: "'P F110 &W '` 0 RH 96-63 August 8, 1936 Page Two A) Twenty percent (20%) of the units occupied by households earning no more that seventy percent (70%) of the median income for the county, or.!! -half (10% of project units) of which will be orcupled by households earning no more than fifty percent (50%) of the median income of the county. The very low income household's income will be adiu.ited for household size and they shall not pay more than thirty percent (30%) of their income for rent. OR B) Twenty-five percent (25%) of the units occupied by households earning no more: than eight percent (80%) of the median income for the county, with ten percent of the Wits occupied by very low income households as described above. The Tax Code previously required that twenty percent (20%) of the units in a bond financed project be occupied by households at eighty percent (80%) of median income witli no adjustments for household size or l.t-rcent of income paid for rent. Therefore, these new requirements are more stringent. Consistent with the Developer Agreement approved with the entitlements .for this project, the policy outlined in "E" above be applied to this project. It is important to note that this policy choice will need to be made on a case--by-case basis for all bond financed multi -family projects in the future. THE DOCUMENTS APPROVED HEREWITH HAVE BE_FN DRATTED TO CONFORM TO THE PROVISIONS OF THE TAX REFORM ACT AS AN:"IC:II-ATED. ANY SIGNIFICANT CHANGES IN THE FINAL VERS.ON OF THE ACT WILL. AFFECT CERTAIN PROVISIONS OF THESE DOCUMENTS AND MAY REQUIRE SUBSEQUENT OFFICIAL ACTION BY TIME COUNCIL,. Substantial final form documents are on file with the City Clerk's office for Council review. ALTERNATIVE ACTIONS: Do not approve the attached resolution. This will pre-empt the provision of tax exempt financing for the project. FUNDING SOURCE: Costs of issuance to be paid from bond proceed-s. Developer has submitted required deposit with city. City will receive the one-half of one perr._ent issuance fee upon closing of the issue. ATTACHMENTS: lzcsclutions. CWI*/GLB/SVK:...ar 0007r �t TO: A l i c i at W e n t w o r t h FROM : City Clerk Princ nba' gedev- etoppectwliRt DATE: 5 August 1986 51JBJ ECT : SUBSTANTIAL FINAL FORM POCUMEhTS ; "THE VILLAGES" TAX EXEMPT FINANCING Attached piease find substantial final form 'Wcuments for the subject financing. This ; irnancing wi 1 1 be the rub jec:t of a City Council public ic: hearing 4L the Council " s regu', ar ad jaurned meeting of Monday, 18 Augu:n .vm 1966, and we have let the Council members know that you Sri 1 1 be holdin4 documents ,jhould they wish to review them prior t.0 the hFarinw. As alwayF, I e ppieciate _dour roope'?ratior, and ;-)s"sistance in Lhis maat.ter, and it you should have avv questif.)r,s, do not hesitate to K.KNMXTH 1.Jl NX4 AN D REW C. KALL. Jit. CHAIRLES Jr. ADANG li7'!Cr"N R. CASA WQ0010 WMLL%X H. MAD 18O N rK1LKrr42LA*N I Xit lCDO . N. EADY. JIL PAUL J. THUWTQ ARUN 10. QUINT J4Ri1 M I..• N[RLSEN TRAC'Y K. QONNER JONN PAUL TFt+' MAS •Hf7 Joiqims Hui, & WHITE:. A. r1WVNIM iON" LAM CO1d20 RAT1ON MEMORANDUM! Tc. Those Persons on the Attached Distribution List From: Edsell M. Eady, Jr. Date: August 7, 1986 � r POUR EU13J ROADERO CENTER BULKS low SAN MAMvlaQO 04111 WO) 391•57100 A UTOMA111U TELECOPIIER (416)391.5764 tR08V F T J.1U LL OFCOUNSEL Re: $7,700,00 City of Huntington Beach, California Variable, Rate Demand Multifamily Housing Revenue Bonds (Mercury Savings and Loan Association/Village Partnership Project), 1986 Series A � w Delivered to You with this memorandum are revised, anO substantially filial, drafts of the indenture, the Lozn Agreement and the Regulatory Agreement for the captioned financing. Arrionrl other things, the drafts reflect the preference of the developer to follow the 20% at 701% of median income standard for low and moderate incomA tenants. We gust caution you quite explicitly that the tax concerns raised by proposed Wwal legislation 01111 have; not been resolved. We cannot give you any comfort at this time that the Fonds will be lax -exempt after September 1, 1936. and we will be discussing the implications of our position at the all hands meeting scheduled to occur in Mercury's officas at 9:00 a.m. on Wednesday, August 13, 1986. We remain concerned about the advantages and disadvantage4► of closing this transaction prior to epactment of federal tax reform and will discuss these issues fu, ther with you at our meeting. We have also received information that it is possible, that all housing (single and multifamily) bonds will be planed under a volume cap for housing bor:ds only. if that were to emerge as the Conference Committee decision, it would be extremely unlikely that we would receive any volume allocation from the Slate of California (which has been and remains a prerequisite to issuance of the Bonds under present California law as well as proposed Federal la.w). It Is also possible that Mond issuers such as the City will b4 required to take some further odicial action subsequent to or in conre►;tinn with on,, of volume cap POUR EU13J ROADERO CENTER BULKS low SAN MAMvlaQO 04111 WO) 391•57100 A UTOMA111U TELECOPIIER (416)391.5764 tR08V F T J.1U LL OFCOUNSEL Re: $7,700,00 City of Huntington Beach, California Variable, Rate Demand Multifamily Housing Revenue Bonds (Mercury Savings and Loan Association/Village Partnership Project), 1986 Series A � w Delivered to You with this memorandum are revised, anO substantially filial, drafts of the indenture, the Lozn Agreement and the Regulatory Agreement for the captioned financing. Arrionrl other things, the drafts reflect the preference of the developer to follow the 20% at 701% of median income standard for low and moderate incomA tenants. We gust caution you quite explicitly that the tax concerns raised by proposed Wwal legislation 01111 have; not been resolved. We cannot give you any comfort at this time that the Fonds will be lax -exempt after September 1, 1936. and we will be discussing the implications of our position at the all hands meeting scheduled to occur in Mercury's officas at 9:00 a.m. on Wednesday, August 13, 1986. We remain concerned about the advantages and disadvantage4► of closing this transaction prior to epactment of federal tax reform and will discuss these issues fu, ther with you at our meeting. We have also received information that it is possible, that all housing (single and multifamily) bonds will be planed under a volume cap for housing bor:ds only. if that were to emerge as the Conference Committee decision, it would be extremely unlikely that we would receive any volume allocation from the Slate of California (which has been and remains a prerequisite to issuance of the Bonds under present California law as well as proposed Federal la.w). It Is also possible that Mond issuers such as the City will b4 required to take some further odicial action subsequent to or in conre►;tinn with on,, of volume cap .� r1 f _ � 4 1 • I } ern � � � � - � ,4 � ! � * .. � � ,� � .+� h 10t*-ts JHHW EME pab DISTRIBUTION LIST 07 2s-ea 0b'04M E F2115 $7,7OO9000 CITY OF HUNTING'S ON BEACH, CALIFORNIA VARIABLE RATE DEMAND MULTIFAMILY HOUSING REVENUE BONDS (MERCURY SAVINGS AND I.GAN ASSOCIATION/ VILLAGE PARTNERSHIP PROJECT) 1986 SERIES A ISSUER -Mr. Stephen V. Kohler Principal Redevelopment :specialist City of Huntington Beach 2000 Main Street Huntington Beach, California 92646 (714) 536.5511 (2 copies) BOND COUNSEL -Edsell M. Eadv, Jr., Esq. • ,tones Hall Hill & White A Professional Law Corporation Four Embarcadero Center, Suite 1950 San Francisco, California 94111 (415) 391-5730 Telocopiar (415) 391.5764 DEVELOPER -Mr. T. Danlel Noveau -Mr. William L. Seay Village Partnership 1810 - 14th Street Suite 207 Santa Monica, California 90404 (213) 450-6999 Mr. Nzraveau (213) 385-54 t 4 Mr. Sea; DEVELOPER'S COUNSE! .Sherman L. Stacey, Esq. Law Offices of Sherman r-. Stacey 1299 Ocean Avenue, Suite 330 Santa Monica, California 90401 (213) 394-' 163 LENDER -Mr. Robert B. Kreeger -Ms. Lauren R. Haines -Mr. Gerard P. Berens -Jero,11e jam(,;,, cst;. ,Mercury Savings and Loan Association 7812 Edinger Avenue Huntington Beach, Califomia 92647 (714) 842-9333 Telec:opier (714) 848-9606 (714) 841.8398 Mr. Robert B. Kreeger (714) 841.8683 Ms. Lauren R. Haines (714) 841.8243 Mr. Gerard P. Berens (714) 841-8423 Jerome 7-amos, Esq. LENDER'S COUNSEL. -Arnold P. Schuster, Esq. -Carol L. Johsnon, Esq. -Kirk A. Schaffer, Esq. Pettit and Martin 101 California Sir eet 35th Floor San Francisco, California 94111 (415) 434.400 3 1'elecopier Kl5) 781-433-9 or Telecopier (415) 982-4608 OR lNYDERWRfTERS Alr. James S, Bancroft Bancroft, Garcia, & Lovell, Inc. 2029 Cerfury Park East Suite 3750 Los Angeles, California 90067 (213) 556-8890 -Mr. Ira Goldberg Banker's Trust Company 130 Libe'ty Street 3 ► st Floor New York, Now 'Mork 10006 (212) 775-2445 Telecopier (212) 850-1852 -Mr. Peter Kelly Banker's Trust Company 400 South Hope S'.reet Los Angeles, Dalifomia 90071-2888 (2-13) 6'12-8286 Telocopier (t 13) 612-8.221 UNOERWRITER'S COUNSEL -Robert H. Baker, Esq. . Jones, Day, Reavis & Poa:,c: 355 South Grand Avenue suite 3000 Los Angeles, California 90071 (213) 625.3039 Telecopier (213) 253.4439 (:13) 253-4440 -Ron Rodgers, Esq. Jones, lay, Reavis & Pogue 2029 Century Para, East ;quite 3600 Los Angetes, California 90067 (213) 553.3939 Telecopler (213) 201.3939 IPA TRUSTEE -Mr. David Pringle Assistant Vice President -Mr. Jssse Mtinkert Trust Assistant Seattle -First Nationai Bank 1001 Fourth Avenue, Ninth Floor Seattle, Washington 93154 (206) 583.2966 (Mr. Pringle) (206) 583-7130 (M(. Minkert) rRUSTEE'S COUNSEL -Sam Waldman, Esq. 64 Oak Knoll Drive San Anselmo, Californla 94960 1415) 459.4 35 RATWC AGENCY -her. Thomas Gillis I'tandard R.� Poor's Corporation 25 Broadway Now York, Ne,,v York 10004 (21.2) 208-8000 COLLATERAIL AGENT -M�c JU01.1 Sweet First Interstate Bank of California Trust Division 9301 Wilshire Boulevard Beverly Hills, California 90210 (213) 858.5520 'felecopier (213) 858.1446 -Mr. Robert Hainey First Interstate Bank of California Trust Division 707 Wilshire Boulevard, Ninth Floor Los Angaies, California 90017 (213) 614-4802 Telecopier (21:3) 614.4820 .N AA v , :�"+ s�;,,� , w� past s y �Y, �t r f Iv ' ,..,. _�. ,qr( ,� rf•! `+{ f� °��!i' � r'if,r iti `'" � �rlilf�'j ° .fi1'i4�, � + �, � � S ,1Y:'i• S rt,, . � � � •,� '� r � ., �'�� � i��;� ��,f{r �+1:?,tl ���ti�;r j r .�� itt �� � �v ;; + •' " ' }n : ,,r + ' , ' ' .,, i + �.r }-,t "�r �.1 Y +' �'`$;�:�. � }i'��,! ,� v�tij :�'1 ,+ r�. •w, r �� !' + ,„ e� - .. a = + w At k ` ib01¢1• •)Mi*WEME Fab 0725 N Pr141 • 0d'Ul.ba i INDENTUnE OF TRUST tr*m the CITY OF HUNTINGTON BEACH, CALIFORNIA to SEATrLE-FIRST NATICNAL BANK, as Trustee Dated as of August 1, 1486 CITY OF HUNTINGTON BEACH, CAL.IFORNiA VARIABLE RATE DEMAND M ULTIFAMILY HOUSING REVENUE BONDS (MERCURY SAVINGS AND LOAN ASSOCIATION/VILLAGE PARTNERSHIP PROJECT), 1986 . series A e ti P2161.TOC TABLE OF CONTENTS ARTICLE I DEFINITIONS Smflon10i. Definitions.......................................................................................................... 5 ARTICLE 11 THE BONDS ction 201. Autalorixed Amount of Bonds............................................................................. 15 Section 202. Issuance of the Bonds...................................................................................... 15 Section 203. Registration, Transfer and Exchange................................................................. 18 Section 204. Execution; Limitou Obligation............................................................................ 17 Sectior. 205. Authentication................................................................................................... 17 Section 206. Form of the Bonds............................................................................................ 18 Sew' ion 207. Mutilated, Destroyed. Lost or Stolen Bonds ...................................................... 18 section208. Tempora,'y Bond............................................................................................... 18 Section 209. Cancellation and Dc.struction of Surrendered Bonds .......................................... 18 Section 210. Delivery- of the Bonds ......................................................................................... 18 Section 211. Interest on the Bonds......................................................................................... 19 Section 212. Reset of Option: Fixed Rats............................................................................ 25 Section213. Limitation ...................,......................................................................................28 ARTICLE III REVENUES AND FUNDS Section 301. Sources of Payment of tho Bonds..................................................................... 29 Section 302. Creation of Funds and Accounts....................................................................... 29 Sec: -an 303. initial Deposits................................................................................................. 29 ,tior, 304. Developer Loam Funo........................................................................................ 29 e.;tion 305. Cost of Issuance Fund...................................................................................... 30 Sw%on :305. Application of Revenues.................................................................................... 31 Section 307. W)t Service Fund............................................................................................ 31 Section 307.A. RHserve Account............................................................................................ 32 Section 308. General Fund.................................................................................................... 32 Section 309. Letter of Credit; C iawings Under the Letter of Credit ........................................ 33 Section 310. Final Balances.................................................................................................... 34 ,Section 311. Security of Fcmd's ............................................................................................ �4 Sactio^. 312. Non-Presontinent of Bunds................................................................................ 34 Semion 313. Moneys to Be Held in Tru�t............................................................................... 34 t; w—ion 314. Tender Payments; Tendsr Payments Fund ........................................................ 31 Soc'tion 315. Rights of Sect Off; Equal Security...................................................................... 35 a M r Env ARTICLE IV REVENUES AND APPLICA i ION THEREOF S60on 401. Revenues to Se Paid Over to the Trustee........................................................ 36 SKtion 402. Payments of Principai. Premium and Interest.................................................. 36 .. Section 403. Revenues to Be Held For All Bondholders; Certain Exceptions ........................ 36 ARTICLE V INVESTMENT OF MONEYS Section 501. Investment of Moneys...................................................................................... 37 Section 502. Earnings and Losses......................................................................................... 38 Section 603. Investment Yield Limitations............................................................................... 38 Sec:tlon 504. Rebate of Excess Investment Earnings to the United States ............................. 40 Section 505. Investments; Arbitrage; Special Arbitrage Restriction ....................................... 41 ARTICLE VI REDEMPTION OF BONDS BEFORE MATURITY Section601. Redemption........................................................................................................ 42 Section 602. Mandatory Redemption................................................................................... 42 Section 603. Optional Redomption......................................................................................... 43 Section 604. Authorization to Trustee..................................................................................... 44 Section 605. Partiai Redemption............................................................................................ 44 Section 606. Notice of Redemption....................................................................................... 44 Section 607, Payment Upon Redemption.............................................................................. 45 Section 608. Effect of Redemption...................................................................................... 45 ARTICLE VII PAYMENT: FURTHER /ASSURANCES Section 701. Payment of Principal or Redemption Price of, and Interest on, th Bonds................................................................................................ 46 5ect'on 702. Designation of Additional Paying Agent: ....................................................... I.... 46 Section 703. Further Assurance............................................................................................. 46 Section 704. Immunities and Limitation of Responsibilities of the Issuer ................................. 46 Section705. Stataments......................................................................................................... 46 Section 706. List of they Owners............................................................................................ a7 Section707. Use of Proceeds.............................................................................................. 47 Sactior. 708. Accounting Records and Report....................................................................... 47 Scctioci 70S. Right;, Under 'he Developer loan DocUlTiems and the Coliaterel FledgeAgreement.............................................................................. 47 Section 710. Pos:.(: �sion and Inspection of the Developer Loan Daeumems and the Collaterai Pledge Agreement ................................................. 48 Section 711. Rigms Under the Reg-rlatory Agreement........................................................... 48 Section 712. Dawmination of TSxability: Notice.................................................................... 48 Section 713. Notice to Rating Agent...................................................................................... 48 Section 714. Release of Collater8l....................................................................................... 48 w. i +ram � • ;•,£ R ARTICLE Vill DEFAULT PROVISIONS AND REMEDIES OF THE TRUSTEE AND THE OWNERS S"lion 801. Dotaults; Events of Default................................................................................. 49 Section802. Acceleration ..................................................................................................... 49 Section 803. Remedies; Rights of the Owners........:.............................................................. 50 Section 804. Right of the Owners to Direct Proceedings........................................................ 51 Section $05. Application of Moneys........................................................................................ 51 Section WF. Remedies Vested in Elie Trustee.................................................................. I..... 51 S% in 807. Limitation on Rights and Remedies of the Owners ............................................ 51 Section 808. Termination of Proceedings............................................................................... 52 Section 809. Waivers of Events of Defau;t.............................................................................. 52 Section610. Limitation............................................................................................................ 52 ARTICLE IX THE TRUSTEE Sectiry•, 901. Acceptance of the Trust..................................................................................... 63 Sectieg f102. Corporate Trustr;n 171equired; Eligibility............................................................... 55 Section 903. Compensation of Trustee .......... ......... ........................................ I....................... 55 Section 904. Notice to the Owners If Default Occurs............................................................ 55 Section 905. Intervention by the Trustee................................................................................ 56 Section906. Successor Trustee............................................................................................. 56 Section 907. Designation by the 'Trustee................................................................................ 5E Soctir>n 908. Removal of the Trustee..................................................................................... 5 Section 909. Appointment of Successor Trustee.................................................................... 56 Section 910. Concerning A,iy Successor Trustee ................................................................ 56 Section 911. Designation znd Succession of the Paying Agent; Agreernent With the Paying Agent........................................................................ 57 Section 912. Appointment of Co -Trustee .............................................................................. 57 Section q13. Trustee Protected in Relying Upon Resolution, Etc, .......................................... 58 Section 914. Successor Trustee as the Trustee of the Funds and Accounts, Paying Agent .and Bonn Registrar....................................................... 59 Section 915. Survival of Rights; Indemnification................................................................... 58 Section 916. Rema?keting Agent............................................................................................ 58 ARTIu'LE X SLIPP'.EMENTAL INDENTURES Section 1001. Supplemental Indentures Nr}t Requiring Consent of the Owners ..................... 59 Section 1002. Supplemental indenture: Requiring Consent of the Owner, ...................I......1. 59 Section 1003. Consents to Supplemental lodemilo es............................................................. 60 A r ad M,glow E , Pp e ARTICLE XI PURCHASE AND PLACEMENT OF BONDS Section 1101. Purchase of Bonds at Option of Owners and on ConversioA Date................................................................................................. 612 Section 1102. Remarketing of Bonds: Purchase of Bonds ...................................................... 63 S cation 1103. Funding by the A39ociation.............................................................................. 64 Section 1104. nefaiult by the Association........................................................................:....... 64 Section 1105. Tender Payments........................................................................................... 64 Section 1106. RernaeketkV Proceeds.................................................................................... 64 Section 1107. Protection of Owners....................................................................................... 64 Section 1108. Dolivery of Bonds............................................................................................. 65 Section1109. Trustee's Agent.............................................................................................. 65 Section 1109. Re.gmptions by Association, Cancellation...................................................... 66 Section1111. Repayments ................................................................................I.................. 66 Section 1112. Replacement f3onds........................................................................................ 66 ARTICLE XII AMENDMENT OF THE DEVELOPER LOAN DOCUMENTS OR THE COLLATERAL PLEDGE AGREEMENT Section 1201. Amendments, Etc., to the Developer Loan Documents or the Collateral Fledge Agreement Not Requiring Consent of theOwners........................................................................................ 67 Section 1202. Amendments, Etc., to the Developer Loan Documents or the Collateral Piedge Agreement Requiring Consent of the Owners............................................................................................... 57 Section 1203, R"uired Opinion of Band Counsel.................................................................. 68 ARTICLE XIII DEFEASANCE Section 1301,Defeasancc...................................................................................................... E9 ARTICLE XIu MISCELLANEOUS Section '1401. Consents. Et;.., of the Owners......................................................................... '71 Section 1402. limitation of Rights.......................................................................................... 71 Section 1403. Severabiiity..................................................................................................... 71 Section, 1404. Notices........................................................................................................... 71 Section 1405. Payments Clue on ('';-vr Than a Business Day ................................................ 73 Section 1406. Counterparts.................................................................................................... 73 Y Section, 1407, Applicable Law................................................................................................ 73 SWion140t Captions........................................................................................................... 73 S+E 0on 1409. Calculation of Interest..................................................................................... 73 Section 141 C. Compliance Certificates and Opinions .. •.......................................................... 73 .,%ction 1411. ronrlict With Trust Indenture Act of 1939—..................................................... 73 „, ,,4, y r ,, ,dw, ,.) ��,, ��fa,1. .+ r,;t /-r-.:{�Yf'gf •.I '? , .4:'�. h �'.y.Z'; 1 `` ,:aYfrrt;il,ak + 'kd. ,1 .y;; y ►y:�;y ”; r^'�. �' ;•..f,...r:,., ..t. �,.1 � ,_; i ,':..yy •y• �� r'. r S:r."'r ' �.rRS. +1��' ,a v ,p'X ��.I r�d�ll I r� ld' ,� �. , -.. t , • .. ,. �. ,;'. . Tn' 1 ..,•"i .. a •... "i _.: 1 ' v' J.;. f \ r ;, 'r,, ' " *.3, j,,. •.4. U,� �r'r'1�;' :�.�° 1 I;!. •+4 ;�:', ail ,:,..� '!..'I��j ;,il1 ��,r..1 T .�, ,t, �., .�., I ,;v .�. r�' r ;., r�� •M�:� :•r.,t,. ... ��� 7.,K'.1` ,,�, ,1, ,;;i �. },,4 , r, , � �; 1+.• .:. � .,.., , :..y..- � •+ '"ri. !�'•.. �. ;.. Y. 1•r.y.. (•"{„f.R: , � 't' t�G's' '+'�'h +��� :C ' 1.'i ; ��} . \ h `r+. .� � ..,f.r ,f',,,'i! .�r � ' �'(5 �' P�•r. 7.L .: .: � T, .• � � �'r�' ,.��,.,•- '.,.:,.. .. :.:� .J r y. 'i `i"h•?7 .i� t r..J•� ,: 1 'e.�i. 'r. ,• ++ '';•.+ �•';•'• .; .:II p, f 1: ! .,. ,t.�4 M is ° •t t, n� �' :��'. y � yt\�. .rf`ry `'� '�. 1C t'I. 1��{�O;yg !v A ..rr. . ..:I i. �•:'.i •'..-� f t Rl( fi' 1' T� 1 �.J"+ I AI,h. 1. 'i •'..R..r }} '. "i y�} k� }} �, 1, �� � :r 7 I�:I't'' / .i, :'S.n,'�' e• `�ri' \ ,`: :{•, l.4., '.}. 7.. ���# r !' � 1.,. •,'A i'.�'�9. Y., ti:+ P, r is ',.' fo ✓. �1 q•.}. r •s. S . r {r^ .1. .:��' '[r: y ,'�ir r' r' FJt bt �' ,4:� „t' "�1�1 � �4'� r{�� f � `�• r �' � �1± 1- { � 'r �l •� M '* 1 Y i.' • , Jr i . � J • �' 1 y '� t ~J Ll Y- r' ' 4, r � � I�1 �i 1 i { f + • �'. I F r 1 .. r, L. •fir i ' .I: •� 1i.. ;, " ,r � .. - + 7 � r l . I .I 1/• �• � •a n � r r r T r. r w +C x , 1.f 1 y .0 `. r• � � A - ` ,� � - •. ` • I+ � J •,� T, rS�. + 7 �'1. j ~�1 y a'�( + ai ��7� �1�. � �• 'tl `t.. i. � * ` / TA f' Y r �\ .. t �. • ! .1�. i !fir •.�- y,., • .4 ,41 - / J y) . - r .� r• 1 h j T�• C INDEPITURE OF TRUST This INDENTURE OF TRUST (the "Indenture"), dated as of August 1 1986, City of Huntington Beach, California, a municipal corporation and charter city duly organized and existing under- the laws of the State of California (they "Issuer"), and Seattle -First National Bank, a national banking association organized under the craw= of the United States of America (together with any successor trustee serving as such pursuant to this Indenture and any separate or co -trustee serving as such hereunder, the "Trustee"). WITNESSETH THAT: WHEREAS, the Issuer is authorized pursuant to Chapter 7 of Part 5 of Division 31 of the Health and Safety Code of the State of California, as amended (the "Act"), to finance the construction or development of multifamily rental housing and the provision of capital improvements in connection therewith through the issuance of tax-exempt bonds; and WHEREAS, the Issuer has heretofore determined to adopt and implement a multifamily housing program (the "program") under which the Issuer will make a loan (the "Developer loan") to Village Partnership, a California general partnership (the "Developer"), to provide financing for a multifamily residential rental development (the "Project") located within the City to be occupied partial!y (at least 200i,) by persons of low or moderate income within the meaning of Section 103(b)(12)(C) of the Internal Reverkle Code of 1954 (the "Code"), as amended, and partially (at least 10%) by persons of very low ;ncorne within the meaning of the Act; and WHEREAS, the Issuer desires to issue, sell and deliver its Variable Rate Demand Multifamily Housing Revenue Bonds (Mercury Savings and Loan Association. Village Partnership Project), 1986 Series A (the "Bonds") in the aggregate principal amount hereinafter set forth to obtain moneys to carry out the Program and to pay the tests of ISGU;ng the Bonds and financing expenses, all under Pnd in accordance with the Cuostitutior. and laws of the State of California, including the Act; and WHEREAS, the City Council of the Issuer (the "City Council") it") has expressly determined and hereby confirms that the issuance of the Bonds and the implernentation of the Program will accomplish r. valid public purpose of the Issuer by assisting persons of low and moderate income in obtaining decent, safe and sanitary housing; and WHEREAS, in order to irnp!ement the Program, the Issuer has heretofore entered into a loan Crig?nation and Servicing Agreement, dat,ad as of even date herewith, with Mercury Savings and Loan Association, a State chartered savings and loan association (the "Association"), the Developer and the Trustee (the "Loan Agreement") pursuant to which the Issuer has agreed to make, and the Developer has agreed to accept, the Developer Loan to be originated by the Association pursuant !o the Loan Agreement to provide financing for the Project, and in connection with such loan, and in accordance with the letter of Credit and Reimbursement Agreement (the "Reimbursement Agreement"), dated as of even date horewith among the Developer, the Trustee end the Association, the Association has agreed to deliver to the Trustee: for the benofit of the owners of the Bonds a dire;•t pay letter of credit Qhe "Letter of Credit") further secured by a collateral pledge agreement (the "Collateral Pledge Agreement"), datod as of the Delivery date by and among the Issuer, the Trustee, the Association and First Interstate Flank of California as Collateral Agent, provided by the Association to the Trustee; and WHEREAS, the execution and delivery of this Indenture and the issuance and sale of the Bonds have been in all respects duly and va5dly authorized by Resolution No. _,_ duiy adopted by the Issuer on August 16, 1986; and ' Rol% L WHEREAS, the execution and delivery of the Bonds and of this Indenture have been duly authorized and all things necessary to snake the Bonds, when executed by the Issuer and authenticated and deliverers by the Trustee, duly issued, binding and valid limited obligations, and to constitute this Indenture a valid assignment of the amount pledged to the payment of the principal of, and premium,, if any, and interest on, the Bonds, have been done cnd performed, and the creation, execution and delivery of this Indenture, subject to the terms hereof, in all respects have been duly authorized by the Issuer; NOW TH15REFORE, this Indenture witnesseth that the Issuer, in consideration of the promises, the acceptance by tho Trustee of the trust hereby created, the purchase and acceptance of the Bonds by the purchasers thereof and delivery of these presents and other good and valuable consideration, the receipt of which is hereby acknowleuged, and in order to secure the payment of the principal of, and premium, it any, and interest on, all Bonds outstanding hereunder from time to time, according to their tenor and effect, and the observance and performance by the Issuer of all the ^ovenants expressed or implied herein a,' d in the Bonds, does hereby pledge and assign unto the Trustee, and unto i±s successors and assigns forever and does hereby grant to it and them a security interest in: GRANTING CLAUSE FIRST All right, title and interest of ;he Issuer in, to and under the Developer Loan, the Developer Mote, the, Developer Mortgage, the Developer loan (documents and the Letter of Credit (each as hereinafter defined), including all extensions and renewals of the term thereof, if any, and the Collateral Pledge Agreement, except the Issuer's rights under any of said documents to indemnifications and notice, including but without limiting the generality of the foregoing, the prose,nt and continuing right to receive, receipt for, collect or make claim for any of the, moneys, income, revenues:;, issues, profits and other amounts payable or receivable under or in con ;lion with the Developer Luan, whether payable under the Developer Loan Documents, including the tieve loper Note, the Developer Mortgage, the Letter of Credit, the Collateral Pledge Agreemeni or otherwise, to bring actions and proceedings thereunder or for the enforcement thereof, and to do any and all things which the Issuer or any other person on behalf of the Issuer is or may become entitled to do under the Developer Loan documents c r the CoMaterall Pledge Agreemiant, GRANTING CLAUSE SECOND All right, title and interest of the Issuer in and to all payment; to be received by, or on behalf of, the Issuer from or in connection with the Developer Loan, the Developer Loan Documents, the Latter of Credit and the Collateral Pledge Agreement together with all other Revenues (as hereinafter defined), and all monoys, obligations and securities which may frorn time to time hereafter be conveyed, assigned, hypothecated, endorsed, pledged, mortgaged, granted or delivered to, or held by. the Trustee in any Fund or Account (both as hereinafter defined) established pursuant to the terms of this Indenture, together with inveitmenl earnings thereon; but excluding (a) proceeds of the s,yle of the Bonds required to be deposited into the Developer Loan Fund' #, including investrrwt earnings thereon##, unless the Association defaults under the Letter cr' Credit or the Collateral Pledge Agreement, Of (b) mor;eys held by the Trustee fcr !ha purchase ',f Bonds required 1.0 he purchased by they Trustee and (c) moneys hold by then Trusted in the Excess trtverstrnent Earnings Fue'►d (as hareina►ltor d WWW): and GRANTING CLAUSE TI-AIRD Any and all other property of any name and nature from time to time hereafter by delivery or by writing of any kind pledged or assigned as and for additional i ecurity hereunder, by the Issuer or by anyone on its behalf rur with its written consent, to the Trustee, which is hereby authorized to receive any and all Such property at any and a!i times and to hold and apply the same subject to the terms horec»f. TO HAVE AND TC HOLD all and singular the Trust Estate; whether n,-w owned or hereafter acquNod unto the Trustee and its raspective successors in said trust and assigns forever. IN TRUST NEVERTHELESS., upon the terns and trusts herein set forth for the equal and ratable benefit, security and protection of all present and future Owners of the Bonds. from time to time issued under and s6wed by this Indenture, without privilege, priority or distinction as ±y lien or otherwise of any of the Bonds over any of the other Bonds, except as herein provided, and for the benefit of the Associmion as its interests may appear. PROVIDED, HOWEVER, that if the Issuer, its successors or assigns, shall well and truly pay, or cause to, be paid, the principal of the Bonds and the interest and premium, if any, due or !o Uecame due thereon, at the timer and in the manner mentioned in the Bonds, According to the tru►s intent and meaning thereof, and shall cause the payments to be made into the Debt Service Fund (as hereinafter defined) as required hereunder ur shall provide, as permitted by Article klli hereof, for `.`o payment thereof, and she l we;,' and truly keep, perform and observe all the covenants and conditions pursuant to this towns of this !odenture to be kept, performed and observed :y it, and shall pay► or cause to be paid to tho trustee and all Paying Agents (as hereinafter defined) all sums of money due or to become due to thorn in accordance with the term; and provisions hereof, then, upon such payment and performance, the Indenture and the rights hereby granted shall cease;, determine and be void; otherwise; this Indenture to be and remain in full force and effect. THIS INDENTURE OF TRUST FURTHER WITNESSETFI, and it is expressly declared, that all Bonds issued ?,,tid secured hereunde► are to be issued, authenticated and delivered and Cie Revenues hereby assigned and pledged are to be dealt with and disposed of under, upon and subject to the terms, condition.;, stipulations. covenants, agreements, trusts, uses and purposes as nereafter expressed, and the Issuer has agreed and covenantees, and dons hereby agree and covenant, with the Trustee and with the respective Owners from time to time of the Bonds, as follows: -a• 40 ARTICLE DEFINIVONS Section 1w. Definitions. (a) For all purposes of this indenture except as otherwise expressly provided or unless the context otherwise requires: (1) This "Indenture" nneans this instrument as originally executed and as it may from time to time be supplemented or amended by one or mom indentures supplemental hereto entered into pursuant to the applicable provisions hereof. (2) All references in this Indenture to designated "Articles", "Sections" and other subdivisions are to the designated Articles, Sections and other subdivisions of this Indenture. The words "herein", "hereof', "hereto", "hereby" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to airy particular Article, Section or othet- sut:division. (3) The terms defined in tnis Article have the meanings assigned to them in this Article and include the plural as well as the singular. (4) All accounting terms not otherwise defined heroin have the meanings assigned to them in accordance with generally accepter± accounting principles as in effect from time to time. (5) Every "request", "order", "demand", "application", "appointment", "notice" "statement", "canificate", "consant", or similar action hereunder by the issuer shall, unless tag form thereof is specifica:"; providO, be in writing signed by a duly authorized officer or agent of the Is: surer. (6) A reference to any gender shall be deemed to include one or morn other genders, if appropriate. (b) for all purposes of this Indenture, except as otherwise expressly provident or ur,loss the context otherwise requires - "Acceleration Default" meads an Event of Oefault under the Regulatory Agreement causing the Trustee to take the action set forth in Section 16(d) of the P.egulatory Agreement. "AceourR" means any one or more of the separate special trust accounts created in A►rticia III hereof. "Act" means Chapter 7 of Part 5 of Division 31 of the Health and Safety Code rf the State of California, as amended. "Act of ,bankruptcy" moans the filing of a petition, in bankruptcy (or other commenWamem of a bankruptcy or similar proceeding) by or against the Developer or any general partner of the Developer under any applicable bankruptcy. insolvency or similar law as now or herealter in effect. "Act of 1 ankruptcy of association" means that the Association has become �nst lvent or has failed to pay it S debts generally as such debts become due or has admitted in writing its inability to pay arty of its inuabtedness or has consented to or has petitioned or applied to any authority for the appointment of a receiver. liquidator, trustee or similar official for itselt or for all or any substantial part of its properties or assets or that any such 1trustee, receive;, liqui,1+ator or similar official has been appointed or that insolvency, reo►ganization, arranrjerr.ent or liqu aitiori p►oceedings (or similar prx,Wings) have been instituted by or againvt the Association. •5• �`.40 may'+ "Alternator Credit facility" means a creriit facility other than the Letter of Credit delivered to the Trustee pursuant to Section 5.8 of the Loan Agroement, ir'cluding but not limited to an insurance Oicy, whit;h complies with the requirements of said section. "Alternate Credit Facility" shall c,e .deemed to include any collateral or other a--eements with respect thereto which may required for the satisfaction of all applicable, requirements of said Section 5.8, as provided therein. "Appraisal Withhold Account" means the Account in the Developer Loan Fund by that narne created by Section 302 hareof. "Assocfatlon" means, as the context may require, Mercury Savings and Loan Association, a State chartered savings and loan association, as issuer of the Letter of ("'rerdit, or as the issuer of any replacement letter of credit or Alternate Credit Facility as provides! in Section 5.8 of the Loan Agreement, or as servicer of the Developer Loan under the Loan Agreement, or any successor as servicer of the Developer Loan, or as pledgor of collateral under the Collateral Pledge Agreement. "Band" or "Bonds" means any one or more of the bonds authorized, authenticated and delivered under this Indenture. "Bond Counsel" means an attorney at law or a firm of attorneys at taw of nationally recognized standing in matters pertaining to the tax-exempt nature of interest on bonds issued by states and their political subdivisions accept rble to the Issuer and the Trustee and duly admitted to the practice of law before the highest court of any stag of the United States of America or the district of Columbia. "Bond Peeister" means the registration books required to be maintained pursuant to Sieciion 203 hereof. "OTC" means Bankers Trust Company, Now York, Now York. "Business Day" moans a day which is not a Saturday or a Sunday or a bank holiday under the laws of the United States or the States of Caiifomla, Washington or New York. "Code" means the Internal Revenue Code of 195.4, as amended, together with corresponding and applicable final, temporary or proposed regulations and t?venue ru!inas issued or emended with respect thereto by the Treasury Department or Internal Revenue Service of the Ur,:ter; ,States. All inferences herein to sections, paragraphs or other subdivisions of the Code or the regulations promulgated thereunder shall ba deemed to rn references to correlative provisions of any successor code or regulations promulgated thereunder. "CollaterO' shall have the same meaning specified in the Collateral Pledge Agreement. "Collateral Agent" means the Collveral Agent designated under the Collateral Pledge Agreement. "Collateral Funds" moans proceeds of the Wlateral derived irvtrl List: pursuant to the Collateral Pledge Agreement. "Collateral Pfedgt. Agrmement" means the collateral plodge agreement dated as of even dete. herewith by and arriong the Issuer, the Trustee, the Association and First Interstate Bank of California as Coilateral Agent whareunder the A '. oCirition secures its payments under the Lettar of Crecyit through the pledge of certain collateral. "Commission" means tho SsGu-wits and Exchange Commission. -6. "Completion Cortificate" means the certificate of completion of the Project required to be delivered by the Developet to the Issuer, the Association and the Trustee pursuant to ttie Regulatory Agreement. "Construction Term" means the period prior to the date the conditions to ow%;i-!sion to the Pert Two as set torch in 00 the Dic.bursement Agreement are satisfied. "Completion Data" means the date of the completion of the acquisition, construction and equipping of the Project, a, that date shall be certified a3 provided in the Regulatory Agreement. Vcmtruction Interest Payment Account" nvwis ft Aco mt in the Developer Loan Fund by tit n>srrre p'eate+'! by Swfion 302 hereof . "Conversion Date" means the date on which interest on the Bonds is converted to the Optional Fixed Rate. "Conversion Period" means the period (which shall not be longer than tern (Q) days) specified by the rAveloper (in accordance with the procedures described in Section 211.C.(1)) as the p8006 during which the Developer dosires to convert the rate of interest on the Bonds to the Optional fixed Rate. "Cost of Issuance Fund" means the Fund by that name created by Section 302 hereof. "Costs or the Project" means all costs incurred by the .'ssuer or the Deve!oper with respect to the acquisition, construction, purchase, reconstruction and equipping, as the case may be, of the Project, including, without limitation, the acquisition of property, the construction, purchase, reconstruction and equipping of housing, related facilities and improvements, and all other work in connt+;tior. therewith, and all costs of financing, including, without limitation, the cost of consultant. accounting and legal services, other expenses necessary or incident to determining the feasibility of the Prc;ect, administrative, grid other expenses necessary or incident to the Project and the financing thereof and interest accrued during construction of the Project. "Co -Transfer Agent", "Transfer Agent" and ' fend n: Agent" mean the person or persons appointed as such in Section 1109 hereof, "Counsel" means an attorrioy at law or a firm of attorneys at law (who may be an ernp!oyee of, or counsel to, the Issuer, the Association, (he Developer or the Trustee) duly admitted to the practice of law before the highest court of any state of the United States of America or the District of Columbia. "Debt Service" means the scheduled amoLsnt of interest and amortization of principa! payable during the period of computation on the Eia,i►fs (excluding for purposes of such computation an;, additional interest payable pursuant to %clion 211.6.). "Debt Service Funs!" means the Hind by that narria created by Section 202 hereof. "Delivery Date" means August 29. 1986, the date of delivery of the Bonds to the initial purchaser or purchas:;rs thereat in accordance with Section 210 hereof. "Doliveey Office" means the address of the Tr:r.der Agent established pursuant to Section 1109 hereof. "Designated Purchase gate" has the meaning set forth in Section 1101(a) of this Indentures. "Divermination of Taxability" means the enactment of applicable legislation, or a judgment or order of a corn of original or appeal —a jurisdiction, or a final ruling or decision of the Internal Revenue .7- ..0"A. .db ON Service, in either case to the effect that the interest on the Bonds (other than interest on any Bond for any period during which such Bond is hold by n "substantial user" of any facility financed with the procoods of the fonds or a "ref ted parson", as such temv; are used in Section 103(b) of the Codrr) is iidudable for federal income tiax purposes in the gross incomes of all recipients thereof subject to federal income taxes or the filing with the Trustee of an opirion by Bond Gouniwl to such effect. A judgment or order of a court of original jurisdietioi) or a ruling or decision of the internal Revern ) Service shall to considered final only if no appeal or action for judicial review has been filed and the time for filing such appeal or action has isxpifed. "DwerminaUbn of Unenforceab:,14" means a judgment or order of a court of original or appellate jurisdiction to the effect that the Letter of Credit is unenforceable or any payment thereunder is to be wrt+,heid, enjoined, restricted, restrained or prohibited. -Developer" mean: Village Partnership, a California general partnership. "Developer Loan" rneans the loan secured by deed of trust to be originated by the Association on behalf of the Issuer to the Developer to provide financing for the Project. "Developer loan gocumenfs" rncar►a the 00 Regulatory Agreement, the Loan Agreement, !:IF Developer Note, the Certificate of ;;ont;rooincg Program Compliance, the Developer Mortgage, the Disbursarnent Agreerriont, the Reimbur�i,7in =art Agreement and any other docurrionts or agreements which may be required by the Issuer or the /Association in connection with the Developer Loan, but excluding the Certificate of Continuing Program Compliance a, of any Urne prior to when such certificate is required. "Developer Loan Fund" means th.e Fund by tha! narne in Se,c;ion 302 hereof. "Developer Mortgage" means the Uer d of Trust with Assignment of Rents and Security Agreement with FixtUre Filing granting a mortgage on, and security interest in, the land, buildings and equipment comprising the Project, in substantially the form required by the Loan Agreement, rrinde froin the Deve'oper to a trustee for t'ie benefit of the Trustee and the Association as co -beneficiaries. securing the repayment of the Developer loan and the ohligaticris of the Developer ur:der the Reimbursement Agreement, the Loan Agreement, the Disbursement Agreement, the Regulatory Agreement, and other agreements related to the Proler..t and the financing t: ereoi. "Developer Nate" moans the mate executed by the Developer pursuant to the Loan Agreement. "Disbursement Account" means the r# Account in ft Devekipar Loan Furxi by that name created by Seetkin 302 hsreof. "aisoursernent Agreement` rneans the Project Disb,rrsernent Agreement between the Association and the 136velopar, as referred to in the Loan Agrearnent and pursuant ;o which mor;eys in the Developer Learn FuM will be disbursed to the Developer. "Eligible funds" means any of the following: (i) SeascAvd Funds, (ii) prccoads of the issua,lce of the Bunds or invo~t kVi; on s:n.h proceeds, (ai) proceods of any draw wder tha Letter of Crwio cr any inveshnerat earnings on such proceeds and (iv) Cc feral funds and any investmOnt earr*Vs nit C;ollatwW. Fiords. "Event of Default" means an event sr�:ci!ied in Ftectioil 801 hereof; provided, that for all purpuses •r!ating to this indenture no Event of Default shall ')e deemed to have occurred or to exist except as provided in Section 601. "Excess Investment Earnings" shall have the meaning ascribed to such term in Section 504 hereof. , 12 r r W. "Excess Investment Earnings Fund" ni,eans the Fund by that name in Section 504 haroof. "Fixed Rate Bond" means :any Bond issued, P:uthenticated an; delivered under this Indenture on or after Conversion Dace, exacts :such Bond typing required to be in the form set forth in the Indenture for use on or after the Conversion Date;. "Fixing date" .•shun used with reference to the Conversion Date, means the date on which the Optional Fixed Rate, to become effective as ui sudi Conversion date, is required to be fixed by the Remarketing Agent pursuant to the Remarketing Agreement. "Fund" means any one of the separate special trust funds created in Sections 302 or S" hereof. "General Fund" means the Fund by that name created in Section 302 hereof. "government Obligations" means direct, general obligations of the United Stato. s of America, or arty obligations unconditionally guaranteed as to thn payment of principal end interest by the full faith and credit of the United States of America; provided, however, that the term "Government Obligations" shall not include those obligations having a maturity o, one year or greater which do not pay interest periodically. "Gross Proceeds" sna., _,-_,`n the sum of the following amounts, (i) original proceeds, being the mmounts receive] by the Issuer or Belo; by the Trustee as proceeds of the original issuance cf the Binds (after payment of aft expenses of issuing ,he Bonds): (ii) investment proceeds, being amounts rncr:ived at any time by the: Issuer, the Association, (tie Developer or the Trustee, such as interest and dividand.,, resull'ng frt. m the ink,aVment of proceeds of the Bonds, including profits and less losses rec:civoc on 3uch investments; (iii) amounts, other than original procs~ads and ►nvastment proceeds, hold in an,,, fund or account (including the Reserve Account) and reasonably expected to be used to pay ;principal of or interest an the ;:;ands; (iv) securities or obligations pledged as security for the payment of the Bonds by an ultimate obligo, (or a relatfid person) or the Issuer; (v) paymartts by the Developer under the Developer Loan or by the Association under the Letter of Credit; tvi) amounts used to *pay principal cif or interesi on the Bonds; and (vii) amounts received as a result of investing the a arr►ounts listed ir, clauses (i) through (vi). "Meticement Oate" inearis May 19, 1966, the date official action within the meaning of the Code was taken to provide financing in connection with the Project. "!merest Account" means the account in the Debt Service Fund by that n31ne created by Suction 302 hereof. ";sits -rest Payment f3 ife " means (a) prior to the Conversion Date, any tvlarch 1, June 1. September 1 or Dvc.e►nber 1, rommencing on March 1, 1987, (b) the Conversion Date., (c) after thr4 Conversion Date, any March I or September 1, (d) any Beset Data. and (e) any other date upon which interest cn the Bonds is duel and payable. "Inviesi rent Year" shall mean the twelve-month period beginning on the Delivrrry Date and fjndl-ii 1 on the day next preceding the first anniversary thereof and, thereafter, each twelve-month period commencing on an annivetrsary of the Delivery Date and ending on the d6y preceding the next such anniversary. "Issuer" means the City of Huntington Beach, California, a municipal corporation and charter city organized and existing under the laws of the State of California. .9• ey 1' "Letter of Credit' means the Irrevocable Letter of Credit No. issued by the Association pursuant to the Reimbur;;ement Agreement, or any replacement letter of credit or Alternate Credit Facility provided in accordance with Section 5.8 of the Loan Agreement. M "Loon Agreement" means the Loan Origination and Servicing Agreement, dated as of December 1, 1985, by and among the Issuer, the [developer, the Trustee and the Association. "Nexir.rium Interest Rate" means eleven percent (11%) per year. The Maximum Interest Rate, however, shall not at any time exceed the maximum interest rate permirted by any then applirable lave. "Nonparrpose Obligation" shall mean any security or obliggation (other than an obligation on which 4 interest is excludable from gross income for federal income tax purposes under Section 103(a) of the $ Cade) in which Cross Proceeds are invested and which is not acquired to carry out the governmental purposes of the Bonds. "Operating Expenses" means the fees to be paid to the Trustee and the I=;suer pursuant to the terms of this Indenture, all expeni es and costs (including reasonable counsel fees) incurred by the Trustee and the Issuer in c;or,nedion with the Program or the trust created hereby to 'he extent that the Trus':e ^nd the Issuer are entitled to reimbursement therefor under the terms of thislndenture. the Regulatory Agreement or the Loan Agreement, any amount due to the Association as a fee pursuant to any agreement between the Association and the Developer for maintaining of the Letter of Credit ind servicing of the Developer Loan and any fee to Standard � Poor's Corporation for maintaining the raring on the Bonds. "Operating Lease -Up Loss Account" means the Acc;ocrnt in the Devehmper Loan Fund by that rya * created by .Section 302 hereof. "Optional Fixed pate" means that rate per annum of interest which is vequired to be fixed by the Remarketing Agent on the Fixing Date for the Convc: lion Gate and which is (in the reasonable discretion of the Remarketing agent, having due regard to prevailing market conditions) equal to, but not in excess of, that rate per .annum of interest whic.r will enable the Remarketing Agent to remarket on the Conversion Dater, at a price equal to 100% of the principal amount thr;roof plus unpaid interest accrued thereon to the Conversion Date, all Sonds required to be purchased by the Trustee on the: Conversion Date pu,•suant to Section 1101(c). "Ouftfanding" or "Bonds Ornsionediag when used with respect to the Bcnds, means, as of the time in question, al! Bonds exacutvi by the Issuer and authenticated and delivered by the Trustee ender this Indenture, except: (1) Bonds theretofore cancelled or required to tre cancelled under Secti;sn 209 hereof; (2) Bonds which are deemed to have been paid in accordance with Article XIII hereof; (3) Bonds in substitution for which other Bonds have been authenticated and delivered pursuant to Article li hereof; and (4) Any Unre.idered Bonds. In determining whether the owners of a requisite aggregate principal arnount of Ourstanding Bonds have concurred in any request, demand, authorization, d,rec;tion, n rice!, consent, vote or waiver under the provisions of tliis Indenture, Bands which are owned by the Do, �Ioper, the Issuer, the Association Or any other obligor on the Bonds, or any affiliate of any one of said entities (for the purpose of this •10. 'MON$( .. ' definition an "affiliate" of any specified Person ;Weans .any other Parson directly or indirectly controlling or controlled by or under dire,Wt or indirect common control with such specified Person) shall be disregarded and deemed not to be Outstanding hereunder for the purpose of any such determination. For purposes of this definition, "control", when used with respect to any specified P+orson, means the power to direct the management and policies of such Iverson, directly or indirectly, whether through the ownership of voting securities, by contract, or otherwise; and the terms "controlling" and "controlled" have meanings correlativa to the foregoing. to case cif a dispute as to sucl. right, any decision by the Trustee taken upon the advice of Counsel shall be full protection to the Trustee. "Owner" or "owner". when used, with respect to any Bond issued under this Indenture, means the registered owner of such bond as shown by the Bond Register kept by the Trustee as Bond Registrar. "Paying Agent" means the Trustee or any other bank, or trust company designated pursuant to this Indenture to serve, in addition to the Trustee, as the paying agent or place of payment for the Bonds. • "Permanent Term" means the period commencing at the end of the Construction Term and ending one hundred twant-! ('120) months after the date. of commencement of the Construction Torm. "Person" means any natural person, firm, partnership, association, corporation, !rust, put lic body or otlh.r entity. "Permitted Investments" means any of the following which at the timo are lesal investments for tha Issuer under the laws of the Stale, and to the extent provided by lave, for the moneys held hereunder then proposed to be invested therein: (i) evidences of indebtedness, or obligations the payment of principal of and interest on which is unconditionally guaranteed by the United States and which are }packed by the iu;f faith and credit of the United States, and guaranteed as to ptincipal of and interest by the United States, including: direct obligations of, or certificates of L en©licial ownership fully guaranteed by, the United States Ehport-Impart Bank; certificates of bonefic;ai ownership issued by the Farmers Home Administration; participation certificates issteed by the General Services Administration; guaranteed 'title XI financing of the United States Maritime Administration; mortgage backed bonds and pass through obligations issued and guaranteed by the Government National Mortgaga Association; United States Public Housing Program, United States goverment guaranteed housing notes and bonds; project notes and local authority bonds of the United States Department of Housinc, end Urban Development; Federal i t:using Administration debentures, participation certificates and senior debt obligations of the Federal Home Loan Mortgage Corporation and Farm Credit Sanks (Federal Land Banks, Federal intermediate Credit Banks and Banks for Cooperatives): mortgage, bac'kE:d securities anti senior debt obligations of the Federal National Mortgage Association; and letter of credit•br-,,kee, iss,�es and senior dabt ob�igations of the Student Loan Marketing Association; (ii) evidence of indebtedness of corporations autr►o,rized by 11-ia provisions of Section 1364 of the California Finc:ncial Code: provided such indebtedness is rated, or is on a parity with obligations that are rated, "P•1" and "A-1 +" or batten by the Rating Agents: (iii) repurchase agreements with financial i,ivitutions fully insured by the Federal deposit Insurance Corporation or the Gnderal Savings and Loe n Insurance Corporation, or any broker -dealer with "retail customers" which falls under Lecuritios Investors Protection Corporation jurisdiction, which repurchase agreements are secured by any of they oblications referred to in (i) above, provided (a) such repurchase agreement is collateralized at a. level acceptable to the Rating tgent, (b) the Trustee or a third patty acting soiely as agent for the 'trustee has possession of the collateral, securing such repurchase agreement, (c) the Trustee has a perfected first seicurity intr:rast in the collateral securing such repurchase agreement, (d) the collateral securing such repurchase agt,eemunt is free and c!eear of third party liens, and (e) such repurchase agreement requires the Trustee to liquidate the collateral t4erCuring such iopurchase agreement if the rectuirhd level of collataralization is Writ maintained; (iv) with respect to moneys in the Developer Loan Rind or the Disbursement Account, the Investment Agraement; anl (v) with respect to ,honeys in, the Suasoned -11- 04 t4-7 Funds Acc(vnt, obligations referred to in (i) above or securities rated by Standard & Poor's Corporation at lea$t equal to the rating on the Bonds. "Principal Account" means thv. Account in the Debt Service Fund by that name created by `action 302 hereof. "Principal Office" means (i) when used with respect to the Trusllpe, the principal corporate trust offices of the Trustee, which at the date of this Indenture is located at we3attle, Washington and (ii) when used with respect to uny Paying Agent means the office of such Paying Agent as designated by notice given by the Trustee to the Band Owners and (iii) when used with respect In the Tender Agent appointed pursuant to Section 1109 means the office of such Tende;- Agent as designatad in Section 1109 or by notice given by the Trustee to the Bond Owners, and (iv) when tised with respect to the Remarketing Agent, means the office of the Remarketing Agent as designated by notice given by the Trustee to the Bond Owners. "Program" means the Issuer's multiltamily housing program, as set forth in this Indenture and tho Developer Loart Documents. 'Projec!" means, the multift.,,nily residential rental development to be financed with the Developer Loan, as described in the Hegulatory Agreement. "Purchase DXcr" means the Designated Purch3se Date or the date during the Purchase Period on which the Bonds are purchased or redeemed. "Purchase Period" means the 30-dray perind commencing on the Designated Purchase Date. "rtuafified project Costs" shall have the same meaning specifieu in the Regulatory Agreoment. "Dating Agent" means (A) Standard & r'aor's Corporation so lung a� Standard & Poor'; Corporation shall rate the Bonds, or (B) Moody's Investors Service, Inc., so long as (i) Standard Poor's Corporation shall not rate the Bonds. and (ii) Moody's Investors Service, Iric., shall rate the Bonds, or (C) if neither Standard & Poor's Corporation nor Moody's Investors Service. Inc. shall rate the Bonds. any other nationally recognized debt . -rating agency or bureau which may be acceptable to the Trustee and the Association. "Record gate" means, with respect to any Interest Payment Data on the Bends except• a date for payment of defaulted interesi and except fcr the Conversion Cate, the fifteenth calendar day of the month next preceding such lnter%st Payment Date, unless such day is not a 3%sinew Day, in which care such Record Date shall Nj the Business Day immediately following such fifteenth calendar dray. Wtn respect to any payrnsnt of defaulted interest, a special record dato shall be established in accordance with the provisioosof Section 202 hereof. With respect to the Conversion Date, ;he Record bate shall be the Business Doty next preceding the Conversion Date. "nedemption Price" rneans the price at which a Bond is to be redeerned pursuant to this Indenture. "Regulations" means the regulations with respect to the Code aromtAgated from tim!a to time. by the United States Department of the Treasury. "A-eguletory Agreement" means the Regulatory Agreement and Declaration of Restrictive Covenants, in substantially the form required by the Loan Agreement, by and amor.Q the Issuer, the Trustee, the Association and the Developer. "P imbursement Agreement" means (i) with respect to the initial Letter of Credit, the Letter of Credit and Reimbursement Agreement dated as of the date hereof, between the Association and the -12- aim .04 Deveioper provAin0 for the issuance of the Letter of Credit by the Association and (ii with respect to any otlwr Letter of Credit (atcluding any ."ilternate Credit Facility), the agreement pur&L ant to which a bank- or savings and loan association (or, where relevant, an insurance company) �r,"�� to issue such Letter of Credit or Alternate Credit Facility. "fi1lmorketing Agent" memrs (i) BTC, so losig as EITC shall be required to perform the obligations set forth to be per ni- med bko BTG under Secticn3 3(a) and 5(b)-(f) of the Remarketing Aprea;rient, or ;ii) that Berson,, it any, who rray have assumed (per•,: �ni to 5ectinn 7 of the Remarketing ,agreement) thn obligations set forth t•.� be pedormed by B►* -.hider Sections 3(a) and 5(b)-(f) of the Remarketing Agreement, so lotig as such Person shall be required to perforrn such obligations. "Rer seketing Agirwi oyer:i" means the TENRT, Service and Flemarf.eting Agrenrnent, dated as of August 1, 1986, ainoaq BTC, the Issu ;r, the Association ani2 the Caveioper. ORelserve. Accouni" means the Account by that name within the Debt Servi,:a Fund created by Section 302 hereof. "Reserve Res,jtrirement" means (i) prier to the Corve.sion Date. an amount equa! to 3.250,000: and (ii) from and altar the Warivers:on Date, an amount equal to one hundred eighty-five: days' interest on tho Bonds, cornputed at thrm Opti, final Fixed {date. "Rax*t Date" has the rneanii,g specified in Section 212 hereof. "AtsoMion" me .rib Resolution Nu. x,_• duhi adopted by the lsrwer on August 18, t 986, authorizing the issuance and sale of tho Fonds and the execution of this IndALnture. "Revenues" means the arnounts plec;ged hereunder to the payment of the princ9iii of, and premium, if any, and interest on, .tie Boras, including the fol!awinrg: (i) afl income?, ;evenues, proceeds and other amounts derived from or in connection with the Qevelope� Lean. and the Developer Loan Documents. including ail schaduied payments of thn principal thereof, and !r-West thereon, th,3 Letter of Credit or the Cailat,4ral pledge Agreement and all prepayments, including amounts obtained through the exercise of the remecics provided in the Developer Loan Documents or the: Co!Wtera+l Pt%dge Aii iixx sent upon the occurrence of an ©vent of default thereunder, and all receipts of tho Trustee cr,wiited under the provisions of this Indenture against said amounts payable, and (0) moneys held in t`he.' Funds and Account!; (excluding tt Excess investment Ea,rirings Fund), together with inw3stmetnt earnings thereon received by the Tru ,tea which th6 Trustee is authorized to receive, held and apply t►urs cant to the terms of this Indenture: provided, that "Revn,ajes" dues not include any Tender Payririent.y or any investrr,;:r,t anrnings requirod under the. Di bursertxxit Agre!imrxit ,.r ttwi "1;!irnta:xsemem. t AgreemerV. "Seav,,-nect Funds" means moneys deposited by the Developer with the -Tustee and so J-9sirgnated by the Developer, which moneys ;,hail have been hgid by the T rustt?a for all least 95 days prior to tE.e date the Letler of Credit is drawn upon by the Trustee to make) avaiiabie moneys to be used to make regularly scheduled payments on the Bonds or at least 95 clays prior to the date rotira of prier redemption ii mailed by the i'ruelee to Bondowners cx at Writ 96 Jays prior to ttte date of any iirwxoase in the Fie*,,.ar w Re:Wwxxi+t in corxiectirart with ft Converskm Date or any Reset Date, provided that no Act of Bankruptcy shall have occurred during such 95-days period after such moneys were deposited with the Trustee (the Trustee shall be entitled to rely on a Developer's certificate to the effo, 3 that no Act of Bankmp►c•y has occurred as evidence that no such bankruptcy has occurred). "Sjrritsoned Funds Account" means the account so desit-nateed in the Debt Service Fund. "Slate" r,�eans the State of California. -13. Y is r � � 1.0 04%1� , •.I "5upplernentta! Indenture" means any agreement hereafter authorized and entered int) between the Issuer and the Trustee which amends, modifies or supplements and forms a part of this Inde:.ture. "Tender" and "Tor�dered ", when used %ith respect to any Bond required to bo purchased by the Trustes on behalf of the Association pursuant to Section 1101 means the physical delivery to th? T'rasteo at its Principal Office, or (it the Principal Office of the Trustee shall not be in New York, Naw York) to the Prir•cipal Offico of the Person -appointed as agent of the Trustee pursum to Section 1109 of: (A) the Band recluired to be ;:2 ;.r-ri-t;hasad by the Trusted, duly endorsed =br transfer to the Trustee by the Cywoer of such Bond or iay his attorney -in -fact duly authorized in writir.g, filed with the Trustee, un or prior to the date of delivery of suet, Bond and with the signature of suc;, Owner or such attorney - in -fact guaranteed in writing (in the form provider' on su:h Eond) by a member firm of the New Ynrk Stock Exchange a: ,a commercial batik or trust company incorporated under the laws of the United States, and (B) in the case of any Bonet (other than any Bond required to tie purchased by the Trustee on the Convarsioiil Gate) required to be purchased by the Trustee on behalf of the Association on a Record Date ur at wny time from and after a record Date through and including the next succeeding Interest Payment Date, a due bill in form ard substance satisfactory to the Trustee, for the interest wl".0 wriii b-j duce and payhble in respect of such Bond on such Interest Paymp.nt Dato. "Tencf,cr Aoartt" rnoans the Teneer Agent sppointrd pursuan', to Section 1109 hereof. "Tender Payments" has thr .,,naning ;;pecifisd in Section 1 10 ). "Tender ^ay,monts Fiord" means the Fund by that narne !treated by Suction 302. "TENAa" has the; meaning sp!cified in Section 111.13.2. "T1]:N!R0 Amount" has the; meaning specif ied in SPcIion 211.6.1. "ir'ruitee" means Seattic,-First National Bank or any successor trustee serving as such pursuoni to Section 40;' or 909 mere:! and any ser,arate or co-trust+::e serving aS suCh herounder. '7rust Estate" rneans the property conveyed to the Trustee pursuant to the Grantinc Clauses hemot. "Untendered Bond" means any l3cno as to ~which the Owner hereof has not, as and when required by Section 2';1.i:.1. given rufice of such Owner's desire to retair. such Bond after the Conversion Date. -1d- K THIF BONDS Sectioo 201. Authoniit- i Amount of ponds. No Bonds may be issued under, the provisions of 'his Indenture, except in accordance with this Article. Tha total principa: amount of Bonds that may be issued is hereby expressly limited to S7,700,000, except as prrvided in the second sentence of Section 202 hereof. 1�ect;on 202. issmwice of the Bonds. The Issuer may issue the Sonds following the e•: ecution o' this IndenA:re, and the Trustee shall, at the Issuer's request, authenticate such Bonds and de.,iver them as specified in Such request. No Bonds may be issued under this Indentu, p in addition to ;hosa authorized by Section 201, except Bonds issued on transfer or exchange as prc:rvided in Sackiris !1`.0' � or 9.08, o: Bonds issued in replacement at lost, stolen, mutilated or destroyed Bonds purl! •nr.. to Section .107 or Bonds issued as. replacement Bonds pursuant to Section 1101(c). The Bonds shell be designated " City of FWntington Beach, California Variable fate Dernand Multifamily Housing Revenue Bonds (Mercury Savings and loan Associatior.'Village Partnership Project), 1986 Series A". The Sorids shall be issuable as folly regis%red Bonds without coupons in the minimurn denomination of ,1,000,000 or any intNrai multiple of $100,000 in excess of $1,000,000; provided that i) subject to the approval of the Remarketing Agent, such minirrmr.im denomination prior to the Conversion. date may be S100X00 or any into-gral multiple of $25,000 in excess of S100,000, and -ii) on and after the Conversion Date, Bonds in the minimum denomination of $5,000 or any integral multiple thereof mcy be issued. Unless the Issuer shali otherwise direct, the Bonds shall be numbered as determined by the Prior to the Conversion (late, the form of t`,,c Bond5 and the Trustee': certificate at authe,-rtication to be endorsed t1hereon and the fo►m of assignment to be endorsed on such fronds are to be in substantially the form sot forth on Exhibit A. and hereby made G part hereof, with necessary and appropriate _variations, omissions and insertions as permitted or required by this Indenture. From and after tie Conversion Date. the Bonds, the Trustee's certificate of authentication to be endorsed th-root, and tb(, fcrm of assi nment to be emd,.�rspd on such Bonds are to be in substantially, the farm set forth 0 Exhibit B, and hereby made a part hereof, with necessary and appropriate variations, omissions and insertion-, as permitted or requires: by this Indenture. Son .s authenticated and delivered prior to the Conversion Date shall be dated as of the Delivery Dalo. Bonds authenticated and delivered on or after the Conversion Date shall be dated as of the Conversion Data or tho applicable Reset Dale, if any. interest on the Bonds, shall be payable on the Conversion Cate, if any, and prior to the Conversion Date on March 1, June 1, Beptember 1 o. CA,cwnbcrrr 1, commencing March 1, 1987, and after the Conversion Date on June 1 and December 1 cf each year. The Bands shall rnatur,: ^n Septernbor 1, 2016. Each Bond shall beer interest fr„rn the lat;,r of the Delivery Dam or the most recent Interest Fayme.nt Date to which interest has been paid or made available for payment pursuant to this Indenture. The Trustee or the Co-Transfur Agent shall insert the date of registration and au"..hentication of each Bond in the place provided for such purpose in the form of Trustee's Certificate of authentication to be printed c,n each 9ond. Each Bond shall bear interest on overdue principal at the rate then in effect on the Bonds. The Bonds shalt bear interest at this rates provided in Sections 211 and 212. The principal of, and premium, it any, and interest on, and all Tender Payments with respect to, the Bonds shall be payable in iawfur money of the United Stale, of America, being any coin or currency of the United States of America which, ,-.t the respective dale of payment thereof, is legal tender for the payment of public and private debts, and such principal, premium, if any, and interest shall be payable at the Principal Office of the Trustee, or of ony Paying Agent or successor Paying Agent designated e rmilikk I rl , !, rl` r. 4, 1 pursuant to me terms of this Incienture. The principai of and premiun•#, if any, on each Elond will be payable upon the presentation and surrender of such Bond, when due, at the principal co. porate trust office of the Trustee. Payment of interest on each Bond shall by made to the Owner thereof at the close of business on the Record mate with respect to :h interest payment irrespective of the cancerNgtion of such Bond upon any transfer or exchange thereof subsequent to such Record late and prior to such Interest Payment Date, unless the Issuer shall defcult in the payment of interest due 0.1 such Interest Payment Date. Each interest payment on each Bond (other than the final installment of interest) shall be paid by check or draft mailed to such Owner at his address as it appears on the Bond Register or at such rather address as is furnished to the Trustee (in a notarized writing in a form acceptable to the Trustee) by such Owner at leapt one day prior to such Record [late with respect to such interest payment, or, at the option tit any Owner of at least $1,000,000 in aggregate principal amount of Bands, prior to the Conversion Date, by wire transfer to an account designated by such Owner not less than fire (5) days prior to such Record Date. The final installment cf interest on each Bond shall be paid only upon surrender of such Bond at the Principal Office of the Trustee cr any Paying Agent. In the ovent of any default in the payment of interest, such defaulted interest shall be payabk- to the Owner of ,Such Bond on a special record date for the payment of such defaulted interest Pstablished by notice mailed by or on behalf of the Issuer to the Owners of Bonds not less than fifteen calendar days precedinq :such special record date. No interest shall be payable on any Interest Payment Date in respect of any bond purchased by the Trustee on such Interest Payment Date pur; .,ant to Section 1 1 01(c) or redeemed on such Interest Payment Date, to the extent that interest is included in detormrning the purchase price, or price payable upon redemption, of such Bond. The bonds may be in printod, eng,aved, typewritten or photucopied form. Section 203. Registration, transfer and Exchange. The Issuer shall cause books for the registration and transfer of the Bands (the "Banc' Register"), as provided in this Incienture, to be Item by the Trusteo, which is Hereby constitutad and appointed the Bond Registrar of the Issuer. The registration of ownership o, the Bonds may be Iransferred only in the Bond Register. Upon surrender for transfer of any Bond at the Principal Office of the Ttustea or at the Principal Office of the Cc - Transfer Accent, duly endorsed for transfer or accompanied by an assignment duly executed by the Owner or his attorney duly authorized in writing, the Issuer shall cause to be executed and the Trustee or the Coo -Transfer Agent shall authenticate and deliver i,i the name of the transferee or transferees a nF?,w Bond or Bonds, for a like acdgregate+ p I ipal amount. Bonds may lie exchanged at the f"'rinc:pal Office of tho Trustee or w the Principal Office of the Co- Transfn- Agent for a like aggregate principal amount of Bondi of other authorized denominations. The I; suer shall cause to t* executed and tha Trustee or the Co -Transfer Agent shall authenticate and deliver Bonds which the Cwrer making the exchange is entitled to receive, bearing numbers no! then outstanding. The execution by the iacsimi'e signatutes of the Mayor and the Ciiy Cleric Of the Issuer of any Bond of any authorized denomination shall constitute full and due authorization of such denomination and fhe Trustee and the Co -Transfer Agen; shall thereby be authorized to authenticate and cW-1ver such Bonds. The Trustee or the Co -Transfer Agent shall not be required to transfrr or exchange any Bond attar the mailing of notice calling such Bond for redemption has been given as herein provided, nor during the pt• :;o of fifteen calendar days next prPced.ng the giving of such notice of redemption; provided, however, that J any Bond shrill be transferred after such Bcnd has been called for redemption, the Trustee or the Co -Transfer Agent shall deliver to the transferee of such Bond a copy of the applicable redemption notice Indicating to the transferee that the Bond cle ivered to such transferee has previously been called for rademption. As to any Bond, the Owner snall be df+tned and regardcd as the absolute owner thereof for all purposes. Payment ,,t principal or prerniurn (if any) on any Bond shall be made only to or upon the order of the ORnE, thereof or his attorney duly authorized in writing as of the date of such payment. Paymont of the Verest on anv Bond shall be made only to or on the order of the Owner thereof or his . y 0 attormy duly authotized in writing as of the Hecord date or, if appticab'a, special record date for such payment, as hereinabcve provided. All such payments s)aC be valid and pfiectual to satisfy and discharge rN3 liability upon such Bond to the extent of the sum or sums so paid. The is.11luer, 1ho 'r►ustee and the Co-Transfe~ Agent shall not charge Owners for any exchange or transfer of tends, "xcept pursuant to Section 207 hererif end except that in each case the Trustee shall roquire ttte payment by this Owners requesting exchange or transfer of any t3X or other governmental charge require;t to be ,paid with respect thereto. The cost of arty printing of any n.;w Bonds and anti servires ren::ared or other expenseres incurred by the Trustee in connection with any exchange or transfer provided for io this Section 203 shall be paid from the aener; l Fund. S ctiort 204. Execution; Limited t WIgation. •fete Bonds shall be executed on behalf of the Issuer with the facsimile signature kit the Mayor and attested with the facsimile signature of the City Clerk anti shall have impressed or printed thereon u f,.:,5imile of the corporaip seal of the Issuer. Any such fac3irnife signature shall have the same force and effect as it the applicable officer had manually signed each of said Bonds. In case any officer whose facsirn&-, signature shall appear on the Bonds shall cease to be such officer before. the dolivery of such Hands, such facsii-nile signature shall nevertheless be valid and sufficient for ?It purpcses, as if such officer had remained in office until delivery. Nlo recourse shay! be had for the paymant of the principal of, or premium, if aray, or interest on, any of the Bonds or for any rlaini based thereon or upon any obligation, covenant or agreement in this Indenture contained', against any past, present or future m amb�sr of the City Council, officer, umployee or agent of the Issuer, or member or officer of any successor public entity, as suc;0, ether directly or througn the Issi er or any successor public entity, under any rule of lave or penalty or otherwise, ano r.11 lath liability of any such merrrher of the City Council, officov, smployee or agent as such is hereby expressly waived and releaser+ as a condition of, and in consideration for the execution of this Indenture and the issuance of any of the Bond 1'he Bonds are not and never shall become gensial oblia-.tions of thz Issuer but are limited obligations rjayrable by the Isslfrer solely ,and only fror;n the Revenues and t.)e other security pledged herein for !3uch purpose, which Revenuas, together with any such ether security provided herein, faro hereby sl*cifirally and irrevocably granted, bargained. sold, conveyed, transferred, aliarated, assigned and pledged to such purposeu in the manner and to the extent provided herein. The Bonds and the: premium, if any, and intaiest thio,aon do not and never shall constitute a dobt or an indebtedness or an obligation of tfie Issuer or a►,y county, city or rather municipal or political corporation or subdivision of the State or of the State, or a loam of the faith or credit or the taxing power of any of them, within ihr� meaning of any constitutional or .;tatutory provision;, nor shall the Bonds be construed to create any moral obligation on the part of the Issuer or any county, city or other municipal or political corporation or subdivision of the State or the State with res;.)oct to the payment of the Bonds. The Bonds shall not be riyatle from the general revenues of the issuer, and neither the Issuer nur the State nor any political corporation, subdivision tx' agency thereof will be liable thereon, nor in any event shall the Bonds be payabie out of any funds or properties other than those of the Issuer specifically pledged the ref or. Section 205. Auftaticallion. No Bmid shall be valid for any purpose or entitled to any security or benefit under this Indenture until the certificate of authentication on such Bond shall have beon duly executed by the Trustee, or by an agent or by the Co -Transfer Agent, and such authentication s`rall be conclusive proof that such Bond has been duly authenticated and delivered under this Indenture and that the Owner thereof is entitled to the benefits of the trust hereby created. The Trustee's certificate of authentication on any Bond shill be deerned to have teen executed by it or the Co -Transfer Agent if (1) it is. signed by an authorized officer of the 'trustee or the Cc -Transfer Agent, out it shall not be -17- 14 1. • r 1 necessary that the same officer sign the certificate of authentication on all of the Bonds issued he3reund•3r. and (2) the d, to of rogistration and authentication of the Bond is ;nseirted in the place provided therefor in the 'trustee's certificate of authentication printed on such Bc nd. Section 206. Form of the floods. The Bonds issued under th;s Indenture shall be substantially in the form set forth in Exhibit A and Exhibit B attached hereto and incorporated by reference herein, with such appropriate variations, omissions and insertions as are permitted or required by this Indenture. Section 207. ANY111sted, Do3troyed, Lost or .Stolen Bonds. In the event any Bond is muti!ated, lost, stolen or destroyed, the Issuer may cause: to be executed and the Trustee or Co -Transfer Agent appointed pursuant to the authorization set forth in Section 1109 may authenticate a now Bond of like date, materrity, interest rate and denomination as that mutilpte d, lost, stolen or destroyed: provided, however, that in the case of any mutilated Bonds, such mutilated Bond shall first be surrendered to the Issuer, and in the case o! any lost, stolen or destroyed Fiends, these shall be first furnished to; thb Trustee or Co -Transfer Agent on beLdif of the Issuer evidence of such loss, theft or destruction s0isfactcry to the Trustee or Co -Transfer Agent, together with an indr;rnnity satisfactory to the Trr•-tee. In too event any such Frond shall have matured, instead of issuing a duplicate Bond, the issue r lay i)ay the same withcut surrender thereof. The Issuer and the Trustee or Co -Transfer Agent may charge the Owner of such Bond with their reasonatle fees and expenses it this connection. The !,suer srlall cooperate with the Trustee or Co -Transfer Agent in connection with tt'ra issue of replacement Bonds, but nothing in this Section 207 shall be construed in derogation of any rights which the Issuer or the Trustee or Co -Transfer Agent ma; have to receive indemnification against liability, or payment or roimhurssmrnt of expenses, in connection with the issuance of a replacement Bond. Eveiy substitut: Bored issued pursuant to this Section 207 shall constitute an additional contractual obligation of the Issuer, whether or not the Bond alleged to have been mutilated, destroyed. lost or sto-len shall be at any time a^!orceable by anyone, and shall be entitled to all ;hro benefits of this Indenturs equally and ratably with aly and all other Br nds duly issued hereunder. All Bonds shall be owned upon the express condition that the foregoing provisions are, to the oxtent perrriited by law, exclusive with respect to the replacement or payment of mutilated, destroyed, lost or stolen Bonds, and shall preclude any and all ;.tther rights or remedies. Secti.an 258. Temporary 13onds. Pending preparation of definitive Bonds, or by agreement with thU purchasers of all Gonds, the Issuer may issue and, ;jpon its ,equest, the Trustee shall authenticate, in lieu of definitive Bonds, one or more temporary ;printed or typewritten bonds in any .authorized denomination of subslantially the tenor recited above. Upon request of the Issuer, the Trustee shall authontiL.ne definitive Bonds in exchange for and upon surrender of an equal principal amount of terporary Bonds. Until so axchanged, temporary Bondi shall have the sarne rights, rernedies and security hereunder as definitive Fonds. Section 209. Ctnceffotion and Destruction of Surrendered Bondi. Whenever any Bond shall be delivefed to the Trustee or Co•Trans,er Agent for replacempnt or exchange pursuant to Sections 203, 207, 208, or 1101(c) hereof. such Bond shall be promptly cancelled and destroyed by the Trustee, end a certificate of destruction evidencing such destruction shall be furnished by the Trustee to the Issuer. Section 210. G Hvvey of the Bonds. Upon the execution and delivery of this Indenture, the Issuer shall execute c-4 doliver to the Trustee, and the trustee shall authenticate, the Bonds and dtiliverr them to tf'te purchasers as directed by the Issuer as hereinafter in this Section 210 provided. Prior to the delivery by the Trustee of any of the Bonds there shall have been received by the Trustee: ,rr S N (1) a copy, duly certified by the City Clerk, of all resolutions adopted and proceedings had by the issuer authorizing the issuance of the Bonds, including the resolution authorizing the execution, delivery and performance of this Indenture and the Loan Agreement; (2) original executed Counterparts of this Indenture, the Developer Lonn Documents, the CaNsWail Pledger Agreerrwt, the Reimbursemcnt Ag; eement and all other materials required by the Loan Agreement; (3) the letter of Credit; (4) written confirmation. )f the Collateral Agent that it holds the Collateral, and that no event has occurred which constitutes, or would with the passage of time constitute, an Event of Default under the Collateral fledge Agreement; (5) art opinion of Bond Counsel substantially to the effect that (A) the Bonds constitute legal, valid and binding limited obligations of the Issuer, enforceable in accordance with their terms, subject to bankruptcy, insolvency, moratorium, reorganization and oiher similar lays affecting the rights of creditors generally and further subject to the exercise of judicial disc:re;ion in accordance with general principles of equ,ty, and (B) the interest !m the Bonds is exempt from federal income taxation under existing laws, regulations, rulir,g�. and Judicial decisions, except for interest on any Bond for any period during which such Bond is held by a "substantial user" of any facilities financed with the proceeds of the Bonds or a "related person", as such terms are defined in Section 103(b)(13) of the Cade; ,6) a request and authorization to the Trustoo on bel4i of the Issuer directing the Trustee as to the investment of the proceeds of the Bonds including, without limitation, thr amounts required to be deposited into the Bost of Issuance Fund pursuant to Section :303 of this Indenture; (7) a rw4uest and authorization to the Trustee on behalf of the Issuer to authenliicaie any, deliver the t-•.ands to the purchasers therein i ierrtrfied upon payment to the Trustee, for the account of the Issuer, of a sum specified in such request and authorization plus accrued intorest thereon, if any, to the date of delivery, which shall be transferred and deposited pursuant to Article lil hereof and as indicated in surh request and authorization, (8,1 an original executed counterpart of the certification of tho Issuer establishing expectations to the effect th3► the Bonds will not be "arbitrage bonds" within the meaning of Section 103(c) of the Code: and (9) any additional agreements, certificates, do.uments or other items or matters authorized cis regUirtid by the provisions of the Resolution. Section 2 f 1. Interest on the Bonds, A. Until March 1, 1987, the Bonds shall gear interest at the rate of _ percent (_°') per annum, subject to the provisions of Section 211.G hereof. Un s!i redeemed on or prior to March 1. 1987, the Bonds shall boar interest from and after March 1, 1987, at a rate per annum determined in accix, ^4e witty Sections 211.8., C. and F. and Section 212. Until the Conversion Date, interest shall be computed 6n the basis of j 360•day year, actual number of days elapsed. After the Conversion Date, interest on the Bonds shall be computer; on the basis of a 360•day year of twelve 30-day months. B. Frorn and after March 1, 1987. and (it March 1, 1987, is not the Conversion Date) prior to the Conversion Date, the intorest rate on all Bonds Shall be as follows; .19- 1. The Bonds shall (Subject to the further provisions of this Section 211.B.1) bear interest at a floating rate of interest per annum equal as of any given date of determination to TENR 9 as most recently announced by BTC plus an amount (the "-FENRb Amount") equal (unless adjusted pursuant to Sections 211.13.1. (i) or (ii)) to one-half percent (1 ,2G0) per annum. (i) If tha Trustee shall have recoived notice from any owner in accordance with Section 1101(a) requiring the purchase of any Bond(s) by the Trustee on behalf of the Association in accordance with Section 1101(b), the TENRID Amount shall be adjusted, if necessa.ry•, by the Remarketing Agent on the date of purchase of such Bond(s) by the 1 ustee on behalf of the Association pursuant to Section 1101(b) so that the TENR') Amount as so edjusted, when added to TENRO as in effect nn the date of the purchase cif such Bond(s) by the Trustee on behalf of the Association pursuant to Section 1101(b), will produce that rate per annum of interest which is (in the reasonable discretion or the Remarketing Agent, having due regard to prevailing market conditions) equal to, but nct in excess of, that rate per annum of interest which will enable the Remarketing AgQ,nt to remarket such Bond(s) crn the date of purchase of such Bond(s) by the TruMee on behalf of the Association pursuant to Section 1101(b) ai a price equal to 1001110 of the unpaid principal amount thereof plus unpaid interest accrued thereon to the date of purchase thereof by the Trustee on behalf of the Association pursuant to Section 1101(b); provided, that in no event shall the interest rate on the Bonds exceed the Maximum Interest Bate. The Remarketing Agent shall notify the Association, the Developer, and the Trustee of any adjustment of the TENRID Amount pursuant to INN: Section 211.E.1.(i) on the date on which such adjustment becomes effective. Any adjustment of the 'i ENRID Amount pursuant to this ,Section 211.B.1.(i) shall becorne effective on the date next following tho date on which TENRs next is announced following the date of such adjustment. In the event TENFO� is no longer announced or is discontinued for any reason, then the Bands shall hear interest at a rate per annum which is (in the reasonable discretion of the Remarketing Agent, having due regard to prevailing market conditions), equal to, but not in excess of, that rate per annum of intorest which will enable the Remarketing Agent to remarket the Bonds at a prism equal is 100% of the unpaid principal amount thereof plus unpaid interest accrued thereon to the (late of purchase thereof by the Trustee on behalf of the Association pursuant to Secticn 1101(b). (ii) On each Interest Payment Date, the TENRO Amount shall be adjusted, if necessary, by the Remarketing Agent so that the TENR11-D Amount as so adjusted, when added to TENRO as in effect on such Interest Payment Date, will produce that rate per annum cf interest which .9 (in the reasonable discretion of the Remarketing Agent, having due regard to prevailing (-,rarket conditions) equal to, but not in excess of, that rate per annum of interest which would enable the Remarketing Agent to remarket on such Interest Payment Date any bonds required to be purchased by the Trustee on behalf of the Association on such Interest Payment Date pursuant to Section 1101(b) (regardless of whether any Bonds actually are so required to be purchases.. on such Interest Payment Date) at a price equal to 100% of the unpaid principal amount thereof plus unpaid interest accrued thereon to such Interest Pr yment Date, provided, that in no event shall the interes► rate on the Bonds exceed the Maximum Interest Rate. The Remarketing Agent shall notify the Association, the ranveloper and the Trumee of any such adjustment. Any adjustment of the TENR) Amount pursuant to this Section 211.B.(ii) shall become effective on the date next following the date on which TUNRO is announced following the date of such .:tiustment. (iii) li the TENRO Amount is adjusted pursuant to Section 211.13.1.(i) cr (ii), the TENRO Amount as so adjusted shall remain in effect until the earlier of (A) the date next succeeding the effective date of such adjustment on which a further adjustment to the TENRe Amount becomes effective pursuant to section 211.8.1.(i) or (6), or (B) the data next succeeding the effective date of such adjustment on which the interest rate on the -20- bra � Bonds shall bo fixed pursuant to any of the previsions of this Indenture ether than those described in this Section 211.B.1. (iv) Notwithstanding the foregoing or anything in Section 211.8.2., no adjustment shall be made to either TENRe or the TENRe Amount during the period beginning five (5) Business Days prior to an Interest Payment Date and ending on the date the next announcement of TENRO after such Interest Payment Date becomes affective. Notwithstanding the foregoing, no change in either TENRe or the TENRe Amount shall become effective as to any Bond for which the Owner thereof has given a notice of tender to the Trustee for purchasr- pursuant to Article XI hereof; provided. however, 4 such bond is not tendered to the Tru.: tee on the first day of the Purchase Period, the foregoing provision of this sentence sha!1 not apply to such Bond. 2. As emplcyed in this Indenture, "TENRe" means the rate by that name announced (pursuant to the Remarketing Agreement) by BTC in New York, New York, or, in the event thiit no longer det,,rmines TENRe, the rate determined by an independent securities indexi,tg agent acceptable: tc the Association, the Rating Agent and the Deve!oper (the "Substitute Indexing Agent") which rate is intended by BTC cr the Substitute Indexing Agent, as applica'31e, to :ta indicative of currant (as of the di.,.3 of each announcement of TENRS or any alternate index) bid -side yields on high -quality, short-term, tax-exempt obligations. Under the Remarketing Agreement, *rENR� shall be announced by ESTC as of the close of business on Wednesday in each cElcndar week beginning on the Wednesday next preceding the date of )uthenticatior. and delivery of the first of the Bonds to be authonlicaled and delivered under this Indenture until tho earlier of (i) the Conversion Date, or (ii) the date on which there are: no longer any Bonds Outstanding; provided, that if Wednesday in anv calendar week is not a Business Day, then TENRl, shall be announced by OTC on the next succeeding day which is a Business flay. Sub;ect to Section 211.B.1.(iv), "ENRO as announced by BTC shall be effective dc.: ing the period frarn and including the day next succeeding the day on which day on which BTC next announces TENR'D. TENRI) shall be communicated by BTC to the Trustee, the Association, the Developer and the Remarketing Agent on the same day that TENR,b is an.nouriced by BTC. 3. The computation of TENRs by BTC and any adjustments to the TENRe Amount by the Remarketing Agent as contemplated by the foregoing paragraphs shall be conclusive and binding upon the Trustee, the Issuer, the Association, the Developer and the Owners of the Solids. 0. Rrov;ded that the Trustee shall have received the written con:;ent of the Association (which consent the Association may, in its sole discretion, withhold), the Developer may (subject to the conditions stated in the following Section 211.C.(5)) cause tho interest rate on the Bonds to bo convoiI&I to the Optional Fixed Bate on or after March 1, 1987 (provided that if March 1, 1987, is not the Conversion Date, the Conversion [date shall not be earlier than ,September 1, 1987) in accordance with the following procedures: (1) At least 0*1y (30) days in advance of the Conversion Date##, the Developer shall notify the Trustee, the Issuer, the Remarketing Agent. citnd the Association of the Conversion Period, and together with such notice to the Trustee, the Developer shall de!iver to the Trustee evidence of its having obtained a binding commitment for the issuance of a Letter of Credit or Alternate Credit Facility to be in effect on the Conversion Date pursuant to Section 5.8 of the Loan Agreement. Such notice shall be accompanied by an opinion of Bond Coun561 to the effoct that the conversion of the interest rate on the Bonds to the Optional fixed Rate will not adversely affect the exemption of interest on the Bonds from federal income taxation. At least Mteen (15) days prior to the Conversion Date, the N Trustee sW be furnished by the Deyeloperr, or from soxxrs3ws of wVed by ttre Deveaaw, with E4gblo Fw4a for tkiposit in the rvnww Accourd in an amount equal to 0 the difference between (' ) %.150,000 and (n) one -21- _J hundred eighty-five days' interest on the Bonds, computed at the trtaxim,urr Interest R ate.## TNr TruWtee shall Wso w6ive fr+orrm ttwi Devek)per or from a source arrar►ged by ft. Devek f eevirtwwe sat actory to it ftt the Collatwal hold uncle► the C 01atem•ai Pledge Agreerr►ent cwwWs or*y of sash, togs&w with rm wWAKtMing by ft Association not to subsbtute any ColfAWat fir Ruch cash unlit after the ConversiNi matte. (2) Promptly upon receipt of the notice, 00 documeniahon wd Eligible Funds described in Section 211.C.(1) and in any event within twenty (20) clays prior to the first day in the Conversion Period specified such notireW, the Trustee shall give notice to each Owner by first class mail, postage prepaid, at the address of such Owner a-., it last appears in the Bond F?egistrar identifying 0.e Conversion Period and slatinG (A) that on the Conversion Date (which shalt be ra day in the Conversion Period), the interest rite on ►he Bonds will (subject to the conditions specified in ,Section 211.C.(5), which conditions shall be set forth in full in such notice) be converted to tf.e Optional Fixed Aare; (8) that all Bonds not Tendered to the Trustee or or prior to the Conversion Date for purchase by 16,e Trustee on behalf of the Association pursuant to Section 1101(b) or as to which the Owners thereof have not (pursuant to Section. 211.E(1)) given notice of thoir desire to rotai.^ such Bonds attar the Conversion Date shall b,.i purchased by the Trustee on behalf of the Association on the Conversion Dale at a purch6s9 price equal to the unpaid principal amount thereof plus unpaid interest accrued thersop to the Conversion Date; (0) that, from and after the day next succeeding the Conversion Date, the Bond,; shall not he subject to the provisions of Section 1101(a), and, specifically, tint the Trustee will rx)t purchase Bonds or, behalf of the Association upor demcnd of any OwnerAW (D) that, from and aft, .r th;a Conversion Date, tho only payrnen; to which the Ovvnor of any Untenderec; Bond or arty other Person shell he entitled in respect 0 such Uniendered Bond is the purchase prire of such Untendered Bored, a_ set forth in the preceding clause (B); (E) that the ourchase price of any Unterdared Bo^d sha!I not be due ar.d iayahle to the O.vnir thereof or to r,rty other Persor, until such Dond is presented to the Trustee and (F) that if any of the conditions fat conversion of the iniercist rate cn the Bonds to tho Optional Fixer; Rata are not satisfied by the Conversion Dale,#*, any Bonds Tendered for purchase on such Cor►vernion Date shall be returned by the 'trustee to the: Owners th©renf, and the Elands shall (unt!I that date, if any, on which the interest rate on the Bends may thereafter Lie converted to a fixes; rate of interest pursuant to Section 211.C. horcof) continue to bear interest at tiv-4 rate+ required under Section 211.8. here3of.## Not later than three (3) Business Days, prior to the Conversion Date, the Trustee shall draw upon the Latter of Credit so as to receive, not later than the Conversior, Data, funds sLrffici'ant to pay the agaregate principal of all Outstanding E3ortds and all unpaid interest accrued and to accrue on the 2onds through this Conversion Date. (9) The Conversion Data shall be a Business Day specified by thr� Developer (but, if prior to Septtimber 1, 1987, shall be March 1, 1907) and shaii be the dato for conversion (subject to the conditions specified in Section 21 t.C.(51) of the interest rate or. the Bonds to the Optional Fixed Rate. Notic9 of the Convc,rsion Data as so se locted by the Developer shall be given by the Developer to the Trustee, the Issuer, the Remarketing Agent, and the Association at leiFist fifteen (15) Business Days prier to such Conversion Cate. If (a) the Letter of Credit to be ,n effect from ana aher the Con t,4rsion Date has been doEvered to the Trustee and is effective, and (b) the Rating Agent has delivered to the Trustees its written approval of the Letter of Credit to be in effect from and afar the Conversion Date, then on the tenth Of day prior to such Conversion Elate, the 'rrustee shall give ,notice of such Conversion Date and of the Optional Fixed Rate (as fixed by the Remark0ing Agent pursuant to Section 4 of the Remarketing Agreement on the fixing Late for such Conversion Date) to each Owner of a Band by first class mail, postage prepaid, at the address of such Owner as it lest appears in the Bond Register. Ir; addition to the, requirements of Section 5.8 of the Loan Agreement, M the Developer Shall provide to the Rating Agent tne: forms of the Letter of Credit and Collaierai Pledge Agt,eerment to ae in effect on the Conversion rate?, including the ;tame of the issuer ;hereof. The Bonds shall not he converted to the riptional foxed Rate unless the Rating Agent .22. 60 OW hM approved in writing the letter of Credit to N in effect from and after the Conversion (lit (4) On the Fixing Date for the Conversion date seiected by the Develope� as described in Section 211.C.(3), the Remarketing Agent shall notify the Association, the Developer, the Issuer and the Trustee of the Optional Fixed Rate, as required to be fixed by the Remarketing AQWt pursuant to Seotiun 5 of the Remarketing Agreement. If the Optional Fixed Rate so dewFerrtrined is less than the Maximum Interest mate, the difference between 185 days' interest on the Bonds calculated at the Maximum Interest Rate and 185 days' interest on the Bonds calculated at the Optional Fixed Rate shall be paid by the Trustee to the Developer on the day fo lowkV the Conversion Date. (c) On the Conversion We selected by the Developer, as described in Section 211.C.(3), d* interest rate on the Surds will, without any further action by the Developer, t+ie Issuer, the Trustee or any other Person, be converted to the Optional Fixed Rate so long as each of the iofiowing conditions is satisfied in full: (A) the Optional Fixed Rate shall have been fixed by the Remarketing Agent on the Fixing Date for such Conversion Date; (B) the Remarketing Agent shall ha-e received binding commitments on or before such Conversion Date to purchase all Bonds Tendered for purchase ?2y the Trustee on behalf 6f the Association on such Conversion Date at a price at least equal to the purchase price required to be paid by the Trustee in respect to such Bonds; (C) tirje Developer shall have followed the procedures required] to be followed by the Developer in connection with the conversion of the interest rate on the Bonds io the Optional Fixed Plata, as described in this Section 211.C; (D) the Developer shall not have given notice to the Trustee, the Remarketing Agent, the Issuer or the Association on or before the ekwenth N day pre -tiding such Conversion Date, that the Developer is dissatisfied with IN Optional Fixed Rate; (E) the Trustee shall huld (and for a period of not less than fifteen days prior ;o the Conversion Date shall have hold) rash in the Reserve Account (representing EENgible Funds), #0 in an amount not less than the Reserve Requirement as in effect from and after the Conversion Date; and (F) the Trustee shall have determined that all applicable requirements of Section 5.8 of the Loan Agreement have been satisfied with respect to the Letter of Credit or Alternate Credit Facility to be. effective, f; om and after the Conversion Date (including, without limitation, the requirements that such Letter of Credit or Alternate Credit Facility permit draws or claims in an amount equal to the aggregate principal amount of the Outstanding Bonds plus one hundred eighty --five (185) days' interest thereun at the Optional Fixed Rate and that the Trustee shall have received a written statement signed by the Rating Agent to the effect that the rating on the Bands will not be reduced or withdrawn as a result of the delivery of such Letter of Credit or Alternate Credit Facility). (6) The Remarketing Agent shall, on or prior to the Conversion Date selected by the Developer, as described in Section 211.C.(3), give notice to the Developer, the Association, the Issuer and the Trustee of any failure of the condition specified in clause (B) of Section 211.C.(,) to be satisfied. The Trustee shall immediately give notice to the Developer, the Association, the Issuer and the Remarketing Agent, of any failure of the conditions specified in cla .,ses (A). (C), (D), (E) or (F) of Section 211.C.(5) to be satisfied. In the event that any of the conditions specified in clauses (A) through (F) inclusive of Section 211.C.(5) fail to be satisfied, the interest rate on the Bolos shall be deemed not to have been converted to the Optional Fixed Rate on such Conversion Date; any Bonds Tendered to the Trustee for purchase by the Trustee on behalf of the Association on such Conversion Date shall be returnod by the Trustee io the Owners thereof; and the Bonds shall (until that date, if any, on which the interest rate on the Bonds may thereafter be converted to the Optional Fixed Rate pursuant to Section 211.C.) continue to bear interest at the rate required under Section 211.8_ and the Trustee shall, within five (5) Business Days after such Conversion Date, give notice of such fact to the Remarketing Ag .:.t, the Developer, the Issuer, the Association and each Owner at the address of surf Owner as it last appears in the Bond Register.00 -23- 1+� 0. In Any case where notice is to be given to the Oyiners by the Trustee pursuant to motion :11.C., neither the failure to give any such notice nor any defect in any notice so given shall prelude or make ineffective any conversion of the rate of interest on the Bonds to the Optional Fixed Rate. C.1. The Owner of any Bond desiring to retain such Bond on and after the Conversion [date must notify the Association, the Remarketing Agent and the Trustee in writing received on a Business Day which is at least five (S) days prior to the Conversion Date. Said notice must state in substance: (a) The numbers and principal amounts of the Bonds which the Owner wishes to retain on and after the Conversion Date; (b) That the owner recognizes that on the day next succeeding the Conversion Cate the Bonds shall no longer be subject to the provisions of Section 1101(a) and, specifically, that the Trustee will no longer purchase Bonds on behalf of the Association upon demand of any Owner (except that such notice may omit the mattors stated in tnis paragraph (b) if March 1, 1987, is the Conversion Date); and (t;) That the Owner wishes to continue to own the Bonds specified as described in Section 211.F.1.(a); and (d) That the Owner recognizes that if any of the conditions for conversion of the interest rate on the Bonds to the Optional Fixed Rate are not satisfied by the Conversion Date, the Bonds shall (until that date, if any, on which the interest rate on the Bonds may thereafter be converted to a fixed rate of interest pursuant to Section: 211.C. hereof) & bear interest at the rate required under Section 211.21. '.tereof.## 2. All Bonds not specified in a notice given as and when required by Section 211.E.1. shall be purchased by the Trustee on behalf of the Association on the Purchase bate pursuant to Section 1101(c) at a purchase price equal to the unpaid principal amount thereof plus unpaid interest accrued thereon to the Purchase Date.tf 3. From and after the Conversion Date, the only payment to which the Owner of such Untendered Bond or any other Person shall be entitled in respect of such Untendered Bond is the purchase price of such Untendered Bond determined in accordance with the. preceding paragraph (2), which shall be due and payable to the Owner thereof upon prese station of such Bond to the Trustee. 4. From ano after the Conversion Date, if any Bond is owned by an owner who has given notice of his desire to continue to own such Bond as and when required by :section 211.F.1., until the Trustee shall have authenticated and delivered to the Owner a replacement Bond substantially in the form hereinabove set forth, which the Trustee shall complete as soon as is practicable after the Conversion Date, su %Ii Bond then neld by the owner shall be deemed to be a replacement Bond and notwithst:jndinn the terms and conditions expressed therein, the i ights of the Owner of such Bond sha:l be the same as the rights of the Owner of an equal principal arnourzt of replacement Bonds in the form to be so authenticated and delivored on and after the Conversion Date. F. In no event shall the interest rate on the Bonds exceed the Maximum Interest Bate or by less than two percent (29,6) per annum. 0. Notwithstanding the provisions of Section 211.A. hereof (but subject to tho provisions of Section 211Y. hereof), if legislation is enacted prior to January 1, 1987, and the Trustee is unable to obtain on or before February 13. 1967. an opinion of Bond Counse! to the effect 1,,at such •24. 5A enactment in and of itself has not adversely affected the exemption from Federa! incom(i taxation of interest on the Bonds, then M there shall be paid as additional interest on the Vjonds an amount equal to _„,, % of the aggregate amount of interest paid or accrued (or to bc, paid or to accrue) on the Bonds through March 1, 1967, except that such additional interest shall. be held by the Trustee in a separate trust account for the benefit of the Owners and former Owners of the Bonds and disbursed to such Owners as follows: Any Person who was the Owner of a Bond, as evidenced by the Bond Register. at any time on or prior to Mort*,, 1, 1987, shall be entitled to receive a portion of such additional interest, such portion to be Calculated oy multiplying (i) 0. t,*mes (ii) the interest paid or accrued (or to be paid or to accrue through March 1, 1967) on each ►3cmd owned by such Owner with respect to the period during which such Owner owned each suet Bond. Or, March 1. 19137, the Trustee shall pay to each Owner of the Bonds on the the Pppficable Record Date (Fy 17, 1987) the portion of such additional interest to which each Owner is entitled, shall send to each Person who was a former Owner of Bonds (at iho address of such Owner last shown on the Bond Register) a notice identifying the portion of such additional interest to which such Owner is entitled arto shall pay such portion upon demand ot, such former Owner.# Section 212. Reset of Optional Fixed Rate. Following the Conversion Date, the Developer may under Section 5.8 of the Loan Agreement deliver to the Trustee an amendment to the Letter of Credit or Alternate Credit Facility which complies with the requirements of said Section 5.8. If such delivery is made on or before the ninetieth (90th) clay pre^eding the date of expiration of the term of the Letter of Credit or Alternate Credit Facility which would occur absent ,uch delivery, and if such delivery complies with all applicable requirements of said Section 5.8 and causes any possible expiration of the term of the Letter of Credit or Alternate Credit Facility (except as the result of the final payment of all Bonds Outstanding) to be postponed beyond the earliest date upon wh?ch an expiration of the term of the Letter of Credit or Alternate Credit Facility (except as the rost:lt of the final payment of all Bonds Outstanding) would have occurred absent such delivery, the Trustee upon ver:tication of the satisfaction of the foregoing conditions shall designate the first day of a ca!endar month, which day is at least thirty f30) days after the date of such delivery (but in any event is a date which is prior to the expiration of the term of the Letter of Credit or Alternate Credit Facility (except as the result of the final payment of all Bonds Outstanding) which would occur absent such delivery) as a reset date: (the "Reset Date"). On such Anset Date, the Oterest rate on the Bcndc shall be changed from the Optiona! Fixed Rate to the reset rate (the "Reset Rate") in accordance with the following procedures: (1) At least tWrty (30) days in advance of the Reset Date, the Developer sha!I notify this Trustee, the Issuer, the Remarketing Agent and the Association of its intent to deliver a Letter cf Credit or Alternate Credit Facility in accordance with this Section 212 arid, together wit't such notice to the Trustee, the Developer shall deliver to the Trustee evidence of its having obtained a binding cornm;tment for the issuance of the Letter of Credit or Alternate Credit Facility to be in effect on the Reset Date pursuant to Section 5.8 of the loan Agreement and, further, shall deliver or cause le, be delivered to the Trustee, Eligible Funds for deposit in the Reserve Account to equal or excee-,J the Reserve Requirement to be in effect from and after the Reset bate (it being understnod that in computing such Reserve Requirement the Maximum Interest Rate shall be used until tha Reset Rate has been determined). The TnAstes Wmill also receive from the Devekgw or fnxn .d source affanged by the Developm wAd% nca satisfactmy to it that the Collateral held under the GrAwerW I kxJge Agreement (if ttten applicable) c consists only of rasa, togettw with an unrmrtakirg by the Association (or provider of the Letter of cruet or Alternate Credit Fac city then in ef'ract) not to s kMute any CAa Weral for such rash until after the Reset Date. Such notice sh,,ll also be accompanied by this written consent of the Associati(xi to such reset (which consent the Associatw may, in its srAe discretion, virithf)oici), unless the Letter of Cmi t will not be in effect from aW after the Reset Date, and h r an opinion of Bond Counsel to the effect that the, estabhsWent of ft reset Rate will not adversely affect the exemption of interest on the Bonds fain fede;•al income taxation. (2) Promptly upon receipt of the notices, lligible Funds and documontation described in subsection (1) above and in any event v:ithin tarartty (20) days prior to the Reset Batt, the Trustee .25. r shall give notice to oach Owner by first class mail, postage prepaid, at the address of such Owner as it last appears in tl•oe Bond Register identifying the Beset Date and stating (A) that or, the Reset Date the interest rate on the Bonds will (subject to the conditions specified ir. Section 211.C(5), which conditions shall be set forth in full in such notice) be converted to the Reset Rate; (B) that ail Bonds as to which the Owners thereof have not (pursuant to subsection (8) of this Section 212) given notice of their desire .o retain such bonds after the Reset Date shall be purchased by the Trustee on behalf of the Association on the Reset Date at a purchase price equal to the unpaid principal amount thereof plus unpaid interest accrued thereon to the Reset Date: (C) that, from and after the Reset Date, the only payment to which the Owner of any Untendered Bond or any other Berson shall be entitled in respect of such Untendered Bond is the purchase price cf Untendered Bond, as set forth in the preceding clause (B); (D) that the purchase price of any Untenderedj Borrd shall not be due and payable to the Owner thereof or to any other Person until such Bored is presented to the Trustee and (E) that in the event any of the conditions for conversion of the Sonds to the Reset Rate are not satisfied by the Reset Date, the Bonds shall be deemed not to have been Wnd wod to the Trustee for purchase on such Reset Date rmid shall be returned by the Trustee to the Owners thereof, and the Bonds shall (until the date, ?f any, on whic-h the interest rate on the Bonds may thereafter be converted to a Reset Rate pursuant to Section 212 hereof) continue to bear interest at the Optional Fixed Rate or the Reset Rate, as the case may be, then in effect. Not later than the third (3rd) Business Day prior to the Conversion Date, the Trustee shall draw upon the Letter of Credit or Alternate Credit Facility so as to r-eceive, not later than the Reset Date, funds sufficient to pay the aggregate principal of all Outstanding Bonds and all unpaid interest accrued and to accrue on the Bonds through the Reset Date. (3) On the fifteenth (15th) Business Day prior to the Reset Data, the Remarketing Agent shall notify the Association, the Issuer, the Developer and the Trustee of the Reset Rate, as required to be fixed by tho Remarketing Agent pursuant to the Remarketing Agreement. (4) On the tenth (10th) Business Day prier to tho Reset Date, the Trustee shall give notice of the Reset Rate (as fixed by the Remarketing Agent pursuant to the Remarketing Agreement) to each Owner of a Bond by first class mail, postage prepaid, at the address of such Owner as it last appears in the Bond Register. (5) On the Beset Date the interest rate on the Bonds will, without any further action by the Developer, the Issuer, the Trustee or any other R�rson, t:e converted to the Reset Rate so long as each of the following conditions is satisfied in fu,l: (A) the Reset Rato shall have been fixed by the Remarketing Agent as described above; (B) ,he Remarketing Agent shall have received binding commitments on or before such Reset Date to purchase all Bonds Tendered for purchase by the Trustee on behalf 0 the Association on such Reset Date at a price at least equal to the purchase price required to be paid by the Trustee in respec, to such Bonds or monies shall be available pursuant to a draw on the Letter of Credit to purchase any Bonds Tendered which have not been remarketed; (C) the Developer shall have followed the procedures required to be followed by the aiveloper in connecti;jn with the conversion of the interest rate on the Bonds to the Reset Rate, as describe in this Section 212; (D) the Developer shall not have given notice to the Trustee, the Issuer, the Remarketing Agent and the Association on or before the ekwerrth day preceding such Reset Date, that the Developer is dissatisfied with the Reset Rate; (E) the Trustee sh::ll hold (and for a period of not less than fifteen (15) days prior to the Reset Date shall have held) cash in the Reserve Account (representing Eligible Funds), ## in an amount not less than the Reserve Requirement as in effect from and after the Reset Date; and (f) the Trustee shalt have determined that all applicable requirements of Section :i.8 of the Loan Agreement have been satisfied with respect to the Letter of Credit or Alternate Credit Facility to be effective from and after the Reset [late (inc!uding without limitation. the requirerents that such Letter of Credit or Alternate Credit Facility permit ciraw5 or claim,, in an amount equal to the aggregate principal amount of the Outstanding Bonds plus one hundred eighty -live (185) days interest thereon at that Reset Rath and that the Trustee shall have received a written statement signed by the Rating Agent to the effect .28. • r that the rating on the Bonds will not be reducer, or withdrawn as a result of the delivery of such Letter of Credit or Alternate Credit Facility). (6) The Remarketing Agent shall, on or prior to the Reset date, give notice to tl ie Developer, the Issuer, the Association and the Trustee of any failure of the condition specified in clause (B) of the preceding subsection (5) to be satisfied. The Trustee shall immediately give notice to the Developer, the issuer, the Association and the Remarketing Agent of any failure of the conditions specified in clauses (A), (C), (D), (E) or (F) of said subsection (5) to be satisfied. If any of the conditions specified in clauses (A) through (F) inclusive of said subsection (5) fail to be satisfied, fhe interest rate on the Bonds shall be deemed not to have been converted to the* Reset Fate on such Reset Cate, any Bonds Tendered to the Trustee for purchase by the Trustee on behalf of the Association on such Reset Date shall be returned by the Trustee to the Owners thereof, and the Bonds shall (until that date, if any, on which the interest rate on the Bonds may thereafter be converted to a Reset Rate pursuant to this Section 212 hereof) continue to bear interest at the Optional Fixed gate or the Reset Rate, as the case may be, then in effect, and the Trustee shall, within five (a) Business Days after such Reset Date, give notice of such fact to the Remarketing Agent, the Issuer, the Developer, the Association and each Owner at the address of such Owner as it last appears in the Bond Register. (7) In any case where notice is to be given to the Owners by the Trustee pursuant to this Section 212 neither the failure to give any such notice nor any detect in any notice so given shall preclude or make ineffective any conversion of the rate of interest on the Bonds to the Reset Rate. (8) (A) The Owner of any Bond desiring to retain such Bond on and after the Reset Date must notify the Association, the Remarketing Agent, the Issuer and the Trustee in writing received on a Business Day which is at !east We (5) days prior to the Reset Date. Said notice must state in substance- (i) The numbers and principal amounts of the Bonds which the Owner wishes to retain o-i and after the Resot Daie; and (ii) That the Owner wishes to continue to own the Bonds specified as described in the preceding clause (i). (iii) That the Owner recognizes that in the; ovent any of the conditions for conversion for the interest rate on the Bonds to the Reset Rate are not satisfied by the Reset Date, the Bonds shall be deemed not to have been converted to the Reset Bate on such Reset Bate and the Bonds shall (until that dale, if any, on which the interest rate on the Bonds may thereafter be converted to a Reset Rate pursuant to Section 212 horeot) continues to bear interest at the Optional Fiv.2,J Rate; cr the Reset Rate, as the case: may be, then it efiect. (B) All Bonds not specified in a notice given as and \s.hen required by the preceding subparagraph (A) shal! be purchased by the Trustee on behalf of the Association on the Reset Date at a purchase price equal to the unpaid principal amount thereof plus unpaid interest accrued thereon to the Reset Gate. (C) From and after the Reset Date, the only payment to which too Owner of such Untendered Bond or any other Person shall be entitled in resoect of such Untendered Bond is the purchase price of such Untendored Bond determined in accordance with the preceding paragraph (13), which shill be due and payable to the Owr►er thereof upon presents'ion of such Bond to the Trustee. (D) from and after the Reset Date, if any Bond is owned by an Owner who has oiven nc:i,ce of his desire to continue to own such Bond as and when required by subparagraph 'A) .;27. N above, until the Trustee shall have authenticated and delivered to the Owner a replacement Bond substantially in the form hereinabove set forth, which the Trustee shall complete as soon as is practicable after the Reset Date, such Bond then held by the Owner shall be deemed to be a replacement Bond and notwithstanding the terms and conditions expressed therein, the rights of the Owner of such Bond shall, be the same as the rights of the Ovrners of an equal principal amount of replacement Bonds in the form to be so authenticated and delivered on and after the Reset Date. (9) Notwithstanding any provision of this Indenture to -the contrary, the interest rate on the Bands shall not exceed the Maximum Interest mate nor shall it be less than two percent (2%) per annum. Sevt an 213. Um MaVoa. Except as otherwise expressly provided in the Loan Agreemant or the Regulatory Agreement, the Association has no responsibility to the Owner of any Bond in respect of tM state or federal income tax treatment of any payment of interest, premium or principal of any Bond or any other osyment thereon or in respect thereof whether received from the Trustee, the Developer, the Association or others. -28- MRI ARTICLE It/ REVENUES AND FUNDS Section 301. Sources of Payment of the Sonds. The Bonds herein authorized and all payments by the Issuer hereunder are not and shall never become general obligations of the Issuer, but are limited obligations payable solely and only from the Revenues and the Funds and Accounts created pursuant to this Indenture (excluding the Excess lowstment Earnings Fund), and as authorized by the Act and provided herein, Section 302. Creation of Funds and Accounts. The following Funds and Accounts of the Issuer are hereby created and established with the Trustee: (1) the Developer Loan Fund, which includes the Apptaisal Withhold Account, the C mstructitim interest Payment Account, the Cpwating Lease -Up loss Awau t and *w Disbursement Account; (2) the Cast of Issuance Fund; (3) the Debt Service Fund, conosting of the Interest Account, the Princil,.;l Account, the Reserve Account and the Seasoned Funds Account; (4) the Tender Payments Fund; mW (5) the General Funl#. Each such Fund and Account shall be maintained by the Trustee as a separate and distinct tru:.t fu.,d or a separate and diatirrct trust account to be held, managed, invested, disbursed and administered as provided in this Indenture. Alt moneys, obligations and securities deposited in the Funds and ► ccounts shall be used solely for the purpose set forth in this Indenture, The Trustee shall keep and maintain adequate records pertaining to each Fund and Account and all disbursements therefrom. Not less frequently than annually, the Trusteo shall submit to the Rating Agent a report its to the amounts on deposit in the Deserve Account. Notwithstanding anytNnq to the contrary in this Section 302, the Tender Payments Fund may be maintained by the Trustee with the accent of the Trustee appointed pursuant to Section 1109. Section 303. Initial Deposits. On the Delivery Date, as shall be r iota fully specified in a written reque-st from the Issuer, the *trustee shall deposit the proceeds receive d from the sale of the Bonds, together with a disbursement on behalf of the Developer under, the Dev, lop,ir Loan to cover ihA costs of issuance of the Bonds, as follows: (1) first, an amount equal to S _ shall be deposited in the Cost of Issuance Fund: (2) second, an amount equal to the Reserve Requirement shall he deposited into the Reserve Account but shall be deemed to have been disbursed to the Developer as part of the Developf r Loan; and (3) third, the balance of the proceeds shall be deposited in the Developer Loan Fund. Section 304. Devefoper Loan Fund. (a) Gi the Delivery Date, the Trustee shall deposit into the Developer Loan Fund the amount ree;uired by Section 303(3) of this Indenture. Except as spsic:ified below in this Sectia-t 3r'' , moneys ot, deposit in the Drweloper Loan Fund shall. be applied or disburses in accnr%-,;ance with Section 3.4 of the Loan Agreement. (b) On the Delivery Date, there shall be allocated from the amounts deposited into the Developer Loan Fund tc the Canstirtiction Interest Payrtmnt Account the sum of S322,8.30 to be held in the 0ainstruiction Interest Pioymenl Account on the following terms and conditions: (i) SubjeM, to the prior satisfaction of the conditions precedent to the disbursement of amounts on deposit in the Developer Loan Pond pursuant to Section 3.4 of the Loan Agreement, in aLcortlance with ii"Aeable provisions o` the Reimbursement Argreerment, amounts or deposit in the C.onstriy,:Wn Interest Payment Acco-jnt shall used to make -29- the monthly payments at the Developer Rate (as defined in the Reimbursement Agreement) due under the Letter of Credit Note (as defined in the Reimbursement Agreement) during the Construction Term. (ii) Subject to the prior catisfrction of the conditions precedent to the disbursement of amours!s on depoait in th:? Developer Loan Fund pursuant to Section 3.4 of the Loan Agreement, Any monies remaining in the Consbw1kin Interest Payment Account shall be renwttledl to ft Associa i,dr'r far deposit## in the Ilntarest Paserve Account (as defined in ft PwnburseffwA AgivAn ►ent), to be disbursed as provided in the R*nbursernent Agreemnt. (c) On the Delivery Date, there shall be allocated from the amounts deposited into the Developer Loan Fund to the Appraisal Wthhold Account the sum of $1,120,000, to be held in the Appraisal Withhold Account on the follov ling terms and conditions. (i) Subject to the prior satisfaction of the conditions precedent to the disbursement of amounts on deposit in the Developer Loan Fund pursuant to Section 3.4 of the Loan Agreement >tsrel in accordance with 00 the Reimbursement Agreement, upon written rrntice from the Association that the applicable conditions s9t forth in # the Reimbursement Agreement have been satisfied, amounts on deposit in thci Appraisal Withhold Account shall be disbursed to the Developer. (ri) Notwithstanding the foregoing, h the appicable conditions set forth in #till the Reimbursement Agreement are not satisfied on or before duty 1, 1985, subject to the prior satisiaction of the conditions precedent to the disbursement of amounts on deposit in the Developer Loan Fund pursuant to Section 3.4 of the Loan Acreement, in accordance with the Reimbursement Agreement, the monies on deposit in the Appraisal Withhold Account shall 5e 6500rsed to the Developer and applied by !ho Trustee, but only at the Association's direction, to repay principal and accrued interest on the Letter of Credit Note. Section 305. Cost of Issuance fund. On the Delivery Date, the Trustee shall deposit thra amount • s•oer:iiied in Section 303(1) into the Cost of Issuance Fund. Moneys on deposit in the Cost of Issuance Fwid shall be applied to pay the costs of issuing the Bonds, including, but not lirroted to, the Issuer's fees and expenses (including an initial fee of 1.2 of 1 % of the aggregate principal amount of the. Bonds); exit# mTibnq fees orxi ox►,*nses; expenses in connection with prepat v tioo of the Indenture, the Developer Loan Documents, ft Water'at PW.ge Agreement, the Bort's and the Official Statement pertaining to the Bonds; legal fees relating to any blue sky or legal investment memoranda: rating agency fees: market study fees; legal fees and expenses of Bund CoUnsei and counsel to the Issuer. Association counsel, aid Developer's counse!; any computer and other expenses incurred in connection with determining or verifying the sufficiency of the projected cash flows from the Developer Loan o, in deletmming that the Bends are not arbitrage bonds; the in'.tial foes and expenses of the Trustee ant! any Paying Agent; the ini-iial fees for the Letter of Credit or otherwise payable under the Reimbursement Agreement; inhW Collat'c3ral Agent fees; and other fees and expenses incurred in connection wi!h the issuance of the Bonds (such as printing, telephone, etc.), to the extent such fees and expenses are approved by the Issuer. Such costs shall be pcyable upon submission of = written request from the Issuer, stating that the amount indicated thereon is due and owing, has riot been the subject of another written request which has been paid. and is a proper cost of issuing the Bonds. Any moneys remaining in they Cast of Issuance Fund on the one hundred eightieth (1801h) day following the Delivery Date and determined by the Trustee not !o be. necessary for the payment of any expenses hereunder or costs of issuance of the Bonds shall be transferred to the General Fund. 30- M Section 306. Application of Revenues. L (a) The Trustee shalt apply all Revenues and any other amounts (other than Tender Payments) received by the Trustee which are subject tc the lien and pledge of this Indenture, to the extent not required to be deposited in other Funds or Accounts, :n accordance with the terms of this Indenture. (b) Moneys on deposit which represent payments made to thn Trustee by the Developer shall be applied as follows: (1) To the Seasoned Funds Account, any moneys deposited by the Developer or the Issuer directly with the Trustee whether or not so designated by the Developer or the Issuer, for any purpose other than the payment of amounts owing under Section 4.3 of the Loan Agreement. Without limiting tho generality of the foregoing, any moneys deposited by the Developer or the Issuer directly with the Trustee for the payment of principal of, interest on and premium, if ary, on the Bonds shall N opplied to the Seasoned Funds Account; and (2) To the Genera! Fund, moneys deposited by the Developer or the Association with the, ,trustee as psyment of the amounts owing under Section 4.3 of the Loan Agre oment for the fees and expenses required to be paid thereunder: including those of the Issuer, the Trustee, the Co - Transfer Agent, the Tender Agent, the Remarketing Agent, any Paying Agent and the Rating Agent, Section 307. Debt Service! Fund. (a) The Trustee shall deposit into the Interest Account of the Debt Service Fund from a draw on the Letter of Credit an amount was determined in accordance with Section 309(2)(a) hereof, or from the Reserve Account, (roar Collateral Funds or from other Eligible Funds, in that order of priority, an amount sufficient to pay the interest becoming due and payable on the Bonds on the next Interest Payment Date or Redemption Date. Moneys on deposit in thu Interest Account snail be applied solely to pay the interest on the Bores as the same becomes dupe and p?yable. On each date fixed for mandatory or optional redemption of the Bonds and or, each scheduled Interest Payment Date on the Bonds (except the scheduled Interest Payment Da: that coincides with the final maturity date of the Bonds), the Trustee shall remit in accordance with Section 202, to the respective Owner of such Bonds, as of the Record Date for such interest payment, an as-nount from the Interest Accour-1 sufficient to pay the interest on the Sands becoming due and payable in such date, and on the scheduled Interest Payment (late that coincides with the final maturity of the Bonds, the Trustee shall set aside and hold in 'rust, or shall remit to any Paying Agent to be held in trust, an amount from the Interest Account sufficient to ;gay the interesa on the Bonds becoming due and payaUla on such date. (b) 'fhe Trustee shall deposit into the Principal Account of the Debt Service Fund from a draw on the Letter of Credit, amounts rn the Reseme Account, or from Collateral Funds or from udw. Efigitle .."und s, in that order of priority (provided that any pr©mium small be payable solely from Seasoned Funds!, an amount sufficient to pay the principal of lher Bonds maturing on the ne),t Interest Payment Date o- the redemption date. Moneys on deposit in the Principal Account shall be applied solely to pay the principal of and prerrium, if any, on the Bands as the same becomes due and payable at maturity or by prior redemption or acceleration. On each date on which any principal or premium becomes payable on the Bonds, the Trustee .hall set aside and hold in trust, or remit to any Paying Agent to be held in trl'St, an amount from the. Principal Account sufficient to pay the amount becoming due and pxayahte on such date. rc) They 7rusteo shall deposit in the Seasoned Funds Account the moneys required �y Section 306(b)(1) of this, Indenture. Moneys on deposit ;n the Seasoned Funds Account shall be held therein for a period of at least 95 days and until they shall othnrwi =e meet the definitio of "Seasoned Funds" under this Indenture and shall thereafter be transferred first, to the Reserve Account in an amount necessary io bring the amount on deposit therein to an amount equal to the Fleserv€ Requirement -31. (except ki the extent other Funds are doposked dwofur), and then to the Interest Account and Principal Account for the payment of principal of, interest on and redemption premium, if any, on the Hoods. All deposits into the Seasoned Funds Account shall be held in separate subaccounts until transferred as otherwise provided herein and shall not be commingled with other deposits made into such accoun'. (d) The Trustee shall deposit in the Reserve Account within the Debt Service Fund the moneys required by Sections 303(2), 2114 and 212 of this indenture. If on any Interest Payment Date, the an.o� ants on deposit in the Interest Account of the Debt Service Fund are not sufficient to pay the interest becoming due and payable on such Interest Payment Date, the Trustee shall withdraw from the Reserve Account and transfer to the Interest Account an amount sufficient to enable the Trustee to pay the interest becoming due and payable on the Bonds on such Interest Payment Date. Section 3W.A. Reserve Account. (a) The Trustee shall deposit fros n the proceeds of the sale of the Bonds an amount equal to the Reser",)e Requirement in the Reserve Account as required under Section 303(2) of th;s Indenture and shall deposit therein the amounts specified in Section 211.0 and 212 of this Indenture at the times specified in said Sections .1.11.0 and 212. The Trustee shall apply moneys on deposit in the Reserve Account solely for the following purposes, in the f-.)llowing order of priority and in accordance with the following conditions: (1) 'The Trustee shall deposit into the Inter-yst Account of the Debt Service Fund amounts sufficient to pay the interest becoming due and payable on the Bonds cn the next Interest Payment Datri or the redemption date of the Bonds to the extent amounts in the Interest Account from draws on the Letter of Credit on such Interest Payment Data or redemption date are insufficient to pay such interest. (2) The Trustee shall deposit into the Principal Account of the Debt Service Fund amounts sufficient to pay the principal becoming due and payable on the bonds on the next Interest Payment Date or the redemption date of the fonds to the extent amounts in the Principal Account from draws on the Letter of Credit on such Interest Payment Cate or redemption date are insufficient to pay such principal; provided. however, that monies on deposit in the Reserve Actx mt shall not be used to pay principal on the Bonds until all interest accrued or to accrue on the Bonds has been paid or otherwise provided for. (3) On each September 5 commencing September 5, 1987, the '► . ustee 5ha,l transfer any amount in the Res.irve. Account in excess of the Reserve Requirement, but only after payment of all principal of and interest on the Bonds then due, to the Genet,al Fund. (b) Notr,ithctanding anything contained herein to the contras,► during the period commencing with the delivery of any notice as provided in Sections 211.C.0) of 212 hereof and ending on thy, - Conk grsion Data, the Reservo Ruquirem:?nt shall be doomed to be the greater of the Heserve Requsi-ement in effect immediately prior tc the delivery of such notice and the Reserve Requirement to be in effect frorn and aftor the Conversion Date. Section 308. General Fund. Tho Trustee shall deposit into ►ho General Fund the amounts rcguired by Sections 305 and 306(b) of this Indenture. The Trustee shall apply moneys on deposit in the General Fund solely for the following purposes, in the following order of priority and in accordance with the following conditions: (1) The Trustee shall apply moseys on deposit in the General Fund (but only to the extent such moneys core ,tituto F"igible Funds) to rep!enish the Reserve Account to the extent of anv -32. I deficiency therein with respect to the Reserve Requirement as and when such deficiency nray arise. (2) The Trustee, from time to time, shall apply moneys on deposit in the veneral Fund for the purpose of paying Operating Expenses. (3) The 'trustee, on September 15 of each year commencing September 15, 1987. shall pay Zo the Association any moneys remaining in the General Fund on such date in oxcess of those required for the purposes described in clauses (1) and (2) immediately above. Section 309. Letter of Credit; Drawings Under the Letter of Credit. (1) The Letter of Credit shall be hold by the Trustee and drawn upon in accordance with its terms consist nt with the provisions of this Indenture and tha Loan Agreement, and specifically by such means and manner specified in the Letter of Credit as shall be sufficient to enable ttre Trustee to receive funds therefrom on or before the dates such funds are required for the purposes hereof. Moneys derivod from draws upon the Letter of Credit shall be deposited in :he appropriate accounts of the Debt Service Fund and applied by the Trustee to pay the principal of and interest on the Bonds. (2) The Trustee shall draw moneys under the Letter of Credit ir► accordance with the terms thereof to the extent necessary to make timely payments of the principal of and interest, but not premium, on the Bonds required to be made from the Debt Service Fund. Such draw .shall be made specifically by such moans and manner specified in the Letter of Credit as shall be sufficient to enable the Trustee to receive funds therefrom on or before the dates such funds are required for the purposes hereof. In accordance with the preceding paragraph, the Trustee shall draw moneys under the Letter of Credit to make payments on the Bonds as follows: (a) Three (3) Business Days prior to each Interest Payment Date, in an amount which, when added to the funds then on deposit in the Debt Service Fund. are sufficient tr. pay (i) the interest becoming due and payable on Bonds on such date, which shall be determined cc:treance with Sections 211 or 212 hereof, as applicWo; and (ii) the principal of the Bonds . ring on such date, if any (p ovkW, however, that unless the Trustee shall receive cnnfir-.,, from the L;cpNat" agent at lea.,At forty (40) days prior to any Interest Payment Date that all of 1lateral cimisisls soWy of wash and the Association agrees not. to Substitute any Cothateral other u„ mtsh for such caste Collated during the poriod beginnirxj frxrty (40) days prier to such Interest Payment Date and ending on such Interest Payment Date, such draws strati be made thirty-seven (37) days; prior to each Interest Payment Date); (b) Three (3) Business Days prior to the final maturity or the date fixed for redemption of the Bonds, in an amount sufficient to redeem the Bonds (other than the amount owing as a redemption premium, if any); (c) As required by Section 802 hereof; (d) As required by Section 1103 hereof; (e) As required by Section 211.C.(2) hereof; and (f) As required by Section 2'12(2) hereof, (3) Subject to Section 12(c) of the Collateral Pledge Agreernant, if with respect to any draw on th Letter of Credit by the Trustee pursuant to subsection (2) the Association fails to make any payment under the Letipr of Credit when due and payable, then the Trustee shad accelerate the Bonds as provided in Section 802 hereof and shall 1:ke such steps with respect to the Collateral as hall be •33- sufficient under the Collateral Fledge Agreement to cbmin Collateral Funds to pay all principal of and accrued interest on the Bonds. The Trustee shall deposit the Collate; al Funds as follows: (1) tha amount drawn to cover the aggregate amount of interest due and payable on any Interest Payment Date upon aN Bonds then Outstanding but not paid by the Association and not on deposit in the Reserve Account shall be deposited in the Interest Account, (2) the amount drawn to cover the aggregate amount of principal due and payable on the Outstanding Bonds on any Interest Payment Date, tHat not paid by the Association, shall be deposited in the Principal Account. If with respect to any draw on the Letter of Credit by the Trustee pursuant to subsection (2)(d) above, the Association fails to make any payment under the Letter of Credit and the Bonds are required to be redeemed pursuant to Section 602.A.(a) hereof, then the Trustee shall take steps to redeem the Bonds in accordance with said Section, shall proceed to enforce its remedies under the Collataral Pledge Agreement and shall apply amounts on deposit in the Reserve Account to pay interest on the Bonds on the date fixers for redemption. (4) Any Letter of Credit or Alternate Credit Facility provid??d to the Trustee as a replacement or substitute for the then outstanding Letter of Credit shall meet the applicable roquirements of Section 5.8 of the Loan Agreement. Section 310. Final Balances. Immediately upon the deposit with the Trustee of moneys in accordance with the provisions of Article XIII sufficient to pay all principal of, and premium, if any, and interest on, the Bonds, and upon satisfaction of all :aims against the Issuer hereunder, including all fees, charges and expenses of the Trustee, and any Paying Agent, which are properly due and payable hereunder, and all fees due the Issuer under the Loan Agreement and the Regulatory Agreement or upon the making of adequate provision for the payment of such amounts, as permitted hereby, and subjt-.,(:t to the provisions of Article V hereof, all moneys remaining in all Funds and Accounts except moneys necessary to pay principal of, and premium, if any, and interest on, the: Bonds or the purchase price of Bonds required to be purchased by the Trustee (which moneys shall be held by the Trustee), shall be paid to the Association. Section 311. Security of Funds. All moneys deposited with the Trustee or with any agent of the Trustee appointed pursuant to Section 1109 under this Indenture (except for money hold by the Trustee, as paying agent, or remitted to any Paying Agent for the payment of the principal of, premium, if any, and interest on, the Bonds) shall, while held by the Trustee, constitute part of the Trust Estate. .jectif)n 312. Non -Presentment of Bonds. In the event any Bond shall not be presented for Payment whon tho principal thereof becomes dug, either at maturity or otherwise, or at the date fixed for redemption thereof, if rn neys sufficient to pay such Bond shall have been deposited in the Deb, Service Fund, all liability of they Issuer to the Owner thereof for the payment of such Bond shall forthwith cease, determine and be completely discharged, and thereupcn it shall be the duly of the Trustee to hold such moneys, without liability for interest thereon, for the beneiit of the Owner of such Sond, who shall thereafter be restricted exclusively to such moneys, for any claim of whatever nature on his part under this Indenture or on, or with respect to, said Borid. Any moneys so deposited with and held by the Trustee that are not so applied to the payment of Bonds within five (5) years after the date of the final maturity or earlier redemption or payment of all Bonds shall be paid by the Trustee to the Issuer, and thereafter Owners shall be entitled to inok only to the Issuer for payment, and then only to the extent of the amount so repaid, and the Issuer shall not be liable for any interest thereon and shall not be regarded as a trustee of such money. Section 313. #oneys to Be Held in Trust. All moneys required to be deposited with, or paid to, the Trustee under any provision of this Indenture shall bh held by the Trusted in trust and applied for the purposes herein specified. Section 314. Tender Payments; Tender Payments Fund. All Tender Payments shall be held by the Trustee in tho Tender Payments Fund which is hereby created with the Tr;istee and shall be used i lr►y mo Trustee only to pay the purchase price of Bonds required to be purchased by the Trustee pursuant to Sections 1101(b) or (c) and to make the payments, if any, required to he made by the Trustee pursuant to Suction 111 t. Any surplus funds shall be raturnwrd to the payor of such funds rriid>rn Ova Wwou []M" after 11re purdme of TandOW Bands, Secbort 315. RWft of SW Off; Equel Sscurd!y. The Association has waived its right of set-off against any deposits or other indebtedness owing to the Developer or any general partner thereof as more fully dewbed in Section 2.08(d) of the Reimbursen, ent Agreement, provkW that such right of set-off may be feinstated upon receipt of an opinion of counsel as provided in said section and a written statement, signed by an officer of the Rating Agent, to the effect that such action will not in and of itself result in a lowering or withdrawal of the rating on the Bonds by the Bating Agent. The Trustee shall be secured on a parity with the Association with respect to any collateral or security for the reimbursement obligation of the Developei . -35. 0 ARTICLE IV REVENULS AND APPLICATION THEREW Semli-v 401. Revenues to die Peid Over to the Trustee. The Issuer Ws { the Revenues icy be paid io the Trustee for deposit whe► i necessary in accordance with ft twr this indenture to effect payment of the principal of, premium, it any, and interest on the bonds ha sarrie become due. Seceion 402. Poyments of Principal, Premlum and interest, The trustee sh- one available to the Paying Agent froin toe Revenues sufficient amounts to pay t`a principal of, prEr it.. it arts,, and interest on, the Bonds as the same become due and payable. Section 403. Revenues to So H#1d For +411 BoNholders. Certain Excepiduns. Ilia Rel�nnues shall, until applied as pro,,ided in this Indenture, by held by the Trostea for the benefit of '(he Cwnc,-i of all 0utst Sonds, except that any portion of the Revenues representing principal or redempt ,n ,rice of or purchase price of, and irte►ast' on, any Bonds previously called for r gdarription i, accordance with Article Vi of this Indenture, tendered (or deemed to have been terdered) for purchaaf. in accordance with the provisions of Article Xi hereof, or previously matu►.3, shail be field for the benefit of the owners of such Bonds only and shall not be deposited or invest+ed pursuant to Article V herW, notwithstanding any ^rravision of Article V. -36• P �;,�{.,•try„ Z ARTICLE V IkYESTMENT OF MONEYS SeCtion 501. kN*S m ffl of W- , ys. Morays in all Funds and Accounts shall be continuously invested and reinvested by the Trustee as provided in this Section 50100, until such time or times as said money sharl be needed for the purposes for which they were deposited. Moneys on deposit in the Developer Loan Fund M shall be invested in lPerff tte'd linve►sbnerits offend by the Association or by other barking kw9k►tims to its cudomers gorreraly. Moneys on deposit in all Funds and Accounts, except the Developer Loan FundN, may be invested only in: to) Government Obligations; or (b) Permitted Investments#; provided that (1) arriounts held in the DE•bt Service Fund (except moneys in the Reserve Account, which shall be invested as provided in the next paragraph) and the Tender Payments Fund drawn on the Letter of Credit or obtained from Collateral Funds shall be either (i) held as cash or (ii) small be invested and reinvested by the Trustee, only in Covernrnent Obligations maturing not later than the earlier of (A) thirty (30) days after the date on which they are acquired or (B) the date such moneys are required for the purpose of such Fund, and in repurchase agreements with 110ancial institutions having a rating at least egUal to the rating on thL Bonds and secured by Government Obligations maturing not later than the earlier of (x) thirty (30) days after the date on which they are acquired or (y) the date such moneys are required for the purposes of such Fund, investments pursuant to clause (ii) to be at the request of and as directed in writing by the Association by 12:00 noon Pacitrc time on the day prior to such investment or in the absence of such request, then at the discretion of the Trustee and (2) amounts in the Debt Service Func shall not be invested in any instruments bearing a credit rating by the Rating Agent of lesser quality than that of the Bonds. Except as provided above in this paragraph, all such investments shall mature not later than 90 days from the date of purchase, and not later, nor, to the extent reasonably practicabie, earlier, than the date such moneys or investment proceeds are required for the purposes of the respective Funds and Accounts; provided, however, that investments of moneys in the Seasoned Funds Account snall mature not later than the earlier of 90 days after the date they are invested or (b) when required for the purposes of such account. Notwithstanding the foregoing provisions. the Trustee shall not make any investment which does not conform to the investment guidelines provided to the issuer by Bond Counsel on the Delivery Date. Moneys oo deposit in the Reserve Account shall he invested in Government Obiigations maturing thirty (30) days after the date on which they are acquired. All inver?ment earnings or moneys held in the Pese.ve Account shall be transferred to tyre Interest Account and, to the extent not required to be transferred to the Interest Account pursuant to Section 307(d) hereof, shall be remitted to the Association on the Business Day succeeding ea,,i: Interest' Payment Date, to be credited against the Developer's obligations to the Association under the Reimbursement Agreement. Subject to Section 3.6 of the Loan Agreement, the Isst•er, from time to time and to the extent practicable. may provide the Trustee with written requests as to specific Permitted InveStments to be made with the moneys he'd in the Funds and Accounts. The Trustee shall, neverthelesq, select the Perrrtitteti Investments to be made with such moneys i;t accordance vrith prudent investment standards and ,he provisions of this Se;ticn 501. The TrLrstee shall hdvd no liability or responsibility for any loss resulting from any investment made in accordance with the provisions of this Section 501. All investments and all investment earnings thereon, othar than the investment earnings or moneys held in the Deserve Account, which shall be applied in accordance with the second paragraeh of this Section 501, shag constitute a Fart of the Fur.J or Account from which the muneys used co acquire such investments have come, except as provided in Section 305(a) hereof. The Trustee shall self and reduce to cash : sufficient amount of investrntnts in o Fund or Account whenever the cosh balance therein is ir.sufficiont to pay the amounts required to be paid therefrom. 7. h -_ ..__,.... , ,, W In computing the amount in any fund or Account, obligations ,purchased as an investment of moneys ftrein shall be valued at the market price of such obligations, excluding any accrued interest. 0 tna market price of such obligations is not readily available, the Trustee shall determine the value of such obligations in any reasonable manner that has been approved by Standard a Poor's Ctrporation. Any other provision in this Section 501 to the contrary notwithstanding, for purposes of the arbitrage requirements under Suction 103(c) of the Cods and the regulations proposed or promulgated thereunder, in computing the amount in aoy Fund or Account held by the Trustee under the provisions of this Indenture, investments shall be valued at cost. except if any investment is purchased at a discount, or 1 the amount of interest accruing in any period is greater than the amount of interest in the prior period (thus -effecting the reinvestment of interest as principal) thei amount of such discount or excess interest shall be added to the cost of the investment ratably each year over its term. Section 502. Eafning►s and Loss ts. Subject to the restrictions hereinafter set forth in this Article V, all capital gains, profits and interest earnings resulting from the investment of moneys in all Funds, including any Accounts thereof, shall be deposited into, and any loss of principal value resulting f,om the investment of moneys in any Fund or Account and any expenses incurred in making or disposing of investments shall be charged, when incurred, to the Fund or Account from which such investments were made. Section 503. investment YietJ Umitations. (a) Except as provided in paragraph (b), at no time during any Investment Year shall the Trustee nernoit the aggregate amount of Gross Proceeds of the Bonds invested in Nonpurpose Obligations with a yield higher than the yield on the Bonds to exceed 150 percent of the Debt Service on the Bonds for such Investment Year. In addition, the iruMee shall assure that, beginning with the Investment Year following completion of the Project, but in no event later than the fourth Investment Year, said aggregate amount of Gross Proceeds of the Bonds invested in Nonpurpose Obligations with a yield higher than 'the yield+ on the Bonds is ;promptly and appropriately reduced as the principal amount of the Bends is reduced. In order to comply with the preceding sentence, the Trustee shall reduce said investment in Nonpurpose Obligations with a yie'd higher than the yield on the Bonds within a period not to exceed thirty (30) days followinq the payment of principal of the Bonds (by maturity, redemption, acceleration or otherwise); providea, however, that said reduction need r,o: be made if the failure to make said ;eduction will not violate the 1b0 percent requirement set forth in the first sentence of this paragraph (a). (b) paragraph (a) hereof shall not apply to Gross Proceeds which: (i) era original proceeds or investment proceeds (as defined in clauses (i) and (k) of the the definition of Gross Proceeds) invested until needed for accrued interest on the Hands or for the governmental purposes of the Bonds; (ii) are hold in the Debt Service Fund; or (iii) are invested for a period not in excess of one year beginning on the date of re,:eipt and constitute investment proceeds gas defined in clause (ii) of the definition of Gross Proceeds). (c) For the purposes of paragraph (a), in determining the aggregate amount of Gross Proceeds of the Bonds invested in Nonpurpose Obligations, the Trustee shall value each Nonpurpose Obligation in. which Gross Proceeds are invested (including an ulfigation or security that was not a Nonpurpose Obligation when acquired but that becomes a Nonpurpose Obligation with respect to the Bonds (for example, obligations pledged as security for the Bonds) as if the Nonpurpose Obligation were acquired for its fair market value at the time such u0gation or security beconvs a Nonpurpose Obligation or the !'loads. The Trustee shall value Noripurp ose Obligations on the date of acquisition and need not revalue such Nonpurpose Obligations unless oth,,rwise required in this indenture, N4 ya. , .. VIM (d) For the purposes of paragraph (a), the Trustee shall compute the yield of the Bonds and the yield of Nonpurpose Obligations in accordance with Section 1.103-13(c) of the Regulations, except that the yield of the Swds shall be determined on the basis of the initial offering prica of the Bonds to the public (not including bond houses and brokers or similar persons or organization, acting ill tng capacity of underwriters or wholesalers) at which price a substantial amount of the, Bonds were sold, or if privately pf3ced, the price piid by the first buyer of the Birds or the acquisition cast of the first buyer of the Bonds, !n addition, the Trustee shall compu!e the yield of each Nonpurpose Obligation based on the fair market value thereof on the date of acquisition thereof or on the date the obligation or security in question becomes a Nonpurpose Obligation of the Bonds. In the case of variable rate Nonpurpose Obligations, the Trustee sh&ll detormine the yield thereof on the date the Nonpurpose Obligation is acquired and on the first day of each Investment Year by assuming that the rate of interest on the Nonpurpose Obligation will be the weighted average rate of interest for such Nonpurpose Obligation during the preceding one year period (or portion thereof in which the Nonpurpose Obligation was outstanding). For a Nonpurpose Obligation purchased on its date W issue, the Trustse shall determine the yield for the first Investment Year by assuming that the rate of interest will be the initial rate of iviterelst for st,ch obligation as determined under the prescribed formula for the variable rate of interest on the date cf issue of the Nonpurpose C09ation (without regard to any fixed rate irlititliy applicable to such Nonpurpose Obligation). (e) For the purposes of this Section, the Trustee shall compute the yield and the Debt Servico on the Bonds by assuming that the rate of interest or, the Bonds will be (i) for the first Investment Year, the initial rate of interest for the Bonds as determined under Section 211.6. hereaf on the Delivery Date (without regard to any fixed rate initiaily applicable to the Bonds pursuant to Section 211.A. hereof), and (ii) for subsequent Investment Years, the weightad average rate of interost foi the Bonds during the preceding Investment Year. Paragraph (a) of this Section shall not be deemed to be violated it, after the expiration of the period ending with the date of completion of the Project or three years from the Delivery Data (whichever is sooner), the Nonpurpose Obligations with a yield higher than the yield on the Bonds in excess of 150 percent of tha Debt Service on the bonds are disposed of by the Trustee within thirty (30) days of the annual determination of the Debt Service of the Bonds rand within thirty (3C) days of any redemption of the Bonds resulting in a reduction in annual Debt Service on the Brands. (f) For the purpose of paragraph ia) of this Section, the Trustee reed not sell or dispose of NnnpurposP Obligatiors subject to such paragraph if such sale or disposition would result in the realization of a loss for federal income tax purposes that exceeds that amount that would be paid to the Onitad States pursuant to Section 504 hereof (but for such sa!s or disposition) at the time of such sale or disposition (not including amounts that have been previously paid to the United States pursuant to Section 504) if a payment undo~' Section 504 were due at such time; provided. however, that the preceding semence shall no: apoly to the extent that other Nonpurpose ONigations acquired with the Gross Proceeds of tha Bonds may be sold or disposed of without incurring a loss in excess of the arnount tha! ;vould be paid to the United States pursuant to Section 504 (but for such sale or disposition) a: the time nf such save or disposition if a payment under S,&ction 504 were due at such time, and provided, further, that with raspmt to any Nonpurpose Obligation that, under the rule described in this paragraph need not be sold or disposed o!, said rule shall cease to apply thirty (30) days after the last day of the first computation period gnding thereafter on which the Nonpurpose Obligation in question can be sold or disposed of without incurring a toss in excess of the amount that :Mould be paid 'a the United States pursuant -) Section 504 (hut for such sale or disposition, if a payment under Section 504 were due at such time. For the purposes of this subsection, the Trustee shall treat diiferant issues of Nonpurpose Obligations acquired at different times or with different interest rates or maturity periods us separate issues. .39. } — r.nq. ., a I ;- Sock) n 504. A4tbate of Exc*sin Investment Earnings to the United States. (a) The Trustee shall calculate Excess Investment Earnings in accordance with paragraph (b) and shall pay Excess Investment Earnings to the United States in accordance .+i;h paragraph (c). The term "Excess Investment Earnings" means an amount equal to the sum o!: (i) the excess of (A) the aggregate amount eamed from the Delivery Date or, all Nonpurpose Obligations in which Gross Proceeds o$ the Bonds are invested (other than amounts attributable to an excess described in this subparagraph (1)), over (8) the an-rount that would have been earned if the yield on such Nonpurpose Obligations (other thin amounts attributable to an excess described in this subparagraph (i;) ham been equal to the yield on the Bonds, plus (ii) any income attributable to the excess described in paragraph (i). (b) At or prior to tho last day of the first Investment Year, the Trustee shall calculate the Excess Ir+vestrrant Earnings referenced in subparagraph (i) of paragraph (a) and shah transfer an ad'ntount equal to such EAcees Irv"b'twwA Eamiojs into the Excess InvesU neat Earnings Fund, such tranafer to be derived b m available awneys on the other Pmds and Acoounts hell by the Trustoe under this kxbnlum in the k0owing order of pr1,. ity: (i) the General Fund, (i) the Disbursement Alcwunt, (iiii) the Cwmbuclim kk+resf Payment Account, (iv) the Operating Lease -Up Loss Account and (v) ttar Apt nwW Withhold Account. in the event of any der-mency in avail moneys fur the purposss of such trerster, such defick-icy shall be paid by Me Developer upon dernarrJ of the Trustee. Thereafter, prior to the last day of e: •ch Investment Year and or. the date of the retirement of ,he Bonds, the Trustee shall calculate the amount of Excess Investmen! Earnings referenced in subparagraphs (i) and (ii) of paragraph ;a) and make corres;xMing transfers into the Excess Investment E3mings Furl. Said calculations sha!I be made by the Trustee in accordane.;e with the followinq: (1) Except as provided in (2), in determining the amount described in subparagraph (i)(A) of paragraph (a), the aggregate amount earned on Nonpurpose Obligations shall include (i) all incornc realized under federal income tax accounting principles (whether or not the porson earning such income is subject to federal income iax) with respect to such Nonpurpose Obligations and with respect to the reinvestment of investment receipt - from such Nonpurpose Obligations (without regard to the transaction costs incurred in acquiring, carrying, selling or redeeming such Nonpurpose Obligations), including, but not limited to, pain or loss realized on the disposition of such Nonpurpose Obligations (without regard to when su.h gains are taken into account under Section 453 of the Code relating to taxable yea, of inclusion of gross incarne), and inromc under Section 1272 of the Code (relating to original issue discornt) and (ii) any unrealized gain or loss as of the elate of retirement of the Bonds if any Nunnurpose Obligations is retained after such date. (2) ,n determining the amount described in subparagraph (i) of paragraph (a), an obligation cr security shall be treated as acquired for its fair market value at the time it becomes a Nonpurpose Obligation, so that gain or loss on the disposition of such an obligation or security shall be computed ••rith reference to such fair market value as its adjusted basis. (3) In determining the arnount described in subparagraph (i)(B) of paragraph (a), the yield on the Bonds shall be determined based on the actual yield of the Bonds during the period between the Delivery Date and the data the computation is made (with adjustments for discount or premium). (4) In determining the amount described in subparagraph (ii) of paragraph (a), all Income attributable to the excess described in subparagraph (i) of paragraph (a) must be taken into -40- r 4'.`(i` M I(4MIN • i(J; � r account, whether or not that income exceeds the yield on the Bonds, and no amount may be treated as "negative arbitrage". (c) life Trustee shall pay Excess Investment Earnings to the United States in installments with the first payment to be made not later than thirty (30) days after the end of the fifth Investment Year and with subsequent payments to be made not later than five (5) years after the preceding payment was due. The i rustae shalt assure that each installment is in an arnount equal to at least 90 percent of the Excess Investment Earnings with rest to the Bonds as of the close of the computation period. Not later than thirty (30) days after the retirement of the Bonds, the Trustee shall pay 100 percent of the theretofore unpaid Exces3 Investment Earnings of the Bonds. The Trustee shall r emit •such payments to ills United States at the address and in the manner prescribed by the Regulations as the same may be in time to time in effect, together with such reports and statements as may to prescribed by such Regulations. (d) In order to assure that Ex%,;:ess Investment warnings are paid to the United States rather than to a third party, investments by the Trustee in certificates of deposit and in investment contracts ## shall be made only in accordance with the Regulations therefor as from time to time in effect. (e) The Trustee slWl keep and retain for a period of si,, k6) years following the retirement of the Bands records of the determinations made pursuant to this Section 504. (f) Payments pursuant to paragraph (c) of this SecOM 504 shall be made to the maximum extent from rrraneys on depowt in tf* Exc:ess krrestrttent Eammgs Fund and, to the extort of any delik*mcly tFaerw for woh purpose, MM to made from the fallowing sources arxi in the foAovang order of priority: �,� fie CawwW Fund, (ii) the Disbursement Account, (iii) the Construction interest Payment Account, (iv) ttm Operating U%LwUp Loss Account and (v) the Appraisal Withhold Account. In the event ref any rewzi *V def-+ckwxy in available moneys for the purposes of such transfer, such mercy WW be paid by ttro Developor upon deer end of the 'Trustee. Section 505. lavestmenta; Arbitrage; Special Arbifre a Restriction. Subject to the provisions of Sections 503 and 504 hereof, the Trustea may make any and all investments permitted by the provisions of Section 501 hereof through its own, investment department. As and when P.ny amount invested pursuant to this Article way be needed f;:r disbursement, the Trustee may cause a sufficient amount of such investments to be sold and reduced to cash to the credit of the applicable Fund or Account. The issuer and the Trustee covenant with all Owners of the Bonds from time to time Outstanding that so long as any of the Bonds remain Outstanding, moneys on deposit with the Trustee under the Indeoture, whether or not such moneys were derived from the proceeds of the sale of the Bands or from any other source, wi" -lot be used in a manner w1hich, if such use had been made on the date of issuance of the Bonds. would have causoa the. Bonds to be "arbitrage hinds" within the meaning of Section 103(c) of the Code, and any lawful regulations proposed or promulgated thereunder, including SEtc:tions 1.103.13, 1.103-1A and 1.103-15 of the Incomo Tax Regulatiuns (%B CFR Part 1), as the same exist on this date, or may from time to time hereafter be arnencied, supplemented or revised. -41- r 4 1. , 1 ARTICLE VI REDEMPTION OF BONDS BEFORE MATURITY Section dot. Redomptlan. The Bonds shall be subject to redemption prior to maturity only as provided in this Article VI. Section 602. Aftndafory Redemption. The Bonds shall to subject to mandator} redemption as fellows: (a) The Bonds shall be subject to redemption in whole on or prior to the thirtieth (30th) day tollowin9 the Designated Purchase Date, Conversion Date or Reset Date, as the case may be, at a price equal to the principal amount ti;ereof plus interest accrued thereon to the date of redemption, 0 on the Designated Purchase Date the Trustee lacks Tender Payments derived from the sources described ir, Section, 1105(1). H Section 1105(2; or Section 1105(3) sufficient to pay the purchase price of all Bonds required to be purchased on such date pursuant to the p. ovisions of Article XI hereof. (b) TN Bonds shall be subjoct to redemption in part on the earlier of Augusq 1, 1989 or the 9wWst practicable Interest Payment Date after the Completion Dete: for which notice of redemption may be given pursuant to Section 604 hereof, at a price equal to the principal amount of Bonds redeemed plus interest accrued thereon to the date fixed for redemption in a principal amount as nearly equal as possible to, but not exceading, the amount remaining in the Developer Loan Fund on the earlier of July 1, 1989 or the Completion Date, respectively. (c) The Bonds shall be subject to redemption in whole or in part on any Interest Payment Date, at a price equal to the principal amount of Bonds redeemed plus interest accrued thereon to the date fixed for mdemption, upon the election .of the Association, to apply the amount of any net proceeds of insurance or condemnation awards not used to repair or replace the Project to the redemption of Bonds. (d) The Bonds shall be subject to redemption in wholo- or in oairt on any date, at a price equal to the principal amount of Bonds redeemed) plus interest accrued thereon to the date fixed for redemption, - ithin 45 days following an Acceleration Defr:ult or at the request or with the consent of tits Association following any other Event of Default under Vie Loan Agreement, . or, at the feaquest or with the consent of the Association following an acceleration of the Developer Lcan pursuant to the Reimbursement Agreement or the Cisbursemer.t Agreement, in ail an.ount as nearly equal as possible to, but not exceeding, the amount of the Developer Loan so accelerated. (e) The Borvlfs shall be subject to redemption in whole on -!ny date, at a price equal to the principal amount thereof plus interest accrued thereon to the date fixed for redemption which is not more than 22 days prior to and not later than the date of expiration of any Letter of Credit or Attemate Credit Facility unless the Trustee receives a renewal or extension of or replacement for sigh Letter of Credit or Aitemate Credit Facility rreet:ng the requirements of Section 5.8 of ,he Loan Agreement rmt less V,,an forty (40) days before the expiration of such Letter of Credit or Alternate Credit Facility. (f) The Bonds shah be subject to redemption in whole without premium on March 1, 1987, 00 in the event that construction on the Project has not commenced by February 1, 1987, +loll at an aggregate price equal to the principal amount of the Bonds, but without premium, plus unpaid accrued interest thereon (including, as to clause (ii), any additional interest due pursuant to Section 211.G. hereof) to tfae date of redemption. .q2. JO (g) The Bonds shall lad subject to redemption in whole at a price equal to the principal amount thereof plus interest accrued thereon to the date fixed for redemption on they first date for which notice of redemption may be given in accordance with the prowiKons of Section 604 of this lrtdenture following an Event of Default under the Collateral fledge Agreement. (h) The Bonds shall be su*ct to redemption in whole at a price equal to the principal amount thereof plus interest accrued thereon to the date fixed for redemption, on the first date for which notice of redemption may be given in accordance with the previsions of Section 604 of this Indenture, in the event of an Act of Bankruptcy of Association, or a Determination of Unenforceability, where the Developer does not cause to be delivered to the T'l-ustee a aUbstitute Letter of Credit in accordance with Section 5.8 of the Loan Agreement. (1) The Bonds shal! be subject to redemption in whole at a price oqual to the principal amount thereof plus interest acci*vod thereon to the date fixed for redemption, on th's first date for which rotice of redemption may be given in accordance with the provisions of Section 604 of this Indenture, in the event of receipt by Me trustee of written notice from the Association that an event of default has occurred under the Re!mbursement Agreement. Q) The Bonds shall be subject to redemption in whole at a price equal to the principal amount thereof plus inter►)st accrued thereon to the date fixed for redemption, on the first date for which notice of redemption .may be given in accordance with the provisions of Section 604 of this Indenture, in the event of acceleration of the Developer Loan or the occurrence of any other ev&.nt of default pursuant to Section 7.4. of the Loan Agreement. !k) The BoW:t' shall be suh)ect to redemption in whole at a price oqual to the principal amount OWMA Pius ktterest awxuod thereon to the date fixed for redemption, on te first date for which rMce of redemption may be givers in accordance with the provisions of SecOon 604 of this Indenture, in the event of a Mtermination of Taxability occurring on or "alter the Conversion Date. Section 603. Optional Redemption. The Bonds shall be subject to optional redemption as follows: (a) Prior to the Conversion Date, but not before September 1. 1987, the Bonds are subject to redemption on any Interest Payment Date, in the amount of S100,000 or more in an ;egral multiple of $25,000, at a redemption price equal to the principal amount to be redeem=u, plus accrued interest, without ;premium, in the event and to the extent that th9 Developer Loan is voluntarily prepaid, (b) Atter the Conversion Date, the Bonds are subject to redemption prior to thHir stated maturity, in whole or in part, in integral multiples of S5,000, on any of the following dates, at a redemp►ion price equal to the principal amount to be redeemed, plus accrued interest to the date of redemption, in the event and to the extent the Developer Loan is voluntarily prepaid, plus the applicablo premium set forth in the following table: ,� Qn Dates Redemption PremiUrr� The two interest Payment Dates first occurring: 7 years after the Conversion Date 3% 8 years after the Conversion Date 2 9 years after the Conversiin Date 1 10 years after the Conversion Date 0 -43• W v Thoa Issuer shall notify the Trustee at least 45 days before the redemption date of any optional redemption of Bonds and the Developer shall have deposited with the Trustee at least 95 days prior to merifing of notice by the Trur'ee of such redemption, an amount sufficient to psy the applicable redemption premium which shall be deposited by the Trustee upon receipt into the Seasoned Funds Account. No rye of optional redemption of Bonds shall be mailed by the Trustee, however, until the Trustee shall have reeved notice from the Association that the Developer Loan has been prepaid in an amount equal to they principal amount of the Bonds to be redeemer!. Section 604. Aullftrization to Trustee. The Trustee is hereby outhorized and directed, and hereby agrees, to give notice of the calf for redemption of Bonds at the times set forth. in Section 604 hereof, to fix the date for any such redemption within the periods prescribed by Section 604 hereof, and to redeem the Bonds so called on the date so fixed by the 'trustee and set forth in such notice. The Trustee shall give such redemption notice (i) in the case of redemption pursuant to subsections (a), (b) or (c) of Section 602.A or Section 602.E above or this Section 602.0, following receipt from the .Association as soarvicer of tha Developer loan under the Loan Agreement of notice of the amount of the Developer Loan prepaid or to be deemed prepaid, as appropriate: (ii) in the case of redemption pursuant to Section 602.A(e) above, at the !ime required therefor pursuant to Section 604, without any further authorization or direction; (iii) in the case of redemption pursuant to Section 602.A(d) above, as soon as possible, but not more than five (5) days after receipt of an opinion of Bond Counsel indicating that an Acceleration Default has occurred and upon acceleration of the Developer Loan by the Trustee, or after receipt from the Association of a request for or consent to acceleration of all or part of the Developer Loan following any Event of Default under the Loan Agreement other than an Acceleration Default; and (iv) in the case of redemption pursuant to Section 602.A(f), (g) or (h) above, as soon as possible. Notwithstanding any of the foregoing provisions to the contrar; , tree Trustee shall not give notice of any redemption of Bonds unless prior to giving such notice the Trustee holds Seasoned Funds, proceeds of the sale of the Bonds upon original issuance, earnings from the investment of such proceeds, proceeds from drawings upon the Letter of Credit, or Collateral Funds sufficient to pay all principal of and premium, if any, on the Bonds to be redeemed. Section 605. partial Redemption. In the event of a redemption (other than pursuant to Section 1110 of this Indenture) the Bonds to be redeemed shall be selected by lot in such manner as the Trustee deems appropriate and fair. The Trustee shall promptly notify the Issuer in writing of Bonds o, portions thereof selected for redemption. Prior to the Conversion Date Bonds shall be redeemed only in integral multiples of 5100,000; provided that to the extent any Bond is issued in any integral of 525,000 in excess of $100,000, such partial redemption may be of the entire principal amount of such Bond or of the amount in excess of 5100,000 it being the intent that Bonds not remain outstanding after such partial redemption in principal amounts less than $100,000. Following the Conversion Date Bonds shall he redeerricd in the principal amount of 55,000 or any integral multiple of S5,000. Upon surrender of any Bond for redemption in part, the Issuer shall execute and the Trustee shali authenticate and deliver to the Owner thereof, at thh .,xpense of the Issuer, a new Bond or Bonds of authorized denorr.inaticoos in an aggregate principol amount equal to the unredeemed portion of the 13nnd so surrendered. Any Bonds owned by the Association shall be redeemed prior to any other Bonds. Section 606. Notice of Redemp±;on. Except in the case of redemption prior to the Conversion Date as a result of the voluntary prepayment of the Developer Loan, in which instance notice shall be mailed not less than 45 days prior to the date fixed for redemption, or redemption of Bonds pursuant to Section 602.A (a) or (h) following liquidation of Collateral in which instance notice shall be given on the day of redemption, the Trustee shall give notice of any such redemption pursuant to this Article VI by sending such notice by certified mail, postage prepaid, not less than 7 days prior to the date fixed for redemption in the event of redemption prior to the Conversion Date and not less than 30 days prior to the date fired for redemption in tho event of redemption following the Conversion Date. All notices of redemption shall be mailed to the Association, the Tender Agent and to tone Owner of each Bon,! to be redeemed in whole or in part at the address of such Owner as shown or v j Bond Register; provided, howryver, that no such notir a of r,ademptoon shall be mailed unless on or p- for to such date the Trustee -44- 'r+ Itas re U-,iVh-„; a. id has on deposit funds available for redemption in an amount sufficient to pay 'che Redemption Price due upon such redemption; and provided further that in fl a event such redemption is to be made in whale or in part from Seasoned Funds, the Trustee shall have received notice from the Developer that an Act of Bankruptcy has not occurred on or before the Trustee mails ocitice of s•rch redemption. Neither the failure of an Owner to receive notice by mail nor any defect in any notice so rrWed shall affect the validity of the proceedings for such redemption. Such notice shall state the redemption date, the redemption price, the amount of accrued interest payable cti tha redemption date, the place at which the Bonds are to be surrendered for payment, that from the redemptio7 date interest on the Bonds will cease to accrue, and. if less than all of the Bonds Outstanding are to be redeemed, an identification of the Bonds oi• portions thereof to be redeemed. Any notice mailed as providau t'ri this Section 604 shell be conclusively presumed to have been duly given, whether or not the Owner receives such notice. Notwithstanding the foregoing, the Trustee shall not mail any notice of redem, `ion with respect to Bonds to be redeemed in whole or in part from funds received by the Trustee from draws upon the Letter of Credit or from Seasoned Funds unless the funds to be used in connection with such redemption are on deposit in the Debt Service Fund or the Seasoned Funds &,%count (and constitute Seasoned Funds). Section 607. Poyment Upon Redemption. Except in the case of B _ �,ds deemed redeemed pursuant to Section 1110, prior to each redemption date, the Trustee shall make provision for the payment of the Bonds to be redeemed or, such date by setting aside and holding in trust, or depositing in trust with any Paying Agent, an amount irom the Principal Account and the Interest Account or otherwise received by the Trustee from the Issuer or shall otherwise determine that it will have available as a result of a draw upon the Letter of Credit or Collateral Funds an amount sufficient to pay the principal of, and interest on, such Bonds. Upon presentation and surrender of any such Bond at the Principal Office of the Trustee or any Paying Agent, as the case may be, on or after the date fixed for redemption, the Trustee or any Paying Agent shall pay the principal of, and premium, if any, and irterest on, such Bond from the moneys set aside for such purpose. Bonds deemed redeemed pursuant to Section 1110 shall be paid as provided in Section 1101. Section 608. Effect of Redemption. Notice of redemption having teen aiv€n as provided in Section 604 Hereof, the Bonds or portions thereof designated for redemption (other than Bonds deemed redeemed pursuant to Section 1110) shall become due and payable on the date fixed for redemption and, unless the Issuer defaults in the payment of the principal thereof and premium, if any, and interest thereon, such Bonds or portions thereof shall cease to bear interest from and aher the date fixed for redemption whether or not such Bonds are presented and surrendered for payment on such datQ (as more particularly provided in Section 312). If any Bond or portion thereof called for redemption is not so paid upon presentation and surrender thereof for redemption, such Bond or portion thereof shall continue to bear interest at the rate set forth thereon until paid or until due provision is made for the payment of sarne. .485- ARYICLE V11 PAYMENT; FURTHER ASSURANCES 5ecdw 701. Payment of Princilml or Redemption Price of, and Interest cn, the Bonds. The ;sir shall promptly pay or cause to'" paid the principal or Redemption Price of, and the Werest on, every Fond issued hereunder according to the terms hereof, but shall be required to make such payment or cause such payment to I.* made only out of Revenues. Tho Issuer hereby designates the Principal Office of tho Trustee as the principal place of payment for the Bonds, and'the Trustee as principal Paying Agent for the Bonds, such appointment and designation'to remain in effect until notice of change is filed with the Trustee pursuant to the terms of this Indenture. Section 702. Designation of Additional Paying Agents. ; he Issuer hereby covenants and agrees to cause the necessary arrangements to be made through the Trustee and to be thereafter continued for the designation of alternate Paying Agents, if any, end for the making available of funds hereunder for the payment of such Bonds as shall be presented when due at the Principal Office of the Trustne or of the Principal Office of said alternate Paying Agents. Section 70,1, FWM#r Assurance. Except to the extent otherwise provided in this Indenture, the Issuer shall not enter into any contract or take any action by which the rights of the Trustee Gr the Owners may be impaired and shall, from time to time, execute and deliver such further instruments and take such further action as tnay be required by the Trustee to carry out the purpose -f this indenture. The Issuer shall be entitled to reimbursement from the General Fund for any action taken pursuant to this Section. Section 704. Immunities and Limitation of Aesoonsibilities of the Issuer, The Issuer may act upon the opinion or advice of its Counsel and shall be wholly protected as to tiny action taken or omitted in good faith in reliance upon such opinion or advice. The issuer may rely conclusively on any communication or other document turnished to it hereunder and reasonably believed by it to be genuine. 'rhe issuer sha!I not be liable for any action (1) taken by it in good faith and reasonably believed by it to be within its discretion or powers hereunder, or (2) in good faith omitted to be taken by it because it reasonably believed such action to be beyond its discretion or powers hereunder, or (3)taken by it pursuant to any direction or instruction by which it is governed hereunder, or (4) omitted to be taken by it by reason of the 'sack of any direction or instruction requited hereby for such action; nor shall it be responsible for the consequences of any error of judgment reasonably made by it. The Issuer shall in no event be liable fcr the application or misapplication of funds or for other acts or deiaui,s by any person, except for the willful misconduct of its own members, officers, agents and employees. When any payment or consent or other action by the [Esuer is called for hereby, it -nay defer such action pending receipt of such evidence (if any) as it may require in support t",Rreof. The Issuer shall not ae required to take any remedial action (other than the giving of notice) unless reasonable indemnity is furnished for any expense or iiability to be incurred thereby, other thar liabili!y for failure to meet the standards set forth in this Section 704. As provided herein and in the Loan Agreement, the Issuer shall be entitled to reimbursement for its expenses reasonably incurred or advances reasonably made in the exercise of its rights or the performance of its obligations hereunder, to the extent that it acts without prAviously obtaining indemnity. No permissive right or power to art which it may have shall be construed as a requirement to F: ct; and no delay in the exercise of a right or power shall affect its subsequent exercise of that right or power. Section 705. Staterrlsnts. The Issuer shall cause this Indenture or a financing statement relating hereto to be filed in such manner and at such places as may be required by law fully to protect the right, title and interest of the Trustee in and to the 'Trust Estate or any part thereof. The Issuer shall execute or cause to be executed any and all further instruments as may be required by law or as :Nall roasonably be requested by the Trustee k•r such protection of the interests of the Trustee and the Owners. and shall furnish satisfactory evidence to the Trustee of filing and refiling of such instruments .46- ;nr and of every additional iostrument which shall be necessary to preserve the lien of this Indenture upon the Trust Estate or any part thtEreof until the principal of, and premium, if any, and interest on, the Brands issuuod shall have been paid. Section 706. List of We Owners. The Trustee. as the Bond Registrar, will keep on file in the Bond Register a list of names and addresses of all Owners of !sands registered in the Bond Register together with the principai amount and numbers of such Bonds. The Trustee shai; be under no responsibility with regard to the accuracy of said list. At reasonable times and under reasonable regulations established by the Trustee, said list may be inspected and copied by tho Issuer, the Assw.iation. or by Owners of twenty-five percent (250i0) or more in aggregate principal amount of Bonds men Outstanding (or a das.ignated representative thereof), su:.h ownership and the authority of any such designated representative to be evidenced to the satisfaction of tho Trustee. Section 707. Use of Proceeds. The Issuer covenants that at least ninety-five percent (95%) of the amounts initially deposited in the Developer Loan Fund are and shall be used to fund a loan to provide multifamily residential rental property. Section 708. Accounting records and Report. The Trustee shall at all times keep proper books of record and account, in which complete and accurate entries shall be made of all transactions relating to the proceeds of Bonds, the Revenues, the Trust Estate and ail funds and accounts established pursuant to this Indenture. Such books of record and account shall be av3ilabte for inspection by the Issuer, the Association, the Developer, oy any Bondowner or agent or representative thereof duty auihori.:ed in writing, At reascriable hours and under reasonahle circumstances. The Issuer shall file with the appropriate govornmont agency all notices and reports required to ba filed under Section 103(1) of the Code ancf the .Act. Not later than 30 days following each scheduled Interest Payment Date on the Bonds, the Trustee shall prepare and file with the Issuer, the Association and the Developer a report setting forth: (i) amounts withdrawn from and deposited in each Fund and Account; (ii) the baiance on depo,;it in each Fund and Account as of the Interest Payment Date for which such report is prepared; (iii; a brief description of all obligations he'd as investments in each Fund and Account: and (iv) thr, amount applied to the payment or redemption of Bonds and a description of the Bonds or portions of Bonds so paid or redeemed. Copies of such reports shall be mailed or delivered to any owner of ary Bond upon request at a cost not to exceed the Trustee's actual costs of duplication and mailing or delivery. aectlon 709. Rights Under the Developer Luan Documents and the Collateral Pledge Agreement. The Developer Loan Documents and the Collateral PkKk a Agreement set forth certain covenants and obligations of the Issuer, the Developer, th- Trustee, and the Association, as medicable, and reference is hereby made to the Developer I-oan Documents and tf* Collateral Pledge Agreement for a detained statement of such covenants and obligations. So long as any of the Bonds remain Outstanding, the Issuer and the 'trustee shall faithfully and punctually perform and observe all obligations and undertakings on Chair parts to be performed and observed under the Developer Loan Documents and the CoUterral Fledge Agreement. Except as expressiy permitted by this Indenture, the Collateral Pledge Agreement or the Devoloper L. n Documents. the Issuer and the Trustee shall take no action, and shall permit no action to be taken by others, which action might release the Association from its liabilities or obligations under the Developer Loan Documents or the Ca laterall Pledge AWeenxmt or result in the surrender, termination, amendment or modification of, o• impair the validity of, the Developer Loan Documents or the CoNataral Pkdge Agrewriiiant. The Issuer hereby authorizes and directs the TrustLa to enforce any and all of its rights under the Developer Loan Documents or the C448 eral P%idge Agreement on behalf of the Issuer and the Owners of the Bonds. -47- M The Trustee hereby acknowledges, accepts and agrees to the terms, conditions, appointrn gnts and agencies of the Loan Agreement as they relate to it and its participation in the transactions contemplated thereby. Section 710. Possession tend Inspection of the Developor Loan Documents and the Collateral Pledgee Agreement. Except as specifeed below, this Trustee shall retain possession of the Developer Loan Documents or copies di eof, on behalf of the Issuer and shall release the same only in accordance with the provisions hereof. The Developer Loan Documents and ft C Woral Pledge Agreernerrt shall be available for inspection at reasonable times and under reasonable conditions, by the Issuer, the Association, and any Owner of any Bond. The Association sW retain poswsssion of the original of any Developer Loan Docurwnt a: to which it is this payee or the primary beneficiary. Section 711. Rights Linder the P,79ulator y Agreement. The Regulatory Agreement wili set forth certain covenants and obligations of tf Issuer, the Trustee, the Association and the Developer relating to the acquisition, construction and up ration of the Project, and reference is hereby made to the Regulatory Agreement for a detailed statement of such covenants and obligations. The Issuer and the Trustee shall faithfully and punctually perform and observe all obligations and undertakings on their part to be performed and observed under the Regulatory Agreement. Sxcept as expressly contemplated or permitted by this Indenture or the Regulatory Agreement, the Issuer and the Trustee shall take no action, or shall permit no action to be taken by others which action might release the Developer from its liabilities or ob!igations under the Regulatory Agreernent or result in the surrender, termination, amendment or modification of, or impair the validity of, the Regulatory Ag-eement. The Issuer hereby authorizes and directs the Trustee to enforce any ald all of its rights under the Regulatory Agreement on behalf of the Issuer and the Owners of the Bonds. The Trustee hereby acknowledges, accepts and agrees to the terms, conditions. appointments and agencies of the Regulatory Agreement as they relate to it and its participation in the transactions contemplated theraby. Section 712. Determination of Taxability; Notice. The Trustee shall immediately, upon knowledge of a Determination of Taxability, provide written notice thereof to the Issuer, the Association, the Remarketing Agent and the Developer. Section 713. Notice to Rating Agent. The Trustee shall promptly provide noticr; to the Rating Agent with respect to any amendment to the Coilateral Pledoe Agreement or the Letter of Credit. Section 714. Release of Collateeral. if the Developer shall deliver to the Trustee an Alternate Credit Facility which complies with the provisions of Section 5.8 of the Loan Agreement, the Trustee shall release to the Association Collateral then held for the benefit of the Trustee, but only to tho extent such release may b-% made without causing any of the requirfinents of said Section 5.5 to fail to be satisfied in full at any time from and after such delivery. r hl� i 1 .ter y I'� ARTICLE Wit DEFAUit i PROVISIONS AND REMEDIES OF THE MUSTEE AND THE OWN'EAS Section 801. Defaufts; Events of Default. FAch of the fol!owing shall constitute an event of defaLlt: (1) failure to make due and punctual payment o! any installment of interest upon any Bond when the same shall have become due and payable; (2) failure to mskn due and punctual payment of the principal of, or premium, if any, on any Bond, whether at the stated maturity thereof, or upon proceedings for redemption thereof, or upon the maturity thereof by acceleration; (3) any material brar'ch by the Issuer of any representation or warranty made in this Indenture or the Bonds or failure by the Issuer to observe and perform any covenant, condition or agreement on its part to be observed or performed under this Indenture or the Bonds (other than as referrsd to in clauses (i) or (2) of this Sect;on 801). for a period of sixty (60) days after written notice specifying such bteach or failure and requesting that it be remedied, has been given to the Issuer, the Association and tho Developer by the Trustee or by the Owners of not less than twenty-five percent (26%) in aggregate principal amount of the Bonds then Outstanding, unless (i) the Trustee shall agree in writing to an extension of such time prior to its expiration or (ii) if the breach or failure be such that it cannot be corrected within the applicable period, corrective action is instituted by the Issuer or by the Association or the Developer on behalf of the Issuer within the applicable period and is being diligently pursued; provided, however, that notwithstanding Section B09 hereof, a breach of the covenants set forth in Sections 503, 504, 505 or 707 hereof or of any other covenant with respect to the tax exempt status of interest on the Bonds may nct be %vaived nor may the time for performance be extended hereunder; or (4) fa�lurE by the Association to honor any draw on the Letter of Credit made by the Trustee pursuant to Section 309 hereof, or the occurrence of an Event of Default under the Collateral Pledge Agreement. Section 802. Acceleration. Upon the occurrence of an Event of Default specified in clauses (1), 12) or (4) of Section 801 hereof, the Trustee shall, subject to the provisions of Section 810 hereof, de.-lare the aggregate principal amount of the Bonds then Outstanding and the interest accrued thereon immediately due and payable, and such principal and interest shall thereupon become and be immediately due and payable; provided that. interest, on such accelerated Bonds shall continue to accrue until the date fixed for payment of the principal thereof. Upon the, occurrence of an Event of Default specified in clause (3) of Section 801 hereof, and so long as such event is continuing, the Trustee may, and upon receipt of notice given by the Owners of mt less than twenty-five percent (25%) of the aggregate principal amount of Bonds then Outstanding shall, declare the aggregate principal amount of the Bunds then Outstanding and the interest accrued thereon (to the date fixed for payment of such principal) irr-mediately due and parable, and such principal and interest shall thereupon become and be immediately due: and payable. Immediately upon acc,Aeraticn as set forth above, the Trustee (i) shall draw on the Letter of Credit as provided Wow and, (ii) immediately after the Association honors the Trustee's request to draw upon trte Letter of Credit, shall transfer all moneys ther on deposit in all of the Funds (except any amounts drawn on the Letter of Credit and any amounts representing Seasoned Funds to be applied to such redemptior, or to pay expenses due under Section 308 hereof) to the Association and (iii) shall take such action as is necessary to pay the Bonds out of such moneys at the earliest possible date -49. • .. �� i Al i after pn)v ding the Bond Owners with a notice of redemption as provided in Section 6(Y. hereof. The amounl drawn unftr the Letter of Credit shall equal the aggregate unpaid principal and interest on the Outstanding Bonds to thet redemption datu fixed by the Trustee, less this amount of any Seasoned Funds held by the Trustee herevnder which are available to redeerr,, Bonds. The Trustee also shall take, Nhatever additional action at lew or in equity may appoar necessary or desirable to collect the moneys necessary to pay the redemption price of the Bonds. in the event a draw under the Letter of Credit is net' honored, the Trustee shall take immediate action under the Collateral Hodge Agreement to liquidate the Collateral. The above provisions of Sections 801 and 802 hereof are subject to the conditions that if, aftQr the principal of ail Bonds then Outstanding shall have been so declared to be due and payabh• prior to the Trustee's draw on the Letter of Credit referred to hereinabove, all arrears cf interest upor, such Bonds, and intefesi on overdue installmenis of interest (to the extant permitted by law) at the rate of interest they. in effect on the Bonds, and the principal and redemption premium, if any, on ail Bonds then Outstanding which snail have become due and payable otherwise than by acceleration, and all other sums payable under this Indenture, except the principal of, and interest on, the Bonds whict by such declaration shall have become due and payable, shall have been paid by or or, behal', of the Issuer, together with tho reasonable expenses of the Trustee and of the Owners of such Bonds, including reasonable attorneys' fees paid or incurred, then and in every such case, but only upon recaipt by the Trustee of the express written consent of the Owe iers of a majority in principal amount of the Bonds then Outstanding, the 'trustee may/ annul such declaration of maturity and its consequences, which waiver and annulment shall he binding upon all Owners; but no such waiver, rescission and annulment shall Wend to or affect any subsequent default or impair any right or remedy consequent thereon. In the case or' any such annulmen!. the Association, the Issuer, the Trustee and the Owners shall be restored to their former positions and rights under this indenture. Nothing contained in this Section 802, however, shall be construed to allow the Trustee to permit its rights on behalf of the Owners under either the Letter of Credit or the Collateral Pledge Agreement to be reduced, to lapse or otherwise be extinguished. Notwithstanding airy other provision of this Indenture, ir the event of the insolvency of the Association, and the occurrence of an Event of Default under subsection (1) or (4) of this Section, the Trustee shall immediately accelerate and redeem the Outstanding Conds. Section 803. Remedies; Rights of the Owners. The Trustee may pursue any available remedy at law or in equity by suit, action, mandamus or other proceedings upon thq occurrence of are Event of Default. to enforce the payment cf the principal of, premium, if any, and interest on, the Bonds then Outstanding, and to enforce wnd compel the performance of the duties and obligations of the issuer as herein set forth. In acidiiion, the Trustee may, upon notice to the issuer and the Association but without the consent of the Issuer or the Association, exercise any and aU remedies afforded the Issuer under any Developer Loan Documents, the Collaterai F kxkje Agreen of or the Regulatory Agreement in its narne or the name of the issuer without the necessity of joining the Issuer. If an Event of Default shall have occurred and be continuing and if requested so to do by the Owners of not less than twenty-five percent (25-40 in aggregate principal ainount o► Bonds then Outstanding, and the Trustee shall be indemnified to the satisfaction of the Trustee as provided in Section 901 hereof, Me Trustee shall be obliged to exercise such one or more of the rights and powers conferred by this Section 803 and Section $02 hereof as the Trustee being advised by its Counsel shall deern most expedient in the interests of the Owners. No remedy by the terms of this Indenture conferred upon or reserved to the Trustee (or to the Owners) is intended to be exctusrve of any other remedy, +gut each and every ►emiedy shall be -50• la ot hive :. t • i shall be in addition to any other remedy c',ren to the Trustee or to the Owners hereunder or now or hereafter existing at law or in equity or by statute, . No delay or oftsi3gn to exercise any right, power or remedy accruing upon any Event of Default SW 01mir any such fight, power or remedy or shall be construed to be a waiver of any such Event of Default or aoquib:�,ence therein; and every such right, power or remedy may be exercised from time to On* wid as otten as may be deemed expedient. No weivar of any Event of Default hereunder, whether by the Trustee or by the Owners, shall extend to or shall affect any subsequent Event of Default or shall impair any rights or remedies consequent thereon. Section $04, light of the Owners to Direct Proceedings. Anything in this Indenture t^ the contrary notwithstanding, the Owners of not less than a majority in aggregate principal amount of Bonds then Outstanding shal! have the right, at any time by an instrument or instruments in writing ex,.cuted and delivered to the Trustee, to direct the time, method and place of conducting all proceedings to be takers in connection with the enforcement of the terms and conditions of this Indenture, or for the appointment of a receiver or any other proceedings hereunder; provided that such direction shad not be otherwise Iran in accordance with the provisions of law and of this Indenture, and that the Trustee shall have th-3 right to de,:line W follow any such direction if tho Trustee shall be advised by counsel that the action or ptoceeding so directed may riot he taken lawfully, of it the Trustee in good faith shall d.3tarmine that the action or proceeding so directed would involve the Trumee in personal liability or be, unjustly prejud,cial to Owners not parties to such direction. Section 605. Application of Moneys A!I moneys received by the 7iustee pursuant to any right given or action taken under the previsions of this Article, shall be transferred, to the extent necessary to pay the principal of and interest on all outstanding BondF, to the Debt Service Fund, with such moneys to lie depos+led in the Accounts thereof in the order provided therein, and the balance (from proceeds of the Collateral) shall be applied to the payment to the Trustee of its reasonable expenses incurred in exercising its rights and remedies under this Article MIN; provided that all foods drawn under the Letter of Credit (8xc:ept Tender Payments) shall be used only to pay fhe principal and interest on Bonds; and provided, further, that all Tender Payments shall be dep .sited by the Trustee in the Tender Payments fund. Section &Oa. pemedies Vested in the Trustee. All rights of action (including the right to file proofs of claims) under th,s Indenture or under any of the Bonds may be enforced by the Trustee without the possession of any of the Bonds or the production thereof in any trial or other proceedings relating ,hqreto and any such suit or proceedi;:g instituted toy the Trustee shall bo brought in i!s name as Trustee without the necessity of joining as plaintiffs or defendants any Owners of the Bonds, and any recovery or judgment shall be for the equal and ratable benefit of the Owners of the Outstanding Bor:ds. Section 807. Umitatfon on Rights and Remedies of the Owners. No Owner of any Bond shall halve any right to institute any suit, action or pro,Peding in equity or at law for the enforcerm:mt of !his Indenture or for the execution of arty trust thereof or for the appointmeIt of a receiver or any other T.�svaecty h©reunder unless (1) an Event of DefaJt has occurred of which this T►uslee has been notified as pmvidod in subsection (g) of Section 901 hereof, (2) tree Owners of ;ot legs than twenty-five oercent (251',p) in aggregate princip:'al amount of Bonds then Outstanding shall have m.nde written ,equest to the Trustee, shall have oifer9d the Trustee reasonable opportunity 61,)or to proceed to exercise the powers herein granted or to institute such action, suit or l,roceading in its own narie, and shall have offered to the Trustee indemnity salisfactory to the Trustee as provided in Section 901, and (3) the Tru:,tee shall 'hereafter tail or refuse to exercise the powers herein granted, or to institute such action, suit or proceeding in its own nr hie as Truslee; and such notification, request and offer of opportunity and indemnity are hereby der.►u,ed in revery rase at the option r,f the Trustee i.f ne conditions pr,,i~edent M the execution of the powers and trusts M this Indenture, and to any acticn or 16121111 k f cause of action for the enforcement of this Indenture, or for the appointment of a receiver or for any other remedy hwounder. No one or more Owners of the Bonds shall have any right in any manna, whatsoever to enforce awiy right hereunder except in tho manner herein provided, and all proceedings at law or in equity shall be instituted, had and maintained in the manner herein provided and for the equal and rataxble benefit of they owners of all Bonds then Outstanding. Nothing in this Indenture coritsinod shad, however, affect or impair the right of any Owner to enforce the payment of the pravipal of, and premium, if any, and interest on, any Bond at and after tho maturity thereof. Section 808. TOrmination of Proe*edings, In case the Trustee shall have proceeded to enforce any right under this Indenture by the appointment of a receiver or otherwise, and such proceedings shall have been discontinued or abandoned for any reason, or shall have been deterr:,ined adversely to the Trustee, then and in every such cese the Issuer, the Trustee and the Owners shall be restored to their former positi-/ns and rights hereunder, respectively, and all rights, rarnedies and powers of the Trustee shall continue as if no such proceedings had been taken. Section 809. Waivers of Events of Default. The Trustee may, in its discretion, waive any Event of Default hereunder (odxw than an Event of DafaeA with respect of ft provisions of Mcie V hereof) and re-scind its conserauences and shall do so upon the written request of the Owners of not less than a majority in aggregate principal amount of all Bonds then Outstanding; provided, however, that there shall not be waivod (1) any Event of Default in the payment of the principal of, or premium on, any Outstanding Bonds when due (whether at maturity or by redemption or as a result of acceleration), (2) any Event of Default in the payment when due of the interest on any such Bonds or (3) any Event of Cefa ,--It in the payment of any amount under Article XI of this Indenture, unless prior to such waiver and rescission, all arrears of interest and 311 arrears of principal and premium, if any, when duc, as the case may be, togethE;r with the reasonabie expenses of the Trustee and of the Owners of such Bonds, including reasonable attorneys' fees paid or irn;urred, shall have been p3id or provided for and the owners of not less than a majority in aggregate principal amount of all Bonds then Outstanding approve such waiver: arid, provided, further, that any declaration pursuant to Sertion 802 hereof made at the; request of the Owners of twenty-five parcent (25%) or more in aggregato principal amount of the Bonds titan Outstanding shall not be waived. In the case of any such waiver and rescission, or in case any proceeding taken by the. Trustee on account of any such default shall have been discontinued or abandoned or determined adversely to the Trustee, then and in every such casa the Issuer, the Trustee and t1he Owners shall be restored to their former positions and righrs hereunder, respectively, but no such waiver and rescission shall extend to ar►y subsequent or other dWaull, or irn;,air any right consoquent thereon. All waivers under this Indenture shall be in writing and a ropy thereof shall be delivered to the (ssuer and to the Association. Sect�on 810. Umitation. Notwithstanding anything to the contrary in this Indenture, neither tht.1 Trustne, the Issuer nor the Bondowrror, , ;hall, without the prior written consent of the AsscCiation, tape any action to accelerate the Boners, except for the occurrence and continuation of ^-i Event of Default under Sections 7,11(a) or 7.1(d) of the Loan Agreement or the occurrence and continuation of an Event of Defatirlt under 4ection 12(d) of the Collateral Pledge Agreement, unless and until the Association shall fail to honor any draw on the Letter of Credit; provided that the Trustees shall at all times be free to. and shall. Seek recovery under the Letter of Credit of any amount duo .and payable thereunder, when and as ;he same shall become due and pay.3ble. -52- i A ARTICLL IX THE TRUSTEE Oection 901. Acceptance of the Trust. The Trustee hereby accepts the trust imposed upon it by this indenture, represents and covenants that it is fully empowered under the applicable laws and regulations to accept said trust, and agroes to perform said trust, but only upon and subject to the following express terms and conditions, and no implied covenants or obligations shall be read into this Indenture against the T. ostee. (a) 'the Trustee may execute any of the trusts or powers hereof and perform any of its duties by or through attorneys, but shall not be re!;punsible fcr tho acts of any attomr~, s, ,agents or receivers appointed by it in accordance with the standards set forth herein. The TFLstee mEy, in all cases, pay such reasonable compensation to all such attorneys, agents, receivers and employees as may reasonably be employed in connection with the trusts hereof. The Trustee may act upon the opinion or advice of its counsel and shr,ll ue wholly protected as to any action taken or omitted in good faith in reliance upon such opinion. The Trustee shall not be responsible for any loss or damage resulting from any ;action or non -action in good faith in reliance upon such opinion or advice. (b) The Truszea shall not be rosponsible for any recital hemin or in the Bonds (except with respect to the certificate of the Trustee endorser) on the Bonds); or the validity of the execution by Me Issuer of this Indenture or any supplements thereto, or any instruments of further assurance; or the legality or validity of the Regulatory Agreement, the Cullateral Fledge Agreement or the Developer Loan Documents or any document or instrument relating thereto; or the recording or rerecording, or filing or re -filing of this Indenture or a financing statement relating hereto or the Regub:%;ory A.greerne,nt; or insuring the Project or coVecting any insurance moneys; or the sufficiency o, the security for the Bonds issued hereunder or intended to be secured hereby. The Trustee shall riot to responsibie cr li able for any loss suffered in oonnection with any invostment of funds �irnade by it in accordance with article V hereof, including, without limitation, any loss suffered in connection with the sale of any investment pursuant to Article V hereof. (c) The Trustee shall nut he accountable for the use of any Bonds authenticated or Jeliveree, oerounder. The Trustee may become an Owner of Bonds with the same rights which it wouid have if it Yvere not rustee. To the eAtent permitted by law, the Trustee may receive tenders and purchase Bonds from itself, including any department, affiliate or subsidiary, with like effect as if it were not the Trustee. (d) The Trustee shall be protected in acting in good faith upon any notice. req!-gist, rosolution, conse.r,' certiticate, affidavit, letter, telegram, statement, opinion, appraisal. report, policy, bond, letter of instruction or other vapor or document, or a: al co,-rimunication or direction, bel;eved by the Trustee to be genuine and correct and to have been signed, presented, sen, or given by tha proper person or pe+•sons, including,, a certificate to the effect that no act of bankruptcy has occurred. Specifically, with r,•spect if; the administration, enfoi cernent of and compliance with the Developer Loan Documents acid the Regulatory Agreernerit, the Trustee shall tie on4itlr d to rely conclusively ,.tpc�n the accuracy of the certificates of thy_? Association and tite Developer provided for therein and shall not be obligated to make any independent investigation with respect thereto. (e) As to the existence or r,on-existence of any fact or as to the sufficiency or validity of any inMrurnent, paper cr proceeding. the Trustee shall be entitled to rely upon a certificate signed on behalf o; the Issuer by the Mayor, the City Administrator or the City Clerk ## as sufficient evidence of the facts therein contained, rind prior to the occurrence of an Event of Detault of which the Trustee has been notified or is depmed to have notice as provided in Section 901(g) hereof or subsequent to the waiver, resci„ion or annulmont of an Event of Default as provided in Anic:le VIII -53- Y her"shall also be at liberty to accept a similar certificate in the event that any particular ,dealing, transaction or action is necessary or exp6dient, but may, at its discretion, secure such further wvidw-c:e deemed necessary or advisable, but shall, in no case, be hound to secure the same. The Trustee may accept a certificate signed on behalf of the Issuer by any of the aforementioned officars to the effect that a resolution has been duly adopted, and is in full force and effect. (f) The permissive right of the trustee to do things enumerated in this Inden,.ure shall nee be construed as a duty and the Trustee shall not be liable in the performance of its obligations hereunder except for its gross negligen^e or willful misconduct. (g) The Trustee shall not be required to taka notice or be deemed to have taken notice of ti'e occurrence of any event of default hereunder or under the Loan Agreement, Regulatory Agreement or any other agreement to which the Trustee is a party (including, but not limited to, any default hereunder), except iailure by the Isr:uer to cause to be made any of the payments to the Bondowners required to be made by Sectior, 307 hereof, unle s;. the Trustee shall bo specifically notified in waiting of such default or event by the issuer or the owners of at !Past 25°/r in aggregate principal amount of all Bonds then outstanding. (h) At any and all reasonabla times trio Trustee. and its duly authorized agents, a"arneys, experts, engineers, accountants and representatives, shall have tf a right fully to inspect the Project, including all books, papers and records of the Issuer or the Developer pertaining to the Project and the Bonds, and to take such memoranda from and in regard thereto as may he desired. (i) The Trustee shall not be required to give any bond or surety in respect of the execution of its trusts and pothers hereunder. (j) Before taking any action u!)dor Article VIII hereof or this Section at the request or direction of the Owners (except a; to the expense of a draw upon the Letter of Credit), the Trustee may teouire• that an indemnity bend satisfactory to the Trusiee be furnished by' the; Owners for the reimbursement of all expenses to which it may be put and to protect it against al; liability, except liability which i, adjudicated to have resulted frorn its gross negligence or willful misconduct in cannecrion with any action so taken. (k) All moneys received by the Trustee or any Paying Agent shall, until used or applied or invested as herein provided, shall ►ie held in trust for the purposes for which they were received. and shall tie segregated as required by Section :302 hereof. Neither the Trustee nor any Peying Agent shall be under any liability for interest on any moneys received hereunder except such as may be agreed upon. (1) The Trustee:, prier to the occurrence of an Event of Default spe;c;fied in Section 801 of this Indennture and after the curing of all Evens of Default which may have occurred, undertakes to perform such duties and only such duties a, are specifically set forth :n this Indenture anti, in the absence of bad faith on its peer;, the Trustee may conclusively rely. as to the truth of the statements and correctness of tho opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of 'this Indenture, but in ..Ae case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall bo under a duty to examine the same to determine whether they conform to the requirements of this Indenture. In case an Event of Default has occurred of which the: rustee has knowledge cr is deemed to have knowledge pursuant to Section S01(g) hereof (which has not been cured), the Trustee shall exercise such of the rights and powers vested in it by this !ndenturc,, and use the same degree of care and skill in their exercise, as a prudent person would esxemise or use under the circurnstances in the conduct of his own affairs. .54. y•, 1 r AAO f l.a. •r., � •ter e (m) No provisions of this Indenture shall be construed to relieve the Trustee from liability for its own n Vige:►nt action, its own negligent failure to act, or its own willful misconduct, except that: (1) this subsection shell not be construed to limit the effect of Section 901(1) of this Section; (2) the Trustee shall not be liable for any error of judgment made in good faith by an c"'• .er of the Trustee, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; (3) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Owners of ,a majority in aggregate principal amount of the Bonds Outstanding relating tc the time, method and place of conducting any proceeding or any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this indenture; and (4) no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise Incur any financial liability in the performance of any of its duties heroundei or in the exercise of any of its rights and powers (except as to the expenses of a draw under the Letter of Credit or the rpolization of Collateral Funds, in which event the Trustee may recover its expenses in accordance with the provisions of Section003 and of the Collateral 4gre+emen,), if it shall have reasonable grounds for believing that repayment of such funds or adegUate indemnity against such risk or liabi!ity is not reasonably assured to it. (n) the Trustee shall make ail determi,iations of interest payable or accruing on the Bonds and give all notice to the pay/ors as required by the Indenture and Loan Agreement. Section 902. Corporate Trustee Required; Eligibility. There shall at all times bF a Trustee hereunder which shall be a bank. trust company or national banking association organized and doing business under the law_ of the United States of America or of any state, aLithorized under such laws to exercise corporate trust powers, authorize ' to accept and exercise the trusts herain provided, having a combiner) capital and surplus of at least 6100,000,000 and subject to supervision or ex<sr7rination by federal or state authority. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then for the purposes or this Section 902, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published if at. any time the Trustee shell coase to be eligible in accordance with the prov:, ,!ons of this Section 902, it shall resign irnnriediately in the manner and with the effect hereinafter specified in this Article IX, and shall irramediateiy provide notice of such resignation by registered or certified mail to the issuer, the Association, the Developer, and to each Owner of Bonds as shown by the list of Owners required by Section 706 hereof. Section 903. Competmation of Trustee. The Developer has covenanted in ihit Loan Agreement to pay to the Trustee from tirio to time the; expense of all services rendered by the Trustee in the execution of they trust created hereby and in the exercise and perforrnonl:e of any of the rights and duties hereunder of the 'trustee and to pay r reimburse ;he Trustee for all expenses, disbursements and advances incur red or made by the "f rustee in ,accordance with any of the provisions of this Indenture (including the reasonable compensation and the expenses and disbursemeWs of its counsel and of all persons not regularly in its employ) except any such expense, disbursement or advance as may arise from its gross nergligencP, willful misconduct or had faith, should the moneys in the Genoral Fund not be sufficient to pay such fees, charges and expenses of the Trustee:. SpeWn 904. Notice to the Owners; If 0afault ()ccurs. If an Event of Default occurs of which Trustee is by Section b)01(g) hereof required to Wke notice or if notice of such Event of Default be given as provided in said Section 901(g), the Trustee shall promptly give written notion thereof by -55. �O Mob d y R 4 'N re tared r+r certified nW, within thirty (30) days (unless such default is curai or waiver!), to each Owrw of Bonds #wm OutstaixOng shown by the Bond FWgister required by the terms of Section 70C hereof to be kept at the office of the Trustee. Se+chm 905. Ifntwwrifion by the Trusm. If any judicial procoodings arise to which tho Issuer is a party and which, in the opinion of the Trustee and itc Counsel, has a substantial bearing on Pie interest of Owners of the Bonds, the Trustee may intervene on behalf of Owners and, subject to the provisions of Section 901(j), shall do so if requested in writing by the Owners c` a majority in aggregate principal arruunt of all Sonds then Mtstandin5 Section 906. Successor Tr:istee. Any corporation or association into which the Truster: may be merged, C. with which it may be consolidated, or to which it may sell, lease or transfer its corporate trust business and assets as a whole or substantially as a whole, shall be and become successor Trustee hereunder and shall be vested with all the trusts. power, rights, obligations, duties, remedies. imrnunitie:: and privileges hereunder as was its predecessor, without the execution or filing of any instrument on the part of any of the parties hereto. Section 907. aesigna;ion by the Trustee, The Trustee may at any time resign from the trust hereby created by giving sixty (60) days' written notice by registared or certified mail to tho issuer, the Association and to each Owner of Bonds as shown by the list of Owners required by Section 700 hereof, and such resignation shall tale effect at the appointment of a successor Trustee pursuart to the provisions of Section 909 hereof and acceptance by the successor Trustee of such trust. If no suc:.'ossor Truittee shall hrve been so appointed and have accepted appointment within sixty (60) days of the giving of written notice by the resigning Trustee as aforesaid, the resigning Trustee tn&y petition any court of competi nt jurisdiction for the appointment of a successor Trustee. SeVion 908. Pernovat of the Trusted. The Trustee rnav be removed at any time, by an instrument or concurrent instruments in writing delivered to the Trusts the Issuer, the Association and the Developer and signed by the Issuer, or if an Event of Default shall have occurred and be continuing, by the Owners of a majority in aggregate principal amoun, of Bonds then Outstanding; provided that such removal will not be effective without the appointment of a successor Trustee. Section 909. Appointment'. of Successor Trustee. In rase the Trustae hereunder shall- (1) resign pursuant to Section 902 or 907 hereof; (2) be removed pursuant to Sw.tion 9U8 hereof; or (3) be dissolved, taken under the control cf any public officer or officers 01. of a receiver appointed by a court, or r herwise h^come incapable of acting hereunder, a succer sear shall be appointed by the Issuer; provided that if a successor TrUStee is not so appointed w0hin ten (10) clays after notice of resignation :s mailed or an instrument of removal is delivered as provided under Sections 902, 907 mid 906 hereof, respectively, or within ien ,10) days of the Issuer's knowledge of any of the eventi specified in (3) hereinabove, then the Owners of a majority in aggregate principal amount of Bonds then Outstanding, by an instrument or noncurrent instruments in writing signed by or on behalf of such Owners, and delivered to the Truster: with notice•: thereof given to the Issuer, may designate a Successor Trustee. Every such successor Trustee appointed pursuant to the provisions of this Section 909 must oosseSs the qualifications necessary undo- Section 902 to serve as Trustee under the terms and conditions of this Indenture. Section .910. Concerning Any ,UCce=or Trustee. Every successor Trustee apf)oInted hereunder shall execute, ,acknowledge and Jeliver to its predecessor and also to the issuer and rho Association, an instrument in writing acc6pling such appointment hereunder, and thereupon such successor shall become fully vested with all the trusts, powers, rights, obligations, duties, remedies, .g6. irmunities and privileges of its predecessor; but, nevertheless, (1) such predecessor shall, on the written rquest Of the Issuer, execute and Oeliver an instrument transferring to such successor Trustee ail ft trusts, powers, rights, obligations, duties, remedies, immunities and privileges of such predecessor hereunder and (2) such predecessor shall deliver all securities and moneys held by it as Trustee hereunder to its stucces,sm; provided, however, that before any such delivery is required or made, all proper fees, advances and expenses of the predecessor Trustee shall be paid in full. Should eny instrument in writing from the Issuer be required by any successor Trustee for more fully and certainly vesting in such successor, the trusts, powers, rights, obligations, duties, r,-,medies, immunities and privileges hereby vested in tfhe predecessor, any and all such instruments in writing shall, on request, be executed, acknowledged and delivered by the Issuer. The resignation of any Trustee and the instrument or instruments removing any Trustee and appointing a successor hereunder, together with all other instruments provided for in this Article IX, shall be filed or recorded by the successor Trustee in each recording office, if any, where the Indenture or a financing statement relating thereto shail have been filed or recorded. Section 911. Designation and Succession of the Paying Agent; Agreement With the Paying Agent. The Trustee shall be the Paying Agent for the Bonds. Any bank, nationd banking association or trust company with or into which any Paying Agent may be merged or consolidated, or to which the assets and business of such Paying Agent may be cold, sha;I be deemed to be the surr'essor of such Paying Agent for the purposes of this Indenture, If the position cf Paying Agent shall become vacant for any reason, the Issuer may appoint a bank, national banking association ur trust company located in the same city as such Paying Agent to fill such vacancy. Each Paying Agent shall enjoy the same protective provisions in the performance of its duties hereunder as are specified in Section 901 henaof with respect to the Tru_tee in,afar as such provisions rnay be applicable. Section 912. Appointment of Co -Trustee. It is the purpose of this Indenture that there shall be no violation of any !aw of any jurisdiction, (including particularly the law of the State) denying or restricting the right of banking corporaiians or associations to transact business as trustee in such jurisdiction. It is recognized that in case of litigation under this Indenture, the Loan Agreement, the Collateral Fledge Agreement or the Regulatory Agreement, and in particular in case of the enforcement th erecif or default thereunder, or in case the Trustee, deems that by reason of any present or future law of any jurisdiction it may not exorcise any of the power-,, rights or remedies herein granted to the trustee or hold title to the properties, in trust, as herein granted, or take any .action which may be desirable or necessary in connection therewith. it rnay be necessary that the Trustee appoint an additional individual or institution as a separate or cc -trustee, The following provisions of this Section 912 are adapted to these ends. In the event that the Trustee appoints an additional individual or institution as a separate or co- trustea, each and every remedy, power, right, claim, demand, cause of action, immunity, estate, title, interest, duty, obligation and Iron expressed or intended by this Indenture to be, exercised by. or vested in or conveyed to the i rustee with respect thereto, shall be exercisable by and vest in such separate or co-trusloe but only to the extent necessary to c cable such separate or co -trustee to exercise such powerr-, rights avid remedies, and every covenant and obligation necessary to the exercisL- thereof by such separate cr co -trustee shall rur,� to and be enforceable by either of there. Should any instrumen•, in writing from the l!,suer be required by the separate or co -trustee so appointed by the Trustee for more fully and certainly vesting in and confirming to him or it, such properties, rights, powers, iru,its, duties and obligations, any and all such instruments in writing shall, on request, be executed, ack,(owledged and dc-livered by the Issuer. In case any separate or co - trustee or a successor to either shall die, become incapable of acting, resign or be removed, all the estates, properties, rights, powers, trusts, dunes anti obligations of such separate or co -trustee, so far -57. ' Y;i• as permitted by law, shaU vast in and be exercised by the Trustee until the appointment o! a new i rugea or successor to such separate or co•trustee. Section 913. Trustee Protected in Relying Upon ftsolution, Ege. The resolutions, opinions, cettilkattS and other instrument, provided for in this Indenture may be accepted by the Trustee as conclusive Avidence• of the 'sets and conclusions stated therein and shall be fuli warranty, protection and authority to the Trustee for the release of property and the withdrawal of cash hereunder. Section 914. Successor Trustee as the Trustee of the Funds and Accounts, Paying agent and Bond Registrar. In the event of a change in office of the Trustoe, the predecessor Trustee which has resigned or Wen removed shall cease to be Trustee of the Funds and Accounts created hereunder and Bond Registrar and Paying Agent for the principal of, premium, if any, and interest on the Bonds, and tie successor Trustee shall becoma such Trustee, Bond Registrar and Paying Agent. Section 915. Survival of Rights; Indemnification. The Trustee's rights to immunities and protecton tram liability hereunder and its rights to payment of its fees and expenses shall survive its resignation or removal and final ;payment or defeasance nt the Bonds. All ir,dernnifications and aleases from liability granted herein to the Trusteu shall extend to the directors, officers, employees and agents of the Trustee. Section 91'6. Remarketing Agent. ETC has been appointed Remarketing Agent pursuant to (he Remarketing Agreement. BTC and any successor remarketing Agent shall be institutions authorized by law to peli:)rm all the duties imposed upon thern by the Remarketing AgreerneW. -58.. i ARTICLE x SUPPLEMENTAL INDENTURES rh r Z !, S�' y � 1 rF Section 1001. S<upplementel Indtritures Not Requiring Consent of the Owners. The Issuer and the Trustee may, without consent of, or notice to, any of the Owners but subject to the last sentence of Section 1002 enter into an indenture or indentures supplernontal to this Indenture as shall not be inconsistent with the terms and provisions hereof as theretofore in 6ftect for any one or more of the following purposes; (1) to add to the covenants and agreements of, and limitations and restrictions upon, the Issuer in this Indenture and other covenants, agreements, limitat?ons and restrictions to be observed by the Issuer for the protection of the Bond Owners which are not contrary to or inconsistent with this Indenture as theretofore in affect; (2) to grant to or confer or impose upon tha Trustee for tha benefit of the Owners any additional rights, remedies, powers, a.ithority, security, liabilities or duties which may lawfully he granted, Conferred or imposed and which are not contrary to or inconsistent with this Indenture ws theretotore in effect; (3) to curet any ambiguity or omission or to cure, correct or supplement any .defective provision of this Indenturr) or otherwise to amend or supplement this !ndenture in such manner as shall not impair ths. security hereof or adversely affect tt,e Owners: (4) to evidence the :appointment of � spparate Trustee or a Co trustee, or the successor of a new Trustee or Paying Agent hereunder: (5) to comply 1•rith the requirements of the Trust Indenture Fact cf 1939, as from time to time arnended; (6) to subject to this Indenture additional revenues, ;properties or co►lateral:## (7) to modify, alter, amend or supplement this Indenture in any ether respect which, in the iudgment of the Trustee, is not materially adverse to the Owners (including any change which, in the opinion of Sand Counsel, is necessary to comply fully with ail applicable rules, rulings, policies, procedures, regulations or other official statements promulgated or proposed by the Department of the Treasury o; the Internal Revenue Service pertaining to obligations issued under Section 103(b)(4)(A) of the Code) and which does not involve a change described in clauses (1), (2), (3) or (4) of Section 1002 hereof; or (6) to modify, after, amend or supgkxT ertt this Indenture in any other respect which, in the judgnxx►t kA the Tftwee, is not mterialty & verse to the owners (including any change which, in Ito opinion of good Crxm:,+el, is not requ►rod to comply fully vita all apcAicabk: niles, rulings, polk•ies, procedures, re7Aations or other otficWl statements promulgated or proposed by the Depwtnmt of tktra Treasury cw the Internal Revonue S ivice pertaining to obligations issue,; r, ,Ier Section 103(b)(4)(A) of the GoW or any Mwision of tact Act) and which does not invulvrj a ct,,:nge described in causes (1), (2), (3) or (4) of Sec,•lion 1002 hereof. Section 1002. Sup;plemental Indentures Fequirin , Consent or the Owners, Exclusive of Supplemental Indentures covered in Section 1001. hereof and subject to the terms and provisions contained in tnis Section 1002, and not otherwise, the owners of not lens %hart sixty-six and two-thirds Wrcent (66•.2 3%) in aggregate principal amount of the Sords then Outstanding shall have the right. subiact to the last sentence c. ihns Section 1002, trorn time to time, anything contained in this Indenture to ,he contrary notwithstanding (other than in the last sentcnre of this Section 1002 aid -59- 6 . .. ••ram Section 1003), to Consent to and approve the execution by the Issuer and the trustee cf su& other indenture or indentures supplemental hereto for the purpose of modifying, amending, adding to or rescindir;1, in any particular, any of the terms or provisions contained in this Indenture; provided, however, that nothing contained in this Section shall permit or be construed as permitting without Lie consent of the Owners M all Bonds then Outstanding (1) an extension; of the maturity date of the Principal of or the interest on any Bond issued hereunder or any payment due under Article XI hereof, or (2) a reduction in the principal amount of, or redemption premium on, any Bond or the rate of interest theroon, (3) a privilege or priority of any fond or Bonds over any other Bond or Bonds, (4) a reduction in the aggregate principal amount, of the Bonds required for consent W such Supplemental Indentures. (5) any change affecting the option of the Owner to require the T►•.,stee on or before the Conversion Date to purchase such Owner's Bonds, or (6) art amendment of this Section 1002. If at any !;me fhe Issuer shall request the Trustee tc enter into any such Supplemental Indenture for any of the purposes allowed by this Section 10C2, the Trustee shall, at the request of the Issuer and upon being satisfactorily indemnified with respect to expenses, cause notice of the proposed execution of such SupplerYiental Indenture to be given in substant;ally the same manner provided in Section 604 hereof with respect to redemption of Bonds. Such notice shall briefly set forth the~ nature of the proposed Supplemental Indenture and shall state that copies thereof are on file at the Principal Office of the Trustee for inspection by all Owners. If, within sixty (60) days or such longer period as shall be proscribed by the Issuer following the mailing of such notice, the Owners of sixty-six and twc thirds percent (66-2i361Q) in aggregate principal amount of the Bonds Outstanding at the time of the execution of any such Supplemental indenture shall have consented to and approved the execution thereof as herein provided, no Owner of any Bond shall have any night to object to any of the terms and previsions contained therein, or the operation thereof, or in any mariner, to question the propriety of the execution thereof, or to enjoin or restrain the Trustee or the Issuer from oxccuting the same or fror►m taking any action pursuant to the provisions thereof. The Issuer shall have the right to extend from time to time the period within which such consent and approval may be obtained from Owners. Subject to the last sentence of this Section 1002 and to Section 1003, upon the execution of any such Supplemental indenture, as permitted and provided in this Section 1002, this Irt&nture shall bQ and be deerned to be modified and amended in accordance therewith. The Trustee may obtain an opinion of Coumel that any such Supplemental Indenture entered into by the Issuer and the Trustee complies with the provisions of this Article X and the Trustee may corclusivelki rely upon such opinion. Notwithstanding anything to the contrary in this Indenture, neither this Indenture, nor the Collateral PkNJge A4greoment nor any of the Developer Loan Dociments may be arrierded in any r ospect whatsoever without the prior written consent of the Association (except in accordance with Section 1001(4)), and, to the extant any such amendment alters the Trustee's indemnity, rights or immunities, without the Trustea.'s prior approval. and any amandm(3;:' .)r Supplemental Indenture in violation of this provision shall be null and void. Section 1003. Consents to Supplemenial Indentures. Anything herein to he contrary notwithstanding and in addition to thc last sentence of Section 1002, a Supplemental Indenture under this Article X which adversely affects any right: of the Association, the Developer or the Ramarketing Agent in any manner not contemplated by the Developer Loan Documents or ft Collateral Pledge Agreement shall not become effective unless and until the Association, the Developer and the Remarketing Agent shall have consented to the execution and deli•.,ery of such Supplemental Indenture (except in accordance with Section 1001(4)). In this regard, the Trustee shall cause notice of the proposed execution and delivery of any such Supplemental Indenture to be- mailed by certified or registered mail to the Assuciation and the Remarketing Agent (with a copy to the Developer) at least fifteen (15) calendar days prior to the date of the first mailing of notice of the proposod execution of such Supplemental Indenturc as herein provided. Hie Association, the Developer and the Remarketing Agent shall be deemed to have consented to the e:ecution and delivery of any each Supplemental Indenture if the Truster: does not receive a letter of protest or objection thereto signed by or on behalf of the Association, the Developer and the Remarketing Agent on or before 4:00 o'clo%-k P.M.. Pacific } - �. 1 'r - � � ► ,t ,� �1 k / � � w � ,�)� .�,�... ''i r Y 1 ARTICLE XI PURCHASE AND PLACEMENT Of BONDS Section 1101. Purchase of Bonds at Option of Owners and on Conversion Date. (a) The. Owner of any Bond may demand that the Trustee on behalf of the Associ2tion purchase such blond by delivering to the Remarketing Agent at it; Principal Office and to the Trusm;�j at its Principal Office not later than 10:00 A.M., Eastern time. on any Business Lay a written notice which states (A) the aggregate principal amount and the number of such Bond and (B) a c'emand that the Trustee on behalf of the Association purchase such Bond on a date specified in such notice (the "Designated Purchase Date"), which date shall be a Business Day (i) which is the Conversion Date or a date on or after March 1, 1987, and prior to the Conversion Date and (ii; is the seventh (7th) say next succeeding the date of delivery of such notice to the Remarketing Agent at its Principal Office and to the Trustee at its principal Off'ce: provided that in the event that a draw upon the Letter of Credit is not honored by the Association, the Bonds shall be purchased on the Business Day next following the date proceeds are received from a liquidation of the Collateral during the Purchase Period. Such a notice delivered after 10:00 A.M., Easterr time, on any Business Day shall he deemed to be delivered on the next succeeding Business Uay. On he Designated Purchase Date as specified by the Owner of a Bond in such Owner's notice pursuant to the presenting sentences, such Owner shall be requited to Tender the Bond identified in such notice to the Trustee for purchase by the Trustee on behalf of the Association pursuant to Section 1101(b). The Tender Agent, as soon as possible, but no later than the close of lousiness on the Designated Purchase Date, sholl give telephonic or telegraphic notice to the Remarketing Agent, the Association and the Trustee soecifyincd the principal amount and number of Bonds no deliverer. If the applicable Bond is not so Tendered on the Designated Purchase Date, then the notice of demand to purchase such Bond shail be null and void and, for purposes of Section 1101(b), shall not be deemed to have been giver, and the Owner of such Bond ,Trust deliver a new notice to the Primarksting Agent and the Trustee with respect to such Bond before the Trustee will again be required to,, purchase raoy such Bond. (b) During the Purchase Period, the 'Trustee on behalf of the Association shall purchases, but only from Tender Payments any Bond which the Owner thereof has demanded (in accordance with Section i 101(a)) that the Trustee purchase. The purchase price of each Bond required to be ;purchased by the Trustee on behalf of the Association pursuant to this Section 1101(b) shall (A) be equal tr., the unpaid principal amount thereof as r`" such Designated Purchase Date plus unpaid interest accrued thereon to the Designated Purchase rate, and (B) be due and payable on (i) the Designated Purchase Date, if such Bor.d is Tendered to the Trustee or the Tender Agent at its Delivery Office at or befo►e 10:00 A.M. Eastern time on such Designated Purchase Date and if the Trustee then holds Tender Payments derived fr ITI the sources described in Section, 1105(1) or Section 1105(2) sufficient to pay Such purchase price cf all Bonds then required to be purchased, (i!) on the Business Day next succeeding such Design2ted Purchasc, Date if such Bond is Tendered to the Trustee cr the Tender Agent at its Delivery Office after 10:00 A.M., Eastern time, on each first day of the Purchase Period and if the Trustee then ho!ds Tendei Payments derived from the sources describod in Suction 1106(1) or 1105(2) sufficient to pay such purchase price of all Bonds then required to be purchased, or (iii) the first date, not later than Wie end of the Purchase Period, on which the Trustee holds Tender Payments from the source described in Section 1105 sufficient to pay such purchase price of all Bonds then requited to be purchased. (c) On the first Business Day on or after the Conversion Dite on which the Trustee has funds ava►laule. a •-e 'I rustee on ueh;all of the Assuciatieru shaii pu►c case on th3 Purchase Date. but only from Tender Payments, each Sond as to which the Owner thereof has r.,;t, as and when required by Section 211.E.1, given notice to ter; Trustee of such Owner's desire to retain such Bond after the Conversion Data. The putchase price of each Bond tequirWd to be purchased by the Trustee on behalf of the Association pursuant to this Section 1101(c) shall (A) be an amount equal to the unpaid principal .g2.. V amount thereof as of the Purchase Date plus unpaid interest accrued thereon to the Purchase Date, and (8) be plaid by the Trustee or the Tender Agent out of the Tender payments Fund on the Purchase Date into a separate fund established for such purpose by the Trustee to be held in trust is such fund by the Trustee pending distribution to the Owners entitled thereto upon presentation of the Fonds s;o purchased by the Trustee on behalf of the Association, Upon purchase of any Bond by the Trustee on behalf of the Assmiation pursuant to the preceding sentence, the Issuer shall cause to be prepared and executed, and tfre Trustee e• the Tender Agent shall authenticate and deliver in accordance with Section 1101, in replacement for such purchased Eond, one or more Bonds in authorized denominations and in aggregate principal amount equal to the unpaid principal amount of such purchased Bond. (d) Notwi!hstar►ding anything to the contrary in Sections 1101(a), (b) or (c) or in any other provision of this Indenture, the Trustee on behalf of the Association shall never be required to purchase only a portion of any Bond. (e) Immediately uroon receipt by the Trustee of any notice delivered to it in accordance with Section 1101(a) demanding the purchase of any Bond, the Trustee shall give nonce by telephone, promptly confirmed in writing, to the Association and the Remarketing Agent specifying (i) the purchaso price which will be payable (from Tender Payments) by the Trustee on behalf of the Association in respect of such Band, (ii) the Designated Purchase Date as specified in such notice and (iii) the name and number of an account in New York, Now York (and the name of the bank and address of the branch where such account is maintained) to which the payment required to be ►made by the Associatiol} pursuart to Section 1103 shall tie paid. Immediately upon receipt by the Trustee of any notice delivered to it in accordance with Section 1101(a) demanding the purchase of any Bonds) in aggregate principal amount of 1'200,000 o, more, the Trustee shall give notice by telephone, promptly confirmed in writing, to BTC, specifying the purchase price which will be payable (frorY► Tender Payments) by the Trustee on behalf of the Asscciaticrt in respect of such Bond(s) and the Purchase Period and tho Designated Purchase Date as specified in such notice. (f) Prior to 11:00 A.M., Pacific time, on the firth (5th) day next preceding 'the Convers;on Cate (or if such dal► is not a Business Day, prier to 11:00 A.M, Pacific time on the next preceding day which is a BuLlness Day), the Trustee shal! give notice by telephony;, promptly confirmed in writing, to the Remarketing Agent and the Association Specifying the aggregate purchase price of all Bonds which will be required to be purchased by the Trustee on behalf of the Association during the f urchaso F'edod pu, suant to Section 1101(c) and the name and numt~er of an account in New York, New York (and the name of the bank and address of the branch where such account is maintained) to which the payment required to be made b) the Association pursuant to Section 1103 shalt be paid. Section 1102. Remarketing of Bonds; Purchase of Bonds. During the Remarketing Period, the Remarketing Agent shall offer for sale and use its bast efforts to remarket on or prior to the date any Bond is required to be purchased (from Tender Payments) by the Trustee on behalf of the Association pursuant to Sections 1101(b) or (c), each Bond required to be purchased (frorn Tender Payments) by the Trustoe on behalf of the Association pursuani tc, Sections 1101(b) or (c) and any Bond which may be delivered in replacement thereof pursuant to Section i 101(c). In the evert '- tat the Remarketing Agent shall be unable► to remarket any such Bond on or prior to the, Designated Purchase Date and the Bond is purchased from Tender Payments specified in Section 1105(3) hereof, the Remarketing Agont shall, during the Remarketing Period. continue to offer to,- sale and use its best efforts to remarket such Eland on behalf of the Association, as the Owner thereof. The selling price of each Bong' which the Remarketing Agent is required (pursuant tc) this Section 1102) to offer for sale and to use its best efforts to remarket shall be Gin purchase price paid or to be Paid therefor by the Trurteo on behalf of the Aossociation or (in the case of L.ond s ownpd by the Association) such lesser amount as the Associatl'un may speciiy by nonce given to the Remarketing Agent. All proceeds of sales of 60nds by the Remarketing Agent stall be remitted by Me Rernark3ling Anent in accordance with Section 1106. 6U- �w;�;S;w••... a �,�..�,, ..,� SOC&M 1IM3. Fw4ing by the Association. In the event that the Trustee on behalf of the Association shah be required to purchase (from Tender Payments) any Swtds pv wuant to Sections 1101(b) or (e), the Trustoo .shall draw upon the letter o! Credit in an amount equal to the purchase price of the W-td so required to be purchased by the Trustee on behalf cf the Association, which draw shall be made not leler than close of business on the third (3rd) Business pay prio! to the day the Truster on behalf of the Association is required to purchase the Bonds. Such draw Shall be due and payable ire immediately available funds in New Wrk, New York. for the credit of the account specified by the Trustee in its notice pursuant to Section ' 101(e) or (1) and such fund; shall be held in trust for the Association until applied to the purchase pricy ct Bonds pursuant to this ;article Xi or returned to the Association, Section 1104. Default by the Association. In the event that the Association shall fail to tioror any draw by ine Trustee, when and as '.ate same ,shall become due and payable, of any amou,lt due and payable by the Association~ pursuant t,, Section 1103, the Trustee shall irnmediatialy tame all action necessary to realize Tender Payments descrited in Section 1105(3) hereof sufficient to, fund the purchases with respect to which such failed draw was made, and the Trustee shall imryiediatuiy proceed to redeem the Bonds pursuant to Section 602.A(a) hereof. 1105. Tenter Payments --ends for the payment of the purchase price of Bonds required to be purchaser; by the Trustee on behalf of the Association pursuant to Section 1101(b) wnd (c) shall be derived frorn thc, following sources in the following order of prior'8ty: (1) the proceeds of the sale of such Bonds which have been remarketcd by the Remarketing Agent prior to 4:00 p.m., Eastern time, -.n the Bucine ss Day precoding the data such Bonds are to be purchased, to any entity other than the f, �vFioper, the Issuer cr the Association; (2) Seasoned Funds held by the Trustee; (3) arnounts reci ived by the Trustee from the. Association pursuant to Section 1 *103: and (4) Collateral Funds. The funds identified in parts (1), (r) and (3) oi' this, Section .ire referred to in this Indenture as "Tender Payments". On the date of each purchase. of Bonds by the Trustee, the Trustee shall give notice by telephone, promptly confirmed in ;luting, to the Remarketing Agent specifying llir-, sources of Tender Payments applied to such purchase. Section 1106. Remarketing Proceeds. Ail proceeds of sales by the Remarketing Age!:t of Gonds purchhased with Tender Payments described in c•iauce (1) of Section 1105 shall be remitted by the Tender Agent to the owners of the Tgw-ered Boncis. All proceeds of sales t,y the Remarkcting Agent of Bents purchased by the Trustee on behalf of the Association solely with "I under Payments described in clause (2) of Section 1105 shall be remitted; by t`•e Tender Anent to tr,�, Association. All p,-ocoeds of sales by the Rernarkeling Agent of Bonds purcha-, ed by the Trustee with any 'Fender Payments described in clause (3) of Section 1105 (whether or not purchased solely with such funds) shalt be rRmtted by the Tender Agon1 to the Association. Section 1107. Protection of Owners. The Truste--i agrees that it will; (i) hold all Bonds Tendered to it for purchase on behalf of the Association parsutint to Sections 1101(b) or (c) in trust solely for the benefit of tea respective ( wet rs so tendering such Bonds until the purchase price of such Bonds sh,.11 have been pairs to or for the account of or to the order of such Owners, and .gw. (ii) hold J11 fends paid te, the Association pursuant to Section 1103 in trust solely for the bensJit of the Person paying the 3ai, . ,ntil the purchase price of the Bonds to be purchased with such flAnds shall have 0e"corne due and payaUk Serwtlron 1108. L'1Rftfvery, of Bands. (e) Bands rurchased b, the Trustee on b{ : calf of the Association pursuant to Ssctions 1101(b) or (r;) end any due -bills r.areived by the Truste upon tf t,.r Tender of such Bonds shall be delivered as WOWS: (1) Bonds pur -hase4 solely with Tender Payments described in clause (1) of Section 1105 shelf be delKerod by the Trustee, tngether with the due-vilf checks, it any, received by the Trustee or the `err,'-,r Agani upcn the Tender of : tclh Bonds to the Trustee or the Tender Agent to the PerW.3n to whom the Remarketing Agent ha;. Ji-ranged pursuant to the Remarketing l,gresment to splt such Bcind(st as of the Me of purchase thereof by the Trustee, provided that such Person has, on u, prior to the date of purchase it such Bonds by the -•rustee, paid t" the Remarketing Aq(,nt in it,.rnediately availaLle fund in Ni .v Yorl:, New Yct:c, flit purchase price required to be pair by such Berson irr, respect A the I,-)rchase of such 9onds Ihv su.:h Person. M R,,nds purchased by the Trustee r)10, with 'l'•�nder Payment; described in clause (2) of Sect'nrl 1105 shall hi deli,��,red by iiv? Tro ,(t e, ' 'grither -,with tlha du . wills, if any, received bar the Trust(_, or ihe, T9nri:�r Agr,rit Upon the tend; of ::t :h Bon:�s to tS;o Trustee or the Tender Agent, (i) to the pci;;on to whom the Reniati otincy PV1ject has rarrangt•cl pursuant to the Remarketing Agreerrlent to bell vuck Bonds ;i�, of thy, date pur,..1i sr} ther4?( 1 by thc- Trustee; provided that Such perse;- has, -after 4:00 p.m. f=-151an'! tirne, on the-: I_i!Jne s:, Day pr,•recfing the date such fk)nds arcs to be Ourch-)sed through the (Into of pu--(-has,, of see :h Borids by t'i:: Trusted, paid to the F49m,-,.rke1ting Ac;r m in irri v.:diately ob!3 fends in i .,,err York, York, trv; purchase price required to t,t paid by such persc ". in ra�zpect �,f the ,-,urchase of 4 .;:tt r'onds by such person and provided furthdr that the 'iF,u;lee hl-�s recQio+.d wrilten ;�citce Iron-, the Association that the Letter of '.;relit ha_ been reinstated with rr-pect t,. all arnounts dra-.vrt under the Letter of Credit for the purchase of such 'ends; or (ii) to ttio tlssoci,:tion, if the ("'emarke:ling Agent :,hall not, pursuant to the F; Iir.arketirlg Agreeir-oht, have tc ,,ell s;, h E ,aids a,3 of the, date of purchase thereof try the Trustee on behalf of the '1,co,,,-'. :l or tf any prospective purchaser thereof shall have failed to pay io the Remarketing Agr;rit in : r onedi?t. -ly avriilablu funds In New `r elk, New York, the purchase price required to be paid by sw i, purchaser r: respect of ;lie l)urchase of such Bonds by r,tJCI1 pG'1'GI3r1. (3) Bonds purchased by the Trw:tee with any Tandut Payments described in clause (3) of Section 1105 shall be cancelled by the 1 tustoe upon r(. iompton the,- a of in accordance with .Sectic: i 602. A(a) herecf . (b; Bonds delivered as provided in trisi ;.,action 1108 shall be registered in the manner directed by Vh-i -- Person tU whom •",uLh Oond!i (we io be c llvUred iv the TrUSte;: or the Tender Agent at least 24 Irx-,ir;, prior to the ',line of del:vely thereof: ),-,vtded that In the case: of any Sonds delivered in accordance with clan)a,a (1) of Section 1108(a) 'i,=re3of, such Prinds be registered in accordant e with the instrUCtiOnS furnished b, the Ftramarketrr , Agent to the, Tender Ag() nt at least 24 hours prior to the , rve w"• ,n such Scnds rite r�!(J inlet to L•. ? c+ct...,.-fld. The Trustee s! „ill not deliver nny Bonds held by + until n has received notico 'hit the arn- WI e,f the Letter of credit I;as been reinstated in th i fell pmizip-ii anlotant of the Sonds bctrng d0ive, e; rer;uir,: rd by the, i imburser-.-,ent Agreement. F 1 Z. Trustee's Agent. Anything contained ir, this Article XI to the contra- n0vithstanding, if any time chr tires the Piirictrp,-,l office of the Trustee is not locat9d in New York, Nf, w York, the Trustee will at all such limr,s c rse an agent tir,hose Principal Office is in New York, Nf Y.O. to bo appo:nted P.r,d to &c.-t as Co-l"i insfer Aq,.ant. fender Agent and or agent of the Truster:. t-rdsir Article XI and sectirn 2L 'o periorin -III acts and duties, including the acts and dutiris of the Trustee set forth in Sectoor. L05, and as otherwise provided in this Indenture, required to be performed by, and to receive all Bonds required to be'rendered and all demands, notices, due -bill checks and other documents required to be delivered or given to, tho Trustee under this Article M. While any agent is so appointed and acting, all references in tnis Article XI (except in this Section 1109 and in clause (b) of Section 1101 and in Section 1110) and in Section 2111.1. to the Trustee sha l be deemed to be references to such agent, and all references in this Article X1 (except in this Section 1109 and in Clause (b) of Section 1101 and in Section 1110) to the Principal Office of the Tr ustee :;hall be deemed to he references to the Principal Office of such agent; provided, that the Trusters shall tit all times be and remain responsible for the timely and faithful performance by such agent of the acts and duties of the Trustee under this Article XI. Any person appointed as agent of the Trustee pursuant to this Section 1109 shall possess the sarne qualifications vequired to be possessed by fle Trustee ur+der Section 902, and may be removed as such agent at any time by written notice delivered to such agent by the Trustee or by written notice delivered to such agent and the 'rrustee by the Remarketing Agent or fire Association. The Trustee shall give written notic ., to the Remarketing Agent, the Association and each Owner at the address of such Owner as it last appears in the, Bond Register of any resignation or removal of such agent and of the identity and the address of the Principal Office of ary successor agent. Until notice to the contrary given pursuant hereto, J. Henry Schroder BanM & Trust Co., Stock Transfer Department whose office is locates: at One State Street, New `fork, New York 10015, is hereby appointed as Co -Transfer Agort, Tender Agent and,'or agent of the Trustee pursuant to this Section 1109. Sect., 1109. Redemptions by Association; C;arcellation. The Association may elect, by giving notice► !o such eHect to the Trustee and Tander Agent, to have time Trustee cancel any ©onds (cr any portion of the Bonds) whin.h (in the absence of such elaction pursuant to this Section) would otherwise be required to be delivered by the Trustee to the Association pursuant to Section 1108. In the event of any such election by the Association, the Bonds so cancelled by the Trustee shall be deemed to bu redee►ned for all purposes relating to this Indenture, the principal of the Developer Loan shall be deemed prepaid in an remount equal to the principal amount of the Bonds so deemed - -%'Oemed, and interest on the Developer Loan shall be deemed prepaid in an amount equal W the U11paid interest accrued on sush Bond., as of the date o; the purchase thereof by the Tiuvlee on behalf of the Association. Notwithstanding any other provision herein n to the contrary, any Bends purchased with Tender Payments described in clauses (1), (2! or (3) of Section 1105 after tx-ilection thereof for redemption pursuant to Article VI hereof shell be delivered to the Trustee for cancellatiun. Section 1 i 11. Repayments. In the event that any Bond requires' to be Tendered to the Trustee pursuant to Section 1101(2k.) is not Tendered to the Trustee on the date on which such Bond is required to be so Tendered pursuant to said Section, any Tender Payments paid to the Trustee by the Association to fund the purchase of such Bor,d by the Trustee on behalf of the Association shall be repaid by the Trustee (less any payments made therefrom pursuant to Section 1101(b)) to the AssocMition on the second Business flay next succeeding the date on which su ;h Bond was required to be so Tendered. The repayment of such Tender Payments by the Trustee shall not impair the Trustee's rights under Sections 1103 and 1104 or under the Letter of Credit of the Collateral Pledge Agreement in respect of any payments subsequently required io be paid by the Association pursuant to said Sr:ction. Section 1112, Replacement Bonds, The Trustee shall authenticate and delver replacerr►ent Bonds on the Conversion Date (or as socrr thereafter as is practical) to the p irchasers of the Fixed Flate Bonds. including any Owner of a Bond who providers notice to the Trustee of such 01vrner's wish to retain the applicable Bond as authorized by Section 2111.1. of this Indenture. The Trustee shall cancel all Bonds delivered to the Trustee in connection therewith. M. V ARTICLE XII AMENDMENT OF THE DEVELOPER LOAN DOCUMENTS OR THE COLLATERAL PLEDGE AGREEMENT Section 1201. Amendment*, Etc.; to the Developer Loan Documents or the %0'allateral Pledge Agreemt.t Not Requiring Cons+*nt ok the Owners. The Issuer and the, Association may, subject to the provisions of Section 1203 hereof and the last sentence of Section 1002 and with the written consent of the Trustee, but without the consent of or notice to any of the Owners,- enter into any amendment, change or modification of the Developer Loan Documents or 0* Collateral fledge AgnwrftW in accordance with said documents as may be required (1) by the provisions of the Developer Loan Documents or tare Collateral P`Iledgra Agreement or this indenture, (2) for the purpose of curing arty ambiguity or trotmal defect or crnission, (3) so as to add additional rights acquired in gi:rordance with the provisions of the Developer Loan Documents or the Collateral Pledge Aareement, or (4) Ir conA90on w any other change therein which, in the judgment of the Trustee, is not to the prejudice of the Trustee or the Owners of the Bonds. The Issuer and the Trustee shall, without the consent of or notice to any of the Owners but not before giving notice thereof to the Association, enter into any arnen.lmont, change or modification of the Developer Loan Documents or the Collateral Pledge AgrewTwnt as may bra necessary, in the opinion of Bond Counsel, to comply fully with all applicable rules, rulings, policies, procedures, regulations or other official statements promulgated or proposed by the Department of -the Trea!,ury or the Internal Revenue Serv;ce pertaining to obligations issued under Suction 103(b)(4)(A) of the lode. Section 1202. Amendments, Etc., to the Developer Loan Documents or the Collateral Pledge Agreement Requiring Consent of the Owners. Except for the amendments, changes or modifications as provided in Section 1201 hereof and oubiect to the provisions of Section 1203 hereof, neither the Issuer nor the Association shall enter into any other amendment, change or modification of the Deveioper Loan Documents or the "ateral P". ge Agreement, including the Deed of Trust and Regulatory Agreement, wit',out the mailing of notice and the written approval or consent of the Owners of not less than sixty-six and two-thirds percent (66-213%) in aggregate principal amount of the Bands at the time Outstanding given and procured as provided in this Section 1202; provided, however, that nothing in this Section 1202 or in :section 1201 hereof shall ;permit or be construed as permitting. withc,,i the consent of the Owners of all bonds then Outstanding, (1) an extansion of or change in the time of the payment of any amounts rive under the Loan Agreement or the Peimburserrrent Agreetent: or (2) a reduction in the amount of any payment or in the total ec.mcunt due under the Developer loan, the Letter of Crodit or the CollateraI Pledge Agreement. If at any time the Issuer and th9 Association shall request tine consent of the truster: to any such proposed amendment, change or modification of the Developer Loan Documents or the C;oilateral Pledge Agreement, the Trustee may, upon advice of its Counsel, and shall, at thF r-quest of the Issuer, in both cases t,pon being indemnified to its satisfaction with respect to expenses, cause notice of such proposed amendment, Change or modification to be given in the -ame manner as provided by Section 604 hereof with respect to redemption of Bonds. Such notice shall briefly set forth the natthe of such proposed amendment. change or modification and shall state that copi>>s of the in.-trument embodying the same are on file with the Trustee for inspection by all Owners. If, within sixty (60) days, or such longer period as shall be prescribed by the Issuer, fdiowing the mailing of such notice. the CNnurs of sixty-six and two-thirds percent (66 2 396) in aggregate principal amount of the Bonds Ousstanding at the time of the execration of any such amendment, change or modification shall have consented to and approved the execution, thereof as herein provided, no Owner of any Bcnd shall have any right :r) object to any of the terms and provisions contained therein, or the operation thereof, or in any manner to question the propriety of me execution thereof, or to enjoin or restrain the Association or the Issuer from executing the same or ;rom taking any action pursuant to the provisicns thereof. or the Truster, frorn consenting thereto. The Trustee on behalf of the Issuer shall have the right to extend from time to time the period within which such consent and approval may L-e obtained from Owners. Upon the execution of ;any such amendment, change or rnodificat�on a , in this Section permitted and provided, the Developer Loan .67. r 1" Dxun nts or titer Herat Pledge AW99 rrW shall, subject to the last sentence of Section 1002 and to Section 1003, be and be deemed to be modified, changed and amended in accordance therewith. Section 1203. A*quir+ed Opinion of Bond Courlsel. The Issuer and the Trustee shall not enter in'- rsr consent to any amendment, change or moCificstion to any one or rrore of the Developer Loan Documents or t Corral Pledge AgreernW unless the Trustee on behalf of the Issuer has received an opinion of BoM Counsel to the effect, that such amendment will not impair the exemption of the .interest on the Bonds from Federal income taxation. The Issuer and the Trustee may conclusively rely upon an opinion of Counsel to the effect that any such proposed amendment, change or modification will comply with the provisions of this Article XII. 6A- ARTICLE X111 DEFEASANCE Section 1301. Deftasance. If the Issuer shall pay or cause to be paid, or there shall be otherwise paid or provisions for payment made to or for the Owners of the Bonds, the principal of, premium, if any, and interest due or to become due thereon at the times and in the manner stipulated therein, and if the Issuer shall have kept, performed and observed all and singular the covenants And promises in the Bonds and in this Indenture expressed to be kept, performed and observed by it or or, its part, and shall pay or cause to be paid to the Trustee and any Paying Agent all sums of money due ur to become due according to the provisions hereof, then this Indenture and the lien, rights, estate and interests created hereby shall cease, determine and become nurl and void (except as to any rights of registration, transfer or exchange of Bonds herein provided for, which shall survive), wherSUpon the Trustee shall take all such actions to cancel and discharge the lien of this Indenture and to terminate the trust created herein, and shall, with the prior written consent of the Association, release, assign and deliver unto the Issuer any and all the est-ate, right, title and interest in and to any and all rights ,assigned or pledged to the Trustee or otherwise subject to this Indenture, except moneys, obligations or securities held by the Trustee for the paymrsnt of the principal of, premium, if any, and interest on the Bands. Any Bond or portions thereof in principal amounts of 5100,000 prior to the Conversion Date or S5,000 following the Conversion Date or any integral multiple of either thereof, as applicable, shall, prior to the maturity or redemption date thereof, to deemed to be paid and defeased within the meaning of this Indenture when payment of the principal of and the applicable redempticn premium, it any, on such Bond or portion thereof, plus interest treason to the due date thereof (whether such due date be by reasnn of maturity or upon redemption as provided in this Indenture, or otherwise), either: (1) shall have been made or caused to be made in accordance with the terms of Section 307 hereof, or (2) shall have been provided tar, but only on or after the Conversiun Date, by irrevocably depositing with the 'Trustee, in trust and irrevocably setting aside exclusively for sr.,ch payment any com ':cation of (A) Seasoned Funds, proceeds derived from a draw upon the Letter of Credit, Collateral Funds, or refunding bonds, which shall be sufficient to mako such payment when due, and (B) revenues described in (A) and or nc ri-callable Government Obligations maturing as to principal and interest in such amounts and at such times. not later than 30 days from the date of investment, as will be such as to insure the availability of sufficient moneys to make such payment, and the Developer has provided the Trustee Mth an opinion of counsel that the moneys so deposited will be sufficient to pay the principal, premium, if any, Lind interest on all Bonds to the due date thereof and all necessary and proper fees, compensation and expenses of the Trustee and any paying Agent pertaining to the Bonds with respect to which such deposit is made shall have been paid or the payment thereof provided for to the satisfaction of the Trustee and any Paying Agent. At such time as a Bond : portion thereof shs.' . 3 learned to be paid hereunder, as aforesaid, it shall no longer be secured by or entitled to the benefits of ;his Indenture, except for the purposes of Sections 203, 207 and 311 hereof and of any such payment from such moneys or Government Obligations. Any moneys so deposited with the Trustee as provided in this Article may at the direction of the issuer also be invested and reinvested in non -callable Government Obligations maturing in the nmounts and -it the times as heroinbafore set forth, and all income from all such Govr•,rnment Obligations in the hands of the Trustee pursuant to this Article which is not required for the payment of the Bonds and interest and premium thereon with respect to which such money; shad have been so deposited, shag' be deposited in the Debt Service Fund as and when realized and collected for use and application as are other moneys deposited in that fund. .59- t , �wrr► e I•Y , ""woo r: Notwithstanding any provisions of any other Article of this Indenture which may be contrary to the provisions of this Article, all such mormys or government Obligations set aside and held in trust pursuant to the provisions of this Article and for the payment of Bonds (including interest and premium thereon, if any) shall be applied to and used solely for the payment of the particular Bonds (including interest and premium thereof, if any) with respect to which such moneys and Government Obligations have been so set aside in trust. Anything in article X hereof to the contrary. notwithstanding, if such moneys or Government Obligations have been deposited or set aside with the Trustee pursuant to this Article XIII for the oayment of Bonds and interest and prernium thereon, iT any, and such Bonds shall not have in fact been actually paid in full, no amendment to the provisions of this Article XIII shall be made without the consent of the Clw+ier of each Bond affected thereby. -70. ARTICLE XIV MISCELLAHEOUS Section 1401. Consents, Etc., of the Owners. Any consent, approval, direction or other instrument required by This Indenture to be signed and executed by the Owners may be in any number of concurrent writings of similar tenor and may be signed or executed by such Owners in person or by agent appointed in writing. Proof of the execution of any such consent, approval, direction, objection, request or other instrument or of the writing appointing any such agent, if made in the following mariner, shall be sufficient for any of the purposes of this Indenture, and shall be conclusive in favor of the Trustee with regard to any action taken under such request or other instrument, namely: (1) the fact and date of the execution by any Person of any such consent, approval, direction, objection, request or other instrument or writing may be proved by the certificate of any officer in any jurisdiction who by law has power to take acknowledgmonts within such jurisdiction that the Person signing such instrument or writing acknowledged before dim the Execution thereof, or by affidavit of any witness to such execution; and (2) notwithstanding any notice to the contrary, the fact of ownership of Bonds and the amount or amounts, numbers and other identification of such Bonds, and the date of owning the same shall be proved by the Bond Register of the Issuer maintained pursuant to Section 203 hereof. Any action taken by the Trustee pursuant to this Indenture upon the request or authority or consent of any Person who at the time of making such request or giving such authority or consent is the Owner of any Bond shall be conclusive and binding upon all future Owners of the same Bond and upon Bonds, issued in exchange therefor or upon transfer or in place thereof. Section 1402. Umitatlon of Rights. With the exception of rights herein expressly conferred, nothing expressed cr mentioned in or to be implied from this Indenture or the Bands is intended or shall be construed to give to any Person other than the parties hereto, the Association, and the Owners of the Bonds any legal or equitable right, remedy or claim under of in respect to this Indenture. This Indenture and all of the covenants, con6tions and provisions hereof are intended t:) be and are for the !tole and exclusive benefit of the parties hereto, the Owners of the Bonds, and the Association. Section. 1403. Severrshility. If any provision of this Indenture shall he invalid, inoperative or unenforceable as applied in any particular case in any jurisdiction or jurisdictions or in all jurisdictions, or in all cases because it conflicts with any other provision or provisions hereof or any constitution or s+atute or rule of public policy, or for any other reason, such circumstances shall not have the effect of rendering the provision in question inoperative or unenforceable in any other case or circumstance, or of rendering and other provision or provisicns herein contained invaiid, inoperative, or unenforceable to any extent whatever. The invalidity of any one or more phrases, sentences, clauses or Sections in INN Indenture contained, shall not affect the remaining portions of this Indenture, or any part thereof. Section 1404. Notices. (a) All notices (other than telephone notices), certificates or other communications (outer than telephcne communications) required or permitted neraunder shall be sufficiently given and shall be deemed given when personally delivered ur when mailed by registered or certified ma:l. postage prepaid, or when sent by telegram, addressed as follows: -71- [At t• w •i .rYr 0 to ft Issuer: City of Huntington Beach 2000 Main Street Huntington Beach, California 92648 Attention: Principal Redevelopment Specialist Phone No. (714) 536.5511 ff to thy► Trustee: Seattle -First National Bank 1001 Fourth Avenue Seattle, WA 98154 (delivery) P.O. Box 3586 Seattle, WA 98124 (mail) Attention: Bond Trustee Services, 9th Floor Phone No. (206) 583-5566 0 to the Developor: Village Partnership 1810 - 14th Street Suite 207 Santa Monica, California 90404 Attention: T. Daniel Neveau Phone No. (213) 460.6999 If to the Association: Mercury Savings and Loan Association 7812 Edinger Avenue Huntington Beach, California 92647 Attention: Chief Financial Officer Phony, No. (714) 842.9333 ('With a copy to: Pettit & Martin 101 California Street, 35th Floor Wan Francisco, California 94111 Attention. Arnold P. Schuster, Esq. Phone No. (415) 434-4000) 0 to. BTC: Bankers Trust Company One 13ankers Trust Plaza 130 Liberty Street Now York, Neiv York 10006 Attention: Man_arter, Public Finance Dept. Phone No. (2,12) 775.5813 "(the delivery of such copy shall not constitute the delivery of notice) (b) AJI telephone notices and communications requited to be given to th4 Association or the Remarketing Agent hereunder shall be given by telephone at the telephone nunnbars listed in Section t404(a) for such parties as the same may from time to time be changed. (c) A duplicate copy of each notice ;ogler than ar?y telephono notice) given hereunder by any part/ shall ba given to each of they Issuer, the Trustee, the Association, the Developer, and BTC. The issuer, the Trustee, the Developer, 8TC, any Remarketing Agent other than 8TC, and the Association may, by notice given hereunder, designate any further or different addresses or telephone numbers to v.,hich subsequent notices, certificates or other communications shall be sent or directed. .72- a1� � r1 Section 1405. Payments Due on CNmr Th&n a Business Day. In any case where the data of maturity of interest on or principal (and premium, if any) of the Bonds or the date fixed for redemption of any ,bonds shali be a day other than a Business [day, then payment of interest or principal (and promium, if any) need not be made on such date but may be made on the next succeeding day which is a Smsiness flay with the gam force and Ofect Cs if made on the date of maturity or the date fixers for redemption, and no interest shall accrue for tho period atter st ch date. Section 1406. C.otrrrttrparts. This Indenture may be simultaneously executed in several Counterparts, each of which shall be an original and all of which shall constitute but one and the same histnJ(nent, Secbvn 1407. AppNsob/t Low. This Indenture 0311 be governed by and construed in accordance with the laws of the State. Section 1468. Captions. The captions or headings in this Indenture are for convenience .nly and in no way define, li:nit, or describe the scope or intent of any provisions or sections of this Indenture. Section 1409, Calculation of Interest. Interest on the Bonds shall be computed on the basis set forth in Section 211.A hereof. Section 1410. Compliance Ceilificates and Opinions. Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include: (1) a statement that the Person or Persons making such certificate or opinion have read such covenant or condition and the definitions herein relating thereto: (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contain,ad in such certificate or opinion are based, (3I a statement that, in the opinion of the signers, they have made or causn'd to be made such examination or investigation as is necessary to enable them to express an informed opinion as to whr',her su;,h covenant or condition has been complied with; and (4) a statement as to whether, in the opinion of the sinners, such condition or ccvenant has Wen complied with. Section 1411. Conflict With Trust Indenture Act of 1939. If this Indenture is qualified under the Trust Indenture Act of 1939, as arnunded, and any provision of such act limits, qualifies or conflicts with another provision hereof which is required to be included in this (;,denture by any of the provisions o+ such act, such required provision shall control. .73. . V'A f eL 1 .. % ., a IN WITNESS WHEREOF, the City of Huntington Beac'n, California, has caused these presents to �". be signW in it$ name wd behalf by the City Administrator and the City Cie: k, and to evidence its acceptance of the trusts heretby � created Seattle -First National Bank has caused these Gress; its to to In its neM and behalf by one of its duly authorized officers, ,all as of the 1 st day of August, '1899. Attest: ...y. �.�...w City Clark APPROVED AS TO FORM: City Attorney CITY OF HUNTINGTON BEACH, CALIFORNIA By_____-------�----- - - -- - City Administrator SEATTLE-FIRST NATIONAL BANK, as Trustee 'title: -7d- 1 ., No. R}-r..,„, rri EXHIBIT A [JvORM Of BOND PRIOR TO CONVERSION) UNITED STATES OF AMERICA STATE OIL CALIFORNIA CITY OF HUNTINGTON BEACH, CALIFORNIA VARIABLE RATE DEMAND MULTIFAMILY HOUSING REYIENUE BOND (MERCURY SAVINGS AND LOAN ASSOCIATIONiVILLAGE PARTNERSHIP PROJECT) 1986 SERIES A THIS SONG IS SUBJECT TO MANDATORY TENDER UNDER T HE CIRCUMSTANCES HEREINAFTER DESCRIBED, AND IT MUST BE SO TENDERED OR IT WILL BE DEEDED TO HAVE BEEN SO TENDERED AND WILL CEASE TO BEAR INTEREST AND WILL NO LONGER BE ENTITLED TO THE BENEFITS CDIF THE INDENTURE (AS HEREINAFTER DEFINEDI. UNDER CERTAIN CIRCUMSTANCES DESCRIBED HEREIN OR IN THE INDENTURE, A TENDERED BOND WILL BE PURCHASED FROM THE OWNER HEREOF ON A DESIGNATED PURCHASE DATE WHICH DATE SHALL BE A BUSINESS DAY (i) WHICH IS ON OR AFTER MARCH 1, 1987, AND ON OR BEFORE THE CONVERSION DATE, AND (2) WHICH IS THE SEVENTH (7TH) DAY FOLLOWING THE DELIVERY OF A TENDER NOTICE AS PROVIDED HEREIN AND IN THE INDENTURE. IF THE TRUSTEE OR THE TENDER AGENT HOLDS SUFFICIENT FUNDS FROM REMARKETING PROCEEDS OR PROCEEDS FROM DRAWS UNDER THE LETTER OF CREDIT AS HEREIN DESCRIBED, SUCH PURCHASE SHAI..I. OCCUR ON THE DESIGNATED PURCHASE DATE. IF THE TRUSTEE OR THE TENDER AGENT DOES NOT HOLD SUCH FUNDS, SUCH PURCHASE SHALL OCCUR ON THE FIRST BUSINESS DAY NEXT FOLLOWING THE DAY DURING THE PURCHASE PEITOD ON WHICH THE TRUSTEE OR THE TENDER AGENT HOLDS FUNDS DERIVED FROM THE SOURCES SPECIFIED IN THE INDENTURE WHICH ARE SUFFICIENT 'TO PURCHASE ALL BONDS THEM REQUIRED TO BE PURCHASED. Interest (artt tW�rity_,N e Qr;ainal-Date Variable September 1, 2016 September 1986 REGISTERED OWNER: PRINCIPAL AMOUNT: The City of Huntington Beach, California (the "Issuer"), being a ►nun;cipal corporation and charter city orgy sized and existing undor the laws of the State of Californ;a, for va.ue received, hereby prornisQ:. to pay in lawful money of the United States of America (but only out of the sources hereg:naiter provided) to the Registarad Owner named above, or registered assigns, upon presentation and surrender hereof, the Principal Amount set north above on the Maturity Date specified above and to pay in such lawful money (but only out 0 the so,'rces hereinafter provided) interest on the balance of said Principal Amount from time to time remaining unpaid from tt. later of t;ie date hereof, or the most recent Interest Payment Date (as that term is defined in the Indenture referred to hereinafter) to which interest has beers paid or made available for pay~nent in accordance with the terms of the Indenture (as A-1 hereinafter defined) at the ate per annu set forth herein, payable on March 1, June 1, September 1, and Vecenriber 1 of each year commencing on March 1, 1987, and in the event of conversion of the rate of interest on this Bond to the Optional Fixed Rate (as that term is defined in that Indenture), on the Conversion bate (as that term is defined in the Indenture), and to pay interest on overdue principal at the rate from time to time in effect on this Bond while any such amount continues to bs overdue; provided, that no interest shall accrue or be payable with respect to this Bond irorn and aftsr that date. if any, on which this Bond is required to be Tendered (as that terrn is defined in the Indenture) to Seattle -First National Bank, as trustee (the "Trustee"), having a principal office in Seattle, Washington (said principal office being herein referred to as the "Principal Office of the Trustee") for purchase by the Trustee pursuant to Sections 1101(b) or (c) of the Indenture. "the interest so payable on any March 1, June 1, September 1 or [ocerriber 1 will, subiect to certain exceptions provided in the Indenture (as hereinafter defined), he paid to the person in whose name this Bond is registered a! the close of business on the record date (the "Record Date") for such payment, which shall be the fifteenth (151h) calendar clay of th? month immediately preceding such Interest Payment Date (as that term is defined in the Indenture), or if such day is not a Business Day (as that term is defined in the Indenture), on the Business Day immediately following such day. Principal of, and premium, if any, and interest on, this Bond are payable in lawful money of the United States of America at the Principal Office of the Trustee o, (with respect to interest payments only) at rich other plat, ,� arid in such other rnann as may be elected by the Registered Owner hereof in accordrance with the Indenture. All capitalized terms used in this Bond whici-i are defined in the Indenture are used in this Bond as so defined. All references herein to Sections are. references to Sections within the Indenture, unless otherwise noted. This Bond and the series of which 't forms a part is a limited obligation of the Issuer giving rise to no pecuniary liability of the Issuer nor any charge against its general credit, is payable solely from, and a valid claim of the Registered Owner hereof against only, the revenues, funds and assets or the Issuer pledged unaar the Indenture, dogs not constitute an indebtedness, liability, general, special or moral obligation or a pledge or loan of the faith or credit or taxing power, within tha, meaning of any constitutional or statutory provision of the State of California or any political subdivision thereof, and neither the State of California nor any political subdivisio,) thereof, shall be liable hereon, and in no evert shall this Bond or the Bonds of the series of which it forms a part be p;_,yable out of any funds or properties other than those pledged tinder the Indenture. This Bond is one of any authorized issue of bonds limited !n aggregate principal amount to S7,; 00,000 (the "Bonds") issued pursuant to a resolution duly adopted by the City Council of the City of Huntington Beach, California on August 18. ' 986, and an Indenture of Trust (the "Indenture") dated as of August 1, 1986, between the Issuer and the Trustee. The Bonds are issued in accordance with the Constitution and laws of the State of California, undue the provisions of Chapter 7 of Part 5 of Division 51 of the Health arid Safety Code of the State cif California, as amended (tho "Act") and are equally and ret.ably secured by and entitled to the protection of ',vlenlorri. The Bonds are issued for the purpose of (1) obtaining fund) to ,. 10JI, % Loan") to Village Partnership, a California general partnership (the "Developer"), to provide construction and permanent financing for the multifamily rental res-dential ci-�velopment (the "Project") to be constructed by the Developer in the City of Huntington Beach, to be occupied partially (et least W- 1o) by persons of low or moderate income within the meaning of Section 103(o)(12)(C) of the Internal Revenue Cade of 19`14. as amended, and partially (at least 101 b) by persons of very low income within the meaning ui the: Act; and (`) paying certain cots incurred in conner -n with the issuance of the Bonds. T►,e Issuer has made the Developer Lorin pursuant to a loan G.. atiao and Servicing Agreement (the "Lean Agreement") the payments on which are secured by a deed of trust` on the Project from the Developer to the Issuer and Mercury Savings and Loan Association. a California corporation (the "Association' ;the "Developer Mortgage") (collectively the Loan Agreement and the Developer Mortgage, together avrth the Latter of Credit and Regulatory Agreement mentioned below. are hereinafter reforred to as the "Developer Loan Documents") by and between the Issuer and A•2 the Developer. To secure its obligation to make payments on the Developer Loan in accordance with its terms, the Developer has delivered to the Trustee on behalf of the Issuer an irrevocable direct pay Weir cf credit (the "Letter of Credit") issued by the Association and an assignment of collateral and Trust Agreement (the "Collateral Pledge Agreement") by and among the Issuer, the Trt.%ee, and the Association. The Developer will enter into a Regulatory Agreement and Declaration of Restrictive Cov:inants (the "Regulatory Agreement") with the Issuer, the Association and the Trustee setting forth certain provisions relating to the acquisition, construction and operation of the Project. Reference is hereby made to the Indenture and the Developer Loan Documents, copies of which are on file with the Trustee, for the, provisions, among others, with respect to the nature and extent of the rights, dutios and obligations of the Issuer, the Trustee, the Developer and the owners of the Bonds; the terms upon which the Bonds are issues and secured; the collection and disposition of revenues; a description of the properties and interests pledged; the modification or amendment of the Indenture and the Developer Loan Documents; and other matters, to all of which the Registered Owner of this Bond assents by the acceptance of this Bond. The Bonds are secured by 3n assignment and pledge of (i) the revenues and other amourt+s received by the Issuer from or in connection with the Developer Loan, including any amounts obtained through the exercise of the remedies provided upon an event of default under the Developer Loan Documents; (ii) the moneys held in the funds and accounts established under the Indenture, togetine; with investment earnings thereon, (iii) the Issuer's rights and interesi in the Loan Agreement; and (iv) any amounts realized under the Letter of Credit end the Collateral Pledge Agreement, prov;dud that said pledge Gnd assignment are subject to certain exceptions set forth in the Indenture. The Fonds are limited obligations -if the Issuer payable solely from the revenues, funds and assets of the Issuer pledged under the Indenturc and not from any other revenues, funds or assets of the Issuer. 9 thu Developer, with the consent of the Association, so elects, the interest rate on the Bords shall be converted to the Optional Fixed Rate at any time that Bonds are outstanding on any Interest Payment Date selected by the Developer following compliance with certain provisions of the Indenture (the "Conversion Date") and following the mailing of notice to the Bondowners by the Trustee, which mailing shali occur not less than 15 days prior to the Conversion Date, The Optional Fixed Rate :;hall be Thai interest rate, not in excess of the then applicable Maximum Interest (gate, which in the determination of the Remarketing Agent, if borne by the Bonds on the date of such determination, would result in the market value (excl►,dii,y accrued interest) of the Bonds on said date being 100 percent of the princip,il amount t;,erec.. This Fond is transferable by the registered Owner hereof in person, cr by his attorney duly authorized in writing at the. Principal Office of the Trustee but only in the manner, subject to the limitations and upon payment rf the charges provided in the Indenture, and upon surrender and cancellation of this Bond. The Trustee shal! rot be required to transfer or exchange-- any Bond after the mailing of notice calling such Bond for redemplion as provided in the Indenture, nor during any period during which this Bond is required by the Indenture to be Tendered, but has not been sc Tendered, to the Trustee. Upon such transfer, 2 new registered Bcnd or Bonds of authorized denomination or denominations, for the same aggregate principal amount, will be issued to the transferee in exchange heref;rr. The bonds are issuable as registered Bonds without coupons initially in minimum denomir,a!ions cf S11,000,000 or any integral multiple of $100,000 in excess of S1,000,000; provided, that Bonds in the minimur, .'enomination of $5,000 or any integral multiple of S5.000 may be issued on or after the Conkers,.,n D:ato. Subject to th8 limitations and upon payment of the c'i?rges provided in the Indenture. Bonds may be exchang6d for a like aggregate principal amount of Bonds of authorized denominations. The Fonds of this issue are of like tenor except as to numbers, amounts and, after the Conversion Date described below, form. A in The Owner of any Bond !including this f3ona) may demand that the Trustee purchase su::h Bor,d by delivering to the FAernarketiag Agent at One Bankers 'frost Piaza, Attention: Public Finance Group, New `Fork, New York, and to the Trustee at the Principal Office of the Trustee, not later than 10:00 A.M. Eastern time on any Business Day, a writter, notice which states (A) the number of such Sund. and (B) a demand that the Trustee purchase such Bond can a date specified in such notice (the "Ussignested Purchase Date"), which date shall he on a Business Day (i) which is on or after March 1, 1987, and on or before the Conversion Date, and (ii) which is the seventh (7th) day r,eXi Succeeding the date of delivery of such notice to the Remarketing Agent and to the Trustee: provided that in the event th;, Trustee or its agent has not received sufficient Tender Payment derives from remarketing proceeds and that a draw upon the Le+Sgr of Credit is not honored by the Association, the Bonds shall be purchased on the E:usiness Day next succeeding the date, proceeds are received from a liquidation of the Collateral during the.Purchase Period. Any such notice delivered sfter 10:00 A.M. Eastern time will he date ned !o be delivered on the pert succeeding Business Day. On the Designated Purchase Date, such Owner shall be required to Tender (as that term is defined in the Indenture) this Bond to the Tender Agent at its corporate trust office in New York, Now *York. for purchase by the Trustee pursuant to Section 1101(b) of the Indenture. IF THE BOND IS NOT SG TENDERED ON 'rHE DESI&OATED PURCHASE DATE, THEN THE NOTICE OF DEMAND TO PURCHASE SUCH BOND SHALL BE NULL AND VOID AND 'SHAE.L BE DEEMED Tl) NOT HAVE BEEN GIVEN FOR PURPOSES OF THE INDENTURE, AND, IN SUCH EVENT, OWNER OF TIIiS BOND MUST CAUSE A NEW NOTICE OF DEMAND TO BE DELIVERED p1.3 REQUIRED iN ORDER To CAUSE THE TRUSTEE TO PURCHASE SUCH BONE). On the Desirgrt,ated Purchase Data, the Trustee shall fyjrccha�,e, but only from funds specified in the Indenture, any 3ond (including this Bond) which the Owner thereof has demanded (in accordance with the rroceduies Set forth abovs) that the Trustee purchase, but in the event the Trustee or its agent has not receiv. . sc efficient Tender Payment derived from remarketing proceeds and that a draw or., the Letter of Credit pursuant to the Indenture is not honored by the Association, the Trustee on behalf of the Association shall purchase daring the Purchase Period, but only from the Tender Payments specified in Slection 11061,3) of the Indenture, any Bond which the Owner thereof has demanded to b�6 purchased in Lccordance herewith. The purchase price of each Bond so ,squired to b-; purchased by the, Trustee shall (A) be equal to the unpaid principal ani unt thereof as of the Designated Purchase Data plus unpaid interest accrued thereon to the such data, and (8) be due and payable cn (i) the Designates; Furchase Date, if such Elond is Tendered to the Trustee at or before 11:00 A.M. Er,stern time on such Designated Purchase Date and if tW,� Trustee than holds Tenter Payments derived from remarketing proceeds or draws under the Letter of Credit sufficient to pay such purchase price of all Sonds then required to be iurchased, (ii) the Eusiness Oay next succeeding, such Designated Purchase Date if :such Bond is Tendered to the Trustee after 11:00 A.M. Eastern time on such Designated Purchese Date and if the Trustee then holds Tender Payments deriver) from remarketing proceeds or draws under the Letler of Credit sufficient to pray such purchase price of all Bonds then required to be purchased, or (iii) the first date. not later than !hE. end of the Purchase Period, on which the Trustee holds Tender Payments from any source or sources described in Inc i,ldenture sufficient to pay such purchase price of all Sends then required to be purchased. With respect to Bonds tendered fcr purchase prior to the Conversion Date, the Purchase Period shall bt. the period of 30 days commencing on the Designated Purchase Date. With respect to Bonds tendered or deemed tendered for purchase on the Conversion Date ,as described below), the Purchase Period shall br:, the period of 30 d3ys commencing on the Conversion Date. Until the Conversion Date, interest on this Bond shall be computed on the basis of a 365-day year for the actual number of days elapsed. except that after the Conversion Dale interest on this Bond shall be c,ompi 1,ed on the basis of a 36)-day year of twelve 30-oay months. In no event shall interest on this Bond exceed the Maximum interest Rate, as defined in the Indenture. A. Prior In the Conversion Date, the Indenture provides that the interest rate on all Brands (including this Bond) until Mnirch 1, 1987, shall be per annum, and thereafter shall be dolermined as follows: A -A 1. The Bonds shall (subject to the further provisions of tho Indenture described in this paragraph A.1) bea. at a floating rate of intorest per annum equal .as of any given date of deiermination to TENRa as most recantly announced by Elankers Trust Company ("PTc-) plus an amount (the "TENRtD Amount") equal (unless adjusted pursuant to the provisions of the Indenture described in paragraph 12.1,1i) or (ii)) to one-half percent (1'?%) per annum (or such lesser percentage a; from time to time announced by BTC). (i) If the 'rustee shall have receivsd notice from any Owner in accordance with Section 1101(a) of the Indenturo requiring the purchase of any Bon,+(s) by the Trustee in accordance with Section 1101(b) of the Indenture, the; TFI\IRb Amount shall be adjusted, if necessary, by the Remarketing Agent on the date of purchase of such Bond(s) by the Trustee pursuant to Section 1110(b) of the Indenture so that the TENS to Amount as so adjusted, when added to 'rENIRO) as in effect on the date of the purchase of such Bond(s) by the Trustee pursuant to Suction 1101(b) of the Indenture, will produce that rate per annum of interest which is (ir; the reasonable discretion of the Remarketing Agent, having due regard to prevailing market conditions) equal to, but not in excess of, that rate per annrim of interest which will enable the Rernarksting Agent to remarkel such Bonds) on the date of purchase of such Bond(s) by the rustle pursuant to Section 1101(L) of the Indenture at a p, ice equal to 1001310 of the unpaid princin al arnorint thereof plus :..., 0 interest accrued thereon to the date of purchase thereof by the Truster; purSLI..rl; to Section 1101(b) of the Indenture; provided, that in no event shall the interest rate or the Londe e3/ceed twelve percent (12%) or, if lower, the maximum legal rain, if any, applicable to the Bonds. The: Remarketing Agent shall notify the Association, the DDvelcper, and 'tie Trustee of any suoh adjustment of the TENRo Amount on the date on W,� ;ch such -idjUstment becornes eff_ctive. Any such adjustment of the TENRI Amount shall become effective on the date next fellmving the date on which TENRT next is announced i0lowing th u date of such adjustment. (6) On each Interest Payment Dale. the TENRS Amount shall be adjusted, if necessary. t)y the; RernEirkeling Agent such that the TENW) Amount as so acilusted, when added to TENRC" a; io effect on such Interesi Payment Date, will produce that rate por annum of interest which is (in the reasonable discretion of the Remarketing Agent, having due regard to prevailing marke; condiiions) equal to, but not in excess of, that rate per annum of interest which would er:able thn Remarketing regent to re.-narket on such Interest Payment Date any Bonds required to br• purchased by the Trustee on such Inturest Payment Date by the Trustee pursuant to 4Eiction 1101(b) of the Index ,ure (regardleass of whether any Bonds actually are sro required to he purchased an such interest Payment Date) at a price aqua! to 100% of the unpaid principal amount th roof plus lsnpaid interest accrued toereon to such Interest Payment Date: provided, th,It in no event ,hall thy? interest rate on the Bonds exceed the Maximum Interest Fate applicabie7 to the Bonc,,. Th ., Remarketing Agent shall notify the Association, the Developer and the Trustef: of any such adjustment of the: TENR(1) Amount on the date on which siJ.:h adjustment becomes effective. Any such adjustment of the TENIRC, Amount shall become effective on the date next following the date on which TENRO nF•:t is announced following the Oats) of such adjustment. (iii) If the TENROD Amount is adjusted as described in (i) or (ii) above, me TENF10 Amount as so ) ijustc d shall remain in effect until the earlier of (A) the data next succeeding the effective date of such adjustmerrt on which a further adjustment to the TENRI- Amount becornes effective pursuant to the provisions of *he Indenture described in (i) and (ii), abova, or (8) the date next succeeding the efi('ctive date of such adjustment on which the interest rate on the Bonds shall be fixed pursti.ant to any of the othor provision] of the Indenture. (iv) With respect to the Sands, no adjustment shall W made to either TENRID or the TENRt Arnount during the period heginning five Business Days prior to an Interest Payment Date and ending on the data the next announcement of TENRs after such Interest Payment Date r.)ecomes effective. Notwithstanding the foregoing, no change in either TENRI" or !hey A-s . ate TENR9 Amours shall become effective as to any Bond for which they Owners thereof have given a notice of tender to the Trustee for purchase pursuant to Article XI of the Indenture; provided, however, if such Bond is riot tendered to the Trustee on the Designatad Purchase Date, the foregoing provision of the sentence shall not apply to such Bond. 2. As employer in this Band and in the Indenture, TENR© means the rate by that name announced (pursuant to Vie Remarketin Agreement) by BTC in New York, New York, which rate is intended by 8TC to be indicative of current (as of the date of each announcement of TENRO) bid -side yields on high -quality, short-term, tax-exempt obligations. Under the Remarketing Agreement, TENRe shall (A) be determined by BTC substantially in accordance with its past practice, and (B) be announcer by BTC as of the close of business on Wednesday in each week beginning on the Wednesday next preceding the date of authentication and delivery of the first of the Bonds to bo authenticated and delivered under the Indenture until the earlier of (i) the Conversion Date or (ii) the date on which there are no longer any Bonds Outstanding; provida-1 that if Wednesday in any waek is not a Business lay, then TENRO shall be announced by BTC on the next :succeeding day which is a Business Day. Subject to paragraph H.'I.(iv) hereof, TENRs as announced by BTC shall to effective during the period from and including the day next succeeding the day or, which B i r announces 'rENRa, to and including the day on which BTC next announces T ENRM. TENRO shall be communicated by BTC to tf►e Trustee, the Association, tho Ceveloper and t`►3 Hemarkefing Agent on the same day that TENRO is announced by BTC. :3. The computation of TENRO by BTC, and any adjustments to the TENRO b1mount by th. Remarketing Agent as contemplated by the foregoirg paragraphs, shall be conclusive and binding upon the Trustees, the Issuer, the, Association, the Developer and the Lwnsrs of the Bonds. B. The Indenture provides that the Developer, with the consent of the Association, may Caine the interest rate oil the Bonds to be converted to the Optional Fixed Rate in accordance with proceoures set forth tht3rein. G. 'rho Indenture provides that, in any Lase where notice is to bs given :o Owners Ly the Trustee pursuant to the provisions of the Indenture described in paragraphs ;,. or G. hereof, neither the failure to give any such notice nor any defect in any : otico so given shall preclude or make ineffective any conversion of the rate of interest on the 9onds to the Optional Fixed Rate. D.1. The Indenture, !provides that the Owner of any Bond desiring to retain such Band on and after the Conversion Date mus: notify the Association, ft, Remarketing Agent and the Trustec, in writing received on a Business Day which is at le2st fiv : (5) days prior to the Conversion Date. Said notice must state ir, substance: (a) The n6mbers and principal ;mounts of the Bonds which the Owner wishes to retain on and after the Conversion Date; (b) That the Owner recognizes that on the day next succeeding the Conversion Date the Bonds shall no !anger be subject to the provisions of Section 1101(a) of the Indenture and, specifically, that the Trustee will no longer purchase Bonds on behalf of the Association upon demand of any Owner; and (c) t;iat the Owner wishes to continue to own the Bonds specified as described in paragraph D.1.(a) abov,i. 2. The Indenture provides :hat all Bonds not specified in a notice given as and when requirEd in D.1. above shall Ix. purchased by the Trustee on behalf of the As; Viation on the Purchase Data pursuant to Section 1101(c) of the Indenturo at a purchase price eau..! to tho unpaid principal amo,.nt thereof plus unpaid interest accruerd thereon to the Purchase Date. A•6 in dm"r ,8 FROM AND AFTER THE CONVERSION DATE (A) THE ONLY PAYMENT TO WHICH THE OWNER OF SUCH UNTENDERED BONi) OR ANY OTHER PERSON SHALL BE ENTITLED IN RESPECT OF SUCH UNTENDERED BOND IS Tf l-iE PURCHASE PRICE OF SUCH UNTENDERED BOND DETERMINED IN ACCORDANCE WITH SECTION 1101(C) OF THE INDENTURC, AND (B) NO INTEREST SHALL ACCRUE OR LE PAYABLE W: T ri RESPECT TO SUCH UNTENDERED BOND. THE PURCHASE PRICE OF .6 NY UNTENDERED BONG SHALL NOT BE DUE AND PAYABLE TO THE OWNER THEREOF CR TO ANY OTHER PERSON UiJTIL SUCH BOND is, PRESENTED TO THE TRUSTEE. 3. From and after the Conversion Date, if this Bond is awned by an Owner .who has given notice of his desire to continue to own this Bond as described in paragraph D.1. ahove, this Bond shall br, deemed to be a replacement Bond and notwithstanding the terms and conditions expressed herein, the rights of the Owner of this Bond shall be the same as the rights of the Owner of an equal principal amount of replacement Bonds it the form to be issued on and after "he Conversion Date. E. The Indenture provides that from and after the Conversion Date, all Bonds (including this Bond) shall bear interest at the Optional Fixed Rate established as described in paragraph B., which rate shall be expressly stated in each Bond issued on or after the Conversion Date. F. The Indenture provides that if legislation is enacted prior to January 1, 1987, and the Trustee is unable to obtain an or before February 15, 1987, an opinion of Bond Counsel to the effect that such enactment in and of itself has riot adverset,y affected the exemption from Federal income taxation of interest on the Bonds, then ## there shall be paid as additional interest on the Bonds an amount equal to -_% of the aggragata amount of interest paid or accrued (or to be paid or to accrue) on the Bonds through Match 1, 1987, except that such additional interest shall ba held by the Trustee in a separate trust account for the benefit of the Owners and former Owners of the Bonds, and disbursed to such Owner; as followr: Any Person who was the Owner of a Bond, as eviden::ed by the Bond Register, at any time: on or prior to March 1, 1987, shall t'e entitled to receive a portion of such additional interest, such portion to be calculated by multiplying (i) 0._,_!# times (ii) t)n interest paid or accrued (or to be paid or to accrue through March 1, 1967) on each Bond owned by such Owner with respect to the period during which such Owner owned Bach such Bond. On March 1, 1987, the Trustee shall pay to each Owner of the Bonds on Fetxuaryy 17, 1987, the portion of such additional interest to which each Owner is entitled, shall send to each F76rson who was a former Owner of BonJs (at the address of such Owner last shown on the Bold Register) a notice ident;fying the aurtion of such additional interest to which sur •, Owner is enti0ed and shall pav such portion upon dernand of such former Owner•,## The Bonds shall be subject to ►nandatory redemption as follows (in each rase arcrusd interest to the redemptior date shall be paid to the Registered Owner on tho Record Date for such payment): (a) The Bonds shall tX-6 subject to redemption in whole on or prior to the thirtieth (30tii) day following the Designated Purchase Date, at a price equal to the principal amount thereof plus interest accrued thereon to the date of redemptior,., if on the Designated Purchase date lh a Trustee lacks Tender Payment derived fro, - the sources described in Sr ction 1105(1) or Sectioi 1106(2) sufficient to pay the purchase price of all Bonds required to be purchased during sucl Purchase Rariod oursuant to the provisions o; Article XI hereof. (b) The Bonds shall be subjer:t to redemption in part on the earlier of August 1, 1989 or the earliest prac licablr) interest Payment Date after the Completion Date for which notice of redemption may be given pursuant to Section 604, at a price equai to the principal amount of Bonds redeemec' plus interest accrued thereon to the elate fixed ifor redemption. (c) The Bonds shall be subject to redemption in whole or in part on any Interest Payment Date. at a price equal to the principal amount of Sonds redeemed plus interest accrued thereon to the A-7 date fixed for redemption, upon the election of the Association to apply the amount of any net proceeds of insurance or condemnation awards not used to repair or replace thr s Project to the redemption of Bonds. (d) The Sonds shalt bra subject to redemption ,n whole or in part on any date, at a price equal to the principal amount of Bonds redeemed plus interest accrued thereon. 'io the date fixed for redemption, within 45 days following can Acceleration Default or at the request or with the consent of the Association following any other Event of Default under the Loan Agreement, or, at the request or with the consent of the Association following an acceleration of the Deveioper Loan pursuant to the Disbursement Agreement, in an amount as nearly equal as possible to, but not exceedinq, the atnount of the Developer Loan so accelerated. (e) The Bonds chall be Subject to redemption in whole on any data, at a price equal to the principal amount thereof plus interest accrued thereon to the date fixed for redemption which is not rrore than 2.2 days prior to and not late. than the clato of expiration of any Letter of Credit unless the Trustee receives a renewal or extension of or replacement for such Letter of Credit meeting the requirements of Section 5.5 of the Loan Agreeinont not lesF than 40 days before the expiration of such Letter of credit. (f) The Bonds shall be subject to redemption in whole witltout ;tre►n;urn on March 1, 1987, in the ev- nt that construction on the Project has not comr;tenced by February 1, 1987, ## at -o aggregate price aqual to the principal amount of the Bonds, but without premium, plus unpaid accrued interest thereon to the oate of redemption. (n) The Br;rlds shall be subject to redemption in whole at a price equal to the principal amount !hereof plus interest accrued thereon to the: date fixed for redemption on the first date for which notice of i edemption may be given in accordance witl, the provisions c'r the. Indenture following an Event of Default under the Collateral Pledge Agreement The Bonds are subject to optional redemption as follows: (a) Pricr to the Conversion Cate the Borlds are subject to redemption on any Interest Payment Date, in the amount of S10J,000 or more ;n an integral multiple of $25,000, at a ,redemption price equal to the principal arnotint to be redeemed, plus accrued interest, without ;premium, in the event and to the extent that the Developer Loan i!; voluntarily orepaid. (b) After the Conversion Data thn bonds are subject to redemption prior to their statod maturity, in whole or in part, in integral multiples of S5,000, on any of the following do os, at a redemption price equal to the prindpal amount to be redeemed, plus accrued interest to the date of redemption, in the event and to thu uo,nt the Developer Loan is voluntarily prepaid, plus the applicable premium sat forth in the frillowing table: 13r!¢emPi n [' Ftr.r .mt� R nen- W rn The two Interest r ayment Dates first occurring: 7 yea. , after the Conversion Date 3°.0 8 years after the Conversion Date 2 9 years after, the Conversion Date 1 10 Veers after the Conversion Date 0 In the event of a redemption (other than pursuant to Section 1110 of the Indenture), the Bonds to be redeemed shall I>a selected by lot in such manner as in the Trustee's sole discretion it may doom on .1 6 , =Wb appropriatq a;%d fair. The Trustee shall prornpti5e notify the issuer in writing of Bonds or portions the:•eof selected for redemption. Bonds snail '+9 redeem9d f i) prior to the Conversion date, ir, tt; a princl,wil amount of $100,000 and (ii) following the Conversion Date only in integral multioles of S5,O00. in the event thai the Issuer elects to redeem Bands pursuant to the indenture, the ISSUer sha!1 so notify the Trustee in a written request submittcd to the Trustee at least forty-five (45) days prior to the applicable redemption date. and the Devc!opF • sha►l deposit with the Trustee at least ninety-five 0,.5) days prior to such redempeion dwe an akmo mt sufficient to pay the applicable miderrf-10 1 premium payable with respect to such redemption which will be deposited by the 'Trustee r 4easor.ed Funds Account. Notice of each such redemption (other than pursuant to Section 1110 of th.) Indenture) 04,11 be given by sending such notice, by regisiered or certified mail, not less than se\,en (7) days prior to the date fixed for redemption, to the Heglstered Owner each Bond to be red,- omed in whole or in part at the address in the Bond Register. Failure to givr, notice by mail or any defect it any notic-P Fo mailed shod not affect the validity of the pro ;eedinas for such redemption. All Bonds or portions theraot so called for redemption will cease to bear inteipst on the specified rode'nption date it funds fcr their redemption a on deposit at the principal place of payment at that time. NO recourse shall to had for the payment of the principal of, premium, if ar.y, or interest on. any of the Bonds or for any claim based thereon or spun ar.y obiigaticn, ruvonant or agreement contained in the Indenture, against any past, present or future msrnber of the City Council, any officer, employee or agent of the Issuer or through tree Issuer or the Gity of Huntington Seach, or any successor, under any rule of law or equity, statute or contitution or by the enforcement of any assessment or penalty or otherwise, and all such liability of any such member of tits City Council, officer, employee or aggent of the Issuer ac such is hereby expressly weived and ieleased as a condition of, and in consideration for, the axacuJon of they Indenture and the issuance of any of the Bonds. Thr; Registered Owner of this Bond shall h,av6 no right to enforce the orovisions of the Indent-.:ra or to institute action to enforce the covanants therein, or to take any action with respect to any evert of default under the Indonturp, or to institute, appear in or defend any suit or other procet4nns with respect locreto, ex►-,ept as providad in the Indenture. If an Event of Default as Wined in the Indenture occurs, the principal of all Bonds then outstanding �SSL10d ;.ruder the indenture may be declared due and payable upon the conditions and :i the r,ianne: and with the effect provided in the Indenture. lire Issuer. iiia Trustees, any paying agent and any agent of the Issuer or the Trustee may treat the person in whose name this Bond is rogiSti�red as the owner hereof for the purpose of receioir,g payment as herein provided and for all other purposes, whether or not this Bor �.1 shall be overdue, and neither the Is uer, the Trustee, any paying agent nor any such agtmt shall be tiffected by notice to the contro.r� . Mcdificatianr; or alte,ations of the inde.ntuwe, or of any supplemenis thereto, may be made on'y to the extent and in the cis umstances perrnittod by the Indenture. The Indenture prescribes the manner ,n which it may be discharged, including a provision that the Bends shall be deerned to he paid if Seasoned Funds and or Government Obligations (as defined in O e Indenture) mats -ring as to principal and interest in such amounts arid at Stich timo3 not later than 30 days after the date of investment as will be such to insure the availability of 3ufticiont moneys to pay ttm principal of, arid prea*iiurrl, if any, and interest on, the Bonds and all necassary end proper fee,, compensation and expenses of the Trustee shall have been deposited with the Trustee, after which the Bonds shall no longer be secured by or entitled to the benefits of the Indenture, excr;pt for the purposes of registration and e:xcnange of Bonds and of payment from such source. r IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts and conditions required to bo performed precedent to aril in the execution and delivery of the Indenture and thr issuance of thin M r r q a u . WIN f r i 7 .1 " r rSond havebeen performed - • due time,form andmanner by - • that t ' lie issuance of limitation.Vni; Bond and lme Seties of which it fornis a part does not exceod e: violate any constitutional or Statutoty r. aThis Bond ON not be valid or ♦rne obligatory for any purposebe entitled to nny security or benef:1 under the IndentureunlessandcertificateAautheriticetionhereonll beery Irduly executed by the Trustee. . r y A r 4 r 4 + ^ L , I ■ rl •I i r� 1 I Y r h 1 'x r :t fr IS J� IF 4 h�ir a IN WTNESS WHE REOF, the City of Huntington Be��, i, California, has caused this Bond to be executed in its by tI,e facsirrile signature of the Mayot and attested b-i the facsimile signature of v � _ 1• the City Clerk and tt:o fac5irnile of its seai tu be imprinted herein, all as of tho 29th day of August, 1988. p BEACH,CITY OF CALIFORNIA h , k L M ( �'? • #' City Clerk �1 'Jr .t. 5 L r a ,t 1 �tJ - •y + L, i r ` .. :. 1IL 17 imp q 1 r l h- 4 7TA r. TRUSTEE'S CERTIFICATE OF AWHENTICATION This Band is one of the Bonds described in the within. mentioned Indenture of Trust. Date of registration SEATTLE-FIRST 1%,.ilAL BANK, and authentication: as Trustee 19— By: — Authorized Officer Tho following abbreviations, when used in the inscription on the face of this Bond, shalt be construad as though they were written out in full according to applicab!e laws or regulations: TEN COM -as tenants in common TEN ENT --as tenants by the entimzties JT TEN - as joint tenants with right of survivorship and not as tenants in common UNIT GIFT MIN AC Under Uniform Gifts to Minors Act (State) _—Custodian (Gust) (Minor) Additional abbreviations may also to used, though not in the above list. A-12 ASSIGNMENT FOR VALUE RECEIVED, the undrsigned sells, a!:Signs and transfers unta Nampa and Address of Assignee) the within Bond and does hereby irrevocably constitute and appoint_____anoffwy to transfer the ;paid Eiond on the Bond Register with full power of substitution in tie premises. Dated: .._ _.._...�._....... _ �. .__. Signature Guaranteed: The Trustee will register a Bond in the name of a•transferee rinly if provided with the information requested be+ow. Tho trrinsteref: (or his designated represeotative) should p,ovide as much of the information requested below as is applicable to him prior to submiIting this Bond for transfer. Nnm'�' . Address: Social Security or Employer Identification Number: If a Trust, Name and Addfors ,A lrllSt+'i': NOTICE: Signature(s) must be guaranteed by a merriber firm o; the New York Sto :Ic Exchange or a commercial bans; or trust company incorporated under the laws d' tho United States or a state of the United States. NOTICE: The signature to this Assignment must correspond with the name as it appeara upon they fake of the Nithin Bond in eve-y particular, without alteration or enlargement or any change whatsoaver. A•13 ... soil' /} • i 1 NOTICE OF EXERCISE OF OPTION TO SELL BONDS (NOT EXERCISAFLE BEFORE MARCH 1, 1097) The undersignM is the registered owner of Bonds) of the City of Huntington Beach. California, Multifamily Housing Revsnue Bonds (Ivwerury Savings and Loan Village Partnership Project), 1986 Series A►. In accordance with the purchase option contained in the lndenturp, the undersigned hereby demands that: 1. S.._ in aggregates principal amount o+ its Bonds) R- _ be purchaoed in accordance with the Indenture. P. Such Bonds are to be purchased during the 30-day Purchase Period commencing on the dato which is the oext Business Cay not less than seven days after the date of receipt of this notice by the Trustee or Paying Agent, ais the case may be (which date shall not be later than the Conversion Date). Print narna of registereu owner: (Dated: Signature guaranteed by: :'►tote: The signature to the ar;signrnont or the notice of exercise of option must correspond with tr- nanie cf the registered owner as it' appears on the fact, of the within certificate in every parliculat, without alteration, Wargement or any change whatsoever; and such signature; must by guaranteed by h Mern er of the New York Stock Exchange or a comme cial bank or trust company. A-M F;I. • 4�• In I M , 1 o0o EXfflBIT 9 [FORM OF BOND AFTER CONVERSION DATE] [FORM OF FACE OF BOND] No. UNITED STATES OF AMERICA STATE OF CALIFORNIA CITY OF HUNTINGTCN BEACH, CALIFORNiA MULTIFAMILY HOUSING REVENUE BONDS (MERCURY SAVINGS AND LOAN/VILLAGE PARTNERSHIP PROJECT) f mt RW-1� REGISTERED OWNER: PIINCIPAL AMOUNT: *36 SERIES A MatgrilyDato September 1, 2016 -QU-1 IF? N.vmbor The City of Huntington Beach, California (the "Issuer"), ;.,eing a municipal corporation and charter city duly created, urganized and existing under the laws of the State. of California, for value recaived, hereby promises to pay in lawiul money of the Urritec, Sates of America (but only out of the source h reinafter provided) to the registered owner narried shove, or registered assigns, upon presentation and ;surrender oereof, ttie principal sum set forth above on the maturity date speecified above and to pay in such lawful money (but only out of the sources hereinafter provided) interest on the balance of said principal surn from tirne to tirne remaining unpaid from the later of the date hereof, or the most recent interest Payment Date to which interest has been paid o, made available for payment in accordance with the terms of the Indenture (as here,'. ,after defined) .at the rate per annum set fortli f $rein, payable: on March 1 and September 1 of e3c.h year and to nay interest on overdue principal at the rate from time to time in effect on this Bond while any such arTiOLint continues to be overdue. The interest so payable on any March 1 or Sepeembc-r 1 will, subject to certain exceptions provided in the Ir nhire (as hereinafter de -fined j, t* pc id to the: person in whose name this Bond is registered at the close of business on the rKc�rd dsle (the "Record Date") for such paymeni, w16ch shall bs the: fifteenth (15th) calendar day of the month immediately preceding such Interest Pcjyment Date (as that term is de5ned in the Indenture), or if such day is not a Business [lay (as that term is defined in the 10enture), on the Business Day immediately following such day. Principal of, premium, if any, and inhorest on, this Bond are payable ir, 'c;wful money of the United States of America at the principal t,ffice in Seattle, 'Washington of cattle -First National Bank (the "Trustee") (said principa: office being hereinafter refered to as the "Principal Office of the Trustea") or (with respect to interest payments only) at such other placer^ and in such other manner as may he elected by the Owner hereof in accordance with the Indenture. B-1 0 W 1 r. . I THE TERMS AND PROVISIONS OF THIS BOND ARE CONTINUED ON THE REVERSE SIDE HEREOF AND SUCH CONTINUED TERMS AND PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS THOUGH FULLY SET ;-ORTH AT THIS PLACE. All capitalized terms used in this Bond which are defined in the Indenture are used in this Bond as so defined. This Band and the series of which it forms a part is a limited obligation of the Issuer giving rise to no pecuniary -ability of the issuer nor any charga against its general credit, is payable solely from, and a valid claim of the owner heracf against only, the revenues, funds and assets of the. Issuer pledged under the Indenture, dc( 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 provision of the State of California or any political subdivision thereof, of the State of California or any political subdivision thereof, and neither the State of California nor any political subdivision thereof, shall be liable hereon, and in no event shall this Bond or the Bonds of the series of which it forms a part be payable ou! of any funds or properties other than those pledged under the Indenture. IT IS HEREBY CERTIFIED, RE CITED AND DECLARED that all acts and conditions required to be performed precedent to and in the execution and delivery of thr; Indenture and the issuance of this Bond have Lben performed in due time, form and manner as required by law; and that the i,suan^u of this Bond and the series of which it forms a part does not exceed or violaw- any constitutional or statutory limitation, This Bond shall not be valid or becorne obl;gatory for ,any purpose or be entitled to any security or benefit under the Indenture unless and until the certificate of authentication hereon shall have been duly executed by the Trus,too. 8.2 0 i W, a WNW t IN WITNESS W iEREOF, the City of Huntington Beach, California, has caused this Bond to be executed in its name by the printed facsimile signature of the Mayor and attested by the printed facsimile signature of the City Clerk and the facsimile of its sea! to be impressed or imprinted herein, all as of the _ day of _.._._ .�. r.�, 1 CITY OF HUNTINOTON BEACH, CALIFORNIA By. Mayor ATTEST: (J.ity Clerk .. (SEAL] (FOAM OF TRUSTEE'S CERTIFICATE OF AUTHENTICA,1'ION) This Bond is one of tha Bonds dosrribod in the within mentioned indenture of Trust, date of registration SEATTLE-FIRST NATIONAL BANK, arid authentication: as TrUstee 19^ By. - Authorized Officer By- .. as Agent Pursuant to Section 1109 of such Indenture of Trust B-J Authorized Officer (FORM OF REVERSE OF BOND) This Bond is one of an authorized issue of bonds limited in aggregate pnricipal amount to $7,:00,000 (the "Bonds") issued pursuant to a resolution duly adopted by the City Council of the City of Huntington teach on August 18, 1986. and an Indenture of Trust (the "Indenture") dated as of August 1, 1986, between the Issuer and the Trustee. The Bonds are issued in accordance with the Constitution and laws of the State of California, under rho provisions of Ch,,pter 7 of part 5 of Division 31 of the Health and Safety rode of the State of California (the "Act") and are enually and ratably s►rcured by and entitled to the protection of the Indenture. The Bonds ars issued for the purpose of (1) obtaining funds to make a loan (the "Developer Loan") to Village i"artnership, a California general partnership (the "Developer"), to provide permanent financing for the rnvltifamily rental residential development (the "project") to be constructed by the Developer in the City of Huntington Beach, to be oc.;upiead partially (at least 2MI10) by persuns of low or moderate incornej within the meaning of Section 103(b)(12)(C) of the Internal Revenue Corse of 1954, as amended and patally (at IeraWt !0%) by persons of very low income within the meaning of the Act: and (2) paying certain costs incurred in connection with the issuance of the Bonds. The Issuer has made the Developer Loan pursuant to a loan agreement (tire "Loan Agreement") and developer loan (the "Developer Luan") the payments on which are secured by a deed of trust on the Project from the Developer to the Issuer and Mercury Savings and Loan Association, a California corporation (the "Association") (the "Project Murtgige") (collectively, the Loan Agreement and the Project t"lortgage together with the Letter of Credit, the Collateral Pledge Agreement and the Regulatory Agreement mentioned below are hereinafter referred to as the "Developer Loan Documents") by and between the issuer and the Developer. To secure its Oligation to make payments on the Developer Loan in accordance with its terms, the Developer has delivered to the T�ustee or► behalf of the ',,suer an irrevocable letter of credit (the "Letter )f Credit") issued by the Association and a collateral piedge agreement (the "Collateral Pledge Agreement") by and among the Issuer the trustee, and the Association. The Developer will enter into a regulatory sq) cement and declaration of mstrictivc) covPnaat,s the "Regulatory Agreement") with this issuer, 'he Associatioo and 'trustee seiting forth certain provisions reiating to the acquisition, construction and operation of (lie Project. Reference is hereb} made to they Indenture and the Developer Loan Documents, copies of which are ors file with the Trustee, for the provisions, arnong others, with respect to the nature and extent of tt' rights. duties; and obligafons of the Issuer, the Trustee, the; Developer and tho 3wrlers of the Bonds: the terms upon which the Bonds are issued and secured; the: ccllertion and dispositirn of revenues: a description of the properties and interests pledged; the moditication or amendment of the Indenture and the Developer Loan Documents; and other matters, to all of which the owner of this Bond assents by the acceptance of tn►s Bond. The Bonds are secured by an assignment and pledge of (i) the revenues and other amounts received by the issuer from or in connection with the Developer Loan, including any amounts obtain d through the exercise of the remedies provided upon an event of dc'faL'lt under the Developer Loan DoCuments; (ii) the moneys held in the funds and accounts established under the Indenture, tocdather with investment earnings thereon; (iii) the Issuer's rights and intererst in the Loan Ac01'eemen!; and f iv) any arnounta realizFd under the Letter of Credit a,►d the Collateral Pledge Agreement; provided that said pledge and assignment at-e subject to curtain exceptions set forth in the Indenturo. The Fonds are I imited obligations of the issuer payable solely from the revenues, funds and assets of the issuer pledged under the indenture and not from any other revenues, funds or assets of the Issve�. This Bond is transferable by the registered Owner hereof in person or by his attorney duly authorized in writing W the Principal Office of the, Trustee but only in the manner, subject to the linidations and upon payment of the charges provided in ins Indenture, and upon► surrender and cancellation of this Bond. The Trusters shall not be required In transfer or exchange any Bond after the mailing of wmice calling such Bond for rodemption as provided in the Indenture, nor during the period of fifteen calendar days next pre eding the giving of such notice of redempiion. Upon such transfer, a 8•4 Mob now reg'atdred end or Bonds of authorized denomination or denominations, for the same aggregate principa.' amount, will be issued to the transferee in exchange herefor. The Bonds are issuable as registered Fonds without coupons in minimum denomination of $6,000 or any integral multiple of $5,000. Subject to the limitations and upon payment of the charges provided in the Indenture, Bonds may be exchanged for a like aggregate principal amount of Bonds of authoritod denominations. The Bonds of this issue are of like tenor except as to numbers and amounts. Interest on this S nd shall accrue and be payable at the rate per annum set forth above. Interest on this Bond shall be computed on the basis of a 360-day year comprised of twelve 30-day months. Thy► Bonds shall be subject to mandatory redemption as follows (in Bach case accrued interest to the redemption date shall be paid to the owner of record on the Record Crate for such payment): (a) The Bonds shall be subject to redemption in part on the earlier of September 1, 1989, or the earliest practicable Interest payment Date after the Completion Data for which notice of redemption may be given pursuant to Section 604 of the Indenture, at a price equal to the principal antiount of Bonds redeemed plus interest accrued thereon to the date fixed for redemption. W The Bonds shall be subject to redemption °- whole or in part on any Interest Payment Date, at a price equal to the principal amount of Honda redeemed plus interest accrued thereon to the date fixed for redemption, upon the election of the Association to apply the amount of any net proceeds o, insurance or condemnation awards not used to repair or replace the Project to the redemption of Bonds. (c) The Bonds shall be subject to redemption in whole or in part on any data, at a trice equal to the principal amount ,f Bonds redeemed plus interest accrued thereon to the date fixed for redemption, within 45 days following an acceleration of the developer Loan in whole or in part following an Acceleration Default, subject to the consent of the Association, or at the request or with the consent of the Association following any other Event of Default under the Loan Agreement, in an amount as nearly equal as possible to, but not exceeding, the amoUnt of the Developer Loan so accelerated. (d) The Bonds shall be subject to redemption in whole on any date, at a price equal to the orincipal amount thr;reof plus interest accrued thereon to the date fixed for redemption, on the date ')f expiration of any Letter of Credit unless the Trustee receives a renewal or extension of or replacement for such Letter of Credit meeting the requirements of Section 5.8 of the Loan Agreement not less than thirty (30) days before the expiration of such Letter of Credit. (e) The Bonds shall be subject to redemption in whole at a price equal to the principal amount thereo; plus interest accrued thereon to the date fixed for redemption on the first date for which wtice of redemption may be given in accordance with the provisions of the Indenture following an Event of Default under the Collateral Pledge Agreement. The Bonds are subject to optional redemption prior to their stated maturity, in whole or in part, in integral multiples of S5,000, on any of the following dates, at a redemption price equal to the principal amount to be redeemed, in the event and to the extent the Developer Loan is voluntarily prepaid, plus accrued interest, plus the applicable premium set forth in the fallowing table: 6-a 4 1 .. • ; 1 - The two Interest Payment Dates first occurring: Re eMption Premiums 7 years after the dated date 'iereof 3% 5 gears after the dated date hereof 2 9 years after the dated date hereof 1 10 years after the dated date hereof and thereafter 0 In the event of a redemption, the Bonds to be redeemed shall be selected by lot in such manner as in the Trustee's sole discretion it may deem appropriate and fair. The Trustee shall promptly notify the issuer in writing of BCinds or portions thereof selected for redemption. Bonds shall be redeemed only in integral multiples of $5,000. K the Issuer elects to redeem Bonds pursuant to the Indenture, the Issuer shall so notify the Trustee in a written request submitted to the Trustee at least forty-five (45) days prior to the applicable redernpOw date, and the Developer shall deposit with the Trustee at least ninv!y-five (95) days prior to such redemption date an amount sufficient to pay the applicable redemption premium payable with rust to tuuch redemption which will be deposited by the Trustee in the Seasoned Funds Accouni. H less than all of the Bonds are to be redeemed, the principal amount of the Bonds redeemed shall be an integral multiple of $5,000 and the particular Bonds to be redeemed shalt be selected as provided in the Indenture. Notice of each such redemption shall be given by sending such notice, by registered or certified mail, not less than thirty (30) days prior to the date fixed for redemption, to the registered Owner of each Bond to be redeemed in whole or in part at the address in the Bond Register. Failure to give notice by mail or any defect in any notice so mailed shall not affect the validity u: the proceedings fcr such redemption. Al Bonds or portions thereof so called for redemption will cease to bear interest on the specified redemption date if funds for their redemption are on deposit at the principal place of payment at that time. No recourse shall be had for the payment of the principal of, premium, it any, or intorest on, any of the Bonds or for any claim based thereon or upon any obligation, covenant or agreement contained in the Indenture, against �ny past, present or future member of the City Council, officer, employee or agent of the Issuer, or through the Issuer, or any successor, under any rule of law or equity, sta,ute or constitution or by the enforcement of any assessment or penalty or otherwise. and all such liability of any such rriember o; the City Council, officer, employee or agent of the Issuer as such is hereby expressly waived End released as a cundRion of. and in consideration fur, the execution of the Indenture and the issuance of any of the Bonds. The owner of this Bond shall have no right to enforce the provisions of the Indenture or to institute action to enforce ,..,e covenants therein, or to take any action with respect to any event of default under the Indenture, or to institute, appear in or defend any sl11t or other proceedings with respect thereto, except as provided in the Indenture. If an Event of default as defined in the Indenture occurs, the prir.cipal of all Bands Then outstanding issued under the Indenture may be declared due and payable upon the conditions and in tho manner ancf.:R,ith the effect provided in the Indenture. The Issuer, the Trustee, any paying agent and any agent of the Issuer or the Trustee may treat the person in whose name this Bond is registered as the owner hereof for the purpose of receivilig payment as herein provided and for all other purposes, whether or not this Bond shall be overdue, and neither the Issuer the Trustee. any paying agent nor any such accent shall be affected by notice to the contrary. Modifications or alterations of the Indenture, or of any supplements thereto, may be made only to the extent and in the circumstances permitted by the Indenture. The Irtdenturo prescribes the manner in which it may be discharged, including a provision that the Bonds shall be deemed to be paid it Seasoned Funds and.'or Government Obligations (as defined in the kilenture) maturing as to principal and interest in such amounts and at such urns, not later than 30 days after the date of investment as will be such to insure the availability of sufficiant moneys to pay 0* principal of, premiums if any, and interest on, the Bonds and all neressa;y and proper fees, compensation and exponses of the Trustee shall have been deposited with the Trustee, after which the Bonds shall no longer be secured by or entitled to the benefits of the Indenture, except for the purposes of registration and exchange of Bonds and of payment from such sourre. The following abbreviations, when used ire tho inscription on the face of this Hord, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COW. -as tenants in common TEN ENT --as tenants by the entireties JT TEN -- as joint tenants with right of survivorship and not AS tenants in common UNIF GIFT MIN AC Under Uniform Gifts to Minors Act Custodian_ _. (Gust) (State) (Minor) tional abbreviations may also be used, thcugh not in the above list. B-I [FORM OF ASSIGNMENT] FOR VALUE RECEIVED, the undersigned setts, assigns and transfers unto (Name and Address of Assignee) ..� the within Bond and does hereby irrevocably constitute and appoint_ ..___-- -- „_.a orney to transfer the said Band on the Bond Register with full power of substitution ire it ie premises. Datod: Signature Guaranteed: The Trustee will register a Bond in the name of a transferee only if provided with the information requested below. The transferee (or his designated representative) should provide as much of the informMion requested below as is applicable to him prior to submitting 'this Bond for transfer. Narne: Address: Social Security or Employer lderttification Dumber: If a Trust, Name and Address of Trustew. NOTICE: Signature(s) must be guaranteed by a mernber firm of the New York Stock Exchange or a cornmercial bank or trust company incorporated un&!r the laws of the United States or ki state of the United States. NOTICE: The signature to this Assignment must correspond with the name as it appears upon the face of the within Bond in every particular, without alteration or enlargement or any change whatsoever. W .t JHHW CME dab A72S d k2lu o. dr.t�e LOAN ORIGINATION AND SERVICING AGREEMENT among CITY OF HUNTINGTON BEACH, CALIFORNIA MERCURY SAVINGS AND LOAD ASSOCIATION VILLAGE PART74ERSHIP and SEA77L.E-FIRST NATIONAL. BANK as Trustee Dated as of August 1, 1986 $7,700,000 CITY OF H'UNVNGTON BEACH, CALIFORNIA VARIABLE RATE DEMAND MULTIFAMILY HOUSING REVENUE BONDS (MERCURY SAVINGS AND LOAN ASSOCIATIC]falVli.LACF PARTNERSHIP PROJECII 1,386 SERIES A The interest of the City of Huritington Beach, California, In th;e Loan Originatton and Servicing Agreement has been assigned to Seattle -First National Bank, as Trustee under the Indenture of Trust dated aw. of the date hereof from the City of Huntington 8e3ch, California to Seattle -First National Brok. JHHW CME dab A72S d k2lu o. dr.t�e LOAN ORIGINATION AND SERVICING AGREEMENT among CITY OF HUNTINGTON BEACH, CALIFORNIA MERCURY SAVINGS AND LOAD ASSOCIATION VILLAGE PART74ERSHIP and SEA77L.E-FIRST NATIONAL. BANK as Trustee Dated as of August 1, 1986 $7,700,000 CITY OF H'UNVNGTON BEACH, CALIFORNIA VARIABLE RATE DEMAND MULTIFAMILY HOUSING REVENUE BONDS (MERCURY SAVINGS AND LOAN ASSOCIATIC]falVli.LACF PARTNERSHIP PROJECII 1,386 SERIES A The interest of the City of Huritington Beach, California, In th;e Loan Originatton and Servicing Agreement has been assigned to Seattle -First National Bank, as Trustee under the Indenture of Trust dated aw. of the date hereof from the City of Huntington 8e3ch, California to Seattle -First National Brok. P2162.TOC TA13LE OF CONTENTS ARTICLE I DEFINITIONS AND STRUCTURE e 1 , .. % .% i Z Section1. i . rAffinitkwis .................................................................... ....................................... 2 Sacbm1,2. Paymit On Business Day................................................................................ 6 Secdrl 1.3. llltwpn*tkA....................................................................................................... 6 Socfiw 1.4. Aeckals, Ptles and Headings............................................................................. a ART!C LE II REPRESENTATIONS Section 2.1. Representations by the Issuer............................................................................. 7 St3ction 2.2. Representations by the Develop -or ...................................................................... B See ion 2.3. Representalions and Warrntias of the Trustee .................................................. 10 Section 2.4. RepreseMations and Warranties of Association .................................................. 10 AriTlClE Ill ISSUANCE OF BONDS; DEVELOPER LOAN Section 3.1. Agtoement to Issue Bonds; Application of Bond Proceeds ................................. 13 Section 3.2. Origination of Developer loan; Fees ............................................................. 1:3 Section 3.3. Conditions Precedent to Disbursement of Developer Moan ................................. 13 Section 3.4. Disbursement of Developer Loart...................................................................... 13 Section 3.4. E-stablishment of Complotion Date; Obligation of Developer to Complete...........................................................................................1 14 Section 3.6. investment of Moneys; Ai0ra e......................................................................... 14 ARTICLE IV REP"MENT OF DEVELOPER LOAN .Section 4.1. Developer Loan................................................................................................. 1 ti Secbori 4.2. CMveloper Loan Payments................................................................................. 16 Swion 4.3. Payment of Cliher knourits............................................................................... 1ft Section 4.4. Uticer0tional Obligation...................................................................................... it, Section 4.5. Assignment of Issuer's Rights............................................................................ 17 Section 4.6. Amounts Flernaining in Debt -Service Fund ......................................................... 17 Section 4.7. Ass�xiation to Act as Servicer -if Developer Loan ............................................. IS n 11 19- •: ARTICLE V SPECIAL COVENANTS AND AGREEMENTS Section 5.1. Right of Access to the Project and Records....................................................... 19 Section 5.2. Maintenance of Existence; Assignments............................................................. 19 Section 5.3. Statement of Compliance; Notice of Certain I=vents........................................... 19 Soction 5.4. Insurance; Maintenance and Repair..................................................................... 20 Section5.5. Additional Instruments....................................................................................... 20 Section 5.5. Tax Exempt Status of Bonds.............................................................................. 20 Section 57. Regulatory Agreement ....................... ....................... ..................... I.................... 21 Section S.S. Letter of Credit; Allernati� Credit Facility............................................................. 22 8ectio16.9. Collateral Pledge Agreemiar;t............................................................................... 24 Section8.10. kftnturo................................................................................... I ...................... 24 ARTICLE VI DAMAGE, DESTRUCTION AND CONDEMNATION; USE OF PROCEEDS Section 6.1. Ohligation to Continue Payments....................................................................... 25 Section 6.2. Application of Net PraceeJs................................................................................ 25 Section 6.3. Insufficiency of Net Proceeds............................................................................ 25 ARTICLE VII EVENTS OF DEFAULT AND REMEDIES Section 7.1. Events of Default............................................................................................... 25 Section 7.2. Remadies on Default........................................................................................ 26 Section 7.3. AgreerneN to Pay Attomeys' Fetes and Expenses .............................................. 27 Section 7.4. No Remedy &clusive........................................................................................ 27 Section 7.5. No Additional Waiver Implied by One Waiver ...................................................... 28 Section7.6. Limitation............................................................................................................ 28 ARTICLE Vill PREPAYMENT Section G.1. Prepayment of Developer Loan ......................................................................... 29 Section 6.2. Redemption of Bonds Upon Prepayment........................................................... 30 Section 8.3. Arnount of Prepayment.......................................................................................10 ARTICLE IX LIMITATION ON LIABILITY OF ISSUER; EXPENSES: INDEMNIFICATION .%,ction 9.1. Limitation on Liability of Issuer .......................................................................... 31 Section9.2. EiKpenses.......................................................................................................... 31 :"action 9.3. Indesrinification................................................................................................... 31 a A j • PAID ARTICLE X MISCELLANEOUS Section10.1. Entire ,4preerw il.............................................................................................. 33 Section10.2. Notices........................................................................... .................................. 33 SeMNY.• •O.W AY7 o1m11tY...........................................................• .......................................... WR Section10.4. Severability....................................................................................................... 34 Section10. S. Execution of Counterparts................................................................................. 34 Section 10.6. Amendments, Changes and Modifications ......................................................... 34 Section10.7. Govemir+g Law................................................................................................ 34 Section10.8. Term *f Agreem,gnt................................•.......................................................... 34 Section10•9. Recordation...................................................................................................... 34 Section 10.10. Payments Under Collateral Pledge Agreemant................................................ 34 SIT A CERTIFICATION OF CONTINUING PROGt-!AI%A COMPLIANCE ............................ 1 EXH&T 9 CERTIFICATE OF TENANT ELIGIBILITY ANC) INCOME VERIFICATION....................•.................•..,........................................ I EXHIBIT C COMPLETION CERTIFICATE ............................................................................... 1 EXHIBIT D PROMISSORY NOTE SECURED BY DEED OF-rRI'ST...................................... I } i 1 LOAN ONIQIMATION AND SEEDING AeREEMENT • This Loan OrlginaWn and Servicing Agreement (the "Agreement"), bated as of August 1, 1986, is by and ainong the City of Huntington Beach, California, a charter city and municipal corporation organized and existing under the laws of the State of California ("Issuer"), Mercury Savings and Lear. Association, a State -chartered savings and loa, association organized and existing under the laws of the State of California ("Asr viation"), Village Partnership, a California general partnership ("Developer"). and Seattle -First National Bank (the "Trustee"', a national banking association duly organized and existing under the laws of the United States and authorized to accept and execute trusts of the type contemplated by the Indenture. For and in coosideration of the mutual agreements hereinafter contained, the parties hereto agree as follows: E ARTICLE i DEFINIVONS AwD STRUCTURE Section 1.1. Defiinitiorts. (a) The following words and terms as used in this Agreement shall have the following meanings unlass the context or use ctherwise rsquires: "Ac4;Worodon Default •" means an Event of Default under Section 16 of the Regulatory Agreement rA� rng the Trustee to take the action set forth in Section 16(d)ff of the Regulatory Agreement. "fact" means Chepter 7 of Part 5 of Division at of the Health and Safety Code of the State of California, as amended. "Act of Bankruptcy" steal! have the same rnbaning specified in the Indenture. "Apimrt►ani'' means this Loan Origination and Servicing Agreement, as originally executed and as arrwnded and supplemented from time to time. "Aft~* Credit Facility" means a credit facility other than the Latter of Credit delivered to the Trustee pursuant to Section 5.8 hereof, including but not !imited to an insurance policy, which complies with the requirements of said section. "Alternate Credit facility" shall be deemed to include any col!ateral or other anreements with respect thereto which may be required for the satisfaction of all applicable requirements of soic Section 5.8, as provided therein. ",association" means Mercury Savings and Loan Association, a State -chartered savings and loan association organized and existing under the la -vs of the Strte of California, or the issuer of any replacement lattsr of credit or Alternate Credit Facility as provided in Section 5.8 hereof. "Association Representative" means any person or persons designated by the Association frurn time to time to act on its behalf under this Agreement. "Bootd Counsel" means an attorney at law or a firm of attorneys at law acceptable to the Issuer and the Trustee of nationally recognized standing in matters pertaining to the tax-exempt nature of interest on bonds issued by states and their political subdivisions duly admitted to the practice of law bofore the highest court of any state of the United States of America or the District of Columbia. "Bond Purchase Agreement" means the Sond purchase Agrti-eerrmpnt, datcd August 1986, among the Underwriters, the Issuer and the Association. "Bond Rate" means, prior to conversion to the Optional Fixed Rate (as that term is defined in the Indenture), the sum of TENRO and the TENReD Amount and, after the Conversion Date. the Optional Fixed Rate;: provided, however, that prior to Marr h 1, 1907, the Bond Rate will be the rate stated in SaCtion 211.A. of the Indenture plus; any additional intarest payable under Section 211.G. of the Indenture. "Bards" means the Variable Fate Demand Multifamily Housing Revenue Bonds, (Mercury Savings and Loan Association,Village Partnership Apatiments project), 1986 Serieu, A, of the Issuor to be issued pursuant to the Indenture. "Business Vey" means a day which is not a Saturday or a Sunday or a bank holiday under the laws of the United States or the States of California, Washington or New York. "BTC:" rneami Banters Trust Company. New York, iVew `fork, and its successors and assigns. -2- c "CoWir s6on of Corftuing Program Compliance" means the document substantially in the form attached hereto as Exhibit A. "Certltkiftn of Tsnatrlrt Ellglb Ny asset incomre Verifications" means the documant substantially in the form attached hereto as Exhibit B. "Ciosing", when used with respect to the Developer Loan, means the initial disbursement to the Developer of a portion of the proceeds of the Developer Loarti. "Code" means the Internal Revenue Code of 1954, a!j amended, and any successor statute thereto, as in effect on the date in question, together with corresponding and applicable final, temporary or proposed regulations and revenue rulings issued or amended with respect thereto by the Treasury Department or Internal Revenue Service of the United Slates. All references herein to sections, paragraphs or other subdivisions of the Code or the rwjufations promulgated thereunder shall be daem+ed to be references to correlative provisiotrs of any successor code or regulations promulgated thereunder. "CoNsteral" shall have the same mearOg specified in the Collateral Pledge Agreement. "Coftteral pledge Agreement" means the Collateral Pledge Agreement by and among the Issuer, the T. ustee, the Association and the Collateral Agent named therein. "Completion Certificate" means the certificate in the form attached hereto as Exhibit C to be provided by the Developer on the Completion Date. "Completion Caste" has the meaning specified in Section I of the Regulatory Agreement. "Ccnstructlon Term" has the meaning specified in Section 101 r i the Indenture. "Conversion Gate" has the meaning specified in Section 101 of the lnG,�nture. "Cast of issuancre Fund" has the same meaning as specified ire the IrldL "Delivery Date" means the date of delivery of the Bonds to the initial purchaser., of. "Determination of T'aimbilit;y" means the enactment of applicable legislation, or a judgment or order of a court of original jurisdiction, or a final ruling or decision of the Internal Revenue Servicn, in either case to the effect that the interest on the Bands (other than interest on any Band for any period during which such Boyd is held by a "substantial user" of any facility financed with the proceeds of the Bonds or a "relatod person", as such terms are used in Section, 103(b)(13) of the Code) is includable for federal income tax purposes in the gross incomes of all recipients thereof subject to federal income taxes or the filing with the "trustee of an opinion by Bond Counsel to such effect. A judgment or order of a court of original jurisdiction or a ruling or docision of the Internal Revenue Service small be considered final owy it no appeal or action for judicial review has been filed and the time for filing such appeal or action has expired. "Dev#10per" means Village Partnership, a California general partnership. "Developer Loan" means the loan evidenced by the Developer Note and secured by the Developer Mortgage to be made by the Issuer to the Developer hereunder to provide finsncing for the Project. "Developer Loan Documonts" means this Agreement, the Regulatory Agreement, the Certification of Continuing Prograrr, Compliance. the Developer Notu, the Developer Mortgage, the Reimbursement Agreement, t`:o Disbursement Agreement and such other agreements as may be -3- •1 required by the Issuer or the Association in connection with the Developer Loan, but excluding tho Certification of Continuing Program Compliance as of any time prior to when such cerificate is required. "Developer Loern Fund" means the Fund by that name In Section 302 of the Indenture. "Developer Mortgage" means the Deed of Trust with Assignment of Runts and Security Agreement (with Fixture Filing) granting a mortgage on, and security interest in, the land, buildings and equipment comprising the Project, in substantially the form required by this Loan Agraemant, made from the Developer to a trustee for the benefit of the Trustee and the Association, securing the repayment of the Developer Loan and the obligations of the Dovelopw under the Raimbursemerit Agreerent, this Loan Agreement, the Disbursement Agreement, the Ftegul4tory Agreement and other agraements related to the Project and the financing thereof. 00eveloper Mote" means the note executed by the Dev*kqw pursuant to tt s Agreement, the form of which is attached hereto as Exhibit "D". "laevelaper Representative' shall mean the person or persons (who may be employees of the Developer) designated from time to tirne to act on behalf of the Developer in a written certificate furnished to the Issuer, the Association and the Trustee containing the specimarr signature of such person or persons and signed on behalf of the Developer. "Disbursement Account" means the account by that name established by the Trustee under ft Made &Ke. "Disbursement Agreement" means the Project Disbursement Agreement between the Developer and the Association and dated as of August 1, 1986, which is incorporated herein by reference and pursuant to which moneys deposited in the Disbursement Account will be disbursed to the Developer. "Event of Default", as used in this Agreernant, means any of the events described as an event of default in Section 7.1 hereof. "Indenture" means the Indenture of Trust, dated as of the date hereof, between the Issuer and Trustee relating to the issuance of the Bonds, as originally executwd and as amended or supplemented from time to time. "inducement Dire" means May 19, 1986, the date the Issuer took official action within the meaning of the Cods to provide financing in connection with the Project. "Interest Payment Date" means (a) prior to the Conversion Date, any March 1, June 1, September 1, or December t, commencing March 1, 1987, (b) the Conversiun Date, (c) after the Conversion Bate, any March 1 or September 1, (d) any Reset Date or (e) any other date upon which interest on the Bonds is due and payable. "Issuer" means the City of Huntington Beach, California, a municipal corporation and charier city organized and existing undei the laws of the State of California. "Issuer Representative" means any person or persons designated by the Issuer from time to time to act on its Whalf under this Agreement. "Letter of Credit" means the Ir.evocable Lotter of CrAc,'t No. issued by the Association pursuant to the Rsimbursoment Agreement, or any 10ter of credit or Alternate Credit Facl.ity in replacement thereot in accurdarice with Section 5.8 hereof. .a. "Lo ter of Credit Note" means the note executed by the Developer pursuant to the Reimbursement Agreement. OTIf iciel Statrtement" means the Official Statement of the Issuer, dated August 1986, relating to the issuance of the Bonds. "Permarlord Term" has the same meaning as specified in the Disbursement Agreement. "Project" means the multitainily residential rental development, the financing of which is to be financed with the Developer Loan, as described and furtrar defined in the Regulatrny Agreement. "P'r Wt Costs" has the same meaning as specified in the Regulatory Agreement. "Qualilled NOW Costs" has the same meaning es specified in the Regulatory Agreement. "Qualifled Project Period" has the meaning specified in the Regulatory Agreement. "Rating Arent" has the same meaning as specified in the Indenture. "Regulatory Agreement" means the Regulatory Agreement and Doclarration of Restrictive L ants dated ac of August 1, 1986 by and among the Issues, the Trustee, the Association and the Dev, , "Rein, . --ment Agreement" means (i) with respect to the initial Letter of Credit, the Letter of Credit and I,.. -foment Agreement dated as of August 1, 1986, among the Developer, the Association and ,tee and (ii) with respect to any other Letter of Credit (including any Alternate dredit Facility), tht, 'Ont pursuant to which a tank or savings and loan association (or, where relevant, an insurance -) agrees to issue such Letter of Credit or Mernate Credit Facility. "Remarketing Agent" OIL. Remarketing Agent appointed pursuant to the Remarketing Agreernert and any successors ap;.. ;n accordance with Section 916 of the Indenture. '`Rerrtarkertiny AQr,2emer:t" has the r,, specified in Section 101 of the Indenture. "Remarketing fee" means the fee to be. pair. 'aterly to the Remarketing Agent :n an amount equal to 1 /4 of 14; per annum of the outstanding principal amount of they Bonds. "Reserve Account" means the account by the name created by Section 302 of the Indenture. "I - serve Requirement" shall have the same meaning as specified in tho'Indenture. "Reset Role" has the meaning !;pecified in Section 1 C 1 of the Indenture. "Reset Date" has the meaning specified in Section 101 of the Indenture. "Seosoned Funds" has the meaning specified in Section 101 of the Indenture, "Servicer" means the Association in its capacity as servicer of the Developer Loan under tiu Agmerent. "Serylcing Fees" means the sums to be paid to the Association for servicing of the Developer Loan unde- the terms of the ReimbursamGnt Agreement. "State" means the State of California. .5. I I KANO "TWW*r Agent" rmatts the person or entity appoiratad tc such w: "TENRO" has the meaning specified in Section 211.8.2 of thi, Inde ',n pursuant to the Indenture. 9. "TENRO Amount" has the maning spocif;ed in Suction 211.B.1 ' I'molenturs. "T►astee" mans Seattle -first National Bank, or any successor It, serving as such pursuant to the Wamure and any separate or co-trustse serving as stich therounder. "16:7derwriter" mans collectively the initial purchasers of the 1301 �)ursuant to the Bond Purchaso Agroement. Section 1.2. Payment On ticrslness pay. Any payment Which wou; --i of x-!,%vise he due and peyttrble under this Agreement on a day which is not a Business MAy rrr � -j be f,.,,i;d on the next succeeding day which is a Busin$ e.; Day, with the same force and effect as if such vpap,,r Ont had been paid ort the nominal dater for such payment. Section 1.3. lnderpretstlon. Unless the context clearly requires atherwi,e, words of r!. xuline gamer shall be construed to include correlative words of the fe�rr.' lne and neutar ganders ar,:, vice versa, and words of the singular number shall be construed to include corrr,fative words of the number and vice versa. This Agreement and all the terms end provisions hereof shall be Construed 'n effectuate the purp-ss set forth herein and to sustain the validity hsnLiuf. Section 1.4. Recitals, Titles and Head/ngs. The cities and hoM:dincgs of the arlic.',es and ser;tiens of this Agreement have been inserted for convenience of referonc.r. envy and shai, not in ariy w«y modify or restrict any of tho terms or provisions hereof and sisal,' ivr,vir biz, considered or givers env effect in c mstru-'ng this Agreement or any provisions hereof or in .:;scertainincg intent, if any gvestian of intent should arise. on, i s ARTICLE II REPRESENTATIONS Secow 2.1, Reprosentetlr, ,s by the Issuer. (a) Th3 Issuer is a municipal corporation and charter city duty organized and existing under the laws of the State of California. (b) The Issuer has full legal right, power and authority under the 1:,ws of the State, including the Act, (1) to eater into this Agreement, the Collateral Pledge Agreement, the Remarketing Agreement, the Regulatory Agrament and the Indenture, (2) to issue, execute and deliver the Bonds, (3) to perform its obligations under this Agreement, the Collateral Pledge Agreement, the Remarketing Agreement, the Regulatory Agreement, the Indenture and the Fonds and (4) to consummate the transactions contemplated by this Agreement, the Collateral Pledge Agreement, the Remarketing Agreement, the Regulatory Agreement, tha Indenture, the Bonds and the Official Statement. (c) The Issuer has taken all actions necessary to authorize (1) the execution and delivery of this Agreement, the Collateral Pledge Agreement, the Remarketing Agreement, the Regulatory Agreement and the indenture, (2) the issuance, execution and delivery of the Bonds, (3) the performance by the Issuer of its obligations under this Agreement, the Collateral Pledge Agreement, the Remarketing Agreement, the Indenture, the RNulatory Agreement and the Bonds and (4) the consummation of the transactions contemplated by this Agreement, the Collateral Pledge Agreement, the Remarketing Agreement, the Regulatory Agreement, the Indenture, the Bonds and the Official Statement. (d) This Agreement has been duly executed and delivered by the Issuer and constitutes a valid and binding obligation of th-3 Issuer, enforceable in accordance with its terms, except as limited by bpnkruptcy, insolvency, rsorganization, moratorium and other similar laws affecting the rights of rreditors generally and the exercise of judicial discretion in accordance with gene, -al principles of equity. Upon the execution and delivery thereof, the Collav ral Pledge Agreement, the Remarketing Agreement, the Regulatory Agreement, the Indenture and the Bonds will const'tute valid and binding limited obligations of the Issuer, 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 the :4xercise of judicial discretion in accordance with general principles of equity. (e) The execution and delivery of this Agreement, the Collateral Pledge Agreement, the Remarketing Agreement, the Regulatory Agreement and the Indenture, the issuance, execution and delivery of the Bonds, the performance by the issuor of its obligations under this Agreement, the Collateral Pledge Agreement, the Remarketing Agreement, the Rcgulatory Agreement, the Indenture and the Bonds and the consummation of the transactions contemplated by this Agreement, the Collateral Pledge Agreement. the Remarketing Agreement, the Regulatory Agreement, the Indenture, the Bonds and the Official Statement, do not violate any law, rule, regulation or ordinance or any order, judgment or decree of any federal, state or local court, and do not conflict with, or constitute a breach of, or a detault under, the Act, or under the terms and conditions of any agreement, instrument or commitment to which the Issuer is a party or by which the Issuer or any of its property is bound. . (f) To the kruwWge of the issuer, there is no action, slut, proceeding, inquiry or investigation pendirtg or threatened against the Issuer by or before. any court, governmental agency or public board or body (nor, to the knowledge of the Issuer, is there any basis therefor), which (1) affe�� -rr quostions fire exisw-fie or the territorial jurisdiction br the Issuer or the title to office of any commissioner, director of of%,,4r of the issuer, (2) affects or seeks to prohitit, restrain or enjoin the execution and delivery of this Agrawnent, the Cotlatera.l Pledge Agreement, the Remarketing Agreement, the Regulatory Agreement or ttm Indenture, the issuance, execution cr delivery of the Bonds, the performance by the Issuer of its obligations under this Agreement, the Collateral Pledge Agreement, the Remarketing Agreerner,t, the Regulatory Agroement, the Indenture or the Bonds or iha consummation .7. 0 •r• of the transactions contemplated by this Agreement, the Collateral Pledge Agreement, the Remarketing Agre~, the Regulatory Agreonvnt, the Indenture, the Bonds or the (Vicial Statement, (3) affects or qmfions the vWWky or enforceability of this Agreement, tha Collateral Pledge Ag►eerreent, the Remarketing Agreement, tho Regulatory Agreement, the Indenture or the Bonds, (4) questions the tax- exempt $tus of fire Ronds or the mmpleteness or accuracy of the Otf,riat' Statement, or (I) questions the power or authority of the Issuer to perform its obligations under this Agreement, the Collateral Pietlgo Agreement, the Remar Pting Agreement, the Regulatory Agreemnt, the Indenture or the Bonds Or to carry out the transactions contemplated by this Agreement, the Collatem; Pledge agreement, the Remarketing Agmement, the Indenture, the Regulatory Agreement, the Bonds or the Official Statement. (g) The Issuer has determined that the issuance of the Bonds to obtain moneys to carry out the purposes contemplated hereby will serve the public interest and will further the purposes of the Act, including, among other purposes, the provision of decent, safe and sanitary re-,;idential rental housing. (h) Any c+ertificato signed by an Issuer Representative and delivered pursuant to this Agreement or Me Indenture shall be deemed a representation and warranty of the Issuer as to the staterr:ants made therein. Section 2.2. RePresewaffins by the Developer. The Developer covenants, represents and warrants that: (a) The Developer is a genera! partnership duly organized under the laws of the State of _ California, has the power and authority to own its propertiec a.id assets and to carry or, its business a3 now conducted and as contemplated to bo conducted, and the power to enter into and has duly authorized by proper action, the execution and delivery of this Agreement and all other documents contemplated hereby to be executed by the Developer, including tha Regulatory • Agreement, the Disbursement Agreement and the Reimbursement Agreement. (b) Neither the execution and delivery of this Agreement, the Developer Loan Documents or any other document in connection with the fioancirg of the Project, the consummation of the transactions contemplated hereby and thereby, nor the fulfillment o° or compliance with the terms and conditions hereof and thereof, conflicts with or results in a breach of any of the terms, conditions or provisions of Developer's partnership agreement or of any agreement or instrument to which the Deve!opei is now a party or by which it is bound, or constitutes a default (with due notice or the passage of time or Moth) under any of the foregoing, or results ii, the rreation or imposition of any prohibited lien, charge or encumbrance whaisoever upon any of the property or assets of the Developer under the terms of any instrument or agreement to which the Developer is now a party or by which it is bound. (c) The Project wall be located wholly within the City of Huntington Beach, California. (d) The Developer has and will have title to the Project sufficient tv carry nut the purposes of this Agreement, and such title shall be in and remain in the Developer excopt as p,;rmitted by Section 6.2 hereof and the Regulatory Agreement. (e) The estimated cost of the Project is as set forth in the Developer's Certificate Regarding Use of Proceods, dated as of August 29, 1.386. and has been determined in accordance wiih sound engineering principles. (f) The Project consists and will consist of those facilities describad in the Regulatory Agreement. and the Developer shall make no changes to the Project or to the operation thereof which would affect the qualification of the Project under the Act or impair the eYemptior from federal income taxation of the intsiest on thie Bonds. The Developer intends to utilize the Project as muttifamity rental housing during the terra of the Sands. r •e- �f y� 1 I r P •'+, (9) Tt* construction, irnproving and equipping of the Project commenced subsequent to the inducerrait Date, and prior to the Inducement Date neither the Developer nor any related person had entered into any bindirg agreement in connection with the construction, improving or esquipprng of the Project, no on -site work had been commenced in connection with the construction of the Project, and no off -site fabrication of arty portion of the Project hod been commenced. The Project consists, and win at all times consist, of property which is land or is subject to the allowance for depreciatkwl provideal in Section 1 B? of the Code. All of the procoWs of the Bonds will be uaed to pay Protect Costs, and at least 95,11/a of the rum of the proceeds of the Bonds plies income from the investment thereof (after payment of costs of issuance thereof) will :►e used to pay the Project Costs which are chargeable to the capital account of the Project, and which were paid or incurred after the Inducement date. None of the proceeds of the Bonds will be used to finance any portion of the Project which was placed in service by the Develope.• one year or more prior to the date of issuance of the Bonds. (h) The Developer has incurred a substantial binding uoligation to acquire and construct the Project of at least $100.000. The Developer will proceed with due diligence to construct the Project and reasonably expects to expend the full arnaunt of the Loan b; no later than July 1, 1989. (i) Under Rev. Proc. 62-21, the average reasonably expected economic; life -.t the Projoct is at least _ years; the average .maturity of the Bonds is not more than 1201% of such econci ric life; and there are no facilities integrally associated with the Project that, under the term& of this Agreement, could be financed with the proceeds of the Bonds but are not being so financed. G) Less than 250,10 of the proceeds of the Bonds wit; be used, directly or indirectly, for the acquisition of land or an interest therein; none of the proceeds of the Bonds will be used, directly of indirectly, for the acquisition of land, or an interest therein, to be used for farming purposes; none of the proceeds of the Bonds will be used for the acquisition of any prooerty of an interest therein unless the first use of such properly is pursuant to such acquisition, except with respect to any building and the equipment therefor if the rehabilitation expenditures with respect to such building equal or exceed 15% of the cost of acquiring such building and equipment; grid none of the proceeds of the Bonds will be used to finance commercial property. (k) There is no action, sui,' or proceeding at law or in equity or by or before any governmental instrumentality or other agency now pending, cr, to the knowladge of the Developer, threatened against or affecting it or any of its properties or rights, which, if adversely determined, would materially impair its rignt to carry on business substantially as now conducted or as now contemplated to be conducted, or would materially adversely affect its financial condition. The Developer is not in material default in ihw performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any material agreer, rent or instrument to which it is a party. (1) The operation of the Project in the manner presently conterplated and as described herein will not conflict with any zoning, water or air pollution or other ordinance, order, law or regulation applicaUe thereto. The Deve:oper has caused the Project to be designed in accordance with all federal, state and Ideal laws or ordinances (including rules and regulations) relating to zoning, building, safety .W environmental quality. (rn) The Developer has filed or caused to be filed all federal, state and local tax returns which are roc uirad to be filed, and has paid or caused to be paid all taxes as shown on said returns or on an� assessment recaivod by it, tc the extent that such taxes have become due. (n) To the best of trhe 13,aveloper's 0owlt-dge, the information contained in the Official :statement, itisofar as such information relates ;o the Developer and the Project, is accurate ill -Al, material respects a: id does not cuntain any untrue statement of a matai ial fact or omit to state a 91 .r mallo al fact required to be stated themin or necessary to mat sl the statements made therein, in tt~u1 light of the circi unstances under which they were made, not misleading. (a) No officer or other official of thN Issuer has any interest whatsoever in the Developer or in the transactions contemplated by this Agreement. (p) The Developer has obtained, or will obtain on or before the date required therefor, all necessary ceetificams, approvals, permits and authorizations with respect to the cronstn lotion cf the project. (q) The Developer will not submit any funding requisition to the Association for disb►!rsement of advances under the Developer Loan which, if paid, would result, as of the date of rich payment, (i) in less than 95% of ere proceeds of the Developer Loan, exclusive of proceeds used to pay the costs of issuing the Bond, being used to pay or reimburse the Developer for Qualified Project Costs and (ii) any of the proceeds of the L-`evsloper Loan being applied to pay or reimburse costs or expenses o!f-*r than Projec, k;osts. Se0bn 2.3. Repmse#, ite eons and Warranties of the Trustee. The Trustee makes the following represemtatio►ns and warranties: (a) The Trustee is a national hani:ir,g association in good standing under the laws of the United States. The Trustee is duly authorized to act as a fiduciary and to execute the trust created by the !ndenture, and is qualified to act as Trustee under the Indenture. (b) The trustee has all the power and authority rye}: essary (i) to execute and deliver this Agreement, the Collateral Piedgb Agreement, the Regulatory Agreement and the Indenture, (ii) to perform its obligations under this Agreement, the Collateral Pledge Agreement, the Regulatory Agreement and the Indenture and (iii) to consummate the transactions contemplated by this Agroement. the Indenture, the Collateral Pledge Agreement, the Regulatory Agreement and the Official Statement. (c) The Trustee has taken all actions necessary to authorize (i) the execution and delivery of this Agreemont, the Collateral Pledge Agreement, the Regulatory Agreement and the Indenture, (6) the performance by the Trustee cf its obligations under this Agreement, the Collateral Pledge Agreement, the Regulatory Agreemant and the tndenttire and (iii) the consummation of the transactions contemplated by this Agreement, the ,ndpnture, the Collateral Pledoo Agreement, the Regulatory Agreement and the Official Sratnmeni. (d) This Agreement, the Collatera! Pledge Agreement, tie Regulatory Agreement and the Indenture have been duly exec,-ted and delivered bv the Trustee and constitute valid and bi .ling obligations of the Trustee, enforceable in accordance with their respectivR terms, except as limited by bankrteptcy, insolvency, reorganization, moratorium and other similar taws affecting the rights of creditors generally. (e) No approval, permit, consent, authorization or order of any court, government -I agency or pubitc beard or body not already obtained is required to be obtained by the Trustee as a prerequisite to (i) the execution and delivery of this Agreement, the Collateral Pledge Agreement, the Aegutatory Agreement o; the lrtdenrure, (ii) z,'*, autreentication or delivery of the Bonds, (iii) the peedormanca by the Trustee of its obligations under this Agreement, the Collateral Pledge Agreement, the Regulatory Agreement or the Indenture or (iv) the consummation of the transac!iarns contemplated .,y this Agreement, the Indenture, the Bonds, We Coll:iteral Pledge Agreement, the Regulatory Agreement or the Official Statement. Secdon 2.4. Aeprosentallons and Warr&Wos of Aszo:ladon. The AssociaJon makes the following representations and warranties: •10- M (a) The Association is a State chartered savings and loan association duly organized and validly existing under the laws of the State of California. (b) The Association has all power and authority necessary (i) to execute and deliver this Agreement, the Reimbursement Agreement, the Letter of Credit, the Collateral Pledge Agreement and the Developer Lear Documents, (ii) to perform its obligations under this Agreement, the Reimbursement Agreement, the Letter of Credit, the Collateral Pledgc Agreement and the Developer Loan Documents and its obligations as Servicer under this Agreement and the Developer Loan Documents, and (iii) to consummate the transactions contemplated by this Agreement, the Reimbursement Agreement, the Letter of Credit, the Collateral Pledge Agreement, the Developer Loan Documents and the Official Statement to be consummated by the Association. (c.) The Association has taken all actions necessary to authorize (i) the execution and delivery of this Agreement, the Reimbursement Agreement, the Letter of Credit, the Collateral Pledge Agreement and all of the Developer Loan Documents and in its capacity as Servicer under the Developer Loan Documents, (ii) the performance of its obligations under this Agreement, the Reimbursement Agreement, the Letter of Crerf: the Collateral Pledge Agreement and the Developer Loan Documents and in its capacity as Servi,;er under the Developer Loan Documents, and (iii) the consummation of the transactions contemplated by this Agreement, the Reimbursement AgreEamem, the Leiter of Credit, the Collateral Pledge Agreement, the Developer Loan Documents and the Official Statement to be consummated by the Association in its individual capacity or in its capacity as Servicer. (d) This Agreement, the Reimbursement Agreement, the Letter of Credit, the Collateral Pledge Agreement, the Developer Loan Documents and the Association's obligations in its capacity as Servicer under this Agreement and the Developer Loan Documents have been duly executed and delivered by the Association and constitute, a5scuning (except as to the Letter of Credit) due execution and delivery by the other parties thereto, the valid and binding obligations of the Association, enforceable against the Association i:r accordance with their terms, except as limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting the rights of creditors generally. (e) Neither the execution and delivery by the Association of this Agreement, tha Reimbursement Agreement, the Developer Loan Documents, the Letter of Credit. the Collateral Piedge Agreement, nor the performance by the Association of its obligations under this Agreement, the Reimbursement Agreement, the Letter of Credit, the Collateral Pledge Agreement, the Developer Loan Documents cr in its capacity as Servicer under any of the Developer Loan Documents, nor the consummation of the transactions contemplated by this Agreement, the Reimbw se-ment Agreement, the Letter of Credit, the Collateral Pledge Agreement, or any of the Developer Loan Documertt6 or th;, Official Statement to be consummated by the Ast aciation (in its individual capacity or its capacity as Servicer), will violate any law, rule, regulation or ordinance, or any order, iudgment or decree of any federal, state or local court or will conflict with, or constitute a breach of, or a default under, the charter or by-laws of the Association or under any agreement, instrument or commitme-.: to which the Association is a party or by which the Association or any of its property is bound. (f) To the knowledge of the Association, there is no action, suit, proceeding, inquiry or invest .anon by or before any court, governmental agency or pu;)lic board or body pending or, to the knowied. of the Association, threatened against the Msooiaiion (nor, to the knowledge of the Association, is there any basis therefor), which (i) affects or seeks v) prohibit, restrain or enjoin the execution and delivery of this Agreement, the Reimbursement ".g:eement, the Letter of Credit, the Collateral Pledge Agreement or any of the Developer Loan Documents, the issuance, execution or delivery of the Bonds, the performance by the Association (in its individual capacity or ir, its capacity as Servicer) of i!s obligations under this Agreement, the Reimbursement Agreement, the Letter of Credit, the Collate; of Fledge Agreement or any of the Developer Loan Cocuments or the comwmmation of the transactions contemplated by this Agreement, the Reimbursement Agreement, the Latto+r of Credit, tha Cotr;iteral Pledge Agreement, any of the developer Loan Documents a the Official Statwmnt io be consurmated by the Association (in its individual Capacity or in its Capacity as rvicer), (ii) affects or questions the validity or enforceability of this Agreement, the blond Purchase Agreement, the Reimbursement Agreement, the Letter of Credit, the Collateral Pledge Agreement, any of the Devtrltrper Loar. documents, the Indenture or the Hands, (lit) questions the tart exempt status of the fonds or the completeness or accuracy of the Official Statement, or (iv) questions the power or authority of the Association to perform (in its individual capacity or in its Capacity as Servicer) its obligations unde► this Agreement, the Fk*nburser�rerrt Ag ooment, the Letter of Credit, the Collateral Pledge Agreement or any of the Developer Loan Documents, or to consummate the transactions contemplated by this Agreement, the Reimbursement Agreement, the Letter of Credit, the Collaisral Pledge Agreement, any of the Devaloper Loan Documents or the Official Statement to be consummated by the Association (in its individual capacity or in its capacity as Servicer). (g) No approval, permit, consent, authorization of order of any court, governmental agency or public board or body not already obtained is required to be obtained by the Association as a prerequisite tG the execution and delivery by the Association (0 its individual capacity or in its capacity as Servicer) of this Agreement, the Reimbursement Agreement, the Letter of Credit, the Collateral Pledge Agrooment or any of the Developer Loan Documents, the performance by the Association (in Is individual capacity or in its capacity as Servicer) of its obligations under this Agreement, the Reimbursement Agreement, the Letter of Credit, the Collateral Pledge Agreement or any developer Loan Documents or the consummation of the transactions contemplated by this Agreement, the Reimbursement Agreement, the Letter of Credit, the Collateral Pledge Agreement, any of the developer Loan Documnnts or the Official Statement to be consummated by the Association (in its individual capacity or in its capacity as Servicer). (h) Any certificate signed by a representative concurrently with this Agreement shall be deemed as to the statements made therein. -12- of the Association ant delivered pursuant to and a representation and warranty of the Association ARTICLE ill ISSUANCE OF BONDS; DEVELOPER LOAN Secko 3.1. Aareaft t to fts" No►tds; Application of Bond Proceed:. To provide funds to make the De•: stover Lcw to die Developer to finance the Project Casts as provided herein, the Issuer agr"s that .1 will issue under the Indenture, sell and cause to be delivered to the purchaser's thereof, the Wnds, bowing interest at the miss and pevable as to principal and interest at the times as set forth in the Indenture. The tssLw will thereupon deposit the proceeds received from the sale of the Bonds as provided in the Indenture. Secdon 3.2. OrVnetlon of Developor Loan; Fees. The Association agrees on behalf of the Issuer to originate and service the Developer Loan to finance the Project Costs in an amount equal to $7,700,000. The proceeds of the rXvetopor Loan shawl bo disbursed in accordance with the provisions of S9cti0n 3.4 hereof. Section 3.3. Cr4idltfons Precedent to Disbursement of Developer Loan. As a condition precedent to the disbursement of the Developer Loan, the Developer shall comply with all conditions precedon; to the funding of the Developer loan as set forth in the Reimbursement Agreement and the Disbursement Agreement. Section 3.4. Disbursement of Developer Loan. (a) On the Delivery Date, the Developer Loan shall bo originated and, in accordance with Section 303 of the Indenture, the proceeds of the Developer Loan shall be deposited in the following Funds Held by the "Trustee pursuant to the Indenture: (i) first, an amount equal to the Reserva Requirement shal► oe deposited into the Reserve Account - but slra?I be deemed to have been disbursed to the Developer as a portion of the Developer Loan; (ii) second, an amount equal to the aggragate principal amount of the Bonds (less the amount of the Reserve Requirement) shall be deposited into the Developer Loan Fund, and (iii) third, tite Developer Loan disbursement to cover the cost, of issuance of the Bonds shall be deposited into the Cost of Issuance Fund. (b) The moneys in the Developer Loan Fund shall be disbursed by the Assoxiation as agent for the Trustee to pay the Project Costs upon written orders executed and delivered to the Trustee directing such disbursements as follows: the Association shall disburse moneys in the Developer Loan Fwrd from time to time upon delivery to the Trustee of a requisition executed by thu Developer Representative and an Association Representative, which: (A) states with respect to each disbursement to be nWo: (1) the requisition number, (11) the name and address of the person, firm or corporation to whom payment will he made, (111) the amount to be disbursed, (IV) that each obligation mentioned therein is a proper charge against the Developer Loan Fund and has nc" been the basis of any previous disbursement and (V) that at least ninety-five percent (96%) of the amuupt of such disbursenent, together with all other disbursements theretofore made frorn the Developer Loar, Fund, has Lin or will be used for payment of Oualified Project Costs; and (B) specifies in reasonable detail the nature of the obligation; anti (C) is accompanied by a bill or statement of account for such ob 4afim. Notwithstanding the foregoi lg provisions to the contrary, there shall be withheld from each of the foregainy disbursements, and retained in the [developer Loan Fund ## such amxurds as mat► be pro-Aded in the Disbursement Agreement. Upon receipt of a properly signed requisition for rroney and aWrovad by the AssoclaWn raw the payment of the Project Costs, the ftsuaatim is authorized to act thereon without further inquiry and # the Developer and the Association shall hold the "i rustee -13- •� 10 harcrMesa against any and all losses, claims or liabilities incurred in connection with the AssociaMon makft such disbursements from the Developer Loom Fund in accordance with such requisition. (c) L+pon the earlier of (i) tt'te filing with tits Trustee of the Completion Certificate pursuant to Section 9,5 of this Agreement, or (ii) July 1, 1989, the Trustee shall retain in the Developer Loan Fund such amount as shall be sWifietd in the Completion Certificate to be required to pay future Project Costs and amounts to pay requisitions theretofore submitted but not paid, and the Trustee shall withdraw and transfer to the Debt Service Fund the balance of moneys in the Developer Loan Fund. Therroafter, the Developer Representative shall deliver notice to the Trustee specifying all amounts so reWne d in the Developer Loan Fund but not subsequently used to pay Project frosts and all such amounts "I be transferred by the Trustee into the Debt Service Fund. The amounts so transferred from the Developer Loan Furrd to the Debt Service Fund shall be held in a segregated account therein said appliratf to redeem Bonds on the earlier of (i) August 1, 1989, or (1i) thfa first Interest Payment Date following the Completion Date, pursuant to Ser.tion 601 of the Indenture. Until used for one or more of the foregoing purposes, such segregated amounts Tray be invested as permitted by the indenture, but v portion of such segregated arr,ounts may be invested to produce a yield on such amounts (computed from tho date of such transfer into such segregated account and taking into account any investment of such amounts from such date) greater than the yield on the Bonds, computed in accordance with Section 103(c) of the Code. All of the foregoing provisions of this Section 3.4, including, without limitation, those related to the application or holding of investment earnings on funds held in the Developer Loan Fund, shall be subject to the provisions of cuticle V of the Indent -.ire. (d) The Association shall authorize disbursements of amounts on deposit in the Developer Lo,,n Fund and otherwise service the Developer Loan, in its rapacity as Servicer hereunder, in accordance with the terms and provisions of this Agreement and the Disbursement Agreement. Section 3.5. Establishment of Completion Date; Obligation cl Developer t--i Complete. As soon as the Project is completed, but not later than July 1, 1989, the Developer Representative, on behalf of the Developer, shall evidence the Completion Date by providing a certificate to the Trustee stating the total Project Costs and further stating that (i) construction of the Project has been completed substantially in accordance with the plans, specifications and work orders therefor, and all labor, services, materials and supplies used in construction have been paid for, and (ii) all oiher facilities necessary in connection with the Project have been acquired, constructed and installed substantially in accordance with the plans and specifications and work orders therefor and all costs and expenses incurred in connection therawith have been paid. Notwithstanding the foregoing, such certificate may state that it is given without prejudice to any rights of the Developer against third parties for the payment of any amount not then due and payable which exist at the date of such certificate or which may subsequently exist. It the morteys in the Developer Loan Fund ## available for payment of the Project Costs should be insufficient to pay the crests thereof in full, the Issuer and the Association shall be under no obligation to provide for payment of any costs of completing the Project in excess of the moneys available for such purpose in the Developer Loam Fund##, it being understood that the Developer shall pay all costs of cc)mpleting the Project in excass of tae moneys available for such purpose in the Developer Loan Fundff. The Issuer and the Association make no express or implied warranty that the moneys deposited in the Developer Loan Fund " and available for payment of Project Costs, u. Aer thu provisions of this Agreement, will be sufficient to pay all the amounts rthich may be incurred for such Project Casts. The Developer agrees that if the Developer should pay or cause to be paid any portion of t1w Project Costs pursuant to the provisions of this Section, it shall not be entitled to any reimbursement therefor. from the Issuer, from the Trustee, from the Association or from the owners of any of the Bonds, nor shall it be entitled to any diminution of the amounts payable under Eir ction 4.2 hereof. Section 3.6. Inresbnerrt of Alf wwys; Arb&sge. Any moneys in a.iy fund or account herd :Jy the Trustee shalt be invested or reinvested by the Trustee at the direction of the Developer in Permitted -14- C, 11 J� ti\ kwemnw to as pirovkkd in the Indenture, a.rd the Developer hereby approves such provisions of the lrt�ltrrgrsri. The haw hereby certifies to ft Developer that it has not been notified of any listing or proposed lhtirp d k by the IrRernal Revenue Service as a bond issuer whose arbitrage certifications may not be relied upon. The Devslaper hereby covenants and represents to the Issuer, and, bated upon said representMons, the Issuer and the Developer jointly and severally covenant with all purchasers and owners of the Bonds from time to time outstanding that, as long as any of the Bonds remain outstanding, nvneyys on deposit in any furx! or account in connection with the Bonds, whether such moneys were derived from the proceeds of the sale of the Scrods or from any other sources, and whether held by ft Trustee pursuant to the Indenture or by the Association in the disbursement Account or any other account or by any other person pursuant to any other arrangement, will not be used in a manner which will cause the Bonds to be "arbitrage bonds" within the meaning of Section 103(c) of the Coda and any regulations promulgated or proposed thereunder, and the Developer and the Issuer further covenant to comply Frith the requirements of said Section 103(c) and said regulations. -t5- !jo f 4 M N1: ARTICLE IV REPAYMENT OF DEVELOPER LOAN Setctiw 4.1. Devekqw Loon. The Developer hereby acknowledges its indebtedness to the hiftw and agrees to repay the Developer Loan in the amounts, at the time and at the interest rate as provided in Section 4.2 hereof. The Issuer acknowledges and agrees that so long as the Association hoivrs draws on they Letter of Credit, the Developer's payments pursuant to the Reimbursement Agreement will satisfy the developer's obligation to reply the Developer Loan. To evidence the Developer Loan, the Developer agrees to execute and deliver the Developer (dote to the Issuer. Section 4.2. Developer Loan Payments. (a) principal 6Mgunt and Tgan. The Developer Loan shall be for the total principal amount of $7,7.00,000, which unpaid principal and any unpaid accrued interest thereon shall be due and payable in full at the end of the Construction Term unless the Developer has satisfied all conditions for conversion to the Permanent Term pursuant to Section 2.02(b) of the Disbursement Agr",ment on or before the end of the Construction Term, in which event principal and any unpaid accrued interest shall be due Lnd payable in full at the end of the Permanent Terri; provided that if the Letter of Cr.tdit, with to prior wriCen consent of the Association, is replaced by a substitute Letter of Credit pursuant to Section 5.8 hereof expiring after the Permanent Term, they, unpaid principal and any unpaid accrued interest thereon shall be due and payable in full on or before the expiration of the term of said Letter of Credit, but in no event later than September 1, 2016. (b) Intertl5t Rate. Interest shall accrue on principal from and after disbursement at the Bond Rate. /rdl rate changes on the Bonds shall result in an equal rate change in the interest rate due on the Developer Loan. (c) 2 ants. The Developer shall make quarterly inst Ilments of interest on the disbursed principal amount of the Developer Loan on or before the first day of each March, June, September and December during the term of the Developer Loan. The Developer shall make payment of the principal of all Outstanding Bonds on September i, 2016. Such payments together with investment earnings on the amount deposited in the Developer Loan Fund ## to be paid to the Trustee shall be sufficient to pay principal of and interest or. the Bonds. The Developer shy!1. cause the Association -to provide the Trustee with the Lettet of Credit, the draw upon which will tie in an amount sufficient together with the amount of deposit in the Reserve Account to pay interest loan principal of the Bonds when due. All such payments by the Association to the extent of amounts payable by the Developer sander the Developer Loan shall be Beamed payments by the Developer of the Developer Loan. Section -..3. Payment o1 Other Amounts. (ay The Developer agrees, or agrees to cause the Association: (1) to pay to the Trustee from time to time reasonable compensation for all services rendered by it under the Indenture (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust): (2) except as otherwise expressly provided in the Indenture, to reimburse the Trustee upon its request fob all reasonable expenses. disbursements and advances incurred or made by the Trustee in accordance with any provision of the Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its gross negligence or bad faith; and (3) to indemnify the Trustee for, aril hold it harmless against, any loss, liability or expense incurrod without gross negligence or willful misconduct on its part, arising out of or in connection with the acceptance or administration of the trust under the Indenvire, including the costs and expenses (including attorneys' fees) of dr;fending itself against any clairn or liability in connection with the exercise or performance of any of its powers or duties thereunder. M C N " r (b) Thi Dft*oper also agrees to pay, within thirty (30) days after receipt of request for payment Owred, all masomi* expenses of the Issuer related to the Project and the financing thereof which are not oth+rrerfsi required to be paid by the (Developer under the terms of this Agreement and are not paid from thi Cost 0 Issuance Fund under the Indenture; (c) The Cevoloper also agrees to pay, or to cause the Association to pay from amounts received from the Developer, the Developer Loan or otherwise, (1) the fees of the Trustee, (H) on the Delivery Daly, an irkia l program administration tee payable to the Issuer of one-half of one percent (1 /2%) of the outstrarOV principal amount of tha Bonds, (iii) until the Conversion Date, the fees of the i~etiing Agent and the Tender Agent and (iv) the fees of the Collateral Agent. (d`r Tho Develcper also agrees to pay the periodic fees of the Rating Agent with respect to the maintanance of any rating of the Bonds. Section 4.4. Unconditlonal MigsVon.. The obligations of the Developer and the Association, respectively, to make the payments required by Sections 4.2 and 4.3 hereof, as applicable, and to perform and observe the other agreements on their respective parts contained herein shall be absolute and uncond4ional irrespective of any defense or any rights of set-off, recoupment or counterclaim they night othorwise have against the Issuer and/or tho Trustee and.'or the Association and during the term of thin Agreement, the Oeveloper shall pay absolutely net the payments required hereunder, free of any doductions and without abatement, diminution or set-off. Until such time as the principal of, premium, it any, and interest on the Bonds shall have been fully paid, or provision for the payment thereof shall have been made as required by the Indenture, the Developer (i) will not suspend or discontinue any payments provided for under this Agreement or the Reimbursement Agreement; (ii) will perform and obsenv all of its other covenants contained in tills Agreement and in the Reimbursement Agreement; and (iii) except as provided in Article VIII hereof, will not terminate this Agreement for any cause, including, without limitation, failure to complete the Project, the occurrence of any act or circumstances that may constitute failure of consideration, destruction of or damage to the Project, commercial frustration of purpose, any change in the tax or other laws of the United States of America or of the State of California or any political subdivision or either of these, or any failure of the Issuer or the Trustee to perform and observe any covenant, whether express or implied, or any duty, liability or obligation arising out of of connected with this Agreement or the Indenture, except to the extent permitted by this Agreement. Section 4.5. Assignment of Issuer's Rights. As security for the payment of the Bonds, the Issuer will assign to the Trustee the Developer Note and certain of the Issuer's rights under this Agreement, including the right to receive payments hereunder (except the right of the Issuer to receive certain payments, if any, with respect io its fees, expenses and indemnification), and the Issuer hereby directs the Developer to make the payrnsnts require: i hereunder (except such payments for fees, expenses and ir.demnifica!ion of the Issuer) directly to the Trustee. The Developer hereby assents to such assignment and agrees to make payments directly to the i rusteh without defense or set-off by reason of any dispute between the Developer and the Issuer or the Trustee. By virtue of such assignment, the Trustee shall be a third -party beneficiary of this Agreement and shall have the right to enforce the obligations of the Developer hereunder; provided, however, that so long as all required payments are made undor the letter of Credit, the Developer need not make the above payments but shall in lief: thereof make payments directly to the Association required by the Reimbursement .'Igreermnt and the Letter of Credit. Section 4.6. Amowrrts Remaining in Debt Service Fund. It is agreed by the parties hereto that after (i) payment in full of tha Bonds, o; provision for suer, payment having been made as provided in the Indenture, (ii) payment of all fees, charges and expenses of the Trustee and any paying agents in accordance with the terms of the Indenture, and (iii) payment of all other amounts required to be paid under this Agreement and the Indenture, any amouriis remaining in Vie Debt Service Fund held by the Trustee under the Indenture shall be paid bi the Trustee to the Association. -t7- }.. P. OPW A / tq WAN* ? e y;�,w.+.,:r�• r.+.. tit } Secoan 4.7. Assocl~ to Act " Swker of Developer Lore. The Association agrees that so IQnp as any of the Bands remain Outstanding, and whether or not the Letter of Credit remains in effect, It rwil scat as Servicer of the Osveloper Loon and will collect all payments thereon and enforce the 'prl Msidrts of ifria4 Agreement on behslf of the Issuer, Developer agrees to pay to the Association a mor" payment es set form in the Reimbursement Agreement. Iles Association, as Servicar, shall have full power and authority to do any and all things in connection with such servicing which it may deem necessary or desirable, and will sxercise at least the same degree of care that the Association exercises with respect to servicing of multifamily construction anal permanent loans for its own account. -Is- P low OR J ARtICLE V SPECIAL COVENANtS AND AGREEMENTS 1 lI •lYi1y .` I I Section 5.1. Right of Acc"s to the Project and Records. The Developer &gross that during the term of this Agreement the Issuer, the 'i-rustee and the duly authorizod agents of any of them and the Association shall have the right at all roasonable times and upon reasonable notice during normal business hours to antor upon the site of the Project to examine and inspect the Project and to have access to the books and records of the Developer with respect to the Project. Section 5.2. Atfairdsivance of Existence; Ass!gnments. (a) The Developer agrees that during the term of this Agreement it will remain qualified to do tusirtoss in the Stato of Califomia and will maintain its existence as a general partnership, will not dissolve or otherwise dispose of all or substantially all of its assets and will not combine or consolidate with or merge into another entity or permit one or mere other entities to consolidate with or merge into it; provided, however, that the Developer may so combine, consolidate with or mergo into another entity existing under the laws of one of the states of the United States, or permit one or more entities to consolidate with or merge into it, or sell or otherwise transfer to another entity all or substantially all of its assets as an entirety and thereat'ter dissolve, provided that the surviving, resulting or transferee entity, as the case may be, (1) assunies and agrees in writing to pay and perform all of the obligations of the Developer hereunder, and (ii) qualities to do business in the State of California; and provided further that the Developer shall have obtained the prior written approval of the Association. (b) The rights and obligations of the Developer under this Agreement may be assigned by the Developer to any person in whole or in part, subject, however, to each of the following conditions: (1) No assignment other than pursuant to this Section shall relieve the Developer from primary liability for ary of its obligations hereunder, and in the event of any assignment not pursuant to this Section the Developer shall continue to remain primarily liable for the payments specified in Section 4.1 hereof and for performance and observance of the other agreements on its part herein provided to be performed and observed by it. (2) Any assignment from the Developer shall retain for the Developer such rights and interests as will permit it to perform its obligations under this Agreement, and any assignee from the Developer shall assume the obligations of the Developer hereunder to the extent of the interest assigned. (3) The Developer shall, prior to the effective date thereof, furnish or cause to be furnished to the Issuer and the Trustee a true and complete copy of each such assignment tog'ather with an inVrunert of assumption. (4) The Developer shall have obtained the prior written consent to such assignment from the Eis.ociation. Section 5.3. Statement of Compliance; Notice of Certain Events. (a) The Developer will deliver to the Issuer, the Trustee and the Association, within 120 days after the end of each calendar year, a written statement signed by a Developer Representative stating, as to the signers thereof, tt►at (1) a review of the activities of tha Developer during such year arid of performance under this Agreement has been made under their supervision, and (2) to the best of their know4eclge, based on soch review, thc- Developer has fulfilled all its obligations throughout such year, or, if there has been a default in the fulfillment of any such obligation, specifying each such default known to then. and the nature and status thereof. -19- (b) The Dee per hereby covenants to notify the issuer, the Trustee and the Association in writing of ft occurs of any Event of Default hereunder or aay event which, with the passage of time or swim of notice, or both, would constitt •te an Event of Default hereunder, specifying tho nature and period of eAftfte of >fich event and the actions being taken or proposed to be taken with respect thereto. Such na�bice shall N given promptly, and in no event less Than ten (10) Business Days after Ow Developer raiceiaes notice or gains knowledge of the occurrence of any ouch event. The Devetoper " the association further agree that they will give prompt written nutire to the Trustee if insurance pracveds or condemnation awards are received with respect to the Project and are not used to repair or replace the Project, which notice shall state the arnount of such procoods or award. Section 5.4. Inswenca; Nointenance and repair. The Developer agrees to insure the Project or cause the Project to be insured during the term of this Agreement for such amounts and !or such occurrences as are required under the Developer Mortgage. The Developer further agrees to maintain the Project, or cause the Prcject to be maintained, during the term of this Agreement (i) in a reasonably safe condition and (ii) in good repair and in good operating condition, ordinary wear and tear excepted, making from time to time all necessary repairs thereto and renewals and replacements thereof. Section 5.5. Additional Instruments. The Developer hereby covenants to execute and deliver such additional instniments and to perform such additional acts as may be reasonabiy necessary, in the opinion of the Issuer or the Trustee, to carry out the intent hereof or to perfect nr give further assurances of any of the rights granted or provided for herein of contemplated hereby. Section 5.6. Tax Exempt Status of Bonds. It is the intention of the parties hereto that interest on the Bonds shall be and remain exempt from federal income taxation, and to that and the covenants and agreements of the Issuer, the Association and the Developer in this Agreement are for the benefit of the Trustee and each and every owner of the Bonds. The Issuer covenants and agrees that it has rot taken and will not take, and the Developer and the Trustee covenant and agree that they have not taken or permitted to be taken and will not take or permit to be taken, any Action which will cause the interest on the Bonds t:.) become subject to federal income taxation pursuant to the provisions of Section 103(b) of the Code; provided that neither the Developer. the Trustee nor the Issuer shall have violated these covenants if the interest on any of the Sonds becomes taxable to a person solely because such person is a "substantial user" of the Project or a "related person" within the meaning of Section 103(b)(13) of the Coda; and provided furher that none of the covenants and agreements �.arein contained shall require eithor the Developer or the Issuer to enter an appearance or intervene in any administrative, legislative or judicial proceeding in connection with any changes in applicable laws, rules or regulations or in connection with any decisions of any court or administrative agency or other governmental body affecting the taxation of interest on the C,nds; and provided further that the Trustee's ai.d the Issuer's responsibility under !his paragraph shall be limited to actions within its control. The Developer hereby warrants and covenants that each unit of the Project constitutes and will constitute multifamily residential rental property, as defined in Section 103(b)(4) of the Code and the regulations promulgated thereunder, which will be rented or available for rental on a continual basis to members of the general public for the period required by said Section. The Project con:,ists of one or more proximate buildings or structures containing one or more similarly constructed accommodations containing separate and complete facilities for living, sleeping, eating, cooking and sanitation which are to be used on other than a transient basis and facilities which are functionally related and subordinate to such accommodations. No actions will be taken by the Developer which will in any way affect the use o' the Project therefor and not less than 201% of the units of the Pruject shall be rented or available for rental solely to individuals who are of low or moderate income, within the rnearing of Section 103(b)(4) of the Code, for the period required by said Section;, and nottless than to% of the units of .2p. ShV,"'4a. ,w T� ON PMOd shall be ranted or available for rental solely to individuals who, are of very low income, **M f1'ta mining of an0 in accordance with the Act. The Developer further agrees that it shall not discriminate on the basis of race, creed, color, sex, ap or nfttiea .W origm in the lease, use or occupancy of the Project or in connection with the *"%plbyn:.nt or application for employment of persons for the construction, operation and management Of the Project. The Developer further warrants and covenants that it has not executed and will not execute any other agreement, or any amendment or supplement to any other agreement, with provisions contradictory to, or in opposition to, the provisions hereof, of the Indenture and of they Regulatory Agreement, end that in any event, the requirements of this Agraement and the Regulatory Agreernert are paramount and controlling as to the rights and obligations herein set forth and supersede any other requirements in conflict herewith and therewith. 5ec6o►r 6.7. Regulatory AQreettrrroot. In order to maintain the exemption from fadersl income taxation of interest on the Fonds And to assure compliancy with the Act and c9rtain additional requirements of the Issuer. the Developer hereby agrees that it shall, concurrently with or before they execution and delivery of the Bonds, execute and deliver and cause to be recorded the Regulatory Agrcement. The Developer hereby further agrees as follows: (a) The Developer shall submit to the Issuer, the Trustee and the Association, (i) at the+ time of initiel occupancy of any Low or Moderate Income Tenant or Vyry Low Incomt3 Ten; rat (as defined in the Regulatory Agroement), (ii) upor; the vacancy or reaccupancy of any unit held available for Low or Moderate income Tenants or Very Low Income Tenants, and (iii) as often a, recejsary to comply with the requirements of Section 103(b)(4) of the Code and the Act, a Certificate or Tenant Eligibility and Income Verification, in the forme scat forth in Exhibit S hereto, each of which shall be s► tl ject to indepandent investigation and vUr;iicaticn by the Issuer, the Trustee send the Association. After the Pro;act is available for cccupanc;y and until the Projer:t is 900/o ranted, t`u Developer shall, un or before (tic, fifth day of each month, file with the Association, thj Trustee and the Issuer a Certificate of Ccntinuing Program Compliance, in the form set forth in Exhibit A hereto, setting, forth for the prior iroonth the information required to be provided in such certification. After the Project is 900% rented and during the Qualified Project Period, such certification shall be filed on or before the fifth day of each June, September and December and shall set forth the required information for the preceding calendt:r quarter. The gooks and records of the Developer pertainirg to the incomes of Low or Moderate Incomo Tenants residing in the Project shall be open to inspection by any authorized representative of the Issuer, the Trustee and the Association. (b) The Developer shall comply with every rither term of the Regulatory Agreement. and the Developer hereby ackno,-rledges than in the event of a default under the Regulatory Agreement which is not cured ,aiW.in a reasonable period of time (at least $30 days after such default is fit st discovered or would have been discovered by the exercise of reasonable diligence) the Developer Loan may be accelerated and the Developer Mr_rtgage may be foreclosed upon. The Developer agrees to cause any amendments to the Regulatory Agreement to be recorded in the appropriate �?ffi;iai public records. The Issuer agrees to rwiiew certificates and other information that may be provided from time W time by the Developer in connection with the Developer's obligations under the Regulatory Agreement and in the event of a discovery of noncompliance by the Developer with the Regulatory Agreement to take such action as it may deem appropriate. The Issuer shall incur no liability in the avant of any breach of its !arms by Developer aril th? NvOopar agree, to indemnify the Issuer from any claim or liability for such breach pursuant to Section 9.3 hereof. (c) Thf, Trustea shall not be responsible for verifying or monitoring cornrliance by the Developer with its obligations under tho ReoulAoty Agreement. The Issuer shall he, resportsibIrf "I performing sash duties. -21- AR ' - 5ec6on 5.8. 1AW*r of Cm0 t; Alternate Cr*dit F Nity. At all times before the Conversion Date ft D"oper shall Cause to be providers and Continuously availaLle to the Trustee, as beneficiary, an irrevocable Letter of Credit cr Alternate Credit Facility meeting the requirements of subsection (a) of this Section: and at aN times after the Conversion Date the Developer shall cause to be provided and continuously avaiilWe to the Trustee an irrevocable Low of Credit or Alternate Credit Facility molting the requirements of' subsection (b) of this Section. The Developer shall have the right at any time, but only with the prior written consent of the Association, to deliver to the Trustee a substitute Letter of Credit or Alternate Credit Facility meeting the requirements of suhsectio- rs (a) or (b) of this Section 5.8, as applicable upon thirty days notice to the Issuer, the Trustee and tr",e Rating Agent (as such term is defined in the Indenture) and the Truste3 shall accept such substitute Letter of Credit or Alternate Credit Facility in plane of the Letter of Credit thers held by the Trustee and shall return the Letter of Credit or Alternate Credit facility then held by the Trustee to the Developer, brit only if the Trustee shall have receivod notice from the issuer of the then outstanding Letter of Crodit or Alternate Credit Facility that no amounts are due and owing from the Developer to such i;,suer with respect to such Letter of Credit or Aitnroste Credit Facility. Upon delivery of such substitute Letter of Credit or Alternate Credit Facility, all liability of the Association hereunder and under the Peimburcement Agreement shall terminate. (a) Tho following requirements shall apply to any Lsitter of Credit or Alternate Credit Facility provided before the Conversion Date: (1) The Lettur of Credit initially provided shall be effective from no later than the data of i::'tial authientication and delivery of the Bonds, and any Letter of Credit or Alternate Credit Facility provided in substitution for any then outstanding Letter of Credit or Alternate Credit Facility shall be for a term commencing not later than the expiration date of the term of the prior Letter of Credit or Alternate Credit Facility. (2) The Latter of Credit initially provided (and any Letter of Credit or Alternate Credit Facility in substitution thereof) shall be for a ►ernr expiring not earlier than December 1, 1995 provided that any I.etter of Crodit or Alternate Credit Facility may provide that it shall terminate prior to _ its stated expiration elate at the Conversion gate or upon receipt by the issuer thereof of notice from the Trustee that no Bonds remain outstanding or upon the date of issraance and delivery of a substitute Letter of Credit or Alternate Credit Facility. (3) Each Letter of Credit or Alternate Credit Facility shall ter, in an amount at any crate not less than the SUM of the aggregate principal amuunt of the Bonds, plus an amount equal to interest on th,3 Bonds for i period of 95 days at an assumed maximum rate of eleven percent (I I%) per annurn, calculated on the basis of a 360-say year, actual days lapsed. (A) Except for its torm, each Letter of 'Credit or Alternate Crodit Facility shall have substantially the sarne provisions as the Letter of Credit delivered at tfia time of original delivery of the Bonds, including wit;iout limitation provisions permitting drawings thereunder to pay arnounts due on the Bonne; on the sch€tduled date:: for payment of such amounts or upon redemption or acceleration and to pay the purchase price of Bonds tendered for purchase as provide; in Section 1103 of the Indenturr„ and providing for automatic and irrevocable reinstatement of the amuunt thereof immediately upon any dra—ing there6oder to pay interest or: the Bonds, and shall be in the form acceptable to the Trristee. (5) Each Letter of rr redit or Alternate Credit Facility shall bs. issued by a national banking association organized under the National Bankirg Act, or any successor law, or a banking corporation organized under the laws of any state of the United States, or a savings and loan association or corporation organized under the laws of the United States or any state thereof, or a branch or agency of a foreign banking corporation or associp. Lion licensed in and regulated by one of the states of the United Stites. .2 2- (6) Each Letter of Credit or Alternate Credit Facility delivered to they Trustee must be accompanied by (i) an opinion of Bond Counsel addressed to the Trustee to the effect that delivery of the Letter of Credit or Alternate Credit Facility complies with the provisions of this Agreement end the Indenture and will not cause interest on the Bonds to become subject to federal incomes taxation; and (ii) one or morns opinions of counsel addressed to the Trustee to ft effect, singly or together that: (A) The Letter of Credit or Alternate Credit Facility is a legal, valid and binding obligation of ttq issuer thereof, enforceable against ;he issuer thereof in accordance with its terms, excerpt as limited by applicable reorganization, insolvency, liquidation, readjustment of debt, moratorium or other similar laws affecting the anforcempnt of the rights of creditors generally as such laws may be applied in the event of a reorganization, insolvency, liquidation, readjustment of debt or other similar proceeding of o; moratorium applicable, to the issuer thereof and by general pri►iciples or equity (regardless of whether such enforceability is considered in a proceeding in equity or at law); and (B) Payments made by the issuer thereof under the Letter of Credit or Alternate Credit Facility will not be voidable under Section 64 7 of the Federal Bankruptcy Code in the context of a case or proceeding by or against the Developer or by the Issuer under the Federal Bankruptcy Code. (7) Each Letter of Credit or Altornate Credit Facility delivered to the Trustee in substitution for the then outstanding Lotter of Credit or Alternate Credit Facility sha!I be accompanied by a written statement, signed by an officer of the Rating Agent, to the Offact Viat such Rating Agent approves such substituta Lettor of Credit or Alternate Credit Facility and that its rating on the Bonds will not be reduced or withdrawn as a result of the delivery of such Letter of Credit or Alte?rri�.to Credit Facility. (b) The following requiremants shall apply to any Letter of Credit or Alternate Credit Facility provided in connection with or after the Conversion Bate, as applicable: (11 The Letter of Credit or Alternate Credit Facility provided in connection with the conversion of the interest on the Sor:ds to a fixed rate pursuant to the Indenture stall be delivered not less than thirty days before the Conversion Date and shall be effective from no later than the Conversion date, and any Letter of Crf:dit or Alternate Credit Facility provided in substitution for any then outstanding Letter of Credit or Alternate C.-edit Facility shall be fcr a term commencing not later than the expiration date of the prior Letter of Credit or Alternate Credit Facility. (?} -ach Letter of Credit or Alternate Credit Facility shaii be for a term expiring not earlier than the earlier of ten (10) years froin Ar.)gust 1. '1986; provided that any Letter of Credit or Alternate Credit Facility may provide that it Shall terminate prior to its stated expiration date upon recelpt by the issuer thereof of notice from the Trustee that no Bonds remain outstanding or upon the date; o`. issuance of a substitute Letter of Credit or Alternate Credit Facility. (3) Each Letter of Credit or Alternaty Credit Facility she!! be in an arnount at any date not less than the sum of the aggregate principal amount of the Bonds then outstanding, plus an ,amount EKlual to interest on the Bonds for a period of M days at the 'OptionnJ Fixed Rate, calculated on the basis of a 060-day year comprised of twelve 30-clay months, plus an amount equal to any redemption premium then applicable to the Bonds. (4) Each Letter of Credit or Alternatc: Credit Facility ,,hall contain provisions permitting drawings 1heraunder to pray arnounis due on the Bonds on the scheduled dates for payment of such amounts or upon redemption or acceleration. and providing for automatic and irrevocable -23. reinstatement of tho amount thereof immediately upon any drawing thereunder to pay interest on the is xWs, and shall be in a form acceptable to the Trustee. (5) Ewh Letter of Credit or Alternate Credit Facility shall be issued by an entity described in subsection (a)(5) of this Section. (6) Each Letter of Credit or Alternate Credit Facility delivered to the Trustee must be accompanied by an opinion of Bond Counsel and one or more Opinions of Counsel, each addressed to the Trustee, to the effect set forth in subsection (a)(6) of this Section. (7) Each Utter of Credit or Alternate Credit Facility shall ba accompanied by a written statement, signad by an officer of the Rating Agent, to the effect that such Rating Agent approves such Letter of Credit or Alternate Credit Facility and that its rating on the Bonds will not bo reduced or withdrawn as a resralt cf the delivery of such Letter of Credit nr Alternate Credit Facility; and each subsequent Litter of Credit or Alternate Credit Facility deliv%,.,ed to the Trusteo shall be accompanied by a written statement of such dating .Agent to the same effect. (6) Each Letter of Credit or alternate Credit Facility shall, unless issued by the sarne ib: uer as the Men outstanding Lettei- of Credit or Alternate Credit Facility, be accompanied by a written instrurront of the issuer of such outstanding Letter of Credit consenting to the .conversion of the interest rate un the Bonds ;o a fixed rate pursuant to the Indenture. (^) In connection with a Letter of Credit or Alternate Credit Facility provided in accordance with either subsection (a) or (b) above. the Trustee shall first receive evidence satisfactory to it that s, )ch substitution will not result in a reduction of the rating on the Bonds. (d) Pursuant to Section 10.24 of the Disbursement Agreement, the Association may substitute an aiternative crodit enhancement in place of the Letter of Credit or Alternate Credit Facility in the event the Trustee shall hold at least 25% of the aggregate outstanding principal amount of the. Bonds for the benefit of the .Association for a period of ninety (90) days or more; provided that such substitute credit enhancement or Alternate Credit 1=aci!ity is sufficient to maintain a long-term debt rating for the Bonds, of "AA" or better, and provided iurther that the approval of Bond Counsel is first obtained with respect to such substitution. Se►.;tion 5.9. Collateral Pledge Agreement. So long as the Letter of Credit or any substitute Letter of Credit issued by the Association is outstanding, the Developer and the Association agree tc cause the Collateral to t>e providea and continuously available to the Trustee; provided, however, that the Association shall have the right to deposit with the Collateral Agent substitute Collateral in substitution for the t oCateral or any portion thereof, under the terms and conditions of Section 7 of the Collateral Pledges Agrwment. Section 5 10. Indenture. The Developer hereby agrees to all of the terms and provisions of the Indenture and accepts each of its oblivations expresser] or implied thereunder. The Developer hereby approves the initial appointment under the Indenture; of the Remarketing Agent for the Bonds. .24. r t ARTICLE VI DAMAGE, DESTRUCTION AND CONDLANNAVON; USE Of PROCEEDS Sec;:on 0.1. Obligation to Continue PayMents. if prior to full payment of the Bonds (or provision for pp-; ment thereof in accordance with the provisiot%s of the Indenture) the Project or any portion thereof is destroyed (in whole or in part) or is damaged by fire ur other casualty, or title to, or the temporary use of, the Project or any portion thereof shall be taken under the exercise of the power of eminent domain by any governmental body or by any person, firm or corporation acting under governmental authority, the Developer shall nevertheless be obligated to continue to pay the amounts specified in Article IV hereof, to the extent not prepaid in accordance with Article Vill hereof. Section 6.2. Application of Net Proceeds. The net proceeds, if any, of any insurance or condemnation awards resulting from the damage, destruction or condemnation of the Project or any portion thereof shall be applied in the manner provided in the Developer Mortgago. Section 6.3. Insufficiency of Net Procoeds. If the Project or a portion thereof is to be repairer, restored, relocated, modified or improved pursuant to Section 6.2 hereof, and if the not proceeds referred to in Section 6.2 are; insufficient to pay in full the cost of such repair, restoration, relocation, modification o • improvement, the Developer will nonethWess complete the work or cause the work to be completed and will pay or cause to be paid any cost in excess of the amount of such nat proceeds. -25- .7� ARTICLE VII EVEWS OF DEFAULT AMC REMEDIES Seckm 7.1. Events of Default. Any one of the following which occurs and continues shall constit -te an Event of Default: (a) The occurrence of an Acceleration Default; (b) Failure by the Developer to (i) pay any amounts required to be paid under Article IV hereof at the tines specified heroin or (ir) observe and perform any other covenant, condition or agreement on its part required to be observed or performed by this Agreement (including performance of its obligations under the Regulatory Agreement), which is not an Acceleration Default and which continues for a period of thirty (30) days after written notice, specifying such failure and requesting that it be remedied, is given to the Developer by the Issuer, the Trustee or the ,t.ssoc:iation, unless the Issuer and the Trustee shall, with the consent of the Association, agree in t -iting to an extension of such timo prior to its expiration; provided, however, that if the failure stated in the notice pursuant to subclause (ii) of this Section 7.1(b) cannot be corrected with tr such poricd, the Issuer sod the Trustee will not unreasonably withhold their consent to an extension of such lime if corrective action is instituted within such period and diligently pursued until the default is corrected; (c) The making of any representation or warranty by the Developer in this Agreern:snt or in any document executed it connection with this Agreement which is false or misleading in any material respeol; (d) The occurrence of any event which is an Event of Default under the Re;mbursenient Agreement, and receipt by the Trustee from the Association of notice of such drrfault and a request that it be treated as an Event of Default hereunder; or (e) The occurrence of any event which is an Event of Default under the Collateral Pledge Agreement. 'Fria provisions of subsection (b)(ii) of this Section are subject to the limitation that the Developer shall not be deerned in default if and so long as the Developer is unable to carry cut its agreements hereunder by reason of strikes, lockouts or other industrial disturbances; acts of public enamies; orders of any kind of the guvernment of th3 I Ir..ed States or of the State of California or any of their departments, agencies, or officials, or any civil or military authority; insurrections, riots, epidemics, landslides; lightning; earthquake, fire; hurricanes; Storms; floods, washouts; droughts; arrests; restraint of govornment and people; civil disturbances: expresions; breakage or accident to machinery, transmission pipes or canals: part;al or entire failure of utilities; or any other cause or event not reasonably within the control of the Developer, financial inability excepted; it being agreed that the settlement of strikes, tockoutt and other industrial disturbances shall bu entirely within the discretion of the Developer, and the Developer shall not be required to make settlement of strikes, locknuts and other irdustr•ial disturbances by acceding to the demands of the opposing party or parties when such course is, in tho judrament of the Developer, unfavorable to the Developer. T: pis limitation shall not ;apply to any defaNt except under subsection (b)(ii) of this Section. .section 7.2. Rertledies on Default. Whenever any Event of Default shall have occurred and shall contin►,e, the Issuer and tho Trustee may take any on(; or more of the following ron*.dial steps: (a) The Trustee shall in the case of an Acceleration Default, arid, at the request o► with the consent of the AssociR►tion, ;upon the occu►renLO Of any other Event of Default hereunder, by .2g. i I %wriffen notice to the Developer, shall declare to be due and payable immediately the unpaid belarr-e of the (Developer Loan. (b) The Issuer, the Trustee and the Association may have access to and may inspect, examine and make copies of the books and records and any and all accounts, data and federal income tax and other tax returns of the Developer. (c) The Issuer or the Trustee may take whatever action at law or in equity as may bo rrecassary or desirable to collect the;, payments and other amounts than due and thereafter to become due or to enforce performance and observance of any obligation, agreement or covenant of trio Developer under this Agreement. (d) The Trustee may institute any action or proceeding at law or in equity for- the collection :)f any sums due and unpaid, and may prosvicute any such action or proceeding to judgment or final decree, and may enforce any such judgment or final decree against the Developer and collect in the manner provided by law the moneys adjudged ur decreed to be payable. In case the Trustee or the Issuer shall have proceedied to enforce its rights under this Agreement and such proceedings shall have been discontinued or abandoned for any reason or shall have been determined adversely io the Trustee or the Issuer, then, and in every such case, the Developer, the Trustee and the Issuer shall be restored respectively to their severai positions and rights hereunder, and all rights, remedies and powers of the Developer, the Trustee and the Issuer shall continue as, though no such action lmd bean taken. In case proceedings shall be pending for the bankruptcy or for the reorganization of the Developer under the federal ba,ikruptcy laves or any other applicable lair., or in case a receiver or trusted shall have been appointed for the property of the Developer or in the case of any other similar judicial proceedings relative to the Developer, or the creditors or property of the Developer, then the Trustoo shall he entitled and empowered, by intervention in such pror.:hedings or otherwise, to file and prove a claim or claims for the whole amount owing and unpaid pursuant to this Agreement and, in case of any judicial proceedings, to file such proofs of claim and other papers or document as may bo necessary or advisable iri Order; to have the claims of the Trustee allowed in such judicial proceedings relative to the Developer, its creditors or its property, and to collect and receive any moneys or other property payable or deliverable on any such claims, and to distribute such amounts as provided in the Indenture after the deduction of its charges and expenses. Any receiver, assignee or trustee in bankruptcy or reorganization is hereby authorized to make such payments to the Trustee, and to pay to the 'Trustee any amount due it for coropensation and expenses, including expenses and fees of counsel incurred by it up to the date of such distribution. Section 7.3. Agreernertt to Pay Attorneys' fees and Expenses. In the event the Developer ahould default under any of the provisions of this Agreement and the Issuer or the Trustee should employ attorneys or incur expenses for the collection of the payments clue under this Agreement or the enforcement of performance or observance of any obligation or agreement of-, the part of the Developer herein contained, the Developer agrees to pay to the Issuer or the Trustee the reasonable fees of such attorneys and such ether amponses so incurred by the Issuer or the Trustee. Section 7.4. Ko Remedy Exclusive. No reined-i herein conferred upon or reserved to the issuer or thfr Trustee is intended to be ex%lusive of any other available remedy or remedies, but Bach and every such remedy shall be cumulative and shall be n addition to every other remedy given under this Agreernont or now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power accruv,g upon any d©fault sh,-A impale any such right or power or shall be construed to W, a waiver thereof, but any such right and power may be exercised from time to time and as oftan as may be deemed expedient. In order to entitie the Issuer or the Trustee to eyemise any remedy re ;,,,.rved to it in this Article, it shall not be necessary to give any notice, other than such nctico as may Mr herein expressly required. Such rights and remedies as are given tl7e Issuer -27- ,r R T" . r • �y hereunder shall also extend to the Trustee, and the Trustee and the owners of tha Bonds shall be deemed third party beneficiaries of all covenants and agreements herein contained. Sa+cOW T.S. No Addltiontl Waiver Implied by One Wolver, In the event any agreement or covermn co ntair*d in this Agreement should be breached by the Developer and thereafter waived by ft Isauar or tw Trustee, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other breach hereunder. Section 7.8. UnWotlon. Notwithstarding anything to the contrary in this Agreement, the Trustee ll take no action without the written consent of the Association to accelerate the Bonds due to the oocunance and continuation of an Event of Default under Section 7.1 (b) through (9) hereof unless and until tfie Association shall fail to honor any draw on the Letter of Credit, provided that the Trustee shali at all times be free to, and shall, seek recovery under the Letter of Credit of any amount due and payeole thereunder, when and as the same shall become due and payable. .2fi. mob � irw'-; ARTICLE Vlll PREPAYMENT Section 8.1. Prepayment of Developer Loan. The Developer Loan shall not be prepaid except as provided in this Section. No prepayment of the Developer Loan shall relieve the Developer of its obligations under the Regulatory Agreement during the Qualified Project Period. The Developer shall be deemed to have prepaid the Developer Loan, in whole or in part, and the principal amount Thereof shall be reduced accordingly, in an amount equal to the principal amount of Bonds redeemed and on the date of such redemption the Association shall promptly give notice to the Issuer � nd the Trustee of the occurrence of any of the events set forth in subsections (a) or (b) below and of the arnounts prepaid by the Developer upon the occurrence of any of tha events sat forth in subsections (a) or (b), glow. (a) MandJQry Prepayment. The Developer Loan is subject to mandatory prepayment in whole cr io part, at a redemption pace equal to the outstanding principal amount thereof to be prepaid, together with accrued interest, to the date fixed for tedemption of tha Bonds to be redeemed with such prepayment: (i) In part on July 1, 1989, as may be approved by the Association pursuant to the Reimbursement Agreement, or the earliest practicable Interest Payment Data after the Completion Date for which notice: of redemption of the .9onds may be given pursuant to Sec:ti-n 604 of the Indenture in a princi�. ° ,amount as nearly equal as possible to, but not exceeding, the amount remaining in the Ctivoloper Loan Fund end the Disbursement Account on the Completion Date; (h) In whole or in part on any Interes, Payment Data, in the event of the election of ttre Association to apply any not. proceeds of insurance or condemnation awards nr t used to repair or replace the Project to the redemption of Fonds, in a principal amount oqual to such net proceeds; (* In whole on any date, lipon the occurrence of an Acceleration Default or at the request of or with the consent of the Association tollowing and+ other Event of Default, in a principal amount equal to the amount of the Developer Loan so acceleratedW (iv) In whra!e on any date in a principal arnount equal to the outstanding principal amount of the Developer Loan upon the expiration of any Letter of Credit or Alternate Credit Facility unless the "rustee receives a renewal or extension or replacement for such Letter of Gredit or Alternate Credit Facility meeting the requirements of Section 5.8 of the Loan Agreement not less than thirty days before the expiration of such Letter of Crf dit or Alternate Credit Facility: Wild (v) In whole on 4my date after ft Convensicm Date 4 a t-ritwmination of Taxabifity shall or.cur. (b) Op-tgnai .PrenayMenl• With the prior consent of the Association, the Developer may, at il5 option, prepay the Developer Loan as fellows: (i) Prior to the Conversion Date, but on or after March 1, 19P7, the Developer may prepay the Developer Loan, in whole or in part, on any Interest Payment Date, toliowing written notice of the Developer's intention to do so as set forth herein below, in the arnount of $100,000, or any intogtal multiple of $25,000 in excess; of $100,000, such that following such prepayment .29- 6•: 1f and rodwVtion of Fonds no Outstanding Bond (as defined in the Indenture) will be of a dwvwninaWn of less than $100,000, at the principal amount thereof; and (ii) Aftor the C xivetrsion gate, tho Developer may, at its option, ,prepay the Developer Loan, in whole or in part, on any Interest Payment Date on or after seven years after the Conversion [ate in any integral multiple of $5,000, at the prepayment prices set forth below, expressers as percentages of the principal amount prepaid: prg211YMMI date Prenavment.Piices The two Interest Payment Dates first occurring: 7 year % after the Conversion Date 103% 8 years after the Conversion Date 102 9 years aftsr the Conversion Date 101 10 years after the Conversion Date 100 Any optional prepayment of the principal of the Developer Loan must be made from the proceeds of a draw m the Letter of Credit Wth the applicable premium boinrg paid with Seasoned Funds. Any payment of the prepayment premium must be made by the Developer to the Trustee at least 95 days priof to they dates on which the Trustee mails notice of redemption of the Bonds, and on the date of such payment, the Developer shall give written notice to the Issuer, the Association and the Trustee of the p; incipal amount to be optionally prepaid on the applicable Interest Paymen, Date. No optional prepayment ,hail occur if an Act of Bankruptcy occurs within the g5-day perio! prior to the date the Trustee mails notion to the Bonduwners of the redemption date. In such event, the Trustee shall hold suuch funds of the Deveioper until directed by a court of competent jurisdiction as to their disposition. Section 8.2. Hedemptier: of Bonds Upon Prepayment. Upon any prepayment of the Developer Lean as provided in Section 8.1, the Trustee is required by the Inlanture to call all or part of the Bonds for redemption and to draw upon the Letter of Credit in the revpective amounts set forth in tha applicable paragraph of Section 8.1, together in each case with an amount ,,-qual to accrued interest on the Bonds to be redeemed. Sectio,r 8.3. Amouat of Prepayment. In the event of any prepayment pursuant to Section 6.1, :#roe amount of the Developer Loan deemed to be prepaid shall be equal to the principal amount of Bonds redeemed as described in Section 8.2. In the case 6 ;o•ep---yrnent of the Developer Loan in full, she Developer shail pay to the Trustee an amount sufficient, together with other funds hold by the Trustee and available for such purpose, to pay all rerasonrb,e and necessary fees and expenses of the Issuer, ,lie Trusle,e and aoy paying agent accrued and to accrue through final payment of the Bonds and all other liabilities of the Developer accrued and to accrue under this Agreement, and shall pay to the Issuer any amount required by Article IV hereof. In the rase of partial prepayment of the Dev"leper Loan, the Developer shall pay or cause to be paid to the i rustee an amount sufficient, together with other funds held by the Trustee and available for such purpose, to pav expenses of redemption of the Fonds to be redeemed upon such prepayment. ,, 1 A 1 , d JP1. v"lowi i . i AtIa ARTICLE iX LIMITATION ON LIABILITY OF ISSUER; EXPENSES; INDFMNiFICAV►' N Secow 9.1. Lknitation on Ll*6111ty of Issuer. The Issuer shall not be obligated to pay the primipW of, or premium, is any, or interest on the Bonds, except from Rev xnues as defined in the Indenture. T►re Developf�r hereby acknowledges that the issuer's sole source of moneys to repay the Bonds and to pay expenses of the Program will be provided by the payrents made by the Developer pursuant to this Agrrernent, together with other of said Revenues, including any drawings under the Letier of Credit, procowls of liquidation of the Collateral by the Trustee and investment income on certain funds and acm-ants held by the Trustee under the Indenture, and 'nereby confirms that amounts available to pay all principal of, and premium, if :any, and interest on the Bonds as the same shall itiecome due (whHther cy maturity, redemption, acceleration or otherwise), have been calculated to be at aft times sufficient for such purpose. Any obligation or liability of the Issuer created by or arising out of this Agreement (including without firnitatiof. any liability croated by or arising out of the representations, warranties or covanants set forth herein or otherwise) shall not impose a debt or pecuniary liability upon the issuer or a charge upon its general credit, but shall be payable solely out of the said Revenues. Neither the issuance of the Solids nor the delivery of this Agreement shall, directly or indirectly or contingently, obligate the Issuer to make any appropriation for their payment. Nothing in the Bonds or ir, the indenture or this Agreement or the proceeeings of the Issuer authorizing the Bonds or in the Act or in any other related document shall be construed to authorize the Issuar to create a debt of the Issuer within the meaning of any constitutional or statutory p-ovision of the State of California. No breach of any pledge, obligation or agreornent of the Issuer hereunder may impose any pecuniary liability upon the Issuer or any charge upon its general credit. Section v.2. Expenses. The Developer covenants and agrees to pay and to inderrinify the Issuer, ' including reasonable f"s and disbursements of attorneys, accountants, consultants and other experts, incurred in good faith in ronnection with this Agreement, the Bonds or the Indenture. .r Section 9.3. Indemnification. The Developer shall indernr+ify, hold harmless and defend the Issuer, the Association and the Trustee and the respective councilinernbers, officers, membars, directors, officials and em. ployees and each of their (a; from and against any and all claims by or on behalf of any person arising from any cause wriatsoever ;n connection with the approval of tax•exomfrt financing for the Project or the making of the DeveloF ,r Loan, (b) against all loss, costs, damages, expenses, suits, judgments, actions and liabilities of whatever nature (including, without limitation, attorneys' fees, litigation and court costs, amounts paid in settfernant, and amounts paid to dischai ge judgments) directly or indirectly resulting frorTr or arising out of or related to (i) the design, construction, insiaifation, nperation, use, occupancy, maintenance, or owner,,hip of the Project (including compliance with laws, ordinances and rules and regulations of public authorities relating thereto); or (ii) any written statements or representations with respect to tho Developer, the Project or the Fonds made or given w the Issuer, the Association or the Trustee, or any underwriters or purchasers of any of the Bonds, by the Developer, or any of its partners, agents or employes, including, but not limited tostatements or ' representations of facts, financiai information or partnership affairs. The Developer also shall pay and discharge and shall indemnity and hold harmless the Issuer, the Association and the Trustee from (x) any Tien or charge upon payments by the Developer to the Issuer and the Trustee hereundei and (y) any taxes (including, without limitation, all rid valorem taxies and sales taxes), assessments, imp.)sitions and other charges in respect of any portion of the Project. If any such claim is asset-trrd, or any such 1-ion or charge upon payments, or any such taxes, asi4essments, impositions or other charges, aru sought to be imposed, the Issuer or the. Trustee shall give prompt notice to the Developer and the Developer shall have the sole right and duty to asiu`ne, ►Snd will assume, the defense thy re ?`. full power to irtigata, compromise or settle the same in its sr.tle di5GtE3tinn; pr;,;. - i,iat the Issu?r and the .31. N, r TnnW shall have ft right to review and approve or disapprove any such compromise or settlement. „ . In edddWw theft. the Developer shall pry upon demand all of the fees and expenses paid or incurred by ft TrurAe andacx the Issuer andior the Association in enforcing the p ovisions hareof. I .32. 0 ARTICLE x AIISCELLANEOUS ttuW I0.1. Entire Agmement. This Agreement constitutos the entire agrenment and OarW$*deG ON prior a+grooments and ur+dr►rstandings, both written and oral, between the !ssuer, the '!trustee and the Association with respect to the subject matter hereof. Secdlon 10.2. NoUces. Adl notices, corresr,ndence and other communicatior,3 pursuant to this Agreement shall be in writing and shall be delivered at the applicable address set forth below: If to the Issuer: City of Huntington Beach 2000 Main Street Huntington Beach, California 92648 Attention: opal Redevelopment Specialist Phone No. ('714) 536-5511 If to the Trustee: Seattle -First National Bank 1001 Fourth Avenue Seattle, WA 98154 (deiivery) P.O. Box 35% Seattle, WA 98124 (mail) Attention: Bond Trustee Services, 9th Floor Phone No. (206) 583-5566 If to the Developer: Village Partnership 1810 - 141h Street Suite 207 Santa Monica, California 90404 Attention: T. Daniol Neveau Phone No. (213) 454-6995 If to the Association: Mercury Savings and Loan Association 7812 Edinger Avenue Huntington Boach, California 926,17 Attention: Chief Financial Officer PhanQ No. (714) R 12--9333 (With a copy to: Pettit & Marlin 101 California Stree!, 351h Floor Seri Francisco, California 94111 Attention: Arnold P. Schuster, Esq. Phony: No. (416) 434.4000) If to ©TC: Bankers Trust Company One Bankers Trost Plaza 130 Liberty Street New York, F4.aw York 10006 Attention: Manager, Public Finance Dept. Phone No. (212) 775-5813 '(which copy rh.eH not constitute notice to the Association hereunder) -33. .. Ir y�1 AN not ces shall be sufficiently given and shall be deemed given on the date on which the same havp bw personally deliveted or on the third Business Gay foi;owing the date on which the sarne have been rn*led by Certified or registered mail, return receipt requested, postage pmpat►id, addressed as indicated above. A copy of any communication delivered to any of the parties listed above shall be delivared to each of the other parties, Any such party may ch�nga its address by delivering notice of sucan cnenge to the Miler parties in accordance with this Section. Section 10.3. Assignmentm Tttis Agreement may not be assigned by any party without consent of all of the others except that the Issuer shall assign tr, the 'rrustes its righta urtd,3r this Agreement (except its rights to notice and indemnification) and the Association may assign to any transferee or any surviving or resulting corporation its rights under this agreement es provided in this Agreement. Section 10.4. Severablllty. If any provision of this Agreement shall be held or deemed to be or aynall, in fact, be illegal, inoperative or unenforceable, the same shall not ;affect any other f,,ovision or proviskms herein contained or render the sane invalid, inoperative or unenforceablo to any extra, whatever. Section 10.5. Execution of Counferpaarts. This Agreement may be simultaneously executed in several counterparts, each of which shall ba an original and all of which shalll constitute but one and the same instn.-rr ent. Section 10.6. Amendirn ants, Changes and Modificaations. This Agree-nc;nt may not be effectively amendod, chwiged, modified, aa!taared or !errninated without the written consent of a!l pasrties hereto. Section 10.7. CovernIng law. This Agreen,ant shall "se governed exclusively Cy and construed in a ucordarics► with the aapplicable iaw3 of the State. Section 10.8. Term of Agf,eernene. This Agreement shall be in full force and etfe; t from the date hereof until such time as all the Sonds shall have been fully paid or provision made for such payment pursuant to the Indenlure, whichever sha it be earlier. Section 10.5. necordetion. The Association Covenaaiita that it will c4LUSO ;tar- R(Ig hItory Agreement and any finan;,ing staaternent and all s-,appleme►tts thereto and any other such instruments as may from time to time be required to be kept, recorded nand i`iied in suc:t a manner and in such places as may he required by law in o-der to fully proserve and prolect the security of the Owners of the Bonds and the rightu of the Issuer and the Tru:,lee under the Regulatory Agreement. Notice of any filing or aecordation shall be given by the Association to the Trustee no later than thitty (301 days after such filing or recordation. 6eudur► 10. 10. Poyrrtaents Under Colleterol Pledge Agreement. Whelhor or not dernand has been made an the Ascociation tinder the 'aollatriral Pledge Agreement or otherwise, the Asso►;iation may at its option (bu! shall not in any manner b�e obligated W QxcFpt as !provided in the Collateral Ply ee Agreement) pay any amount duE and payable by the Association under the Lever of Credit and .trot paid by the Association when so clue and payable, with the same effect as ij such payment or payments had been paid by the Association under the Letter of Credit. �{ 77, tr ►�4'.. p'Y,,•, •+. 'k r' �'i' ,t^.r S ftl 9: fir,,, �' E, ip', 'i ? t� .r.' r'. 1 r.F r . �i 'A.. � :,,_ yr, •� ,. ,: ,. f SA�:v, !�: �.' r;,' F i�� �/ { 'i nM, t, ,,..r•r � ,� �}, ti, y ,4 ,�.„1,� .� �;, �,, . i �. is a rr. r�.�. . J: •.�.•�� r1�:. �..li•'r �'� � b . ,. , , , ,• ..:. ;i r ., ... r lS�ti4' , 1 ,,yyff FF ,u. ,, I,p l ',�a ' q•, ' c ,>n , '+;',,r� r � ,5 , � :� r ,'• •1r �r.•r' 1.. (•�� i• � t 5�. ,�±t+;r+� ,�k i1..U� Ai 'Y �. �- a .� a .7ir f: rd � +l .I ;�„ .t. a. .r •t' a ��t'r't, !I �+� 1tr i'` Seal. � c .e. 1,,� �. f aI . ; ;,'� r ,r , y`r ,l i. t a''a. ,,r�" �' v / w �:� • t 4' � , ,v 4 e Ii #'.'R � : f *' d� , 3' M4r '-+� ; f , f � A • P - - 't;. r • • +' w -',G :,klrr.. , +w- f• ,�`� :# `,1• +l i "'b� i �� 'y/ t #M �. r � `'•/R: �'1. �`t- !,r� � 1 �•. 1 LM . ( . h ,r�y .i ♦y .� � �r, r 4F # (� (.. Vl !t f r �� � r T 4 ! a 7 City Administrator t , J City Cie •'MERCURY IAVINGS AND LOAN ASSOCIATION I' A + Y7 Y r , • - �' ■ yr NATIONAL BANK, as ,1 h ' 4 •hf rt 1 General Partner r fi n S i r General Partner ' M . a 1 .. y r ' , 1 • / n • l J' � 1 �', ' A. TT �, � �1` fir. A F h . • ! � } i An I 7 EXHIBIT A CERTIFICATION OF CONTINUING PROGRAM COMPiLJANCI: TO: City of HunbVon Beach Main St " Hunt*% ton &nwh, Callforr -la 92648 A t+tirthon. PdndpW Redevelopment Speraalist Stele-17W N96onal Bank 1001 Fourth Avwxm Sortde, WA 98164 (delivery) P.O. Sox 36 Sleaffle, WA 96124 (retail) Attention: Bond Trustee Services, 9th Floor s Mercury Savings and Loan Assoctation 7812 Edinger Avenue Huntington Beach, California 92647 Attention: Chief Financial Officer Pettit & Martin 101 California Street, 35th Floor San Francisco, California 94111 Attention: Amotd P. ;chustor, Esq. The undersigned, _._ , being duly authorised to execute this certificate on ' behalf of Village Padmrship, a California gensrai partnership (the "Develnrjer"), hereby represents -nd warrants that: 1. He has read and is thoroughly familiar with the provisions of the various Developer Loan Documents associated with the Developer's participation in the $7,700,000 City of Huntington Beach, California Vwiaable Rate Demand Multifamily Housiig Revenue Fonds (Mercury Savings and Loan Association/Village Partnership Project), 1986 Series A hand issue, such documents including: (a) 11* R9g►ulatory Agreer:ient and Declaration of Restrictiv6 Covenants dated as of August 1, 198 ;, among tho Developet-, the Association, the Issuer and SeaCle-First National Bank (the rust+E7ee" ); and (b) The Developer Mortgage dated as of August 29, 1986 2. As of the dates of this certificate, the fcllowing percentages of corrpleted residential units in the Pro9ect (i) are occupied by Low or Moderate Incomes Tenants (as such terms are defined in the Regulatory Agreement) or (ii) are currently vacant and tjoing hold available for such occupancy and haN a been so held continvously since the dare a Low 3r Moderate Incc; a Tenant vacated such unit. "x1icated: Occupied by Low or Moderate Income Tenants: °� Units Nos.: A•1 Field vacant for occupancy continuously Wce last occupied by Low or Moderate Income Tenant: a/o Units Nos.: 3. At no time since the date of filing of the last Certification of Continuing Progrer n Complisme have less than 20 percent of the completed units in the Project been occupied by or been last occupied by Low or Moderate Income Tenants, wu have less than 10 porc:M of ft compl wl unite in the P px.1 been occupied by n been lay! occupied by Very Low Memo Tenwft d. The Developer is not in default under the terms of the Regulatory Agreement and, to the best knowledge of the developer, no C�etermination of Taxability has occurred with respect to dw Bonds. VILLAGE PARTNERSHIP By: Nxieral Partner A•2 r . 4f.. � r 1 EXHIBIT B CERTIFICATE OF TENANT ELIGIBILITY AND INCOME VERIFICATION The undersigned hereby (certify) (certifios) that: 1. this Income Certificate is being delivered in conro.,tion with the undersigned's application for oc:cuparcy of an apartment in Huntington Beach, California, 2. The or*y occupants of such apartment will W the undersigned and the following individuals all of whose aggnopde anticipated ac mual income for the twelves month period commencing with the date that the undersigned initially occupies an apartment is set forth below: I. M- (lb) ._..�.�.�. ` (d) - -- --- (0) --- -- 3. -None of the occupants listed in Section 2 are students who are riot entitled to file a joint return urrdar S'ac:tion 6013 of the Intermil Rey►ienue Cade, as amanded, 3xcept such ocrupants listed with are asterisk (I fnflovair>g their name, NC i L: In computing aggregate anticipated annual income of such occupants, such total anticipated payments from all sources received by the undersigned and the Occupants listed in sectio"I 2, shall include but not be limi%td to, ttm following: (a) grass wages, salaries, overtime, commissions, fees, tips, and bonuses: (b) net income from operation of a business or profession or from rental of real or personal Pop": (c) intereFt and dividends: (d) periodic payments frorn social security, annuities, insurance poticie% retirement funds, pensions, disability or death benefits and other similar types of periodic payment;;; (e) payments in lieu of earnings, such a; unemployment and disability compensation, worker's compensation and severance pay,, (f) public assistance income, where payments inolude amount; specifically designated for sheitee and utilitia5; r B•1 (9) periodic and determinable allowances, such as alimony and child support, and regular contributions or gifts from persons not residing in tha dwelling and (h) e!I regular and special pay and allowances of members of the Armed forces (whether or not living in the dwelling) who are the head of the family or spouse. You many, however, exclude the following items from total anticipated annual income: (a) cauml, sporadic or irregular gifts; (b) amounts specifically for or :n reimbursement of medical expenses; (c) lump -sum additions to family assets, such as inheritances, insurance payments (including payments under health and accident insurance and workmen's compensation), capital gains, and settlement for personal or property losses, (However. where a family has "not family assets" in excess of $6,000, income shall include the actual amount of income, it any, derived from al, of the net family assets or 100/6 of the value of all such assets, whichever is greater.) "Net family assets" means the value of equity in real property, savings, stocks, bonds and other forms of capital investment. The value o: necessary items such as furniture and automobiles is excluded; (d) educationsi scholarships paid directly to the student or educotional institution and amounts paid by the government to a veteran for use in meeting costs of tuition, fees, books and equipment. (Any amounts which are not used for the above purposes and which are available for subsistence, are to be included in income): (e) sproiat pay to a serviceman (who is head of a family) away from horns and exposed to hostile fire: (f) relocation Payments made pursuant to Title 11 of the Uniform Relocation Assistance and Real Propetty Acquisition Policies Act of 1970: (g) foster child care payments: (h) tt.a va'uA of coupon allotments for the purchase of food pursuant to the footl Stamp Act of 1964 which is in excess of the arriount actually charged for the same; and (i) Payments received pursuant to participation in the following volunteer programs under the ACTION agoncy: (1) National Volunteer Antipoverty Programs including VISTA, Service i_earninq Programs and Special Volumeer Programs. (2) National Older American VoUntoer Programs for persons aged 60 and over including Retired Ser& : V,Auntoor Progm-mT, ' ester Grandparent prtgrains, Older American Community Services NYGwram, and National Ivustintear Program to Assist Small Business Experience, SCORE ant' ACE. TENAN'rs STMEMENT: The information an this form is to be used to determine maxinloni income for eligibility fcr occupancy of an apartment unit. Me have provided either an Employer's Vierificetion of current anticipated annr gal income for each person set forth in Section. 2 or eopies of their most recent ffitferal ;ncome tax returns. I/We certify that the statements above are true and complete to the best of my/our knowledga and gets, and are given under the penalty of perjury. The undEtrSipried is consents to tho diJcicsure of any of fhe information contained on this farm to tiny person interested in the exemption from federal income taxation of interost on the Housing Authority of a-2 1 �c 40* ' �WAMb the City of Huntington Beach Variable Hate Demand Multifamily Housing Revenue Bonds (Mercury Savings and Low AssociationNilBage Partnership Project), 1986 Series A. (Signature of each person whose name appears in Section 2 and who has an annual income reported in Section 21 CYINNERJUE/ELOPt R'S STATEMENT: The persons) named in Section 2 of the Certification of Tonant Eligibility and income Verification hereir.above is/are eligible under the provisions of the Program Guidelines to live :n a unit in thy► Project, as defined in the Agreement, between the Deve►oper and the Housing Authority of the City of Huntington Beach, and, based upon ti ie aggregate anticipated annual incvme set forth in Section 2 above, constitutes a Low or Moderate Income 'tenant. Date:., ._._.�.�......_.. _ Signature of Developer's Agent 8-3 EXHIBIT C COMPLETION CERTIFICATE TO: City of Huntington Beach 2000 Whiin Street Hunti%#on Beach, California 92648 Attwition: Phr*ipd Redevelopment Specialist Sir+ ft-i=irst NatkKW Bank 1001 F Jurth Avenue Seattle, WA 98154 (delivery) P.O. Box 34586 Seattle►, WA 98124 (mall) Attention: Bond Trustee Services, 9th Floor ff ff M The undorsignod hereby cer;it j that all portions of 'he Project were substantially completed and available eittw for occupancy or use by tenants in the Project as of (the "Completion We"). 4iLLACE PAWmERSHIP By:_._.._._ Namel: Title: The undersigned hereby certify that: (1) Thn aggregate amount disbursed can the Developer Loan as of the Completion Dwe is 6 ; (2) All amounts disbursed on the Developer Loan have been applied to pay or reimburse the undwsign+ed for the payment of Project Costs and none of the amounts disbursed on the developer Loan hsvo beon applied to piy or reimburse any party for the payment of costs or expenses other than Prot Costs; 0-nd (3) At least 95% of the amounts disbursed on the Developer Loan, less the amounts applied pursuant to the Indenture to pay for the costs of issuing the Bonds, have been applied to pay or reimburse the Developer for the payment of Qualified Project Costs (as that term is defined in the Regulataoy AgrfAment). n 4r i, Ir, A . •r,Xor 4�' ..• " ,r'r',j'!'sw"* .r•;nar.�r vy'7?!,�1' it'� :+� . mT7 �+• r'.a..e.' .�f AY� ..' ,1.,... ,..x,..t- '�.• - P,-^ H l 'y'� .,4r�'�x+ ;✓. .} ic•'♦ '?;A: +, :1 t4 +•; g 1. :r1 33 .. ,� r ,y '. •. -:.,K, �:'+; f:`�'...•` �:,. r~ +� A::•_ :. •, •�, xA,., _"' ,,� �, wi -.�. ��.: y 1 {, a� wYh I, 3 ,�.x+ ? - ,7,. y. i y +, L, is A� f :s`; �, w: , 7,, -I, :a, dr 'r', u,::�ti. l.. .1, x'+-.A� .n :WTI, �i•t ! Y (. -r � q;' t ,. r +, �1,X, T c,' �: J'r;F"'6^ K�^ d' R, 1�� 1, I •v � r I''.9. r {.'it. Y �r (` i. �i � •l: r i, �l f,�f' _ n 7 F, pp 'Tr ., r. ri�� �!' "'N'� .? r 4 i"`+,f• .ale! �' I. �'I. .I t ,'.r i �(9 •• �r ,• I. � i' �� r, ri� •I, 'd. i,. �, .y19.� ��. J 1 I ..r �£; u. �!. Y �, � � + d ��:'}, r �. ..� :,. lA, A Y� V a •', �,�a.. 4r:�r :,_ I I r I ,. ..} I� r, �;•: �... +• w •.,•i.`� r' r 'f'ifi r.: w >. `v r, � u ,l4 y 1 �5'. I'. y k�.� s, d, 7 P tr t bt a. { .r.� + �, d. 4 I_,J�b r.r ;V';•.F �. 9 r i,s. :ill k .!t ' �•f 3,�� J TJt-'., e. 4 f�, f. . .,, ,-4h.- f IA,JT (., ,. - �.Y , } s,4 .,: .,, ,... -��{ � •.- ,•T;+ ..x,• ;1- ,� a 7,, .rl. ,•; � x'. o h, �M � r:{, ,fix d, ..}� �. r� 'r.. �r r,�• ,'h_. JT,c' } - 'S �, ��„ � :r _ ,p..M. '��•.T lYr, '1•'a :1 .I,. .t t ,.-��'4. t1�:.t'' . "� '�� r,'�'.}, . � �'' ry ; r A . i , r • j.. �I w + r ' �' � '�d I 'y •� N' I ° , , ' T- e } y } f • , {+, + `` I -fir f �. ap ?�: � �I11.." ' �• r�.. r � �' �'' ' r i .�� .t f �ti` �1.�'. � � �, l_. -} + •', �',•1�•'N �� 1 ` .., i ' +.: �. i - ',� '4 •i. .. ,. f } {, +' ,. �'. -e _ I •. jj�� .' ., �'><, _�It" .. `r. - r -� b..:+, r ,Y, , •}may. �" � EXHIBIT D PROMiSSORY NOTE SECURED BY DEED OF TRUST S71700,000 as of August 1, 1986 Huntington Beach, California FOR VALISE RECEIVED, the undersigned (the "Maker") promises to pay to Seattle -First National lBw* (the "Payee") not individually, but as Trustee under a certain Indenture dated as of August 1, 19W ,(the "IndenWre") between the Payee and the Housing Authority of the City of Huntington Beach, California, or orod:.,, at Bond Trustee Services, P. O. Box 3586, Seattle, Washington 98124 (mail) or 1001 Fourth Avenue, Seaitfe, Washington 98154 (delivery) or at such other place as the holder hereof may from time to tinge designate, a principal sum equal to Seven Million Sevon Hundred Thousand ($?',700,000), with interest on the unpaid principal balance from time to time outstanding, at fine rates set forth below, payment of principal and interest to be made in the lawful money of the United States of America that is legal tender for public and private debts at the time of payment. All terms not specificaliy defined herein shall have the same meaning as ascribed to them in the Indenture. Principal an,ii interest shall be payable as follows: 1. (a) This Dote shalt bear interest at the Bond Rate (as defined in the Loan Agreement). (b) interest -only uaymo, +s shall be paid quarterly by the Maker on the first day of December, March, June and September. commencing on March 1, 1987 and continuing until the date required under the Loan Agreement; provided that if the entire outstanding principal balance of this Note is not prepaid as hereinafter provided, the Maker shall make the payment of principal on September 1, 2016 (the "Maturity Date"', on which date the entire outstanding prirnclipal balance of this Note, together with all accrued but unpaid interest, shall to applied first to any interest that has at.-crued an this Note, and the balance, if any, shall be applied to the outstanding principal balance hereof. 2. (a) On any date that the Letter of Credit or any substitute Latter of Credit or Alternate Credit Facility expires in accordance with its terms, the Maker shall prooay, without premium or penalty except as provided Wow, the entire outstanding principal balance of this Note, together with all accrued but unpaid interest due thereon, urdess a new Lelia., of Credit or Alternate Credit Facility is delivered to the Payee in compliance with the provisions of ;action 5.8 of the Loar, Agreement. (b) This Note may be prepaid in accordance with Section 8.1(b) of the Loan Agreement. (c) This Note is suhiect to mandatory prepayment as provided in Section 8.1(a) of the Loan Agreement. 3. (a) The payee consents and agrees that during the period between the date hereof and that date which is the earlier to occur of the completion of construction of the Project or July 1, 1989, the F,asociation shall be entitled to reimburse itself from the Disbursement Account in an amount equal to all interest arc„ principal payments made on the Bonds that aro funded from draws by the Payee on the Letter of Credit. To the extent that the Association reimburses itself from the Disburs.xim. mit Account, the Maker shall be deerned to receive an automatic creoit against its payrn,vi ,t obligations hereunder for all sums that are so reimbursed to the Association. (b) From and after the earl* to occur of the completion of construction of the Project or „toy 1, 1989, the payee consents and agrees that the Association shall be entitled to reimburse D-1 itself from any payments made by the Maker hereunder for any sums of principal andor interest tt'iat are paid on the Bonds from draws upon the Letter of Credit. 4. Notwitoranding anything to the contrary contained herein, the entire unpaid principal balance hereof, togethee with all accrued but unpaid interest thereon, sha!I become due and pays -le at the option of the Payee upon the occurrence of any default on the part of the Maker under the Regulatory Agreement. "i. At the option of the holdor hereof, the entire pvincipa l balance hereof, together with all accrued but unpaid principal thorecn, shall be immediately due and payable, without notice or demand, upon the occurrence of any of the forlowing events: (a) Failure to pay when due any payment of principal or Interest due hereunder or under the Developer LsA w Documents; or (b) Failure to perform or observe the terms and conditions of the deed of trust or other agreement securing this Note (the "Security Instruments"), beyond any applicable grace period; or (c) Default in the payment or performance of any other term or condition hereof on the part of the Maker, for 30 days after repeipt of written notice; o; (d) The making of any assignment f.:r the benefit of creditors by the Maker, or the voluntary appointment (at the req�;est of the Maker or with the consent of the Maker) of a receiver, custodian, liquidator or trustee in bankruptcy of the Maker's property or the filing by the Maker of a petition in bankruptcy or other similar proceeding under law for relief of debtors; or (e) The filing against the Maker of a petition in bankruptcy or other similar procoeding under law for relief of debtors, or the involuntary appointment of a receiver, custodian, liquidator or trustee in bankruptcy of the property of the Maker and such petition or appointment is not vacated or discharged within sixty (60) calendar days after the filing or making thereof. 6. Neither the Maker nor any of its partners or employees shall be deemed to have any personal liability for the payments of any amounts that are due or shall become roue pursuant to this We. Tha Payee shall not exerciso any rights or institute any action against the Maker or any of its partners or employees for the payments of any sum of money that is or may become payable under this Note or any Security Instrument securing the same other than the right to fornclbse such Security Instrument and the right to realize upon any collateral given as security for Me payment of this Note in addition to the property given un 1er such Security Instrument. The Payee shalt not seek against the Maker or any of its partners or employees any judgment for a deficiency in any action to foraclosn such c ecurity Instrument or to realize upon such collateral, provided, however, that ncthinrg contained herein shall be or be desi'ned to be a release or impairment of such indebtedness !.-or of such Security Instrument or of any security interest in any coilateiral pledged to secure the indebtedness evidenced by this Note, or preclude the Payee from forer:losing such Security Instrument or realizing upon any such collateral upon the happening of ant, evwit of default under this Note, si!ch Socurity Instrument or any other documents executed in connection tharewith. rurther, nothinq contained in the foregoing shall in any way limit or affect the per:',onal liability of the Developer for the performance and fulfillment of any and all of the covenants and agreements of the Developer under the Socurity Instruments. 7. 1`. this Note is not paid when due, whether at maturity or by acceleration, the Maker shall pay all costs of co!lection, including without limi-Rion reascnable at►arneys' fees and all expenses in connection with the protection or realization of the collaters! secui ing this Note incurred by the holder hereof on account of su-:h collection, whether or ►tot suit is ruled ha►ehn. 'Such costs and D•2 N y, t expenses shalt include without limitation all costs, attorneys' fees and expenses incurred by the holder hereof in connection with any insolvency, bankruptcy, reorganization, arrangement or other similar proceedings i ivolving the Maker, that in any way affects the exercise by the holder hereof of its rights and remedies under this Nate or under any of the Security Instruments. Should interest not be paid when due, it shall thereafter bear interest at the rate for unpaid principal. Nothing in this Section i shalt precluda the Payee from proceeding directly again:,i the Maker in mkinection Nith the obligation of the Maker to indemnify the Payee under Sections 9.2 and 9.3 of the Ltd Agreement and Section 6 of the Regulatory Agreement or to make any payment to the Maker or to any Paying Agent required to be paid by the Maker pursuant to the provisions of Factions 4.3 and 19 of the Loan Agreement. a, Prosentment, demand, protest, notices of protest, dishonor and nonpayment of this Note �9rr@ hereby waived. To the extent permitted by applicable law, the defense of the statute of kmrtabon is hereby waived. 9. No single or partial exercise of any power hereunder or any Security Instrument shall preclude other or further exercise thereof o* the exercise of any other power. The holder hereof shall at all times have the right to proceed against any portion of the security held herefor in such order and in such manner as the holder may deem fit, without waiving any rights with respect to any other iwurit�. No delay or omission on the part of the holder hereof in exercising any right hereunder shall operate as a waiver of such right or any other right under this Note. The release of any party liable on this Note shall not operate to release any other party liable hereon. 10. This Note will be secured by a Deed of Trust for the benefit of the Payee and the Association, which Deed of Trust contains provisions for the acceleration of the Maturity mate hereof upon the happening of certain stated events. . 11. The Loan evidenced by this Nate is made pursuant to and Shall be construed and governed by the laws of the State of California. 12. It is ttre Intent of the Maker and the Payee in the execution of this Note and all other instruments securing this Note to contract in strict compliance with the usury laws of the State of California governing the Ican evidenced by this Nolte. In furtherance thereof, the -Payee and the Maker stipulate and agree. that none of the terms and provisions contained in this Note or in any oOw document or instrument shall ever be construed to create a contract for the use, forbearance or detention of money requiring payment of interest at a rate in excess of the maximum interest rate permitted to be charged by the laws of the State of California governing the Loan evidenced by this Note. The Maker shall never bo liable for unearned interest on this NOW and shall never be required to pay interest on this Note at a rate in excess of the maximum interest that m"y be lawfully charged under the laws of the State of California. The provisions of this paragraph shall control over all other provisions hereof and over any other instrument executed in connection herewith that may be in apparent conflict herewith. if any holder hereof shall collect moneys that are deemed to constitute interest that would otherwise increase the effective rate on this Note to a rate in excess of that permitted to be charged by the laws of the State of California, all such sums deemed to constitute interest i;r excess of the legal rate shall be immediately returned to the Maker upon such determination. VILLAGE: PAPITNER ;HIP Title:: 7.3 ...v" '". r , � "W' ': 1a0ta•�. JHNW EME ab 07 t3.64 �yzsd7 08 07.16 +► HECOROING REOVESTEO BY AND WHEN RECORDEO RETURN TO: I:daa;l M. Eady, Jr.. Esq. Janes H31I H016 While, A Pmte� Law Oapo wan Four Embarcadam Cerw. . Suite 19M Sin ' fwcisco, C+alibn is iM 111 REGULATORY AGREEMENT ANC* DECLARATION OF RESTRICTIVE COVENANTS by and among the CIrf OF HUNTINGTON BEACH and SEA'o`TLE-FIRST NATIONAL SAND, TRUSTEE and MERCURY SAVINGS AND LOAN ASSOCIATION and VILLAGE PARTNERSHIP Dated as of bupst 1, 1986 Relating to 7170r' nf)O CITY OF MUNTINGTON BEACH, CALIFORNIA VARIABLE RATE DEMAAD MULTIFAMILY HOUSING REVENUE BONUS (MERCURY SAVINGS AND LOAN ASSOCIAT�001/ VILLAGE PARTNERSHIP (PROJECT) 1986 SERIES A ilgf i •` `'•ff ' �: f!'' •1G r r i P2163.TOC TABLE OF CONTENTS Section 1. Definitions and Interpretation.................................................................................. 2 Section 2. Consbuc0n, Acquisition and Completion of the Project ........................................ 6 Section 3. Aesklent;W Rental Project..................................................................................... 7 Wi 4. Low or IN oftrate Income Tenrnts 8 Section 5. ......................................................................... Tax -Exempt Status of fonds.................................................................................. 10 Section B. Indernnification of Issuw, Assn—ciation and Trustee ................................................ 10 Section. 7. Owside�yration......................................................................................................... 11 Section8. Phft-,ce..... Section9. ............................................................................................................. P *ct Location 11 11 Section 10. ..................................................................................... ..... Sale or Transfer Y Project; Syndication.............................................................. 11 Socticx, 11. Involuntary Substantial Loss or Substantial Destruction ...................................... 12 Section 12. Covenants to Run With the Land......................................................................... 12 Section 13. Burden and Benefit.............................................................................................. 12 Section 14. Uniformity; Common Plan ................................................................................... 13 Section15. Term.................................................................................................................... 13 Section 16. Events of Default; Enforcement......................................................................... 13 Section 17. Qoweming Law.............................................................................. Section16. Arr.endrr*nts........................................................................................................ 14 Suction 19. Payment of Trustee's and Issuer's Fees............................................................. 14 Section20. Severability.......................................................................................................... 14 Section 21. Time of the Essence I6 SocWi22. ............... Recording and Filing............................................................................................ t 3 Section23. Notice Sectkxi ................................................................................................................... Compliance by Developer 1 F 16 .24. .................... ................. EXHIBIT "A" DESCRIPTION OF PRUJECT S;(TE.................................................................. 18 .« dam` REGULATORY A. MEMENT AND DECLARATION OF RESTRICTIVE COVENANT'S THIS REGULATORY AGREEMENT A14D DECLARATION OF RESTR!CTIVE COVENANTS is made vW entered into as of August 1, 1986, by and among the City of Huntington Bract,, a mu iicipal corporation and charter city organized and oxisting under the laws of the State of California (the "Issuer"), Seattle -First National Bank, a duly organized, existing e!nd authorizer national bank having its principal offices in Seatt'.e, Wat±hington (the "Trustee"), Mercury Savings and Loan Association, a State -.bartered swings and loan association organized under the laws of the State of California (the "Association") and Village Partnership, a California general partnership (the "Developer"). PREAMBLE . WHEREAS, the Developer proposes to construct a multifamily rental housing development (the -Pro*V) located within the City of Huntington Beach (the "City") to be occupied partially (at least 'o) by individuals 31 low and moderate income within the meaning of Section 103tb)(12)(C) of the Internal Revenue Code of 1954, as amended (tl,e "(,ode:"), and partially (at least 10%) by individuals of very low in,,ome within the meaning of the Act 'a:, defined below), all for the put'lic purpose of assisting individuals of low and moderate income anti vary low income within the City to obtain decent, safe and sanitary housing at rentals they can atford; and WHEREAS, pursuant tc Chapter 7 of Port 5 of division 31 of the Healtri and Safety Ccooe of the State of California (t`ns "Act"), the Issuer has entered i.o!o an Indenture of Trust dated as of August 1, 1986, by aril behireen the Issuer ,nind the Trustee (the "Indenture"); and WHEREAS, pursuant to the Act and the Indenture, the Issuer proposes to issuo its Variable Rate Demand Multdamlly Housing Rev3nur' Bonds (Me-cury Savings and Losn!Villacgr, Partnership Project), 1986 Series A (the "Bonds") in the aggregate principal amount of �7,700,000, the proceeds of }which will be used to make a loan to the Developer (the "Developer loan") in the principal arnount of $7,700,000, to provide consruction and permarient financing for the Project; and WHERt=A$, the Cade, the regu,ations and rulings promulgated with respect theratco and the Act -0 proscribe that the financing, rise and operation of the Project be restricted in certain resaects and in order to ensure that tfie Project will be financed, usod and operated in accord,-•nce with the Coda, such regulations and rulings and the Act. the ISSLIer, the Trustee, the Association and the Developer have determined to er.!sr into this Pegulatory Agreament; NOW, THEREFORE, in consideration of the mutual covenants and undertakings set forth herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby ackrim-ApAged, the Issuer, the Trustee, the Association and the Developer do hereby contract and agreo as frrllows: 5" . Section 1. teiirWons and Inter{iretatiearr. Unless otherwise expressly provided herein or unless the contr,;:t clearly requites otherwise, the following terms shall have the respective meanings set forth Wow for air purposes of thin Regulatory A ree3mF.nt: 'Act" shalt mean Chapter 7 of Part 5 of Division 31 of the Heafth and Safety Code of the State of California, as amended. "Adjusted Far,711,y ;ncorne" shall mean the anticipated annual income of a person (together with the anticipated Cnnual income of all persons who intend to reside with such person in one residential unit), as calculated in accordance with "treasury Regulation 1.167(k)-3(b)(3). "Affillated Party" of a person shall mean a person such that (i) the relationship between such parsons would result in a disallowance of losses under Section 267 or Section 707(b) of the Code or (ii) such pe bons are members of the same controlled group of corporations (as defined in Section 1563(a) of We Code, e::cept that "more than 50 percent" shall be substituted for "at least 80 percent" each piace it appears therein). "Affordat. 'e Rents" sha!I mean, for any unit, a monthly rental for a unit of the applicable size which does not exceead ' 90',6 of the N. Adjusted Family Income permitted for Very Low income Tenants in such.:;nit. . "Asvociadon" shall rnean Mercury Savings and Loan Association, a state -chartered savings and !o n assoc:ivion organized andrr the taws of the State of California, and its successors and assigns. "Bond Counzel" shall mean an attorney at law or a firm of attcrneys acceptable to the Issuer and ,fie Trustee of nationally recognized standing in m2r:ers pertaining to the tax-exempt nature of interest on bonds issued by stakes and their political subdivisions duly admitted to the practices of law before the highest r:ourt of eny state cf the United States of America, or the District of Columbia. "Bonus" :,hall rraean the I„uer's Variable Bate Cemano Multifamily Housing Revenue Bonds (Merc<<ry Se -pings and Loan/ iflags Partnership Project), 1986 Series A, to be issued pursuant to the ln+ientiuri?. "Code"' sha'1 mean the Internal Revenue Code of 1964, as amended, or any successor statute; 1horeto, as iei effect on the date in question, together with corresponding and applicable final, temporary or proposed tegulaticns and revenue rulings issued or mended with respect thereto by the Treasury Department or Internal Revenue Service of the United Status. Ail roferences Ivrein to sartions, paragraphs fy odw-r sa► xlivi,ions of faze Cr.,da or the regulatk)ns promulgated thereunder shaq be dWrrW. tri bet nefre3KKrc13-19; to cOrrrataNve pro%,;sierrs of any suemssor code or regulations prrxnulgwed thy. "Co/fateiRr'al Agent" shall rnean First Interstate Bank of C,;'ifornia, and its successors and assigns. Volialeral Xedge Agreement" stml mean the coNaterai glean, ag►reernont darted as of even herewah by erw artrt+txry then lsser'ar, the rnmtee, ft AssrAmtwn and Fwsi inkwswe tiara. of CaMmia as Gallll l Agent wh re wder the Asw;iabon somas its Mr rwnts under the Letter of Oce4t ttwo gh Cis pWW of c wWn ciAnteral. "Completion Certlfkrr4a' shall mean the certificate of completion of the project required to be delivered by tare Devekaper to the Issuer, the Trustee and the Association pursuant to Section 2(g) hereof, which shall be substantially in the form attached to the Loan Agreement as Exhibit C -2. G. t VOW • 5 I 11 w. wCompletlo►r Dote" tihall mean the date of substantial completion" of the Project as slat forth in the Completion Certificate. "DWivery itrte" shall rnenn the date of delivery of the fonds to the initial purchaser or purchasers thereof. "Dete.minatiorr of Tattabifily" means the enactrnent of app:;rahle legislation. or a judgment or order of a court of original or ar peli ate jurisdiction, or a final ruling a. t;acision of the internal Reverue Swvice, in either case to the effect that the interest on the Bonds (other than interest on any Bond for any period during which such Bond is held by a "substantial user" of any facility financed with, the proceeds of the Bonds or a "related person", as such terms are used in Section 103(b) of the Code) is includable for feder,ai income tax purposes in the gross incomes of all recipients thereof subject to federal income taxes or tho filing with the Trustee of a; opinion by Bond Counsel to such effect. A judgment or order of a court of original ,jurisdiction or a ruling or decision of the Internal Revenue Service shall be considered final only if no appeal or action for judicial review has been filed and the time for filing such appeal or action has expired. "Developer" shall mean Viliacge Partnership, a California general partnership, and its successors and assigns. "i „ve;oper Loan" shall mean the Joan in the amount of $7,700,000, :,ec°.rrpd by a deed of trust, to be originated by the Association pursuant to the Loan Agreement ov behalf of the Issuer to the Developer to provide construction erd permanent financing for the Project. "Developer Loan Documents" shall mean this Regulatory Agreement, the Re;mbursrament Agreement dated as of August 1, 1986, among the Devoloper, the Trusteu and th-i Association; ## the Loan Argre9marit; thin Certificate of Continuing Prograir, Compliance (from and after the date such certificate is first required); the Developer Mortgage, and all other documents related W the Developer Loan axeeuted by the Developer. "LXsveloper mortgage" means the Deed of Tr -;at with ## Assignment of Rents and Security Agreement with Fixture Filing (Construction and Permane►it Loan) granting a mortgage on, and security interest in, the land, buildings and equipment comprising the Project, in substantielly the form required by the Loan Agreement, made from the Developer to a trustee for the benefit of the Trustee, sacuring the repayment of the Developer Loan. "Devoloper Notre" means the promissory note executed by the Developer pursuant to the Loan Agreement. "ewelcper Representative" shall mean the person or persons (who may be employees of t►IF Developer) ►designatod from time to time to :act on behalf of the Developer in a writien certificate furnished to the Issuer, the Association and the Trusters containing thf, specimen signature of such person or persons and si jned on behall of the Developer by an authorized officer thereof. "ln+idanture" shall mean that certain Indenture o' Trust dated as of August 1, 1986, by and between the Issuer and the Trustee, pursuant to which the Bonds are issued and secured. "Issuer" shall mean the Ci,y of Hintington Beach, California, beeinq a municipal corporation and chartcr r:;y duly ert3anited and existing wider the laws of the State of California, and its successors and assigns and any body resulting from or surviving Fny consolidr"in or mtarger to which it or its succoss ors may be L; party. "Lo*n Agro*ment" shall nioan thy: Loan Origination arrd ES, -vicing Agreement dared as of August 1, 1986, by arnc, antang the Issuer, the Developer, the Trustee and the Association. .3- "Low or i fodorate Income Tenant" shall mean the occupant or occupants of a residential unit in the Project whose aggregate Adjusted Family Income does not exceed 70 percent of the Median Gross Income for the, Area. If all the occupants are students (as defined in under Section 151(e)(4) of the Code), no one of whoir is entitled to file a joint return under Section 6013 of the Code, such occupants shall not quality as Low or Moderate Income Tenants. The determination of an occupant's status as a Low or Moderate Incor.is Tenant shall be made at the commencement of such occupant's occcIpaincy of a unit in the Project and annually thereafter pursuant to Section 4 hereof. "Low any' Mcdorate Untts" shall mean the residential units in the Project designated for occupancy by the Low or Moderate Income Tenants or the Very Low Income Tenants. "Aledlen Gross Income for, the Area" shall mean the median income for households of an applicable size in the P;-imary Metropolitan I- tatistical Area which includes the City, most recently determined by the Department of Housing and U•5an Development under Section 8(f)(3) of the United States Huusing Act of 1937, as amended, or it program under ,Section 3(f) are terminated. median income determined under the method used by said Dopa►rtment prior to " termination. in each case as adjusted for farr,ily size in accordance with the applicable unit size as set forth in the following table: Uh1L-; ZV Fes? d9Qrr,0 f= roily Size Q (studio) 1 2 3 3 4 4 or more, 5) "Program" shall rnean the I:suE,';; ► ultifamily housing program, as set forth in the Indenture. "Program Adrninisr'rafar" shall naaan the mlministrator of comp: ante of the Project with this kjrernmmit, who strall be appointed by 'Je Cravekpw with tfie consent of the Issuer oof. latro than the date on which the first unit witlM the Project in initially ooeupiod. "i*roject" shall mean the parcel of real property described in Exhibit A hereto, and all rights and app+urtenan,. es appertaining thereto, and the bail dings, structums and other improvbmenzis to be constructed thereon, O;tcluding all fixtures and other propcirty owned, leased or !icensed by the Developer and locatwi on, or used in connection with, such buildings, structures or other improvements, al! of which shall be constructed and operated 611 the Developer hi accradance with the restrictions set forth in this Regulatory Agreamernt, Section 103(b) of the Cede and Section 1.103- 8(b)(4) of the R-agulations promulgated theroUntler. "Project Costs" shall mean, to the extent authorized by the Code and tho Regulations, any and all costs incurred by the Issuer or the Developer with respect to the construction. and equipping, as the case may be, Ut the Project, whether paid or incurred prior to or after the date of execution of this Regulatory Agreement, includint,, without limitation, costs for site preparation, the planning of housing and improvements, the acquisition of property, the removal or demolition of existing structures, the construction and purchase of housing, related facilities and improvements, and all other work in connection therewith, and all costs of financing, including, without limitation, the cost of consultant, accounting and legal scrrices, other expenses necessary or incident to determining the! feasibVity of the Project, administrative and other expenses necessary or incident to the Project and the financing thereof (including reimbursement !o any municipality, county or entity for expenditure.,- made, with the approval of the City, for the Protect), interest accrued during construction and prior to itre Completion Date and all other costs approved by Bond Counsel. .4- j . I W L I "OuMfied Project ;oats" shall mean Project Costs incurred by the Developer in connection with the constr-uchon of the Project, but only to the exte,it that (i) such casts were not paid or incurred by lust Developer pfior to May 19, 1986, the date of the official action by the City Council of the City idontifying the Project as a project within the Program, (ii) such costs are chargeaula to the Project's capital account or would be so chp►;teable either with a proper election by the Developer to capitalize such costs or but for a proper election by the Developer to deaLict such costs, within the meaning of Treasury regulation 1.103-8(a)(1), and (iii) such costs are made exclusively wi!'o respect to residential units together with airy functionally related and subordinate facilities; providers, however, That if any portion of the Project is Ming constructed by an Affiliated Party of the Developer (wrlether as a general contractor or a subcontractor), "Qualified Project Costs" shall include only (a) the actual out-of-pocket costs incurred by such Affiliated Party in constructing the Project (or any portion thereof), (b) any reasonable fees for supervisory services actually rendered by the affiliated Party, and (c) any overhead expenses incurred by the Affiliated Party which are directly attributable to the work performed on the Project, and shall not include, for example, intercompany profits resulting from members of an affiliated group (within the meaning of Section 1504 of the Code) panicipatinn in the construction of the Project or payments received by such Affiliated Party due to early completion of the Project (or any portion thereof). "tualilie d Pt-oject Feriocd" means a period beginning on the later of (a) the first day of-i which at least ton percent of the residential units in the Project aro first occupied, or (b) the DAlk ory Date, and ending on tho iatQsti of: (i) the) date of retirement of ail of the Bonds, (ii) (he date -which is twelve years after the; date on which at least fifty percent (50%) of the: residential units in the Project are first occupiers; (iii) titre gate vihinh is a Cualified Number of Days after the date i3n which any of the :asidential units in the Project is first occupied; or (iv) the (Ute on which any assistance provided with respoct to the Project cinder Swclion 8 of the (!nited States Housing Act of 1937 terminates. "Qualified Mumbeer of Bays" rneans 50 percent of the) longest term of any 66nd, or in the Casa of a refunding of the Bands, 50 percent of the sum of the period the fronds were outstanding PIus the long-4st turm of any refunding obligations. "regulatory Agreement" shall mean this Regulatory Agreement and Decla!,ation of Restriciive': Covenants by and among the Issuc,r, the Developer, tho Association and the Trustee, pertaining to the Project. "T#w3toe" shall meat`; Seatlle-First National Bank. or its successors in truct under the Indenture. "Very Low Income Tenants" shall have the same meaning as that gi„sn to the tern) "Low or Mod,arate Incomo Tenant" herein, except that "70�10" in the definition of said term shall be "50 for Very Low Income Tenants. Unles; the context clearly equires otherwise, words of the masculine gender shall be construed to include correlative ►.xord:, of the famininer and neuter ganders, and vice versa, and words of the singular number shall be construed to include cc-, lative words of the: plural number, and vice versa. This Regulatory Agreement and all the terms and provisions hereof shall be construed to effectuate the purposes set forth herein and to sustain the validity hereof. The terms and phrases used in the recitals of this Regulatory Agreement have been included for convenience of faterence only, and the meaning, cunstructinn and interpretation of all such terms and phrases for purposes of this Regulatory Agreement ohall 1�0 determined by references to this Section. The titfos and headings of the sections of this regulatory Agreement have; been inserted for convenience of reference only and are not to be considered a part hereof and sha!I not in any way modify or restrict any of the terms or provisions hereof &nd shall never be considered or Qiven any effect in construing this Regulatory Agreement or any provision hereof or in ascertaining intent, if ar%y question of intent shall arise. 161 M S906on 2. Constrrrrtloq, Acgtrlshlon and Completion of the Project. The Devdoper hereby represents, .,ovena+its an.1 agreds as follows: (a) The Developer has inct,>red a substantial binding obl!gation to cornmer;c,) tha construction of the Pr,cgec:t, pursuant to which the Developer is or will be obtigatod to expend at least the lesser of $100,00 or 2-1/29'6 of the principal amount cf the Developer Loan; (b) The Devek4 's rV3sonable expectations respecting the total Project Costs are accurately set forth in t''te Devfg,)pet's Certificate Regarding Use of Proceeds va',it i has been delivered to the Issuer and the 'Trustof�; (c) The Detweloper has corrimenceJ the construction and equipping of the Project, or will commence the same w thin two (2) months rrom the date hereo`, and will proceed to complete the same with sue d-liger,co, absent the occurrence of an incident of fnrce maieure, to complete the sarrto; (d) 'ire Developer reasonably expects to complete the construction and acquisition of the Project and to expend the full arnount of the procE ads of the Developer Loan for P,ejeci Costs beforej August ?, 1989; (e) At !east .n;ntaty-fi,la percent (."a%) of the proceeds of the Developer Loan, e!rclusive of proceads used to pay the costs of issuing th3 Sonds, sharS be aDr•!ied to pay or reimburse the Developer for Qualified Project Costs, and none of the proceeds of thn. Deveioper Loan shall bti apr:!ied to pay or reimburse t:osts or expenses other than Pr::iect. Cast,,,; (f) The Dov'a!oper shall submit to the Association, and the Trustee prior to or upon the date of each aOvance under ihs Developer Loan a funding requisition, such form as M'3-1 he approved by the Association, certifying that at least ninety -rive percent (95%) of all advances under the Developer Looan to dat9, exclusive of proceeds used to pay the costs of issuingg tea Bonds, will! have been applied to pay or rcirnburse the Davelnrpr for Qualified Project Ctlsts and that all of the advances will be used to pay or rr:imatrrse the Dev;--foper for Project Cast:;; and (g) Upon the Cnreopletion Date, the Developer shall submit to the Issuer, the Association, and the Trustee a Compl+,tion Certificate substantially in the forrn attached to they Loan Agreement as Exhibit C, containing Oils following: (i) the Dsjve!oper's statement that the Project has been sutrstantially completed anJ is ready and available for occupancy as of a spacified dale (which shall be the Completion Deter,); (ii) the Developer's statement, confirmed by the Association, of the aggregate amoq,tnt, advanced against the Developer No'e prior to and upor, the Comp!e;ion Dpte; (iii) the DevOoper's certification th:-,t at least nicety-fiv►y'percent (95%) of the proceeds of the. Developer Loan, nxcl:tsiva of procecsls used to pay the costs of issuing the Bonds, t.ave been applied to pay or rairnburse the Developer for QualiNed Project Costs; and (iv) that WI of the ainounta disbor:sW on the Developer Loan have been vsnd to pay or teirnb►arse the Developer for Prutect Costs, auad (h) Upon any r,repayment of the Developer Loan, thfl Developer w0l submit to the i-rustee a written notice of such prepayment, stating the amount aad dais, of such ptepayment and the amount remaining unpaid on the Developer Loan; and ti) The Developer does not oven any btiddings or structures which are proxirnato to the Project other than those txiiidings or structures which comprise the R'oject, which are bein.) financed pursuant to .i comrnar, plats under which the Project is also being financed; and 0) Less than twenty-five percent (25%) of the proceeds of tho Developer Loan will be used, directly or indirectly, for the acquisition of land, or any interest therein; and M i r „art of, w (k) No portion of the proceeds of the Deve!oper loan wiG be used for acquUtion of any property (or any interest therein) unless the first use of such' property is pursuant tc such acquisition, except with respect to any building and (tie equ'.prtant therefor if the rehabilitation expenditures with respect to such building equal or exceed W-6 of the cost of a.-quiring such building or equipment. (1) The Developer will own and operate the Project in a manner which complies with the Act, and in conneetion with ! .o construction of the Project, the Dev,9loper will comply with all ren, irements o� the Act. (m) All statements made in the various certificates delivered by tho Developer to the issuer on the Deliver, Date are true and correct. Section 3. Residential Rental Project. The Issuer ant; tho Oev�loper hereby decla•e their understanding and intent that ilia Project is to he owned, managed rind operated, for so long as any Bonds remain outstanding under they Indenture, tut in any event at least for the Qualified Project Period, as "residential rental property" as such phrase is utilized in Se:ct;on 103(b)(4)(A) of the Code. To that end, the Developer he•reb)f represents, covenants, warrints and agrees as foilows: (a) That the Project is Riaino acquired and constructed rtir the palpate of pravidinL} residential rents, property, and the ': oje Ct is to be cwncd, munage6 and operated as z residentiat mental project comprised of 5'.1veral intarralated buildings and structures, each conshuting of rnc-9 than one residential dwelling unit, tcgnthe, with faciiities functionally relatod and c,unordinste thereto, in accordance) with they anplicoblo previsions of Section 193(h)(4)(Al of the Code i�nd Trc�sury Reguiation Section as the same may bp amended f, em time to time; (b) That once earth residential unit is the project is -available for occupancy, such unit ,,ill be rentad or available for rental on a continuous basis; (c) That all of the residential t nits in the Project wiil he simi,arly constructed and small contain •� separate and complete fsr,:lities for living, s1en;iing, eating, cooking and sanitation %,► a singie pearsen or a family, including a sleeping area, bathing and sanitation facilities, and cooking facilities equipped with a cooking range, refrigerator and sink: (d) That none or the residential units in the Proiect shall at any time be utilized on a t: ansier,r buis: and that ne;lher the Proj„ct ner any portion thereof sha!I ewer rye used as a t�.otel, motel, dormitory, fraternity house, sorority ` OLISO, rooming house, hospital, nursing horro, sanitarium, rt?<: home or trailer pant or Court; le; That all of the residential emits in the Project will be a�railafb!e for rentfIt an a cor•tmuous hasis to members o; tho general public: at least ?U portent of thn reric em:a.l units in they will be leased or rented, or available for lease or rental, to !_ow or Income Tetia•►tcl, aic a co,ilinuous basis far the Qualified Project Period (and not less than 10 p-;rcent of sucn units will be leaned or- rented. or available for lease or rental, to Ver.; Low Income Tenants at Affordable Fonts); arm the Developer will net give preference to any particular class or ;rott p in rentinp the dwell;ng units in the Project, except to the extent that dwelling units are requ:red to bs iea3ed or rented to Low er Pilloderete !rcome Tenants or Very Low Income Tenants. The units to be Occupied by Low or Modetate Income Tenants and Very l,nw Income Tena+its will be intorminnled with all a;ier dwelling -units in the Project: and will to of a quality, and offer a raise of sizes and number of bedrooms, cornpLirahla to the othar units in the Project. Low or Moderate income Tenants will have equal access and enjoymarrt to all common fac0ities of the Pro;ect, (f) That the Dev4!opor shall not discriminate on the basis o! race, creed, color, sex, age at national origin in the !erase, use or occupancy of th-) Project or in connection with The employment or application for employment of lnrrsons for the operation and mamigement of the Project; •7- (g) That the Developer will accept as tenants, on the same basis as all other prospective tenants, k)w-income persons who are holders of certificates fr i- federal housing assistance pr:yrnents for existing housing pursuant to Section L of the United States Housing Act of 1937 Cr s svcregsor federal program; and, in connection therewith, the 03vetoper will not apply t ria;it selection criteria to such Section 6 certificate holders which are rriore burdensome than the criteria applied to any othor prospective tenants; (h) That the Project consists of a parcel or parcels of land that are contiguous except for the interposition of a road, stiaet or stream, and all of the buildings and structures in the Project comprise a single 9"raphicatly and functionally integrated protect for residential rental propeq, as e•vicir•:nced by the ownership, management, accounting and operation of the Projo;:t; (i) That one or more residential units in any building in the Projec! containing morn tf• five residential units may be occupied by a resident "manager or maintenance personnel who a , may be th6 Developer of the Project; U) That within thirty (30) days after the date on which 10 percent and 50 percent of the dwelling units in the Prnj;ct are first occupor,•d, the Developer sha!! prepare and mail to the Issuer. the Trustee and the Assuciation, return receipt requested, a certificate identifying such date. "rhe Developer may record a copy of said certificata in the Office of the County Recorder of Orange County; (k) 'r hat no Bart of the project will at any tirne be owned or used by a cooperative housing _ corporation; and (1) That, other ;hail obtaining the final rnap approvai and the Final tibdivis!on Report from the C,alivornia Cepaninelnt of Real Estate, the Developer wil! not convert the Project to cordorrriniurn ownership during the term of this agreement without first obtaining an opinion of ?ond Counsel that such condominium conversion will not adversely affect the exemption from Federal ;ncorno taxatkm and State personal income taxation of interest on the Bonds. Unless '.he provisions of this Section 3 are am$ndad as permitted under Section 18 hereof, the provisidhs c` this Sewticwr 3 shall remain in effect fl)r t're longer of (a) the period during which any of the Bonds are outstanding undor the Indenture, and (b) ►he Qualified Project Period; provided, however, that after repayment in full of the Developer loan, the Developer may be di .-harged from its obligation; under this Section 3 to the extent that the same are assumed by any successor in interest to. the Developer. .Section 4. Low rw Moderate Income Tenants. Tc the end of satisfying the requirements of Scctirin 10:3(b)(4)(A) of the Code and r{ the .act, for the full Qualified Project Period, the Deve!oper he,-eby represents, warrants, covenants and agrees as follows: (a) Throughout the Oualified Project Period, (i) at least twenty N percent (2(r.0) of the completed dwelling unKs in the Project shall be our;upied by Low or Moderate Income Tenants (and at least ton porcent (10%) cof such units shall be occupied by Very Low Income Tenants at Affordable Rents), prior to the satisfaction of which no additic-nal unit., stall be rented or ceased to any other tenants, and (ii) after initial renal occupancy of dwelling units by Love or Moderate Income ToneiRs, at Feast twenty IN percent (2(°-0) of the completed dwelling units in the Project (and at least ten percent (10%) of such units snali be once.+pied by Veiy Low Income Tenanta at Affordable Rents), at all times shall be rented to and occ,.ipied (or held available for rent if previously rented to and occupied by a Low or Moderate Income Tenant) by Low or Moderate Income Tenants as rec;uire J by Section 103(b)(4)(A) of the Code or if vacant, shall have lost been occupied for a term of not less thin 32 consecutive days by Low or Moderate Income Tenants and tie available for occW.ancy by Low or Moderate Income Tenants. Foy purposes of satisfying the requirement that not lass than twenty # percent (200,6) of the residential units bn occupied by Low 14 or Moderate Incorne Tenants, no Low or Moderate Income Tenant shall be denied continued occupancy because, after admission, the Low or Moderate Income Tenant's family income exceeds the applicable qualifying incorne level (provided, however, that such tenant shall no longer be counted as a Low or Moderate Income Tenant m, Soy date upon which such tenant's faamily income exceeds one hundred twenty percent (1209,1o) of such level) set forth in the definition of "Low or Moderate Income Tenant" herein; provided, however, that the Developer shal,' maintain the percentage requirements of this Regulatory Agreement by providing the next available units to Low or Moderate Income Tenants (or Very Low Income Tenants, if required) as needed to achieve compliance with the foregoing requiremenis. Any tenant who is a Very Low Income Tenant will be counted as a Low o, Moderate Income Tenant for the purposes of the requirements relating to Low or Moderate Income Tenants. The provisions of this paragraph shall terminate upon they expiration of the Qualified Project Period. (b) To obtain and maintain on file from each Low or Moderate Income Tenant and Very Low Income Tenant rasiding in the Project a copy of such ten�int's executed Certification of Tenant Eligibility and Income Verification in the form and manner required by Treasury Regulation 1.167(k)- 3(b) and in substantial y the fern attached as Exhibit 8 to the Loan Agreement, and (c) To permit any duly authorised representative of th? Issuer, the Associaticn, the Program Administrator, the Trustee or the Internal Revenue Service to inspect the books and records of tilts Developer pertaining to the incomes of Low or Moderato Income Tenants and Vary Low incorno Tenants residing in the Project; (d) To obtain and maintain on file from each Ow or Moderate Income Tenant residing in the Project a copy of surh Low or Moderate Income Tenant s federal 'incoma tar. return for the taxable area+- immediately preceding such Low or- M.odorare Income Tenant's initial occupancy in the Project and annually thereafter or, if a Luw or Moderate Income Tenant carWies that he or she did not file or did not retain a copy of such tax return, other satisfactory evidence of income for such year such as wage stmements or employer records; (a) To prepare and submit to the Issuer, the Program Administrator, the Association, and the Trustee each quarter during the Qualified Project Period a Certification of Continuing Program Compiianr:o, in substantially tho form attached to the Loan Agreement as Exhibit 44, executed by the Developer, and including tre percentage of the residential units of the Project which were occupied by Low or Moderate Income Tenants and by Vert Low Income Tenants at ali times during the period sir+re the filing of the Fast Certification of Continuing Program Compliance. The Developer will attach to the Is�+ier's and the Truswe's copies of the Certification of Continuing Program Complianco the Certifications of Tenant Elig.hility and Income Verification and any tax m(urns received irom Low or Moderate Incume Tenwits and +`corn Very Low income Tenants occupying units in the Project which have not previously been furnished to the Trustee; (f) To prepare and submit to the Issuer, the Trustee, the Program Adriiinistrator, the United States Department of the "i reasury and the Association within 30 days after each ,anniversary of the Completion Date, a cortificate executed by the Developer stating (i) the lowest percentage of tine d.velling units in the Project which were occupied, or held vacant for occupancy, by Low or Moderate Income Tenants and by Very Low Income Tenants durins such period, and (ii) that no default has occurred under th,:; Agreement; and (g) The form of lease to be used by the Developer in rentinro any units in the Project to Low as Moderate Income Tenants or Very Low Income Tenants shall provide for termination of the lease and consent by such person to immediate eviction for failure to qualify as a Low or Moderat9 Income Tenant of Very Low Income Tenant, as applicable, as a result of any material misrepresentAtion made by such persoo with respect to his or her income and inCorne verification. The Issuer hereby elects pursuant to the gods to apply the occupancy requirements for Low and Moderate incram Tenants set forth in paregi ap, i, (a) above to the Fonds, :`eolion 5. Tax -Exempt Status, of Bonds. (1) Thin Issuer hereby represents, revenants rind agrees as follows: (a) That the ISSLIer will .not knowingly tc,*e or fail to take or permit any action to be trtken that would adversely affect the exemption from federal income taxation or state personal income taxation of the interest on tht) Bonds and, if it should take or pet,nit any such c.ction, the Issuer shall take all lawful actions that it cani take to, rescind such action;; promptly upon having knowledge thereof; and (b) That the Issuer will take such action or actions, including without limitation amendment of the Developer Loan Documents or tta!r Collateral Pledge Agreemer�,, as ma'r be necessary, in the opinion of 13ond Counsel, to comply fumy with all applicable rules, rulings, regulations, policies, procedures or other official statements promulgated or proposed by tho United States Department of the Treasury or the Internal Revenue Service pertaining to oblig2tions issued under Suction 103(b)(4)(A) of the Cade. (2) The Developer hereby : ovenants, represents end agrees as follows: (a) That the Davelot)er will not knuvringly take or 'ail to take or permit any action to b taken that would adversely affect the exemption from fed©ral income taxation or stave personal income taxation of the interest on the Sands and, if it should take or permit any such action, the Developer shal, take all lawful actions that it can take to rescind such action promptly upon ha : rng :Utowladge thereof; and (b) That the Developer will take such action or actions, as -nay be reasonably necessary, in the opinion of Bond Counsel, to comply fuliy wi,) all applicable rule;:, rulings, regulations, policies, procpdurop 3r other official statements promulgated u- proposed by the Unitpd States Depfatlmert of the Treasury or the Internal RevenuE Ser,dce pertaining ,o obligations issued under Section 103(b)(4)(A) of the Code. (3) ; he Association hereby covenants, represents and agrees as follows: (it) That the Association will not knowingly take of fail to take or permit any action to be I akers that would adversely affect the exemption from federal income taxation or state persona; income taxation of tro interest on the Bonds and, if it should take or permit any such action, the Association shale take all lawful actions that it carp tako to rescind such action promptly upon having knowledge thereof; and (b) That the Association will take such faction or actions, as may be necessary, in the opinion of Bond Counsel, to comply fully with all applicable i ules, rulings, regulation, policies, procedures or other official statements promulgated or proposed by the United States Department of the Treasury or the Internal Revenue Service pertaining to obligations issued under Section 103(b)(4)(A) of the Code. Section 6. Indamnlfi+cotion of Issuer, Ais.sorfafion and Trustee. The Developer shall indemnify, hold harmless and defend the Issuer, the Association and the Truster, and the respective counci%members, officers, members, directors, officials and employees and each of theft (a) from and against any and all claims by or on behalf of any person arising from r ny cause whatsoever in conntaction with the approval o` tax-exempt financing for the project or the making of the Nveloper Loan. (b) against all loss, costs, damages, expenses, suits, judgments, actions and liabilities of whatever nature (including, without limitation, attorneys' tees, litigation and court costs, amounts paid in -to- settlement, and amounts paid to discharget judgments) directly or indirectly resulting from or arising out of or related to (i) the design, construction, installation, uporation, use, occupancy, maintenance, or ownership of th6 r-gact (including compliance with laws, ordinances ai,d rules and regulations of p%iblic authorities relating tfieretn); or (ii) any written otaternants or representations with respect to the Developer, the Project cr the Bonds made or given to the Issuer, the Association or the Trustee, or any underwriters or purchasers of any of the Bonds, by the Developer, or any of its partners, Agents or employees, including, but not limited to, statements or representations of facts, financial information or partnership affairs. The Developer also shell pay and discharge and shall indemnify and hold harmless the Issuer, the, Assccintion and the Trustee from (x) any lien or criarge upon payments by the Developer to the Issuer and the Trustee thereunder and (y) any taxes (irc;luding, without limitation, all ad valorem taxes and sales taxes;, assessments, impositions and other charges in respect of any portirm 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, a sought to be imposed, the Issuer x the rustrJe shall give prompt notice to the Developer and the 0c)ve!ope. shall have the sole right anal duty to assume, and will assume, the defense thereof, with full power to litigate, compromise or settle the same in its sole discretion, provided that the Issuer and the Trustee shah have the right to review and approve or disapprove any such compromise or settlement. in addition thereto, the Devi'. ,; .8r shall pay upon demand all of tho fees End axpenses paid or incurred by the Trustee and/or the Is4wer and/or the Association in enforcing the provisions hereof. Section 7. Consideration. The issuer ties determined to adopt and implement the i'rogram aixl to issue tho Bonds to obtain moneys to carry out the Program for the purpose, among others, c.f inducing the Developer to cor..;truct and operate the Project as a project for Lovi or Moderato: Income Tenants and Very Low Income Tenants. in consideration of the adoption and implt- -nentation of ilia Program and the issuance of the Bonds by the Issuer, thr; Association and the Davelor er have entered into this Regulatory Agreement. Section 8. Reliance. The Issuer, the Association and the Developer hereby recognize -nd agrea that the representations and covenants set weth herr:,n may be relied upon by all persons interestsd in the lega!ity and validity of the Bonds and in the exemption front federal income taxation and sta}'e personal income taxation of the interest on tha Bonds including, without limitation, We Trustee for the b6iifit of the owners of the Bonds. In perforr ing their duties and obligations hereunder, the Issuer, the Association and the Trustee may rely upon statements and certificates of the Developer and Low or Moderate Income Tenants and Very Law Incorne Tenants believed to be genuine and to have been executed by the proper person or persons, and upon audits of the books and records of the Daveloper pertaining to occt,panc:y of the Project. In addition, thp Issuer, the Association and the: Trustee may consult with counsel, and the opinion of such counsel shall be full and ccmpIQte authorization and protection in respect of any action, taken or suffered by the issuer, the Association or the Trustee here: nder in good faith and in conformity with the opinion of such counsel. In determining whether any default or lack of compliance by the Developer e3xi; is under this Regulatory Agreement, the Trustee and the Issuer shall not he required to conduct any investigat:on into or review of the operations or records of the Developer and may rely sokily upon any notice or certificate delivered to the Trusters by the Developer or the Association with respect to the occurrence or absence of a default. Section g. Project Location. The Developer hereby represents and warrants that the Project will be located entirely within the territorial lirr.its of the Issuer. Section► 10. Sale or transfer of Project; Syndication. The Developer hereby covenants ano agrees not to sell, transfer or otherwise dispose of the Project or any interest therein (other than the making o; leases `nr the units to members of the general publin) without obtaining the prior written consent of the issuer, which shall, bo conditioned solely upon receipt of eviderce satisfactory to the Issuer that the Developer's purchaser or transferee (i) has assumed in writing and in full the Developer's duties and obligations under this Regulatory Agreernerit and the Developer Loan Documents, and (ii) has delivered an opinion of counsel to such party that such party has assumed the obligations of Developer hereunder and that the obligations assurr,ed are binding on such party. Any sale, transfer cr ether disposition of the Project in violation of this Section shall be ineffective to relieve the Developer of its obligations under this Regulatory Agreement. The prior approval of the Association ;i shot! be required before any sale or transfer of the Project under the terms of its agreements with the 't Developer. Not less than 20 days prior to consummating any sale, transfer or disposition cs any interest in the Project, the C�vvefuper shall deliver to the Issuer, the Association and the Trustee a notice in writing explaining the nature of the transfer. The Developer shall n,t syndicate the Project without the prior written 3pprov�:r of the Issuer; provided, however, that !ha Issuer shall not withhold such approval if the issuer oetermines that such syndication meets the requirements of Section 52080(e) of the Act or any successor provision. The Issuer shall mace such detenninatior, upon ' rex*o of an opirkm of counsel for the Developer acceptable to the Issuer to the effect that (i) the terrt:s and conditions of ft syndication do not reduce or limit any of the requirements of the Act or tegulaiions adop ed or docxnents executed pursuant to the Act: (h) no requirements of the fss1,li3r shall tie sWxxdi W9d to "he syndication agreement and (6i) the syndication shall no( result in the provision of fewer assisted units, or f3_, reduction of any bomfits or services, than were in existence prior to the I, rryrxation agrerirrterrt. Section 11. Involuntary Substantial Loss or Substantial Destruction. Upon evidence satisfactory to the Issuer that compliance with the provisions of this Regulatory Agreement is no longer possible due to the involuntary loss or substantial destruction of the Project as a result of unforeseen events whiWh prevent compliance hereunder (e.g., a fire, seizure, requisition, changes in a fuderal lav, or an action of a federal agency after the Delivery Date or condemnation) or due to a foreclosure by the Association of the lien of the Developer k1ortgage or deliver,, of a deed in lieu of foreclosure whereby a party other than the Developer or an Affiliated Party shall take possession of the Project, the Project shall not be subject to the terms and provisions of this Regulatory Agreement provided that (i) all Bonds outstanding pursuant to the Indenture are redeemed within a reasonable period and (ii) an opinion front Bond Counsel is received stating that noncompliance with the provisions hereof as a result of such invOuntary loss or substantial destruction resu!ting iron an unforeseen event will nut adversely effect the exemption from fpdcrai income taxation or state personal income taxation of the interest on the Bonds. Notwithstanding tho foregoing, Cie provisions of this Regulatory Agreement and the terns and provisions hereof shall remain in force and effect as though the provisions, hereof had never ceased to apply to the Project (i) if, after a foreclosure or the delivery of a deed in lieu .if foreclosure, the Developer or an Affiliated Party shall acquire an ownership interest (for federal income tax purposes) in the Project subsequent to such event or (ii) if the Association upon acquiring title by foreclosure or a dead it lieu of foreclosure does not prepay the Developer Loan in full. Upon acquiring title to the Project pursuant to a foreclosure or a dead in lieu of foreclosure, the Association may, in its discretion, convey title to the Project to a subsequent purchaser, provided such subsequent purchaser assumes the Developer's duties and obligwions under the Regulatory Agreement in accordance with Section 10 hereof. Oactron 12. Dovei7ants to Run With the Cans!. The Developer hereby subjects the Project and the !and described ,n Exhibit "A" here o to the cov,anantss, reservations and restrictions set for.;i in this Regulatory Agreement. The Issuer, the Trustee, the Association and the Developer hereby declare their specific intent that the covenants, reservations and restrictions set forth heroin shall he deemed covenants running with the land and shall pass to and be binding upon the Developer's successors in title to the P►ojec!; provided, However, that on the termination of th!s Regulatory Agreement said covenants, reservations and restrictions shall expire. Each and every contract, deed or other instrument hereafter executed covering or conveying the Project or any portion therecif shall conclusively be held to have been executed, delivered and accepted subject to such covenants, reservations and restrictions, regardless of whether such covenants, reservations Lind restrictio7s are set forth in such contr - dead or other instruments. Section 13. Burden ,and Benefit. Tyra Issuer, the Trustee, the Association and the Developer hereby declare their understanding and intent that the burden of the covenants set forth herein touch and concern the land in that the Developer's legal interest in the Project is rendered less valuable t! ►ereby. The Issuer, the Trustee, the Association and ;he Developer hereby further declare their .W .9 understanding and intent that the benefit of such covenants touch and concern the lard by enhancing and increasing the enjoyment and use of the Project by Low or Moderate Income Tenants and by Very Low Income Tenants, the intended beneficiaries of such covenants, reservations and restrictions, and by furthering the public purpose for which the Bond., = were issued. Section 14. uniformity; Common Plan. The covenants, reservations and restrictions hereof shall apply uniformly to the entire Project in order to establish and carry out a common plan for the use, development and improvement of tho land on which it is to be constructed. Section 16. Term, Thies Regulatory Agreement shall become effective upon its execution and delivery. Except as provided in the immediately following paragraph and as otherwise provided in Section 11 hereof, this Regulatory Agreement shall remain in full force anti effect for so long as any Gonds are Outstanding under the Indenture but in any case at least for tho Qualified Project Period, it being expressly agreed and understood that the provisions hereof (other than the provisions of Section +4 hereof which in any case will remain in effect until the date provided in or detenTlined in the manner provided in that Section) are intended to survive the expiration of the Developer Loan Documents and ft) CobWal PkK1ge Agreerent. Notwithstanding any other provisions of this Regulatory Agreement, this entire agreement, or any of the provisions or Sections hereof, may be terminated upon agreement by th-? Issuer, the Trustee, the Association and the Developer if there shall have been received an opinion of Bond Counsel that such termination will not adversely affect the exemption from federal income taxation or state personal 0come axation of the interest on the Bonds. The Developer shall provide notice of any termination of this Regulatory Agreement to the Association. Section 16. Events of Derau"t; Enforcement. If the Developer defaults in the performance or observance of any covenant, agreement or obligation of the Developer set forth in this Regulatory Agreement, and if such default remains uncured for a period of forty-five (45) days after notice thereof shall have been given by the Issuer or the Trustee to the Developer, with a copy of such notice to the Association (or for a period of sixty (60) days after such notice if such default is curaHe but requirei acts to be donee or conditions to be remedied which, by their nature, cannot be done or remedi9d within such 45-day period, and if the Nveloper cornmences to remedy the default within such 45-day period and thereafter diligently and continuously prosecutes tho sarns to completion within such 60-day period), or wuch longer period as may be ,approved by Bond Counsel, then the Issuer (or the Trustee, acting on behalf of the Issuer) may, znd in tho case o` a default affecting the federal or state; income taxation of interest on the Bonds shall, declare that an Event of Defaclt ,:ls U. ,Icurred hereunder and may take any one or more of the following steps, at its option: (a) By mandamus or other suit, action qr proceeding at law or in equiiy, require the Developer to perform its obligations and covenants hereunder, or enjoin any acts or things which rnay be unlawful or in violation of the rights of the .suer. the Association or the Trustee hereunder; (b) 'Have access to and inspect, examine and main, copies of all of the books and re-Drds of the Developer pertaining to the project; (c) Take whatever other action at law or in equity may appear necessary or desirable to enforce tha obligations, covenants and agreements of the Developer hereunder; and (d) Subject to the provisions of Section 802 of the Indenture, declare a default under the Develuror Mortgage, accelerate the Developer loan, and proceed with foreclosure and the exercise of all other rights and remedies under the Developer Mortgage if such indebtedness is not paid. The Trustee and the Association shall have the right, in accordance with this Section and the previsions of the Indenture, without the prior consent or approval of the Issuer, to exercise any or all of .13. 111 �J0 h .. tho Issuer's rights or remedies hereunder; provided that prior to taking any sur,h enforcement action the Trustee or the Association, as the case may be, shall notify the issuer in writing of its intended action. Notwithstanding any provision to the contrary contained herein, ebch of the Trustee, the Association and the Issuer shall have the right to enfores this Regulatory Agrr±emrsnt and require curing of defaults in such shorter periods than specified above as it may reasonably deem nacessary to insure compliance kvith Section 103(b)(4)(A) of the Code. No delay in enforcing the provision, s hereof as to any breach or violation shall impair, darnage or waive the right of any party entitled to onforce the same or to obtain relief against or recover for the continuation or repstition of such breach or violation or any similar breach or violation thereof at any later time or times. Seciic;n 17. Governbig Law. This Regulatory Agreement shall be governed by the laws of the State of California. Seelig T 18. Ainendraents. Except as prov;,:ed in the next succeeding paragraph, this Regulatory Agreement shall be amended only by a written instrument executed by the parties hereto and only upon an opinion of Bond Counsel that such amendment or revision will not adversely affect the exemption, froin federal income taxation or state personal income taxat.iort of interest or. the Bends. The a--eement of the Issuer, the Association and the 'rru-1-itoa to any aimpndment to this Regulatory Agreement Lhall be given only in accordance with the provisions of Article XII of the Indenture or, if the Bonds are no lcnger outstanding, upon receipt of an opinion of Bond Counsel that such amendments or revision will not adversely affect the exemption from federal income taxation or sta'.e personal income taxation of interest on any of the: Bonds. To the extent any amendrisnts to the f.ct, the final Regulations or the Code shall, in the written opinion of Bond Counsel filed with the Issuer and the Trustee, impose requirements upon the ownership or operation r.f the Project more restrictive than those imposed by this Regulatory Agreement, this Regulatory Agreement sh ill be deerned to be automatically amended to impose such additiorol or .more restri0ve requirements. Section tn. Payment of Trustee's and Issuer's Fees. In the event that a party to this Regulatory Agreement brings an action against any other party to this Regulatory Agreement by reason of the broach of any condition or covenant, representaiion or warranty in this Regulatory Agreement, or ot;ierwise arising out of this Rey:-!^Aiory Agreement, the prevailing party in such action shall be entitled to recover from the other reasonable wttorneys' fees to be fixed by the court which shall render a judgment. as well as the costs of suit. The Developer hereby covenants and agrees to pay to the Issuer it3 toes and expenses incurred in connection with the Bonds ap:1 its adm:nistration of the project and to pay to the Trustee and any Paying Agent any amounts owin;? for Operating Expenses. as that term is defined in the Indenture. Such fees and expcns•:s shall be paid by the Developer to the Trustee for deposit into the General .-und created pursuant to the indenture, within 30 days of receipt of an invoi►;e from the issuer, the Trustee or any paying agent. Section 20. Sep erebility. If any provision of this Regulatory Agreement shall be invalid, inoperative or unenforceable as applied in any particular case in any jurisdiction or jurisdictions or in all jurisdictions, or in all cases because it conflicts with any other provision or provisions hereof or any constitution or statute or rule of public policy, or for any other reason, such circumstances shall not have the effect of rendering the provision in question inoperative or unenforceable in any other case or circurristance, or of rendering any other provision or provisions herein contained invalid, inoperative, or unenforceable to any extent whatever. .i4. T The invalidity of any one or more phrases, sentences, clauses or reactions contained in this Regulatory /'agreement shall not affect the remaining portions of this Regulatory Agreement, or any par' heteof. Section 21. Tim* of the Essence. In each provision of this Regulatory Agreement which states 3 soacific amount of time within which the requirements thereof are to be satisfied, time shall NA deemed to be of the essence. Section 22. Recording and Filing. The Developer shall cause this Regulatory Agreement and al. amendments and supplements hereto to be recorded ,and filed in the real property records in the office of the County Recorder of 0(ange County and in such manner .-)nd in ouch place as the City or the Trustee may reasonably request, and shall tray all tees and chi; ges incurred in connection therewith. Upw thu West to occur of ft termination of this Agreement, tee oxpiration of the Qualified PrDiect PeriW &nd the fmal parpnent of ak of ft Bonds, tlrta Issuer shall cooperate iwith ift$ Dtweloper, at tine sole expense of the D"-*) er, in the recording of such insbumfmt or instruments of nAease ur tem iination with res f*ct to etas Agree aient as the Developer may rezi3anabiy request; prole-;dod, how~, that this prom : on shah not be implemented un4ess the Issuer receives an op+nion W Born Counsel to the effect OW such instrunmrtt or instruments may he executed aced recorded wit"L( in, aml of U remselves hevitg an adverse effect upon the exomption of interest on b t-. E3onds from Federal irww.m taxatkxi or U forma persoiial ine,� taxation. ;suction 23. Notice. The Trustee and the Developer shall, provide a copy of any notico 'provided under this Regulatory Agreement to the Association and the Issuer- Any notice required to be given hereunder shal! be give, by personal delivery or by registered or Certified mail at the addresses specified below or at such other addresses as may be specified in vrriting by the parties hereto: If to the Issuer: City of H,intingr.on Dench 2000 Main Street Huntington Boacn, California 92648 Attention: Principal Reckvelopmant Specialist If to the Trustee: Seattle -First National Bank 1001 Fourth A+renue Seattlo. WA 98164 (defiv:3ry) P.O. Box 3586 Seattle, WA 9812.4 (mail) Attention: Gond 'i rustee Services, 9th Floor - It to the C&veloper: Village Partnership 1810 - '14th Street Suite 207 Santa Monica, California 90404 'attention: T. Daniel Neiveau it to the !Association: Mercury Savings and Association 7812 Edinger Avenue Huntington Beach, Cartfo►nia 92647 Attention- Chief Financia! Officer .15. , With a ropy tot Pettit & Martin 101 California Street, 35th FWr San Francisco, California 94111 Attention: Arnold P. Schuster, Esq. Ithe delivery of such copy shall not constitute the delivery of notice harounder) Notice shall be deemed given three (3) business days after the date of mailing, or, if personally dolivered, when received. Section 24. CompNerrce by Developer. The Trustee shall not be responsible for maintaining or ver:`ying corr*Nanco by the Developer with its obligations under this Regulatory Agr3ement. The Program Admit k#ator 9W assume N such responsibilities under the terms of an Administration Agreement 0# wwq the Program Administrator, the Issuer and the Develolmr, to be entered into root NW Ow to dWe on which the first urd MOM the Pmject is in eRly Oocupied. -16- r•. IN WITNESS WHEREOF, ft Issuer, the TrusteO, the Association and the Developer have caused this Agreerrmt to be signed, acknowledged and attested on tizeir behalf by duly authorized representatives, all as of the date first written hereinabove. CITY OF HUNTINGTON BEACH ATTEST: City Clerk By: - — City Administrator MERCURY SAVINGS AND LOAN ASSOCIATION By:_,_ V" Presitie►►t VILLAGE PARTNERSHIP By:�____,-- General partner By: _... General Partner SEATTLE-FIRST h.ATIONAL BANK, as Trustee By: Its: AMIN 'r EXHIBIT "A" i r DESCRIPTION OF PROJECT SITE The kM MemW b in the mport is situeod in the County al LVxige, State of California, end is damenbed as falmn: The EW 4.00 ewes of tho South Half of the NortlmWl QArter' of the Northeat Quarter of Section 21, Taw Wr p 5 South, Rare 11 'rllest, In tftrt Rwwto La Bobs Mica, in ffs3 City of Huntington Bosch, Canty of Orange, Stab of CaMan ia, as per nrari nworded in Book 51, Page 13 of Am ows MAO, in the twice of'Ahe CourNy Recorder cd said County. Exoe*q #m*f m the North 150.00 fort q'Mar W, said s; rid is also known as Paroel One of that cobin Parvol Map nxxvdW Ov.*A er 17, 1969, as Parcel Mare No. 1156 in Book 95 Page 11 of Parcel Maps, in the Office of dw, Ownty Recorder of Orange County, State of Caalilmie. .18. .. WA mom + S• f .; STATE OF CALIFORNIA ) )Ss. COUNTY Or ORANGE ) On this day of Augest, in the year 1986, before me .y,.._.,.� , a Notary PL"ic, personally a"ared -, personally known to (me to 1m the perjon who executed this instrument as the City Administrator of the City o, Huntington Soach, and acknowledged to me than the City of Huntington Beach executed it. WITNESS MY HAND AND OFF10AL SEAL. Notary Public for the State of California Commission Expiras: .t9. STATE OF CALIFORNIA ) • )ss. COUNTY OF ORANGE ) On this day of bust, in the year 1966, before me, Notary Public, personally appeared __ „-�, and ,personally known to me to be the managing general partners of Village Parinerft, a Caiifarria general partnership, said persons being personally known to roe to be the sole general partner at Village Part7ership, a California general partnership, the persons who executed the within instrument and acknowledged to me that they executed the same as a general partners of the partnership first above wwwd, that said partnership executed the same as the general partners of Village Partnership, a California general partnership, and that said last named partnership executed the same. WITNESS MY HAND AND OFFICIAL. SEAL. Notary Public for the State of California Commission Expives: C STATE OF CALIFORNIA ) )ss. COUNTY OF ORANGE ) On this _ day of August, in the year 1989, before me, the undersigned a Notary Public, personalty appeared --I personally known to me to be the person whose name is subscribed to this instrument as the Trust Officer of Seattle -First National Bank, a bank organized under the taws of the State of California and acknowledged to me that such association executed the same, WITNESS MYHAND AND OFFICIAL SEAL. Notary Public for the State of California Commission Expires: -21- Sub1. mitted to: Submitted' by: Prepared by: RIE UE F& ORry o-UN 19 ACT 10N Date Honorable Mayor and City Council Members Charles W. Thompson, City Administrators,) C, ,�" RH-86-8 3 October 22, 1986 Douglas N. La f;eiie:, Deputy City Administrator/Redev Subject: DESIGNATION OF STATE ALLOCATION FOR VILLAGE PARTNERSHIP PROJECT IV) r) Flf`IANCE Coniistent with Council Policy? Yes (j New Policy or Exception Statement of Issue, Recommendation, Analysis, Funding Source, Alternative Actions, Attachments: ree jZ STATEMENT OF ISSUE: Previously the City Council has approved and authorized the sale of bonds to finance an elderly housing project known as The Village Partnership. Pursuant to the allocation system for the Private Purpose Bond Autt-rority determined by the State of California, it is necessary for the City Council to adopt a resolution designating the use: of the State Allocation for this project. Such a resolution is attacixd for the Council's consideration. RECOMMENDATION: Approve and authorize the City Clerk to execute the .Attached resolution designating the Private Purpose: Bond Authority for not to exceed 17,700,000 for the sale of variable rate Multi-Farnily }lousing, revenue Bonds for The Village Partnership Project 1986 Series "A". ANAL PSIS: In May 1986 the City Council adopted 3n Inducement Resolution stating its in►ention to issue bonds to provide financing, for the subject prulect. Subsequently an august 18, 1986 the City Council cond—ted a I'E:FRA Clearing on this subject and at the.' conclusion of the Hearing adopted a Resolution autlerizing the sale of the bonds and the execution of the Purchase Contract by the City administrator. One step reinains tx�fore this financing may proceed. Under the Tax Reform Act of 1986, the Federal Govertirnent has established new ceilings for the dollar arnount of Private Purpose Bonds which may be sold in each state. The allocation of this authority is determined by tit: State Treasurer's Office. At its meeting of October 29, 1986. the Mortgage Bond allocation Committee (one of the Financing Authorities within the State Treasurer's AJf Tice) provided the necessary 7.7 million dol!ar allocation for Tile Village Partnership project pursuant to an a;,plication previously filed by tilt' city. An additional requirement under this year's allocation system is that tile: legislative body of the local jurisdiction selling bonds adopt a Resolution �c-ignating that tite allocation received from the Mortgage Bond Allocation Committee be used for the: specific project for which it was granted. Such a Resolution is attached for Council's consideration. E ►10 5/85 RH 86-83 October 22, 1936 Page Two The Village Partnership Project is an elderly housing project located at Springdale and Edinger and will contain 114 Units. The entitlements for this project were previously approved by the Planning Commission. The attactx--d Resolution represents the last official act necessary by the city to consummate this financing. The closing of the Bond Issue has been scheduled !or November 6 and 7, 1986. . FUNDING SOURCE: Costs paid from bond proceeds. The standard one h,,.lf of one percent City Issuance Fee will be assessed. ($38,500) ALTERNATIVES: Do not approve the attaclx=d Resolution. This will pre-empt the sale of these bonds as previously approved by the Council. ATTACHMENTS: Resolution No..r'11: . CWT/DLB/SVK:tw 0374r to elf RESOLU.'ION 140, 5722 ' RESOLUTION OF THE CITY COU14CIL OF THE CITY OF HUNTINGTON' BEACH DESIG14ATI14G ALLOCATION FOR VOT TO EXCEED Y717OO1000 PRINCIPAL A14UU14T OF VARIABLE RATE DEMAND MULTIFAMILY HOUSING REVENWE BONDS ( MERCURY SAVIN''GS A14D LOAN ASSOCIATION/ VILLAGE PARTNERSHIP PROJECT), 1986 SERIES A 1;hEREAS, the City of hunring':on Beach (rice "City') proposes to issue its City of Hunrinul:on Beach arlaule Pore Uemana !•;ultifar;ily housing Revenue hones (l,ercary Savings ana Loan Associa~ion/:'illage Parrnersn_,p ProDec-), 1986 Series A (-he "Donis"), In -tie acuregate prin'ClL-al ar,OUN- Ot �7, 700,UUU, under and UL'r.'-ijal1# -o Criap'er 7, P,:a' 5 Gt bi%,*161Utl 31 of -nt_ Californla h_al'_!1 anc. --te-.: Lose, a ar,t:nuJ _-u, , t. Orct:r -U : rovict t inan inu 'V 'Ill 1a:,e a C,a11IC.Gr:.,,a- •,t:Tt�:r-c. ; a r"Tier.`-.':.1;., Iur `.:;t: aCLU1J1': IUT2 a1.G C-Ot: r r ..C:` I.)1. id G:: -.� 1.:...^.` _ �� ..: -.:ri. Ll`_Ita1'.i11V IZ.t:T1`1:1 ell' a] rv>•'. SJrlci cafe in -:.t: ci*y; area ��l:tit'•.AS, 'Ale Cl'}' `}' taaS ar.:; aj.,l:: UVL-C 1SSLance G:. ,ne J:JT106; ar1U i.: Lk :AS, 'tit: I ax NeIUI I: AC" ui 1 �'CG :,a: 1i;:1tU.`.=ea Vu - -I.c rCStric`.ions uuun 'nt i5;s 1utict: Ut uciriu!S ! .Jcr. as `tie bona_ ar:C: :;uct; re:;`r1C-luny are Lie1nG .ti ':itr Sta"t ut Caliturrila utra--r the provisions ut a ProciamaG iui. L' ,lie L•UVernur UI `i,e Sta'e of California aa-ea 31U, 1966 (-l�r 'rUC1Cita-lOn") anc hHEREAS, paragraph 6(u) of tree Proclniriation requires that the City prior to the issuance of the Bonos specifically designate to the Bonds a portion of the Private Activity Bond Limit (as such, term is defined in the Proclamation) available or expected to be available to the City; U014, THEREFORE, bE IT RESOLVED by the City Council of the City of Huntington Beach that the City hereby designates to the Bones the Prlvc':e hctiviry bond :..lr,iit avallaGie or expec`ea ro be availlaole ro me City in 1966, succi designa-ion *o Decome irrevocable upon the issuance of stye bungs -o the ex~enr of me amount thereof. Trils resolution shall `c,.e effect fram ano after its aoopFion. PASSED AND ADOPTED by '-tie C1 .f Cuuncl _ of r.e Cl . of hunriny, on inCncn, Cali%Urnia, a': a recular r,e<` InC ":iNreuf nela on me ?ra aa.f Of t.uveruer, 19GE�, c. �i�r follo�inti �fv`e: /r. G_ �� tom'-��-��• C1',: Catr>: r.E.`.' :,►1*::D A11.:) hri'i?0VE:j 2. - Res. No. 5722 01ATE 'OF FORMA ) COUNTY or,. ORAME CITY OF EMINGTON BEACH ) 1,ALICIA H. WENIVORTH, the duly elected, qualified City Clerk of the City of Huntington beach, and ex-officio Cleri: of the City C04cil of baid City, do hereby certify that the whole ntzrber cf members of the. City Council of the Cite of Huntington beach is sever; that the foregoing resolution wa6 passed and adopted by the affirmative vote of more than a majcrity of all the meters of said City Council at a rIe. lar meeting thereof held or. the 11:d day of November 1936 _, by the fofloving vote: AYES: Councilmen: Kelly, MacAllister, Finley, tiandic, Bailev, Green, Thomas NOES: Councilmen: "lone ABSEhri' : Counc i ? men : City C1e.-K and ex-cfficic C:er:. of the City Council of the C: t % cf Huntingtor, beach, California The fcrc,prig instrument is a correct copy of the original on We in this office. n�,,��LL +�tteSt ......../!!O.v.._.y........_..............i�..v.... AUCin M. YVOTWORTH City C!er� a-7,d b-cfflcio C!4,,ik of the City t'ounci if the City of Fluiitin,,ton Duch, Cal. By........... DEputy �_tr': •if.'. rC: 1�:..,5� �,+,.r'I:Sr^ f'•'S C! Lj+ �`.C��1: ' � �''i.t�� hat0ct5't1 Grcrer of the super.or CCU, tar-ge CCIuA11. California, ►lumCer A•6214 dalsd 29 Sep• ben, 1961 ono A•;A631, C!91:a 11 June, 1963 STATE OF CALIFORNIA County of Grange ..a.4 kal" •*won," C*vwdld ..a+ to P►cs cow~ wwn I am a CiIiien of the United States and a resident of the County aforesaid; 1 am ovor the agc of eighteen years, and not a'party to or interested in the below entitled matter. I am a principal clerk of the Orange Coast 'DAILY PILOT, with which is combined the NEWS -PRESS, a newspaper of general circaflation. printed and published in the City of Costa Mesa, County of Orange. State of California, and that a Notice of PUBLIC HEARING of which copy attached hereto is a true and complete copy, was printed and published in the Costa Mosa. Newport Beach, Huntington Beach, Fountain Valley, Irvine, the South Coast communities and Laguna Beach issues of said newspaper for O Tr E TIME consecutive weeks to wit the issues) of August 5 6 19B 198 . 19s I declare, under penalty of perjury, that the foregoing is true and correct. Ez6cuted on ._ August 5 egg 6 r at Costa Mesa, California. � � J f` ';signature N PEWC NOTICE' NOTICE Of - . PUBLIC HaG.l a . CITY OF , . HUNTMTOd BEACH VAMADLE RATE DEMAM man FOULLY HOMMIG REIMME IlOtiDti (ME14CURY SAVtNOta AND LOAN ASSOCIAT1010 VILL tOE PAATi1E1 Ar s PROJECT) . NOTICE .18 HEREBY GIVEN that on Auguo 18, 108, at the hc%w o1 7:30 ritas ADM as poss"A% Chambero, . N UWA Strut, _ Hunt - Eton 066ch, Caoornta, 92ma, the City Council of the"of H B.WA wti( t,o(d a pubic on the prcresod lsxAm* of the Clty1 variable Rat* Do. Rra Sondds (llaraay Sar"s and Lawn Ancoo- loct)1966a Ser*s A i Pcoe teuL 19 f1 Series A in the ygmgsla snuw"t nol to as - cooed 61.700.000.- Said bonds rslat�r+atttfrrrrtppo the h�itmit map roodomw rental proW-1 to bo owned by v11- it" Partnerstol, a CA& to►nts 0ansrat patty wrslsip, taonststiry of approximately If looted in the I. y of Nuntk►pton Beach at is1T1 s4mbVdaw All interested permns tarp' anvtisd to &MN said hoar. :inp and express their iopLNons for or sg0W tf►a . Fu�rtfFeir information may be obtairfad from Stephan KOW. Swelcr Aedorniop- mont Spf laftst • (714) 536-6542. Dtt-d: A* 29. 1986 MA ITtNOTON BEACH CITY COMM far: Akio M. artl%3 rape HI c>ort. Day Au va 0, taC6oQwt TM . J A/f, PROOF OF PU13LICATION , NOTICE OF PUBLIC HEARINQ CITY OF HUNTINGTON BEACH VARIABLE RATE DEMAND MULTIFAMILY HOUSING REVENUE BONDS (MERCURY SAVINGS AND LOAN 'ASSOC !AT ION/VILLAGE PARTNERSHIP PROJECT) NOTICE IS HEREBY GIVEN that on august 18, 1986, at the Your of 7:30 p.m. or as soon as possible, in the Council Chambers, 2000 Main Street, Hunting%on Beach, California, 92648, the City Council of the City of Huntington Beach will hold a public hearing on the proposed issuance of the City's Variable Rate Demand Multifamily Housing Revenue Bonds (Mercury Savings and Loan association/Village Partnership Project), 1986 Series A in the aggregate amount not to exceed 0,700,000. Said bonds relate to the proposed financing of a multifamily residential rental project to be owned by Village Partnership, a California general partnership, consisting of approximately lla-units located in the City of Huntington Beach at 16171 Springdale. All interested persons are invited to attend said hearing and express their opinions for or against the proposal. Further information may be obtained from Stephen Kohler, Senior redevelopment Specialist - (7I4) 536-5542. Dated: 3uly 27, 1986 HUNT I `1GTON BEACH CITY COUNCIL By: Alicia M. Wentworth City Clerk Phone (714) 536-5405 eaul) IJ jr►+A EM! &o t 1: !% d6 µ:►b• NOTICE OF PUBLIC HEARING CITY. OF 'HUNTIN GTON ' S EACH VARIABLE RATE DEMAND MULTIFAMIILY HOUSING REVENUE 13ONDS (MERCURY SAVINGS AND LOAN ASSOCIATION/VILLAGE PARTNERSHIP PROJECT) NO riCE IS HEREBY GIVEN that on August 1 a, 1986, at tree now of 7 30 p.;n, or as suoll mereafter as possible, in the Council Chamoers, 2000 Main Straat. Huntington Beacn, California. 92648. the City Council of the City of Hunt►nyton Beach will nold a public hear►ng on the proposed issuance of the C►ty'S Variable Rate Demand .Mumlam►ly Housing Revenue Bonds (Mercury Savings and Loan Asscc►aticn Village Partnar:;h►p Prefect), 1986 Series A in the aggregate a►riount not to e,iceed S7.700,000. Said pond, rotate to the proposed financing of a multifamily !ental prelect to be owned ny Village Partnersnip, a California general partnership, ccos►stung of approxur►ately 1 13•un►ts located ;in ma City of Huntington Beacn at 16171 Springdale. All ►nteresteu persuns are invited to attend said hearing and express their op,n►ons for or against the proposal. Funner inforrnat►on may be Gotainea IrGrn 5tvpri o monler. 5e:n►Gr devr;IC�rnc:nt specialist. ► Owed: August 4. 1966 r y �) • ..--____.�-----CiTY OF muriT+r•.GTCr. SEACH oily %Clezr+k (Notice: to bo puflbsnvJ riot later August 4, 1986 in a nuwbp:fl e( of gerlerrr! Cn;ulaUon ►n the CdY of Hunttng1w B eachl NOTICE OF PUBLIC HEARItO CITY OF HUNTINGTON BEACH VARIABLE RATE DEMA»*1D MULTIFAMILY HOUSING REVENUE BONDS ( ERCURY SAVINGS AND L=N ASSOCIATION/VILLAGE PARTNERSHIP PROJECT) NOTICE IS :?SRE3Y GIVEN thlat on August 13, L966, 3= the .lour C= 7:30 ?.=. cr as soon as possible, in the Council Chambers, 2000 Main a:reet, Beach, California, 92643, the City Council_ Civi of Huntinv.ton Beach will hol.'_ a p ubLie hear4na on the proucsza iss,:ance of the ::ity's Variable Rate Demand Multifar. lv Housinc Revenue Bonds (Mercuv/ Sa•.,inc:s and Loan Assoc iation,`/; lage Part.^.ership Pro*,.;c-), 1956 Series A in the agcrecate amount rct to exceed ST,700,000. Said bonds relate to the croccsed financing o: a oul_i=aZ_1y resi,'e^_isl rental project to be owned by ViLlace 3 Ca! i fc-Zia ge.neral par :d: S hi^, a: croxi.:tate' y 1:.=-uni ts Inca ted in _he City c, Hun -:inn _cn Beach 3t 617_ S^rinad'le. Al! ir.teres :ed pers%cns are _nvi zeds a _ :end said hear_ nc and express ne.r :o:•._cns :Jr cr acainst the :.ro ccsal. _ :_tha: i..::rmat.on aav ..r:,a S=e_ne:. Redevelocment Specisl:s: - (7 _Y) ; 36--5542 . ,Jatec : .7 u' v 27, 1906 BEACH C11.7117 CCUNC : L" BY: Al ;.:; -a .. Wentworth C i t Clark Phone (714) 536-:405 ✓, '' ' . NOTICE OF PUBLIC HEARI CITY OF HUNTINGTON BEACH VARIABLE RATE DEMAND MULTIFAMILY HOUSING REVENUE BONDS (HERCURY SAVINGS A►ND LOAN ASSOCIATION/VILLAGE PARTNERSHIP PROJECT) vG'?'ZZE IS H-_R173y G11;7N that on %ucust l3, 1966, at t:^.e :.our or 1:30 0.m. or as scan as cossible, in the Council Chambers, 1000 Main Street, Huntington Beach, Callf7rnla, 926113, he City Council c' the ilt'1 o. Hunting cn Beach ;.Li hold a pubLic hearing or, the proposed a �;: the 3i":'s 'Variable date oemand flu-.—a�'_L.i :?ous�^g issuance ` Revenue 3cne?s (:'!erc'�r-! Savings and Loa : Association/`. i1'_age ?artne_snio project), L936 Sar:ps n in the aggregate a.ount act _o exceed t7,700,OGO. Said bonds _elate to the proposed !inancing o� a t I. y res i'er.t i3L re::tal project to be owner: by 'Vi ll ace ?3r _:iSrS:li7, a Zailfornia general car`.nershi.0, consisting O: a� Cr^..:Cliidte�'! L;,ca ted in he L.1 ice! Or ::u ;,'(:tOn Beach 3t 16171 Spr ingda e . A? ! :f,tpr35 =et2 ar3Cf:s 3ra :Cl said hearing 3.^.^A. ..., • �r against = '-he ^roccsa:.. exorass .heir oci:�i�..s �o. ,�_ - Further inf;rmati n =a.1 be cotaine;: �'vuZ �_a_^he:. :1Cf.L? se n_ ;r Rec?velcc.;,er.t Scecialist _ (7141=3e-5=43 0 Dated: ..Tu y 4 l(36 - Bv. Al.:ia ` . 4entworth ?acne (7lY) 536-5406 RESOLUTION NO. 5700 RESOLUTION] OF THE CITY COUNCIL OF THE CITY OF HUNT INGTON.BEECH AUTHORIZING SALE OF 140T TO EXCEED �7,7001000 PRINCIPAL AMOUNT OF VARIABLE RATE DEMAND MULTIFAMILY HOUSING REVENUE BONDS (MERCURY SAVINGS A14D LOAN ASSOC IATION/VI LLAGE PliRTNERSH I P PROJECT), 1986 SERIES A, APPROVIIG RELATED DOCUMENTS AND OFFICIAL STATEM.Et.T APPROVING BOND COUNSEL AGREEME14T AI4D AUTHORI ZII4G OFFICIAL ACTIO14 WHEREAS, the City of Huntington Beach (the 'City') proposes to issue its City of Huntington Beach Variable Rate Demand Multifamily Housing Revenue Bonds (Mercury Savings and Loan Association/Village Partnership Project), 1986 Series A (the 'Bonds'), in the aggregate principal amount of $7,700,000, under and pursuant to Chapter 7, Part 6 of Division 31 of the California Health and Safety Code, as amended, in order to provide financing to Village Partnership, a California general partnership (the "Developer') for the acquisition and construction of an approximately 113-unit multifamily residential• rental pro3ect to be located at 16171 Springdale (the 'Project') in the City; and The Developer is an affiliate of The Villages West, Inc., the entity named in the City's inducement resolution no. 5661, passed and adopted on May 19, 1986; and The Bonds are to be issued under and pursuant to an Indenture of Trust (the 'Indenture'), dated as of August 11 1986, between the City and Seattle -First National Bank, as trustee (the 'Trustee'), and prior to their conversion to a fixed interest rate,. the Bonds are to be remarketed pursuant to a TENR Service and Remarketing Agreement, dated as of August 1, 1986, among the City, the Developer, Bankers Trust company and Mercury Savings and Loan I. -t Association (the 'Association"); and Pursuant to the terms of a proposed Regulatory Agreement ,{ and Declaration of 'Restrictive Covenants dated as of August 1, 1986, among the City, the Association, the Trustee and the Developer (the "Regulatory Agreement"), at least 25% of the dwelling units in the Project are required to be leased or rented to persons or families of low or moderate income (of which at least 10i are to be leased or rented to persons or families of very low income); and The proceeds of the Bonds are to be loaned to the Developer under a Loan Origination and Servicing Agreement dated as of August 11 1986, by and among the City, the Trustee, the Association and the Developer (tire 'Loan Agreement") pursuant to which the City has agreed to lend the proceeds of Lhe Bonds to the Developer to enable the Developer to finance the Project; and The obligations of the Developer under, the Loan Agreement are to oe secured in part by a letter of credit issued oy the Association; and The City Council has heretofore called and conducted a public hearing on the issuance of the Bonds as required by Section 103(k) of the Internal Revenue code of 1954, as amended; and Bancroft, Garcia & Lavell, Inc. and Bankers Trust Company, as underwriters (the "Underwriters') intend to submit an offer to pruchase the Bonds; and The City approves of salh! transactions in the public interest of the City; NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Huntington Beach as follows: hereby finds and declares that the financing of the project from the proceeds of the Bonds as herein described serves the public purposes of assisting persons and families of low and moderate income and very logy, income within the City to afford the costs of decent, safe and sanitary housing. The City Council further hereby finds and declares that this resolution is adopted pursuant to the powers granted by Part 5 of Division 31 of the California Health and Safety Code, as amended, and, in particular, Chapter 7 thereof. SECTIO14 2. Issuance and Sale of Bonds. The City Council hereby authorizes the issuance of the Bonds pursuant to and in accordance with the terms and provisions of the indenture, all of which terms and provisions are incorporated herein by reference. The Bonds are hereby authorized to be sold to :.he Underwriters, pursuant to and in accordance with the terns of an agreement (the 'Bond Purchase Agreement') :::i substantially the fora on file with the City Clerk, by and among the City, the Developer and the Underwriters. The Ci4y Administrator is hereby authorized and directed to approve the terms of and accept an offer to purchase the Bonds which is acceptable to the City Administrator, and to execute the Bond Purchase kgreem,ent for and in the name and on behalf of the City; provided that the Bonds shall be sold to the Underwriters for a price not less than.ninety-five percent (95%) of the part amount thereof. SECTION 3. Indenture. the indenture, in substantially the form presented to the City Council at this meeting, together with any additions thereto or changes therein.dcemed necessary or y advisable by the City Administrator upon the advice of bond 3. IP counsel, is hereby approved. The City administrator and the City Clerk -are hereby authorized and directed to execute and deliver the Indenture for and in the name and on behalf 'of the City. SECTION 4. Loan Agreement. The Loan Agreement, in substantially the forin presented to the City Council at this meeting, together with any additions thereto or changes therein deemed necessary or advisable by the City Administrator upon the advice of bond counsel, is hereby approved. The City Administrator and the City Clerk are hereby authorized and directed to execute and deliver the Loan Agreement for an in the name and on behalf of the City. SECTIO14 5. Regulatory Agreement. The Regulatory Agreement, in substantially the form presented to the City Council at this meeting, togetner with any additions thereto or changes therein deemed necessary or advisable by the City Administrator upon the advice of bond counsel, is nezeby approved. The City . . Administrator and the City Clergy: are hereby authorized and directed to execute and deliver to the Regulatory Agreement for and in the name and on behalf of the City. SECTIONS. Remarketing Agreement. The Remarketing Agreement, in substantially the form presented to the City Council at this meeting, together with any additions thereto or changes therein deemed necessary or advisable by the City Administrator upon the advice of bond counsel, is hereby approved. The City Administrator and the City Clerkvare herby authorized and directed to execute and deliver the Remarketing agreement for and in the name and on behalf of the City. SECTION 7. Official Statement. The final official 4. statement relating to the Bonds, to be dated as'of the 'date of the Bond Purchase Agreement, substantially in the form presented at z this meeting, is hereby approved and the City Administrator of the City is hereby authorized and directed to execute said official statement for an in the name and on behalf of the City, and to approve any additions to or changes in the form of said official statement as the City Administrator may deem necessary or advisable, such approval to be conclusively evidenced by the execution of said official statement as so added to or changed. The Underwriters are hereby authorized to distribute copies of said official statement (as :-o added to or changed) in connection with its reoffering and resale of the Bonds. Distribution by the Underwriters of the preliminary official statement relating to the Bonds is hereby, confirmed and ratified. SECTION 8. Employment of Bond Counsel. That certain agreement for bond counsel services between the City and Jones Hall Hill & White. A Professional Law Corporation, as bond counsel, is hereby approved and the City Administrator and the City Clerk are hereby authorized to execute and deliver said agreement for and in the name and on behalf of the City. SECTION 9. Official Action. All actions heretofore taken by the officers an.i agents of the city with respect to the sale and issuance of the Bonds are hereby approved, confirmed and ratified, and the Mayor, the City Clerk, the Finance Director, the city Administrator, the City Attorney )'the Principal Redevelopment Specialist, the Director of Administrative Services and any and all other officers of the City c.re hereby authorized and directed, for and in the name and on behalf of the City, to do any and all things S. and take any acid all actions relating to the execution and delivery of any and all certificates, requisitions, agreements and other documents, including but not limited to those described in the Bond Purchase Agreement, which they, or any`of them, may deem necessary or advisable in order to consummate the lawful issuance and delivery of the Bonds in accordance with the Bond Purchase Agreement, the Indenture and this resolution. Section 10. Effective Date. This resolution shall take effect from and after its adoption. PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a regular meeting thereof held on this 18th day of August , 1986. 4t4 vo. Mayor ATTEST: APPROVED AS TO FORM: la - City Clerk . City Attorney REVIEWED ' APPROVED: INIT;A"T'`EL 71 City Administrator De, y Ci 0 6. APP�J WD •- t4ninistrator Res.. 5700 X STATE OF churoRkA ) COUNTY 01', OIRAi'1GE ) s s -CM (W EMIHGTON BEACH ) I, ALICIA Me VibIVORTH, the duly elected, qualified City Clerk of file City of Huntington Beach, and ex-officio Clerk of the City Council of said City, do herel~y certify that the Whole numi.er of of the City Council of the City of Huntington beach itsseven; that the foregoing resolution war, passed and adopted by the affirmative vote of more than a majority of all the members of said City Council at a 'regular meeting thereof held or, the lath day of August lg 86 by the following vote: AYES: Councilmen: MacAllister, Finley, Me-idic, Bailey, Creen WJES: Councilmen: Thomas ABSEh? : Count i ltnen: Kelly V r City Clerk and ex-officio Clerk of the City Council of the City of Huntington beach, California Beach: RESOLUTION No. 5701 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH GIVI14G`PUBLIC APPROVAL FOR THE ISSUANCE OF BONDS FOR VILLAGE PARTNERSHIP, A CALIFORNIA GENERAL PARTNERSHIP Be it resolved by the Council of the City of Huntington WHEREAS, the City of Huntington Beach (the 'City') proposes to issue its Multifamily Housing Revenue Bonds (Mercury Savings and Loan Association/Village Partnership Project), 1986 Series A, in the aggregate principal amount of riot more than $7,700,000, and to enter into a Loan Agreement to lend the proceeds thereof to Village Partnership, a California general partnership for the purpose of financing the acquisition and improvement of an approximately 113--unit multifamily residential rental facility (the 'Project') to be located at 16171 Springdale in the City of Huntington Beach. Section 10300 of the Internal Revenue Code of 1954, as amended, requires that the City Council shall approve, after public hearing following reasonable public notice, the issuance of bonds by the City for such purpose. This Council is the applicable elected representative of the City, and it has duly called and conducted a hearing on said financing notice of which has been given in accordance with said Section 103(k), and all persons requesting to be heard have been heard. a NOW*. THEREFORE, the City Council of the City of Huntington Beach hereby finds, determines and declares that the Loan Agreement, the Project and the issuance of bonds by the city 1. in an aggregate principal amount not to exceed $717001000 for the 'a - d are hereby approved. fina"ncin-g.therefor be n PASSED AND ADOPTED by the City Council of the City of 'Huntington Beach at a regular meeting thereof held on the 18th day of August 1966. ATTEST: X City Clerk REVIEWED A14D APPROVED: City Acminist:rator mayor APPROVED AS TO FORM: V 2. LIty i%ELQLIIeY 6 1; 1 TIIA,7V-'D XIP ,%,P P 4dY,#'J� 1, ALICIA H. VEh"NORTH, the duly elected, qualified City Clerk of the City of Huntington beach, and ex-officio Clerk of the City Council'of said City, do hereby certify that the whole number of *embera of the City Council of the City of Huntington Beach is seven; that the foregoing resolution was passed and adopted by the affirmative vote of more than a majority of all the embers of said City Council at a regular meting thereof held on the 18th day of August lg 96 by the following vote: AYES: COI.Mc ilmen: MacAllister, Finley, Mandic, Bailey, Greer,. IMS: Councilmen: Thon ;3S ABSENT: Councilmen: Kelly IF ''.+`.ram-----.•' " + % �� =/S r f t�::�'�^-p"I''�/ City Clerk and ex-officio Clerk of the City Council of the City of Huntington beach, California Y L� G Zf Br //a REWE�f FOR CITY COUN ACTION RN 86-63 Date August 8, 1986 APPItOVED BY CITY COU CL, Submitted to: H000rable Mayor and City Council Members i x ..ub� - Charles W. Thompson, Cii y Administrator (' 1u ! '"'�"�"" -�'—"-- �` t`�"�'`:•• mitted by. , Prepared by: Douglas N. LaBelle, Deputy City Adrninistrator/Redev k oprnen � j C11K£ � Subject: TAX EQUITY AND FISCAL RECOVERY ACT HEARING AND APPROVAL OF DOCUMENTS FOR TAX EXEMPT FINANCING FOR 114 UNIT APARTMENTS: "THE VILLAGES" 'eS .5790 c) �- S r� Consistent with Council Policy?( Yes J New Policy or Exception / q� Statement of Issue, Recommendation, Ar►alysis, Funding Source, Alternative Fictions, Attachments: STATEMENT OF IS51.1E: On Ma}, 19, 1986, the City Council approved an induce. -Trent resolution to provide tax exempt financing; for the subject project. Since that time, staff has worked with the developer, the Underwriter, and Bo d Counsel to prepare the documents necessary to conclude this financing;. The authorizing; resolutions for this financing; area presented herewith for the. Council's consideration. RECOMMENDATION: Approve and authorize the City Clerk to cxece,te the attached resolutions which approve the provision of $7.7 million in tax exc-rapt financing; for the Villages project, authorizes the appropriate ci•y officials to execute the financ_inl, dal-trrnents (including; the Purchase Contract), and establishes a policy that this project will provide twenty-five percent of its units to lower income households. ANALYSIS: As part of the city's on -going tax vxe mpt finance program for multi-farnily housing;, "The Villages" project was induced by a resolution of the City Council or) May. 19, 1986, for a financing; nct-to-exceed $8 rnillion. Since that time, staff has worked with the developer, Bond Counsel, and the U.iderwiters to prepare the documents necessary to conclude this financing;. The resolutions that will approve these docurents and authorize the: sale of the bonds are transmitted herewith for they Council's consideration. "The Villages" project is located at the corner of Springdale and Edinger, is comprised of 114 units, and will be exclusively for senior citizens. Entitlements for the project were approved by the Planning; Commission on :April 1, 1986, and the developer anticipates that construction would commence shortly after the successful closing; of this bond issue. The issue is schf.duled to close as early, as the end of August. 'this could be the fitst multi-farnily financing; closed in the state of California under the provisions of the Tax Reform :act (as its provisions are now anticipated) and new state law that requires that the Issuer deterrnirrc if the project shall provide affordable housing; units as either: P10 Stm A) Twenty percent (20%) of the units occupied by households earning no more that seventy percent (70%) of the median income for the county, one-half (10% of project units) of which will be occupied by households earning no more than fifty percent (50%) of the median income of the county. The very low income household's income will be adjusted for household size and they shall not pay more than thirty percent (30%) of their income for rent. OR f3) Twenty-five percent (25%) of the units occupied by households earning no more than eight percent (50%) of the median income for the county, with ten percent of the units occupied by very low income households as described above. The Tax Code previously required that twenty percent (20%) of the units in a bored financed project be occupied by households at eighty percent (80`k) of median income with no adjustments for household size or percent of incorne paid for rent. Therefore, these new requirements are more stringent. Consistent with the neveloper Agreement approved with the entitlements for this project, the policy outlined in "B" above be applied to this project. It is important to note that this policy choice will need to be made on a case -by -case basis for all bond financed multi -family projects in the future. THE DOCUMENTS APPROVED HEREWITH HAVE BEEN DRAFTER TO CONFORM TO THE PROVISIONS OF THE TAX REFORM ACT AS ANTICIPA i'EI7. ANY SIGNIFICANT CHANGES IN THE FINAL VERSION OF THE ACT \ ILL AFFI.:CT CERTAIN PROVISIONS OF THESE DOCUMENTS AND MAY REQUIRE SUBSEQUENT OFFICIAL ACTION BY THI: COUNCIL. Substantial final form documents are on file with the City Clerk's office for Council review. ALTERNATIVE. ACTIONS: Do not approve the attached resolution. This will pre-empt the provision of tax exempt financing for the. proje-... FUNDING SOURCE: Costs of issuance to be paid from bond proceeds. Developer has submitted required depos&'t with city. City will receive the one-half of one percent issuance fee upon closing of the issue. ATTACHMENTS: Resolutions. CWT/DLI3/SVK:sar 0007r TO. A.Iicia 'WentuortI FROM: %City G1erk F'r 1edev- eloecialfst DATE : C August 100tn SU$J ECT : SUBSTANTIAL FINAL FORM DOCUMT»IlTS ; "THE VILLAGES" TAX EXEMPT r I NANC I N'O Attached please f ; nd sutrstant i a 1 ` i na I ! cr m documents for the subject f inanc nL, This f inarlc.in- �f I i he the subject of a City Counci I P1.1hI;c rii:�a r i n g at. thfy Cvurlci I •s reguiar adjourned meeting of .v 191,5 , E:ndt We I"6v' -4 list rho' C{:�t�;,��21 mf?f11�PTS know that :Ci3 «•:' I "e hr-, I J i ng C;+lC.o?�he., ili=h o TS':2eW them ,► c p r l c T I AS c�luitw'r� <tT 'i l i'.�! }`C t.lI C' t. �li3Tist �lTl iii(� s:+� st.,+,.nce in this ITatt.�,zf id have an t,E,n :7 do T1:)t. he.,_i?at.E t0 C.C?Tlte'rC ti� :. ... .. ,TONES HAJaL 11I1,L & VV11ITE9 A 1'ftoFlaialtlNAL LAN't'III POHATION ATTCII14*4F.YSAT 1,AW KENS ETI1I.J0NE:3 FOUR E INIIIAIWAUEHO f`Eti'I f;It AN UPEWC.;TALL.Jit. H U I T E I).A) SHARON STANTON WHITE :iA:r l�Itw*CWCU I14llf CHARLESF.ADAMS tiTEPHEN R.CASALEGG10 (4101•ri7MO %71LLIAM It. MADISON I'll ILIPNEUSON LEI: AUTOMATIVTELECOPIEN EUSrLLM.l:Ail1•.JR• MEMCRANDUM 441..*A)3,l r+7114 PAULJ. THIA M10 DWAN D. UUINT 110111:RT J. 1111.1. JORGEN L. NIELSEN OFCOUNSE1. `fRACY E. CONN ER JOHN PAULTHOMAS To: Those Persons on the Attached Distribution List From: Edsell IA. Eaay. Jr. Date. August 7, 1986 Re: $7.700,000 City of Huntington Beach, California V;lriaole Rate Demand Multifamily Housing Rcvenue Bonds (Mercury Savings and Loan Association Village Partnership Project). 1986 Series A �✓�_ Delivered to you with this memorandum are revised, and :,ubsfantially final, drafts of the Indenture. the Loan Agreement and the Regulatory Agreeme it for the captioned financing. Among other things the drafts reflect the preference of the developer to lollo,;: the 20Jo at 70% of median income standard lot low and moderate income tenants We mus! caution you quite explicitly that the tax concerns raised by proposed federal legislation still have not been resolved. We cannot give you any comfort at this time that the Bonds will be tax-exempt after September 1. 1986, and we will be discussing the implications of our position at the all -hands meeting scheduled ;o occur in Mercury's offices at 9.00 a.m. on Wednesday, August 13. 1986 We remain concerned about the advantages and disadvantages of closing this transaction prior to enactment of federal tax reform and will discuss these issues further with you at our meeting We have also received information that it is possible !nat all housing (single and multifamily) bonds will be placed under a volume cap tot housing bonds only. If that were to emerge as the Conference Committee decision. it would be extremely unlikely that we would receive any volume allocation from the State of California {which has been and remains a prerequisite to issuance of the Bonds under present California law as well as proposed Federal law). It is also possible that bond issuers such as the City will be required to take some further official action subsequent to or in connection with any "award" of volume cap At 7v Huntington. Beach, August 7, • Page 2 allocation to this financing. It such a requirement were to be imposed, the City would not be able • take sijch action• P92• I • r - ` 4 r .r a • -a i - ti f A Ile A► .. t/019.11 J#4116fME Wt) 07?5tl6 on na rt DISTRIBUTION LIST .1 :. S7,700000 . Y.. T CITY OF`HUNTINGTON BEAC:H,•CALIFORNIa VARIABLE RATE DEMANp MULTIFAMILY HOUSING` REVENUE BONDS (MERCURY SAVINGS AND:.L0AN,ASSOCIATION1 VILLAGE PARTNERSHIPP-PROJECT) 1986 SERIES A ISSUER -Mr. Stephen, V. Kohler Principal Redevelopment Specialist City of Huntington Beach 2000 Main Street Huntington Beach. California 92648 (714) 536-5511 (2 copies) BOND COUNSEL -Edsell M. Eady, Jr.. Esq. Jones Hali Hill & White A Professional Law Corporation Four Embarcadero Center. Suite 1950 San Francisco. California 94111 (415) 391-5780 Tele-opier (415) 391.5784 DEVELOPER -Mr. T. Daniel Neveau -Mr. William L. Seay Village Partnership 1810 - 14th Street Suite 207 Santa Monica. California -90404 (213) 450.6999 Mr. Neveau (213) 385.541 s Mr. Seay DEVELOPER'S'COUNSEL -Sherman L. Stacey, Esq. Law Offices of Sherman L. Stacey 1299 Ocean Avenue, Suite 330 Santa Monica. California 90401 (213) 394-1163 LENDER P?175 -Mr. Robert B. Kreeger -Ms. Lauren R. Haines -Mr. Gerard P. Berens -Jerome Zamos. Esq. Mercury Savings and Loan Association 7812 Edinger Avenue Huntington Beach. California 92647 (714) 8r2.9333 Telecopier (714) 848.9606 (714) 8,11.8398 Mr. Robert B. Kreeger ('14) 8,11.8683 Ms. Lauren R. Haines (714) 841-8243 Mr. Gerard P. Berens (714) 841.8423 Jerome Zamos. Esq. LENDER'S COUNSEL -Arnold P. Schuster. Esq. -Carol L. Johsnon. Esq. -Kirk A. Schaffer, Esq. Pettit and Martin 101 California Street 35th Floor San Francisco, California 94111 (415) 434-4000 Telecopier (415) 781.4399 or Telecopier (415) 982.4608 .00 UNDERWRITERS Mr. 'James S. Bancroft Bancroft, Garcia, 8 Lavell, Inc. 2,029 Century Park East Suite 3750 Los Angeles, California 90067 (213) � 556.8890 'Mr. Ira Goldberg Banker's Trust Company 130 Liberty .'Street 31 st Floor New York, New York 10006 (212) 775-2445 Telecopier (212) 850.1862 ,-Mr. Peter Kelly Banker's Trust Company 400 South Hope Street Los Angeles, California 90071-2888 (213) 612.8286 Telecopier (213) 612-8221 UNDERWRITER'S COUNSEL -Robert H. Baker, Esq. Jones, Day, Reavis 8 Pogue 355 South Grand Avenue Suite 3000 Los Angeles, California 90071 (213) 625-3939 Telecopier (213) 253-4439 (213) 253-41440 •Ron Rodgers, Esq. Jones, Day, Reavis & Pogue 2029 Century Park East Suite 3600 Los Angeles, California 90067 (213) 553.3939 Telecopier (213) 201.3939 -2- E TRUSTEE -Mr. David Pringle Assistant Vice President -Mr. Jesse Minkert Trust Assistant Seattle -First National Bank 1001 Fourth Avenue. Ninth Floor Seattle, Washington 98154 (206) 583-2966 (Mr. Pringle) (206) 583-7130 (Mr. Minkert) TRUSTEE'S COUNSEL -Sam Waldman, F:sq. 64 Oak Knoll Drive San Anselmo, California 94960 (415) 459-4535 RATING AGENCY -Mr. Thomas Gillis Standard & Poor's Corporation 25 Broadway New York. New York 10004 (212) 208.8000 COLLATERAL AGENT -Ms. Judith Sweet First Interstate Bank of California Trust Division 9601 Wilshire Boulevard Beverly Hills, California 90210 (213) 858.5520 Telecopier (213) 858-1446 -Mr. Robert Hainey First Interstate Bank of California Trust Division 707 Wilshire Boulevard, Ninth Floor Los Angeles, California 90017 (213) 614-4802 Telecopier (213) 614-4820 • TITLE COMPANY -Mr. 'Joseph St. John Chicago Title 1010 North Main Street Suite 510 Santa Ana. California 92701 (714) 835.6900 TENDER AGENT -Mr. John Pugliese J.-Henry Schroder Bank & Trust Company One State Street New York, NY 10015 3- r� 1E014 t4 HM r J riE.+EF,st� G7?'�.G Oft V? St, INDENTURE OF TRUST From the CITY OF HUNTINGTON BEACH, CALIFORNIA to SEATTLE-FIRST NATIONAL BANK, as Trustee Dated as of August 1, 1986 $7,700,000 CITY OF HUNTINGTON BEACH, CALIFORNIA VARIABLE RATE DEMAND MULTIFAMILY HOUSING REVENUE BONDS (MERCURY SAVINGS AND LOAN ASSOCIATION VILLAGE PARTNERSHIP PROJECT), 1986 Series A P2161.TOC TABLE OF CONTENTS Pane ARTICLE I DEFINITIONS Section101. Definitions......................................................................................................... 5 ARTICLE II THE BONDS Section 201. Authorized Amount of Bonds............................................................................. 15 Section 202. Issuance of the Bonds..................................................................................... 15 Section 203. Registration. Transfer and Exchange................................................................ 16 Section 204. Execution. Limited Obligation.......................................................................... 17 Section 205. Authentication................................................................................................... 17 Section 206. Form of the Bands............................................................................................ 18 Section 207. tilutilated, Destroyed, Lost or Stolen Bonds ...................................... ......... I...... 18 Section 208. Temporary Bonds............................................................................................ 10 Section 209. Cancellation and Destruction of Surrer.dered Bonds ...................................... 16 Section 210. Delivery of the Bonds..................................................................................... 18 Section 211. Interest on the Bonds....................................................................................... 19 Section 212. Reset of Optional Fixed Rate............................................................................. 25 Section213. Limitation ................................. ......... .............. .................. ........... ............. 28 ARTICLE III REVENUES AND FUNDS Section 301. Sources of Payment of the Bonds ............................................. ................ 29 Section 302. Creation of Funds and Accounts...................................................................... 29 Section303. initial Deposits.................................................................................................. 29 Section 304, Developer Loan Fund....................................................................................... 29 Section 305. Cost of Issuance Fund................................................................................ 30 Section 3,06. Application of Revenues.................................................................................. 31 Section 307. Debt Service Fund........................................................................................... 31 Section 307.A. Reserve Acr:oUflt...................................................................... .................... 32 Section 311'8. General Fund.................................................................................................. 32 Section 309. Letter of Credit: Drawings Under the Letter of Credi! ..................... Section 310. Final Balances................................................................................................... 34 Section 311. Security of Funds .... .......................................................................................... 34 Section 312. Non -Presentment ofBonds............................................................................... 34 Section 313. Moneys to Be Held in Trust............................................................................ 34 Section 314. Tender Payments: Tender Payments Fund ........................................................ 34 Section 315. Rights of Set Off: Equal Security...................................................................... 35 0 Pau ARTICLE IV REVENUES AND APPLICATION THEREOF Section 401. Revenues to Be Paid Over to the Trustee .............................................. ......... 36 Section 402. Payments of Principal. Premium and Interest ..................................................... 36 Section 403. Revenues to 8e Held For All Bondholders: Certain Exceptions ........................ 36 ARTICLE V INVESTIAENT OF t; ONEYS Section 501. Investment of Moneys ..................................................................................... 37 Section 502. Earnings and Losses.......................................................................................... 38 Section 503. Investment Yield Limitations.............................................................................. 38 Section 504. Rebate of Excess Investment Earnings to the United States ............................. 40 Section 505. Investments. Arbitrage: Special Arbitrage Restriction— ...................................... 41 ARTICLE VI REDEMPTION OF BONDS BEFORE MATURITY Section601, Redemption ................................... ............................................................ 42 Section 602. Mandatory Redemption..,.,.,.. ................ .. ... .................... ........................... 42 Section 603, Optional Redemption.. .................... ...... ............................... 43 Section 60-1. Authorization to Trustee ............. .......... 44 Section 605, Partial Redemption...................................................... .................... 44 Section 606. Notice of Redemption................................................................................... 4.2 Section 607. Payment Upon Redemption .. .... ........ .......................... 45 Section 608, Effect of Redemption ................ ........................... ......... ......... 45 ARTICLE VII PAY41-ENT. FURTHER ASSURANCES Section 001. Payment of Principal or Redemption Price of, and Interest on. the Bonds....... .......................................... ....... ... ..... ................ 46 Section 702. Designation of Additional Paying Agents.......................................................... 46 Section 703, Further Assurance .............................................................. .......................... 46 Section 704. Immunities and Limitation. of Responsibilities of the Issuer ............................... 46 Section705. Statements ............I ... ......... .................. ......... .......... ... ...... ........ I .... ....... I.... 46 Section706. List of the Owners,........................................................................................... 47 Section 707. Use of Proceeds.............................................................................................. 47 Section 708. Accounting Records and Report...................................................................... 47 Section 709. Rights Under the Developer Loan Documents and the Collateral PledgeAgreement............................................................................. 47 Section 710. Possession and Inwect►on of the Developer Loan Documrnts and the Collateral Pledge Agreement ...... ... ....... ............................. I.... 48 Section 711. Rights Under the Regulatory Agreement.... .......................... .............. I .............. 48 Section 712. Determination of Taxability: Notice................................................................... 48 Section 713. Notice to Rating Agent................................................................................... 48 Section 714. Release of Collateral--- _.............................................................. 48 • • • E,Me, ARTICLE Vill DEFAULT PROVISIONS AND REMEDIES OF THE TRUSTEE AND THE OWNERS Section 801. Defaults. Events of Default.................................................................I............... 49 Section802. Accelerat►on ...... ............................................................................................. 49 Section 603 Remedies; Rights of the Owners...................................................................... 50 Section 604. Right of the Owners to Direct Proceedings....................................................... 51 Section 805. Appl►cat►on of Moneys ...... ........ ........ ............................ ........... .I ........................ 51 Section 806. Remedies Vested in the Trustee ................................................................... 51 Section 807. Limitation on Rights and Remedies of the Owners ............................................ 51 Section 808. Termination of Proceedings .............................................................................. 52 Section 809, Waivers of Events of Default............................................................................. 52 Section810. Limitation ........................................................................................................... 52 ARTICLE IY. THE TRUSTEE Section 901. Acceptance of the Trust .................. ....... ... ....... ....... ............... .,...... ........... 53 Section 902. Corporate Trustee Required, Elig►o►hty ............................. ............. I.... 55 Section 903. Compensation of Trustee ..................... .... .............. .I.... ... ........... ....... 55 Section 90". Notice to the Owners If Default Occurs .......... .......... 55 Section 905. intervention by the Trustee ...................... .................... ...I., ........ ............. 56 Sect►cn 906. Successor Trustee......................................................................................... 56 Section 907. Resignation by the Trustee ............. I....... ............ .,...................... ...... ............ 56 Sec,;on 908. Removal of the Trustee .......................................................... . ............ 56 Sec;;;,n 909. Appointment of Successor Trustee .. ..... 56 Section 910. Con.ern,ng Any Successor Trustee ..................... .......... 56 Section 911. Designation and Succession of the Paying Agent. Agreement With the Paying .Agent . ............. .I..... ...... _................. .,............. 57 Section 912. Appointment of Co -Trustee ........................................................................ 57 Section 913. Trustee Protected in ROy►ng Upon Resolution. Etc ....................................... 58 Section 914. Successor Trustee as the Trustee of the Funds and Accounts. Paying Agent and Bond Registrar .... .......... ....................... ... 58 Section 915. Survival of Rights; Indemrnf►caticn............ ............................... .... . .... 58 Section 916. Remarketing Agent .................. ............................ .................... .......... ... , .... 58 ARTICLE Y. SUPPLEMENTAL INDENTURES Section 1001 Supplemental Indentures Not Requiring Consent of the Owners ...................... 59 Section 1002. Supplemental Indentures Requiring Consent of the Owners ............................ 59 Section 1003. Consents to Supplemental Indentures............................................................ 60 am Pam ARTICLE XI PURCHASE AND PLACEMENT OF BONDS Section 1101. Purchase of Bonds at Option of Owners and on Conversion Date.................................................................................................. 62 Section 1102. Remarketing of Bonds: Purchase of Bonds .................................................... 63 Section 1103. Funding by Ine Association............................................................................. 64 Section 1104, Default by the Association.............................................................1.................. 64 Section 1105. Tender Payments.......................................................................................... 64 Section 1106. Remarketing Proceeds.................................................................................... 64 Section 1107. Protection of Owners...................................................................................... 64 Section 1108. Delivery of Bonds............................................................................................ 65 Section 1109. Trustee's Agent............................................................................................... 65 Section 1109. Redemptions by Association,, Cancellation ....................................................... 66 Section1111. Repayments.. , ..... .......... ................................ ...................... .......................... 66 Section 1112. Replacement Bonds...................................................................................... 66 ARTICLE Xli AMENDMENT OF THE DEVELOPER LOAN DOCUMENTS OR THE COLLATERAL PLEDGE AGREEMENT Section 1201. Amendments, Etc.. to the Developer Loan Documents or the Collateral Pledge Agreernent Not Requiring Consent of theOwners ................................. ,............... .................... ...... 67 Section 1202. Amendments. Etc., to the Developer Loan Documents or the Collateral Pledge Agreement Requiring Consent of the Owners...................................................................................... 6 Section 1203, Required Opinion of Bond Counsel ....... ............. .... ......... 68 ARTICLE xtu DEFEASANCE Section 1301, Defeasance...................................................................................... 69 AR rICLE XIV MISCELLANEOUS Section 1401. Consents. Etc., of the Owners— .................................................... .... 71 Section 1402. Limitation of Rights....................................................................................... 71 Section1403. Severability..................................................................................................... 71 Section1404. Nor:ces...................... ...1......I........ ,............................................................... 71 Section 1405. Payments Due on Other Than a Business Day ................................................ 73 Section 1406. Counterparts............................................................................................... 73 Section1407. Applicable Law........................................................................... .................. 73 Section1,08. Captions........................................................................................................... 73 Section 1409. Calculation of Interest.....................................,................................................. 73 Section 1410. Compliance Certificates and Opinions.............................................................. 73 Section 1411. Conflict With Trust Indenture Act of 1939........................................................ 73 Y�i; r 0 INDENTURE OF TRUST This INDENTURE OF TRUST (the "Indenture"), dated as of August 1. 1986. City of Huntington Beach, California, a municipal corporation and charter city duly organized and existing under the laws of the State of California (the "Issuer"). and Seattle -First National Bank, a national banking association organi,zed under the laws of the United States of America (together with any successor trustee sernng as such pursuant to this Indenture and any separate or co -trustee serving as such hereunder, the "Trustee"). WITNESSE T H THAT: WHEREAS, the Issuer is authorr.ed pursuant to Chapter 7 of Part 5 of Division 31 of the Heath and Safety Code of the State of California, as amended (the "Act"), to finance the construction or development of multifamily rental housing and the provision of capital improvements in connection therewith through the issuance of tar -exempt bonds; and WHEREAS, the Issuer has heretofore deterrninad to adopt and implement a multifamily housing program (the "Program") under which the Issuer will make a loan (the 'Developer Loan") to V01age Partnership, a California general partnership (the "Developer"), to provide frriancrng for a rnultrfarr:ly residential rental development (the "Project") located within the Crty to be occupied partially (at least 20*0 by persons of low or moderate income within the meaning of Section 103(b)(121(C) of the Internal Revenue Code of 1954 (the "Coda"). as amended. and partially (at least l W ra) by ,ersons of very low income within the meaning of the Act; and WHEREAS, the Issuer desires to issue. sell and deliver its Varrabip Rate Demand M1.1itrlarTIrly Housing Revenue Bonds (Mercury Savings and Loan Association Village Partner,hip Project). 1986 Series A (the "Bonds") in the aggregate principal amount hereinafter set forth to obtain moneys to carry out thc: Program and to pay the costs of issuing the Bonds and financing r�xpenses. all under and in accordance with the Constitution and lasts of the Stale of California, rnciudifig the Act, and WHEREAS. the City Council of the Issuer Iihe "City Council" i has expressly determiner] and hereby confirms that the issuance of the Bonds and the implementation nf the Program will accomplish a valid public purpose of the issuer by assrs:rnq persons of low. and rnorr;*ate income in obtaining decent, sa!e and sanitary housing: and WHEREAS, in order to rrnplernent the Program, the Issuer has heretofore entered into a Loan Origination and Servicing Agreement, dated as of even date hotowrth wilti t.1r..ircu►y Savings and Loan Association, a State chartered savings and loan association (tiro "Assocililmri- ), the Developer and the Trustee (the "Loan Agreement") pursuant to whrrh the Issuer has agreed to make, and the Developer has agreed to accept, the Developer Loan to he originated by the Association pursuant to the Loan Agreement to provide financing for the Prcloct, and in connection with such loan, and in accordance with the Letter of Credit and Reariburserriont Agreement (Ihr. "Re-inbursemtrnt Agreement"), dated as of even date herewith among the Developer. the Trumee and the Association. the Association has agreed to deliver to the Trustee for the benefit of the owners of the Bonds a direct pay letter of credit (the "Letter of Credit") further secured by a collateral pledge agreement Ithe "Collateral Pledge Agreement"), dated as of the Delivery Date by and among the Iss► vi. the Trustee, the Association and First Interstate: Bank of Carfor-nra as rullaler,al Agent, provrdf,d by the Association to the Trustee; and WHEREAS, the execution and delivery of this Indenture and the issuance and safe of the Bondr, have been in all respects duly and validly authorized by Resolution No. duly adopted by the Issuer on August 18, 1986. and WHEREAS, the execution anti delivery of the Bonds and of this Indenture have been duly authorized an:' z!!I things necessary to rnake the Bonds, when executed by the Issuer and authenticated and detrvered by the Trustee, duly issued, binding ano valid limited obligation;, anti to constitute this Indenture a valid assignment of the amount pledged to the payment of the principal of, and preMIUM, if any, and interest on, the Bonds. have been done and performed, and the creation. execution and delivery of this Indenture. subject to the terms hereof, in a11 respects have been duly authorized by the Issuer: NOW THEREFORE, this Indenture witnesseth that the Issuer, in consideration of the premises, the acceptance by the Trustee of the trust hereby created. the purchase and acceptance of the Bonds by the purchasers thereof and delivery of these presents and other good and va'uable consideration, the receipt of which is hereby acknowledged, and in order to secure the payment of the principal of, and premium. if any, and interest on, all Bonds outstanding hereunder from time to time, according to their tenor and effect, and the observance and performance by the Issuer of all the covenants expressed or implied herein and in the Bonds. does hereby pledge and assign unto the Trustee. and unto its successors and assigns forever and does hereby grant to it and thern a security interest in: GRANTING CLAUSE FIRST All right. title and interest of the Issuer in, to and under the Developer Loan, the Developer Note. the Developer Mortgage. the Developer Loan Documents and the Letter of Credit (each as hereinafter defined), including all extensions and renewals of the terra thereof, if any, and the Collateral Pledge Agreement, except the Issuer's rights under any of said documents to indemnifications and nonce, including but without Grz:ting the generality of the foregoing, the p►esent ac.d continuing right to receive, receipt for. collect or malke claim for any of the moneys, income. revenues issues. profits and other amounts payable or receriable under or in connection with the Developer Loan, whether payable under the Developer Loan Documents, including the Developer Note, the Developer Vortgage, the Letter of Credit, the Collateral Pledge Agreement or otner ise. to bring actions and proceedings thereunder or for the enforcement thereof, and to do any and all things which the Issuer or any other person on behalf of the Issuer r5 or may become entitled to do under the Developer Loan Cocuments or the CoMleral Pledge Agreement: GRANTING CLAUSE SECOND All right, tale arid interest of the issuer in and to all payments to be received 7y. or on behalf of. the Iss,.jer from or ,n connection with thtr Developer Loan, the Developer Loan Documents, tho Letter of Credit and the Collateral Pledgf- Agre(,,$rnt-;nt together with all other Revenues (as hereinafter defined), and ali moneys, obligations and securities which may from lime to ;7n)e hereafter he conveyed. assigned. hypothecated, endorsed, pledged, mortgaged. granted or delivafpd to, or held by. the Trustee in any Fund or Account (Loth as hereinafter defined) establrshgd pursuant to the teems of this Indenture. together with investment earnings thereon; but excluding Mi proceeds of the sale of the Bonds required to be deposited into the Developer Loan Fund##, including investment earnings thereon##, unless the Association defaults under the Letter of Credit or the Collateral Pledge Agreement, #if (b) moneys held by the Trustee for the purchase of Bonds- required to be purchased by the Trustee and (c) moneys hold by the Tru ,tee in the Excess Investment Eamings Fund (as hereinafter defined); and GRfiNTING CLAUSE THIRD Any and all other property of any name and nature from time to time hereafter by delivery or by writing of any kind pledged or assigned as and for additional security hereunder, by ;he Issuer or by anyone on. its behalf or with its written consent. to the "trustee, which is hereby authorized to receive any and all such properly at any and all times and to hold and apply the same subject to the terms hereof. TO HAVE AND TO HOLD all and singular the Trust Estate; whether now owned or hereafter acquired unto the Trustee and its respective successors in said trust and assigns forever. IN TRUST NEVERTHELESS, upon the terms and trusts herein set forth for the equal and ratable benefit, security and protection of all present and future Owners of the Bonds, (torn time to time issued under and secured by this Indenture, without privilege, priority or distinction as to lien or otherwise of any of the Bonds over any of the other Bonds, except as herein provided, and for the benefit of the Association as its interests may appear. PROVIDED. HOWEVER. that if the Issuer, its successors or assigns, shall vmlf and truly pay. or cause to be paid, the principal of the Bonds and ftre interest and premium. if any, due or to becorne due thereon, at the times and in the manner rnentior,ed in the Bonds, according to the true intent and meaning thereof. and shall cause the payments to be made into tha Debt Service Fund (as hereinafter defined) as required hereunder or shall provide. as permitted by Article XIII hereof. for the payment thereof, and shall well and truly keep, perform and observe all the covenants and conditions pursuant to the terms of this Indenture to be kept, performed and observed by it, and shall pay or cause to be paid to the Trustee and all Paying Agents (as hereinafter defined) all sums of money dun or to become due to there in accordance wan the terms and provisions hereof, then, upon such payment and performance. the Indenture and the rights hereby granted shall cease. determine and be Vold: otherwise this Indenture to be and remain in full fc:,ce and effect. THIS INDENTURE OF TRUST FURTHER WITNESSETH, and it is evpress;y declared. that all Bonds issued and secured hereunder are to be issued, authenticated and delivered and the Revenues hereby a:,::;ned and pledged are to be dealt with and di5nosed of under, upon and subject to the terms, cond!tions. stipulations covenants, agre(yrnents. trusts, uses and purposes as hereafter expressed. and the Issuer has agreed and covenanter, and does hereoy agree and .ovenani. with the Trustee and with the respectl�oe Owners frorn 101e tc, writs of the Bonds. as follows •a- ARTICLE I DEFINITIONS Section 101, Definitions. (a) For all purposes of this Indenture except as otherwise expressly provided or unless the context otherwise requires. (1) This "Indenture" means this instrument as originally executed and as it may from tirne to time be supplemented or amended by one or more indenture,-, supplernenti.1 hereto entered into pursuant to the applicable provisions hereof. (2) All references in this Indenture to designated "Articles". "Sections" and other subdivisions are to the designated Articles. Sections and other subdivisions of this Indenture. The words "herein". "hereof", "hereto". "hereby" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision (3) The terms defined in this Article ha,re the meanings assigned to them in this Article and include the plural as well as the singular. (a) All accountrno terms not otherwise defined herein have the meanings assigned to them :n accordance with generally accepted accounting principles as in effect from time to time-, (5) Ever; 'request". "order". 'demand' , 'application". 'appointment". 'nonce". 'statement". "certificate". "consent". or similar action hereunder by the Issuer shall, unless the form thereof is specifically provided, be in writing signed by a dwy authorized officer or agent of the 'ssuer_ (6) A reference to any gender shall be deemed to include one or more other genders. if appropriate. (b) for all purposes of this Indenture, except as otherv.-isey expressly provided or unless the context otherwise requires "Acceleration Default" means an Event of Default under the Regulatory Agreement causing the Trustee to take the action set forth in Section 16(dr of the Regulatory Agreement. "Account" means any one or more of the separate special trust accounts created in Article III hereof. "Act" means Chapter 7 of Part 5 of Division 31 of the Health and Safety Code of the State of California, as amended "Act of Bankruptcy" means the filing of a petition in bankruptcy (or other commencerrent of a bankruptcy or similar proceeding) by or against the Dervoloper or any general partner of the Developer under any applicable bankruptcy, insolvency or similar law as now or hereafter in effect. . "Act of Bankruptcy of Association" means that the Association has become rnso+vent or has failed to pay its debts generally as such debts become due or has admitted in writing its inability to pay any of its indebtedness or has consented to or has petut►oned or applied to any authority for the appointment of a receiver, liquidator, trustee or similar official for itself or for all or any substantial part of its properties or assets or that any such trustee, receiver, liquidator or similar official has been appointed or that insolvency, reorganization, arrangement or liquidation proceedings (or similar proceedings) ha.,e been ,nstrtuted by or against mo Association. •5- "Alternate Credit Facility" means a credit facility other than the Letter of Credit delivered to the Trustee pursuant to Section 5.8 of the Loan Agreement. including but not limited I() an insurance policy, which complies with the requirements of said section. "Alternate Credct F,;- Arty" shall be deemed to include any collateral or other agreements with respect thereto which may required for the satisfaction of all applicable requirements of said Section 5.8. as provided therein. "Appraisal Withhold Account" means the Account in the Developer Loan Fund by that name created by Section 302 herecif. "Association" means. as the context may require. Mercury Savings and Loan Association. a State chartered savings and loan association, as Issuer of the Letter of Credit. or as the issuer of any replacement letter of credit or Alternate Credit Facility as provided in Section 5.8 of the Loan Agrcvment. or as servicer of the Developer Loan under the Loan Agreement. or any successor as servrcer of the Developer Loan. or as pledger of collateral under the Collateral Pledge Agreement. "Bond" or "Bonds" means any one or more of the bonds authorized. authenticated and dei�vered under this Indenture. "Bond Counsel" means an attorney at la�v or a fain of attorneys at lavr of natrunally recognized standing in mat!srs pertaining to the tax-exempt nature of interest on bonds issued by states and their political subdivisions acceptable to the Issuer and the Trustee and duly admitted to the practice of law; beforo the highest court of any state of the United States of America or the District of Columbia "Bond Register" means the registration books required to be marnta-ned pursuant to Section 203 hereof. "BTC" means Bankers Trust Company, New York, New Yor.;. "Business Day" means a day which r5 not a Saturday or a SLrndal, or a bartir, ho!rday under the laws of the Unrtea States or the States of California. Washington or New Yo,L. "Code" mrtans they Internal Revenue Code of 1954. aE ilmended, toopther with Corresponding and applicable final, temporary or proposed regulations and revenue ru'rngs issued or amended with respect thereto by t'ie Treasury Department or Internal Revenrle Service of me United Slates All references herein to sections. paragraphs or other subdivisions of the Code or they regulations promulgated thereunder shall be deemed to be references lu - orfelatrve t)rov+sions of any successor code or regulations promulgated thereunder. "Collateral" shall have the same meaning specified in the r ollatefal Pledge Ag,eement, "Collateral Agent" means the Collateral Agent dw;ignated under the Collateral Pledge; Agreement. "Collateral funds" means proceeds of the Collateral nerrved from a liquidation of the Collateral pursuant to the Collateral Pledge Agreement. "Collateral Pledge Agreement" means the collatera' pledge agreement dated as of even date herewith by and among the Issuer, the Trustee, the Association and First Interstate Bank of California as Collateral Agent whereunder the Association secures its payments under the Letter of Credit through the pledge of certain collateral. "Commission" means the Securities and Exchange Commission. .5. "Completion Certificate" means the certificate of completion of the Project required to be delivered by the Developer to the Issuer. the Association and the Truster pursuant to the Regulatory Agreement "Construction Term" Means the aerjod pric• I,- the date the conditions to conversion to the Permanent Term as set forth to AW the Dtsbursernent Agreement are satisfied. "Completion Date" means the oate of the completion of the acquisit►oti. construction and equipping of the Protect, as that date shall be ceart;f►ed as prov►d�1,d in the Regulatory Agreement "Construction Interest Payment Account" means the Account in the Developer loan Fund by that name created by Section 302 hereof. "Conversion Date" means the date on -which interest on the Bonds is converted to the Optional Fixed Rate, "Conversion Period" means the I;e►iod (11h►ch shall not ire longer than ten (10) days► specrf-ed by the Developer (in accordance vmh the? procedures described to Section 211.C.(1)j as the period during which the Developer desires to concert the rate of interest on the Bonds to the Optional Fixea Rate. "Cost of Issuance Fund" mean; the Fun0 by that narne creaf—i by Section 302 hereof. "Costs of the Project" means all c,)st5 incurred by the Issue► or the Deveioper with respect to the acquisition. construction. purchase. reconstruction an-1 equi,^.o-ng, as iht� case may be. of they Project, including, without limitation. the acquisition of property. the construction. purcha5e. reConstrucl►on and equtptarng of housing, related facilities an(t rmpru.,ert)�Lints. and all other worn in connection therewi*,h. anti all casts of frnancinq. ►ncludinq, without trnrtaticn, the cult of Consultant accounting arid legal services. other evpenses neceS5ary or rncidont to dPte'rrn ninq the.' Ieasrbd+ty of the Project, administrative and other expenses necessary or ,nc,iririt to the Project and the financing thereof and interest a,.crued Gunn(; construction of the il►o:ect "Co -Transfer Agent", "Transfer Agent" ano "Tender Agent" mean the person or persons appointed as such in Section 1109 hereof. "Counsel" means an amornay at lao or ;a Rift of attornl�ys at law (who may be an ernplcyee of, or counsel to, the, Issuer. the Assectation, the Developer or the TrusiPtP) duly adrnitted to the oracttce of law t}(?fore the highest court of any slate of the United States of America or the District of Columba "Debt Service" means the scheduled atnnunt of interest and amortization of principal payable during the period of cornputat►on on the Bonds (escludinq for purposes of such computation any additrunai interest payable pursuant to Section 211.G ►. "Debt Service Fund" means the Fund by that name created Uy Section 302 hereof. "Delivery Date" rneans August 29. 1986 the date of delivery of the Bonds to the tr►tial purchaser or purchasers thereof in accordance with Sector 210 her(eot. "Delivery Office" means the address of the Tend►fir Agent established pursuant to Section 1109 hereof. "Designated Purchaje Date" has the meaning set forth to Sect►o:t t 101(a) of this Indenture. "Determination of Taxability" means the enactment of applicable leg!slattort, or a judgment or order of a court of original or appellate jurisdiction. or a final ruling or decision of the Internal Revenue .7- Service, in either case Io the effect that the Interest on the Bonds (other than interest on any Bond for any period during which such Bond 1s held by a "substantial user" of any facility financed with the procc-eds of the Bonds or a "related person", as such terms are used in Section 103(b) of tha Co,�!e) Is includable for federal Income tax purposes in the gross Incomws, of all recipients thereof subject to federal income taxes or the filing with the Trustee of an opincen by Bond Counsel to such offect A jud:.ment or order of a court of original lurlsd+ctlon or a ruling or decision of the Internal Revenue Service shalt be considered `trial only If no appeal or action for judicial review has been flied and the time tot filing such appeal or action has expired. "Determination of Unenlorceability" means in, jUdgrrmm or order of a court (if original or appellate jurisdiction to the effect that the Letter ct Credit Is unenforceabie or any payment thereunder Is to be withheld, enjoined, restricted, restrained or pronlbiled. "Developer" means Village Partnership, a California general par'rersh.p. "Developer Loan" means the loan secured by deed of trust to be originated by the Assoclat;ofl on behalf of the Issuer to the Developer to provide financing for the Project. "Developer Loan Documents" means the ## Regulatory Agreement, the Loan Agreement, the Developer Note, the; Ce!tlflcate of Continuing Proqrarn Compliance, the Develope- tAorigage. the Dlsburseme.-t Agreement, the Reimbursement Agreement and any other documents or agreements which may be required by the Issuer or the Association In connection with the De veloppr Loan. tut excluding lhc, werti'•icate of Continuing PrograrT* Compliance as of any tithe prior to v.-hen Such certificate 1s required. "Developer Loan Fund" means the Fund by that name In Section ?J2 hereof. "Developer Mortgage" mr-ans the Deed of T►ust with Assignment of Rents and S► l:ur-;y Agreement with t=lfture -:',ng granting a rnortgarle on and security interf.sf In. the land. buildings and equipment comprising the Project. In substantially the form required by the Lowi Agreement, made from the Developer to a trustee for the benefit of the Trustee and the Asscciahon as co -beneficiaries, securing the repayment of the De'1eflUj)F?r Loan and the obtlgations of the Developer Jnder the Reimbursement Agreement, the Loan Agreement, thp Disbursement Agreement, the Regulatory Agreement. and other acreernents rrjialed to rile Ptolect anti the financing thefeot. "Developer Note" means the n,te executed by thr� Developer pursuant to the Loan Agrc-lE�rtterit "Disbursement Account" means the rr# Ar.r,ount 1n the Developer Lckin Fund by that narTI.� created by Section 302 hereof. "Disbursement Agreement" means the Project Disbursement Agreement between the Assoctat►on and the Developer, as referred to it,. thf� Lean Ag•genient and pursuant to which moneys In the Developer Loan Fund will be clisbursed to the Developer "Eligible Funds" moans any of the followit.g: (1) Seasonc-ci Funds, (1i) proceeds of the issuance of the Bc+xfs or investment earnings on such proceeds. (in) proceeds of any draw under the Lotter of Credit or any investment earnings on such FxoceMs and (iv) Collateral Fur►Js and any investment earnings on Collateral Funds. "Event of Default" means an event specified In Section 801 hereof, provided, that for all purposes relating to this Indenture no Event of Default shall be deemed to have occurred or to exist except as provided In Section 601. "Excess Investment Earnings" shall have the meaning ascribed to such term in Section 504 hereof. M "Excess Invostrrtent Earnings Fund" moans the Fund by that name in Srr„tion 504 hereof. "Fixed Rate Bond" means any Bond issued or after the Conversion Date, each such Bond Inaenture for use on or after the ConverFion Date, authenticated and delivered under this Indenture on being required to be in the form set forth in the - "Fixing Date" when used with reference to the Conversion Date, means the date on which the Optional Fixed Rate. ;o become effective as of such Conversion Date. is required to be fixed by the Remarketing 1-gent aursuant to the Remarketing Agreement. "Fund" means any one of the separate special trust funds created in Sections 302 or 504 hereof. "General Fund" means the Fund by that name created in Sec!►on 302 here,,)f. "Government Obligations" means direct, general obligations of the United States of America, or any obligations unconditionally guaranteed as to the payment of principal and interest by the full faith and credit of the United States of America; provided. hovweve►. that the term "Government Obligations" shalt net include those obligations having a maturity of one year or greater which do not pay interest per►od►cal!y. "Gross Proceeds" shall mean the sure of the following amounts (►) or►g►nil proceeds. being the amounts received by the Issuer or held by the 1 rustee as p►oceeas of the original issuance of the Bonds (after payment of all expenses of issuing the Bonds): ho mvpstment proceeds. being amounts received at any time by the Issuer, the Association. the Ds?veioper or the TruStpe. such as interest and dividends. resulting from the investment of proceeds of the Bonds. including profits and less lasses received on such investments. (m) amounts. other than original proceeds and investment proceeds. held ,r. any fund or account (including the Reserve Account) and reasonably expected to be used to pay principal of or interest on the Bonds: ov) securities or obligations pledged as security for the payment of the Bonds by an ultimate obligor (or a related person) or the Issuer: (v) payments by the Developer under the Developer Loan or by the Association under the Leiter of Cred►t; fvi) amounts used to oay principal of ur :nterest on the Bonds. and (v►i, amounts ►ece►ved as a result of investing the: amounts listed in clauses (►) through No. "Inducement Date" means Ma/ 19. 19136. the date= ott►c ►al action within the meaning of the Code was taken to provide financing in conne r!vun witti )tie Ptoicct "Interest Account" means the account in the Debt Service Fund by that name created by Section 302 hereof. "Interest Payment Date" means (a) prior to thr� Conv4-,►s:un Data, any ).larch 1. June 1. September 1 or December 1. commencing on ).larch 1. 1987, It)) the Conversion Date. (c) after the Conversion Date, any March 1 or Septembxc r 1. (d) any Reset Dates and (e; any other date upor► which interest on the Bonds is due and payable. "Investment Year" shall mean the twelve-month period beginning on the Delivery Date and ending on the day next preced;ng the first anniversary thereof and. thereafter, each twelve-month period commencing on an anniversary of the, Delivery Date and ending on the day preceding the next such anniversary. "Issuer" means the City of Huntington Beach. California, a municipal corporation and charter city organized and existing under the taws of the State of Cal. -forma. 0 "Letter of Credit" means the Irrevocable Letter of Credit No. issued by the Association pursuant to the Reimbursement Agreement, or any replacement letter of credit or Alte►nate Credit Facility provided in accordance with Section S.8 of the Loan Agreement. "Loan Agreement" means tFe Loan Orrgmation and Servicing Agreement, dated as of December 1. 1965. by and among the Issuer. the Developer, the Trustee and the Association. "Maximum Interest Rate" means eleven percent (1 i ) per year. 1 he Maximum Interest Rate. however, shall not at any time exceed the ma, -mum interest rate permitted by any then applicable Iay.. "Nonpurpose Obligation" shall mean any security or oblioation (:ether than an obligation on which interest is excludable from gross incorne for federal income tax purposes under Section 103(a) of the Code) in which Gross Proceeds are invested and watch is not acquired to carry out the governmental purpose of the Bonds. "Operating Expenses" means the fees to be paid to the Tr;,istee and the Issuer pursuant to the terms of this Indenture. all expenses and costs (including reasonable counsel fees) incurred by the Trustee and the Issuer in connection with the Program or the trust created hereby to the extent that the Trustee and the Issuer are entrt'ed to reimbursement therefor under the terms of this Indenture. the Regulatory Agreement or the Loan Agreement, any amount dui: to the Association as a fee pursuant to any agreement between the Association and the Developer for maintaining of the Letter of Credit and servicing of the Developer Loan and any tee o Standard & Poor s Corporation for maintaining the rating on the Bonds. "Operating Lease -Up Loss Account" means the Account in the Developer Loan Fund by that name created by Section 302 hereof. "Optional Fixed Rate" means that rattt Der annum of interest which is required to be fixed by the Rernart,eting Agent on the Fixing Date for the Conversion ;Date and which 15 (m tre reasonable discretion of the Remarketing Agent. having due regard to prevailing m r�.et condiiions► equal to. out not in excess of, that rate per annum of inictiest v:hrch will enabie the Remarketing Agent to remarket on the Conversion Date. at a pine equal to 100110 of the principal amount thereof plus unpaid interest accrued thereon to the Conversion Date, all Bonds required to be purchased by the Trustee on the Conversion Date pursuant to Section 1101(c) "Outstanding" or "Bonds Outstanding". when used with respect to the BondS, means. as of the time in question, ail Bonds executed by the Issuer ;and authenticated and delivered by the Trustee under this Indenture, except: (1) Bonds theretofore cancelled or required to be cancelled under Section 209 hereof, (2) Bonds which are deemed to have been paid in -accordance with Article flll hereof. (3) Bonds in substitution for which other Bonds have been authenticated and delivered pursuant to Article II hereof: and (4) Any Untendered Bonds. In determining A hether the owners cf a requisite aggregate principal amount r)f Outstanding Bonds have concurred in any request, demand, authorization, direction, notice, consent, vote or waiver under the provisions of this Indenture, Bonds which are owned by the Developer, the Issuer, the Association or any other obligor on the Bonds, or any affiliate of any one of said entities (for the purpose of this • 10• definition an "affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person) shall be disregarded and deemed not to be Outstanding hereunder for the purpose of any such determination For purposes of this definition. "control", when used with respect to any specified Person, means the; power to direct the management and policies of such Person directly or indirectly, whether through the ownership of voting securities, by contract, or otherwise: and the terms ' controlling" and "controlled" have meanings correlative to the foregoing. In case of a dispute as to such right, any decision by the Trustee taken upon the advice of Counsel shall be full protection to the Trustee. "Owner" or "owner". when used with respect to ar,y Bond issued under this Indenture, means the registered owner of such Bond as shown by the Bona Register kept ky the Trustee as Bond Registrar. "Paying Agent" means the Trustee or any other bank or trust company designated pursuant to this Indenture to serve. in addition to the Trustee, as the paying agent or place of payment for the Bond:. "Permanent Term" means the perrcid rommencing at the end of the Construction Term and ending one hundred twenty (120) months after the date of commencement of the Construction Term. "Person" means any natura, person, firm, partnership, association, corporal!on, tru-t. public body or other entity. "Permitted Investments" means any of the folio•„ing which at the time are legs! investments for the Issuer under the laws of the State. and to the extent provided by law, for the mono; s held hereunder then proposed to be invested therein 0) evidences of indebtedness, or obligations the payment of principal of and interest on which is ur-conditionally guaranteed by the Un*-d States and which are backed by the full faith and credit of the United States. and guaranteed as to principal of and interest by the Un:;ed States. including- direct obligations of, or certificates of beneficial ownership fully guaranteed by, the United States Export -Import Bank: certificates of beneficial ownership issued by the Farmers Home Administration: participation ceriifirates issued by the Genera+ Services Administration, guaranteed Title XI financing of the United States Maritime AdrnrniS11'a110rl. mortgage backed bonds and pass through obligations issued and guaranteed by the Government National hlnrtgage, Association: United States Public Housing Program, United Staters government quaranteed housing notes anJ bonds: project notes and local aulnorrty bonds of the United States Department of Housing and Urban Development, Federal Housing Administration debentures. participation COrt►liCates and senior debt obligations of the Federal Horne Loan tAortgage Corporation ,-and Farm Crt►tl,t Banks (Federal Land Banks, Federal Intetined! ale Credit Banks and Banks for Cooperatives.: mortgage backed securities and senior debt obligations of the Federal National Mortgage Association. and letter of creait-backed issues and senior debt obligations of the Studr:ni Loan Marketing Association: W) evidence of indebtedness of corporations authorized by the provisions of Section 1364 of the California Financial Code provided such indebtedness is rated, or is on a parity with obligations that are rated. "P.1" and "A-t +" or better by the Rating Agents: (w� repurchase agreements with financial institutions fully insured by the Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance Corporat+on, or any broker -dexter with "retail customers" which falls under Securities Investors Protection Corporation jurisdiction, which repurchase agreements are secured by any of the obligations referred to to (il above, provided (a) such reputMiSe agreement is collateralized at a Ievrat acceptable to the Rating Agent, (b) the Trustee or a third party acting solely as agent for the Trustee has possession of the collateral securing such repurchase agreem(ant. (c) the Trustee has a perfected first security interest in the collateral securing such repurchase agreement. (d) the collateral securing such repurchase agreement is free and clear of third party Dens, and (e) such repurchase agreement requires the Trustee to liquidate the collateral securing such repurchase agreement it the required level of collateralization is not maintained; (iv) v+ Ih respect to moneys in the Developer Loan Fund or the Disbursement Account, the Investment Agreement: and (v) with respect to moneys in the Seasoned Funds Account, obligations referred to in (i) above or securities rated by Standard & Poor's Corporation at least equal to the rating on the Bonds. "Principal Account" means the Account in the Debt Service Fund by that name created by Section 302 hereof. "Principal Office" means (1) when used with respect to the Trustee, the principal corporate trust `flee of the Trustee. which at the date of this Indenture is located at Seattle, Washington and (n) when used Mtn respect to any Paying Agent means the office of such Paying Agent as designated by notice given by the Trustee to the Bond Owners and (w) when used with respect to the Tender Agent appointed pursuant to Section 1109 means the office of such 'render Agent as designated in Section 1109 or by notice given by the Trustee to the Bond Owners, and (iv) when used with respect to the Remarketing Agent, means the office of the Remarketing Agent as designated by notice given by the Trustee to the Bind Owners. "Program" means the Issuer's multifarni!y housing program, as set forth in this Indenture and the Developer Loan Documents. "Project" mean:_ the multifamily residential rental development to be financed with the Developer Loan, as described in the qt?n. !aIory Agreement. "Purchase Date" means the Designated Purchase Date or the date during the Purchase Period on which the Bona;, are purchased or redeemed. "Purchase Period" means the 30•day period commencing on the Designated Purchase Data. "Qualified Project Costs" shall have the same meaning specified in the Regulatory Agreement. "Rating Agent" means (A) Standard & Poor's Corporation so long as Standard & Poor's Corporatio.. shall rate the Bonds. or (B) Moody's Inve-tors Service, Inc., so long as Oil Standard & Poor's Corporation shall not rate the Bonds. and po Moody's Investors Service. Inc.. shall rate the Bonds, or (C) if neither Standard & Poor's Corporation nor Moody's Investors Service. Inc. shall rate thr- Bonds, any other nationally recogni: ed debt rating agency or bureau which may be acceptable to the Trustee and the Association. "Record Date" means. with respect to any Interest Payment Dates on the Bonds except a date for payment of defaulted interest and except for the Conversion Date, the fifteenth calenoar day of the month next preceding such Interest Payment Date, unless such day is not a Business Day. in which case such Record Date shall be the Business Day immediately following such fifteenth calendar day. With respect to any payment of defaulted intorest, a special record date: shall be established in accordance with the provisions of 5ecticn 202 hereof With respect to the Conversion Date, the Record Date shall be the Btisiness Day next preceding the Conversion Date. "Redemption Price" means the price at which a Bond is to be redeemed pursuant to this Indenture. "Regulations" means the regulations with respect to the Code ;promulgated from time to time by the United States Department of the Treasury. "Regulatory Agreement" means the Regulatory Agreement and Declaration of Restrictive Covenants, in substantially the form required by the Loan Agreement, by and among the Issuer, the Trustee, the Association and the Developer. "Reimbursement A�rcement" means (i) with respect to the initial Letter of Credit, the Letter of Credit and Reimbursement Agreement dated as of the date hereof, between the Association and the .12• Developer providing for the issuance of the Letter of Credit by the Association and (u) with respect t 1 any other Letter of Credit (including any Alternate Credit Facility), the agreement pursuant to which a bank or savings and loan association (or. where relevant. an insurance company) agrees to issue such Letter of Credit or Alternate Credit Facility. "Remarketing Agent" means (i) BTC, so long as BTC shall be required to perform the obligations set forth to be performed by BTC under Sections 3(a) and 5(b)-(f) of the Remarketing Agreement, or (u) that Person, if any, who may have assumed (pursuant to Section 7 of the Remarketing Agreement) the obligations set forth to be performed by BTC under Sections 3(a) and 5(b)-(f) of the Remarketing Agreement, so long as such Person shall be -equired to perform such obligations. "Remarketing Agreement" means the TENR Service and Remarketing Agreement. dated as of August 1, 1986. among BTC, the Issuer, the Association and the Developer "Reserve Account" means the Account by that name within the Debt St -,-vice Fund created by Section 302 hereof. "Reserve Requirement" means (i) prior to the Conversion Date. an amount equal to $250,000. and (n) from and after the Conversion Date. an amount equal to one hundred eighty-five days' interest on the Bonds. computed at the Optional Fixed Rate. "Reset Date" has the meaning specified in Section 212 hereof. "Resolution" means Resolution No. _. __ duly adopted by the Issuer on August 18. 1986. authorizing the issuance and sale of the Bonds and ;he execution of this Indenture. "Revenues" means the amounts pledged hereunder to the payment of the principal of. and premium. if any. and interest on, the Bonds, including the following 01 all income, revenues, proceeds and other amounts derived from or in connection with the Developer Loan, and the Developer Loan Documents, including all scheduled payments of the principal thereof, and interest thereon, the Letter of Credit or the Collateral Pledge Agreement and all prepayments, including amounts obtained through the exercise of the rernedites provided in the Developer Loan Documents or the Collateral Pledge Agreement upon the occurrence of an event of default thereunder, and all receipts of the Trustee credited under the provisions of this Indenture against said amounts payable, and (lit moneys held in the Funds and Accounts (excluding the Excess Investment Earnings Fund). together with investment earnings thereon received by the Trustee which the Trustee is author: ed to receive, hold and apply pursuant to the terms of this Indenture: provided. that "Revenues" does not include any Tender Payments or any investment earnings required under the Disbursement Agreement or the Reimbursement Agreement. "Seasoned Funds" means moneys deposited by the Developer with the Trustee and so designated by the Developer. which moneys shall have been held by the Trustee for at least 95 days prior to the date the Letter of Credit is drawn upon by the Trustee to make available moneys to be used to make regularly scheduled payments on the Bonds or at least 95 days prior to the date notice of prior redemption is mailed by the Trustee to Bondowners or at least 95 days prior to the date of any increase in the Reserve Requireqnent in connection with the Conversiom Date or any Reset Date, provided that no Act of Bankruptcy shall hav3 occurred during such 95-day period after such moneys were deposited with the Trustee (the Trustee shall be entitled to rely on a Developer's certificate to the effect that no Act of Bankruptcy has occurred as evidence that no such bankruptcy has occurred). "Seasoned Funds Account" means the account so designated in the Debt Service Fund. "State" means the State of California. -13. "Supplemental Indenture" means any agreement hereafter authorized and entered into between the Issuer and the Trustee which amends. modifies or supplements and forms a part of this Indenture. "Tender" and "Tendered", when used with respect to any Bond required to be purchased by the Trustee on behalf of the Association pursuant to Section 1101 means the physical delivery to the Trustee at its Principal Office or (if the Principal Office of the Trustee shall not be in New York, New Yorkl to the Principal Office of the Person appointed as agent of the Trustee pursuant to Section 1109 of: (A) the Bond required to be so ourchased by the Trustee, duly endorsed for transfer to the Trustee by the Owner of such Bond or by his attorney -in- fact duly authorized in writing, filed with the Trustee on or prior to the date of delivery of such Bond and with the signature of such Owner or such zttwney- in-fact guaranteed in writing (in the form provided on such Bond) by a member firm of the Ne.v York Stock Exchange or a commercial bank or trust company incorporated under the laws of the United States, and (B) in the case of any Bond (other than any Bond required to be purchased by the Trustee on the Conversion Date) required to be purchased by the Trustee on behalf of the Association on a Record Date or at any time from and after a Record Date through and including the next succeeding Interest Payment Date, a due bill in form and substance satisfactory to tin Trustee. for the rnte►est which will be due and payable in respect of such Bond on such Interest Payment Date. "Tender Agent" means the Tender Agent appointed pursuant to Section 1109 hereof. "Tender Payments" has the meaning specified in Section 1105. "Tender Payments Fund" means the Fund by that name created by Section 302. "TENRO" has the meaning specified in Section 211.8.2. "TENR! Amount' has the meaning specified in Section 211.8.1. "Trustee" means Seattle -First National Bank or any successor trustee servIrlg as such pursuant to Section 906 or 909 hereof and any separi-'2 or co -trustee serving as such hereunder "Trust Estate" means the property conveyed to the Trustee pursuant to the Grantong Clauses hereof. "Untendered Bond" means any Bond as to wt-ch the Owner hereof has not. as and when required by Section 211.E.1 given notice of such Owners des.re to retain such Bond after the C:.i.version Date. ARTICLE ll THE BONDS Section 201. AtAhorized Amount of Bonds. No Bonds may be issued under the provisions of this Indenture. except in accordance with this Article, The total principal amount of Bonds that may be issued is hereby expressly limited to S7,700,000, except as provided in the second sentence of Section 202 hereof. Section 2G2. Issuance of the Bonds. The Issuer may issue the '_?onds following the execution of this Indenture, anti the Trustee shall, at the Issuer's request, authenticate such Bonds and deliver them as specified in such request. No Bonds may be issued under this Indenture in addition to those authorized by Section 201. except Bonds issued on transfer or exchange as provided in Sections 203 or 206. or Bonds issued in replacement of lost. stolen, mutilated or destroyed Bonds pursuant to Section 207 or Bonds issued as replacement Bonds pursuant to Section 1101(c). The Bonds shall be designated " City of Huntington Beach, California Variable Rate Demand tvlultifam►ly Housing Revenue Bonds (10ercury Savings and Loan Association Village Partnership Project). 1986 Series A". The Bonds shall be issuable as fully registered Bonds without coupons in the m►nimurn denomination cf S1.000.000 or any integral ►rultipte of 5100.000 in excess of S1.000.000. provided that (i) subject to the approva, of the Remarketing Agent. such minimum denomination prior to th` Conversion Date may be S100,000 or any integral multiple of S25.000 in excess of $100.000, and (►►) on and after the Conversion Date, Bonds in the minimum denomination of S5.000 or any integral multiple thereof may be issued. Unless the Issuer shall otherwise direct, the Bonds shall be numbered as determined by the Trustee. Prior to the Conversion Date, the form of the Bonds and the Trustee's certificate of authentication to be endorsed thereon and the form of assignment to be endorsed on such Bonds are to be in substantially the form set forth on t h►b►t A. and hereby made a part hereof. with necessary and appropriate variations, omissions and insertions as perrTr►tted or required by t'1►s .noenture From and after the Convers:on Date, the Bonds, the trustee's Certif►r;ale of authentication to be endorsed thereon and the form of assignment to be endorsed on such Bonds are to be in substantially the form set forth in Exhibit B. and hereby ma0e a part hereof, with necessary and appropriate variations, orn►ss►ons .and insertions as permitted or required by this Indenture. Bonds authenticated and delivered prior to the Conversion Date shall be dated as of the Delivery Date. Bonds authenticated and delivered on or after the Conversion Date shall be dated as of the Conversion Date or the applicable Reset Date, if any. Interest on the Bonds snail be payable on this Conversion Date. if any, and prior to the Conversion Date on hlarch 1. .tune 1, September 1 or December 1, commencing March 1. 1087. and after the Conversion Date on ,tun 1 and December 1 of each year. The Bonds shall mature on September 1, 2016. Each Bond shall bear interest from the later of the Delivery Date or the most recent Interest Payment Date to which interest has been paid or made available for payment pursuant to this Indenture. The Trustee or the Co -Transfer Agent shall insert the date of registration and authentication of each Bond in the place provided for such purpose in the forrrr of Trustee's certificate of authentication to be printed on each Bonn. Each Bond shall bear interest on overdue principal at the rate then in effect on the Bonds. The Bonds shall bear interest at the rates provided in Sections 211 and 712. The principal of, and premium, if any, and interest on. and all Tender Payments with respect to, the Bonds shall be payable in lawful money of the United States of America, being any corn or currency of the United States of America which, at the respective date of payment thereof, is legal tender for the payment of public and private debts, and such principal, premium, if any, and interest shall be payable at the Principal Office of the Trustee, or of any Paying Agent or successor Paying Agent designated •15- pursuant to the terms of this Indenture. The principal of and premium, if any. on each Bond will be payab',e upon the presentation and surrender of such Bond, when due. at the principal corporate trust office of the Trustee. Payment of interest on each Bond shall be made to the Owner thereof at the close of business on the Record Date with respect to such interest payment irrespective of the cancellation of such Bond upon any transfer or exchange thereof subsequent to such Record Date and prior to such Interest Payment Date, unless the Issuer shall default in the payment of interest due on such Interest Payment Date. Each interest payment on each Bond (other than the final installment of interest) shall be paid by check or draft mailed to such Owner at his address as it appears on the Bond Register or at such other address as is furnished to the Tru-;tee (in a notarized writing in a form acceptable to the Trustee) by such Owner at least one day prior to such Record Date with respect to such interest payment. or, at the option of any Owner of at least S1,000,000 in aggregate principal amount of Bonds. prior to the Conversion Date, by wire transfer to an account designated by such Owner not less than five (5) days prior to such Record Date. The final installment of interest on each Bond shall be paid only upon surrender of such Bond at the Principal Office of the Trustee or any Paying Agent. In the event of any default in the payment of interest, such defaulted interest shall be payable to the Owner of such Bond on a special record date for the payment of such defaulted interest established by notice mailed by or on behalf of the Issuer to the Owners of Bonds not less than fifteen calendar days preceding such special record date. No interest shall be payable on any Interest Payment Date in respect of any Bond purchased by the. Trustee on such Interest Payment Date pursuant to Section 1 101(c) or redeemed on sucn Interest Payment Date, to the extent that interest is included in determining the purchase price. or pace payable upon redemption, of such Bond. The Bonds may be in panted. engraved. typewritten or photocopied form Section 203. Registration, Transfer and Exchange. The Issuer shall cause books for the registration and transfer of the Bonds (the "Bond Register-). as provided in this Indenture. to be ker)t by the Trustee, which is hereby constituted and appointed the Bond Registrar of the Issuer. The registration of ownership of the Bonds may be transferred only in the Bond Register. Upon surrender for transfer of any Bond at the Principal Office of the Trustee or at the Principal Office of the Co - Transfer Agent, duly endorsed for transfer or accc mparned by an assignment duly executed by the Owner or his attorney duly authorized in writing, the Issuer shall cause to be executed and the Trustee or the Co -Transfer Agent shall authenticate and deliver in the name of the transferee or transferees a new Bond or Bonds, for a like aggregate principal amount. Bonds may be exchanged at the Principal Office of the Trustee or at the Principal Office of the Co. Transfer Agent for a like aggregate pnncrpai amount of Bonds of othpr authorized denominations. The Issuer shall cause to be executed and the Trustee or the Co -Transfer Agent shall authenticate and delver Bonds which the Owner making the exchange is entitled to receive, bearing numbers not then outstanding. The execution by the facsimile signatures of the Mayor and the City Clerk: of the Issuer of any Bond of any authorized denomination shall constitute full and due authorization of such denomination and the Trustee and the Co -Transfer Agent shall thereby be authorized to authenticate and deliver such Bonds. The Trustee or the Co -Transfer Agent shall not be required to trans'er or exchange any Bond after the mailing of notice calling such Bond for redemption has been given as herein provided, nor during the period of fifteen calendar days next preceding the giving of such nonce of redemption; provided, however. that if any Bond shall be transferred after such Bond has been called for redemption, the Trustee or the Co -Transfer Agent shall deliver to the transferee of such Bond a copy of the applicable redemption notice indicating to the transferee that the Bond delivered to such transferee has previously been called for redemption. As to any Bond, the Owner shall be deemed and regarded as the absolute owner thereof for all purposes. Payment of principal or premium (if any) on any Bond shall be made only to or upon the order of the Owner thereof or his attorney duly authorized in writing as of the date of such payment. Payment of the interest on any Bond shall be made only to or on the order of the Owner thereof or his .16. attorney dtrly authorized in writing as of the Record Date or, if applicable, special record date for such payment. as hereinabove provided. All such payments shall be valid and effectual to satisfy and discharge the habit:ty upon such Bond to the extent of the sum or sums so paid. The Issuer, the Trustee and the Co -Transfer Agent shall not charge Owners for any exchange or transfer of Bonds. except pursuant to Section 207 hereof and except that in each case the Trustee shall require the payment by the Owners requesting exchange or transfer of any tax cr other governmental charge required to be paid with respect thereto. The cost of any printing of any new Bonds and any services rendered or other expenses incurred by the Trustee in connection with any exchange or transfer provided for in this Section 203 shall be paid from the General Fund. Section 204. Execution; Limited Obligation. The Bonds shall be executed on behalf of the Issuer with the facsimile signature of the Mayor and attested with the facsimile signature of the City Clerk and shall have impressed or printed thereon a facsimile of the corporate seal of the Issuer. Any such facsimile signature shall have the same force and effect as if the applicable officer had manually signed each of said Bonds. In case any officer whose facsimile signature shall appear on the Bonds shall cease to be such officer before the delivery of such Bonds, such facsimile signature shall nevertheless be valid and sufficient for all Purposes, as if such officer had remained in office until delivery. No recourse shall be had for the payment of the principal of, or premium, if any, or interest on, any of the Bonds ur for any Calm based thereon or upon any obligation. covenant or agreement in this Indenture contained, against any past, present or future member of the CSty Council, officer, employee or agent of the Issuer, or member or officer of any successor public entity. as such, either directly or through the Issuer or any successor public entity, under any rule of law or penalty or otherwise, and all such liability of any such member of the City Council. officer, employee cr agent as such is hereby expressly waived and released as a condition ot. and in consideration for tree execution of this Indenture and the issuance of any of the Bonds. The Bonds are not and npv�r shall become general obligabnns of the Issuer but are limited obligat.ons payable by the Issuer solely and only from the Revenues and the ot`ir-r security pledged herein for such purpose, which Revenues, together with any such ethtlr security provided herein. are hereby specifically and irrevocably granted. bargained, sold. conveyed. transferred. alienated, assigned and pledged to such purposes in the manner and to the extent provided herein. The Bonds and the premium, if any, and interest thereon do not and never shall constitute a debt or an indebtedness or an obligation of the Issuer or any county. city or other Municipal or political corporation or subdivision of the State or of the State, or a loan of the faith or credit or the taxing power of any of thin. within the meaning of any constitutional or statutory provisions, not shall the Bonds be construed to create any moral obligation on the part of the Issuer or any county, city or other rnun,cipal or political corporation or subdivision of the State or the State with respect to the payment of the Bonds. The Bonds shall not be payable from the general revenues of the Is,;uer, and neither the Issuer not the State nor any political corporation, subdivision or agency thereof will be. I4able thereon. nor in any event shall the Bonds be payable out of any funds or properties other than those of the Issuer specifically pledged therefor. Section 205. Authentication. No Bond shall be valid for any purpose or entitled to any security or benefit under this Indenture until the certificate of authentication on such Bond shall have been duly executed by the Trustee, or by an agent or by the Co -Transfer Agent, and such authentication shall be conclusive proof that such Bond has been duly authenticated and delivered under this Indenture and that the Owner thereof is entitled to the benefits of the trust hereby created The Trustee's certificate of authentication on any Bond shall be deemed to have been executed by it or the Co•Trans!er Agent it fill it is signed by an authorized officer of the Trustee or the Co -Transfer Agent, but it shall not be .17• necessary that the same officer sign the certificate of authentication on all of the Bonds issued hereunder, and (2) the date of registration and authentication of the Bond is inserted in the place provided therefor in the Trustee's certificate of authentication printed on such Bond. Section 206. Form of the Bonds. The Bonds issued under this Indenture shall be substantially in the form set forth in Exhibit A and Exhibit B attached hereto and incorporated by reference heirein, with such appropriate variations, omissions and insertions as are permitted or required by this Indenture. Section 207. Mutilated, Destroyed, Lost or Stolen Bonds. In the event any Bond is mutilated. lost, stolen or destroyed, the Issuer may cause to be executed and the Trustee or Co -Transfer Agent appointed pursuant to the authorization set form in Section 1.09 may authenticate a new Bond of like date, maturity, interest rate and denomination as that mutilated, lost, stolen or destroyed. provided, however, that in the case of any mutilated Bonds, such mutilated Bond shall first be surrendered to the Issuer, and in the case of any lost. stolen or destroyed Bonds, there shall be first furnished to the Trustee or Co -Transfer Agent on behalf of the Issuer evidence of such loss, theft or destruction satisfactory to the Trustee ar Co -Transfer agent, together with an indemnity satisfactory to the Trustee. In the event any such Bond shall have matured. instead of issu.ng a duplicate Bond. the Issuer may pay the same without surrender thereof. The Issuer and the Trustee or Co -Transfer Agent may charge the Owner of such Bond with their reasonable fees and expenses in this connection. The Issuer shall cooperate with the Trustee or Co -Transfer Agent in connection with the issue of replacement Bonds. but nothing in this Section 207 shall be construed in derogation of any rights which the Issuer or the Trustee or Co -Transfer Agent may have to receive indemnification against liability, or payment or reimbursement of expenses, in connection with the issuance of a replacement Bond. Every substitute Bond issued pursuant to this Section 207 shall constitute an additional contractual oblioation of the Issuer, whether or not the Bond alleged to have been mutilated, destroyed. lost or stolen shall be at any time enforceable by anyone. and shall be entitled to all the benefits of this Indenture equally and ratably with any and all other Bonds duly issued hereunder. All Bonds shall be owned upon the express condition that the foregoing provisions are, to the extent permitted by law. exclusive with respect to the replacement or payment of mutilated, destroyed, lost or stolen Bonds, and shall preclude any and all other rights or remedies. Section 208. Temporary Bonds. Pending preparation of definitive Bonds, or by agreement with the purchasers of all Bonds, the Issuer may issue and, upon its request, the Trustee shall authenticate, in lieu cf definitive Bonds, one or more temporary printed or typewritten bonds in any authorized denomination of substantially the tenor recited above. Upon request of the Issuer, the Trustee shall authenticate definitive Bonds in exchange for and upon surrender of an equal principal amount of temporary Bonds. Until so exchanged. temporary Bonds shall have the same rights, remedies and security hereunder as definitive Bonds. Snrt,on 209. Cancellation and Destruction of Surrendered Bonds. Whenever any Bond shall be delivered to the Trustee or Co -Transfer Agent for replacement or exchange pursuant to Sections 203. 20,'. 20B. or 1101 (c) hereof. such Bond shall be promptly cancelled and destroyed by the Trustee, and a certificate of destruction evidencing such destruction shall be furnished by the Trustee to the Issuer. Section 210. Delivery of the Bonds. Upon the execution and delivery of this Indenture, the Issuer shall execute and deliver to the Trustee, and the Trustee shall authenticate, the Bonds and deliver them to the purchasers as directed by the Issuer as hereinafter in this Section 210 provided. Prior to the delivery by the Trustee of any of the Bonds there shall have been received by the Trustee: M (1) a copy, duly certified by the City Clerk, of all resolutions adopted and proceedings had by the Issuer authorizing the issuance of the Bonds, including the resolution authorizing the execution, delivery and performance of this Indenture and the Loan Agreement: (2) original executed counterparts of this Indenture, the Developer Loan Documents, the Collateral Pledge Agreement, the Reimbursement Agreement and all other materials required by the Loan 'Agreement: (3) the Letter of Credit; (a) written confirmation of the Collateral Agent that it holds the Collateral, and that no event has occurred which constitutes, or would with the passage of time constitute. an Event of Default under the Collateral Pledge Agreement: (5) an opinion of Bond Counsel substantially to the effect that (A) the Bonds constitute legal. valid and binding limited obligations of the Issuer, enforceable in accordance with their terms. subject to bankruptcy, insolvency, moratorium, reorganization and other similar laws affecting the rights of creditors generally and further subject to the exercise of -udicial discretion in accordance with general principles of equity, and (B) the interest on the Bonds is exempt from federal income taxation under existing laws, regulations, rulings and judicial decisions, except for interest on any Bond for any period during which such Bond is held by a "substantial user" of any facilities financed with the proceeds of the Bonds or a "related person". as such terms are defined in Section 103(b)(13) of the Code: (6) a request and authorization to the Trustee on behalf of the Issuer directing the Trustee as to the investment of the proceeds of the Bonds mclud!ng. without limitation. the amounts required to be deposited into the Cost of Issuance Fund pursuant to Section 303 of this Indenture: (7) a request and authorization to the Trustee on behalf of the Issuer to authenticate and deliver the Bonds to the purchasers therein identified upon payment to the Trustee. for the account of the Issuer, of a sum specified in such request and authorization plus accrued interest thereon. if any, to the date of delivery, which shall be transferred and deposited pursuant to Article Ill hereof and as indicated in such request and authorization; (8) an original executed counterpart of the certification of the Issuer establishing expectations to the effect that the Bonds will not be "arbitrage bonds" within the meaning of Section 1031,c) of the Code: and 191 any additional agreements. certificates, documents or other items or matters authorized or required by the provisions of the Resolution. Section 211. Interest on the Bonds. A. Until March 1, 1987, the Bonds shall bear interest at the rate of percent (,__.°o) per annum, subject to the provisions of Section 211.G hereof. Unless redeemed on or prior to March 1. 1987, the Bonds shall bear interest from and after Mxch 1, 1987. at a rate per annum determined in accordance with Sections 211.B.. C. and F and Section 212. Until the Conversion Date, interest shall be computed on the basis of a 360•day year, actual number of days elapsed After the Conversion Date, interest on the Bonds shall be computed on the basis of a 360•day year of twelve 30•day months. B. From and after March 1. 1987. and (if March 1, 1987, is not the Conversion Date) prior to the Conversion Date, the interest rate on all Bonds shall be as follows: .19. • • 1. The Bonds shall (subject to the further provisions of this Section 21 1.B.1) bear interest at a floating rate of interest per annum equal as of any given date of determination to TENR►- as most recently announced by BTC plus an amount (the "TENRS, Amount") equal (unless adjusted pursuant to Sections 211.B.1. (r) or fill) to one-half percent (1 200) per annurn. (i) If the Trustee shall have received notice from any owner in accordance with Section 1101(a) requiring the purchase at any Hond(s) by the Trustee on behalf of the Association in accordance with Section 1101(b). the TENRI, Amount shall be adjusted, if necessary, by the Remarketing Agent on the date of purchase of such 13ond(s) by the Trustee on behalf of the Association pursuant to Section 1 101(b) so that the TENR''• Amount as so adjusted, when added to TENR Y) as in effect on the date of the purchase of such Bond(s) by the Trustee on behalf of the Association pursuant to Section f 101(b), will produce that rate per annum of interest which is (in the reasonable discretion of the Remarketing Agent, having due regard to prevailing market conditions) equal to, but not in excess of, that rate per annurn of interest which will enable the Remarketing Agent to remarket such Bond(s) on the date of purchase of such Bond(s) by the Trustee on behalf of the Association pursuant to Section 1101(b) at a price equal to 100 ., of the unpaid principal amount thereof plus unpaid interest accrued thereon to the date of purchase thereof by the Trustee on behalf of the Association pursuant to Section 1101(b): provided, that in no event shall the interest rate on the Bonds exceed the 10axrmurn Interest Rate. The Remarketing Agent shall notify the Association, the Developer. and the Trustee of any adjustment of the TENR`' Amount pursuant to this Section 21 t .B. t .(o cn the date on which such adjustment becomes effective. Any adjustment of the TENRI Amount pursuant to this Section 211.8.1.(r) shall become effective on the date neat following the gate on which TENRS next is announced following the date of such adjustment In the event TENRI is no longer announced or is discontinued for any reason, then the Bonds shall bear interest at a rate per annum which is (in the reasonable discretion of the Remarketing Agent. having due regard to prevailing market conditions►. equal to. but not in excess of. that rate per annum of ,nterest which will enable the Remarketing Agent to remarket the Bonds at a price equal to 1000c of the unpaid principal amount thereof plus unpaid interest accrued thereon to the date of purchase thereof by the Trustee on behalf of the Association pursuant to Section 1 101(b). (u) On each Interest Payment Date. the TENRI Amount shall be adjusted. if necessary, by the Remarketing Agent so that the TENR` Amount as so adjusted. when added to TENR' as in effect on such Internal Payment Data will produce that rate per annurn of interest which is (in the reasonable discretion of the Rerna4 Feting Agent. having due regard to prevailing market conditions) equal to. but not rn of, that rate per annurn of interest which would enable the Remarketing Agent to remarket on such interest Payment Date any Bonds required to be purchased by the Trustee on behalf of the Association on such Interest Pa-,ment Date pursuant to Section 1101(b) (regardless of whether any Bonds actually are so required to be purchased on such Interest Payment Date) at a price equal to 1000o of this unpaid principal amount thereof plus unpaid cnfere.CA accrued thereon to such Interest Payment Date: provided, that ir, no event shall the interest rate on the Bonds exceed the Maximum interest Rate The Rernatket►ng Agent shall notify the Association. the Developer and the Trustee of any such adjustment. Any adjustment of the TEN► T Amount pursuant to this Section 211.B.fill shall become effective on the date next following the date on which TENR is announced following the date of such adjustment. (iii) if the TENRL" Amount is adjusted pursuant to Section 211.B.1.(r) or (ii), the TENR° Amount as so adjusted shall remain in effect until the earlier of (A) the date next succeeding the effective date of such adjustment on which a further adjustment to the TENRS Amount becomes effective pursuant to Section 211.B.1.(r) or (ii), or (B) the date next succeeding the effective date of such adjustment on which the interest rate on the -20- E, Bonds shall be fixed pursuant to any ,of the provisions of this Indenture other than those described in this Section 211,B.1. (v.► Notwithstanding the foregoing or anything in Section 211.B.2.. no adjustment shall be made to either TENR`or the TEf• M Amount during the period beginning five (5) Business Days prior to an Interest Payment Date and ending on the date the next announcement of TENR'' after such Interest Payment Dare becomes effective. Notwithstanding the foregoing. no change in either TENR` or the TENRI, Amount shall become effective as to any Bond for which the Owner thereof has given a notice of tender to the Trustee for purchase pursuant to Article Xi hereof; pro%ided, however, if such Bond is not tendered to the Trustee on the first day of the Purchase Period, the foregoing provision of this sentence shall not apply to such Bond. 2. As employed in this indenture. "TENR°"' means the rate by that name announced (pursuant to the Remarketing Agreement) by ETC in New York. Ne.t York. or. in the event that BTC no longer determines TENRt, th-4 rate determined by an independent securities indexing agent acceptable to the Association, the Rating Agent and the Developer (the "Substitute Indexing Agent") which rate is intended by ETC or the Substitute Indexing Agent, as applicable, to be indicative of current (as of the sate of each announcement of TENR- or any alternate index) bid -side yields on high -quality, short -terra, tax•erempt obligations. Under the Remarketing Agreement. TENR I' shall be announced b/ BTC as of the --lose of business on Wednesday in each calendar week beginning on the Wednesday neAl p!eceding the date of authentication and delivery of the first of the Bonds to be authenticated and delivered under this Indenture until the earlier of (►) the Conversion Date, or jq the date on which there are no longer any Bonds Outstanding; provided, that it Wednesday in any calendar week is not a Business Day, then TENR-' shall be announced by ETC on the ne)ct succeeding day which is a Business Day. Subject tC Section 211.B.I tivi. TENR' as announced by BTC shah be effective during the period from and including the day nevi succeeding the day on which day on which BTC ne it announces TENR`'. TENR i snail be communicated by ETC to the Trustee, the Association, the Developer aria the. Remarketing Agent on the same day that TENR! is announced by BTC 3. The computation of TENRs by BTG and an; adjustments to thc� TENR'- Amount by Me Remarketing Agent as contemplated by the foregoing paragiar.lis Shall be conclusive and binding upon the Trustee. the Issuer, the Association. the Devet;.)per and the Owners of the Bonds. C. Provided that this Trustee Shall have feceived the va,tien consent of the Association (which consent the Association may, in its Sol(? discretion, withhold). the Developer may (subject to the conditions stated in the following Section 211.0 15t) cause the interest rate on the Bonds to be converted to the Optional Fi)ed Rate on or after March 1, 1987 1provided that it klarch 1. 1967. is not the Conversion Date, the Conversion Date shall riot be earlior than September 1. 19871 in accordance vnth the following procedures. (1) At least thirty (30) days in advance of the Conversion Date##, the Developer shall notify the Trustee, the Issuer, the Rernar;enric) Agent. and the Association of the Conversion Period. and together with such notice to the Truster, the Developer shall deliver to the Trustee evidence of its having obtained a binding commitment for the issuance of a Letter of Credit or Alternate Credit Facility to be in effect on the Conversion Date pursuant to Section 5.8 of the Loan Agreement Such notice shall be accompanied by an opinion of Bond Counsel to the effect that the conversion of the interest rate on the Bonds to the Optional Fixed Rate will not adversely affect the exemption of interest on the Bonds from federal income taxation. At least fifteen (15) days prior to the Conversion Date, the #0 Trustee shall be furnished by the Developer. or from sources arrarxged by the Devialoper, with Eligible Funds for deposit in the Reserve Account in an amount equal to ## the difference between (1) $250.000 and (it) one -21- hundred eighty-five days' interest on the Bonds, computed at the Maximum Interest Rate.## The Trustee shall also receive from the Developer or frorn a source arranged by the Developer evidence satisfactory to it that the Collateral held under the Collateral Pledge Agreement consists only of cash, together with an undertaking by the Association not to substitute any Collateral for such cash until after the Conversion Date. (2) Promptly upon receipt of the notice, 9# documentation and Eligible Funds described in Section 211.C.(1) and in any event within twenty (20) days prior to the first day in the Conversion Period specified such noticf?##, the Trustee shall give notice to each Owner by first class mail, postage prepaid, v t the address of such Owner as it last appears in the Bond Register identifying the Conversion Period and stating (A.) that on the Conversion Date (which shall be a day in the Conversion Period). the interest rate on the Bonds will (subject to the conditions specified in Section 211.C.(5). which conditions shall be set forth in full in such notice) be converted to the Optional Fixed Rate; (B) that all Bonds not Tendered to the Trustee on or poor to the Conversion Date for purchase by the Trustee on behalf of the Association pursuant to Section 1101(b1 or as to which the Owners thereof have not (pursuant to Section 211.E01) given notice of their desire to retain such Bonds after the Conversion Date shall be purchased by the Trustee on behalf of the Association on the Conversion Date at a purchase price equal to the unpaid principal ;amount thereof plus unpaid interest accrued thereon to the Conversion Date; (C) that, from and after the day next succeeding the Conversion Date, the Bonds shall not be subject to the provisions of Section 1101(ai. and, specifically, that the Trustee will not purchase Bonds on behalf of the Association upon demand of any Cwne4o; (D) that. from and after the Conversion Date, the only payment to which the Owner of any Untendered Bond or any other Person shall be entitled in respect of such Untendered Sund is the purchase price of such Un1endered Bond. as set forth in the preceding clause (B): (EI that the purchase price of any Untendered Bond shall not be due and payable to the Owner thereof or to any other Person until such Bond is presented to the Tustee and (Ft that I' any of the conditions for conversion of the interest rate on the Bonds to the Opt,conai Fixed Rate are not satisfied by the Conversion Date##, any Bonds Tendered for purchase on such Conversion Data shall be returned by the Trustee to the Owners thereof. and the Bonds shall (until that date, if any, on which the interes' rate on the Bones may thereafter be converted to a fixed rate of interest pursuant to Section 211 C. hereof) continue to bear interest at the rate required under Section 211.B. hereof.## Not later than three (3) Business Days prior to the Conversion Date, the Trustee shali draw upon the Letter of Credit so as to receive. not later than the Conversion Date. 'unds suthc:ent to pay the aggregate principal of all Outstanding Bonds and all unpaid interest accrued and to accrue on the Bonds through the Conversion Date. (3) The Conversion Date chat► Lw a Business Day specified by the Developer (but. it prior to September 1, 1987, shall be March 1. 19871 and shall be the date for conversion (subject to the conditions specified in Section 211.C.(5)) of the interest rate on the Bonds to the Optional Fixed Rate. Notice of they Conversion Date as so selected by the Developer shall be given by the Developer to the Trustee. the Issuer. the Remarketing Agent. and the Association at least fifteen (15) Business Days prior to such Conversion Date. If (a) the Letter of Credit to be in effect from and after tr:e Conversion Date has been delivered to the Trustee and is effective. and (b► the Rating Agent has delivered to the Trustee its written approval of the Letter of Credit to be in effect from and after the Conversion Date. then on the tenth 0#r day prior to such Conversion Date, the Trustee shall oive notice of such Conversion Date and of the Optional Fixed Rate (as fixed by the Remarketing Agent pursuant to Section 4 of the Remarketing Agreement on the Fixing Date for such Conversion Date) to each Owner of a Solid by first class ma!l, postage prepaid, at the address of such Owner as it last appears in the Bond Register. In addition to the requirements of Section 5.8 of the Loan Agreement, #0 the Developer shall provide to the Rating Agent the forms of the Letter of Credit and Collateral Pledge Agreement to be in effect on the Conversion Date. including the name of the issuer thereof. The Bonds shall not be converted to the Optional Fried Rate unless the Rating Agent •22- • shall have approved in writing the Letter of Credit to be in effect from and after the Conversion Data. (a) On the Fixing Date for the Conversion Dato selected by the Developer as described in Section 211.C.(3). the Remarketing Agent shall notify the Association, the Developer. the Issuer and the Trustee of the Optional Fixed Rate, as required to be fixed by the Remarketing Agent pursuant to Section 5 of the Remarketing Agreement. If the Optional Fixed Rate so determined is less than the fAax!mum Interest Rate, the orfference between 185 days' interest on the Bonds calculated at the fiaxirnum Interest Rate and 185 days' interest on the Bonds calculated at the Optional Fixed Rate shall be paid by tti, - Trustee to the Developer on the day following the Conversion Date. (5) On the Conversion Date selected by the Developer, as described in Section 211.C.(3). the interest rate on the Bonds will, without any further action by the Developer. the Issuer, the Trustee or any other Person, be converted to the Optional Fixed Rate so long as each of the following conditions is satisfied in full: (A) the Optional Fixed Rate shall have been fixed by the Remarketing Agent on the Fixing Date for such Conversion Date. (6) the Remarketing Agent shall have received binding commitments on or before such Conversion Date to purchase all Bonds Tendered for purchase by the Trustee on benalf of the Association on such Conversion Date at a price at least equal to the purchase price required to be paid by the Trustee in respect to such Bonds: (C) the Developer shall have followed the procedures required to be followed by the Developer in connection with the convers.on of the interest rate on the Bonds to the Optional Fixed Rate, as described in this Section 211.C: (D) the Developer shall rut have given notice to the Trustee, the Remarketing Agent. the Issuer or the Association on or before the eleventh NN day preceding such Conversion Date. that the Developer is dissatisfied with the Optional Fixed Rate: (El the Trustee shall hold (and for a period of not less than fifteen days prior to the Conversion Date shall have held) cash in the Reserve Account (representing Eligible Funds). #0 in an .2mount not less than the Reserve Requirement as in effect from and after the Conversion Date. and IF) the Trustee shall have determined that all applicab!e requirements of Section 5.8 of the Loan Agreement have been satisfied with respect to the Letter of Credit or Alternate Credit Facility to be effective r►orn and after the Conversion Date (including, without limitation, the requirements that such Letter of Credit or Alternate Credit Facility permit dra•.vs or claims in an amount equal to the aggregate princrpa! amount of the Outstanding Bonds plus one hundred eighty-five (1851 days' interest thereon at the Optional Fixed Rate and that the Trustee shall have received a written statement signed by the Rat.ng Agent to the effect that the rating on the Bonds will not be reduced or withdrawn as a result of the delivery of such Letter of Credit or Alternate Credit Facility) (6) The ROMarketing Agent shall, on or prior to the Conversion Date selected by the Developer. as described in Section 211.C.(3). give nonce to the Developer, the Association. the Issuer and the Trustee of any failure of the condition specified in clause (B) of Section 211.C.(5) to be satisfied. The Trustee shall immediately give notice to the Developer. the Assortatron, the Issuer and the Remarketing Agent, of any failure of the conditions specified in clauses (A). (C). (D). (E) or (F) of Section 211,C:.(5! to be satisfied, In the event that any of the conditions soecrfied in clauses (A) through (F) inclusive of Section 211.0 151 fail to be satisfied. the interest rate on the Bonds shalt be deemed not to have been Converted to the Optional Fixed Rate on such Conversion Date. any Bonds Tendered to the Trustee for purchase by the Trustee on behalf of the Association on such Conversion Date shall be returned by the Trustee to the Owners thereof; and the Bonds shall (until that date, if any. on which the interest rate on the Bonds may thereafter be converted to the Optional Fixed Rate pursuant to Section 211.C.) continue to bear interest at the rate required under Section 211.B.. and the Trustee shall, within five f5) Business Days after such Conversion Date, give notice of such fact to the Remarketing Agent. the Developer, the Issuer. the Association and each Owner at the address of such Unner as it last appears in the Bond Register." •23• D. In any case where notice is to be given to the Owners by the Trustee pursuant to Section 211.C., neither the failure to give any such nonce nor any defect in any notice so given shall preclude or make ineffective any conversion of the rate of interest on the Bonds to the Optional Fixed Rate. E.1. The Owner of any Bond desiring to retain such Bond on and after the Conversion Date must notify the Association, the Remarketing Agent and the Trustee in writing received on a Business Day which is at least live (5) days prior to the Conversion Date. Said notice must state in substance: (a) The numbers and principal amounts of the Bonds which the Owner wishes to retain on and after the Conversion Date: (b) That the Owner recognizes that on the day next succeeding the Conversion Date the Bonds shall no longer be subject to the provisions of Section 1101(a) and, specifically, that the Trustee will no longer purchase Bonds on behalf of the Association upon demand of any Owner (except that such notice may omit the matters stated in this paragraph (b) if March 1. 1987. is the Conversion Date): and (c) That the Owner wishes to continue to own the Bonds specified as described to Section 211.E.1.(a). and (d) That the Owner recognr: es that if arty of the conditions for conversion of the interest rate on the Bonds to the Optional Fixed Rate are not satisfied by the Conversion Date, the Bonds shall (until that date, if any. on which the interest rate on the Bonds may thereafter be converted to a fixed rate of interest pursuant to Section 211.C. hereof) 1# bear interest at the rate required under Section 211.B hereof.## 2. All Bonds not soectfied in a rime£ given as and when required by Section 211.E.1. shall be purchased by the Trustee on behalf of the Association on the purchase Date pursuant to Section 1101(c► at a purchase price equal tc the unpaid principal amount thereof plus unpaid interest accrued thereon to the Purchase Date.## 3. From and after the Conversion Date. the only payment to which the Owner of such Untendered Bond or an; other Person shall be entitled to respect of such Untendered Bond is the purchase price of such Untendered Bond determined in accordance with the preceding paragraph (2). which shall be due and payabkr to the Owner thereof upon p►esentat-an of such Bond to the Trusted. 4. From and after the Conversion Date, if any Bond is owned by an Owner who has given notice of his desire to continue to own such Bond as and when requited by Section 211.E.1.. until the Trustee shall have authenticated and delivered to the Owner a replacement Bond substantially to the form heretnabove set forth, which the Trustee shall complete as soon as is practicable after the Conversion Date, such Bond then held by the Owner shall be deemed to be a replacement Bond and notwithstanding the terms and conditions expressed therein, the rights of the Owner of such Bond shall be the same as the rights of the Owner of an equal principal amount of replacement Bonds to the form to be so authenticated and delivered on and after the Conversion Date. F. In no event shall the interest rate on the Bonds exceed the Maximum Interest Rate or be less than two percent (200) per annum, G. Notwithstanding the provisions of Section 21).A. hereof (but subject to the provisions of Section 211.F. hereoll, if legislation is enacted prior to January 1. 1987, and the Trustee is unable to obtain on or before February 13. 1987, an opinion of Bond Counsel to the effect that such .24. enactment in and of itself has not adversely affected the exemption from Federal income taxation of interest on the Bonds, then #0 there shall be paid as additional interest on the Bonds an amount equal to °o of the aggregate amount of interest paid or accrued (or to be paid or to accrue) on the Bonds through March 1, 1987, except that such additional interest shall be held by the Trustee in a separate trust ac,. ount for the benefit of the Owners and former Owners of the Bonds and disbursed to such Owners as follows: Any Person who was the Owner of a Bond. as evidenced by the Bond Register, at any time on or prior to March 1, 1987, shall be entitled to receive a portion of such additional interest, such portion to be calculated by multiplying (r) 0. t►mei (a►) the interest paid or accrued (or to be paid or to accrue through March 1, 1987) on each Bond owned by such Owner with respect to the period during which such Owner owned each such Bond. On March 1, 1987, the Trustee shall pay to each Owner of the Bonds on the the applicable Record Date (February 17, 1987) the portion of such additional interest to which each Owner is entitled, shall send to each Person who was a former Owner of Bonds (at the address of such Owner last shown on the Bond Reg►steri a notice identifying the portion of such additional interest to which such Owner is ent;tled and shall pay such portion upon demand of such former Ovrner.## Section 212, Reset of Optional fixed Rate. Following the Conversion Date. the Developer may under Section 5.8 of the Loan Agreement deliver to the Trustee an amendment to the Letter of Credit or Alternate Credit Facility which complies with the requirements of said Section 5.8. If such delivery is matte on or before the ninetieth (90th) day preceding the date of expiration of the term of the Letter of Credit or Alternate Credit Facility which would occur absent such delivery, and if such delivery complies with all applicable requirements of said Section 5.8 and causes any possible expiration of the terry► of the Letter of Credit or Alternate Cred.' Facility (except as the result of the final payment of all Bonds Outstand;ng) to be postponed beyond the earliest date upon which an expiration of the term of the Letter of Credit or Alternate Credit Facility (except as the result of the final payment of all Bonds Outstand•nq) would have occurred absent such delivery, the Trustee upon verification of the satisfaction of the foregoing conditions shall desi;pate the first day of a calendar month. which day is at least thirty (30) days after the date of such delivery (but in any event is a date which is prior to the expiration of the term of the Letter of Credit or Alternate Credit Facility (eiicept as the result of the final payment of all Bonds Outstanding) which would occur absent such delivery) as a reset date (the "Reset Date-,. On such Reset Date. the interest rate or., the Bonds shad be changed from the Optional Fixed Rate to the reset rate (the "Reset Rate") in accordance witti the follov,►ng procedures (1) At [east thirty (30) days in advance of the Reset Date, the Developer shall notify the Trustee. the Issuer. the Remarketing Agent and the Association of its intent to deliver a Letter of Credit or Alternate Credit Facility in accordance with this Section 212 and, together with such notice to the Trustee. we Developer shall deliver to the Trusters evidence of its having obtained a binding commitment for the issuance of the Letter of Credit or Alternate Credit Facility to be in effect on the Reset Date pursuant to Section 5.6 of the Loan Agreement and. further, shall delver or cause to be delivered to the Trustee. Eligible Funds for deposit in the Reserve Account to equal or exceed the Reserve Requirement to be in effect from and after the Reset Date (►t being understood that in computing such Reserve Requirement the hiaximurn Interest Rate shall be used until the Reset Rate has been deterrnir.ed). The Trustee shall also receive from the Developer or from a source arramjod by the Developer crane satisfactory to d that the Collateral held under the Collateral Pledge Agreement (d then applicable) consists only of cash, together with an undertaking by the Associawn (or provider of the Lotter of credit or Altemate Credit Facility then in effect) not to substitute any Collateral for such cash until after the Reset Date. Such notice shall also to accompanied by the written consent of the Association to such reset (which consent the Association may, in its sole discretion, withhold), unless the Letter of Credit will not be in effect from and after the Reset Date. and by an opinion of Bond Counsel to the effect that the establishment of the Reset Rate will not adversely affect the exemption of interest on the Bonds from federal income taxation. (2) Promptly upon receipt of the notice. Eligible Funds and documentation described in subsection (1) above and in any event within twenty (20) days prior to the Reset Date, the Trustee -25- .. , shall give notice to each Owner by first class mail. postage prepaid, at the address of such Owner as it last appears in the Bond Register identifying the Reset Date and stating (A) that on the Reset Date the interest rate on the Bonds will (subject to the conditions specified in Section 211.C(5). which conditions shall be set forth in full in such notice) be converted to the Reset Rate, (B) that all Bonds as to which the Owners thereof have riot (pursuant to subsection (8) of this Section 212) given notice of their desire to retain such Bonds after the Reset Gate shall be purchased by the Trustee on behalf of the Association on the Reset Date at a purchase: price equal to the unpaid principal amount thereof plus unpaid interest accrued thereon to the Reset Date:_ (C) that. from and after the Reset Date, the only payment to which the: Owner of any Untendered Bond or any other Person shall be entitled in respect of such Untendered Bond is the purchase price of Untendered Bond, as set forth in the preceding clause (B). (D) that the purchase price of any Untendered Bond shall not be due and payable to the Owner thereof or to any other Person until such Bond is presented to the Trustee and (E) that in the event any of the conditions lot conversion of the Bonds to the Reset Rate are not satisfied by the Reset Date. the Bonds shall be deemed not to have been tendered to the Trustee b� purchase on such Reset Date and shall be returned by the Trustee to the Owners thereof, and the Bonds shall (until the date. if any, on which the interest rate on the Bonds may thereafter be converted to a Reset Rate pursuant to Sectiun 212 hereof) continue to bear interest at the Optional Fixed Rate or the Reset Rate, as the case may be. glen in effect. Not later than the third (3rd) Business Day prior to the Conversion Date, the Trustee shall draw upon the Letter of Credit or Alternate Credit Facility so as to receive. not later than the Reset Date, funds sufficient to pay the aggregate principal of all Outstanding Bonds and all unpaid interest accrued and to accrue on the Bonds through the Reset Date. (3) On the fifteenth (15th) Business Day prior to the Reset Dale, the Remarketing Agent shall notify the Association, the 'Ssuer, the Developer and the Trustee of the Reset Rate, as requ►rud to be fixed by the Remarket►nq F--innt pursuant to the Remarketing Agreement. (a) On the tenth (10th) Bu:7 : Day prior to the Reset Date, the Trustees shall g►vo notice of the Reset Rate (as hired by the f• -4etinq Agent pursuant to the Remarketing Agreement) to each Owner of a Bond by first class ►r :postage prepaid. at the address of such Owner as it last appears in the Bond Register. (5) On the Reset Date the interest rate or Bonds will. without any further action by the Developer. the Issuer. IN, Trustee or any other Pe: • I-- converted to the Reset Rate so long as each of the folio -wing conditions is satisfied In full' (t• ''—;et Rate shall have been fixed by the Remarketing Agent ns described above. (B) the Roma,, Agent shall have received binding commitments on or before such Reset Date Io purchase a,► :1 < Tendered for purchase by the Trustee on behV of Ihoa Association on such Reset Date at a p,. . least equal to the purchase price required to be paid by the Trustee in respect to such Bona- )nies shall be available pursuant to a draw on the Letter of Credit to purchase any Bonds Tent, -Mich have not been remarketed. (C) the Developer shall have followed tho procedures requ:reJ followed by the Developer in connection with the conversion of the interest rate on the Bonds is -o Reset Rate. as describe in this Section 212. (D) the Developer shall not have given notice to It,,. ' rustee, the Issuer, the Remarketing Agent and the Association on or before the eleventh day preceding such Reset Date. that the Developer is dissatisfied with the Reset Rate: (E) the Trustee shall hold (and for a period of not less than fifteon (15) days prior to the Reset Date shall have field) cash in the; Reserve Account (representing Eligible Funds). #1 in an amount riot less than the Reserve Requirement as in effect from and after the Reset Date: and (1) the Trustee shall have determined that all applicable requirements of Section 5.8 of the Loan Agreement have been satisfied with respect to the Letter of Credit or Alternate Credit Facility to be effective from and after We Reset Dale (including without limitation, the requirements that such Letter of Credit or Alternate Credit Facility permit draws or claims in an amount equal to the aggregate principal amount of the Outstanding Bonds plus one hundred eighty-five (185) days interest thereon at the Reset Rate and that the Trustee shall have received a written Maternent signed by the Rating Agent to the effect 50 that the rating on the Bonds will not be reduced or wru-1rawn as a re- A of the delivery of such Letter of Credit or Alternate Credit Facility). (6) The Remarketing Agent shall, on or prior to tho Reset Date, giv, -ice to "he Developer. trio Issuer, the Association and the Trustee of any failure of the condition ocrfied in clause 1B) of the preceding subsection (5) to be satisfied. The Trustee shall r►nmec .,ly give notice to the Developer, the Issuer, the Association and the Remarketing Agent of any ►ere of the conditions specified in clauses (A). (C), (DI, (E) or (F) of said subsection (5) fr; be-tisfied. If any of the conditions specified in clauses (A) through (F) inclusive of said subsea* I fail to be satisfied, the interest rate on the Bonds shall be daemed not to have been conti-, the Reset Rate on such Reset Date, any Bonds Tendered to the Trustee for purchase by tto uitee on behalf of the Association on such Reset Date shall be returned by the Trustee to the Uv r ers thereof, and the Bonds shall (until that date, it any, on which the interest rate on the Boric• r,ay thereafter be converted to a Reset Rate pursuant to this Section 212 hereof) continue to ; . interest at the Optional Fixed Rate or the Reset Rate, as the case may to, then in effect, an;; t Trustee shall, within five (5) Business Days after such Reset Date, give notice of such fact to tn�, .Rpiriarkeling Agent, the Issuer, the Developer, the Association and each Owner at the addres, of S;ach Owner as it last appears in the Bond Register. (7) In any case where notice is to be given to the Owners by the Truster.: pursuant ttr) this Section 212 neither the failure to give any such notice nor any defect in any not.e►- so given ; Iiall preclude or make ineffective any conversion of the rate of interest on th3 Bonds to the Reset Ratc• (8) (A) The Owner of any Bor.d desiring to retain such Bono on ano after the Reset Date must notify the Association. the Rernarketirg .Agent, the Issuer and the Trustee in writirg received on a Business Day which is at least five (5) days prior to the Reset Date. Sa;d notice must state in substance, (r) The nurnoers and principal amounts of the Bonds wh ch tl)e? .%fishes to retain on and after the Reset Date, and oo That t.-Ee Owner wishes to continuk" to ci n the, Bonns spf-.dried as described in the preceding clausr) (il ;n . That me Owner recogntles that in the event any of tl',E' conditions for conversion for th-nterest ripe on the Bonds to the Reset Ri o are not salisfied by the Rese: Datry. the Bones steall be downed not to have beet) runvrrte d to theReset Rate on such Reset Date and the Borrds shall (until that date, if any, on whirr: ine interest rate on the Bonds may thereafter be converted to a Resat Rate pursuant to Section 2t2 hereof) continue to bear interest at tho Optional Fixed Rater or the Reset Rate, as the case may be. then in effect (BI All Bonds not speafind in a notwe given as and when reaupred by the preceding subparagraph (At shall bo purchased by the Trustee oil behalf of the Association on the Rc,.et Date at a purchase once equal to the unpaid orr:cipal amount thereof plus unpaid interest accrued thereon to the Reset Date. ICI From and after the Reset Date, the only payment to which the Owner of such Untendered Bond or any other person shalt be entitled in respect of such Untendered Bond is the pu,zhase price of such Untendered Bond determinea in accordance with the preceding paragraph (B). whict, shall be due: and payable to the Owner thereof uporr, presenlatron of such Bond to the Trustee. (D) From and after the Reset Date, it any Bond is owned by an Owner who has given notice of his desire to continue to own such Bond as and whey, required by subparagraph (A) .27• above. until the Trustee shall have authenticated and delivered to the Owner a replacement Bond substantially in the form'herernabove set forth, which the Trustee shall complete as soon as is practicable after the Reset Date. such Bond then held by the Owner shall be deemed to be a replacement Bond and notwithstanding the terms and conditions expressed therein, the rights of the Owner of such Bond shall be the same as the rights of the Owners of an equal principal amount of replacement Bonds in the form to be so authenticated and delivered on and after the Reset Date. (9) Notwithstanding any provision of this Indenture to the contrary, the interest rate on the Bonds shall not exceed the Maximurn interest Rate not shall it be less than two percent (211o) per anrum. Set;ion 213, Limitation. Except as otherwise expressly provided in th, Loan Agreement or the Regulatory Agreement. the Association has no responsibility to ?` a Ownp: of any Bond in respect of the state or federal income tax treatment of any payment of interest, premium or principal of any Bond or any other payment thereon or in respect thereof whether received from the Trustee. the Developer, the Association or others. •28- ARTICLE Ill REVENUES AND FUNDS Section 301. Sources of Payment of the Bonds. The Bonds herein authorized and all payments by the Issuer hereunder, ate not and shall never become general obligations of the Issuer, but are limited obligations payable solely and only from the Re,4enues and the Funds and Accounts created pursuant to this Indenture (excluding the Excess Investment Earnings f..nd), and as authorized by the Act and provided herein. Section 302. Creation of Funds and Accounts. The following Funds and Accounts of the Issuer are hereby created and established with the Trustee: f 1) the Developer Loan Fund, which includes the Appraisal :'Yithhold Account, the Construction Interest Payment Account, the Operating Lease -Up Loss Account and the Disbursement Account; (2) the Cost of Issuance Fund; (3) the Debt Service Fund. consisting of the Interest Account, the Principal Account, the Reserve Account and the Seasoned Funds Account; (a) the Tender Payments Fund; and (5) the General Fund##. Each such Fund and Account shall be maintained by the Trustee as a separate and distinct trust fund or a separate and distinct trust account to be held. managed. Invested, disbursed and administered as provided In tnis Indenture. All moneys, obligations and securities deposited in the Funds and Accounts shall be used solely for the purpose set forth in this Indenture. The Trustee shall keep and maintain adequate records pertaining to each Fund and Account and all disbursements therefrom. Not less frequently than annually. the Trustee shall submit to the Rating Agent a report as to the amounts on deposit In the Fit:serve Account. Notwithstanding anything to the cor;rary In this Section 302, the Tender Payments Fund may be ma►ntz-ned by the Trustr,e vath the agent of t"e Trustee appointed pursuant to Section 1109. Section 303. Initial Deposits. On the Delivery Date. as shai; be more full. specified in a written request from the Issuer. the Trustee shall deposit the proceeds rece-veo from thr.- sale of the Bonds. together with a disbursement on behalf of this Developer under roe De eloper Loan to cover the costs of Issuance of the Bonds, as fellows: (1) first. an amount equal to S shall b+z deposited in the Cost of Issuance Fund. (2) second. an amount equal to the Reserve Requirement shall be deposited 1r.;o the Resere Account but shall be deemed to have been disbursed to the De rv,cpgi as part of the Developer Lean: and (3; third, the balance of the proceeds shall be deposited in the Developer Loan Fund Section 304. Developer Loan Fund. (a) On the Delivery Date. the Trustee shall deposit into the Developer Loan Fund the amount required by Section 303i3t of this Indenture. Except as specified below in this Section 304, moneys on deposit In the Developer Loan Fund shall be applied or disbursed In accordance with Section 3.4 of the Loan Agreement. (b) On the Delivery Date, there shall be allocated from the amounts depositeJ into the Developer Loan Fund to the Constnuction Interest Payment Account the sum of S322.830 to be held In the Construction Interest Payment Account on the following terms and conditions: (I) Subject to the prior satisfaction of the conditions preredent to the disbursement of amounts on deposit In the Developer Loan Fund pursuant to Section 3.4 of the Loan Agreement, In accordance with applicable provisions of the Reimbursement Agreement. amounts on deposit in the Constn,ction Interest Payment Account shall be used to make .29- the monthly payments at the Developer Rate (as defimid in the Reimbursement Agreement) due under the Letter of Credit Note (as defined in the Reimbursement Agreement) during the Construction Terre. (6) Subject to the prior satisfaction of the conditions precedent to the disbursement of amounts on deposit in the Developer Loan Fund pursuant to Section 3.4 of the Loan Agreerent, any monies remaining in the ConstmLlion Interest Payment Account shall be remitted to the Association for deposit## in the Interest Reservp Account (as defined in the Reimbursement Agreement), to be disbursed as provided in the Reimbursement Agrc-ement. (c) On the Delivery Date, there shall be allocated from the amounts deposited into the Developer Loan Fund to the Appraisal Withhold Account the sum of 51.120.000, to be held in the Appraisal Withhold Account on the following terms and conditions. (0 Subject to the prior satisfaction of the conditions precedent to the disbursement of amounts on deposit in the Developer Loan Fund pursuant to Section 1.4 of the Loan Agreement and in accordance with #0 the Reimbursement Agreement, upon written notice from the Association that the applicable cood►tions set forth in ## the Reimbursement Agreement have been satisfied. amounts on deposit in the Appraisal Withhold Account shall be disbursed to tf"_- Developer. (ii) Notwithstanding the foregoing, if tha applicable conditions set forth in x#► the Reimbursement Agreement are not satisfied on or before July 1, 1989, subject to the prior satisfaction of the conditions precedent to the disbursement of amo ants on deposit in the Developer Loan Fu•�,', pursuant to Section 3.4 of the Luan Agreement, in accordance with *# the Reimbtvsem,,nt Agreement. the monies on deposit in the Appraisal Withhold Acco-.;,t shall be disbursed to th, Developer and applied by the Trustee. but only at the Association's direction. to repay principal and accrued interest on the Leiter of Credit Note. Section 305. Cost of Issuance Fund. On the Delivery Date. the Trustee shall deposit the amount specified in Sencri 3030 t into the Cost of Issuance Fund Mona)-s on deposit in the Cost of Issuance Fund shall be appIted to pay the costs of issuing the Bonds. ►ncludmg. but not limited to the Issuer's ,fees and expenses Gncluding an initial tee of 1 2 of t of the aggregate principal amount of the Bondsl; underwriting fees and expenses; expenses in connection with preparation of the Indemoure. the Developer Loan Documents. the Collateral Pledge Agrem-ont, Vie Bonds and the Official Statement pertaining to the Bonds; legal fees relating to any blue sky oe legal investment memoranda. rating agency fees; market study fees. legal lees and expenses of Bond Counse! and counsel to the Issuer. Association counsel, and Develop•?r's counsel: any cornputilr and other expenses incurred in connection with determining or verifying the suftic►enr,; of the projected cash flows from the Developer Loan or in determining that the Bonds are not arbitrage bonds; the initial tees and expenses of the Trustee and any Paying Agent; the initial fees for the Letter of Credit or otherwise payable under the Reimbursement Agreement: initial Coltatmal Agent fees; and other fees and expenses incurrrtd :n connection with the issuance of the Bonds (such as priming. telephone, etc.). to the extent such fees and expenses are approves' by the Issuer. Such costs shall be payable upon s!jbm►ssion of a written request from the Issuer, stating that the amount ►ndicatea thereon is due and owing. has not been the subject of another written request which has been pa,d, and is .a proper crst of issuing the Bonds Any rroneys remaining in the Cost of Issuance Fund on the one hundred eightieth (180th) day following the Delivery Date and determined by the Trustee not to tie necessary for the payment of any expenses hereunder or costs of issuance of the Bonds shall be transferred to the General Fund. .313. Section 306. Application of Revenues. (a) The Trustee shalt apply all Revenues and any other amounts (other than Tender Payments) received by the Trustee which are subject to the lien and pledge of this Indenture, to the extent not required to be deposited in other Funds or Accounts, in accordance with the terms of this Indenture. (b) Moneys on deposit which represent payments made to the Trustee by the Developer shall be applied as follows: (1) To the Seasoned Funds Account. any moneys deposited by the Developer or the Issuer directly with the Trusiae whether or not so designated by the Developer or the Issuer. for any purpose other than the pa;.nent of arnounts owing under Section 4.3 of the Loan Agreement. Without limiting the generality of the foregoing, any moneys deposited by the Developer or the Issuer directly with the Trustee for the payment of principal of, interest on and premium, if any, on the Bonds shall be applied to the Seasoned Funds Account; and (2) To the Genera) Fund. moneys deposited by the Developer or the Association with the Trustee as payment of the amounts owing under Section 4.3 of the Loan Agreement for the fees and expenses required to be paid thereunder; including those of the Issuer. the Trustee. the Co - Transfer Agent. the Tender Agent. the Remarketing Agent. any Paying Agent and the Rating Agent. Section 307. Debt Service Fund. (a) The Trustee shall dcpos:t into the Interest Account of the Debt Service Fund from a draw on the Letter of Credit an amount as determined in accordance with Section 309(2)(a) hereof, or from the Reserve Account, from Collateral Funds or from other Eligible Funds. !n that order of priority, an amount sufficient to pay the interest becoming due and payable on the Bonds on the next Interest Payment Date or Redemption Date. Moneys on deposit in the Interest Account shall be applied solely to pay the interest on the Bonds as the same becomes due and payable. On each date fired for mandatory or optional rede. upon of the Bonds and on each scheduled Interest Payment Date on the Bonds (except the scheduled Interest Payment Date that coincides with the final maturity date of the Bonds), the Trustee shall remit in accordance with Section 202 to the respective Owner of such Bonds, as of the Record Date for such interest payment, an amount from the Interest Account sufficient to pay the interest on the Bonds becoming due and payable on such date. and on the scheduled Interest Payment Date that coincides with Inc, final maturity of the Boncls. the Trustee shall set aside and hold in trust, or shall remit to any Paying Agent to be. held in trust. an amount from the Interest Account sufficient to pat the interest on the Bonds becoming due and payable on suc►1 date (b) The Trustee shall deposit into the Principal AcCOu11t of the Debt Service Fund from d draw on the letter of Credit, amounts ir! the. Reserve Account, or from Collateral Funds Ui from other Eligible Funds. in that order of priority (provided that any premium shall Lie payable solely from Seasoned Funds), an amount sufficient to pay the principal of the Bonds maturing on the; r.eA;, Interest Payment Date or the redemption date. Moneys on deposit in the Principal Account sha!l be applied solely to pay the prmLipal of and premium, if any, on the Bonds as the same becomes due and payable at maturity or by prior redemption or acceleration. On each date on which ;,;ny principal or premium becomes payable on the Bonds, the Trustee shall set aside and hold in trust, or remit to any Paying Agent to be held in trust. an amount from the Principal Account sufficient to pay the amount becoming due and payable on such date. (c) The Trustee shall deposit in the Seasoned Funds Account the moneys required by Section 306(b)(1) of this Indenture. Moneys on deposit in the Seasoned Funds Account shall be held therein for a period o: at least 95 days and until they shall otherwise meet the definition of "Seasoned Funds" under this Indenture and shall thereafter be transferred first, to the Reserve Account in an amount necessary to bring the amount on deposit therein to an amount equal to the Reserve Requirement -31- .. , (except to the extent other Eligible Funds are deposited therefor), and then to the Interest Account and Principal Account for the payment of principal of, interest on and redemption premium, if any, on the Bonds. All deposits into thn Seasoned Funds Account shall be held in separate subaccounts until transferred as otherwise provided herein and shall not be commingled with other deposits made into such account. (d) The Trustee shall deposit in the Reserve Account within the Debt Service Fund the moneys required by Sections 303(2), 211.0 and 212 of this Indenture. If on any Interest Payment Date. the amounts on deposit in the Interest Account of the Debt Service Fund are not sufficient to pay the interest becoming due and payable on such Interest Payment Date, the Trustee shall withdraw from the Reserve Account and transfer to the Interest Account an amount sufficient to enab!e the Trustee to pay the interest becoming due and payable on the Bonds on such Interest Payment Date. Section 307.A. Reserve Account. (a) The Trustee shall deposit from the proreeds of the sale of the Bonds an amount equal to the Reserve Requirement in the Reserve Account as required under Section 303(2) of this Indenture and shall deposit th,areln the amounts specified in Section 21 t.0 and 212 of this Indenture at the times specified in saic Sections 21 t.0 and 212. The Trustee shall apply inoneys on deposit in the Reserve Account solely for the following purposes, in the following order of priority and in accordance with the following conditions: (1) The Tru lee shall deposit into the ! Merest Account of the Debt Service Fund amounts sufficient to pay the interest becoming due and payable on the Bonds un the next Interest Payment Date or the redemption date of the Bonds to the extent amounts in the Interest Account from draws on the Letter of Credit on such Interest Payment Date or redemption date are insufficient to Fay such interest. (2) The Trustee sha!i deposit into the Pr;nc+pal account of the Debt Service Fund amounts sufficient to pay the principal becoming du,:� and payable on tha bonds on the next Interest Payment Date or the redernpt.on date of the Bonds to the extent amounts in the Principal Account from draws on the Letter of Credit on such Interest Payment Date or redemption date are insufficient to pay such principal: provided, howe,.er. that monies of deposit in the Reserve Account shall not be used to pay principal on the Bonds until all interest accrued or to accrue on the Bonds has been paid or otherwise provided for (3) On each September 5 commencing September 5, 1997. the Trustee shall transfer any amount in the Reserve Account in excess of the Reserve Requirement. but uni j after payment of all principal of and interest on the Bonds than due. to the Genera' Fund (b) Notwithstanding anything contained herein to the contrary during the period commencing with the delivery of any notice as provided in Sections 21t.C.(1I or 212 hereof and ending on the Conversion Date, the Reserve Requirement shall be deemed to be the greater of the Reserve Requirement in effect immediately prior to the delivery of such notice and the Reserve Requirement to be in effect from and after the Conversion Date. Section 308. General Fund. The Trustee shall deposit into the General Fund the amounts required by Sections 305 and 306(bi of this Indenture. The Trustee shall apply moneys on deposit in the General Fund solely for the following purposes, in the following order of priority and in accordance with the following conditions: (1) The' Trustee shall apply moneys on deposit in the General Fund (but only to the extent such moneys constitute Eligible Funds) to replenish the Reserve Account to the extent of any -32- deficiency the rein with respect to the Reserve Requirement as sand when such deficiency may arise. (2) The Trustee, from !;me to time, shal! apply moneys on deposit in the General Fund for the purpose of paying Operating Expenses. (3) The Trustee. on September 15 of each year commencing September 15, 1987, shall pay to the Association any moneys remaining in the General Fund on such date in excess of those required for the purposes described in cla.;5es (1) and (2) immediately above. Section 309. Letter of Credit: Drawings Under the Letter o/ Credit. (1) The Letter of Credit shall be held by the Trustee and drawn upon in accordance with its terms consistent with the provisions of this Indenture and the Loan Agreement. and specifically by such means and manner specified in the Letter of Credit as shall be sufficient to enable the Trustee to receive funds therefrom on or before the dates such funds are required for the purposes hereof. Moneys derived from draws upon the Letter of Credit shall be deposited in the appropriate accounts of the Debt Service Fund and applied by the Trustee to pay the principal of and interest on the Bonds- (2) The Trustee shall draw moneys under the Letter of Credit in accordance with than terms thereof to the extent necessary to matte timely payments of the principal of and ante: est. but not premiurr. 0n the Bonds required to be made from the Debt Service Fund. Such draw shall be made specifically by such means and manner specified in the Letter of Credit as shall be sufficient to enable the Trustee to receive funds therefrom on or before the dates such funds are required for the purposes hereof. In accordance with the preceding paragraph. the Trustee shall draw moneys under the Letter of Credit to make payments on the Bonds as follows: (a) Three f3) Business Days prior to each Interest Payment Date, in an amount WhIcn. when added to the funds then on deposit ir, the Debt Service Fund, are sufficient to pay (it the interest becoming due and payable on Bonds on such date, which sha!I be determined in accordance wan Sections 211 or 212 hereof, as appl►eable. and (w the principal of the Bonds maturing on such date, if any (provided, however, that unless the Trustee chall receive confirmation from the Collateral Agent at least forty (40) days pnor to any Interest Paymen; Date than' all of the Collateral consists solely of cash and the Association agrees not to substitute any Coll neral other than cash for such rash Collateral dunng the pE:nod beginning forty (40) days pricx to such Interest Payrment Date and ending on such Interest Payment Date, such drays shall be made thirty-seven (37) days prior to each Interest Payment Date). (b) Three 13) Business Days prior to the final maturity or the date frrea for redemption of the Bonds. in an amount sufficient to redeem the Bonds (other than the amo,im owing as a redemption premium. if any); (c) As required by Section 802 hereof; w.i As required by Section 1103 hereof; (e) As required by Section 211.C.(2) hereol; and (f) As required by Section 212(21 hereof, (3) Subject to Section 12(c) of the collateral Pledge Agreement. ,f with respect to any draw on ;he Letter of Credit by the Trustee pursuant to subsection (2) the Association fails to make any payment under the Letter of Credit when due and payable, then the Trustee shall accelerate the Bonds as provided in Sertion 802 hereof and shall take such steps with respect to the Collateral as shall be •33• sufficient under the Collateral Pledge Agreemen; to obtain Collateral Funds to pay aW principal of and accrued interest on the Bonds. The Trustee shall deposit the Collateral Funds as follows: (1) the amount drawn to cover the aggregate amount of interest dun and payable on any Interest Payment Date upon all Bonds then Outstanding but not paid by the AEsocratron and not on deposit in the Reserve Account shall be deposited err the Interest Account, (2) the amount drawn to cover the aggregate amount of principal due and payable on the Outstanding Bonds on any Interest Payment Date, but not paid by the Association, shall be deposited in the Principal Account. If with respect to any draw on the Letter of Credit by the Trustee pursuant to subsection (2)(d) above, the Association fails to matte any payment under the Letter of Credit and the Bonds are required to be redeemed pursuant to Section 602.A.(a) hereof, then the Trustee shall take steps to redeem the Bonds in accordance with said Section. shall proceed to enforce its remedies under the Collateral Pledge Agreement and shall apply amounts on deposit it. the Reserve Account to pay interest on the Bonds on the date fixed for redemption. (4) Any Letter of Credit or Alternate Credit Facility provided to the Trustee as a replacement or substitute for the then outstanding Letter of Credit shall meet the applicable requirements of Section 5.8 of the Loan Agreement. Section 310. Final Balances. Immediately upon the deposit .vith the Trustee of moneys in accordance with the provisions of Article XIII sufficient to pay all principal of, and premium. if any, and interest on, the Bonds, and upon satisfaction of all clairns against the Issuer hereunder, including all fees, charges and expenses of the Trustee, and any Paying Agent. which are properly due and payable hereunder, and al; fees due the Issuer under the Loan Agreement and the Regulatory Agreement or upon the making of adequate provisicn for the payment of such amounts, as permitted hereby, and subject to the prrvisrons of Article V hereof. all moneys remaining in all Funds and Accounts except moneys necessary to pay principal of. and prerniurn, It any. and interest on, the Bonds or the purchase price of Bonds reouired to be purchased by the Trustee (which moneys shall be held by the Trustee). shall be paid to the Association. Section 311. Security of Funds. All moneys deposited with the Trustee or with any agent of the Trustee appointed pursuant to Section 1109 under this Indenture (except for money held by the Trustee. as paying agent. or remitted to any Paying Agent for the payment of the prrnc<<,al of, premium. if any, and interest on. the Bonds, shall. white field by the Trustee. constitute part of the Trust Estate Section 312. Non -Presentment of Bonds. In the event any Bond shall not be presented for payment when the pnncrpal thereof becomes due. Either at maturity or otherwise, or at the date fixed for redemption thereof, if moneys sufficient to pay such Bond shall have been deposited in the Debt Service Fund. all liability of the Issuer to tree Owner thereof for the payment of such Bond sha!I forthwith cease, determine and be completely discharged. and thereupon ,t shall be they duty of the Trustee to hold such moneys. wilt -out liability for interest thereon. for the benef-t of the O,r.-ner of such Bond, who shall thereafter be restricted eIrclusrvely to such moneys. for any clairn of whatever nature on his part under this Indenture or on. or with respect to. said Bond Any moneys so deposited with and held by the Trustee that are not so applied to the Payment of Bonds within five (5) years after the date of the final maturity or earlier redemption or pa-rment of all E?onds shall be paid by the Trustee to the Issuer. and Viereafter Owners shall ue entitled to ook only to the Issuer for payment. and then only to the extent of the amount so repaid, and the Issuer shall not be liable for any interest therpon and shall not be regarded as a trustee of such money. Section 313. Moneys to Be Held in Trust. All moneys required to be deposited with. or paid to. the Trustee under any provision of this Indenture shall be held by the Trustee in trust and applied for the purposes herein specified. Section 314. Tender Payments; Tender Payments Fund. All Tender Payments shall be held by the Trustee in the Tender Payments Fund which is hereby created with the Trustee and shall be used .3a. „ by the Trustee only to pay the purchase price of Bonds req+,ired to be. purchased by the Trustee pursuant to Sections 1101(b) or (c) and to make the payments, if any, required to be made by the Trustee pursuant to Section 1111. Any surplus funds shall be returned to the payor of such funds within five Business Days after the purchase of Tendered "Bonds, Section 315. `Rights ' of Set 011; Equal Security. The Association has waived its right of set-off against any deposits or other indebtedness owing to the Developer or any general partner thereof as more fully described in Section 2.08(d) of the Reimbursement Agreement, provided that such right of set-off may be reinstated upon receipt of an opinion of counsel as provided in said section and a written statement, signed by an officer of the Rating Agent, to the effect that such action will not in and of itself result in a lowering or withdrawal of the rating on the Bonds by the Rating Agent. The Trustee shall be secured on a parity with the Association with respect to any collateral or security for the reimbursement obligation of the Developer. -35- ARTICLE IV REVENUES AND APPLICATION THEREOF Section 401. Revenues to Be Paid Over to the Trustee. The Issuer will cause the Revenues to be paid to the Trustee for deposit when necessary in accordance with the terms of this Indenture to effect payment of the principal of. premium, if any, and interest on the Bonds as the same become due. Section 402. Payments of Principal, Premium and Interest. The Trustee shall make available to the Paying Agent from the Revenues sufficient amounts to pay the principal of, premium, if any, and interest on, the Bonds as the same become due and payable. Section 403. Revenues to Be Held For All Bondholders; Certain Exceptions. The Revenues shall, until appliecc as provided in this Indenture, be held by the Trustee for the benefit of the Owners of all Outstanding Bonds, except that any portion of the Revenues representing principal or redemption price of or purchase price of, and interest on, any Bonds previously called for redemption in accordance with Article VI of this Indenture, tendered (or deerned to have been tendered) for purchase in accordance with the provisions of Article XI hereof. or previously matured, shall be held for the benefit of the owners of such Bonds only and shall not be deposited or invested pursuant to Article V hereof, notwithstanding any provision of Article V. -36- ARTICLE V INVESTMENT OF MONEYS Section 501, Investment of Moneys. Moneys in all Funds and Accounts shall be continuously invested and reinvested by the Trustee as provided in this Section 501'##. until such time or dines as said money shal! be needed for the purposes for which they were deposited. fAoneys, on deposit in the Developer Loan Fund !# sthdll be invested in Permitted Investments offered by the Association or by other ranking institutions to its customers generally. Moneys on deposit in all Funds and Accounts. except the Developer Loan FundP#• may be invested only in: (a) Government Obligations: or (b) Permitted 'nvestments1l; provided that (1) amounts held in the Debt Service Fund (except moneys in the Reserve Account, which shall be invested as provided in the next paragraph) and the Tender Payments fund drawn on the Letter of Credit or obtained from Collateral Funds shall be either (r) held as cash or (6) shall be invested and reinvested by the Trustee, only in Government Obligations maturing not later ;han the earlier of (A) thirty (30) days after the data on which they are acquired or (B) the date such moneys are required for the pu-pose of such Fund, and in repurchase agreements with financial institutions having a rating at least equal to the rating on the Bonds and secured by Government Obligations maturing not later than the earlier of (x) thirty (30) days after the date on which they are acquired or (y) the date such moneys are required for the purposes of such. Fund. investments pursuant to clause (ri) to be at the request of and as directed .n writing by the Association by 12:00. noon Pacific time on the day prior to such investment or in the absence of such request, then at the discretion of the Trustee and (2) arnounts in the Dent Service Fund shall not be invested in any n7struments bearing a credit rating by the Rating Agent of leaser quality than that of the Bonds. Except as p-ovrded above in t`ris paragraph, all such investments shall mature not later than 90 days from the date ai purchase. and nct later, nor, to the extent reasonably practicable. earlier, than the date such moneys or investment proceeds are required for the purposes of the respective Funds and Accounts: provided. however, that investments of moneys in the Seasoned Funds Account shad mature not later than the earlier of 90 days after the date they are invested cr (b) v.-hen required for the purposes of such account. Notwithstanding the foregoing prov:sions. the Trustee shall not make any investment which does not conform to the investment guidelines provided to the Issuer by Bond Counsel on the Delivery Date. Moneys on eposit in the Reserve Account shall be invested in Governrent Obligation.; maturing thirty (30) days after the date on which they are acouired: All investment ea►ninos or moneys held in the Reserve Account shall be transferred to the Interest Account and, to thc4 extent not required to be transferred to the Interest Accouni pursuant to Section 307(d) hereof, shall be remitted to the Association on ine Business Day succeeding each Interest Payment Date. to be credited against the Developer's obligations to the Association undt�r the Reimbursement Agreement, Subject to Section 3.6 of the Loan Agreement, the Issuer. trrnn time to time and to the extent practrcar,fe, may provide the Trustee with written requests as to specitic Permitted Investments to be made with the moneys herd in the Funds and Accounts. The Trustee shall, nevertheless. select the Permitted Investments to be made with such moneys in accordance with prudent investment standards and the provisions of this Section 501. The Trustee shall have no liability or responsioility for any loss resulting frorn any investment made in accordance with the provisions of this Section 501, All investments and all investment earnings thereon, other than the investment earnings or moneys held in the Reserve Account, which shall be applied in accordance with the second paragraph of this Section 501, shall constitute a part o! the Fund or Account frorn which the moneys used to acquire such investments have come, except as provided in Section 306(a) hereof. The Trustee shall sell and reduce to cash a sufficient amount of investments in a Fund or Account whenever the cash balance therein is insufficient to pc-y the amounts required to be paid therefrom. •3i- In computing the amount in any Fund or Account, obligations purchased as an investment of moneys therein shall be valued at the market price of such obligations, excluding any accrued interest. It the market price of such obligations is not readily available, the Trustee shall determine the value, of such obligations in any reasonable manner that has been approved by Standard & Poor's Corporation. Any other provision !n this Section 501 to the contrary notwithstanding, for purposes of the arbitrage requirements under Section 103(c) of the Codo and the regulations proposed or promulgated thereunder, in computing the amount in any Fund or Account hc;d by the Trustee under the provisions of this Indenture, investments shall be valued at cost. epcept if any investment Is purchased at a discount. or it the arnoun! of interest accruing .n any period Is greater than the amount of Interest In the prior period (thus reflecting the reinvestment of interest as principal) the amount of such discount or excess Interest shall be added to the cost of the investment ratably each year over Its term. Section 502. Earnings and Losses. Subject to the restrictions hereinafter set forth in this Artic!e V, all capital gams. profits and Interest earnings resulting from the Investment of moneys In all Funds. I ncluding any Accounts thereof, shall be deposited into, and any loss of principal value resulting from the investment of moneys in any Fund or Account and any expenses incurred In making or disposing of investments shall be charged, when incurred. to the Fund or Account from which such investments were made. Section 503. Investment Yield Limitations. (a) Except as provided In paragraph (b). at no dine during any Investment Year shall the Trustee permit the aggregate amount of Gross Proceeds of the Bonds invested In Nonpurpose Obligations with a yield higher than the yield on the Bonds to exceed 150 percent of the Debt Service on the Bonds for such Investment Year, In addition, the Trustee shall assure that. beginning with the Investm:�nt Year following completion of the Protect, but In no event later than the fourth Investment Year, said aggregate amount of Gross Proceeds of the Bonds im estea In Nonpurpose Obligations with a yield higher than the yield on the Bonds Is promptly and appropriately reduced as the principal amount of the Bonds is reduced. In order to comply with the precedinq sentence, the 'Trustee shall reduce said investment in Nonpurpose Cbngatlons with a yield higher than the yield on the Bonds within a period not to exceed thirty (301 days followwng the payment of principal of the Bonds (by maturity. redernption. acceleration or otherwise), provided. however. that said reduction nee-i not be made If the failure to make sa►a reduction will not violate the 150 percent requirement set forth In the first sentence of this paragraph fat. (b) Paragraph (a) hereof shall not apply to Gross Proceeds wh:Ch'. (I) are original proceeds or Investment proceeds (as defined in clauses (I) and oo of the the definition of Grnss Proceeds) invested until needoo for accrued Interest on the Bonds or for the governmental purposes of the Bonds: (Ir) are held in the Debt Service Fund, or (III) are Invested for a period not in excess of one year beginning on the date of receipt and constitute Investment proceeds (as defined In clause (o) of the definition of Gross Proceeds). (c) For the purposes of paragraph (ar, In determining the aggregate amount of Gross Proceeds of the Bonds Invested in Nonpurpose 00gatrons, the Trustee shall glue each Nonpurpose Obligation in which Gross Proceeds are invested (Including an obligation or security that was not a Nonpurpose Obligation when acquired but that becomes a Nonpurpose Obligation with respect to the Bonds (for example, obligations pledged as security for the Bonds) as If the Nonpurpose Obligation were acquired fnr Its fair market value at the time such ou,Igation or security t)ecomes a Nonpurpose Obligation of the Bonds. The Trustee shall value Nonpurpose Obligations cn the date of acquisition and need not revalue such Nonpurpose Obligations unless otherwise required In this Indenture. .3g. (d) For the purposes of paragraph (a), the Trustee shall compute the yield of the Bonds and the yield of Nonptrpose Obligations in accordance with Section 1.103'13(c) of the Regulations. except that the yield of the Bonds shall be determined on the basis of the initial offering price of the Bonds to the public (not including bond houses and brokers or similar persons or organizations acting in the capacity of underwriters or who-lesalers) at which price a substantial amount J the Bonds were sold, or it privately placed. the price paid by the first buyer of the Bonds or the acquisition cost of the first buyer of the Bonds. In addition, the Trustee shall compute the yielJ of each Nonpurpose Obligation based on the fair market value thereof on the date of acquisition thereof or on the date the obligation or security in question becomes a Nonpurpose Obligation of the Bonds. In the case of variable rate Nonpurpose Obligations, the Trustee shall determine the yield thereof on the date the Nonpurpose Obligation is acquired and on the first day of each Investment Year by assuming that the rate of interest on the Nonpurpose Obligation w0I he the weighted average rate of interest for such Nonpurpose. Onhgation during tha preceding one year period for portion thereof in which the Nonpurpose Obligation was outstanding). For a Nonpurpose Obligation purchased on its date of issue. the Trustee shall determine the yield for the first Investment Year by assuming that the rate of interest will be the initial rate of interest for such obligation as determined under the prescribed formula for the variable rate of interest on tha date of issue of the Nonpurpose Obligation (without regard to any fixed rate initially applicable to such Nonpurpose Obligation). (e) For the purposes of this Section, the Trustee shall compute the yield and the Debt Service on the Bonds by assuming that the :ate of interest on the Bonds will be (i) for the first Investment Year, the initial rate of interest for the Bonds as determined under Section 211. B. hercof on the Delivery Date (without regard to any fixed rate initially applicable to the Bonds pursuant to Section 211.A hereof), and (i,) for subsequent Investment Years, the weighteo average rate of interest for the Bonds during the preceding Investment Year. Paragraph (a) of this Sect -,on shall not be deemed to be violated if. after the expiration of the period ending with the date of completion of the Project or three years from the Delivery Date (whichever is sooner), the Norpurpose Obligations with a ypelr+ higher than the yield on the Bonds in excess of 150 percent of the Debt Service on the Bonds are disposed of by the Trustee within thirty (30) days of the annual determination of the Debt Service .if the fronds and within thirty (30) days of any redemption of the Bonds resulting in a reduction n annual Debt Service on the Bands. (1) For the pur4ose of paragraph (a) of this Section. the Trustee ne, J not sell or dispose of Nonpurpose Obligations subject to such paragraph if such sale? or dts posit+on we ild result in the realization cif a loss for federal income tax purposes that exceeds that amount that would be paid to the United States pursuant to Section 504 hereof (but for such sale or disposition) at the time of such sale or disposition (not including amounts that have been previously paid to the United States pursuant to Section 504) it a payment under Sectior. 504 were due at such tare. provider, however. that the preceding sentence shall not apply to the: extent that other Nonpurpose Oblige tons acquired with the Gross Proceeds of the Bonds may be sold or disposed of Kithout incurring a loss in excess of the amount that would be paid to the United States pursuant to Section 504 (but for such sale or disposition) at the time of such sale or disposition if a payment under Section 504 were due a: such time: and provided, further, that with respect to any Nonpurpose Obligation that, under the rule described in this paragraph need not be sold or dispoied of. said rule shall cease to apply thirty (30) days after the last day of the first computation period ending thereafter on Ahich the Nonpurpose Obligation in question can tx- sold or disposed of without incurring a loss in excess of the amount that would be paid to the United States pursuant to Section 504 (but for such sa►e or dispnsiticn, if a payment under Section 504 were due at such time. For the purposes of this subsection, the Trustee shall treat different issues of Nonpurpose Obligations acquired at different times or with different interest rates or maturity periods as separate issues. N1`T • Section 504. Rebate o/ Excess Investment Earnings to the United States. (a) The Trustee shall calculate EXCBSs Investment Earnings In accordance with paragraph (b) and shall pay Excess Investment Earnings to the United States in accordance with paragraph (c). The term "Excess Investment Earnings" means an amount equal to the Burn of: (I) the excess cf (A) the aggregate amount earned from the Delivery. Date on all Nonpurpose Obligations In which Gross Proceeds of the Bonds are Invested (other than amounts attributable to an excess described In this subparagraph (I)). over (B) the amount that would have been earned if the yield on such Nonpurpose Obligations (other than amounts attributable to an excess described in this subparagraph /I)) had been equal to the yield on the Bonds. plus (it) any income attributable to the excess described In paragraph (I) (b) At or prior to the last day of the first Investment Year. the Trustee shall calculate the Excess Investment Earnings referenced In subparagraph (►) of paragraph (a) and shall transfer an amount equal to such Excess investment Earnings into the Excess Investment Eamings Fund, such transfer to tx: derived from available moneys in the other Funds and Accounts held by the Trustee under this Indenture in dv following order of priority: (i) the General Fund, (ii) the Disbursement Account, (iii) the Constnichon Interest Payment Account, (iv) the Opawating Lease -Up Loss Account and (v) the Appraisal Wrthhold Account. In the event of any deficiency in available moneys for the purposes of such transfer, such deficiency shall btr paid by the Developer upon demand of the Trustee Thereafter. prior to the last day of each Investment Year and on the date of the retirement of the Bonds, the Trustee shall calculate the amount of Excess Investment Earnings teferenced In subparagraphs (I) and (it) of paragraph (al and mane corresponding transfers into the Excess Investment Earnings Fund. Said calculations shall be made by the Trustee In accordance with the followng (1) Except as providctd In ("-I. In determining the amount doScr+bed In subparagraph (I)(A) of paragraph !a), the aggregate amount earned on Nonpurpose OLGga'ions shall Include (I) all Income realized under federal Income lax accounting principles (whether or not the person earning such income Is subject to federal Income tax) with respect to such Ntionpurpose Obligations and with respect ;o the reinvestment of Investment receipts from such Nonpurpose Obligations (without regard to the transaction costs Incurred In acquiring. carrying, selling or redeeming such Nonpurpose Obligations), including, but not Irrnitea to. gain or loss reallred on the dlspos-tion of such Nonpurpose Obligations (without regard to when such gains are taken Into accnunt under Section 453 of the Code relating '-1 1aAable year of Inclusion of gross Incornel, and Income under Section 1272 of the Code (relating to original issue discount) and fill any unrealized gain or loss as of the date of retirement of the Bonds If any Nonpurpose Obligation Is retained after such date. (2) In determining the amount described In subparagraph (I) of paragraph (a), an oblioation or security shall be treated as acquired for its fair market value at the time It becomes a Nonpurpose Obligation, so that gain or loss on the disposition of such an obligation or security shall be computed with reference to such fair market value as its adjusted basis. (3) In det?rmntng the, amount described In subparagraph (t)(B) o► paragraph (a), the yield on the Bonds shall be determined based un the actual yield of the Bonds during the period between the Delivery Date and the date the computation is made (with adjustments for discount or premium). (4) In determining the arnount described In subparagraph (it) of paragraph (a). all Income attributable to the excess described In subparagraph (I) of paragraph (a) must be taken into .40. account, whether or not that income exceeds the yield on the Bonds, and no amount may he treated as "negative arbitrage". (c) The Trustee shall pay Excess Investment Earnings to the United States in installments with the first payment to be made not later than thirty (30) days after the end of the fifth Investment Year and with subsequent payments to be made not later than five (5) years after the preceding payment was due. The Trustee shall assure that each installment is in an amount equal to at least 90 percent of the Excess Investment Earnings with respect to the Bonds as of the close of the computation period Not later than thirty (30) days after the retirement of the Bonds, the Trustee shall pay 100 percent of the theretofore unpaid Excess Investment Earnings of the Bonds. The Trustee shall remit such payments to the United States at the address and in the manner prescribed by the Regulations as the sarne may be in time to time in effect, together with such reports and statements as may be prescribed by such Regulations. (d) In order to assure tha' Excess Investment Earnings are paid to the United States rather than to a third party, investments by the Trustee ,n certificates of deposit and in investment contracts A# shall be made only in accordance with the Regulations therefor as from time to tirne in effect. (e) The Trustee shall keep and retain for a period of six (6) years following the retirement of the Bonds records of the deterrrunations made pursuant to this Section 5043 . (f) Payments pursuant to paragraph (c) of this Section 504 shall be made to the maximum extent possible from moneys on deposit in the Excess Investment Earnings FurJ and, to the orient of any deficiency therein for such purpose, shall be made from the following sources and in the following order of priority: (i) the General Fund, (ii) the Dtsbursoment Account, (iir) the Construction Interest Payment Account. (iv) the Operating Lease -Up Loss Account and (v) the Appraisal Withhold Account. In the event of any remaining deficiency in available moneys for the purposes of such transfer, such deficiemy shall be paid by the Developor upon demand of the Trustee. Section 505. Investments; Arbitrage, Special Arbitrage Restriction. Subject to the provisions of Sections 503 and 504 hereof, the Trustee may tna�e any and ali investments permitted by the provisions of Section 501 hereof through its own investment department. As anti wMen any amount invested pursuant to this Article may be needed for disbursement, the Trusted may cause a sufficient amount of such investments to be sold and reduced to cash to the credit of the aRplicable Fund or Account. The Issuer and the Trustee covenant with all Owners of the Bonds f►r:rn timid +o tone Outstanding that so long as any of the Bonds remain Outstanding moneys on deposit with the Trustep under the Indenture, whether or not such moneys were derived from the proceeds of the sate of the Bonds or from any other source, will riot be used in a manner which, it such use had been made oil the date of issuance of the Bonds. would thave, caused the Bonds to be "arbrtrag. e txmds" within the meaning of Section 103(c) of the Code, and any lawful regulations proposed or promulgated thereunder. including Sections 1.103.13, 1.103.14 and 1,103-15 of the Income Taw Regulations (26 CFR Part 1i, as the same exist on this date. or may from time to time hereafter be amended. supplemented or revised. •41 ARTICLE VI REDEMPTION OF BONDS BEFORE MATURITy Section 601. Redemption. The Bonds shall he subject to redemption prior to maturity only as provided in this Article VI. Section 602. Mandatory Redemption. The Bonds shall be subject to mandatory redemption as follows: (a) The Bonds shall be subject to redemption in whole on or prior to the thirtieth (30th) day following the Designated Purchase Date, Conversion Date yr Reset Date. as the case may be. at a price equal to the principal amount thereof plus interest accrued thereon to the date of redemption, if on the Designated Purchase Date the Trustee lacks Tender Payments derived from the sources described in Section 1105(1), #0 Section 1105(2) or Section 1105(3) sufficient to pay the purchase price of all Bonds required to be purchased on such date pursuant to the provisions of Article XI hereof. (b) The ` Bonds shall be subject to redemption „ ;far• on the earlier of August 1, 1989 or the earliest practicable Interest Payment Date after the Completion Date for which notice of redemption may be given pursuant to Section 60w hereof, at a price equal to the principal amount of Bonds redeemed plus interest accrued thereon to the date fixed for redemption in a principal amount as nearly equal as possible to, but not exceeding, the amount remaining ►r. the Developer Loan Fur;3 on the earlier of July 1, 1989 or the Completion Date. respect►vely. (c) The Bonds shall be subject to redemption in whule or in part on and '-r,±rest Payment Date. at a price equal to the principal amount of Bonds redeered plus interest accrued thereon to the date fixed for redemption, upon the election of the Association to apply the arnount o' any net proceeds of insurance or condemnation awards not uaed to repair or replace the Project to the redemption of Bonds. (d) The Bonds shall be subject to redernptiar, in tiahole or in part on any date, at a price equal to the principal amount of Bonds redeemed plus interest accrued thereon to the date fixed for redemption, within 45 days following an Acceleration Default or at the request or wish the consent of the Association following any other Event of Default under the Loan agreement. or. at the request or with the consent of the Association following an acceleration of the Developer Loan pursuant to the Reimbursement Agreement or the Disbursement Agreerent. in an amount as nearly equal as possible to, but not exceeding. the :,rn;}unt of the Developer Loan so accelerated. (e) The Bonds shall be subject to redemption in whole on any date, at a price equal to the principal amount thereof plus interest accrued thereon to the date fried for redemption which is not more than 2.2 days prior to and not lalwr than the date of exp►rvion of any Letter of Credit or Alternate Credit Facility unless the Trustee receives a renewal or Extension of or replacement for such Letter of Credit or Alternate Credit Facility meeting the reqJ►rernents Of Section 5.8 of the Loan Agreement not less than forty (40) days before thq expiration of such Letter of Credit or Alternate Credit Facility, (1) The Bonds shall be subject to redemption in v.-hole without premium on March 1, 1987. ## in the event that construction on the Project has not commenced by February 1, 19B7, ## at an aggregate price equal to the principal amount of the Bonds, but without premium, p:us unpaid accrued interest thereon (including, as to clause 0), any additional interest due pursuant to Section 211.G, hereof) to the date of redemption, .42- (g) The Bonc's shall be subject to redemption in whole at a price equal to the principal amount thereof plus Interest accrued thereon to the date fixed for redemption on the first date for which notice of redemption may be given in accordance with the provisions of Section 604 of this Indenture following an Event of Default under the Collateral Pledge Agreement. (h) The Bonds shall be subject to redemption in whole at a price equal to the principal amount thereof plus interest accrued thereon to the date Irked for redemption, on the fist date for which notice of redemption may be given in accordance with the prov-stuns of Section 60.1 o! this Indenture. In the event of an Act of Bankruptcy of Association. or a Determination of Unenforceabrlrty, where the Developer does not cause to be delivered to the Trustee a substitute Letter of Credit in accordance with Section 5.8 of the Loan Agreement. (i) The Bonds shall be subject to redemption In whole at a price equal to the pr;pcipaf amount thereof .plus riterest accrued thereon to the date fixed for redemption. on the first & for which notice of redemption may be given in at cordance with the provisions of Section 604 of this Indenture. in the event of receipt by the Trustee of written notice from the Association that an event of default has occurred under the Rerrnoursernent Agreement. 6) The Bunas shall be subject to redemption In whole at a price equal to the principal amount thereof plus interest accrued thereon to the date fixed for redemption. on the first date for which notice of redemption ,may be given in accordance with the provisions of Section 604 of this Indenture, in the event of acceleration of the Developer Loan or the occurrence of any other event of default pursuant to Section 7.1 of the Loan Agf0ernent. (k) The Bonds shall be subject to redemptrcvt in whole at a price equal to the: principal amount thereof plus interest accrued thereon to the date fixed for redemption, on the first date for which notice or -edemption may be given in accordance with the provisions of Section 604 of this kx7enturo, in the event of a Determination of Taxability occurring on or after the Conversion Date. Section 603. Optional Redemption. The Bonds shall be subject to optional redemption as !ollows: (a) Prior to the Conversion Date, but not before Septernbc!r 1, 1987, . tht� bonds are subject to redemption on any Interest Payment Date, in the arnourn of S100.000 or rnt?re? In an integral multiple of 525.000, at a redemption price uqual to the principal amount to be redeerred. plus accrued Interest, without premium, In the event and to the ettent that the Developer Loan is voluntarily prepaid. (b) After the Conversion Date, the Bonds are subject to rede r-nplion prior to their stated maturity, in whole or In part. In Integral multiples of 55.000. on any of the3 following dates. at a redemption nrrce equal to the prrncrpaf arnount to be redeerrtied. plus accrued interest to the date of redemption, in the event and to the extent the Developer Loan Is voluntarily prepaid, plus the applicable premium set forth In file following table: Redgmp ,r n nx2?e5 R_ ciernx rsln Prpmi-,iM The two interest Payment Dates first occurring: 7 years after the Conversion Date 30z' 8 years after the Conversion Date 2 9 years after the Conversion Date 1 10 years after the Conversion Date 0 .a3. The Issuer shall notify the Trustee at least 45 days before the redemption date of any optional redemption of Bonds , and the Developer shall have deposited with the Trustee at least 95 days prior to mailing of notice by the Trustee of such redemption, an amount sufficient to pay the applicable redemption premium which shall be deposited by the 'trustee upon receipt into the Seasoned Funds Account. No notice of optional redemption of Bonds shall be marled by the Trustee, however, until the Trustee shall have received notice frim the Association that the Developer Loan has been prepaid in an amotj-it equal to the principal amount of the Bonds to be redeemed. Section 604. Authorization to Trustt:e. The Trustee is hereby authorized and directed. and hereby agrees. to give notice of the call for redemption of Bonds at the times set forth in Section 604 hereof. to fix the date for any such redemption within the periods prescribed by Section 604 hereof, and to redeem the Bonds so called on the date so frx.ed by the Trustee and set forth in such notice. The Trustee shall give such redemption notice (i) in the case of redemption pursuant to subsections (a). (b) or (c) of Section 602.A or Section 602.13 above or this Section 602 C. following receipt from the Association as servrcer of the Developer Loan under the Loan Agreement of nonce of the amount of the Developer Loan prepaid or to be deemed prepaid. as appropriate: (it) in the case of redemption pursuant to Section 602.A(e) above, at the time required therefor pursuant to Section 604, v:►thout any further authorization or direction; (iri) in the case of -ederript►on pursuant to Section 602.A(d) above, as soon as puss►ble, but not more than five (5) days after receipt of 2n opinion of Bond Counsel indicating that an Acceleration Default has occurred and upon acceleration of the Developer Loan by the Trustee, or after receipt from the Association of a request for or consent to acceleration of all or part of the Develope► Loan following any Event of Default under the Loan Agreement other than an Acceleration Default, and Irv) in the case of redemption pursuan! to Section 602 All). (gl or (h) above, as soon as possible. Notwithstanding any of the foregoing provisions to the contrary, the Trustee shall not give notice of any redemption of Bonds unless prior to g►v:ng such notice the Trustee holds Seasuned Funds. proceeds of the sale of the Bones upon or►ginal issuance. earnings from the investment of such proceeds, proceeds from drawings upon the Letter of Credit, or Collateral Funds sufficient to Day all principal of and preen+urn, if any. on the: Bonds to be r4deerned. S-,ctrcn 605. Partial Redemption. In the event of a redemption !other than pursuant to Section 1110 of this Indenture) the Bonds to be redeemed shall be selected by lot in such manner as the Trustee deems approor►ate and fair The Trustee shalt promptly notify the Issuer in writing of Bonds or portions thereof selected for redemption. Prior to the Conversion Date Bonds shall be redeemed only in integral multiples of S100,000. provided that to the extent any Bond is issued in any integral of 525,000 in excess of 5100,000, such partial redemption may be of the ,mire principal amount of such Bond or of the amount in excess of $100,000 it t)einq the intent that Bonds no! remain outstandrna after such partial redemption in principal amounts less than 5100.000 Follow-ng the Conversion Date Bonds shall be redeemed :n the principal arr►ount of S5.000 Or any ►ntegral multiple of 55.000, Upon surrender of any Bond for redemption in part. the Issuer shall eitecute and the Trustee shall authenticate and deliver to the Owner thereof, at the expense of the Issuer, a ne:a, Bon! or Bonds of authorized denominations in an aggregate principal amount equal to the unredeemed portion of the Bond so surrendered. Any Bonds owned by the Association shall be redeemed prior to any other Bonds. Section 606. Notice of Redemption. Except in the case of redemption prior to the Conversion Date as a result of the voluntary prepayment of the Developer Loan. in which ►-stance notice shall be marled not less than a5 days prior to the data fixer+ for redemption, c. redempuon of Bonds pursuant to Section 602.A (a) or (h) following liquidation of Collateral in which instance notice shall be given on the day of redemption, the Trustee shall give notice of any such redemption pursuant to this Article VI by sending such notice by certified marl, postage prepaid. not less than 7 days prior to the date fixed for redemption in the event of redemption prior to the Conversion Date and not less than 30 days prior to the date fixed for redemption in the event of redemption following the Conversion Date. All notices of redemption shall be marled to the Association, the Tender Agent and to the Owner of each Bond to be redeemed In whole or in part at the address of such Owner as shown on the Bond RPt�ister; provided. however, -that no such notice of redemption shall be mailed unless on or prior to such date the Trustee .44. has 6.,,J haL on deposit funds available for redemption in an amount sufficient to pay the Redemption Price due upon such redemption; and provided further that in the event such redemption is to be. made In ,vhole or in part from Seasoned Funds. the Trustee shall have received notice from the Developer that an Act of Bankruptcy has not occurred on or before the Trustee marls notice of such rederriptron. Neither the failure of an Owner to receive notice by mail not any defect in any notice so marled shall affect the validity of the proceedings for such redemption. Such notice shall state the rederrptron date, %he redemption price, the arnount of accrued Interest payable on the redemption date, the place at which the Bonds are to be surrendered for payment, that from the redemption date interest on they Bonds will cease to accrue, and, if !ess than all of the Bonds Outstanding are to be redeemed. an identification of the Bonds or portions thereof to be redeered. Any notice mailed as provided in this Section 604 shall be conclusively presumed to have been duly given, whether or not the Owner receivers such notice. Notwithstanding the foregoing, the Trustee shall not marl any notice of redemption with respect to Bonds to be redeemed in whole or in part from funds received by the Trustee from draws upon the letter of Credit or from Seasoned Funds unless the funds to be used In connection with such redemption are on deposit in the Debt Service Fund or the Seasoned Funds Account (and constitute Seasoned Funds). Section 607, Payment Upon Redemption. Except in the case of Bonds deemed redeemed pursuant to Section 1110. prior to each redemption date. the Trustee shall make provision for the payment cf the Bonds to be redeemed on such date by setting aside and holding in trust, or depositing in trust with any Paying Agent, an amount from the Principal Account and the Interest Account or otherwise received by the Trustee from the Issuer or shall otherwise determine that it will have available as a result of a draw upon the Letter of Credit or Collateral Funds an amount sufficient to Nay the principal of, and interest on, such Bonds. Upon presentation and surrender of any such Bond at the Principal Office of the Trustee or any Paying Agent. as the case maV be, on or after the date hied for redemption. th-i Trustee or any Paying Agent shah pay the princrpa! at. an;i premium, if any. and interest on, such I?und from the moneys set aside for such purF,ose Bonds deemed redeemed pursuant to Ser.s*(r 1110 shall be paid as provided in Section 1101. Section 603 Effect of Redemption. Notice of redo rnp!ion hav,n;g befan given as provided in Section 604 hereof, the Bonds or portions thereof designated for rederT}ption toner than Bor,:is deemed redeemed pursuant to Section 11101 shall hIucorner due and payat,te on the date fixed fof, redemption and. unless the Issuer defaults in t"c pa�jrnent of the, principai merr?of and premium. it ar,, . and interest thereon, such Bonds or portions tnereof shall cease to bf�ar interest f,o,n and after the date fixed for redemption whether or not such Bonds are presented ana surrendered for payment ,,III such date (as more particularly provided in Section 3121. if any Bond or portion thereof called for redemption -s not so paid upon prr!sentatron and surrender thereof for redernpt,on, ,4•. n Bond or portion thereof small continue to bear interest at the+ rate SE�t forth thkyeI( ti until paid or until dLIC provision is made for the payment of sarne. •�5- • ARTICLE Vll PAYMENT; FURTHER ASSURANCES C7 Section 701. Payment of Principal or Redemption Price of, and "Interest on, the Bonds. The Issuer, shall promptly pay or cause to be paid the principal or Redemption Price of, and the interest on, every Bond issued hereunder according to the terms hereof, but shall be required to make such payment or cause such payment to be inane only out of Revenues. The Issuer hereby designates Principal Office of the Trustee as the principal placr• of payment for the Bonds. and'the Truster~ as principal Paying Agent for the Bonds. such appointment and designation to remain in effect until notice of change is tiled with the Trustee pursuant to the terms of this Indenture. Section 702. Designation cl Addi!lonal Paying Agents, The Issuer hereby covenants and agrees to cause the necessary arrangements to be made through the Trustee and to be thereafter continued for the designation of alternate Paying Agents. if any, and for the making available of funds hereunder for the payment of such Bonds as sha'I be presented when due at the Principal Office of the Trustee or at the Principal Office of said alternats': Paying Agents. Section 703. Further Assurance. Except to the extent otherwise provided in this Indenture, the Issuer shall not enter into any contract or take any action by which the rights of the Trustee or the Owners may be impaired and shall, from tirne to time, execute and deliver such further instruments and take ;uch farther action as may be required by the Trustee to cam out the purpose of this Indenture. The Issuer shall bp entitled to reimbursement from the General Fund for any act.on taken pursuant to this Section. Section 704. Immunities and Umitadon of Responsibilities of the Issuer. The Issuer may act upon the opinion or advice of its Counsel and shall be wholly protected as to any action taken or omitted in good faith in reliance upon such opinion or advice I ncy ISSUE'r ma', rely rpnCluStvety on arty communication or other document furnished tc it hereunder and reasonably believed by it to be genuine. The Issuer shall not be liable for any action Ili ta1•t'3n by it in good faith and reasonably believed by it to be within its discretion or powers hereunder, or t21 in goad faith ornitted Ica be taken by it because it reasonably believed such action to be beyond its discretion or powers hereunder, or (3) taken by it pursuant to any direction or instruction by vvhich it is governed hereunder, or (a) omitted to be taken by it by reason of the lack of any direction or instruCtion required here by for such action, nor shall it be responsible for the consequences of any ofror of judgment reasonably made by it. The Issuer shall in no event be fable lot the application or misapplication of funds or for other acts or defaults by any person, except for the willful misconduct of its own merrbots. officers. agents and employees. When any payment or consent or other action by the Issuer is called for hereby, it may deter such action pending receipt of such evidence (if any) as it may require in support thereof, The Issuer shall not be required to take any remedial action (other than the giving of notice) unless reasonable indemnity is furnished for any expense or liability to be incurred thereby. other than liability for failure to meet the standards set forth in this Section 704. As provided herein and in the Loan Agreement. the Issuer shall be entitled to reimbursement for its expenses reasonably incurred or advances reasonably made in the exercise of its rights or the performance of its obligation,' hereunder, to the extent that it acts without previously obtaining indemnity. No permissive right or power to act which it may have shall be construes✓ as a requirement to act. and no delay in the exercise of a right or Dower shall affect its suosequent exercise of that tight or power Section 705. Statements. The Issuer shall cause this Indenture or a financing statement relating hereto to be filed in such manner and at such places as may be required by law fully to protect the right, title and interest of the Trustee in and to the Trust Estate or any part thereof. The Issuer shall execute or cause to be executed any and all further instruments as may be required by law or as shall reasonably be requested by the Trustee for such protection of the interests of the Trustee and the Owners. and shall furnish satisfactory evidence to the Trustee of filing and refiling of such instruments -46- and of every additional instrument which shall be necessary to preserve the Ilen of this !ndenture upon the Trust Estate or any part thereof until the principal of, and prenmrrn, if any. and interest on, the Bonds issued shall have been paid. Section 706, List of the Owners. The Trustee. as the Bond Registrar, will keep on file rrl the Bond Register a list of names and addresses of all Owners of Bonds registered in the Bond Register toorither with the principal amount and numbers of such Bonds. The Trustee shall be under no responsibility with regard to the acc+Tracy of said list. At reasonable times and under reasonable regulations established by the Trustee, said list may be inspected and copied b% the Issuer, the Association. or by Owners of twenty-five percent (251o) or more in aggregate orrncipal amount of Bonds then Outstanding (or a designated representative thereof), Such ownership and the authority of any such designated representative to be evidenced to the satisfaction of the Trustee. Section 707. Use of P. oceeds. The Issuer covenants that at least n►net,r•f►ve percent (95`*) of the amounts initially deposited in the Developer Loan Fund are and shall be used to fund a loan to provide multifamily residential rental property. Section 708. Accounting Records and Report. The Trustee shall at all times keep proper books of record and account in which complete and accurate entries shall be made of all transactions relating to the proceeds of Bonds. the Revenues. the Trust Estate and all funds and accounts established pursuant to this Indenture. Such books of record and account shall be available for inspection by the Issuer. the Association, the Developer, by any Bondowner or agent or representative thereof duly authorized in w-►t►na. at reasonable hours and under reasonable circumstances The Issuer shall file with the appropriate government agency all notices and reports required to be fled under Section 103(1) of the Code and the Act. Net later than 30 days fu:lovong each Scheduled interest Payment Date on the Bonds. the. Trustee ::t d1i prepare and file with the Issuer. the Association and the Developer a report setting forth: (►) amounts withdrawn from and ceposited in each Fund and Account: (i,) the balance on deposit in each Fund and Account as of the Interest Payment Date for which such report is prepared. (►►►) a brief description of all obligations held as ►nvestrrien15 in each Fund and Account: c.nd (►v) the amount applied to the payment or roodempt►on of Bonds and a description of the Bonds o. p :r1►ons of Bonds so paid or rede:er -ed CopMs of such reports shall be mailed or delivered to any ov�ner of any Bond upon request at a cost not to eaceed they Trustee's actual costs of duplication and mad:ng or delivery. Section. 709. Rights Under the Developer Loan Documents and the Collateral Pledge Agreement. The Developer Loan Documents and the Collateral Pledge At )reernrnt set forth certain covenants and obligations of the Issuer. the Developer, the Trustee, and the° Association, as applicable, and reference is hereby made to the Developer Loan Documents and the Collateral Pledge Agreement for a detailed statement of such covenants and obligations So long as any of the BL)nds remain Outstanding. the Issuer and the Trustee shall faithtully and punctually p+Vfo-m and observe all obligations and undertakings on their parts to be performed and observed under the Developer Loan Documents and the Collateral Pledge Agreement Except as expressly permitted by this Indenture, the Coltateral Plodge Agm"Inent or the Developer Loan Documents, the Issuer and the Trustee shall taker no action. and shall permit no action to be taken by others. which action might release the .Assoc: yet►on from is liabilities or obligations under the Developer Loan Documents or the Collateral Pledge Agreement or result in the surrender. terrturatiorl. amendment or modification of, or impair the validity of, the Developer Loan Documents or the Collateral Pledge Agreement, The Issuer hereby authorizes and directs the Trustee to enforce any and all of its rights under the Developer Loan Documents or the Collateral Pledge Agrerr,*rrr;!;t on behalf of the Issuer and the: Owners of the Bonds. -47- The Trustee hereby acknowledges, accepts and agrees to the terms, conditions, appointments and agencies of the Loan Agreement as they relate to it and its participation in the transactions contemplated thereby. Section 710. Possession and Inspection of the Developer loan Documents and the Collateral Pledge Agreement. Except as specified below, the Trustee shall retain possession of the Developer Loan Documents or copies thereof, an behalf of the issuer and shall release the sarne only in accordance with the provisions hereof. The Developer Loan Documents and the Collateral Pledge Agreement shall be available for inspection at reasonable times and under reasonable conditions, by the Issuer. the Association, and any Owner of any Bond. The Association shall retain possession of the origins of any Developer Loan Do4urr►ent as to which it is the payee or the primary beneficiary. Section 711. Rights Under the Regulatory Agreement. The Regulatory Agreement will set forth certain covenants and obligations of the Issuer, the Trustee. the Association and the Developer relating 'to the acquisition, construction and operation of the Project, and reference is hereby made to the Regulatory Agreement for a detailed statement of such covenants and obligations. The Issuer and the Trustee shall faithfully and punctually perform and observe all obligations and undertakings on the.r part to be performed and observed .jnder the Regulatory Agreement. Except as expressly contemplated or permitted by this Indenture or the Regulatory Agreement, the Issuer and the Trustee shall take no action, or shall permit no action to be taken by others which action might release the Developer from its liabilities or obligations under the Regulatory Agreement or result to the surrender, termination, amendment or modification of, or impair the validity of, the Regulatory Agreement, The Issuer hereby authorizes and directs the Trustee to enforce any and all of its rights under the Regulatory Agreement on behalf of the Issuer and the Ov.ners of the Bonds, The Trustee hereby acknowledges. accepts and agrees to the terms, conditions. appointments and agencies of the Regulatory .Agreement as they relate to it and its participation in the transactions contemplated thereby Section 712. Determination of Taxability; Notice. The Trustee shalt immediately upon knowledge of a Determination of Taxability. pro%ide written owice thereof to the Issuer, the AssociMon. the Remarketing agent and Irie Developer. Section 713. Notice to Rating Agent. The Trustee shill prornptly provide notice to the Rating Agent with respect to any arendment to the Collateral Pledcte Aoreement or the Letter of Credit_ Section 714. Release of Collateral. If the Doveloper shell deliver to Ine, Trustee an Alternate Credit Facility which cornp.ies with the provisions of Se-ction 5.8 of the Loan AgrUernent. the Trustec: shall relea.;u to the Association Collateral then held for the benefit of the Trustee. but only to the extent such release may be made without causrr5g any of the rt. quirernents of s- jd Section 5.8 to fail to be satisfied in full at any time from and after such delivery. M ARTICLE Vlll DEFAULT PROVISIONS AND REMEDIES OF THE TRUSTEE AND ME OWNERS Section 801. Defaults; Events of Default. Each of the following shall constitute an event of default: (1) failure to make due and punctual payment of any installment of interest upon any Bond when the same shall have become due and payable; (2) failure to make due and punctual payment of the principal of, or premium, if any, oil any Bond, whether at the stated maturity thereof, or upon proceedings for redemption thereof, or upon the maturity thereof by acceleration; 13) any material breach by the Issuer of any representation or warranty made in this Indenture or the Bonds or failure by the Issuer to observe and perform any covenant. condition or agreement on its part to be observed or performed under this Indenture or the Bonds (other than as referred to in causes (1) or (2) of this Section 801), for a period of sixty (601 days after written notice specifying such breach cr failure and requesting Iha! it be remedied. has been a►ven to the Issuer the Association and the Developer by the Trustee or by the Goners of not less than twenty-five percent (2500) in aggregate principal arnount of the Bonds then Outstanding, unless (►) the Truster shall agree in writing to an extension of such time prior to its expiration or (n) if the breach or failure be such that it cannot be corrected within the applicable period. correctiwe action is instituted by the Issuer or by the Association or the Developer on behalf of the Issuer within the applicable period and is being dil;gentl;, pursued: provided. however. that notwithstanding Section 809 hereof, a breach of the covenants set forth in Sections 503, 504, 505 or 707 hereof or of any other covenant with respect to the tax ex0rnpt status of interest on We Bonds may not be waived nor may the time for performance be extended hereunder. or (4) fa;lure by the Association to honor any dray. on the Letter of Credit made by the Trustee pursuant to Section 309 hereof, or the occurrence of an Event of DeetaUlt under the Collateral Pledge Agreement. Section 802, Acceleration. Upon the occurfenctt of an Event of Default specified ,rl clauses (1). (2) or (4) of Section 801 hereof. the Trustee shall, subject to the provisions of Section 810 hereof, declare the aggregate principal amount of the Bonds then Outstanding and the interest accrued thereon immediately due and payable, and such principal and interest shall thereupon become and be immediately due and payable; provided that interest on such accelerated Bonds shah continue to accrue until the date fixed for payment of the principal thereof. Upon the occ•crrrence of an Event of Default specified in clause (3) of Sector, 801 hereof, and so long as such event ri continuing. the Trustee may. and upon receipt of notice given by the Owners of not less than Ci•enty•f►ve percent (250o) of the aggreot P principal amount of fonds then Outstanding shall. declare the aggregate principal amount of the Bonds then Outstanding and the interest accrued thereon (to the date fixed for payme►it of such principal) immediately due and payable, and such principal and interest shall thereupon become and be immediately due and payable. Immediately upon acceleraticn as set forth above. the Trustee (i) shall draw on the Letter of Credit as provided below and, (ii) immediately after the Association honors the Trustee's request to draw upon the Letter of Credit, shall transfer all moneys then on deposit in all of the Funds (except any amounts drawn on the Letter of Credit and any amoernls representing Seasoned Funds to be applied to such redemption or to pay expenses due under Section 306 hereof) to the Association and (m) shall take such action as is necessary to pay the Bonds out of such moneys at the earliest possible date -49- after providing the Bond Owners with a notice of redemption as provided in Section 604 hereof. The amount drawn under the Letter of Credit shall equal the aggregate unpaid principal and interest on the Outstanding Bonds to the redemption date fired by the Trustee, less the amount of any Seasoned Funds held by the Trustee hereunder which are available to redeem Bonds. The Trustee also shall take whatever additional action at law or in equity may appear necessary or desirable to collect the moneys necessary to pay t► r- redemption price of the R)nds. In the event a draw under the Letter of Credit is not honored, the Trustee shall tale immediate action under the Collateral Fledge Agreement to liquidate the Collateral. The above provisions of Sections 801 and E02 hereof are subject to the conditions that if, after the principal of all Bonds then Outstanding shall have been so declared to be due and payable prior to the Trustee's draw on the Letter of Credit referred to hereinabove, all arrears of interest upon such Bonds. and interest on overdue installments of interest (to the extent permitted by law) at the gate of interest then in effect on the Bonds. and the principal and redemption premium, if any, on all Bonds then Outstanding which shall have become due and payable otherwise than by acceleration, and all other sums payable under this Indenture. except the principal of, and interest on. the Bonds which by !,,+ch declaration shall have become due and payable. shall have been paid by or on behalf of the Issuer. tngether with the reasonable expenies of the Trustee and of the Oriners of such Bonds. including reasonable attorneys' fees paid or incurred, then and in every such case, but only upon receipt by the Trustee of the express written Consent of the Owners of a majority in principal amount of the Bonds then Outstanding, the Trustee may annul such declaration of maturity and its con5equence5. :rhich waiver and annulment shall be binding upon all Owners' but no such waiver, rescission and annulment shall extend to or affect any subsequent default or impair any right or remedy consequ?nt thereon. In the case of any such annulment, the Association. the Issuer, the Trustee and the Owners shall be restored to their former positrons and rights under this Indenture Nothing contained in this Section 802. however, shall be construed to allcw the Trustee to permit its rights on behalf of the Ova:ers under either the Letter of Credit or the Collateral Pleage Agreement to be reduced. to lapse or otherwise be extrngwshed. 1# Notwitnstanding any other provision of this Indenture. in the event of the insolvency of the Association. and the occurrence of an Evr'rn1 of Detauit undt�r subsection (1) or (4 ) of th•, Sc!clion. the Trustee shalt rtnrnediatel, accelerate and redeern the Outstanding Bonds Section 603. Remedies; Rights of the Owners. The Truslu�p may pursue any available remedy at law or in equity by suit. action. mandamus or other proceedings upon the occurrence of an Event of Default. to enforce the payment of the principal of, premiurn. if any, and interest on, the Bonds then Outstanding, and to enforce and compel the performance of the duties and obligations of the Issuer as herein set forth. In addition, the Trustee may. upon notice to the Issuer and the Association but without the consent of the Issuer or the Association, exercise any and all remedies afforded the Issuer under any Developer Loan Documents, the Collateral fledge Agrc(-ment or the Reguiatory Agreement in its name or the name of the Issuer without the necessity of loinrng ;he Issuer. It an Event of Default shall have occurred and be continuing and if requested so to do by the Owners of not less than tvrenty•five percent (25°:,) in aggregate principal amount of Bonds then Outstanding, and the Trustee shall be indemnified to the satisfaction of the Trustee as provided in Section 901 hereof. the Trustee shall be otlrged to Exercise such one or more of the rights and powers conferred by this Section 803 and Section 802 hereof as the Trustee being advised by its Counsel shall deem most expedier, in the interests of the Owners. No remedy by the terms of this Inoenture conferred upon or reserved to the Trustee (or to the Owners) is intended to be exclusive of any other remedy. but each and every remedy shal' be •50- cumulative and shall be in addition to any ether remedy given to the Trustee or to the Owners hereunder cr or hereafter existing at lavr or in eni.ity or by statue. No delay or omission to exercise any right, power or rernedy acaueng upon any Event of Default Shall impair any such right, power or remedy cr sha!I Ce construed to be a waiver of ;any such Event of Default or acquiescence therein; and every such right, pother or remedy may be erer ised from time to time and as often as may be deemed expedient. No waiver of any Event of Default hereunder, whether by the Trustee or by the Owners, shall extend to or shall affect any subsegL'nnt Event of Default or shall impair any rights or remedies consequent thereon. Section 804. Right' of the Owners to Direct Proceedings. Anything in this Indenture to the contrary notwithstanding, the Owners of not less than a majority in aggregate prnnc+oa! amount of Bonds then Outstanding shall have the right, at any time by an instrument or instruments in writing executed and delivered to the Trustee, to direct the time. method and place of conducting all proceedings to be taken in connection with the enforcement of the terms and conditions of this Indenture, or for the appointment of a receiver or any other proceedings hereunder; provided that such, direction shall not be otherwise than in accordance with the provisions ul law and of this Indenture, and that the Trustee shall have the right to decline to follow any s ,ch direction if the Trustee vials be advised by counsel that the action or proceeding so directed r-ay not be taken lawfully, or if tha Trustee in good faith shall determine that the action or proceeding so d.►ecieJ would involve the Trustee in personal liability or be unjustly prejudicial to Owr-ers not parties to such direction. Section 805. Application of Moneys. All moneys rccerw(ld by the Trustet� pursuant to any right given or actior, taken un'fer the provisions of thus Afticicf, shall be transferrFd, td the (Went necessary to pay the principal of and interest ort all outstand.nq Bonds. to the Debt Service F:rnd. with such moneys to be deposited in the Accounts thereot in the order provided theroun, and we balance (from proceeds of the Collateral) shall be applied tO Itle paymf!nt to the Trustee of its rtmsonab"e e*Genses incurred in exercising its rights and rerned+es undi?r Stirs Article Vill, provided that all funds dra.,:•. under the Letter of C.-edit (except tender Payr-rents) shall be used only to pay the principal and interest on Bonds- and provided, furtrier, that all Tender Payrnecnts shall be aepoVed LIy thE, Trustestt in the. Tender Payments Fund. Section 806. Remedies Vested in the Trusted. At; rrgtnts of action t►rn; biding the right to We proofs of clairns) under this Indenture or urndklr any of thr? 6ond5 may bet enforced by the Tru5te(? without the possession of any of the Bonds or the production thereof in any trial or other procee?rfing5 rotating thereto and any such suit or procood+nq inst+tute?o by the Trustee shall be brought in +ts narne as Trustee without the necessity of ,oininq as plaintiffs or defendants any Owne-s of the Bonds. and any recovery or judgment shall be for the equaf and ratable benelrt of the Owners of the Outstanding Bonds. Section 807. limitation on Rights and Remedies of the Owners. No Oltiner of any Bond shall have any right to institute any suit, action or proceeding in equity or at law for the enforcement of this Indenture or for the execution of any trust thereof cur for the+ appointment of a receiver or any other remedy hereunder unless 11) an Event of Default has occurred of which the Trustee has been notified as provided in subsection (g) of Section 901 hereol. (2) it a O.%,ners of not lass than twenty-five p6rcent (25�*) in aggregate principal arnount of Bonds then Outstanding Shall have made written request to the Trustee, shall have offered the Trustee reasonable opportunity either to proceed to exercise the powers herein granted or to institute such action, suit or proceeding in its own name, and shall have offered to the Trustee indemnity swrsfaclory to the Trustee as provided in Section 901. and (3) the Trustee shall thoreatter fail or refuse to e►erase the powers herein granted, or to institute such action. suit or proceeding in its own name as Trustee; and such notification, request and otfer of opportunity and indemnity are hereby declared in every case at the option cif the Trustee to be conditions precedent to the execution of the: powers and trusts of this Indenture, aced to any action or •5t• cause of action for the enforcement of this Indenture, or for the appointment of a receiver or for any tither remedy hereunder. No one or more Owners of the Bonds shall have any fight in any manner whatsoever to enforce any righl hereunder except in the manner nerein provided, and all proceedings at law (3. in equity shall be instituted, had and maintained iri the manner ilerein provided and for the equa' ,•ind ratable benefit of the owners of all Bonds then Outstanding. Nothing in this Indenture contarrt,d shall. however, affect or impair the right of any Owner to enforce the payment of the principal of - d premium, if any, and interest on, any Bond at and after the maturity thereof. section 8o8 rermination of Proceedings. In case the Trustee shall have proceeded to enforc:. any right under this lr;;+r�,rtture by the appointment of a receiver or otherwise. and such proceedings small have been d►scontrr+.;od or abandoned for any reason, or shall have been deterrnined adversely to the Trustee. then and in ra,F'rr' such case the Issuer, the Trustee and the Owners shall be restored to th, it former positrons and rv-Jhi5 nereunder, respectively. and all rights, remedies and powers of the Trustee ,na)t continue as if r.,) sucri proceedings had been taken. section 6.19. Waivers of Events of Default. The Trustee may. in its discretion. waive any Event of Default hereunder (other than an Event of Default with respect of the provisions of Article V hereof) anti rescind its consequer;ces and shall do so upon the written request of the Owners of not less than a majority in aggregate principal amount of all Bonds then Outstanding: provided. however, that there shall not be waived (1) any Event of Default in the payment of the principal of. or premium on, any 7utytanding Bonds when due (Miether at maturity or by redemption or as a result of acceleration). (2) any Event of Default in Inn f;ayment vdien due 7f the interest on any such Bonds or (3) any Event of Default in the payment of Pny amount under Article Xi of this indenture, unless prior to such v,aiver and rescission, all arrea►; of intr.-rest and all atreais of p•rrl;ip31 and f)te1T)1Um, if any, vrhe?n due, as the case may nc, tooet`;nr Aitn the reasonable eirponsi?s or the Trustee and of the Owners of such Bonds, ►ncludirt:; reascv,atGle a:to,neys' fees or ir)c.urred. ;hall have been paid or provided for and the owners cf not less than a majoriiy in ag reoate principal amount of all Bonds then Outstanding approve such waiver and, p•rrodCd, furthf•r, that any declare?t;ot, pursuant to Section 602 nereot made at the rc?qu►�St of the O'tirer5 of tr;nnty-i+.,►r perCent t: 5 , s or rtlore in agg►►:gat(a principal amount of the Bonds then Outstanding not b(' L: aiv)?J In the ca!,o of any such waiver and rescission, or in case any proceecinq tal,en by the ►r,i';teo (,in racf: aunt c.1 any s.)-h dcefiaUlt shall have been discontinued or abandoned or di,Ioi •iine(i to th- Trusloe then, .and in every such case the Issuer. the Trustee iandi tho G.-in+?rs shall be restote;f to ftioa lormet pos,?ions and rights hereunder. re5pectivel,r, f-,ut no sucri vvai;er and Stl,all " Rltio to an., C,ibsequent or other default. or impair any rignt Lonsequent thereon All v:aiver.`, unrlor thi�� 4noorill.;to shall be in writing and a copy thereof shall be delivered tr) the Issuer and to thin lAssot,1011 con Section 810. limitation. Notnotlst(w)•fuu) 'anv,thing it) Iho contrivy in this Indenture, nei;husr the Tres +-. the Issur:r nt;r ttlo f]c;ndr).•:nE�r , st„iil witliout thr[)riot written consent of the Association. take any action to a'.:celeraii. it;cr Bonds. exi ept for the occ-urrer)ce and continuation of an Event of Default under Sections y 1(ia) ,), 7.1((it c,' the Loan Agrevrn,�nt or the or-Turrence and continuation of an Event of Default under Sectirri 12(di of the C')Ilalerial Pledge Agreurtiont. unless and until the Association shall fail to honor any car&& on the Lellor of Credo: provided that the? Trustee shall at all times be free to, and s` a I. soO rr�co. i,•ry undcrr the Letter of Credit of any amount due and payable thereunder, when and as the same sral, ber (;ra)e due arv.i pavane -52- ARTICLE IX THE TRUSTEE Section 901. Acceptance of the Trust. The Trustee hereby accepts the trust imposed upon it by this Indenture, represents and covenants Wat it is fully empowered under the applicable lav:s and regulat.ons to accept said trust. and agrees to perform said trust. but only upon and subject to the following express terms and conditions, arid no implied covenants or obligations shall be read into this Indenture against the Trustee. (a) The Trustee may execute any of the trusts or powers hereof and perform any of its duties by or through attorneys. but shall not be responsible for the acts of any attorneys, agents or receivers appointed by it in accordance with the standards set forth herein. The Trustee may, in all cases. pay such reasonable cortipe;nsation to all such attorneys, agents, receivers and employees as may reasonably be employed in connection with the trusts hereof. The Trust^e may act upon the opinion or advice of its counsel and shall b{y wholly protected as to any action }aken or omitted ,n good faith in reliance upon such opinion. i ht3 Trustee shall not be responsible for any foss or damage resulting from any action or ncn•acuor. in good faith in reliance upon such opinion or advice. (b) The riustee shall not be responsible for any recital herein or in the Bonds (except with respect to the certificate of the Trustee endorsed on the., Bonds), or the validity of the execution by the Issuer of this Indenture or any supplements lhe+e lo, or any instruments of further assurance: or the legality or validity of the Regulatory Agreement, the: Collateral Fledge Agreement or the Developer loan Documents or any document or instrument relating thereto, or the recording or rerecordrn-g, or filing or re -filing o1 this Indenture or a financing statement rel,iting hereto or the Regulatory Agreement: or insuring the Project or collecting any insurance moneys: or the sufficiency of thel security tot the bond; issued hereunder or intended to be :secured hereby. The Trustee shall not be responsible or liable for any loss suffered in connection with any investment of funds made.by it in accordance viah Article V hereof, Including. without hrrivation, any toss suffered in connection with the salt? of any investment pursuant to Articles V hereof, tc1 The Trustee shall riot be accountable; for the uses of any Bonds authenticated or deliverea hereunder. The Trustee may be:corne an Owner of f3onds w,th the same rights which it would have if it were not Trustee, To the --etnt permitted by lave. the Trustee may recowe tenders and purchase Bonds from itself, including any department, affiliate or subsidiary. with 110 effect as if it vvere riot the Trustee (d) The Trustee shall be protected in achnrt in good faith upon any notice. request, resolution, consent. certificate. affidavit, letter. telegram. statement, opinion, appraisal, report. policy, bend. letter of instruction or other paper t,r document, or oral communication or direction. believed by the Trustee to be genuine and correct and to have been signed, presented. sent or given by the proper parson or persons. including a certificate to the effect that no act of banl.ruptcy has occurred. Specifically. with respect to the administration. cnforrement of and compliance with the Developer Loan Documents and the Regulatory Agreement, the Trustee shall be entitled to rely conclusively upon the accuracy of the certificates of the Association and the Developer provided for therein and stall not be obligated to make any independent investigation with respect thereto (el As to the existence or non-existence of any fact or as to the sufficiency or validity of any instrument, paper ur proceeding, the Trustee shall be entitled to rely upon a certificate signed on behalf of the Issuer by tht+ Mayor, the City Administrator or the City Clerk s# as sufficient evidence of the facts therein contained. and prior to the occurrence of an Event of Default cf which the Trustee has been notified or is deemed to have notice as provided in Section 901(g) hereof or subsequent to the waiver. rescission or annulment of an Event of Default as provided in Article VIIf -53. hereof. shall also be at liberty to accept a similar certificate in the event that any particular dealing, transaction or action is necessary or expedient, but may, at its discretion, secure such further evidence deemed necessary or advisable, but shall, in no case, be bound to secure the same. The Trustee may accept a certificate signed on behalf of the Issuer by any of the aforementioned officers to the effect that a resolution has been duly adopted, and is in full force and effect. (f) The permissive right of the Trustoo to do things enumerated in this Indenture shall not be construed as a duty and the Trustee shall not be liable in the performance of its obligations hereunder except for its gross nvligence or willful misconduct. (g) The Trustee shall not be required to take notice or be deemed to have taken notice of the occurrence of any event of dc`ault hereunder or under the Loan Agreement. Regulatory Agreement or any other agreement to which the Trustee is a party (including, but not limited to, any default hereunder), except failure by the Issuer to cause to be made any of the payments to the Bondowners required to be made by Section 307 hereof, unless the Trustee shall be specif-cally notified in writing of such default or event by the Issuer or the owners of at least 2520 in aggregate principal amount of all Bonds then outstanding. (h) At any and all reasonable times the Trustee. and its duly authorized agents, attorneys. experts, engineers, accountants and representatives. shall have the right fully to inspect the Project. including all books, papers and records of the Issuer or the Developer pertaining to the Project and the Bonds, and to take such memoranda from and in regard thereto as may be desired. (i) The Trustee shall not be required to give any bond or surety in respect of the execution of its trusts and powers hereunder. (J) Before taking any action under Article VIII hereof or this Section at the request or direction of the Owners (except as to the expense of a draw upon the Letter of Credit i. the Trustee may require that an indemnity bond satisfactory to the Trustee be furnished by the Owners for the reimbursement of all expenses to which it may be put and to protect it against all liability. except liability which is adjudicated to have resulted from its gross negligence or willful misconduct in connection with any action so taken. (k) All moneys received by the Trustee or any Paying Agent shall. unt,l used or applied or invested as herein provided, shall be held in trust for the purposes for which they were received. and shall be segregated as required by Section 302 hereof. Neither the Trustee nor any Baying Agent shell be under any liability for interest on any moneys received hereunder except such 3s may be agreed upon. (1) The Trustee. prior to the occurrence of an Event of Default specified in Section 80, of this Indenture and after the curing of all Events of Default which may have occurred, undertakes to perform such duties and only such duties as are specifically set forth in this Indenture and, in the absence of bad faith on its part. the Trustee may conclusively rely, as to the truth of the statemer.ts and correctness of the opinions expressed therein. upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture, but in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee. the Trustee shall be under a duty to examine the same to determine whether they conform to the requirements of this Indenture. In case an Event of Default has occurred of which the Trustee has know'. ,ge or is deemed to have knowledge pursuant to Section 901(g) hereof (which has not been r- ud), the Trustee shall exercise such of the rights and powers vested in it by this Indenture, an,; use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of his own affairs. •54. (rn) No provisions of this Indenture shall be construed to relieve the Trustee from liability for its ov--n negligent action, its own negligent failure to act, or its own willful misconduct, except that: (1) this subsection shall not be construed to limit the effect of Section 901(7) of this Section. (2) the Trustee shall not be liable for any error of judgment made in good faith by an officer of the Trustee, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; (3) the Trustee shall not be Fable with respect to any action taken or ornitted to be taken by it in good faith in accordaricE- with the direction of the Owners of a majority in aggregate principal amount of the Bonds Outstanding relating to the time, method and place of conducting any proceeding or any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, undo; this Indenture: and (4) no provision of this indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights and powers (except as to the expenses of a draw under the Letter of Credit or the realization of Collateral Funds, in which event the Trustee may recover its expenses in accordance with the provisions of Section 903 and of the Collateral Agreement), it it sha!I have reasonable grounds fur believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. (n) the Trustee shall make all determinations of interest payable or accruiig on the Bonds and give all notice to the payors as required by the Indenture and Loan Agreement. Section 902. Corporate Trustee Required, Eligibility. There shall at all dines to a Trustee hereunder which shall be a bank, trust company or national banking association organized and doing business under the lav►s of the United States of America or of any state. authorized under such laws to e,eerCise Corporate trust powers. authorized to accept and exercise the trusts herein provided, having a combined capital and surplus of at least S100.000.000 and subject to supervision or ei:arnmation by federal or state authority. It such corporation publishes reports of condition at least annually. pursuant to taw or to the requirements of the aforesaid supervising or examining authority. then for the purposes of this Section 902. the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Soclion 902. it shall resign immediately in the manner and with the effect hereinafter specified ►n this Article IX, and shall immediately provide notice of such resignation by-eg!stered or certified mail to the Issuer, the Association. the Developer. and to each Owner of Bonds as shown by the list of Owners required by Section 706 hereof. Section 903. Compensation of Trustee. The Developer has covenanted in the Loan Agreement to pay to the Trustee from time to time the expense of all services rendered by the Trustee in the execution of the trust created hereby and in the exercise and performance of any of the rights and duties hereunder of the Trustee and to pay or reimburse the Trustee for all expenses, disbursements and adva.ices incurred or made by the Trustee in accordance with any of the provisions of this Indenture (including the reasonable compensation and the expenses and disbursements of its counsel ,) and of all persons not regularly in its employ) except any such expense, disbursement or advance as may arise from its gross negligence, willful misconduct or bad faith, should the moneys in the General Fund not be sufficient to pay such fees, charges and expenses of the Trustee. Suction 904. Notice to the Owners It Default Occurs. If an Event of Default occurs of which Trustee, is by Section 901(g) hereof required to take notice or if notice of such Event of Default be given as provided in said Section 901(g), the Trustee shall promptly give written notice thereof by .55- C. • registered or certified mail, within thirty (30) days (unless such default is cured or waived). to each Owner of Bonds then Outstanding shown by the Bond Register required by the terms of Section 706 hereof to be kept at the office of the Trustee. Section 905. Intervention by the Trustee. If any judicial proceedings arise to which the Issuer is a party and which. in the opinion of the Trustee and its Counsel. has a substantial bearing on the interest of Owners of the Bonds. the Trustee may intervene on behalf of O-nners and, subject to the provisions of Section 901(j), shall do so if requested in writing by the Owners of a majority in aggregate principa: amount of all Bonds then Outstanding. Section 906, Successor Trustee. Any corporation or association into which the Trustee may be merged, or with which it may be consclydated, or to which it may sell, lease or transfer its corporate trust business and assets as a whole or substantially as d whole, shall be and become successor Trustee hereunder and shall be vested with all the trusts. power. rights. obligations, duties. remedies, immunities and privileges hereunder as was its predecessor, without the execution or filing of any instrument on the part of any of the parties hereto. Section 907. Resignation, by the Trustee. The Trustee may at any time resign from the trust hereby created by giving sixty (60) days' written notice by registered or certified mail to the Issuer. the Association and to each Owner of Bonds as shown by the list of Owners required by Section 706 hereof, and such resignation shall take effect at the appointment of a successor Trustee pursuant to the provisions of Section 909 hereof and acceptance by the successor Trustee of such trust. If no successor Trustee shall have been so appointed and have accepted appointment within sixty (60) days o` the giving of written notice by the resigning Trustee as aforesaid, the resigning Trustee may petition ajiy court of competent jurisdiction for the appointment of a successor Trustee Section 908 Removal of the Trustee. The Trusted may be removed at any tune, by an instrument or concurrent instruments in writing delivered to the Trustee. the Issuer. the Assnciahon and the Developer and signed by the Issuer. or if an Event of Default shall have occurred and be continuing. by the Owners of a majority in aggregate principal amount of Bonds then C utstanding: provided that such removal will not be effective without the appointment of a successor Trustee. Section 909. Appointment of Successor Trustee. In case the Trustee hereunder shall: (1) resign pursuant to Section 902 or 907 hereof; (21 be removed pursuant to Section 906 hereof: or (3) be dissolved, taken under the control of any public officer or officers or qt a receiver appointed by a court, or otherwise become incapable of acting hereunder. a successor shall be appointed by the Issuer; provided that it a successor Trustee is not so appointed within ten (101 days after notice of resignation is mailed or an instrument of removal is delivered as provided under Sections 902. 907 and 906 hereof, respectively, or within ten (10) days of the Issuer's knowledge of any of the events specified in (3) herernabove. then the Owners of a majority in aggregate principal amount of Bonds then Outstanding, by an instrument or concurrent instruments in writing signed by or on behalf of such Owners, and delivered to the Trustee with notice thereof given to the Issuer, may designate a successor Trustee. Every such successor Trustee appointed pursuant to the provisions of this Section 909 rri.,st possess the qualifications necessary tinder Section 902 to serve as Trustee under the terms and conditions of this Indenture, Section 910. Concerning Any Successor Trustee. Every successor Trustee appointed hereunder shall execute. acknowledge and deliver to its predecessor and also to the Issuer and the Association, an instrument in writing accepting such appointment hereunder, and thereupon Such successor shall become fully vested with all the trusts, powers, rights, obligations, duties. remedies. M-1 immunities and privileges of its predecessor, but, nevertheless. 0 ) such predecessor shall, on the written request of the Issuer, execute and deliver an instrument transferring to such successor Trustee all the trusts. powers, rights, obligations, duties, remedies. immunities and privileges of sucn predecessor hereunder and (2) such predecessor shall deliver all securities and moneys held by :t as Trustee hereunder to its successor. provided. however, that before any such delivery is required or made. all proper fees, advances and expenses of the predecessor Trustee shall be paid in full. Should any instrument in writing from the Issuer be required by any successor Trustee for more fully and certainly vesting in such successor, the trusts. powers, rights obligations, duties. remedies, immunities and privileges hereby vested in the predecessor, any and all such instruments in writing shall, on request, be executed, acknowledged and delivered by the Issuer. The resignation of any Trustee and the instrument or instruments removing any Trustee and appointing a successor hereunder, together with all other instruments provided for in this Article IX, shall be fled or recorded by the successor Trustee in each recording office, if any, where the Indenture or a financing statement relating thereto shall have been filed or recorded. Section 9t t. Designation and Succession of the Paying Agent; Agreement With the Paying Agent. The Trustee shall be the Paying Agent for the Bonds. Any bank, national banking association or trust company with or into which any Paying Agent may be merged or consolidated, or to which the assets and business of such Paying Agent may be sold. shall be deemed to be the successor of such Paying Agent for the purposes of ;his Indenture. It the position of Paying Agent shall become vacant for any reason, the Issuer ma-1 appoint a bank, national banking association or trust cc,npany located in the same city as such Pay -rig Agent to fill such vacancy. Each Paying Agent shall enjoy the same protective provisions in the performance of its duties hereunder as are specified in Section 901 hereof with respect to the Trustee insofar as such provisions may be applicable. Section 912. Appointment of Co -Trustee. It is the purpose of this Indenture trial there shall be no violation of any law of any jurisdiction (mcludmq pancCutarty the law of the State) denying or restricting the right of banking corporations or associations to transact business as trustee in such jurisdiction. It is recognr.,ed that rr. case of litigation under this Indenture. the Loan Agreement. the Collateral Pledge Agreement or the Regulatory Agreement. and in particul:-ir in else of the enforcernent thereof or default thereunder, or in case the Tnrstee deems th,-)t by reason of xly present or futuretaw of any jurisdiction it may not eirercrse any of the powers, rights or reffledies hereon granted to the Trustee or hold title to the properties. in trust. as herein granted, or W.e any action %-which may be desirable cr necessary In connection therewith. it may be necessary that the Trustee appoint an additional individual or institution as a separate or co -trustee The following provisions of this Section 912 are adapters to these ends. In the event that the Trustee appoints an additional individual or institution as a separate or co - trustee, each and every remedy. pov.ir, right. clarrn, domand. cause of action, immunity. estate, title. interest. duty, obligation and lien expressed at intended by this Indenture to be exercised by, or vested in or conveyed to the Trustee with respect thereto, shall be exercisable by and vest in such separate or co -trustee but only to the e,tent necessary to enable such separate or co -trustee to exercise such powers, rights and remedies. and every covenant and obligation necessary to the exercise therect by st-ch separate or co -trustee shall run to and be enforceable by either of them. Should any instrument in wilting from the Issuer be required by the separate or co -trustee so appointed by the Trustee for more fully and certainly vesting in and confirming to him or it, such properties, rights, powers. trusts. duties and obligations, any and all such instruments in writing shall, on request, be executed, acknowledged and delivered by the Issuer. !n case any separate or co - trustee or a successor to either shall die, become incapable of acting, resign or be removed. all the estates. properties, rights. powers. trusts, duties and obligations of such separate or co -trustee, so far -57- as permitted by law, shall vest in and be exercised by the Trustee until file appointment of a new Trustee or successor to such separate or co -trustee. Section 913. Trustee Protected in Relying Upon Resolution, Etc. The resolutions, opinions, certificates and other instruments provided for in this Indenture may be accepted by the Trustee as conclusive evidence of the facts and conclusions stated therein and shall be full warranty, protection and authority to the Trustee for the release of property and the withdrawal of cash hereunder. Section 914. Successor Trustee as the Trustee of the Funds and Accounts, Paying Agent and Bond Registrar, In the event of a change in office of the Trustee, the predecessor Trustee which has resioned or been removed shall cease to be Trustee of the Funds and Accounts created hereunder and Bond Registrar and Payinq Agent for the principal of, premium, it any, and interest on the Bonds, and the successor Trustee shall become such Trustee, Bond Registrar and Paying Agent. Section 915. Survival of Rights; Indemnification. The Trustee's rights to immunities and protection from liability hereunder and its rights to payment of its fees and expenses shall survive its resignation or removal and final payment or defeasance of the Bonds. All indemnifications and re,eases from liability granted herein to the Trustee shall Pstend to the directors, officers, employees and agents of the Trustee. Section 916. Remarketing Agent. BTC has been appointed Remarketing Agent pursuant to the Remarketing Agreement. BTC and any successor Remarketing Agent shall be institutions authorized by law to perform all the duties imposed upon them by the Remarketing Agreement. -58- ARTICLE X SUPPLEMENTAL INDENTURES Section 100 1. Supplemental Indentures Not Requiring Consent of the Owners. The Issuer and the Trustee may, without consent of, or notice to, any of the Owners but subject to the last sentence of Section 1002 enter into ar, indenture or indentures supplemental to this Indenture as shall not be inronsisten1 with the terms and provisions hereof as theretofore in effect for any one or more of the following purposes: (1) to add to the covenants and agreements of, and lanitations and restrictions upon, the Issuer in this Indenture and other covenants, agreements. limitations and restrictions to be observed by the Issuer for the protection of the Bond Owners which are not contrary to or inconsistent with this Indenture as theretofore in effect: 0 to grant to or confer or impose upon the Trustee for the benefit of the Owners any additional rights, remedies, powers. authority, security, liabilities or duties which may lawfully be granted, conferred or imposed and which are not contrary to or inconsistent with this Indenture as theretofore in effect: (3) to cure any ambiguity or omission or to cure, correct or supplement any defec:1ve provision of this Indenture or otherwise to amend or supplement this Indenture in such manner as shall not impair the security hereof or adversely affect the Owners: (4) to evidence the appointment of a separate Trustee or a Co -trustee. or the successor of a new Trustee or Paying Agent hereunder: (5) to comply with the requirements of the Trust indenture Act of 1939. as from tirne to time amended: (6) to subject to this Indenture additional revenues. properties or collaieral.0# (7) to modify, alter, amend or supplement this Indenture in any other respect which. in the judgment of the Trustee, is not materially adverse to the Owners (including any change v.h,ch, in the opinion of Bond Counsel, is necessary to comply full; with all applicable rules, rulings. policies. procedures, regulations or other official statements promulgated or proposed by the Departrnent of the Treasury or the Internal Revenue Service pertaining to obligations issued under Section 103(b)(4)(A) of the Code) and which does not involve a change described in clauses I 1 t. (21, (3) or (4) of Section 1002 hereof; or (8) to m6dify, alter, amend or supplement this Indenture in arty other respect which, in the judgment of the Trustee, is not materially Vr vorsa to the Owners (including any change which, in the opinion of Bond Counsel, is not required to comply fully with all applicable rules. rulings, policies, procedures, regulations or other official statements promulgated or proposed by the Ce.partment of tfw Treasury or the Intemal l ievenue Service pertaining to obligations issued under Section 1163(b)(4)(A) of the Cade or any provision of the Act) and which does not involve a change desc'n'bod in cruses (1), (2), (3) or (4) of Section 1002 hereof. Section 1002. Supplemental Indentures Requiring Consent of the Owners. Exclusive of Supplemental locentures covered in Section 1001, hereof and subject to the terms and provisions contained in this Section 1002, and not otherwise. the Owners of not less than sixty-six and two-thirds percent (66.2 3°e) in aggregate principal amount of the Bonds then Outstanding shad have the right. subject to the last sentence of this Section 1002, from time to time, anything contained in this Indenture to the contrary nomithstanding (other than in the last sentence of this Section 1002 and -59- Section 1003), to consent to and approve the execution by the Issuer and the Trustee of such other indenture or indentures supplerrnerital hereto for the purpose of modifying. amending, adding to or rescinding, in any particular, any of the terms or provisions contained in this Indenture, provided, however, that nothing contained in this Section shalt permit or be construed as permitting without the consent of the Owners of all Bonds then Outstanding (1) an extension of the maturity date of the principal of or the interest on any Bond issued hereunder or any payment due under Article XI hereof, or (2) a reduction in the principal amount of, or redemption premium on, any Bond or the rate of interest thereon. (3) a privilege or priority of any Bond or Bonds over any other Bond or Bonds. (4) a reduction in the aggregate principal amount of the Bonds required for consent to such Supplemental Indentures. (5) any change affecting the option of the Owner to require the Trustee on or before the Conversion Date tc purchase such Owner's Bonds, or (6) an amendment of this Section 1002.. If at any time the Issuer shall request the Truster; to enter into any such Supplemental Indenture for any of the purposes allowed by this Section 1002. the Trustee shall, at the request of the Issuer and upon being satisfactorily indemnified with respect to expenses. cause notice of the proposed execution of Such Supplemental Indenture to be given in substantially the same manner provided in Section 604 hereof with respect to redemption of Bonds. Such notice shall briefly set forth the nature of the proposed Supplemental Indenture and shall state that copies thereof are on file at the Principal Office of the Trustee for inspection by all Owners. If, within sixty (60) days or such longer period as shall be prescribed by the Issuer following the mailing of such notice, the Owners of sirty•six and tr:o- thirds percent (66.2.W:0) in aggregate principal amount of the Bonds Outstanding at the time of the execution of any such Supplemental Indenture shaft have consented to and approved the execution thereof as herein provided, no Owner of any Bond shall have any right to object to any of the terms and provisions contained therein, or the operation thereof, or in an-; manner to question the propriety of the execution thereof, or to enjoin or restrain the Trustee of the Issuer from executing the sarne or from taking any action pursuant to the provisions thereof. The Issuer shall have the right to extend from time to tirrme the period within which such consent and approval may be; obtained from Owners, Subject to the last sentence of this Suction 1002 arid to Section 1003. uper, the execution of any such Supplemental Indenture as permitted and provided in this Section 1002. ttus Indenture shall be and t;e deemed to be modified and amended in accordance therewith. The Trusted may ootain an opinion of Counsel that any such Supplemental Indenture entered into by the Issuer and Trustee complies with the provisions of this Article X and the Trustee may conclusively relY upon such opjiion. Notwithstanding anything to the contrary in this Indenture, neither this Indenture, not the Collateral Pledge Agreement nor any of the Developer Loan Documents may he amended in any respect whatsoever without the prior written consent of the Association (except in accordance with Secticrl 10010)), and. to the exteint any such amendment altars the iri,stee's inderTlnrly, rights or immunities, without the Trustee's prior approval, and any amendment or Supplemental Indenture in violation of this provision shall be null and void Section 1003. Consents to Supplemental Indentures. Anything herein to the Contrary notwithstanding and in addition to the last sentence of Section 1002. a Supplemental Indenture under this Article X which adversely affects any rights of the Association, the Developer or the Remarketing Agent in any manner not contemplated by the Developer Loan Documents or the Collateral Pledge Agreement shall not become effective unless and until the Association, the Developer and the Remarketing Agent shall have consented to the execution and delivery of such Supplemental Indenture (except in accordance with Section 1001(4)), In this regard. the trustee shall cause notice of the proposed execution and delivery of any such Supplemental lnder.ure to be mailed by certified or registered mail to the Association and the Remarketing Agent (with a copy to the Developer) at least fifteen (15) calendar days prior to the date of the first mailing of notice of the proposed execution of such Supplemental Indenture as herein provided. The Association. the Developer and the Remarketing Agent shall be deemed to have consented to the execution and delivery of any such Supplemental Indenture if the Trustee does not receive a letter of protest or objection thereto signed r,y or on behalf of the Association, the Developer and the Remarketing Agent on or before 4:00 o'clock P.10., Pacific U. time. on the fifteenth (15th) calendar day after the mailing of said notice accompanied by a copy of the proposed Supplemental Indenture. • ARTICLE XI PURCHASE AND PLACEMENT OF BONDS E Section 1101. Purchase of Bonds at Option of Owners and on Conversion Date. (a) The Owner of any Bond may demand that the Trustee on behalf of the Association purchas<, s:,ch Boed by delivering to the Rernarket.ng Agent at its Principal Office and to the Trustee at its Principal Office not later than 10:00 A1.1., Eastern tirne. on any Business Day a v:ntten notice e.hrch states (A) the aggregate principal amount and the number of such Bond and (B) a demand that the Trustee on behalf of the Association purchase such Bond on a date specified in such notice (the "Designated Purchase Date"). which date shall be a Business Day (►) which is the Conversion Date er a date on or after March 1. 1987. and prior to the Conversion Date and (n) is the seventh (7 th) day next succeeding the date of delivery of such notice to the Remarketing Agent at its Principal Office and to the Trustee at its Principal Ochre; provided that in the event that a dra-.%, upon the Letter of Credit is not honcred by the Assocrat►cn, the Bonds shall be purchased on the Business Day next fol(nvang the date proceeds are received from a liquidation of the Collateral during the Purchase Period. Such a notice deliverer after 10:00 A.M., Eastern time. on any Business Day shall be deemed to be delivered on the next succeeding Business Day. On the Designated Purchase Date as specified by the Ovrner of a Bond in such Owner's notice pursuant to the preceding sentences, such Owner shall t..� required to Tender the Bond identified in such notice to the Trustee for purchase by the Trustee on behalf of the Association pursuant to Section 1101(b). The Tender Agent, as soon as possible. but no later than the close of business on the Designated Purchase Date, shall give telephonic or telegraphic notice to the Remarketing Agent, the Association and the Trristee specifying the principal amount and number of Bonds so delivered. ff the applicable Bond is not so Tendered on the Designated Purchase Date. then the notice of demard to purchase such Bond shall be null and void and. for purposes of Section 1101(b), shalt not be deemed to have been given and the Owner of such Bond must delver a Pew notice to the Remarketing Agent and the Trustee with re:spe;ct to such Bond before the Trustee will again be required to purchase any such Bond. (b) During the Purchase Period, they Trustee on behalf of the Assoctatoin shall purchase. but onl'. from Tender Payments any Bond which the Owner thereof has d,.rnandc.,d (►n acco,clance voth Section 1101(a)) that the Trustee purchase. The purchase price of each Bond required to bt? purchased by the Trustee on behalf of the Association pursuant to this Section 1101(b) shall (A) be equal to the unpaid principal amount thereof as of such Designated PLOchase: Date plus unpaid interest accrued thereon to the Designated Purchase Data. and (B) be due and payable on (►► thct Designated Purchase Dale. it such Bond is Tendered to the Trustee or the Tender Agent at its Delivery Office at or before 10:00 A.M. Eastern time on such Desegnited Purchase Data and of the Trustee thin holds Tender Payments derived from the sources described in Section 1105(1) or Section 1105(2) sufficient to pay such purchase price of all Band; then required to be purchased. (u) on the Business Day next succeeding such Designated Purchase Date of such Bond is Tendered to the Trustee or the Tender Agent at its Delivery Office after 10:00 A 1A , Eastern time, on each first day of they Purchase Period and if the Trustee then holds Tender Payments derived from thr soe,r .es described in SP7teun 1105(1) or 1 105(2) sufficient to pay such purchase price of all Bonds then required to be purchased. or (ar) the first date. not later than the end of the Purchase Period, on which the 'Trustee holds Tender Payments frorn the source described to Section 1105 sufficient to pay such purchase price of all Bonds then required to be purchased. (c) On the first Business Day on or after the Conversion Date on which the Trustee has funds available, the Trustee on behalf of the Association shall purchase on the Purchase Date. but only from Tender Payments, each Bond as to which the Owner thereof has not. as and ti%hen required by Section 211.E.1. given notice to the Trustee of such Owner's desire to retain such Bond after the Conversion Date. The purchase price of each Bond required to be purchased by the Trustee on behalf of the Association pursuant to this Section 11011ct shall (A) be an amount equal to the unpaid principal .62- amount thereof as of the P(irchase Date plus unpaid interest accrued thereon to the Purchase Date. and IB) be pa-ri t;y the Trustee or the Tender Agent out of the Tender Payments Fund on the Purchase Date into a separate fund established for such purpc:se by the Trustee to be held in trust In such fund by the Trustee pending distribution to the Owners entitled thereto upon presentation of the Bonds so purchased by the Trustee on behalf of the Association. Upon purchase of any Bond by the Trustee on behalf of the Association pursuant to the preceding sentence. the Issuer shal! cause to be prepared ar,d executed, and the Trustee or the Tender Agent shell authenticate and deliver in accordance with Section 1101, in replacement for such purchased Bond, one ur more Bonds In authorized denominations and In aggregate principal amount equal to the unpaid nrincrpal amount of such purchased Bond. (d) Notwithstanding anything to the contrary In Sections 1101(a). (b) or (c) or in any other provision of this Indenture, the Trustee on behalf of the Association shall never be required to purchase only a portion of any Bond. (e) Immediately upon receipt by the Trustee of any notice delivered to It In accordance with Section 1101(a) demanding the purchase of any Bond, the Trustee shall give notice by telephone. promptly confirmed .n writing, to the Association and the Remarketing Agent specifying (I) the purchase price which will be payable (from Tender Payments) by the Trustee on behalf of the Association In respect of such Bond. '0 the Designated Purchase Date as speccfled In such notice and (m) the name and number of an account it New York, New Yorl•. (and the narne of the bank and address of the branch where such account is maintained) to which the payment required to be made by the Association pursuant to Section 1103 shall be paid Immediately upon receipt by the Trustee of any notice delivered to it in accordance with S9clicin 1101(a) demanding the purchase of any Bond(s) In aggregate principal amount, of S200,000 or more, the Trustee shall give notice by telephone, promptly confirmed in writing, to BTC, specifying the purchase price which will oe payable (f'oln Tender Payments) by the Trustee on behalf of the Association In respect of such Botd(s) and the Purchase Period and the Designated Purchase Date as specified in such notice. (f) Prior to 11:00 A.M.. Pacific time. on the fifth (5th) day next proved=ng the Conversion Dates (or if such day Is not a Business Day, prior to 11:00 A.M, Pacific time on the nr�xt .3recedinq day which Is a Business Day), the Trustee shall give notice by telephone. prornpt►y (-::infirrped in wrung. to the Remarketing Agent and the Association specifying the aggregate purchase price of all Bonds which will be required to be purchased by the Truster: an behalf of the; Ass;tclation during the Purchase Period purst ant to Section 1101(c) and the narne and number of an account in New York, New York (and thin name of the bank and address of the branch where such account is marntainedi to which the payment required to be made by the Association pursuant to Section 1103 shall be paid Section 1102, Remarketing of Bonds; Purchase of Bonds. During the Remarketing Period, the Remarketing Agent shall otter for sale and usa its best efforts to remarket on or prior to the date any Bond is required to be purchased Ifrom Tender Payments) by the. Trustee on behalf cif the Association pursuant to Sections 1101(b) or (c), each Bond required to be purchased ifrorn Tendt: Payments) by the Trustee on behalf of the Association pursuant to Sections 1101(b) or (c) and any Bond which may be delivered in replacement thereof pursuant to Section 1101(c ). In the event that the Remarketing Agent shall be unable to remarket any such Bond on or prior to the Designated Purchase Date and the Bond is purchased from Tender Payments specified In Section 1105(3) hereof, the Remarketing Agent shall, during they Remarketing Period, continue to offer for sale and use Its best efforts to remarket such Bond on behalf of the Association. as the Owner thereof. The selling price of each Bond which the Remarketing Agent is require, (pursuant to this Section 1102) to offer for sale and to use its best efforts to remarket shall be the purchase price paid or to be paid therefor by the Trustee on behalf of the Association or (in the case of Sonds owned by the Association) such lesser amount as the Association may specify by notice given to the Remarketing Agent. All proceeds of sales of Bonds by the Remarketing Agent shall be remitted by the Rcrrarketing Agent in accordance with Section 1106. •63 Section 1103. Funding by the Association. In the event that the Trustee on behalf of the Association shall be required to purchase (from 'Tender Payments) any Bonds pursuant to Sections 1101(b) ,.. (c), the Trustee shall draw upon the Letter of Credit in an amount equal to the purchase price of the Bond so requited to be purchased by the Trustee on behalf of the Association. which draw shalt be rnade not later ;han close of business on the third (3rd) Business Day prior to the day the Trustee on behalf of the Association is required to purchase the Bonds. Such draw shall be due and payable in immediately available funds to New York. New York. for the credit of the account specified by the Trustee in its notice pursuant to Section 1101(e) or (t) and such funds shall be held to trust for the Association until applied to the purchase price of Bonds pursuant to this Article XI or returned to the Association. Section 1104. Default by the Association, In the event that the Association shall fall to honor any draw by the Trustee. when and as the same shall become due and payable. of any amount due ana payable by the Association pursuant to Section 1103, the Trustee shall immediately take all action necessary to realize Tender Payments described to Section 1105(3) nereof sufficient to fund the purchases with respect to which such faded draw was made. and the Trustee shall immediately proceed to redeem the Bonds pursuant to Section 602.A(a) hereof. Section .1105. Tender Payments. Funds for the payment of the purchase price of Bonds required to be purchased by the Truster: on behalf of the Association pursuant to Section 1101(b) and (ci shall be derived from the following sources in the following order of priority: (1) the proceeds of the sale of such Bonds which have been remarketed by the Remarketing Agent prior to 4:00 p.m., Eastern time, on the Business Day preceding the date such Bonds are to be purchased. to any entity other than the Developer, the Issuer or the Association; (2) Seasoned funds held by the Trustee. (3) amounts received by the Trustee from the Association pursuant to Section 1101 and (4) Collateral Funds. The funds identified in parts (1). (21 and (3) of this Section are referred to to this Indewture as "Tender Payments". On the date of each purchase of Banos by the Trustee. the T-ustee shall give notice by telephone. promptly confirmed to vrntrng, to the Remarketing Agent specifying tho sources of Tender Payments applied to such purchase Section 1106. Remarketing Proceeds. All proceeds of sales by the )remarketing Agent of Bonds purchased with Tender Paymews de<<crtbed in clause (, I of Section 1 105 shall be remitted by the Tender Agent to the owners of the Tendered Bonds. All proceeds of sales by the Rernarl eting Agent of Bonds purchased by the Trustee on behalf of the Association solely with Tendw Payments described in clause (2) of Section 1105 shall be remitted by the Tender Agent to the Association. All proceeds of sale, by thu Remarketing Agent of Bonds purchased by the Trustee with any Tender Payments described in clause (3) of Section 1105 (whether or not purchased solely with such funds) shall be remitted by the Tuoder Agent to the Association Section 1107. Protection of Owners. The Trustee agrees that it will. (t) hold all Bonds Tendered to it for purchase on behalf of the Association pursuant to Sections 1101(b) or (c) in trust solely for the ben0it of the respective Owners so tendering such Bonds until the purchase price of such Bonds shall have been paid to or for the account of or to the order of such Owners; and •6-1• • 0 (ii) hold all funds paid to It by the Association pursuant to Section 1103 in trust solely for the benefit of the Person paying the same until the purchase price of the Bonds to be purchased with such funds shall have become due and payable. Section 1108. Delivery of Bonds. (a) Bonds purchased by the Trustee on behalf of the Association pursuant to Sections 1101(b) or (c) and any due -bills received by the Trustee upon the Tender of such Bonds shall be delivered as follows: (1) Bonds purchased solely with Tender Payments described In clause (1) of Section 1105 shall be delrve.ed by the Trustee, together with the roue -bill checks. If any, received by the Trustee or the Tender Agent upon the Tender of such Bonds to the Trustee or the Tender Agent to the Person to whom she Remarketing Agent has arranged pursu ." to the Remarketing Agreement to sell such Bond(s) as of the date of purchase thereof by the Trustee. provioed that such Person has. on or prior to the date of purchase of such Bonds by the Trustee. Najd to the Remarketing Agent in immediately available funds In New York. New York, the purchase once required to be paid by such Person In respect of the purchase of such Bonds by such Person. (2) Bonds purchased by the Trustee solely with Tender Payments described in clause (2) of Section 1105 shall be delivered by the Trustee. together with the due -bills, if any. received by the Trustee or the Tender Agent upon the tender of such Bonds to the Trustee or the Tender Agent. (i) to the person to whom the Remarketing Agent has arranged pursuant to the Remarketing Agreement to sell such Bonds as of the date of purchase thereof by the Trustee: provided that such person has. after 4:00 p.m. Eastern tirre, on the Business Day preceding the date such Bonds are to be purchased tnrough the data of purchasF, of such Bonds by the Trustee, pall to the Remarketing Agent In Immed!ately available funds In Nevv York. Nev.- York.. the purchasee price required to be paid by such person In respect of the purchase of such Bonds by such person and provided further that the Trustee has --?ceived written notice frorn the Association that the Letter of Credit has been reinstated with respect to all arnuunts drawn under the Letlor of Credit for the purchase of such Bonds: or (u) to the Association. ,f the Rernark.etinq Agent sha"I nol, pursuant to the Remarketing Agreement. have arranged to 5e11 sUCt: Bonds as of the date of purchase thereof by the Trustee on behalf of the Association or If any f t,spective purchwer thereof shall have faded to pay to the Rpmarkuhng A9(,nt In immediately available funds :n Nevi York,, New York. the purchase price required to be paid by such purchaser in resG('-.t of th+? purchase of such Bonds by such person (3) Bonds purchased by the Trustee with any Tender Payments de5cribed rr clause (31 of Section 1105 shall be cancelled by the Trustee upon redemption thereof in accordance with Section 602.A(al hereof. (b) Bonds delivered as provided in this Section 1108 sha'I be registered In the manner directed by the Person to whorn such Bonds are to be delivered bj the Trustee or the Tender Agent at least 24 hours prior to the time of delivery thereof: provided that in the rase of any Bonds delivered In accordance with clause (1) of Section 1108(a) hereof, such Bond; shall t-p registered In accordance with the instructions furnished by the Reroa►ketrng Anent to the i ender Agent at least 24 hours prior to the time, when such Bonds are required to be delivered The Trustee shall not deliver ;1ny Bonds held by It until It has received notice that the amount of the Letter of Credit has been reinstated in the full principal amount of the Bonds being delivered as required by the Reimbursement Agreement. Section 1109. Trustee's Agent. Anything contained In this Article XI to the contrary notwithstanding, if any time or times the Principal Office of the Trustee Is not located in New York, New York, the Trustee writ at all such times cause an agent whose Principal Office Is In New York, New York to be appointer, and to act as Co -Transfer Agent, Tender Agent and or agent of the Trustee under this Article XI and Section 205 to perform all acts and duties. Including the acts and dukes ct the .65• 0 • Trustee set forh in Section 205, and as otherwise provided it) this Indenture, required to be performed by, and to receive all Bonds required to be Tendered and all demands, notices, duu-bill checks and other documents required to be delivered or given to, the Trustee under this Arttc.e XI. While any agent is so appointed and acting, all references in this Articla XI (except +n this Section 1109 and in clause (b) of Section 1101 and in Section 11 10) and in Section 21 t E.1. to the Trustee shall be deemed to be references to such agent. and all references to this Article XI (except in IN, Section 1109 and in Clause (b) of Section 1101 and in Section 1110) to the Principal Office of the Trustee shall be deemed to be references to the Principal Office of such agent: provided, that the Trustee shall at all times be and rern2.n responsible for the timely and faithful performance by such agent of the acts and duties of the Trustee under this Article XI. Any person appointed as agent of the Trustee pursuant t0 this Section 1109 shall possess the same qualifications required to be possessed by the Trustee under Section 902, and may be removed as such agent at any tone by wiritten notice delivered to such agent by the Trustee or by written notice deltve:ed to such agent and the Trustee by the Remarketing Agent or the Association. The Trustee shall give written notice to the Remarketing Agent, the Association and each Owner at the address of such Owner as it last appears in the Bond Register of any resignation or removal of such agent and of the identity and the address of the Principal Office of any successor agent. Until notice to the contrary is given pursuant hereto. J. Henry Schroder Bank & Trust Co., Stock Transfer Department whose office is located at One State Street. New York. Ne:-J York 10015. is hereby appointed as Co -Transfer Agent, Tender Agent and or agent of the Trustee pursuant to this Section 1109 Section 3109, Redemptions by Association; Cancellation. The Association may elect. by giving notice to such effect to the Trustee and Tender Agent. to hatie the Trustee cancel any Bonds (or any portion of the Bonds) which (►n the absence of such Election pursuant to this Section► we-uld otherwise be required to be delivered by the Trush,e to the Assr)cIMIGn ;+ursuant to Section 1108 In thp event of any such election by the Association. the Bonds so cancelled by Vie Trustee Shall be deemed to be redeemed for all purposes relating tj thi4 Indenture, the principal of the Developer Loan shall t.e deemed prepaid in an arnount equal to the principal amount of thca Bonds so deemed redeemed. and interest on the Developer Loan shalt be dc4e1,jed propa;d o in amount equal to the unpaid tnteres! accrued on such Bonds as of the date of the purchase theree;f by the Trustee on behalf of the Association. Notwithstanding any other provision herein to tht- contrary, any Boncls purchaseh vritn Tender Payments described in clauses (1). (2) or tat tit Secnon 1105 attar se►ection thef(�cf fr.r redemption pursuant to Article VI hereof shall be delivered to the Trustee for cancellation. Section 1111. Repayments. In the event that any fauna required to be T enrlered !o the Trustee pursuant to Section 1101(al is not Tendered to the trustee on the date on vvhich such Bond is required to be so Tendered pursuant to said Sec.11on. anv Tender Payrie:its paid to they Trustee by the Assoc►at►un to fund the purchase of such Bond by the T ru stutt on behalf cif the Association shall be repaid by the Trustee (less any payments made therefrorn pursuant to Section 1101(b)) to the Association on the second Business Day next succef-ding thf• data on wnich such Bond was required to be so Tendered. The repayment of such Tender Paymentc, by the, Trustee Shall not impair the Trustee's rights under Sections 1103 ,and 110•1 or under the Letter of Credit or the Collateral Pledge Agreement in respect of any payments subsequently ►equ►reo to be paid by the Association pursuant to said Section. Section It 12. Replacement Bonds The Trustee shall authenticate and deliver replacement Bonds on the Conversion Date (or as soon thereafter as is practical) to the purchasers of the Fixed Rate Bonds. including any Owner of a Bond who provided notice to the Trustee of such Owner's wish to retain tie applicable Bond as authorized by Section 211.E.1. of this Indenture. The Trustee shall cancel all Bonds delivered to the Tr;,stee in connection therewith. .66- • ar ARTICLE Xll AMENDMENT OF THE DEVELOPER LOAN DOCUMENTS OR THE COLLATERAL. PLEDGE AGREEMENT Section 120.'. Amendments, Etc., to the Developer Loan Documents or the Collateral Pledge Agreement Not Requiring Consent of the Owners The Issuer and the Association may s:;bject to the provisions of Section 1203 hereof and the last sentence of Section 1002 and with the written consent of the Trustee, but without the consent of or notice to any of the Cwners, enter into :any amendment, change or modification of the Developer Loan Documents or the Collateral Pledge Agreement in accordance with said documents as may be required (1) by the provisions of the Developer Loan Documents or the Collateral Pledge Agreement or this Indenture, (21 for the purpc!ze of curing any ambiguity or forma: defect or ornission. (3) so as to add additional rights acg4 •red in accordance with the provisions of the Developer Loan Documents or the Collateral Pledge agreement. or (a) in connection with any other change thereto which, ,n the judgment of the Trustee. is not to the prejudice of the Trustee or the Owners of the Bonds The Issuer and the Trustee shall, without the consent of or notice to any of the Owners but not before giving notice thereof to the Association enter into any amendment. change or modification cf the Developer Loan Decurnents or the Collateral Pledge Agreen'lertt as may be necessary. in the opinion of Bond Counsel. to comply fully with all appb;:ab!e rules, rulings, policies, procedures, regulations or other official statements promulgated or proposed b, the Deparment of the Treasury or the Internal Revenue Service pertaining to obligations issued under Section 103(b)(4)(A) of the Code. Section 1202. Amendments, Etc., to the Developer Loan Documents or the Collateral Pledge Agreement requiring Consent of the Owners. Elcept for the amEnd►rients. changes or modifications as provided in Section 1201 hereof and subject to the prcvis:ons of Section 1203 hereof. neither the Issuer nor the Association shall enter into any other amendment, change or mod:f:catior of the Developer Loan Documents or the Collateral Pledge Agreement. includtng the Deem of Trust and Regulatory Agreoment, without the mailing of not:ccl and tho v.ritten approva, or consent of the Owners of not less than sixty-six and two-thirds percent (66.2 30.1 in aggregate principal jrnouni of the Bonds at the time Outstanding given and procured as prove-ded m this Section 1202, provided, hows?ver. that nothing in this So-ocin 1202 or in Section 1201 he,,00f shall perrntl or be construed as permitting. without the consent of the Owners of all Bonds. then Outstanttrng. t 1 t an extension of c;r change :n the, time of the payment of any amounts due under the Loan Agre ernent or the Reimbursement Agreement: or (2) a redu,tion in the amount of any payinent or in We total anzourt OW? Under the Developer Loan. the Letter of Credit or the Collateral Pledge Agreement 11 at and hrtie the Issuer and the Association shall request the consent of .he Trustee to any such proposed amendment. cttange qr modification of the Developer Loan DoLurnents or the Wlatorat Pledge Arjrectnent. the Trustee may, upon advice of its Counsel, and shalt, at the request of the Issuer, in both rases upon being indemn,'ied to its satisfaction with respect to expenses, cause not re of such proposed amendrnE-nt, mange or modification to be given in the same manner as provided by Section 604 hereot with respect to rc,demotion of Bonds. Such notice shall briefly set forth the nature of such proposed amendment. change or modification and shall state that copies of the instrument embodying the sane are on file with the Trustee for inspection by all Owners. It, within sixty (60) days. or such longer period as shall be prescribed by the Issuer. following the; mailing of such notice, the Owners of sixty-s►, and two-thirds percent (66 2 311o) :n aggregate prrncipai amount of the Bonas Outstanding at the time of Inc, execution of any such amendment, change or modification shall have consented to and approved Intl execution thereof as herein provided, no Owrier of any Bond shall have any right to object to any of the terms and provisions contained therein, or the operation thereof. or in any manner to question the propriety of the execution thereof, or to enjoin or restrain the Association or the Issuer from executing the same or from taking any action pursuant to the provisions thereof, or the Trustee from consenting thereto. The Trustee or, behalf of the Issuer shall have the right to extend frorn time to time the period within which such consent and approval may be obtained from Owners. Upon the execution of any such amendment, change of modification as in this Section permitted and provided, the Developer Loan •67- t • .. 0 . 0 Documents or tho Collateral Pledge Agreement shall, subject to the last sentence of Section 1002 and to Section 1003. be and be deemed to be modified. changed and amended in accordance therewith. Section 1203. Required Opinion of Bond Counsel. The Issuer and they Trustee shall not enter into or consent to any amendment, change or modification to any one or more of the Developer loan Documents or the Collateral Pledger Agreement unless the Trustee on behalf of the Issuer has received an opinion of Bond Counsel to the effect that such amendment will nut impair the eyernption of the interest on the Bonds from Federal income taxation. The Issuer and the Trustee: may conclusively rely upot, an op=pion of Counsei to the effect that any such proposed amendment. change or modification will comply with the provisions of this Art,cle N"I ARTICLE Xlll DEFEASANCE Section 1301. Deleasance. If the Issuer shall pay or cause to be paid. or there shall be otherwise paid or provisions for payment made to or for the Owners of the Bonds, the principal of. premium. if any, and interest due or to become due thereon at the times and in the manner stipulated therein, and if the Issuer shall have kept, performed and observeo all and singular the covenants and promises in the Bonds and in this Indenture expressed to be kept, performed and observed by It or on its pa1l. an;t Shali pay or cause to be pa!d to the Trustee and any Paying Agent all sums of money due or to become due according to the provisions hereof, then this Indenture and the lien. rights. estate and interests created hereby shall cease, determine and becorne null and vo-d (except as to any rights of registration. transfer or exchange of Bonds herein provided for. which shall survtvel, whereupon the Trustee shall take all such actions to cancel and discharge the Iler of this Indenture and to terminate the trust created herein, and shall, with the prior written consent of the Association. release, assign and deliver unto the Issuer any and all the estate. right. titles and interest ;n and to any and all rights assigned or pledged to the Trustee or othervnse subject to this Indenture, except moneys, obligations or securities help by the Trustee for they payment of the principal of, pre.TlluM, If any, and interest on the Bonds. Any Bond or portions thereof In principal amounts of 5100.000 prior to the Conversion Date o' 55.000 following the Conversion Date or any integral multiple of either thereof, as applicaulee, shall, prior to the maturity or redemption date thereof, be deemed to be paid and deceased within the meaning of this Indenture wnen paymert of the principal of and the: appllcah,p redemption pre -morn. It any, on auch Bond or portion thereof, plus Interest thereon h. the due state thereof such due date be by reason of maturity or upon redemption as provided In this Indenture, or othervose). either. (1 ) shall have been made or caused to be made In accordance with the terms of Section 30- hereof. or (2) shall have been provided for, but only on or after teie Conversion Date, by irrevocably depositing with the Trustee, In trust and Irrevocably sett,rg asldi., exc.lus,.,O-t for such payrnerit ary cornbinatton of (A► Seasoned Funds. proceeds derived frorn a dray: upon they Letter of Credit. Collateral Funds. or refunding bonds, whi1i shall be sufficient to rrlake such pa,rrrent wheen ;;use, and (BI reev errues described In (Al and or non -callable Government Obligations maturing as to principal and Interest In such amounts and at such timers. not lacer than 30 days; frUrn the date of investment, as ►oli be sucri as to insure the availability of sufficient riloneeys to ma4•e Such payment, and the Developer has provided the Trustee with an opinion of counsel that tho moneys see deposited will be sufficient to pay the principal, premium, If any, and Interest on all Bands to the due dale thereof and all necessary and proper lees, compensation and erponseys of the TtUati'e? and any Pay,rnq Agent p-wtalning to the Bonds with respect to which such deposit Is made shall have been paid or they payrrlent thereof p►ovlded for to the satisfaction of the Trustee and any Paying Agent At such time as a Bond or portion thereof shall be deemed to be paid hereunder, as aforesaid. It shall no longer be secured by or entitled to the benefits of this Indenture, except for the p..rposes of Sections 203, 207 and 311 hereof and of any such payment from such moneys or Government Obligations. Any moneys so deposited with the Trustee as provided In th,s Article may at the direction of the Issuer also be invested and reinvested In non• Wlabley Government Obrlpatlons maturing In the amounts and at titer times as hereenbefore set forth, and all mcorne Iron all such Government Obligations to the hands of the Trustee pursuant to this Article which Is not required for the payment of the Bonds ano interest and premium thereon with respect to which such moneys shall have been so deposited. shall be deposited In the Debt Service: Fund as and when ne hZed and collected for use and application as are other moneys deposited In that fund. Notwithstanding any provisions of any other Article of this Indenture vehich may be contrary to the provisions of this Article, all such moneys or Government Obligations set aside and held in trust pursuant to the provisions of this Article and for the payment of Bonds (including interest and premium thereon, i' any) shall be applied to and used solely for the rayment of the particular Bonds (including interest and premium thereof, if ony) with respect to which such moneys and Government Obligations have been so set aside in trust. Anything in Article X hereof to the contrary notwithstanding, if such moneys or Government Obligations have been deposited or set aside with the Trustee pursuant to this Article XII1 for the payment of Bonds ano interest and f,, 'mrum thereon, if any, and such Bonds shall not have in fact been actually paid in full, no amendment to the provisions of this Article Xlli shall be made without the consent of the Owner of each Bond affected thereby .7'0- ARTICLE X1V MISCELLANEOUS Section 1401. Consents, Etc., of the Owners. Any consent, approval, direction or other instrument required by this Indenture to be signed and erecuted by the Owners may be in any number of concurrent writings of similar tenor and may be signed or executed by such Owners in person or by agent appointed in writing. Proof of the execution of any such consent, approval, direction, objection. request or other instrument or of the writing appointing any such agent, if mace in the following rranner. shall be sufficient for any of the purposes of th,F Indenture, and shall be conclusive ►n favor of the Trustee with regard to any action taken under such request or other instrument, namely: (1) the fact and date of the execution by any Person of any such consent, approval. direction. objection, request or other instrument or vinting may be proved bi the certificate of any officer in any jurisdiction who by law has pourer to take acknovrledgments within such jurisdiction that the Person signing such instrument or writing acknowledged before him the execution thereof, or by affidavit of any witness to such execution: and 121 notwithstanding any nonce to the contrary, the fact of ownership of Bonds and the amount or amounts, numbers and other ►dentihcation of such Bonds, and the date of ov;rnng the same shall be proved by the Bond Reg!ster of the Issuer maintained pursuant to Section 203 h,:reof. Any action lateen by the Trustee pursuant to this Indenture upon the ipquest .-)r authority or consent of any Person who at the time of making such request or riving such authority or consent is the Owner of any Bond shall be conclusive and binding upon all future O1:ner:, of the same Bor}d and upon Bonds issued in exchange therefor or upon transfer or in plw e thereof Section 1402. Limitation of Rights. With the eKceptjr,ri of rights htrrein expressly conferred, nothing expressed or mentioned in or to be implied from this Indenture or the Bonds is intended or snail be construed to give to any Person other than the part►es hereto, the Association, and the G•.-mcrs of the Bonds any legal or equitable riat11. rernedy or c;lairn undr4r or ,n resp(3ct to ttus Indenture. This Indenture and all of the covenants, conditions and prov+;tons hereof are intended to be and are for trle sole and exclusive benefit of the parties heielo, the Owners of the Bonds. and the Assnr�iat+on Section 1403. Severability. If any provision of th s (,►denture shall bf, invalid. inoperative of unenforceable as applied in any particular rase in any jurisdiction or jurisdictions or in all jurisdictions. or In all cases because it conflicts w►tt7 any other prov►ston or ptovisions heri.of or any constitution or statute or rule of publ►c Policy. or for any other reason. such circumstances shall riot have the effect of rendering the provision in question inoperative or unenforceable in any other casfr or circumstance. or of rendering and other provision or provisions hervin contained invalid, inoperah;e. or unenforceable to any extent whatever. The invalidity of any one or more phrases. sentences. clauses Of Sections in this Indenture contained, shall not affect the remaining portions of this Indenture, or any part thereof Section 1404. Notices. (a) All notices (other than telephone notices). certificates or other communications (other than telephone communications) required or permitted hereunder shall be sufficiently given and shall be deemed given when personally delivered or when mailed by registered or certified mail. postage prepaid. or when sent by telegram, addressed as follotitis' -71. If to the Issuer: City of Huntington Beach 2000 Main Street Huntington Beach, California 92648 Attention: Principal Redovelopment Specialist Phone No. (714) 536.5511 It to the Trustee: Seattle -First National Bank 1001 Fourth Avenue Seattle, WA 98154 (delivery) P.O. Box 3586 Seattle, WA 98124 (mail) Attention: Bond Trustee Services. 9th Floor Phone No. (206) 583.5566 If to the Developer, Village Partnership 1810 • 14th Street Suite. 207 Santa kloncca, California 90404 Attention: T. Daniel Neveau Phone No (213) 450.6999 it to the association: 10jorcur; Savings and Loan Association 7812 Edinger Avenue Huntington Bf.ach. California 926a7 Attentio-i. Chief Financial O`ficei Phone No (714) 842.9332 (Y.rith a copy to. Pettit & Martin 101 California Street, 35th Root Spin Francisco, California 9.1111 Att�ntiuri. Arnold P. Schuster. Esg Phone Nj (415) 434.4000) If to. BTC: Bankers Trust Company One Bankers Trust Pla,:a 130 Liberty Street New York, Nenv Yo'k 10006 Attention 1;1anager, Public Finance Dept Phone No. 12121 775.5813 'Ithe delivery of such copy shall not constitute the delivery of notice) (b) All telephone notices and communications required to be gi►rt?n to the Association or the Remarketing Agent hereunder shall be given by telephone at the telephone numbers listed in Section 1404(a) for such parties as the same may from time to time be changed. (c) A duplicate copy of each notice (other than any telephone notice) given hereunder by any party shall be given to each of the Issuer, the Trustee, the Association. We Developer, and BTC. The Issuer, the Trustee. the Developer, BTC, any Remarketing Agent other than BTC, and the Association may, by notice given hereunder, designate any further or different addresses or telephone numbers to which subsequent notices, certificates or other communications shall be sent or directed. .7Z. Section 1405. Payments Due on Other Than a Business Day. In any case where the date of matur►t; of interest on or principal (and premium, if any) of the Bonds or the date fixed for redernp;-on of any Bonds shall be a day other than a Business Day, then payment of interest or principal (and premium, if any) need not be made on such date but may be made on the next succeeding day which is a Business Day with the same force and affect as if made on the date of maturity or the date fixed for redemption, and no interest shall accrue for the period after such date. Section 1406, Counterparts. This Indenture may be simultaneously executed in several counterparts, each of which shall be an original and all rf which shall constitute but one and the same instrument. Section 1407. Applicable Law. This Indenture shall be governed by and construed in accordance with the laws of the State. Section 1408. Captions. The captions or headings in this Indenture are for convenience only and in no way define, limit. or describe the scope or intent of any provisions or sections of this Indenture. Section 1409. Calculation of Interest. Interest on the Bonds shalt be romputed on the bass set forth in Section 211.A hereof. Section 1410. Compliance Certificates and Opinions. Every certificate or cpin►on with respect to comp!►ance with a condition or covenant provided for in this Indenture shall include: (1) a statement that the Person or Persons making such certificate or opinion have read such covenant or condition and the definitions herein relating thereto: (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based: (3) a statement that. in the opinion of the signers. they have made or caused to be made such examination or investigation as is necessary to enable them to express an informed opinion as to whether such covenant or condition has been cornpl►ed with. and (4) a statement as to whether, in the opinion of the signers, such condition or covenant has been complied with. Section 1411. Conflict With Trust Indenture Act of 1939. It th!s Indenture is qualified under the Trust Indenture Act of 1939. as amended, and any provision of sur..h act limits. qualifies or conflicts with another provision hereof which is required to be included in this Indenture by any of the provisions of such act, such required provision shall control. •73• IN WITNESS WHEREOF, ;he City of Huntington Beach, California, has caused these presents to be signed in its name and behalf by the City Administrator and the City Clerk, and to evidence its acceptance of the trusts hereby created Seattle -First National Bank has caused these presents to be signed in its name and behalf by one of its duly authorized officers, all as of the t st day of August, 1986. Attest: City Clerk APPROVED AS TO FORM: City Attorney CITY OF HUNTINGTON BEACH, CALIFORNIA By: _ City Administrator SEATTLE•FIRST NATIONAL BANK, as Trustee By:_ Title: -74- No. R- EXHIBIT A (FORM OF BOND PRIOR TO CONVERSION) UNITED STATES OF AMERICA STATE OF CALIFORNIA CITY OF HUNTINGTON BEACH, CALIFORNIA S VARIABLE RATE DEMAND MULTIFAMILY HOUSING REVENUE BOND (MERCURY SAVINGS AND LOAN ASSOCIATION/VILLAGE PARTNERSHIP PROJECT) 1 ri86 SERIES A THIS BOND IS SUE? 'IECT TO MANDATORY TENDER UNDER THE CIRCUMSTANCES HEREINAFTER DESCRIBED, AND IT MUST BE SO TENDERED OR IT WILL BE DEE-MED TO HAVE BEEN SO TENDERED AND WILL CEASE TO BEAR INTEREST AND WILL NO LONGER BE ENTITLED TO THE BENEFITS OF THE INDENTURE !AS HEREINAFTER DEFINED). UNDER CERTAIN CIRCUMSTANCES DESCRIBED HEREIN OR IN THE INDENTURE, A TENDERED BOND � WILL BE PURCHASED FROM THE OWNER HEREOF ON A DESIGNATED PURCHASE DATE WHICH DATE SHALL BE A BUSINESS DAY t 1 1 WHICH IS ON OR AFTER MARCH 1, 1987. AND ON OR BEFORE THE CONVERSION DATE. AND (21 WHICH IS THE SEVENTH (7TH) DAY FOLLOWING � THE DELIVERY OF A TENDER NOTICE AS PROVIDED HEREIN AND IN THE INDENTURE. IF THE ' TRUSTEE OR THE TENDER r 3ENT HOLDS SUFFICIENT FU14DS FRO%1 REMARKETING PROCEEDS OR PROCEEDS FROM DRAWS UNDER THE LETTER OF CREDIT AS HEREIN DESCRIBED, SUCH PURCHASE SHALL OCCUR ON THE DESIGNATED PURCHASE DATE. IF THE TRUSTEE OR THE TENDER AGENT DOES NOT HOLD SUCH FUNDS. SUCIH PURCHASE SHALL OCCUR ON THE FIRST BUSINESS DAY NEXT FOLLO`"✓INta TIME DAY DURING THE PURCHASE PERIOD ON WHICH THE TRUSTEE OR THE TENDER AGENT HOLDS FUNDS DERIVED FROk"! THE SOURCES SPECIFIED IN THE INDENTURE WHICH ARE SUFFICIENT 70 PURCHASE ALL OONDS THEN REQUIRED TO BE PURCHASED, Inter ' .R S - Ma ri�y�31,� Qf!�in �.QsTtto Variable Septt�(T)ber 1, 2016 September __..., 1966 REGISTERED OWNER. PRINCIPAL AMOUNT: The City of Huntington Beach. California (the "Issuer"), being a municipal corporation and charter city organized and existing under the laws of the Slate of Cairforn►a. for value received. hereby promises to pay in lawful money of the United States of America (but only out of the cources hereinafter provided) to the Registered Owner named above, et registered assigns. upon presentation and surrender hereof, the Principal Amount set forth above on the Maturity Date specified above and to pay in such lawful money (but only out of the sources hereinafter provided) interest on the balance of said Principal Amount from tanti to time remaining unpaid from the later of the date hereof, or the most recent Interest Payment Date (as that term is defined in the Indenture retorted to hereinafter) to which interest has been paid or made available for payment in accordance with the terms of the Indenture (as A•1 hereinafter -.defined) at the rate per anrlurn set lerth herein, payable on March 1, June 1, September 1, and December 1 of each year commencing on March 1. 1987. and in the event of conversion of the rate of interest on this Bond to the Optional Fixed Rate (as that term is defined in the Indenture), on the Conversion Date (as that term is defined in tho Indenture), and to pay interest on overdue principal at the rate from time to time in effect on this Bond while any such amount continues to be overdue; provided, that no interest shall accrue or be payable with respect to this Bond from and after that date, if any, on which this Bond is required to be Tendered (as that term is defined in the Indenture) to Seattle -First National Bank, as trustee (the "Trustee"). having a principal office in Seattle. Washington (said principal office being herein referred to as the "Principal Office of the Trustee") for purchase by the Trustee pursuant to Sections 1101(b) or (c) of the Indenture. The interest so payable on any March 1, June 1, September 1 or Decerber 1 will, subject to certain exceptions provided in the Indenture (as hereinafter defined), be paid to the person in whose narne this Bond is registered at the close of business on the record date (the "Record Date") for such payment, which shall be the fifteenth (15th) calendar day of the month immediately preceding such Interest Payment Date (as that term is defined in the Indenture), or if such day is not a Business Day (as that term is defined in the Indenture), on the Business Day immediately following such day. Principal of. and premium, if any. and interest on, this Bond are payable in lawful money of the United States of America at the Principal Office of the Trustee or (with respect to interest payments only) at such other place and in such other manner as may be elected by the Registered Owner hereof in accordance with the Indenture. All capitalized terms used in this Bond •white are defined in the Indenture are used in this Bond as so defined. All references herein to Sections are references to Sections within the Indenture, un►ess otherwise noted. This Bond and the series of which it forms a part is a limited obligation of the Issuer giving rise to no pecuniary liability of the Issuer nor any charge against its general credit. is payable solely frorn. and a valid claim of the Registered Ovrner hereof against only, the revenues. funds and assets of the issuer pledged under the Indenture, does not constitute an indebtedness, liability, general. special or moral obl:ahon or a pledge or loan of the faith or credit or taming power, within the meaning of any constitutional or statutory provision of the Slat-. of California or any political subdivision thereof. and neither the State of California nor any political su"idivision thereof, shall be fable hereon, and in no event shall this Bond or the Bonds of the series of which it forms a part be payable out of any funds or properties other than those pledged under the Indenture This Bond is one of any authorized issue o` bonds limited in aggregate principal amount to S7,700.000 (the "Bonds") issued pursuant to a resuluhon duly adopted by the City Council of the City of Huntington Beach. California on August 18, 1986, and an Indenture of Trust (the "Indenture") dated as of August 1. 1986. between the Issuer and the Trustee The Bonds are issued in accordance with the Constitution and lavrs of the State of California, under the provisions of Chaplor 7 of Part 5 of Division 31 of the Health and Safety Code of the Slat(,- of California. as arnended (the "Act") and are equally and ratably secured by and entitiod to the protraction of the Indenture The Bonds are issued for the purpose of (t) obtaining funds to make a loan (the "Developer Loan") to Village Partnership, a California general partnership (the "Developer"), to provide construction and permanent financing for the multifamily rental residential development (the "Project") to be constructed by the Developer in the City of Huntington Beach, to be occupied partially tat least 2040) by persons of low or moderate income within the meaning of Section 103(b)(12)(C) of the 'eternal Revenue Code of 1954, as amended, and partially (at least 1000) by persons of very low income within the meaning of the Act: and (2) paying certain costs incurred in connection with the issuance of the Bonds, The Issuer has made the Developer Loan pursuant to a Loan Origination and Servicing Agreement (the "Loan Agreement") the payments on which are secured by a deed of trust on the Project from the Developer to the Issuer and Mercury Savings and Loan Association, a California corporation (the "Association") (the "Developer Mortgage" I (collectively the Loan Agreement and the Developer Mortgage, together with the Letter of Credit and Regulatory Agreement mentioned below, are hereinafter referred to as the "Developer Loan Documents") by and between the Issuer and A-2 .0 4 ., . 0 0 the Developer. To secure its obligation to make payments on the Developer Loan in accordance with its terms, the Developer has delivered to the Trustee on behalf of the Issuer an irrevocable direct pay letter of credit (the "Letter of Credit") issued by the Association and an assignment of collateral and Trust Agreement (the "Collateral Pledge Agreement") by and among the Issuer, the Trustee, and the Association. The Developer will enter into a Regulatory Agreement and Declaration of Restrictive Covenants (the "Regulatory Agreement" I with the Issuer. the Association and the Trustee setting forth certain provisions relating to the acquisition, construction and operation of the Project. Reference is hereby made to the Indenture and the Developer Loan Documents, copies of which are on file with the Trustee, for the provisions. arnong others. with respect to the nature and extent of the rights. duties and obligations of the Issuer, the Trustee, the Developer and the owners of the Bonds; the terms upon which the Bonds are issued and secured; the collection and disposition of revenues; a description of the properties and interests pledged; the modification or amendment of the Indenture and the Developer Loan Documents, and other matters, to all of whicn the Registered Owner of this Bond assents by the acceptance of this Bond. The Bonds are secured by an assignment and pledge of (i) the revenues and other amounts received by the Issuer from or in connection with the Developer Loan, including any amounts obtained through the exercise of the rerr,edies provided upon an event of default under the Developer Loan Documents; (ii) the moneys held in the funds and accounts established under the Indenture, together with investment earnings thereon: No the Issuer's rights and interest in the Loan Agreement; and t►v) any amounts realized under the Letter of Credit and the CoNiteral Pledge Agreement. provided that said pledge and assignment are subject to certain exceptions scat forth in the Indenture The Bonds are limited obligations of the Issuer payable solely from the revenues, funds and assets of the Issuer pledged under the Indenture and not from any other revenues. funds or assets of the Issuer. If the Developer, with the consent of the Association. so elects. the interest rate on the Bonds shall be converted to the Optional Fixed Rate at any time that Bonds are outstanding on any Interest Payment Date selected 1�y the Developer following compliance with certain provisions of the Indenture (the "Conversion Date") and following the mailing of notice to the Sondowners by the Trustee. %which mailing shall occur not less than 15 days prior to the Conversion Date, The Optional Fixed Rate shall be that interest rate. not in excess of the then applicable Maximum Interest Rate. which in the determination of the Remarketing Agent. if borne by the Bonds on the date of such deterrrnnation. would result in the market value lexclud►ng accrued interest) of the Bonds on said date being 100 percent of the principal arnount thereof. This Bond is transferable by the registered Owner hereof in person or by his attorney duly authorized in wntinq at the Principal Offices of the Trustee but only in they manner. subject to IN -,- limitations and upon payment Of the charges provided in the Indenture. and upon surrender and cancellation of this Bond. The Trustee shall not be ioquireed to transfer or exchange any Bond after the mailing of notice ca!hng such Bond for redemption as provided in the Indenture, nor during any period during which this Bond is required by the, Indenture to be Tendered. but has not been so Tendered, to the Trustee. Uporr, such transfer, a new registered Bund or Bonds of authori,•.ed denomination or denominations, for the same aggregate principal arnount, will be issued to the transferee in exchange herefor. The Bonds are issuable as registered Bonds without coupons initially in rninutlurn denominations GI S1,000.000 or any integral multiple of S100,000 in excess of S1.000.000, provided. that Bonds in the minimum denomination of S5.000 or any integral multiple of S5.000 may be issued on or after the Conversion Date. Subject to the limitations and upon payment of the charges provided in the Indenture. Bonds may be exchanged for a like aggregate principal amount of Bonds of authorized denominations. The Bonds of this issue are of like tenor except as to numbers. amounts and. after the Conversion Date described below, form. A•3 40 ... -0 i The Owner of any Bond (including this Bond) may demand that the Trustee purchase such Bond by delivering to the Remarketing Agent at One Bankers Trust Plaza, Atten,ion: Public Finance Group, New York. New York, and to the Trustee at the Principal Office of the Trustee, not later than 10.00 A.M. Eastern time on any Business Day, a written notice which states (A) the number of such Bond. and (B) a demand that the Trustee purchase such Bond on a date specified in such notice (the "Designated Purchase Date"), which date shall be on a Business Day (i) which is on or after March 1. 1987. and on or before the Conversion Date, and (ii) which is the seventh (71h) day next succeeding the date of delivery of such notice to the Remarketing Agent and to the Trustee, provided that in the event the Trustee or its agent has not received sufficiei-t Tender Payment derived from remarketing proceeds and that a draw upon the Letter of Credit is not honored by the Association. the Bonds shall be purchased on the Business Day next succeeding the date proceeds are received from a liquidation of the Collateral during the.Purchase Period. Any such notice delivered after 10:00 A.M. Eastern time will be deemed to be delivered on the next succeeding Business Day. On the Designated Purchase Date. such Owner shall be required to Tender (as that term is defined in the Indenture) this Bond to the Tender Agent at its corporate trust office in New York, New York. for purchase by the Trustee pursuant to Section 1101(b) of the Indenture. IF THE BOND IS NOT SO TENDERED ON THE DESIGNATED PURCHASE DATE, THEN THE NOTICE OF DEMAND TO PURCHASE: SUCH BOND SHALL BE NULL AND VOID AND SHALL BE DEPAED TO NOT HAVE BEEN GIVEN FOR PURPOSES OF THE INDENTURE, AND, IN SUCH EVENT. THE OWNER OF THIS BOND MUST CAUSE A NEW NOTICE OF DEMAND TO BE DELIVERED AS REQUIRED IN ORDER TO CAUSE THE TRUSTEE TO PURCHASE SUCH BOND. On the Designated Purchase Date. the Trustee shall purchase. but only from funds specified in the Indenture, any Bond (including this Bond) which the Owner thereof has demanded (in accordance with the procedures set forth above) that the Trustee purchase, but in the event the Trustee or its agent has not received sufficient Tender Payment derived from remarketing proceeds and that a draw on the Letter o! Credit pursuant to the Indenture is not honored by the Association. the Trustee on behalf of the Associatioo shall purchase during the Purchase Period, but only from the Tender Payments specified in Section 1106(3) of the Indenture. any Bond which the Owner thereof has demanded to be purchased in accordance herewith. The purchase price of each Bond so required to be purchased by the Trustee shall (A) be equal to the unpaid principal amount thereof as of the Designated Purchase Date plus unpaid interest accrued thereon to the such date, and (B) be due and payable on (i) the Designated Purchase Date, if such Bond is Tendered to the Trustee at or before 11:00 .A.M Eastern time on such Designated Purchase Date and if the Trustee then holds Tender Payments derived frorn remarketing proceeds or draws under the Letter of Credit sufficient to pay such purchase price of all Bonds then required to be purchased. (u) the Business Day next succeeding such Designated Purchase Date if such Bond r5 Tendered to the Trustee after 11:00 A.1.1, Eastern time on such Designated Purchase Date and if the Trustee then holds Tender Payments derived from remarketing proceeds or draws under the Letter of Credit sufficient to pay such purchase price of all Bonds then required to be purchased, or (►) the first date. not later than the end of the Purchase Period. on which the Trustee holds Tender Payments from any source or sources described in the Indenture sufficient to pay such purchase price of all Bonds then regvired to be purchased. With respect to Bonds tendered for purchase prior to the Conversion Date. the Purchase Period shall be the period of 30 days commencing on the Designated Purchase Date. With respect to Bonds tendered or deerned tendered for purchase on the Conversion Date (as described below), the Purchase Period shall be the period of 30 days commencing on the Conversion Date. Until the Conversion Date, interest on this Bond shall be computed on the bans of a 365•day year for the actual number of days elapsed, except that after the Conversion Date interest on this Bond shall be computed on the bass of a 360•day year of twelve 30-day months. In no event shall interest cn this Bond exceed the Maximm Interest Rate, as defined in the Indenture. A. Prior to tha Conversion Date, the Indenture provides that the interest rate on all Bonds (including this Bond) until March 1. 1987. shall be °b per annurn, and thereafter shall be d--itermined as follows. A•a 1. The Bonds shall (subject to the further provisions of the Indenture described in this paragraph A.1) bear interest at a floating rate of interest per annum equal as of any given date of determination to TENR* as most recently announced by Bankers Trust Company ("BTC") plus an amount (the "TENR Amount") equal (unless adjusted pursuant to the provisions of the Indenture described in paragraph 8.1.(r) or (it)) to one-half percent (1'2°o) per annum for such lesser percentage as from time to time announced by BTC). (r) If the Trustee shall have received notice from any Owner in accordance with Section 1101(a) of the Indenture requiring the purchase of any Bondis) by the Trustee in accordance with Section 1101(b) of the indenture, the TENR-Amount shall be adjusted. if necessary. by the Remarketing Agent on the da•e of purchase of such Bond(s) by the Trustee pursuant to Section 1110(b) of the Indenture so that the TENR = Amount as so adjusted. when added to TENR'' as in effect on the date of the purchase of such Bond(s) by the Trustee pursuant to Section 1101(b) of the Indenture, w+II produce that rate per annum of interest which is (in the reasonable discretion of the Remarketing Agent, having due regard to prevailing market conditions) equal to, but not in excess of. that rate per annum of interest which will enable the Remarketing Agent to remarket such Bond(s) on the date of purchase of such Bond(s) by the Trustee pursuant to Section 1101(b) of the Indenture at a price equal to 100"o of the unpaid principal amount thereof plus unpaid interest accrued thereon to the date of purchase thereof by the Trustee pursuant to Section 1101(b) of the Indenture; provided. that in no event shall the interest rate on the Bonds exceed twelve percent (120 0) or, if lower, the maximum legal rate. ,f any. applicable to the Bonds. The Remarketing Agent shall notify trio Association. the Developer, and the Trustee of any such adjustment of the TENRI Amount on the date on which such adjustment becomes effective Any such adjustment of the TENR Amount shall becorne effective on the date next following the date on which TEI`JR,1 next is announced following the date of such adjustment. 0j) On each Interest Payment Date. the TENR'' Amount shall to adjusted, if necessary. by the Pemarketrng Agent such that the TENR' Amount as so adjusted when added to TENR' as in effect on such Interest Payment Data, will produce that rate per annum of interest which is (in the reasonable discretion of the Remarketing Ager.t, having due regard to prevailing market condrt+onsi equal to, but not in excess of. that rate per annum of interest which would er,abie the Remarketing Agent to remarj,.el on such Interest Payment Date any Bonds required to be purchased by the Trustee on such Interest Payment Gate by the Trustee pursuant to "section 1101(b) of the Indenture (regardless of whether any Bonds actually are so required to bo purchased on such Interest Payment Dale) at a price equal to 100= - of the unpaid principal amount thereof plus unpaid interest accrued thereon to such Interest Payment Date. provided. that in no event shall the interest rate on the Bonds exceed the MaXIMUM Interest Rate applicable to the Bonds. The 1=,ermirketing Agent shall notify the Association. the Developer and the Trustee of any such adjustment of the TENR' Amount on the date on which such adjustment becomes elloctive Any such adjustment of the TENR' Amount shall become effective on the date next following the date on which TENR`- next is announced lollowing the date of such adjustment. (in) If the TENR`, Amount is adjusted as described in (i) or (u) above. the TENR'' Amount as so adjusted shall remain m effect until the earlier of (A) the date next succeeding the effective date of such adjustment on which a further adjustment to the TENR''- Amount becomes effective pursuant to the provisions of the Indenture described in (I) and fill. above. or (8) the date next succeeding the effective date of such adjustment on which the interest rate on the Bonds shall be fixed pursuant to any of the other provisions of the Indenture. (iv) With respect to the Bonds, no adjustment shall be made to either TENR' or the TENR Amount auring the period beginning five Business Days prior to an Interest Payment Date and ending on the date the next announcement of TENR* after such Interest Payment Date becomes effective. Notwithstanding the foregoing, no change in either TENR' or the A-5 TENRe'' Amount shall become effective as to any Bond for which the Owners thereof have given a notice of tender to the Trustee for purchase pursuant to Article XI of the Indenture; provided, however, if such Bond is not tendered to the Trustee on the Designated Purchase Date, the foregoing provision of the sentence shall not apply to such Bond. 2. As employed in this Bond and in the Indenture. TENR=• means the rate by that name announced (pursuant to the Remarketing Agreement) by BTC in New York. New York, which rate is intended by BTC to be indicative of current (as of the date of each announcement of TENP.G) bid -side yields on high -quality, short -terra, tax-exempt obligations. Under the Remarketing Agreement. TENRI shall (A) be determined by BTC substantially in accordance with its past practice. and (B) be announced by BTC as of the close of business on Wednesday in each week beginning on the Wednesd3y next precedjng the date of authent,cation and delivery of the first of the Bonds to be authenticated and delivered under the Indenture until the earlier of (rj the Conversion Date or (►r) the date on which there are no longer any Bonds Outstanding; provided that if Wednesday in any week is not a Business Day, then TENRI= shall be announced by BTC on the next succeeding day which is a Business Day Subject to paragraph 8.1.(rv) hereof, TENR as announced by BTC shall be effective during the period frorn and including the day next succeeding the day on which BTC announces TENR'. to and including the day on which BTC next announces TENR TENR*, shall be communicated by BTC to the Trustee, the Association, the Developer and the Remarketing Agent on the same day that TEN►It is announced by BTC. 3. The computation of TENRS by STC. and any adjustments to the TENR'' Amount by the Remarketing Agent as contemplated by the foregoing paragraphs• shall be conclusive and binding upon the Trustee. the Issuer, the Association, the Developer and the Owners of the Bonds B. The Indenture provides that the Developer, with the consent of the Association, may cause the interest rate on the Bonds to be converted to the Optional Fixed Rate in accordance with procedures set forth therein. C. The Indenture provides that, in any case where notice Is to be given to 0%%ne►s by the Trustee pursuant to the provisions of the Indenture described in paragraphs A. or B, hereof. neither the failure to give any Such notice nor any defect in any notice so given shall preclude or make ineffective any conversion of the rate of interest on the Bonds to the Optional Freed Rate. D.1. The Indenture provides that the Owner of any Pond desiring to retain such Bond on and after the Conversion Date must notify the Association, the Remarketing Agent and the Trusted in writing received on a Business Day which is at least live (5) days prior to the Conversion Date Said notice must state in substance: (a) The numbers and principal amounts of the Bonds which the Owner rashes to retain on and after the Conversion Date. (b) That the Owner recognizes that on the day next succeeding the Conversion Date the Bonds shall no longer be subject to the provisions of Section 1101(a) of the Indenture and. specifically, that the Trustee wili no longer purchase Bonds on behalf of the Association upon demand of any Omer; and (c) That the Owner wishes to continue to own the Bonds specified as described in paragraph D.1.(a) above. 2. The Indenture provides that all Bonds not specified in a notice given as and when required in D.1. above stall be purchased by the Trustee on behalf of the Association on the Purchase Date pursuant to Section 1101(c) of the Indenture at a purchase price equal to the unpaid principal amount thereof plus unpaid interest accrued thereon to the Purchase Date. A•6 FROM AND AFTER THE CONVERSION DATE (A) THE ONLY PAYMENT TO WHICH THE OWNER O SUCH UNTENDERED BOND OR ANY OTHER PERSON SHALL BE ENTITLED IN RESPECT OF SUCH UNTENDERED BOND IS THE PURCHASE PRICE OF SUCH UNTENDERED BOND DETERMINED IN ACCORDANCE WITH SECTION 1101(C) OF THE INDENTURE. AND (B) NO INTEREST SHALL ACCRUE OR BE PAYABLE WITH RESPECT TO SUCH UNTENDERED BOND. THE PURCHASE PRICE OF ANY UNTENDERED BOND SHALL NOT BE DUE AND PAYABLE TO THE OWNER THEREOF OR TO ANY OTHER PERSON U14TIL SUCH BOND IS PRESENTED TO THE TRUSTEE. 3. From and after the Conversion Date, if this Bond is owned by an Owner who has given notice of his desire to continue to own this Bond as described in paragraph D.I. above. this Bond shall be deemed to be a replacement Bond and notwithstanding the terms and cond►t►ons expressed herein, the rights of the Owner of this Bond shall be the same as the rights of the Owner of an equal principal amount of replacement Bonds in the form to be issued on and after the Conversion Date. E. The Indenture provides that from and after the Conversion Date, all Bonds t►nclud►ng this Bond) shall bear interest at the Optional Fixed Ram, established as described in paragraph B., which rate shall be expressly stated in each Bond issued on or after the Conversion Date. F. The Indenture provides that if legislation is enacted prior to January 1, 1987. and the Trustee is unable to obtain on or before February 15, 1987. an opinion of Bond Counsel to the effect that such enactment in and of itself has not adversely affected the exemption frorn Federal income taxation of interest on the Bonds. then fir there shall be paid as additional interest on the Bonds an amount equal to t#r °o of the aggregate amount of interest paid or accrued (or to be paid or to accrue) on the Bonds through March 1, 1987. except that such additional interest shalt be held by the Trustee in a separate trust account for the benefit of the Owners and former Owners of the Bonds and disbursed to such Owners as follows: Any Person who was the Owner of a Bond, as evidenced by the Bond Register. at any time on or prior to Koch 1, 1987. shall be entitled to receive a portion of such additional interest. such portion to be, calculated by multiplying (1) 0.## tiMeS (►i) the interest paid or accrued (or to be paid or to accrue through March 1, 19871 on each Bond owned by sut.h Owner witn respect to the period during which such Owner owned each such Bond, On March 1, 1987. the Trustee shall pay to each Owner of the Bonds on February 17. 1987, the portion of such additional interest to which each Owner is emitted. shall send to each Parson who was a former Owner of Bonds (at the address of such Owner last Shown on the Bond Register) a notice identifying the portion of such additional interest to which such Owner is entitled and shall pay such portion upon demand of such former Owner.irir The Bonds shall be subject to mandatory redemption as follows (►n each case accrued interest to the redemption date shall be paid to the Registered Owner on the Record Date for such payment): (a) The Bonds shalt be subject to redemption in whole on or prior to the thirtieth (30th) day following the Designated Purchase Date, at a price equal to the principal amount thereof plus interest accrued thereon to the date of redemption, if on the Designated Purchase Date the Trustee tacks Tender Payment derived from the sources described in Section 1105I 1) or Section 1105(2) sufficient to pay the purchase price of all Bonds required to be purchased during such Purchase Period pursuant to the provisions of Article XI hereof. (b) The Bonds shalt be subject to redemption in part on the earlier of August t, 1989 or the earliest practicable Interest Payment Date after the Completion Date for which notice of redemption may be grren pursuant to Section 604, at a price equal to the principal amount of Bonds redeemed plus interest accrued thereon to the date fixed for redemption. (c) The Bonds shall be subject to redemption in whole or in part on any Interest Payment Date. at a price equal to the principal amount of Bonds redeemed plus interest accrued thereon to the A•7 date fixed for redemption. upon the election of the Association to apply the amount of any rin;t proceeds of insurance or condemnation awards not used to repair or replace the Project to the redemption of Bonds. (d) The Bonds shall be subject to redemption in whole or in part on any date, at a price equal to the principal amount of Bonds redeemed plus interest accrued thereon to the date fixed for redemption, within 45 days following an Acceleration Default or at the request or with the consent of the Association following any other Event of Default under the Loan Agreement, or, at the request or with the consent of the Association following an acceleration of the Developer Loan pursuant to the Disbursement Agreement, in an arnount as nearly equal as possible to. but not exceeding, the amount of the Developer Loan so accelerated. (e) The Bonds shall be subject to redemption in whole on any date. at a price equal to the principa! amount thereof plus interest accrued thereon to the date fixed for redemption which is not more than 22 days prior to and not later than the date of expiration of any Letter of Credit unless the Trustee receives a renewal or extension of or replacement for such Letter of Credit meeting the requirements of Section 5.8 of the Loan Aoreement not less than 40 days before the expiration of such Letter of Credit. (f) The Bonds shall be subject to redemption in whole without premium on March 1, 1987. 1# in the event that construction on the Project has not commenced by February 1, 1987, ## at an aggregate price equal to the principal amount of the Bonds. but without premium. plus unpaid accrued interest thereon to the crate of redemption. (h) The Bonds shall be subject to redemption in whole at a price equal to the principal amount thereof plus interest accrued thereon to the dale fixed for redemption on the first date for which notice of redemption may be given in accordance with the provis!ons of the Indenture following an Event of Default under the Collateral Pledge Agreement The Bonds are subject to optional redemption as follows (a) Prior to the Conversion Date the Bonds are subject to redemption on any Interest Payment Date. in the amount of S100.000 or more in an integral multiple of S25.000. at a redemption price equal to the principal amount to be redeemed, plus accrued interest. without premium. in the event and to the extent that the Developer Loan is voluntarily prepaid, Ib) After the Conversion Date the Bonds are subject to redemption prior to their stated maturity, in whop or in part. in integral rnultipleS of S5,000. on any of the following dates. at a rederTlptlon pricf? equal to the principal amount to be redeer ed. plus accrued interest to the date of redemption, in the event and to the extent the Developer Loan is voluntarily prepaid. plus the applicable premium set forth in the following table?- R rn u n DAfP.5 ign F'r�lLrnc The two Interest Payment Dates first occurring. 7 years after the Conversion Date 3° 8 years after the Conversion Date 2 9 years after the Conversion Date t 10 years after the Conversion Date 0 In the event of a redemption (other than pursuant to Section 1 t 10 of the Indenture), the Bonds to be redeemed shall be selected by lot in such manner as in the Trustee's sole discretion it may deem appropriate and fair. The Trustee shall promptly notify the Issuer in writing of Bonds or portions thereof selected for rede►r.ption. Bonds shall be redeemed (r) prior to the Conversion date, in the principal amount of S' J.000 and (it) following the Conversion Date, only in integral multiples of S5.000. In the event ttrat the Issuer elects to redeem Bonds pursuant to the Indenture, the Issuer shall so notify the Trustee in a written request submitted to the Trustee at least forty-five (45) days prior to the applicable redemption date, and the Developer shall deposit with the 'rrustee at least ninety-five (95) days prior to such redemption date an amount sufficient to pay the applicable redemption premium payable with respect to such redemption which will be deposited by the Trustee in the Seasoned Funds Account. Notice of each such redemption (other than pursuant to Section 1110 of the Indenture) shall be given by sending such notice, by registered or certified mail, not less than seven (7) days prior to the date fixed for redemption, to the Registered Owner of each Bond to be redeemed ,n whole or in part at the address in the Bond Register. Failure to give nonce by mail or any defect in any notice so mailed shall not affect the validity of the proceedings for such redemption. All Bonds or portions thereof so called for redemption will cease to bear interest on the specified redemption date it funds for their redemption are on deposit at the principal place of payment at that time. No recourse shall be had for the payment of the principal of, premium, if any, or interest on, any of the Bonds or for any claim based thereon or upon any obligation, covenant or agreement contained in the Indenture, against any past, present or future member of the City Council, any officer, employee or agent of the Issuer or through the Issuer or the City of Huntington Beach, or any successor, under any rule of law or equity, statute or constitution Or by the enforcement Of any assessment Or penalty or otherwise, and all such liability of any such member of the City Council. officer. employee or agent of the Issuer as such cs hereby expressly warred and released as a condition of. and ;n consideration for, the execution of the Indenture and the issuance of any of the Bonds. The Registered Owner of this Bond shall have no right to enforce the provisions of the Indenture or to institute action to enforce the covenants therein, or to takes any action w,lh respect to any event of default under the Indenture, or to institute, appear in or defeno any suit or other proceedings with respect thereto. except as provided in the Indenture. It an Event of Default as defined in the Indenture occurs, the principal of all Bonds then outstanding rssuod under the Indenture may be declared due and payable upon the conditions and in the manner and with the effect provided in the Indenture The Issuer. the Trustee. any paying agent and any agcant of the Issuer or the Trustee may treat the person in whose name this Bond is registored as Itie owner hereof for the purpose of rece-vmg payment as herein provided and for all other putposes, whether or not this Bond shall be overdue. and neither the Issuer, the Trustee, any paying agent nor any such ag+~,nt shall be affected by notice to the contrary. Modifications cr alterations of the Indenture. or of any supplements there!o. may be mace only to the extent and in the circumstances permitted by the Indenture The Indenture prescribes the manner in which it may be discharged, ;nclua;ng a provision that the Bonds shall be deemed to be paid it Seasoned Funds and ar Government Obl;nahons (as defined in the Indenture) maturing as to principal and interest in such amounts and at SUCK tunas not later than 30 days after the date of rnvest.nient as will be such to insure the ava;tahrlcty of sufficient moneys to pay the principal of, and premium, if any, and interest on, the Bonds and all necessary and proper fees. compensation and expenses of the Trustee shall have been deposited with the Trustee, after which the Bonds shall no longer be secured by or entitled to the benefits of the Indenture, except for the purposes of registration and exchange of Bonds and of paymen; from such source. IT IS HEREBY CERTIFIED. RECITED AND DECLARED that all acts and conditions required to be performed precedent to and in the execution and delivery of the Indenture and the issuance of this A•g Bond have been performed in due time, form and manner as required by law: and that the issuance of this Bond and the series of which it forms a part does not exceed or violate any constitutional or statutory limitation. This' Bond shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the Indenture unless and until the certificate of authentication hereon shall have been duly executed by the Trustee. A•10 IN WITNESS WHEREOF, the City of Huntington Beach, California, has caused this Bond to be executed in its name by the facsimile signature of the Mayor and attested by the facsimile signature of the City Clerk and the facsimile of its seal to be imprinted herein, all as of the 29th day of August, 1986. ATTEST: City Clerk (SEAL] CITY OF HUNTINGTON BEACH, CALIFORNIA By: Mayor A-tt TRUSTEE'S CERTIFICATE OF AUTHENTICATION This Bond is one of the Bonds described in the within -mentioned Indenture of Trust. Date of registration SEATTLE-FIRST NATIONAL BANK, and authentication: as Trustee 19_-- By. Authorized Officer The following abbreviations, when used in the inscription on the face of this Bond, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM -as tenants in common TEN ENT --as tenants by the entireties JT TEN -- as joint tenants with right of survivorship and not as tenants in common UNIF GIFT PAIN AC Under Uniform Gifts to Minors Act Custodian (Cust) (StateI (f,1inor) Additional abbreviations may also be used.: qh not in the above test A-12 In 4 „ a ASSIGNMENT FOR VALUE RECEIVED, the undersigned sells, assigns and transfer, ntu (Name and Address of Ass►gneie) the within Bond and does hereby iri,�vocably constitute and appoint_ _ _ attorney to transfer the said Bond on the Bond Register with full po.ver of substciuticr the prern►ses. Dated: Signature Guaranteed: The Trustee will register a Bond in the name of a transferee only it prov►-., . :mh the information requested below. The transferee (or his designated representative) should as much of the information requested below as is applicable to him nnor to submitting this Bond fcr tr.an,71t;r. Name: Address: Social Security or Employer Identification Numt>er: If a Trust. flame and Address o' Trustee: _- _.__ 9 NOTICE: S►onaturels► must bE guaranteed by a rnertIber trrn ,f the Neiv York Stozk Ecuhange or a commercial Ca-1k or trust compant inCorriU►11!0 ! under the l,ay.s of the United StataS or a state of the United States NOTICE: The v,-nature to this Assignment must correspcinct watt► vie narne as it appears up{tn the face of the within Bond in every particular, without alteration or enlargement or any change whatsoevel. A•13 in NOTICE OF EXERCISE OF OPTION TO SELL BONDS (NOT EXERCISABLE BEFORE MAPCH 1, 1987) The undersigned is the registered owner of Bond(s) of the City of Huntington Beach, California, Multifamily Housing Revenue Bonds (f.lercury Savings and Loan Village Partnership Project), 1966 Series A. In accordance with the purchase option contained in the Indenture, the undersigned hereby demands that: 1. S in aggregate principal amount of as Bond(s) R- be purchased in accordance with the Indenture. 2. Such Bonds are to be purchased during the 30•day Purchase Period commencing r�n the date which is the next Business Day not less than seven days after the date of receipt of this notice by the Trustee or Paying Agent, as the case may be (which date shall not be later than tree Conversion Date). Print narne of registered owner: Dated: S►gnatu,e guaranteed by: Note: The sig+iature to the assignment or the notice of exercise of option must correspond with the name of the registered owner as it appears on the face of the within certificate in every particular. withou! alteration. enlargement or any change whatsoever: and such signature must be guaranteed by a member of the New York Stock Exchange or a commercial bank or trust company A•1d w 0 4�. I No. In r 51.Rate • EXHIBIT B [FORM OF BOND AFTER CONVERSION DATE] [FORM OF FACE OF BOND] 5 UNITED STATES OF AMERICA STATE OF CALIFORNIA CITY OF HUNTINGTON BEACH. CALIFORNIA MULTIFAMILY HOUSING REVENUE BONDS (MERCURY SAVINGS AND LOAN VILLAGE PARTNERSHIP PROJECT) REGISTERED OWNER: PRINCIPAL AM "OUNT: 1986 SERIES A MetQrijy Date September 1. 2016 CUSIP Nvrnb?r The City of Huntington Beach. California (the "Issuer"). being a municipal corporation and charter city duly created. organized and oxisting under the laws of the State of Califurnia. for value received. hereby promises to pay in lawful money of the United States of America (but only out ct the source hereinafter provided) to the registered owner named above. or registered assigns, upon presentation and surrender hereof, the pnncipat sum set forth above on the maturity date specified above and to pay in such lawful money (but only out of the sources hereinafter provided+ interest on the balance of said principal sum from time to time remaining unpaid from the later cf the date hereof. or the most recent Interest Payment Date to which rnvarest has been pa,d or made available for payment in accordance with the terms of the Indenture (as hereinafter defined) at the rate per annum set forth herein, payable on March 1 and September 1 of each year and to pay interest on overdue principal at the rate from time to time in effect un this Bond while any such arnc,int continucs to be overdue. The interest so payable cn any I'Aarch 1 or September 1 will, subject to certain exceptions provided in the Indenture (as hereinafter defined), be paid to the person to whose name this Bond is registered at the close of business on the record date (the "Record Date") for such pa,rnent, which shalt be the fifteenth (151h) calendar day of the month immediately preceding such Interest Payment Date (as that term is defined in the Indenture), or if such day is not a Business Day (as that term is defined in the Indenture), on the Business Day immediately following such day. Principal of, premium, if any, and interest or, this Bond are payable to lawful money of the United St=tes of America at the principal office in Seattle. Washington of Seattle -First National Bank (the "Trustee") (said principal office being hereinafter referred to as the "Principal Office of the Trustee") or (with respect to interest payments only) at such other plate and in such other manner as may be elected by the Owner hereof to accordance with the Indenture. s THE TERMS AND PROVISIONS OF THIS BOND ARE CONTINUED 014 THE REVERSE SIDE HEREOF AND SUCH CONTINUED TERMS AND PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS THOUGH FULLY SET FORTH AT THIS PLACE. All capitalized terms used in this Bond which are defined in the Indenture are used in this Bond as so defined. This Bond and the series of which it forms a part is a firnited obligation of the Issuer giving rise to no pecuniary liability of the Issuer nor any charge against its general credit. is ;payable solely from, acid a valid cla►rn of the owner hereof against only, the revenues, funds and assets of the Issuer pledged under the Indenture, does not constitute an indebtedness, liauii►ty, general. special or moral obl►gat►cn or a pledge or loan of the' faith or credit or taxing power, within the meaning of any constitutional or statutory provision of the State of California or any political subdivision thereof, of the State of California or any political subdivision thereof, and neither the State of California nor any political subdivision thereof, shall be liable hereon, and in no event shall this Bond or the Bonds of the Series of which it forms a part be payable out of any funds or properties other than those pledged under the indenture. IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts and conditions required to be performed precedent to and in the execution and delivery of the Indenture and the issuance of this Bond have been performed in due time, form and manner as required by law. and that the issuance of this Bond and the series of which it forms a part does not exceed or violate any const►tut►unal or statutory limitation. This Bond shall not be valid or becorne obligatory for any purpose or be entitled to any security or benefit under the Indenture unless and until the certificate of authentication hereon sha!! have been duly executed by the Trustee. -W IN WITNESS WHEREOF, the City of Huntington Beach, California, has caused this Bond to be executed in its name by the printed facsimile signature of the Mayor and attested by the printed facsimile signature of the City Clerk and the facsimile of its seal to be impressed or imprinted herein, all as of the day of CITY OF HUNTiNGTON BEACH, CALIFORNIA By: Mayc ATTEST: City Clerk (SEAL] [FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION] This Bona is one of the Bonds described in the within -mentioned Indenture of Trust. Date of registration SEATTLE•FIRST NATIONAL BANK. and authentication: as Trustee By — Authorize;; Officer By as agent Pursuant to Section 1109 of such Indenture of Trust Authorized Officer (FORM OF REVERSE OF BOND) 1 his Bond is one of ar•. authorized issue of bonds limited in aggregate principal amount to S7,700,000 (the "Bonds") issued pursuant to a resolution duly adopted by the City Council of the City of Huntington Beach on August 18. 1986. and an Indenture of Trust (the "Indenture") dated as of August 1, 1986, between the issuer and the Trustee. The Bonds are issued in accordance with ;he Constitution and laws of the State of California. under the provisions of Chapter 7 of Part 5 of Division 31 of the Health and Safety Code of the State of California (the "Act") and are equally and ratably secured by and entitled to the protection of trio Indenture The Bonds are issued for the purpose of Ill obtaining funds to make a loan (the "Developer Loan") to Village Partnership, a Cahfornia general partnership (the "Developer"). to provide permanent financing for the multifamily rental residential development (the "Project") to be const,ucted by the Developer in the City of Huntington Beach, to be occupied partially (at least 20r1o) by persons of Iowa or moderate income within the meaning of Sertion 103(b►(12)(C) of the Internal Revenue Code of 1954. as amended and partially (at least 10110) by persons of very low income within the meaning of the Act. and (2) paying certain costs incurred in connection with the issuaoce of the Bonds. The Issuer has made the Developer Loan pursuant to a loan aoreernent (the "Loan. Agreement") and developer loan (the "Developer Loan") the payments on which are secured by a deed of trust on the Project from :he Developer to the Issuer and Mercury Savings and loan Association. a California corporation Ithe "Association") (the "Project Mortgage") (colleLtIVely, the Loan Agreement and the Project Niortgage together with the Letter of Credit, the Collateral Pledge Agreement and the Regulatory Agreement mentioned below are hereinafter referred to as the "Developer Loan Documents") by and between the Issuer and the Developer. To secure its obligation to ma�,o payments on the Developer Loan in accordance with its terms, the Developer has delivered to the Trustee on behalf of the Issuer an irrevocable letter of credit (the "Letter of Credit' I issued by the Association and a coltatera. pledge agreement (the "Collateral Pledge Agreement") by and among the Issuer the Trustee, and the Association. The Developer will enter into a regulatory agreement and declaration of restrictive covenants (the "Regulatory Agreement") with the Issuer. the Association and the Trustee sell,. g forth certain provisions relating to the acquisition, ConStrur tiorn and operation of the Project. Reference is hereby made to the Indenture ano the Develooer Loan Documents, comes of •stitch are on He with the Trustee. for the provisions, among others. with respect to the nature and extent of the rights. duties and obligations of the issuer, tr,t- Trustee. the Developer and the owners of the Bonds: the terms upon which the Bonds are issued and secured: the collection and d.smsition of revenue.: a description cf the properties and interests pledged. the mc4ficatirn or amendment of the Indenture and the Developer Loan Documents: and otrner matters to all of which the owner of this Bond assents by the acceptance of this Bond. The. Bonds are secured by an assIgnrnerlt and pledge of (i ) the revenues and other arnotJnts received by the issuer from or in connection with the Developer Loan, including any amounts obtained through the exercise of the remedies provided upon an event of default under the Developer Loan Documents, (if) ;he moneys held in the funds and accounts established under the Indenture, toijplher with investment earnings thereon: (Ili) the Issuer's rights and interest in the Loan Agreement: and Iw) any amounts realized under the Letter of Cri-tdit and the Collateral Pledge Agreement. provided that said pledge and assignment are subject to certain exceptions set forth in the Indenture The Bonds Fire limited obligations of the Issuer payable solely from the revenues. funds and assets of the Issuer pledged under the Indenture and n--! :-,)m any other revenues, funds or assets of the Issuer. This Bond is transferable by the registered Owner hereof in person or by his attorney duly authorized in writing at the Principal Office of the Trustee but only in the manner, subject to the limitations and upon payment of the charges provided to the Indenture. and upon surrender and cance4ation of this Bond. The Trustee sha,I not be required to transfer or exchange any Bond after the mailing of notice calling such Pond for redemption as provided in the Indenture, nor during the period of fifteen calendar days next preceding the giving of such notice of redemption. Upon such transfer, a ME new registered Bond or Bonds of authorized denorni -iation or denominations. for the same aggregate principal amount, will be issued to the transferee in exchange herefor. The Bonds are issuable as registered Bonds without coupons in rnir,imurn denomination of S5.000 or any integral multiple of S5,000. Subject tc the limitations and upon payment of the charges provided in the Indenture, Bonds may be exchanged for a like aggregate principal amount of Bonds of authorized denominations. The Bonds of this issue are of like tenor except as to numbers and amounts. Interest on this Bond shall accrue and be payable at the rate per annum set forth cbo je. Interest on this Bond shall be computed on the basis of a 360-day year comprised of twelve 30-day months. The Bonds shall be subject to mandatory redemption as follows (in each case accrued interest to the redemption date shall ha paid to the owner of record on. the Record Date for such payment): (a) The Bonds shall be subject to redemption in part on the earlier of September 1. 1989. or the earliest practicable interest Payment Date after the Completion Date for which notice of redemption may be given pursuant to Section 604 of the Indenture. at a price equal to the principal amount of Bonds redeemed plus interest accrued thereon to the dare fixed for redemption. (b) The Bonds shall be subject to redemption in whole or in part on any Interest Payment Date, at a price equal to the principal amount of Bonds redeemed plus interest accrued thereon to the ,'late fixed for redemption. upon the election of the Association to apply the amount of any net proceeds of insurance or condemnation av:ards riot used to repair or rep' j:e th- Protect to the redemption of Bonds. (c) The Bonds shall be subject to redemption in whole qr in part on any date, at a price equal to the principa; amount of Bonds redeemed plu; interest accruer! hereon to the date fixed for redemption.—.1f:.n 45 days following an acceleration of the Deve.ciper Loan in whore or in part following an Acceleration Default. subject to the consent of the Association, or at the request or with the consent of the Associatic-n hollowing any other Event of Default undo- the Loan Agreement, in an amount as nearly equal as possible to. h not exceeding. the amount of the Developer Loan so accelerated. (d) The Bonds shall be subject to redemption in whole on any date, at a price equal to the principal amount thereof plus interest accrued thereon to the date fixed for redemption, on the date of expiration of any Latter of Credit unless the TrlistPe receives a renewal cr extension of or replacement for such Letter of Credit meeting the requiremnr-'s of Section 5.8 of the Loan Agreement not less than thirty (30) days before the expiration of such Letter of Credit. (e) The Bonds shall be subject to redemption in whole at a price tqual to the principal amount thereof plus interest accrued thereon to the date fixed for redemption on the first date for which notice of redemption may be given in accordance with the pr.,visions of the Indenture folio wing an Event of Default under the Collateral Pledge Agreement_ The Bonds are subject to optional redemption prior to their stated maturity.:n whole or in part, in integral multiples of S5.000, on any of the following dates. at a redemption price equal to the principal amount to be redeemed, in the event and to the extent the Developer Loan is voluntarily prepaid, plus accrued interest. plus the applicable premium set forth in the following table: i3.5 1 v , d Redemption 2atesRe rn fign_Premiums The two Interest Payment Dales first occurring: 7 years after the dated date hereof 3°0 8 years after the dated date hereof 2 9 years after the dated date hereof t 10 years after the dated date hereof and thereafter 0 In the event of a redemption, the Bonds to be redeemed shall be selected by lot in such manner as in the Trustee's sole discretion it may deem appropriate and fair. The Trustee shall promptly notify li►e Issuer in writing of Bonds or portions thereof selected for redemption. Bonds shall be reoeemed only in integral multiples of S5,000. It the Issuer elects to redeem Bonds purfuant to the Indenture, the Issuer shall so notify the Trustee in a written request submitted to the Trustee at least forty-five (451 days prior to the applicable redemption date, and the Developer shall depcs:t with the Trustee at least ninety-five (95) days prior to such redemption date an amount sufficient to pay the applicable redemption premium payable with respect to such redemption which w;ll be deposited by the Trustee inthe Seasoned Funds Account. If less than all of the Bonds are to be redeemed, the principal amount of the Bonds redeemed sha11 be an integral multiple of S5.000 and the particular Bonds to be redeemed Knall be selected as provided in the Indenture. Notice of each such rede,nption shall be given by sending such notice, by registered or certified mail. not less than thirty (30) days prior to the date fixed for redemption, to the registered Owner of each Bond to be redeemed in whole or in part at tne address in the Bond Register ca0ure to give notice "ay mail or any defect in any notice so mailed shall not affect the validity of the proceedings for such redemption. All Bonds or portions thereof so called tot Tedemptian will cease to bear interest on the specified redemption date if funds for their redemption are on depc-sit at the principal pace of payment at that time. No recourse shall be had for the payment of the pr,nc,pal of premium it any, or interest on. any of the Bonds or for any claim based thereon or upon any obligation, covenant or agreement contained in the Indenture, against any past. present or future member of Ime City Council, officer, employee or agent of the Issuer, cr through the Issuer, or any successor. under any rule of law or equity, statute or C:onS"lition or by the enforcerne it of any assess►nent or penalty or otherv:iSe and all such liability of any sucf, member of the City Council, offi-er, employee or agent of the Issuer as such is hereby expressly waived and re.eased as a condition of, and in consideration for. the execution of the Indenture and the issuance of any of the Bonds. The owner of this Bond Shall have no right to onforce the provisions of the Inoenture or to institute action to enforce the covenants therein, or to take any action with respect to any event of default under thu Indenture. or to institute. appear in or defend any suit or other procefd.ngs with respect thereto. e.%zeot as provided in the Indenture, If an Event of Default as definea in the Indenture occurs, th- principal; of all Bonds !hen outstanding issued under the Indenture may be dect3red due and payab'r; upon the conditions and in the manner and with the effect provided in the Indenture. The Issuer, the Trustee, any paying agent and any agent of the Issuer or the Trustee may treat the person in whose name this Bond is regisivred as the owner hereof for the purpose of receiving payment as herein pro�oded and for all other purposes. whether or not this Bond shall be overdue, and na!tr'er the Issuer the Trustee, any paying agent nor any such agent shall be affected by notice to the contrary. Modifications or alterations of the Indenture, or of any supplements thereto, (flay be made only to the extent and in the circumstances permitted by the Indenture. The Indenture prescribes the manner in which it may be discharged, including a provision that the Bonds 'shall be deemed to be paid it Seasoned Funds and or Government Obligations (as defined in the Indenture) maturing as to pnpcipal and interest in such amounts and at such times not later than 30 clays after the date of investment as will be such to insure the availabilit-I of sufficient moneys to pay the principal of, prernium, if any, and interest on, the Bonds and all necessary and proper fees, compensation and expenses of the Trustee shal! have been deposited with the Trustee, after which the Bonds shell n- tonge► be secured by or entitled to the benefits of the Indenture. except for the purposes of registration and exchange o, Bonds and of payment from such source. The following abbreviations, when used in the inscription on the face of this Bond, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM -as tenants in common TEN ENT --as tenants by the entireties JT TEN -- as joint tenants wrtn right of survivorship and riot as tenants in common UNIF GIFT MIN AC Under Unifotm Gifts to lAinors Act Custodian (Custi (State) (Minor J honal abbreviations may also be used. though not ,n the above list. B-% (FORM OF ASSIGNMENTI FOR VALUE RECEIVED, the undersigned sells, assigns and transfers unto (Name and Address of Assignee) the within Bond and does hereby irrevocably constitute and appoint attavney to transfer the said Bond c the Bond Register with full power of substitution in the prem+ses. Dated: Signature Guarantnad: The Trustee will reoister a Bond in the name of a transferee only if provided with the information requested below. The transferee (or )is designated representative) should provide as much of the information requested below as is applicable to him prior to suomitting this Bond for transfer. Name: Address: Social Security or Employer Identification Number: If a Trust. Name and Address of Trustee: NOTICE. Signatures) must be guaranteed by a member firm of the New -A York Stock Exchange or a commercial bank or trust company incorporated under the laws of the United States or a state of the United States. NOTICE: The signature to this Assignment must correspond with the name as it appears upon the face of the within Bond in every part!cular. without alteration or enlargement or any change whatsoever, 160�9 1� Jt4mv% EVE Wb of Zs ec P411V oe pt e6 LOAN 'ORIGINA T ION AND SERVICING AGREEMENT among CITY OF HUNTINGTON BEACH, CALIFORNIA MERCURY SAVINGS AND LOAN ASSOCIATION VILLAGE PARTNERSHIP and SEATTLE-FIRST NATIONAL BANK as Trustee Dated as of August 1. 1986 S7,700,000 CITY OF HUNTINGTON BEACH, CALIFORNIA VARIABLE RATE DEMAND MULTIFAMILY HOUSING REVENUE BONDS (MERCURY SAVINGS AND LOAN ASSOCIATIONNILLAGE PARTNERSHIP PROJECT) 1986 SERIES A The interest of the City, of Huntington Beach, California, in this Loan Origination and Servicing Agreement has been assigned to Seattle -First National Bank, as Trustee under the Indenture of Trust dated as of the date hereof from the City of Huntington Beach, California to Seattle -First National Bank. P2162.TOC TABLE OF CONTENTS ARTICLE I DEFINITIONS AND STRUCTURE pop Section1.1. Definitions........................................................................................................... 2 Section 1.2. Payment On Business Day................................................................................. 6 Section1.3. Interpretation...................................................................................................... 6 Section 1.4. 'Recitals. Titles and Headings............................................................................. 6 ARTICLE. II REPRESENTATIONS Section 2.1. Representations by the Issuer............................................................................. 7 Section 2.2. Representations by the Developer..................................................................... 6 Section 2.3. Representations and Warranties of the Trustee .................................................. 10 Section 2.4. Representations and Warranties of Assoc►at►or................................................... 10 ARTICLE III ISSUANCE OF BONDS; DEVELOPER LOAN Section 3.1. Agreement to Issue Bonds; Application of Bond Proceeds ................................ 13 Section 3.2. Origination of Developer Loan; Fees................................................................... 13 Section 3.3. Conditions Precedent to Disbursement of Developer Loan ................................. 13 Section 3.4. Disbursement of Developer Loan........................................................................ 13 Section 3.5. Establishment of Completion Date. Obligation of Developer to Complete.......................................................................................... 14 Section 3.6. Investment of Moneys: Arbitrage........................................................................ 14 ARTICLE IV REPAYh4ENT OF DEVELOPER LOAN Section4.1. Developer Loan................................................................................................... 16 Section 4.2. Developer Loan Payments................................................................................. 16 Section 4.3. Payment of Other Amounts ........ .......................................... I.............................. 16 Section 4.4. Unconditional Obligation...................................................................................... 17 Section 4.5. Assignment of Issuer's Rights ............................................................................ 17 Section 4.6. Amounts Remaining in Debt Service Fund.......................................................... 17 Section 4.7. Association to Act as Servicer of Developer Loan .............................................. 18 0 Paw ARTICLE V SPECIAL COVENANTS AND AGREEMENTS Section 5.1. Right of Access to the Project and Records....................................................... 19 Section 5.2. 'Maintenance of Existence; Assignments............................................................ 19 Section 5.3. -Statement of Compliance; Notice of Certain Evonts........................................... 19 Section 5.4. Insurance; Maintenance and Repa...................................................................... 20 Section 5.5. Additional Instruments .................................................................. ....................... 20 Section 5.6. Tax Exempt Status of Eonds.............................................................................. 20 Section 5.7. Regulatory Agreement........................................................................................ 21 Section 5.8. Letter of Credit; Alternate Credit Facility ............................................................. 22 section 5.9. Collateral Pledge Agreement............................................................................... 24 Section5.10. Indenture......................................................................................................... 24 ARTICLE VI DAMAGE, DESTRUCTION AND CONDEMNATION; USE OF PROCEEDS Section 6.1. Obligation to Continue Payments...................................................................... 25 Section 6.2. Application of Net Proceeds................................................................................ 25 Section 6.3. Inc.,tficiency of Net Proceeds........................................................ ..... ............. 25 • ARTICLE VII EVENTS OF DEFAULT AND REMEDIES Section. 7.1. Events of Default............................................................................................... 26 Section 7.2. Remed.es on Default....................................................................................... 25 Section 7.3. Agreement to Pay Attorneys' Fees and Expenses ............................................ 27 Section7.4. No Remedy Exclusive... ..................................................................................... 27 Section 7.5. No Additional Waiver Implied by One Waiver ..................................................... 28 Section7.6. Limitation ...... ........................... ......... .............. .... ............ .... I ....... ... I— .......... 1.. 28 ARTICLE Vill PREPAYIMENT Section 8.1. Prepayment of Developer Loan........................................................................... 29 Section 8.2. Redemption of Bonds Upon+. Prepayment........................................................... 30 Section 8.3. Amount of Prepayment................................................................................... 30 ARTICLE IX LIMITATION ON LIABILITY OF ISSUER; EXPENSES. INDEMNIFICATION Section 9.1. Limitation on Liability of Issuer............................................................................ 31 Section9.2. Expenses ....................................................................................................... 31 Section9.3. Indemnification................................................................................................... 31 MM ARTICLE X MISCELLANEOUS Section 10. Entire Aqreement ................................................... 33 Section10.2 ..... ..................................... Notices Section10.3. .................................................................................... ......................... Assignments ............................................ . ........... ......... ................................. 33 34 Section10.4. Severability .............................. .......................................................... 34 Section 10-5. Execution of Counterparts......................................................................... 34 Section 10.6. ....... Amendment:-. Changes and Modifications ......................................................... 34 -Section 10.7. Governing La .............. I ........................................... I ....................................... 34 :Section 10.8. Term of Agreement ................................................ 34 Section10.9. I .............. Recordation ....................................................................................................... 34 Section 10.10. Payments Under Collateral Pledge Agreement ................................................ 34 EXHIBIT A CERTIFICATION OF CONTINUING PROGRAM COMPLIANCE ............................ 1 EXHIBIT 8 CERTIFICATE OF TENANT ELIGIBILITY AND INCOME VERIFICATION....................................... .. ........................................ EXHIBIT C COMPLETION CERTIFICATE ..... ................................................. I ........................ EXHIBIT D PROMISSORY NOTE SECURED By DEED OF TRUST ...................................... LOAN ORIGINATION AND SERVICING AGREEMENT • This Loan Origination and Servicing Agreement (the "Agreement"), dated as of August 1, 1986, is by and among the City of Huntington Beach, California, a charter city and municipal corporation organized and existing under the laws of the State of California ("Issuer"), Mercury Savings and Loan Association, a State -chartered savings and loan association organized and existing under the laws of the State of California ("Association"), Village Partnership, a California general partnership ("Developer"). and Seattle -First National Bank (the "Trustee"), a national banking association duly organized and existing under the laws of the United States and authorized to accept and execute trusts of the type contemplated by the Indenture. For and in consideration of the mutual agreements hereinafter contained, the parties hereto agrne as follows: .00 t.. ARTICLE I DEFINITIONS AND STRUCTURE Section 1.1. Delinitions. (a) The following words and terms as used in this Agreement shall have the following meanings unless the context or use otherwise requires: "Acceleration Default" means an Event of Default under Section 16 of the Regulatory Agreement causing the Trustee to take the action set forth in Section 16(d)## of the Regulatory Agreement. "Act" means Chapter 7 of Part 5 of Division 31 of the Health and Safety Code of the State of California, as amended. "Act of Bankruptcy" shall have the same meaning specified in the Indenture. "Agreement" means this Loan Origination and Servicing Agreement, as originally executed and as amended and supplemented from time to tirne. "Alternate Credit Facility" rnea:is a credit facility other than the Letter of Credit delivered to the Trustee pursuant to Section 5.8 hereof, including but not hunted to an-nsuranc.e policy, which complies with the requirements of said section. "Alternate Credi, Facility" shall be deemed to include any collateral or other agreements with respect thereto which may be required for the satisfaction of all applicable requirements of said Section 5.8. as provided therein. "Association" means Mercury Savings and Loar► Association. a State rr ;rtered savings and loan association organized and existing under the laws of the Stare of California. or the issuer of any replacement letter of credit or Alternate Credit Facility as provided u: Section 5.8 hereof. "Association Representative" rneans any person or persons designa'-sd by they Association front time to time to act on its behalf under this Agreement. "Bond Counsel" means an attorney at law or a firm of attorneys at la:i acceptable to the Issuer and the Trus;.?e of nationally recognized standing in matters pertaunng to the tax-exempt nature of interest on bonds issued by states and their political subdivisions duly admitted to the practice of law before the highest court of any state of the United States of A►TlPriCa Of the District of Columbia. "Bond Purchase Agreement" means the Bond Purchaser Agreement. dated August _,_, 1986, among the Underwriters. the Issuer and the Association. "Bond Rate" means, prior to conversion to the Optional Fixed Rat,; (as that term is defined in the Indenture), tho Sum of TENR�-' and the TENR*• Amount and, afte, rile Conversion Date, the Optional Fixed Rate: provided, however, that prior to March 1, 1987, the Bond Rate will be the rate stated in Section 211.A. of the Indenture plus any additional interest payable under Section 211.G. of the Inde -re. "Bonds" means the Variable Rate Demand Multifamily Housing Revenue Bonds, (Mercury Savings and Loan Association Village Partnership Apartments Project), 1986 Series A, of the Issuer to be issued pursuant to the Indenture. "Businoss Day" means a day which is not a Saturday or a Sunday or a bank holiday under the taws of the United States or the States of California, Washington or New York, "BTC" means Bankers Trust Company. New York, New York, and its successors and assigns. "Cert flcation of Continuing Program Compliance" means the document substantially in the form attached hereto as Exhibit A. "Certilicition of Tenant Eligibility and Income Verification" means the document substantially in the form attached hereto as Exhibit B. "Closing", when used with respect to the Developer Loan, means the initial disbursement to the Developer of a portion of the proceeds of the Developer Loan, "Code" means the Internal Revenue Code of 1954, as amended, and any successor statute thereto, as in effect on the date in question, together with corresponding and applicable final, temporary or proposed regulations and revenue rulings issued or amended with respect thereto by the Treasury Department or Internal Revenue Service of the United States. All references herein to sections. paragraphs or other subdivisions of the Cod(, or the regulations promulgated thereunder shall be deemed to be reverences to correlative provisions of any sul cessor code or regulations promulgated thereunder. "Collateral" shall have the same meaning specified in the Collateral Pledge Agreement. "Collateral Pledge Agreement" means the Collateral Pledge Agreement by and among the Issuer, the Trustee, the Association and thr; Collateral Agent narned therein. "Completion Certificate" means the certificate in the form attached hereto as Exhibit C to be provided by the Developer on the Completion Date. "Completion Date" has the meaning specified in Section 1 of the Regulatory Agreement. "Construction Term" has the meaning specified in Section 101 of the Indenture. "Conversion Date" has the meaning specified in Section 101 of the Indenture "Cost of Issuance Fund" has the same rneaning as specified in the Indenture. "Delivery Date" means the date of delivery of the Bonds to the initial purchasers thereof. "Determination of Taxability" means the enactment of applicable legislation, or a judgment or order of a court of original jurisdiction, or a final roiling or decision of the Internal Revenue Service. in either case to the effect that the interest on the Bonds (other than interest on any Bond for any period during which such Bond is herd by a "substantial user" of any facility financed with trio proceeds of the Bonds or a "related person", as such terms are used in Section 10(b)(13) of the Codel is includable for federal income tax purposes in the gross incomes of all recipients there cif subject to federal income taxes or the filing with the Trustee of an opinion by Bond Counsel to such effect. A judgment or order of a court of or;ginal jurisdiction or a ruling or decision of the Interna! Revenue Service shall be considered final only if no appeal or action for judicial review has been filed and the time for f►lirg such appeal or action has expired. "Developer" means Village Partnership, a California genera! partnership. "Developer Loan" means the loan evidenced by the Developer Note and secured by the Developer Aortgage to be made by the Issuer to the Developer hereunder to provide financing for the Project. "Developer loan Documents" means this Agreement. the Regulatory Agreement, the Certification of Continuing Program Compliance, the Developer Note. the Developer Mortgage. the Reimbursement Agreement, the Disbursement Agreement and such other agreements as may be •3- required by the Issuer or the Association in connection with the Developer Loan, but exclud-ng the Certification of Continuing Program Compliance as of any time prior to :.;►en such certificate is required. "Developer Lozn Fund" means the Fund by that narne in Section 302 of the Indenture. "Developer MortL-age" means ..,a Deed of Trust with Assignment of Pents and Security Agreement (with Fixture Filing) granting a mortgage on, and security .nlerest in. the land, buildings and equipment comprising the Project, in substantially the form required by this Loan Agreement, madp from the Developer to a trustee for the benefit of the Trustee and the Association, securing the repayment of the Developer Loan and the obligations of the Developer under the Reimbursement Agreement, this Loan Agreement. the Disbursement Agreement, the Regulatory Agreement and other agreements related to the Project and the financing thereof. "Developer Note" means the note executed by the Developer pursuant to this Agreement, the form of which is attached hereto as Exhibit "D". "Developer Representative" shall mean the person or persons (who may be employees of the Developer) designated from time to tirre to act on behalf of the Developer in a written certificate furni^hed to the Issuer. the Asscciation and the Trustee containing the specimen signature of such person or persons and signed on behalf of the Developer. "Disbursement Account" means the account by that name established by the Trustee under the Indenture. "Disbursement Agreement" means the Project Disbursement Agreement between the Developer and the Association and dated as of August 1. 19B6. which is incorporated herein by reference and pursuant to which moneys deposited in the Disbursement Account will be disbursed to the Developer. "Event of Defaut:", as used in this Agreement, means any of the events described 3s an event of default in Section 7.1 hereof. "Indenture" means the Indenture of Trust. dated as of the date hereof, between the Issuer and Trustee relating to the issuance of the Bonds. as originally executed and as amended or supplemented Ir:rm time to time. "Inducement Date" means May 19, 1986, the date the Issuer took official action within the meaning of the Code to provide financing in cunnect►on with the Project. "Interest Payment Date" means (a) prior to the Conveosion Date. any March 1, June 1, September 1, or December 1, commencing March 1. 1987. (bf the Conversion Date. (c) after the Conversion Date, any March 1 or Septernber 1. (d) any Reset Date or (e) any other date upon which interest on the Bonds is due and payable. "Issuer" means the City of Huntington Beach. California, a municipal corporation and charter city organized and existing under the taws of the State of California. "Issuer Representative" means any person or persons designated by the Issuer from tune to time to act on its behalf under this Agreement. "Letter of Credit" means the Irrevocable Letter of Credit No. issued by the Association pursuant to the Reimbursement Agreement, or any letter of credit or Alternate Credit Facility in replacement thereof in accordance with Sectior. 5.8 hereof. -4- "Letter of Credit Note" means the note executed by the Developer pursuant to the Reimbursement Agreement. "Official Statement" means the Official Statement of the Issuer, dated August _, 1966. relating to the issuance of the Bonds. "Permanent Term" has the same meaning as specified in the Disbursement Agreement. "Project" means the multifamily residential rental development, the financing of which is to be financed with the Developer Loan. as described and further defined in the Regulatory Agreement. "Project Costs" has the same meaning as specified in the Regulatory Agreement. "Qualified Project Costs" has the same meaning as specified in the Regulatory Agreement. "Qualified Project Period" has the meaning specified in the Regulatory Agreement. "Rating Agent" has the same meaning as specified in the Indenture. "Regulatory Agreement" means the Regulatory Agreement and Declaration of Restrictive Cove -ants dated as of August 1, 1966 by and among the Issuer, the Trustee, the Association and the Developer. "Reimbursement Agreement" means (r) with respect to the initial Letter of Credit. the Letter of Credit and Reimbursement Agreement dated as of August 1, 19@F,. among the Developer. the Association and the Trustee and (ii) with respect to any other Letter of Credit (including any Alternate Credit Facility), the agreement pursuant to which a bank or savings and loan association (or, where relevant, an insurance company) agrees to issue such Letter of Credit or Alternate Credit Facility. "Remarketing Agent" means the Remarketing Agent appointed pursuant to the Remarketing Agreement and any successors appointed in accordance with Section 916 of the Indenture "Remarketing Agreement" has the meaning specified in Section 101 of the Indenture. "Remarketing Fee" means the fee to be paid quarterl; to the Remarketing Agent in an amount equal to 1.'4 of 1°fl per annum 0 the outstanding principal amount of the Bonds. "Reserve Account" means the account by the name created by Se :Icon 302 of the Indenture. "Reserve Pequirement" shall have the same meaning as specified in the Indenture. "Reset Rate" has the meaning specified in Section 101 of the Indenture. "Reset Date" has the meaning specified in Section 101 of the Indent,..re. "Seasoned Funds" has the meaning specified in Section 101 of the Indenture. "Servieer" means the Association in its capacity as serv+cer of the Developer Loan under this Agreement. "Servicing Fees" means the sums to be paid to the Association for servicing of the Developer Loan under the terms of the Reimbursement Agreerent. "State" means the State of California. M "Tender Agent" means the person or entity appcinted to such position pursuant to the Indenture. "TENRs" has the meaning specified in Section 211.8.2 of the Indenture. "TENW) Amount" has the meaning specified in Section 211.B.I of the Indenture. '7rustee" means Seattle -First National Bank, or any successor trustee serving as such pursuant to the Indenture and any separate or co -trustee serving as such thereunder. "Underwriter" means collectively the initial purchasers of the Bonds pursuant to the 'Bond Purchase Agreement. Section 1.2. Payment On Business Day. Any payment which would otherwise be due and payable under this Agreement on a day which is not a Business Day may be paid on the next succeeding day which is a Business Day, with the same force and effect as if such payment had been paid on the nominal date for such payment. Section 1.3. Interpretation. Unless ' the context clearly requires otherwise, words of masculine gender shall be construed to include correlative words of the faminine and neuter genders and vice versa, and words of the singular number shall be construed to include correlative words of the plural number and vice versa. Th.s Agreement and all the terms and provisions hereof shall be construed to effectuate the purpose set forth herein and to sustain the vaiid,ty hereof. Sect nn 1.4. Recitals, Titles and Headings. The title,:, and headings of the articles and se.:tions of this Agreement have teen inserted for convenience of reference only and shall not in any way modify or restrict any of the terms or provlsiol.s hereof and shall never be considered or given any effect in construing this Agreement or any provisions hereof or in ascertaining intent, if any question of intent should arise. Section 2. 1. Representations by the Issuer. (a) The Issuer is a municipal corporation and charter city duly organized and existing under the laws of the State of California. (b) The Issuer has full legal right. power and authority under the laws of the State, including the Act. (1) to enter into ,this Agreement, the Collateral Pledge Agreement, the Remarketing Agreement. the Regulatory Agreement and the Indenture. (2) to issue, execute and deliver the Bonds, (3) to perform its obligations under this Agreement, the Collateral Pledge Agreement, the Remarketing Agreement, the Regulatory Agreement, the Indenture and the Bonds and (4) to consummate the transactions contemplated by this Agreement, the Collateral Pledge Agreement, the Remarketing Agreement, the Regulatory Agreement, the Indenture, the Bonus and the Official Statement. (c) The Issuer has taken all actions necessary to authorize (1, the execution and delivery of this Agreement, the Collateral Pledge Agreement, the Remarketing Agreement, the Regulatory Ag►eement and the Indenture, (2) the issuance, execution and delivery of the Bonds. (3) the performance by the Issuer of its obligations under this Agreement, the Collateral Pledge Agreement, the Remarketing Agreement, the Indenture. the Regulatory Agreement and the Bonds and (4) the consummation of the transactions contemplated by this Agreement, the Collateral Pledge Agreement, the Remarketing Agreement, the Regulatory Agreement. the Indenture. the Bonds and the Official Statement. (d) This Agreement has been duly executed and delivered by the Issuer and constitutes a valid and binding obligation of the Issuer, enforceable in accordance with its terms. except as limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting the rights of creditors generally and the exercise of judicial discretion in accordance with general principles of equity. Upon the executic.n and delivery thereof,. the Collateral Pledge Agreement. the Remarketing Agreement, the Regulatory Agreement, the Indenture and the Bonds will constitute valid and binding limited obligations of the Issuer, enforceable in accordance with their respective terms, except as limited by bankruptcy, insolvency, reorganization, moratorium and other similar la is affectir.; the rights of creditors genera!ly and the exercise of judicial discretion in accordance with general principles of equity. (e) The execution and delivery of this Agreement, the Collateral Pledge Agreement, the Remarketing Agreement, the Regulatory Agreement and the Indenture. the issuance, execution and delivery of the Bonds, the performance by the Issuer of its obligations under this Agreement, the Collateral Pledge Agreement, the Rertiarketing Agreement. the Regulatory Agreement, the Indenture and the Bonds and the consummation of the transactions contemplated by this Agreement, the Collateral Pledge Agreement, the Remarketing Agreement, the Regulatory Agreement, the Indenture. the Bonds and the Official Statement. do not violate any law. rule. regulation or ordinance or any order. judgment or decree of any federal, state or local court, and do not conflict with, or constitute a breach of, or a default under, the Act, or under the terms and conditions of any agreement, instrument or commitment to which the Issuer is a party or by which the Issuer or any of its property is bound. (f) To the knowledge of the Issuer, there is no action, suit. proceeding, inquiry or investigation pending or threatened agwrist the Issuer by or before any court, governmental agency or public board or body (nor, to the knowledge of the Issuer, is there any basis therefor). which (1) affects or questions the existence or the territorial jurisdiction of the Issuer or the title to office of any commissioner, director or officer of the Issuer. 12) affects or seeks to prohibit. restrain ,,, l)njoin the execution `lid delivery of tnis Agreement, this Collateral Pledge Agreement, the Remarketing Agreement, the Regulatory Agreement or the Indenture, the issuance, execution or delivery of the Bonds, the performance by the Issuer of its obligations under this Agreement. the Collateral Pledge Agreement. the Remarketing Agreement. the Regulai,-)ry Agreement, the Indenture or the Bonds or the consummation of the transactions contemplated by this Agreement, the Collateral Pledge Agreement, the Remarketing Agreement, the Regulatory Agreement, the Indenture, the Bonds or the Official Statement, (3) afferts or questions the validity or enforceability of this Agreement. the Collateral Pledge Agreement, the Remarketing Agreement, the Regulatory Agreement, the Indenture or the Bonds, (4) questions the tax- exempt status of the Bonds or the completeness or accuracy of the Official Statement, or (5) questions the power, or authority of the Issuer to perform its obligations under this Agreement, the Collateral Pledge Agreement, the Remarketing Agreement, the Regulatory Agreement, the Indenture or the Bonds or to carry out the transactions contemplated by this Agreement. the Collateral Pledge Agreement. the Remarketing Agreement, the Indenture, the Regulatory Agreement, the Bonds or the Official Statement. (g) The Issuer has determined that the issuance of the Bonds to obtain moneys to carry out the purposes contemplated hereby will serve the public interest and will further the purposes of the Act, including. among other purposes, the provision of decent, safe and sanitary residential rental housing. (h) Any certificate signed by an Issuer Representative and delivered pursuant to this Agreement or the Indenture shall be deemed a representation and warranty of the Issuer as to the statements made therein. Section 2.2. Representations by the Developer. The Developer covenants, represents and warrants that: (a) The Developer is a general partnership duly organized under the laws of the State of _ California. has the power and authority to ow, its properties and assets and to carry on its business as now conducted and as contemplated to be conducted, and the power to enter into and has duly authorized by proper action, the execution and delivery of this Agreement and all other documents contemplated hereby to be executed by the Developer, including the Regulatory Agreement, the D+sbt.rsement Agreement and the Re►rnburs, , oent Agreement. (b) Neither the execution and delivery of this Agreement, the Developer Loan Documents or any other document in connection with the financing of the Project. the consummation of the transactions contemplated hereby and thereby. not the fulfillment of or compl►anc(, with the terms and ccndit►orns hereof and thereof. conflicts with or results in a breach of any of the terms. conditions or provisions of Developer's partnership agreement or of any agreement or instrument to which the Developer is now a party or by which it is bound. or const►tutes a default (with due notice or the passage of time or both) under any of the foregoing. o: results in the creation or imposition of any prohibited lien, charge or encumbrance whatsoever upon any of the property or assets of the Developer under the terms of any instrtrrTnent or agreern%nt to which the Developer is now a party or by which it is bound. (c) The Project will be located wholly within the City of Huntington Beach. California. id) Tne Developer has and will have title to the Project sufficient to carry out the purposes %J this Agreement, and such title shall be in and remain in the Developer except as permitted by Section 5.2 hereof and the Regulatory Agreement. (e% The estimated cost of the Project is as set forth in the developer's Certificate Regarding Use of Proceeds. dated as of August 29, 1986. and has been determined in accordance with sound engineering principles. (fl The Project consists and w!ll consist of those facilities described to the Regulatory Agreement, and the Developer shall make no changes to the Project or to the operation thereof which would affect the qualification of the Project under the Act or impair the exemption from !ederal income taxation of the interest on the Bonds. The Developer intends to uGltie the Project as multifamily rental housing during the term of the Bonds. r .A. (g) The construction, improving and equipping of the Project commenced subsequent to Ilse Inducement Date, and prior to the Inducement Date neither the Developer nor any related person had entered into any" binding agreement in connection with the construction, improving or equipping of the Project, no on -site work had been commenced in connection with the construction of the Project, and no off -site fabrication of any portion of the Project had been commenced. The Project consists, and will at all times consist, of property which is land or is subject to the allowance for depreciation provided in Section 167 of the Code. All of the proceeds of the Bonds will be used to pay Project Costs, and at least 95010 of the sure of the proceeds of the Bonds plus income from the. investment thereof (after payment of costs of issuance thereof) will be used to pay the Project Costs which are chargeable to the capital account of the Project, and which were paid or incurred after the Inducement Date. None of the proceeds of the Bonds will be used to finance any portion of the Project which was placed in service by the Developer one year or more prior to the date of issuance of the Bonds. - (h) The Developer has incurred a substantial binding obligation to acquire and construct the Project of at least 5100.000. The Developer will proceed with due diligence to construct the Project and reasonably expects to expend the full amount of the Loan by no later than July 1, 1989. (i) Under Rev. Proc. 62-21. the average reasonably expected economic life of the Project is at least — years; the average maturity of the Bonds is not more than 120°0 of such economic fife; and there are no facilities integrally associated with the Project that, under the term4 of this Agreement, could be financed with the proceeds of the Bonds but are not being so financed. 0) Less than 2500 of the proceeds of the Bonds will be used, directly or indirectly, for the acquisition of land or an interest therein; none of the proceeds of the Bonds will be used, directly or indirectly, for the acquisition of land, or an interest therein. to be used for farming purposes; none of the proceeds of the Bonds will be used for the acquisition of any property or an interest therein unless the first use of such property is pursuant to such acquisition, except witil respect to any building and the equipment therefor if the rehabilitation expenditures with respect to such building equal or exceed 15'0 of the cost of acquiring such building and equipment; and none of the proceeds of the Bonds will be used to finance commercial property. (k) There is no action, suit or proceeding at law or in eautty or by or before any governmental instrumentality or other agency now pending, or, to the knowledge of the Developer, threatened against or affecting it or any of its properties or rights, which. if adversely determined, would materially impair its right to carry on business substantially as now conducted or as now contemplated to be conducted, or would materially adversely affect its financial condition. The Developer is not in material default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any material agreement or instrument to which it is a party. (1) The operation of the Project in the manner presently contemplated and as described herein will not coollict with any zoning, water or air pollution or other ordinance, order, law or regulation applicable thereto. The Developer has caused the Project to be designed in accordance with ail federal, state and local laws or ordinances (including rules and regulations) relating to zoning. building, safety and environmental quality. (in) The Developer has filed or caused tc be filed all federal, state and local tax returns which are required to be filed, and has paid or caused to be pairs all taxes as shown on said returns or on any assessment received by it, to the extent that such taxes have become due. (n) To the best of the Developer's knowledge, the information contained in the Official Statement, insofar as such information relates to the Developer and the Project, is accurate in all material respects and does not contain any untrue sta►ement of a material fact or omit to state a .9. material fact required to be stated therein or necessary to make the statements made therein, in the light of the circumstances under which they were made, not misleading, (o) No officor or other official of the Issuer has any interest whatsoever in the Developer or in the transactions contemplated by this Agreement. (p) The Developer has r',,ained, or will obtain on or before the date required therefor, all necessary certificates, approvals, permits and authorizations with respect to the construction of the Project. (q) The Developer will not submit any funding requisition to the Association for disbursement of advances under the Developer Loan which, if paid, would result, as of the date of such payment, (1) it less than 9510 of the proceeds of the Developer Loan, exclusive of proceeds used to pay the costs of issuing the 'Bond, being used to pay or reimburse the Developer for Oual►fied Project Costs and (ii) any of the proceeds of the Developer Loan being applied to pay or reimburse costs or expenses other than Project Costs. Section 2.3. Representations and Warranties of the Trustee. The Trustee makes the following representations and warranties: (a) The Trustee is a national banking association in good standing under the laves of the United States. The Trustee is duly authorized to act as a fiduciary and to execute the trust created by the Indenture, and is qualified to act as Trustee under the Indenture. (b) The Trustee has all the power and authority necessary (►) to execute and deliver this Agreement, the Collateral Pledge Agreement, the Regulatory Agreemont and the Indenture, (i►) to perform its obligations under this Agreement, the Collateral Pledge Agreement. the Regulatory Agreement and the Indenture and (u►) to consummate the transactions contemplated by this Agreement, the Indenture, the Collateral Pledge Agreement, the Regulatory Agreement and the Official Statement. (c) The Trustee has taken all actions necessary to authorize (►) the execution and delivery of this Agreement, the Collateral Pledge Agreement, the Regulatory Agreement and the Indenture. (if) the performance by the Trustee of its obligations under this Agreement, the Collateral Pledge Agreement, the Regulatory Agreement and the Indenture and (fit t the consummaho'l of the transactionsrontemplated by this Agreement, the Indenture, the Collateral Pledge Agreement, the Regulatory Agreement and the Official Statement. (d) This Agreement, the Collateral Pledge Agreement. the Regulatory Agreement and the Indenture have been duly executed and delivered by the Trustee and constitute valid and binding obligations of the Trustee, 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. (e) tic approval, permit, consent, authorization or order of any court. governmental agency or public board or body not already obtained is required to be obtained by the Trustee as a prerequisite to (i) the execution and delivery of this Agreement, the Collateral Pledge Agreement, the Regulatory Agreement or the Indenture, (if) the authentication or delivery of the Bonds, (Ili) the performance by the Trustee of its obligations under this Agreement, the Collateral Pledge Agreement, the Regulatory Agreement or the Indennire or (iv) the consummation of the transactions contemplated by this Agreement, the Indentuie, the Bonds, the Collateral Pledge Agreement, the Regulatory Agreement or the Official Statement. Section 2.4. Representations and Warranties of Association. The Association makes the following representations and warranties: .td. (a) The Association is.a State chartered savings and loan association duly organized and validly existing under the laws of the State of California, (b) The Association has all power and authority necessary (i) to execute and deliver this Agreement, the Reimbursement Agreement, the Letter of Credit, the Collateral Pledge Agreement and the Developer Loan Documents, (it) to perform its obligations under this Agreement, the Reimbursement Agreement. the Letter of Credit, the Collateral Pledge Agreement and the Developer Loan Documents and its obligations as Servicer under this Agreement and the Developer . Lean Documents, and (iii) to consummate the transactions contemplated by this `Agreement, the Reimbursement Agreement. the Letter of Credit, the Collateral Pledge Agreement, the Developer Loan Documents and the Official Statement to be consummated by the Association. (c) The Association has taken all actions necessary to authorize (i) the execution and delivery of this Agreement, the Reimbursement Agreement, the Letter of Credit, the Collateral Pledge Agreement and all of the Developer Loan Documents wind in its capacity as Servicer tinder the Developer Loan Documents, (►i) the performance of its obligations under this Agreement, the Reimbursement Agreement, the Letter of Credit, the Collateral Pledge Agreement and the Developer Loan Documents and in its capacity as Servicer under the Developer Loan Documents, and (iii) the consum.:iation of the transactions contemplated by this Agreement. the Reimbursement Agreement, the Letter of Credit, the Collateral Pledge Agreement. the Developer Loan Documents and the Official Statement to be consummated by the Association in its individual capmity or in its capacity as Servicer. (d) This Agreement, the Reimbursement Agreement, the Letter of Credit, the Collateral Pledge Agreement, the Developer Loan Documents and the Association's obligations in its capacity as Serr,r►cer under this Agreement and the Developer Loan Documents have been duly executed and delivered by the Association and constitute, assuming (except as to the Letter of Credal due execution and delivery by the other parties thereto, the valid and binding obligations of :he Association, enforceable against the Association in accordance with their terms, except as limited by bankruptcy, insolvency. reorganization, moratorium and other sirn;lar laws affecting the rights of creditors generally. (e) Neither the execution and delivery by the Association of this Agreement, the Reimbursement Agreement, the Developer Loan Documents. the Letter of Credit. the Collateral Pledge Agreement, nor the performance by the Association of its obligations under this Agreement. the Reimbursement Agreement, the Letter of Credit, the Collateral Pledge Agreement. the Developer Loan Documents or in its capacity as Servicer under any of the Developer Loan Documents, nor the consummation of the transactions contemplated by this Agreement, the Reimbursement Agreement, the Letter of Credit, the Collateral Pledge Agreement, or any of the Developer Loan Documents or the Official Statement to be consummated by the Association (in its individual capacity or its capacity as Servicer), will violate any law. rule. regulation or ordinance, or any order, judgment or decree of any federal, state or local court or will conflict with, or constitute a breach of, or a default under, the charter or by-laws of the Association or under any agreernent. instrument or commitment to which the Association is a party or t)y which the Association or any of its property is bound. (f) To the knowledge of the Association. there is no action. suit, proceeding, inquiry or investigation by or before any court, governmental agency or public•, board or body pending or, to the knowledge of the Association, threatened ,against the Association (nor, to the knowledge .0 the Association, is there any basis therefor), which (i) affects or seeks to prohibit, restrain or enjoin the execution and delivery of this Agreement, the Reimbursement Agreement, the Letter of Credit. the Collateral Pledge Agreement or any of the Developer Loan Documents, the issuance, execution or delivery of the Bonds, the performance by the Association (in its individual capacity er in its capacity as Servicer) of its obligations under this Agreement. the Reimbursement Agreement, the Letter of Credit, the Collateral Fledge Agreement or any of the Developer Loan Documents or the consummation of the transactions contemplated by this Agreement, the Reimbursement Agreement, the Letter of Credit. the Collateral Pledge Agreement, any of the Developer Loan Documents or the Orfir.►al Statement to be consummated by the Association (in its individual cf-Tacity or in its capacity as Sorvicer). (6) affects or questions the validity or enforceability of this Agreement, the Bond Purchase Agreement, the Reimbursement Agreement, the Letter of Credit. the Collateral 'Pledge Agieernent, any of the Developer Loan Documents, the Indenture or the Bonds, joi) questions the tar exempt status of the Bonds or the completeness or accuracy of the Official Statement, or (iv) ques::oris the powar or authority of the Association to perform (in its individual capacity or in its capar.it,r as Servicer) its obligations under this Agreement, the Reimbursement Agreement, the Letter of Credit, the Collateral Pledge Agreement or any of the Developer Loan Documents, or to consummate the transactions contemplated by this Agreement. the Reimbursement Agreement. the Letter of Credit, the Collateral Pledge Agreement, any of the Developer Loan Documents or the Official Staternr;nt to be consummated by the Association (in its individual capacity or in its capacity as Servicer). (g) No approval, permit. consent, autnorizat►on or order ct any court, governmental agency or public board or body not already obtained is required to be obtained by the Association as a prerequisite to the execution and delivery by the Association (in its individual capacity or in its capacity a° �>rvicer) of this Agreernert. the Re►ntbursernent Agreement, the Letter of Credit, the Collateral Pledge Agreement or any of the Developer Loan Documents, the performance by the Association (in its individual capacity or in its capacity as Servicer) of its obligations under this Agreement, the Reimbursement Agreement. the Letter of Credit. the Collateral Pledge Agreement or any Developer Loan Documents or the consummation of the transactions contemplated by this Agreement, the Reimbursement Agreement. the Letter of Credit. the Collateral Pledge Agreement, any of me Developer Loan L)ocurnents or the Official Statement ►o be consummated by the AssGiCiation (in its individual capacity or in its capacity as Servicer). (hi Any certificate signed by a representative of the Association and delivered pursuant to and concurrently with this Agreement shall be deemed a reprnsentat►on and warranty of the Association as to the statements made therein. -12- ARTICLE. 111 ISSUANCE OF BONDS; `DEVELOPER LOAN Section 3.1. Agreement to Issue Bonds; Application of Bond Proceeds. To provide iunds to make the Developer Loan to the Developer to finance the Project Costs as provided herein, the Issuer agrees that it will issue under the Indenture, sell and cause to be delivered to the purchasers thereof, the Bonds, bearing interest at the rates and payable as to principal and interest at the times as set forth in the Indenture. The Issuer will thereupon deposit the proceeds received from the sale of the Bonds as provided in the Indenture. Section 3.2. Origination of Developer Loan; Fees. The Association agrees on behalf of the Issuer to originate and servic a the Developer Loan to finance the Protect Costs in an amount equal to S7,700,000. The proceeds of the Developer Loan shall be disbursed in accordance with the provlsion� of Section 3.4 hereof. Section 3.3. Conditions Precedent to Disbursement of Developer Loan. As a cond!tion precedent to the disbursement of the Developer Loan, the Developer shall comply with all conditions precedent to the funding of the Developer Loan as set forth in the Reimbursement Agreement and the Disbursement Agreement. Section 3.4. Disbursement of Developer Loan. (a) On the Delivery Date, the Developer Loan shall be originated and, in accordance with Section 303 of the Indent;.;e, the proceeds of the Developer Loan shall be deposited in the following Funds Held by the Truster pursuant to the Indenture: (1) first, an amount equal to the Reserve Requirement shall be deposited into the Reserve Account but shall be deemed to have been disbursed to the Developer as a portion of the Developer Loan. (ii) second, an amount equal to the aggregate principal amount of the Bonds (less the amount of the Reserve Requirement) shall be deposited into the Developer Loan Fund. and (iii) third, the Developer Loan disbursement to cover ;, .e costs of issuance of the Bonds shall be deposited into the Cost of Issuance Fund. (b) The moneys in the Develop�lr Loan Fund shall be disbursed by the Association as agent for the Trustee to pay the Project Costs upon written orders executed and delivered to the Trustee directing such disbursements as follows: the Association shall disburse moneys in the Developer Loan Fund from time. to time upon delivery to the Trustee of a requisition executed by the Developer Representative and an Association Representative, which: (A) states with respect to cacti disbursement to be made: (1) the requisition number. (11) the name and address of the person, firm or corporation to whom payment will be made. (III) the amount to be disbursed, (IV) that each obligation mentioned therein is a proper charge against the Developer Loan Fund and has not been the basis of any previous disbursement and (V) that at least ninety-five percent (95'6) of the amount of such disbursement, together with all other disbursements theretofore made from the Developer Loan Fund, has been or will be used for payment of Qualified Project Costs: and (B) specifies in reasonable detail the nature of the obligation: and (C) is accompanied by a bill nr statement of account for such obligation. Notwithstanding the foregoing provisions to the contrary, there shall be withheld from each of the foregoing disbursements, and retained in the Developer Loan Fund ## such amounts as may be provided in the Disbursement Agreement. Upon receipt of a properly signed requisition for money and approval by the Association for the payment of the Project Costs, the Association is authori: ed to act thereon without further inquiry and " the Daveloper and the Association shall hold the Trustee -t3. harmless against any and all losses, claims or liabilities incurred in connection with the Association making such disbursements from the Developer Loan Fund in accordance with such requisition. (c) Upon, the earlier of (i) the filing with the Trustee of the Completion Certificate pursuant to Section 3.5 of this Agreement, or (ii) July 1, 1989. the Trustee shall retain in the Developer Loan Fund such amount as shall be specified in the Completion Certificate to be required to pay future Project Costs and amounts to pay requisitions theretofore submitted but not paid. and the Trustee shall withdraw and transfer to the Debt Service Fund the balance of moneys in the Developer Loan Fund. Thereafter. the Developer Representative shall deliver notice to the Trustee specifying all amounts so retained in the Developer Loan Fund but not subsequently used to pay Project Costs and all such amounts shall be transferred by the Trustee into the Debt Service Fund. The amounts so transferred from the Developer Loan Fund to the Debt Service Fund shall be held in a segrcyatad account therein and applied to redeem Bonds on the earlier of (i) August 1, 1989, or (ii) the first Interest Payment Date following the Completion Date, ' pursuant to Section 601 of the Indenture. Until used for one or more of the foregoing purposes. such segregated amounts may be invested as permitted by the Indenture, but no portion of such segregated amounts may be invested to produce a yield on such amounts (computed from the date of such transfer into such segregated account and taking into account any investment of such amounts from such date) greater than the yield on the Bonds, computed in accordance with Section 103(c) of the Code. All of the foregoing provisions of this Section 3.4. including, without limitation, those related to the application or holding of investment earnings on funds held in the Developer Loan Fund. shall be subject to the provisions of Article V of the Indenture. (d) The Association shall authorize disbursements of amounts on deposit in the Developer Loan Fund and otherwise service the Developer Loan, in its capacity as Servrcer hereunder, in accordance with the terms and provisions of this Agreement and the Disbursement Agreemont. Section 3,5. Establishment of Completion Date; Obligation of Developer to Complete. As soon as the Project is completed, but not later than July 1. 1989. the Developer Representative, on behalf of the Developer, shall evidence the Completion Date by providing a certificate to the Trustee stating the total Project Costs and further stating that (i) construction of the Project has been completed substantially in accordance with the plans. specifications and work orders therefor, and all labor. -se;-Aces. materials and supplies used in construction have been paid for, and trr) all other facilities necessary in connection with the Project have been acquired. constructed and installed substantially in accordance with the plans and specifications and work orders therefor and all costs and expenses incurred in connection therewith have been paid. Notwithstanding the foregoing, such certificate may state that it is given without prejudice to any rights of the Developer against third parties for the payment of any amount not then due and payable which exist at the date of such certificate or which may subsequently exist. If the moneys in the Developer Loan Fund NI availahir for payment of the Project Costs should be insufficient to pay the costs thereof in full, the Issuer and the Association shall be under no obligation to provide for payment of any costs of completing the Project in excess of the moneys available for such purpose in the Developer Loan Fund##. it being understood that the Developer shall pay all costs of completing the Project in excess of the moneys available for such purpose in the Developer Loan Fund##. The Issuer and the Association make no express or Implied warranty that the moneys deposited in the Developer Loan Fund i'f and available for payment of Project Costs, under the provisions of this Agreement, will be sufficient to pay all the arrounts which may be incurred for such Project Costs. The Developer ;agrees Thai it the Developer should Nay or cause to be paid any portion of the Project Casts pursuant to the provisions of this Section, it shall not be entitled to any reimbursement therefor from the Issuer, from the Trustee, from the Association or from the owners of any of the Bonds, nor shall it be entitled to any diminution -! :: ie amounts payable under Section 4.2 hereof. Section 3.6. 'Investment of Moneys; Arbitrage. Any moneys in any fund or account held by the Trustee shall be invested or reinvested by the Trustee at the direction of the Developer in Permitted -14. Investments as provided in the Indenture, and the Developer hereby approves such provisions of the Indenture. The Issuer hereby certifies to the Developer that it has not been notified of any listing or proposed listing of it by the Internal Revenue Service as a bond issuer whose arbitrage --erhtications may not be relied upon. The Developer hereby covenants and represents to the Issuer, and, based upon said representations, the Issuer and the Developer jointly and severaliy covenant with all purchasers and owners of the Bonds from time to time outstanding that, as long as any of the Bonds remain outstanding, mcneys on deposit in any fund or account in connection with the Bonds, whether such moneys were derived from the proceeds of the sale of V w- Bonds or from any other sources, and whether held by the Trustee pursuant to the Indenture or by the Association in the Disbursement Account or any other account or by any other person pursuant to any other arrangement. will not be used in,a manner which will cause the Bonds to be "arbitrage bonds" within the meaning of Section 103(c) of the Code and any regulations pron,;rlgated or proposed thereunder, and the Developer and the Issuer funhe► covenant to comply with the requirements of said Section 103(c) and said regulations. .15. ARTICLE_ IV REPAYMENT OF DEVELOPER LOAN Section 4.1. Developer Loan, The. Developer hereby acknowledges its indebtedness to the Issuer and agrees to repay the Developei Loan in the amounts, at the time and at the interest rate as provided in Section 4.2 hereof. The Issuer acknowledges and agrees that so long as the Association honors draws ' on the Letter of Credit, the Developer's payments pursuant to the Reimbursement Agreement will satisfy the Developer's obligation to repay the Developer Loan. To evidence the Developer Loan, the Developer agrees to execute and deliver the Developer Note to the Issuer. Section 4.2. Developer Loan Payments. (a) Principal_ Amount anjo Term. The Developer Loan shall be for the total principal amount of S7,700,000, which unpaid principal and any unpaid accrued interest thereon shall be due and payable in full at the end of the Construction Term unless the Develcper has satisfied all conditions for conversion to the Permanent Term pursuant to Section 2.02(b) of the Disbursement Agreement on or before the end of the Construction Term, in which event principal and any unpaid accrued interest shall be due and payable in full at the end of the Permanent Term: provided that if the Letter of Credit, with the prior written consent of the Association, is replaced by a substitute Letter of Credit pursuant to Section 5.8 hereof expiring after the Permanent Term, then unpaid principal and any unpaid accrued interest thereon ! nall be due and payable in full on or before the expiration of the term of said Letter of Credit, but in no e•:ent later than September 1. 2616. (b) Interest Rate. Interest shall accrue on principal from and after disbursement at the Bond Rate. MI rate changes on the Bonds shall result in an equal rate change in the interest rate due on the Developer Loan. (c) P@ympn The Developer sha'I make quarterly installments of interest on the disbursed principal amount of the Developer Loan on or before the first day of each Mach, June, September and December during the term of the Developer Loan. The Developer shall make payment of the principal of ail Outstanding Bonds on September 1. 2016. Such payments together with investment earnings on the amount deposited in the Developer Loan Fund ## to be paid to the Trustee shall be suffic,ent to pay principal of and interest on the Bonds. The Developer shall cause the Association -to provide the Trustee with the Letter of Credit, the draw upon which will be in an amount sufficient together with thu amount of deposit in the Reserve Account to pay interest loan principal of the Bonds when due. All such payments by the Association to the extent of amounts payable by the Developer under the Developer Loan shall be deemed payments by the Developer of the Developer Loan. Section 4.3. Payment of Other Amounts. (a) The Developer agrees, or agrees to cause the Association: (1) to pay to the Trustee from time to time reasonable compensation for all services rendered by it under the Indenture (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust): (2) except as otherwise expressly provided in the Indenture, to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of the Indenture (including the reasonable compensation and the expenses and disbursements of its agents and .counsel). except any such expense, disbursement or advance as may be attributable to its gross negligence or bad faith: and (3) to indemnify the Trustee for, and hold it harmless against, any loss, liability or expense incurred without gross negligence or willful misconduct on its part, arising out of or in connection with the acceptance or administration of the trust under the Indenture. including the costs and expenses (including attorneys' fees) of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties thereunder. Sis1 (b) The Developer also agrees to pay, within thirty (30) days after receipt of request for payment thereof, all reasonable expenses of the Issuer related to the Project and the financing thereof which are not otherwise required to be paid by the Developer under the terms of this Agreement and are not paid from the Cost of Issuance Fund under the Indenture; (c) The Developer also agrees to pay, or to cause the Association to pay from amounts received from the Developer, the Developer Loan or otherwise, (i) the fees of the Trustee, (ii) on the Delivery Date, an initial program administration fee payable to the Issuer of one-half of one percent (1 2°�) of the outstanding principal amount of the Bonds, (iii) until the Conversion Data, the fees of the Remarketing Agent and the Tender Agent and (iv) the fees of the Collateral Agent. (d) The Developer also agrees to pay the periodic fees of the Rating Agent with respect to the maintenance of any rating of the Bonds. Section 4.4. Unconditional Obligation.. The obligations of the Developer and the Association, respectively., to make the payments required by Sections 4.2 and 4.3 hereof, as applicable, and to perform and observe the other agreements on their respective parts contained herein shall be absolute and unconditional irrespective of any defense or any rights of set-off, recoupment or counterclaim they might otherwise have against the Issuer and'or the Trustee and or the Association and during the term of this Agreement, the Developer shall pay absolutely net the payments required hereunder, free of any deductions and without abatement. diminution or set -oft. Until such time as the principal of, premium, if any, and:interest on the Bonds shall have been fully paid, or provision for the payment thereof shall have been made as required by the Indenture. the Developer (i) will not suspend or discontinue any payments provided for under this Agreement or the Reimburnernerrt Agreement: (6) will perform and a,serve all of its other covenants contained in this Agreement and in the Reimbursement Agreement. and (iii) except as provided in Article VIII hereof, will not terminate this Agreement for any cause, including, without limitation, failure to complete the Project, the occurrence of any act or circumstances that may constitute failure of consideration, destruction of or damage to the Protect, commercial frustration of purpose, any change in the tax or other laws of the United States of America or of the State of California or any political subdivision or either of these, or any failure of the Issuer or the Trustee to perform and observe any covenant, whether express or implied, or any duty, liability or obligation arising out of or connected with this Agreement or the Indenture, except to the extent permitted by this Agreement. Section 4.5. Assignment of Issuer's Rights. As security for the payment of the Bonds. the Issuer will assign to the Trustee the Developer Note and certain of the Issuer's rights under this Agreement. including the right to receive payments hereunder (except the right of the Issuer to receive certain payments, it any, with respect to its fees, expenses and indemnification). and the Issuer hereby directs the Developer to make the payments required hereunder (except such payments for fees, expenses and indemnification of the Issuer) directly to the Trustee. The Developer hereby assents to such assignment and agrees to make payments directly to the Trustee without defense or set-off by reason of any dispute between the Developer and tho Issuer or the Trustee. By virtue of such assignment, the Trustee shall be a third -party beneficiary of this Agreement and shall have the right to enforce the obligations of the Developer hereunder: provided, however, that so long as all required payments are made under t'ne Letter of Credit. the Developer need not make the above payments but shall in lieu thereof make payments directly to the Association required by the Reimbursement Agreement and Vie Letter of Credit. Section 4.6. Amounts Remaining in Debt Service Fund. It is agreed by the parties hereto that after (i) payment in full of the Bonds, or provision for. such payment having been made as provided in the Indenture, (6) payment of all fees, charges and expenses of the Trustee and any paying agents in accordance with the terms of the Indenture, and (iii) payment of all other amounts required to be paid under this Agreement and the Indenture, any amounts remaining in the Debt Service Fund held by the Trustee under the Indenture shall be paid by the Trustee to the Association. -17- Section 4.7. Association. to Act as Servicer of Developer Loan. The Association agrees that so long as any of the Bonds remain Outstanding, and whether or not the Letter of Credit remains in effect, it will act as Servicer of the Developer Loan and will collect all payments thereon and enforce the provisions of this Agreement on behalf of the Issuer. Developer agrees to pay to the ASSOCi3tlon a morithly payment as set forth in the Reirnbursernent Agreement. The Association, as Servicer, shall have full power and authority to do any and all things in connection with such servicing which it may deem necessary or desirable, and will exercise at least the same degree of care that the Association exercises with respect to servicing of multifamily construction and permanent loans for its own account. ARrICLE V SPECIAL COVENANTS AND A&EEMENTS Section 5. 1. Right a/ Access to the ' Project and Records. The Developer agrees that during the term of this Agreement the Issuer, the Trustee and the duly authorized agents of any of them and the Association shall have the right at all reasonable times and upon reasonable notice during normal business hours to enter Won the site of the Project to examine and inspect the Project and to have access to the books and records of the Developer with respect to the Project. Section 5.2. Maintenance of Existence; Assignments. (a) The Developer agrees that during the term of this Agreement it will remain qualified tc do business in the State of California and will maintain its existence as a general partnership. will not dissolve or otherwise dispose, of all or substantially all of its assets and will not combine or consolidate with or merge into another entity or permit one or mere other entities to consolidate with or merge into it: provided, however, that the Developer may so combine, consolidate with or merge into another entity existing under the laws of one of the states of the United States, or permit one c;r more entities to consolidate with or merge into it, or sell or otherwise transfer to another entity all or substantially all of its assets as an entirety and thereafter dissolve, provided that the surviving, resultii g or transferee entity, as the case may be. (i) assumes and agrees in writing to pay and perform all of the obligations of the Developer hereunder, and (ii) qualifies to do business in the State of California: and provided further that the Developer shall have obtained the prior written approval of the Association. (b) The rights and obligations of the Developer under this Agreement may be assigned by the Developer to any person in whole or in part. subject. however, to each of the following conditions: (1) No assignment other than pursuant to this Section shall relieve the Developer from primary liability for any of its obligations hereunder, and in the event of any assignment net pursuant to this Section We Developer shall continue to remain primarily liable for the payments specified in Section 4.1 hereot r,, id for performance and observance of the other agreements on its part herein provided to be performed and observed by it. (2) Any assignment from the Developer shalt retain for the Developer such rights and interests as will permit it to perform its obligations under this Agreement. and any assignee from the Developer shall assume the obligations of the Developer hereunder to the extent of the interest assigned. (3) The Developer shall, prior to the effective date thereof, furnish or cause to be furnished to the Issuer and the Trustee a true and complete copy of each such assignment together with an instrument of assumption. (4) The Developer shall have obtained the prior written consent to such assignment from the Association. Section 5.3. Statement 'ol Compliance; Notice of Certain Events. (a) The Developer will deliver to the Issuer, the Trustee and the Association, within 120 days after the end of each calendar year, a written statement signed by a Developer Representative stating, as to the signers thereof, that (1) a review of the activities of the Developer during such year and of performance under this Agreement has been made under their supervision, and (2) to the best of their knowledge. based on such review, the Developer has fulfilled all its obligations throughout such year, or, if there has been a default in the fulfillment of any such obligation, specifying each such default known to them and the nature and status thereof. •19- (b) The Developer hereby covenants to notify the Issuer, the Trustee and the Association in writing of the occurrence of any Event of Default hereunder or any event which, with the passage of timo or service of notice, or both, would constitute an Event of Default hereunder, specifying the nature and period of existence of such event and the actions being taken or proposed to be taken with respect thereto. Such notice shall be given promptly, and in no event less than ten (10) Business Days after the Developer receives notice or gains knowledge of the occurrence of any such event.. The Developer and the Association further agree that they will give prompt written notice to the Trustee if insurance proceeds or condemnation awards are received with respect to the Project and are not used to repair or rr olace the Project, which notice shall state the amount of Such proceeds or award. Section 5.4. `Insurance; Maintenance and Repair. The Developer agrees to insure the Project o., cause the Project to be insured during the term of this Agreement for such amounts and for such occurrences as are required under the Developer Mortgage. The Developer further agrees to maintain the Project, or cause the Project to be maintained, during the term of this Agreement (1) in a reasonably safe condition and (ri) in good repair and in good operating condition, ordinary year and tear excepted. making from time to time all necessary repairs thereto and renewals and replacements thereof. Section 5.5. Additional 1:::,truments. The Developer hereby covenants to execute and deliver such additional instruments and to perform such additional acts as may be reasonably necessary, in the opinion of the Issuer or the Trustee, to carry out the intent hereof or to perfect or give further assurances of any of the rights granted or provided for herein or contemplated hereby. Section 5.6. Tax Exempt Status o/ Bonds. It is the intention cf the parties hereto that interest on the Bonds shall be and remain exempt from federal rncorne taxation, and to that end the covenants and agreements of the Issuer, the Association and the Developer in this Agreement are for the benefit of the Trustee and each and every owner of the Bonds. The Issuer covenants and agrees that it has not taken and will not take, and the Developer and the Trustee covenant and agree that they have not taken or perm-tted to be taker, and will not take c• permit to be taken, any action which will cause the interest on the Bc-ids to become subject to federal income taxation pursuant to the provisions of Section 103(b) of the Code: provided that neither the Developer, the Trustee nor the Issuer shall have vro!ated those covenants if the interest on any of the Bonds becomes taxable to a person solely because such person is a "substantial user" of the Project or a "related person" within the meaning of Section 103(b)(13) of the Code. and provided further that none of the covenants and agreements herein contained shah require either the Developer or the Issuer to enter an appearance or intervene in any administrative. legislative or judicial proceeding in connection with any changes in applicable laws, rules or regulations or in connection with any decisions of any court or administrative agency or other governmental body affecting the taxation, of interest on the Bonds; and provided further that the Trustee's and the Issuer's responsibility under this paragraph shall be limited to actions within its control. The Developer hereby warrants and covenants that each unit of the Project constitutes and will constitute multifamily residential rental property, as defined in Section 103(b)(4) of the Code and the regulations promulgated thereunder, which will be rented or available for rental on a continual basis to members of the general public for the period required by said Section. The Project consists of one or more proximate buildings or structures containing one or more similarly constructed accommodations containing separate and complete facilities for Irving, sleeping, eating, cooking and sanitation which are to be used on other than a transient basis and facilities which are functionally related and subordinate to such accommodations. No actions will be taken by the Developer which will in any way affect the use of the Project therefor and not less than 2000 of the units of the Project shall be rented or available for rental solely to individuals who are of low or moderate income, within the meaning of Section 103(b)(4) of the Code, for the pe •iod required by said Section, and not rless than 10% of the units of •2G- the Project shall be rented or available for rental solely to individuals who are of very low income, within the meaning of and in accordance, with the Act. The Develnper further agrees that it shall not discriminate on the basis of race, creed. color, sex. age or national origin in the lease, use or occupancy of the Project or in connection with the employment or application for employment of persons foi the construction, operation and management of the Project. The Developer further warrants and covenants that it has not executed and will not execute any other agreement, or any amendment or supplement to any other agreement, with provisions contradictory to, or in opposition to, the provisions hereof, of the Indenture and of the Regulatory Agreement, and that in any event, the requirements of this Agreement and the Regulatory Agreement are paramount and controlling as to the rights and obligations herein set forth and supersede any other requirements n conflict herewith and therewith. Section 5.7. Regulatory Agreement. In order to maintain the exemption from federal income taxation of interest on the Bonds and to assure compliance with the Act and certain addittona: requirements of the Issuer, the Developer hereby agrees that it shall, concurrently with or before the execution and delivery of the Bonds, execute and deliver and cause to be recorded the Regulatory Agreement. The Developer hereby further agrees as follows: (a) The Developer shall submit to the Issuer, the Trustee and the Association, (r) at thb time of initial occupancy or any Low or Moderate Income Tenant or Very Low Income Tenant (as defined in the Regulatory Agreement), (ii) upon the vacancy or reoccupancy of any unit held available for Low or Moderate Income Tenants or Very Low Income Tenants, and (ill) as often as necessary to comply with the requirements of Section 103(b)(4) of the Code and the Act. a Certificate of Tenant Eligibility and Income Verification, in the form set forth in Exhibit B hereto. each of which shall be subject to independent investigation and verification by the Issuer. the Trustee and the Association. After the Project is available for occupancy and until the Project is 9011c rented, the Developer shall, on or before the fifth day of each month, file with the Association, the Trustee and the Issuer a Certificate of Continuing Program Compliance, in the form set forth in Exhibit A hereto. setting forth for the prior month the information reoured to be provided in such certification. After the Project is W6 rented and during the Qualified Project Period. such certification shall be filed on or before the fifth day of each March, June. September and December and shall set forth the required information for the preceding calendar quarter. The books and records of the Developer pertaining to the incomes of Low or Moderate Income Ten;;nts residing ill the Project shall be open to inspection by any authorized representative of the Issuer. the Trustee and the Association (b) The Developer shall comply with overy other term of the Regulatory Agreement. and the Developer hereby acknowledges that in the event of a default under the Regulatory Agreement which is not cured within a reasonable period of time (at least 60 days after such default is first discovered or would have been discovered by the exercise of reasonable diligence) the Developer Loan may be accelerated and the Developer Mortgage may be foreclosed upon. The Developer agrees to cause any amendments to the Regulatory Agreement to be recorded in the appropriate official public records. The Issuer agrees to review certificates and other information that may re provided from time to time by the Developer in connection with the Developer's obligations under the Regulatory Agreement and in the event of a discovery of noncompliance by the Developer with the Regulatory Agreement to take such action as it may deem appropriate. The Issuer shall incur no liability in the event of any breach of its terms by Developer and the Developer agrees to indemnify the Issuer from any claim or liability for such breach pursuant to Section 9.3 hereof. (c) The Trustee shall not be responsible for verifying or monitoring compliance by the De<eloper with its obligations under the Regulatory Agreement. The Issuer shall be responsible for performing such duties. .2t. Section 5.8. Letter of Credit; Alternate Credit Facility. At all times before the Conversion Date the Developer shall cause to be provided and continuously available to the Trustee, as beneficiary. an irrevocable Letter of Credit or Alternate Credit Facility meeting the requirements of subsection (a) of this Section; and at all times after the Conversion Date the Developer shall cause to be provided and continuously available to the Trustee an irrevocable Letter of Credit or Alternate Credit Facility meeting the requirements of subsection (b) of this Section. The Developer shall have the right at any time, but only with the prior written consent of the Association, to deliver to the Trustee a substitute Letter of Credit or Alternate Credit Facility meeting the requirements of subsections (a) or (b) of this Section 5.8. as applicable upon thirty days notice to the Issuer, the Trustee and the Rating Agent (as such term is defined in the Indenture) and the Trustee shall accept such substitute Letter of Credit or Alternate Credit Facility in place of the Letter of Credit then held by the Trustee and shall return the Letter of Credit or Alternate Credit Facility then held by the Trustee to the Developer. but only if the Trustee shall have received notice from the issuer of the then outstanding Letter of Credit or Alternate Credit Facility that no amounts are due and owing frorn the Developer to such issuer with respect to such Letter of Credit or Alternate Cr?drt Facility. Upon delivers of such substitute Letter of Credit or Alternate Credit Facility. all liability of the Association hereunder and under the Reimbursement Agreement shall terminate. (a) The following requirements shall apply to any Letter of Credit or Alternate Credit Facility provided before the Conversion Date: (1) The Letter of Credit initially provided shall be effective from no later than the date of initial authentication and delivery of the Bonds, and any Letter of Credit or Alternate Credit Facility provided in substitution for any then outstanding Letter of Credit or Alternate Credit Facility shall be for a term commencing not later than the expiration date of the term o` the prior Letter of Credit or Alternate Credit Facility. (2) The Letter of Credit initially provided (and any Letter of Credit cr Alternate Credit Facility in substitution thereof.) shall be for a term expiring not earlier than December 1, 1995 provided that any Letter of Credit or Alternate Credit Facility may provide that it shall terminate prior to its stated expiration date at the Conversion Date or upon receipt by the issuer thereof of notice from the Trustee that no Bonds remain outstanding or upon the date of rssuarce and delivery of a substitute Letter of Credit or Alternate Credit Facility. (3) Each Letter of Credit or Alternate Credit Facility shall be in an amount at any date not less than the sum of the aggregate principal amount of the Bonos. plus an amount equal to interest on the Bonds for a period of 95 days at an assumed maximum rate of eleven percent (t t%) per annum, calculated on the basis of a 360•day year, actual days lapsed. (4) Except for its term, each Letter of Credit or Alternate Credit Faciiity shall have substantially the same provisions as the Letter of Credit delivered at the time of original delivery of the Bonds, including without limitation provisions permitting drawings thereunder to pay amounts due on the Bonds on the scheduled dates for payment of such amounts or upon redemption or acceleration and to pay the purchase price of Songs tendered for purchase as provided in Section 1103 of the Indenture, and providing for hutornatic and irrevocable reinstatement of the amount therr,-of immediately upon any drawing thereunder to pay interest on the Bonds, and shall be in the form acceptable to the Trusted. (5) Each Letter of Credit or Alternate Credit Facility shall be issued by a national banking association organized under the National Banking Act, or any successor law, or a banking corporation organized under the laws of any state of the United States, or a savings and loan association or corporation organized under the lav:s of the Umed States or any state thereof, or a branch or agency of a foreign banking corporation or association licensed in and regulated by one of the states of the United States. .22. (6) Each Letter of Cinclit or Alternatc Credit Facility delivered to the Trustee must be accompanied by (i) an opinion of Bond Counsel addressed to the Trustee to the effect that delivery of the Letter of Credit or Alternate Credit Facility complies with the provisions of this Agreement and the Indenture ar.d will not cause interest on the Bonds to become subject to federal income taxation; and (ii) one or more opinions of counsel addressed to the Trustee to the effect. Singly or together that (A) The Letter of Credit or Alternate Credit Facility is a legal, valid and binding obligation of the issuer thereof. enforceable against the issuer thereof in accordance with its terms, except as limited by applicable reorganization, insolvency, liquidation, readjustment of debt, moratorium or other similar laws affecting the enforcement of the rights of creditors gone: ally as such laws may be applied in the event of a reorganization, insolvency, liquidation, readjustment of debt or other similar proceeding of or moratorium applicable to the issuer thereof and by general principles or equity (regardless of whether such enforceability is considered in a proceeding in equity or at law); and (B) Paymenrs made by the issuer thereoi under the Letter of Credit or Alternate Credit Facility will not be voidable under Section 547 of the Federal Bankruptcy Code in the context of a case or proceeding by or against the Developer or by the Issuer under the Federal Bankruptcy Code. (7) Each Letter of Credit or Alternate Credit Facility delivered to the Trustee in substitution for the then outstanding Letter of Credit or Alternate Credit Facility shall be accompanied by a written statement, signed by an officer of the Rating Agent. to the effect that such Rating Agent approves such substitute Letter of Credit or Alternate Credit Facility and that its rating on the Bonds will rot be reduced or withdrawn as a result of the delivery of such Letter of Credit or Alternate Credit Facility. (b) The following requirements shall apply to any Letter of Credit or Alternate Credit Facility provided in connection with or after the Conversion Date, as applicable: (1) The Letter of Credit or Alternate Credit Faculty provided in connection with the conversion of the interest on the Bonds to a fixed rate pursuant to the Indenture shall be delivered not 19ss than thirty days before the Conversion Date and shall be effective from no later than the Conversion Date, and any Letter of Credit or Alternate Credit Facility provided in substitution for any then outstanding Letter of Credit or Alternate Credit Facility shall be for a term commencing not later than the expiration date of the prior Letter of Credit or Alternate Crf*d►t Facility. (2) Each Letter of Credit or Alternate Credit Facility shall be for a term expiring not earlier than the earlier of ten (10) years from August 1, 1986; pruvided that any Letter of Credit nr Alternate Credit Facility may provide that it shall tormnate prior to its stated expiration date upon receipt by the issuer thereof of notice from the Trustee that no Bonds rernarn outstanding or upon the date of issuance of a substitute Letter of Credit or Alternate Credit Facility. (3) Each Letter of Credit or Alternate Credit Facility shall be in an arnount at any date, not less than the sum of the aggregate principal amount of the Bonds then outstanding, plus an amount equal to interest on the Bonds for a period of 185 days at the CpWr-k- l Fixed Rate, calculated on the basis of a 360-day year comprised of twelve 30•day months, plus an amount equal to any redemption premium then applicable to the Bonds. .(4) Each Letter of Credit or Alternate Credit Fr ;,tii: r sha'; contain provisions permitting drawings thereunder to pay amounts dun on the Bonds on the scheduled dates for payment of such amounts or upon redemption cr acceleration. and providing for automatic and irrevocable -23- • s reinstatement of the amount thereof immediately upon any drawing thereunder to pay interest on the Bonc+ti, and shall be in a form acceptable to the Trustee. (5) Each Letter of Credit or Alternate Credit Facility shall be issued by an entity described in subsection (a)(5) of this Section. (6; Each Letter of Credit or Alternate Credit Facility delivered to the Trustee must be accompai „ad by an opinion of Bond Counsel and one or more Opinions of Counsel, each addressed to the Trustee. to the effect set forth In subsection (a)(6) of this Section. (7) Each Letter of Credit or Alternate Credit Facility shall be accompanied by a written statement, signed by an officer of the Rating Agent, to the effect that such Rating Agent approves such Letter of Credit or Alternate Credit Facility and that its rating on the Bonds will not be reduced or withdrawn as a result cf the delivery of such Letter of Credit or Alternate Credit Facility. and each subsequent Letter of Credit or Alternate Credit Facility delivered to the Trustee shall be accompanied by a written statement of such Rating Agent to the same effect. 18) Each Letter of Cret';t or Alternate Credit Facility shall, unless issued by the same Issuer as the then outstanding Letter of Credit or Alternate Credit Facility. be accompanied by a written instrument of the Issuer of such outstanding Letter of Credit consenting to the conversion of the interest rate (;n the Bonds to a fired rate pursuant to the Indenture. (c) In connection with a Letter of Credit or Alternate Credit Facility provided in accordance with either subsection (a) or (b) above. the Trustee shall first receive evidence satisfactory to It that such subr'o,ition will not result in a reduction of the rating on the Bonds. (d) Pursuant to Section 10.24 of the Disbursement Agreement. the Association may substitute an alternative credit enhancement In place of the Letter of Credit or Alternate Credit Facility In the event the Trustee shall hold at least 2500 of the aggregate outstanding principal amount of the Bonds for the benefit of the Association for a period of ninety 190) dais or more. provided that such substitute credit enhancement or Alternate Credit Facility Is sufficient to maintain a long-term debt rating for the Bonds, of "AV or better. and provided further that the approval of Bond Counsel is first cbtar;,ed with respect to such substitution. Section 5.9. Collateral ?ledge Agreement. So long as the Letter of Credit or any substitute Letter of Credit Issued by the Association Is outstanding. the Developer and the Association agree to cause the Collateral to be provided and continuously available to the Trustee. prcvided. however, that the Association shall have the right to deposit with the Collateral Agent substitute Collateral In substitution for the Collateral or any portion thereof, under the terms and conditions of Section 7 of the Collateral Pledge Agreement. Section 5.10 Indenture. The CevelWer hereby agrees to all of the terms and provisions of the Indenture and accepts each of Its obligations expressed or Implied thereunder. The Developer hereby approves the Initial appointment undo- the Indenture of the Remarketing Agent for the Bonds. ARTICLE VI DAMAGE, DESTRUCTION AND CONDEMNATION; USE OF PROCEEDS Section 6. t. Obligation to Continue Payments. If prior to full payment of the Bonds (or provision for payment thereof in accordance with the provisions of the Indenture) the Project or any portion thereof is destroyed (in whole or in part) or is damaged by fire or other casualty. or title to, or the temporary use of, the Project or any portion thereof shall be taken under the exercise of the power of eminent domain by any governmental body or by any person, firm or corporation acting under governmental authority, the Developer shall nevertheless be obligated to continue to pay the amounts specified in Article IV hereof, to the extent not prepaid in accordance with Art, -.le VIII hereof. Section 6.2. Application of Net Proceeds. The net proceeds, if any, of any insurance or condemnation awards resulting frorn the damage, destruction or condemnation of the Project or any portion thereof shall be applied in the manner provided in the Developer Mortgage. Section 6.3. Insufficiency of Net Proceeds. If the Project or a portion thereof is to be repaired. restored, relocated, modified or improved pursuant to Section 6.2 hereof, and if the net proceeds referred to in Section 6.2 are insufficient to pay in full the cost of such repair, restoration, relocation, modification or improvement. the Developer will nonetheless complete the work or cause the work to be completed and will pay or cause to be paid any cost in excess of the amount of such net proceeds. 25- r_� ARTICLE VII EVENrS OF DEFAULT AND REMEDIES s Section 7. f. Events of Default. Any one of the following which occurs and continues shall constitute an Event of Default: (a) The occurrence of an Acceleration Default; (b) Failure by the Devaloper to (i) pay any amounts required to be paid under Article IV hereof at the times specified herein or (u) observe and perform any other covenant, condition or agreement on its part required to be observed or performed by this Agreement (including performance of its obligations under the Regulatory Agreement), which not an Acceleration Default and which continues for a period of thirty (30) days after written notice. specifying such failure and requesting that it be remedied, is given to the Developer by the Issuer, the Trustee or the Association, unless the Issuer and the Trustee shall, with the consent of the Association, agree in writing to an extension of such tirne prior to its expiration: provided, however, that if the failure stated in the notice pursuant to subclause (!I) of this Section 7.1(b) cannot be corrected within such period, the Issuer and the Trustee will not unreasonably withhold their consent to an extension of such time if corrective action is instituted within such period and diligently pursued until the default is corrected. (c) The making of any representation or warranty by the Developer in this Agreement or m any document executed in connection with this Ag►s�ement which is false or misleading in any material respect. (d) The occurrence of any event which is an Event of Default under the Reimbursement Agreement. and receipt by the Trustee from the Association of notice of such default and a request that it be treated as an Event of Default hereunder; or (e) The occurrence of any event vwh+ch is an Event of Default under the Collateral Pledge Agreement. The provisions of subsection (b)(rrt of this Section are subject to the limitation that the Developer shall not te deemed in default if and so lung as the Developer is unable to carry out its agieements hereunder by reason of stakes, lockouts or other rndustrai disturbances, acts of public enemies: orders of any kind of the government of the United States cr of the State of California or any of their departments. agencies, or officials. or any civil or military authority: rnsurrectians. riots, epidemics, landslides; lightning: earthquake: fire; hurricanes, storms: floods, washouts: droughts; arrests; restraint of government and people: civil disturbances: explosions: breakage or accident to machinery, transmission pipes or canals; partial or entire failure of utilities. or any other cause or event not reasonably within the control of the Developer, financial Inability excepted; it bung agreed that the settlement of stakes, lockouts and other Industrial drsturba,icos shail be entirety within the discretion of the Developer, and the Developer shall not be required to make settlement of stakes, lockouts and other industrial disturbances by acceding to the de-nands of the opposing party or parties when such course Is, ii the judgment of the Developer, unfavorable to the Developer. This limitation shall not apply to any default except under subsection (b)(rI) of this Section. Section 7.2.. Remedies on Default. Whenever any Event of Default shall have occurred and shall continue, the Issuer and the Trustee may take any one or more of tho following remedial steps: (a) The Trustee shall in the case of an Acceleration Default, and. at the request or with the consent of the Association, upon the Occurrence GI any otter Event of Default hereunder, by •26. written notice to the Developer shall declare to be due and payable immediately the unpaid balance of the Developer loan. (b) The Issuer, the Trustee and the Association may have access to and may inspect, examine and make copies of the books and records and any arid all accounts, data and federal income tax and other tax returns of the Developer. (c) The Issuer o; the Trustee may take whatever action at law or in equity as may be necessary or desirable to collect the payments and other amounts then due and thereafter to become due or to enforce performance and observance of any obligation, agreement or covenant of the Developer under this Agreement. (d) The Trustee may institute any action or proceeding at law or in equity for the collection of any sums due and unpaid, and may prosecute any such action or proceeding to judgment or final decree, and may enforce any such judgment or final decree against the Developer and collect in the manner provided by law the moneys adjudged or decreed to be payable. In case the Trustee or the Issuer shall have proceeded to enforce its rights under this Agreement and such proceedings shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Trustee or the Issuer, then. and in every such case, the Developer, the Trustee and the Issuer shall be restored respectively to their several positions and rights hefeunder. and all rights. remedies and powers of the Developer. the Trustee and the Issuer shall continue as though no such action had been taken. In case proceedings shalt be pending for tho bankruptcy or for the reorganization of the Developer under the federal bankruptcy laws or any other applicable law, or in case a receiver or trustee shall (rave been appointed for the property of the Developer or in the case of any other similar judicial proceedings relative to the Developer, or the creditors or property of the Developer, then the Trustee shall be entitled and empowered, by intervention in such proceedings or otherwise. to file and prove a claim or claims for the whole amount owing and unpaid pursuant to this Agreement and, in case of any judicial proceedings, to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee allowed in such judicial proceedings relative to the Developer, Its creditors or its property. and to collect and receive any moneys or, other property payable or deliverable on any such c.iaims, and to distribute such amounts as provided in the Indenture after the deduction of its charges and expenses. Any receiver. assignee or trustee in bankruptcy or reorganization is hereby authorized to make such payments to the Trustee, and to pay to the Trustee any amount due it for compensation anti expenses, including expense; and fees of counsel incurred by it up to the date of such distribution Section 7.3. Agreement to Pay attorneys' Fees and Expenses. In the event the Developer should default under any of the provisions of this Agreement and the Issuer or the Trustee should employ attorneys or incur expenses for the coilection of the payments due under this Agreement or the enforcement of performance or observance of any obligation or agreement on the part of the Developer herein contained, the Developer agrees to pay to the Issuer or the Trustee the reasonable fees of such attorneys and such other expenses so incurred by the Issuer or the. Trustee. Section 7.4. No Remedy Exclusive. No remedy herein conferred upon or reserved to the Issuer or the Trustee is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative ano shall be in addition to every other remedy given under this Agreement or now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waver thereof. but any such right ano power may be exercised from time to time and as often as may be deemed expedient. In order to entitle the Issuer or the Trustee to exercise any remedy reserved to it in this Article, it shall not be necessary to give any notice, other than such notice as may be herein expressly required. Such rights and remedies as are given the Issuer -27- hereunder shall also extend to the Trustee, and the Trustee and the owners of. the Bonds shall be doomed third party beneficiaries of all covenants and agreements herein contained. W-:cticn 7.5. No Additional Waiver Implied by One Waiver. In the event any agreement or covenant contained in this Agreement should be brearhed by the Developer and thereafter waived by the Issuer or the Trustee, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other breach hereunder. Section 7.6. Limitation. Notwithstanding anything to the contrary in this Agreement, the Trustee shall take no action without the written consent of the Association to accelerate the Bonds due to the occurrence and continuation of an Event of Default under Section". t (b) through (e) hereof unless and until the Association shall fail to honc;r any draw on the Letter of Credit; provided that the Trustee shall at all times be free tc., and shall, seek recovery under the Letter of Credit of any amount due and payable thereunder, when and as the same shall become due and payable. -28• • ARTICLE VIII PREPAYMENT Section 8.1. Prepayment of Developer Loan, The Developer Loan shall not be prepaid except as provided in this Section. too prepayment of the Dw eloper Loan shall relieve the Developer of its obligations under the Regulatory Agreement during the Oualrfied Project Period. The Developer shall be deemed to have prepaid the Developer Loan, in whole or in part, and the principal amount thereof shall be reduced accordingly, in an amount Equal to tho principal amount of Bonds redeemed and on the date of such sedemptice, the Association shall promptly give notice to the Issuer and the Trustee of the occurrence of any of the events set forth in subsections (a) or (b) below and of the amounts prepaid by the Developer upon the occurre:ice of any of the events set forth in subsections (a) or (b) below. (a) ttan a r Pry a yin n . The Developer Loan is subject to manda!ory prepayment in whole or in part, at a redemption price equal to the outstanding principal amount thereof to be prepaid, together with accrued interest, to the date fixed for redemption of the Bonds to be redeemed with such prepayment: 0# (i) In part on July 1. 1989. as may be approved by the Association pursuant to the Permbursement Agreement, or the earliest practicable Interest Payment Date after the Completion Date for which notice of redemption of the Bonds may be given pursuant to Section 604 of the Indenture in a principal amount as nearly equal as poss,nte to. but not exceeding, the amount remaining in the Developer Loan Fund and the Disbursement Account on the Completion Date: (;i! In whole or in part on any Interest Payment Date. in the event of the electioi of the Association to apply any net proceeds of insurance or condemnation awards not used to repair or replace the Project to the redemption of Bonds. in a principal arnount equal to such net proceeds. (ni) In whole on any date, upon the occurrence of an Acceleration Default or at the request of or with the consent of the Association following any other Event of Default. in a principal amuunt equal to the amount of the Developer Loan so accelerated.## (iv) In whole on any date in a principal arnount equal to the outstanding principal arnount of the Developer Lcan upon the expiration of any Letter of Credit or Alternate Credit Facilrhr unless the Trustee roceives a renewal or extension or replacernellt for such Letter of Credit or Alternate Credit Facility meeting the requirements of Section 5.8 of the Loan Agreement not less than thirty days before the expiration of such Letter of Credit or Alternate Credit Facility; and (v) In wtxAc on any date after the Conversion Date if a Dotertninatron of Taxability shall occur. (b) Q ► ,l Prepayment. With the prior consent of the Association. the Developer may, at its oation, prepay the Developer Loan as follows: (i) Prior to the Conversion Dater, but on or after March 1, 1987. the Developer may prepay the Developer Loan, in whole or in part, on any Interest Payment Date, following written notice of the Developer's intention to do so as set forth herein below, in the amount of S100.000, or any integral multiple of S25.000 in excess of S100,000, such that following such prepayment -29- s �11 and redemption of Bonds no Outstanding Mond (as defined in the Indenture) will be of a denomination of less than 5100.000, at the principal amount thereof; and (ii) After the Conversion Date, the Developer may, at its option, prepay the Developer Loan. in whole or in part, on any Interest Payment Date on or after seven years after the Conversion Date in any integral multiple of S5,000, at the prepayment prices set forth below, expressed as percentages of the principal arnoun; prepaid: PregsaYmn1 D.� The two Interest Paymew. mates first occurring: 7 years after the Conversion Date 8 years after the Conversion Date 9 years after the Conversion Date 10 years after the Conversion Date ,Prr pa-Y-1n n Pri u 103% 102 101 100 Any optional prepayment of the principal of the Developer Loan must be made from the proceeds of a draw on the Letter of Credit with the applicable premium being paid -with Seasoned Funds. Any payment of the prepayment prent►urn must be made by the Developer to the Trustee at least 95 days prior to the date en which the Trustee mails notice of redemption of the Bonds. and on the date of such payment, the Developer shall give written notice to the Issuer, the .Association and the Trustee of the principal amount to be optionally prepaid on the applicable Interest Payment Date. No optional prepayment shalt occur if an Act of Bankruptcy occurs within the 95•day period prior to the date the Trustee mails notice to the Bondowners of the redemp*oun date. In such event. the Trustee shall hold such funds of the Developer until directed by a court of competent jurisdiction as to their disposition. .Section 8 2. Redemption of Bonds Upon Prepayment. Upon any prepayment of the Developer Loan as provided in Section 8.1. the Trustee is rer:iired by the Indenture to call all or part of the Bonds for redemption and to draw upon the Letter of Credit in the respective amounts set forth in the applicable paragraph of Section 8.1, together in each case with an ainount equal to accrued interest en the Bonds to be redeemed. Section 8.3. Amount of Prepayment. In the event of any prepayment pursuant to Section 8.). the amount of the Developer Loan deemed to be prepaid shall be equal to the principal amount of Sonds redeemed as described in Section 8.2. In the case of prepayment of the Developer loan in full. the Developer shall pay to the Trustee an arnount sufficient, together with other funds held by the Trustee and available for such purpose, to pay all reasonable and necessary fees and expenses of the Issuer. the Trustee and any paying agent accrued and to accrue through final payment of the Bonds and all other liabilities of the Developer accrued and to accrue under this Agreement, and shall pay to the Issuer any amount required by Article IV hereof. In the case of partial prepayment of the Developer Loan, the Developer shall pay or cause to be paid to the Trustee an amount sufficient. together with other funds held by the Trustee and available for such purpose, to pay expenses of redemption of the Bonds to be redeemed upon such prepayment. •30- ARTICLE IX LIMITATION ON LIABILITY OF ISSUER; EXPENSES; INDEMNIFICATION Section 9.1. Limitation on Liability of Issuer,. The Issuer shall not be obligated to pay the principal of, or premium, if any, or interest on the Bonds, except from Revenues as defined in the Indenture. The Developer hereby acknowledges that the Issuer's sole source of moneys tc repay the Bonds and to pay expenses of the Program will be provided by the payments made by the Developer pursuant to this Agreement, together with other of said Revenue, including any drawings under the Letter of Credit, proceeds of liquidation of the Collateral by the Trustee and Investment income on certain funds and accounts held by the Trustee under the Indenture, and hereby confirms that amounts available to pay all principal of, and premium, if any, and interest on the Bonds as the samrt shall become due (whether by maturity, redemption, acceleration or otherwise), have been calculated to be at all times sufficient for such purpose. Any obligation or liability of the Issuer created by or arising out of this Agreement (including without limitation any liability created by or arising out of the representations, warranties or covenants set forth herein w otherwise) shall not impose a debt or pecuniary liability upon the Issuer or a charge upon its general credit, but shall be payable solely out of the said Revenues. Neither the issuance of the Bonds nor the delivery of this Agreement shall, directly or indirectly or contingently, obligate the issuer to make any appropriation for their payment. Nothing in the Bonds or in the Inc'?r.ture or this Agreement or the proceedings of the Issuer authorizing the Bonds or in the Act or in any ether related document shall be construed to authorize the Issuer to create a debt of the Issuer within the meaning of any constitutional or statutory provision of the Stale of California. No breach of any pledge. obligation or agreement of the Issuer hereunder may impose any pecuniary liability upon the Issuer or any charge upon its general credit. Section 9.2. Expenses. The Deve,oper covenants and agrees to pay and to indemnify the Issuer, including reasonable fees and disbursements of attorneys, accountants, consultants and other experts. incurred in good faith in connection with this Agreement, the Bonds or the Indenture. .. Section 9.3. Indemnification. They Developer shall indemnify. hold harmless and defend the Issuer, the Association and the Trustee and the respective councilmermbers, officers, members. directors, officials and employees and each of them (a) from and against any and all claims by or on behalf of any person arising from any cause whatsoever in connection with the approval of tax-exempt financing for the Project or the making of the Developer Loan, (bl against all loss, custs. damages. expenses, suits, judgments, actions and liabilities of whatever nature (including, without limitation. attorneys' fees. L•tigation and court costs. amounts paid in settlement, and amounts paid to discharge judgments) directly or indirectly resulting from or arising out of or related to (r) the design. construction, installation, operation, use, occupaw:y. maintenance. or ownership of the Project (rncludinn compliance with laws, ordinances and rules and regulations of public authorities relating thereto); or (n) any written statements or representations with respect to the Developer. the Project or the Bonds made or given to the Issuer, the Association or the Trustee, or any underwriters or purchasers of any of the Bonds, by the Developer, or any of its partners, agents or employees, including, but not limited to, statements or representations of facts, financial information or partnership affairs. The Developer also shall pay and discharge and shall indemnify and hold harmless the Issuer, the Association and the Trustee from (x) any lien or charge upon payments by the: Developer to the Issuer and the Trustee hereunder and (y) any taxes (including, without limitation, all ad valorem taxes and saes taxes), assessments, impositions and other charges in respect of any portion of the Project. If any such claim is asserted, or arty such lien or charge upon payments, or any such taxes, assessments, impositions or other charges, are sought to be imposed, the Issuer or the Trustee shall give prompt notice to the Developer and the Developer 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; provided that the Issuer and the •31- Trustee shall have the right to review and approve or disapprove any such compromise or settlement. In addition thereto, the Developer shall pay upon demand all of the fees and expenses paid or incurred by the Trustee and or the Issuer and•or the Association in enforcing the provisions hereof. .32. 0 .0 ARTICLE X MISCELLANEOUS Section 10.1. Entire Agreement. This Agreement constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, between the Issuer, the Trustee and the Association with respect to the subject matter hereof. Section 10.2. Notices. All notices. correspondence and other communications pursuant to this Agreement shall be in writing and shall be delivered at the applicable address set forth below: If to the Issuer: City of Huntington Beach . 2000 Main Street Huntington Beach. California 92646 Attention: Principal Redevelopment Specialist Phone No. (714) 536.5511 If to the Trustee: Seattle -First National Bank 1001 Fourth Avenue Seattle. WA 98154 (delivery) P.O. Box 3596 Seattle. WA 98124 (mail) Attention: Bond Trustee Services. 9th Floor Phone No. (206) 583-5566 If to the Developer: Village Partnership 1810 - 14th Street Suite 207 Santa 1,1ornca. California 90404 Attention: T. Daniel Neveau Phone No. (213) 450.6999 If to the Association-. Mercury Savings and loan Association 7812 Edinger A-.-enue Huntington Beach. California 92647 Attention: Chief Financial Officer Phone No. (7W) 842-9333 ('Wrh a copy to: Pettit 8 Martin 101 California Street. 35th Floor San Fra-cisco. California 94111 Attention: Arnold P. Schuster, Esq. Phone No. (415) 434.4000) If to BTC: Bankers Trust Company One Bankers Trust Plaza 130 Liberty Street Now York. New York 10006 Attention: Manager. Public Finance Dept, Phone No. 1212) 775.5813 "(which copy shall not constitute notice to the Associatien hereunder) .33- All notices shall be sufficiently given and shall be deemed given on the date on which the same have been personally delivered or on the third Business Day following the date on which the same have been mailed by certified or registered mail, return receipt requested, postage prepaid, addressed as indicated above. A copy of any communication delivered to any of the, parties listed above shall be delivered to each of the other parties. Any such party may change its address by delivering notice of such change to the other parties in accordance with this Section. Section 10.3. Assignments. This Agreement may not be assigned by any party without consent of all of the others except that the Issuer shall assign to the Trustee its rights under this Agreement (except its rights to notice and indemnification) and the Association may assign to any transferee or any surviving or resulting corporation its rights under this Agreement as provided in this Agreement. Section 10.4. Severability. If any provision of this Agreement shall be held or deemed to be or shall, in fact, be illegal, inoperative or unenforceable, the same shall not affect any other provision or provisions herein contained or render the same invalid, inoperative ur unenforceable to any extent whatever. Section 10.5. Execution of Counterparts. This Agreement may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. Section 10.6. Amendments, Changes and Modifications. Thus Agreement may not be effectively amended, changed, modified, altered or terminated without the written, consent of all parties hereto. Section 10.7. Governing Law. This Agreement shall be governed exc►usitiely by and construed in accordance with the applicable laws of the State. Section 10.8. Term of Agreement. This Agreement shall be in full force and effect from the date hereof until such time as all the Bonds shall have been fully paid or provision made for such payment pursuant to the Indenture, whichever shall be earlier. Section 10.9. Recordation. The Association covenants that it will cause the Regulatory Agreement and any financing statement and all supplements therolo and any other such instruments as may from time to time be required to be kept, recorded and filed in such a manner and in such places as may be required by law in order to fully preserve and protect the security of the Owners of the Bonds and the rights of the Issuer and the Trustee under the Regulator, Agreement. Notice of any filing or recordation shall be given by the Association to thn Trustee no later than thirty (30) days after such or recordation. Section 10.10. Payments Under Collateral Pledge Agreement. Whether or not demand has been made on the Association under the Collateral Pledge Agreement or otherwise, the Association may at its option (but shall not in any marine, be obligated to except as provided in the Collateral Pledge Agreement) pay any amount due and payable by the Association under the Letter of Credit and not paid by the Association when so due and payable, with the same effect as if surii payment or payments had been paid by the Association under the Letter of Credit. .34. • • IN WITNESS WHEREOF, the parties hereto have executed this Agreement, all as of the day and year fir:,t mentioned above. ATTEST: City Clerk CITY OF HUNTINGTON BEACH By: City Administrator MERCURY SAVINGS AND LOAN ASSOCIATION By. Name: Title: SEATTLE-FIRST NATIONAL BANK. as Trustee By: Name: Title: VILLAGE PARTNERSHIP By. -35. General Partner General Partner EXHIBIT A CERTIFICATION OF CONTINUING PROGRAM COMPLIANCE TO: City of Huntington Beach 2000 Main Street Huntington Beach, California 92648 Attention: Principal Redevelopment Specialist Seattle -First National Bank 1001 Fourth Avenue Seattle, WA 98154 (delivery) P.O. Box 3586 Seattle, WA 98124 (mail) Attention: Bond Trustee Services, 9th Floor Mercury Savings and Loan Association 7812 Edinger Avenue Huntington Beach, California 926.17 Attention: Chief Financial Officer Pettit & Martin 101 California Street, 35th Floor San Francisco, California 94111 Attention: Arnold P. Schuster. Esq. The undersigned, , being duly authorized to execute this certificate on behalf of Village Partnership, a California general partnership (the "Developer"), hereby represents and warrants that. 1. He has read and is thoroughly familiar with the prr tisions of the various Developer Loan Documents associated with the Developer's participation in the S7,700,000 City of Huntington Beach, California Variable Rate Demand h4ultifamily Hotising Revenue Bonds (Alercury Savings and Loan Association Villago Partnership Project), 1986 Series A bond issue, such documents including: (a) The Regulatory Agreement and Declaration of Restrictive Covenants dated as of August t, 1986. among the Developer, the Association, the Issuer and Seattle -First National Bank (the "Trustee"); and (b) The Developer Mortgage dated as of August 29. 1966. 2. As of the date of this certificate. the following percentages of completed residential units in the Project (i) are occupied by Low or Moderate Income Tenants (as such terms are defined in the Regulatory Agreement) or (6) are currently vacant and being held available for such occupancy and have been so held continuously since the date a Low or Moderate Income Tenant vacated such unit, as indicated: Occupied by Low or Moderate Income Tenants: °c Units Nos.: A-1 Held vacant for occupancy continuously since last occupied by Low or Moderate Income Tenant: Units Nos.: 3. At no time since the date of filing of the last Certification of Continuing Program Compliance have less than 20 percent of the completed units in the Project been occupied by or been last occupied by Low or Moderate Income Tenants, nor have less than 10 percent of the com.plated units in the Project been occupied by or been last occupied by Very Low Income Tenants. 4. The Developer is not in default under the terms of the Regulatory Agreement and. to the best knowledge of the Developer. no Determination of Taxability has occurred with respect to the Bonds. VILLAGE PARTNERSHIP By: General Partner A•2 0 • EXHIBIT B CERTIFICATE OF TENANT ELIGIBILITY AND INCOME VERIFICATION The undersigned hereby (certify) (certifies) that: I. This Income Certificate is being delivered in connection with the undersigned's application for occupancy of an apartment in Huntington Beach, California, 2. The only occupants of such apartment will be the undersigned and the following individuals all of whose aggregate anticipated annual income for the twelve month period commencing with the date that the undersigned initially occupies an apartment is set forth below: Name (a) (b) (c) (d) (e) Anticipated Annual Income S 3. -None of the occupants listed in Section 2 are students who are not entitled to file a joint return under Section 6013 of the Internal Revenue Code. as amended. except such occupants listed with an asterisk (') following their name. NOTE: In computing aggregate anticipated annual income of such occupants, such total anticipated payments from all sources received by the undersigned and the occupants fisted in section 2. shalt include but not be limited to, the following: (a) gross wages. salaries, overtime, commissions, fees, tips, and bonuses: (b) ne' income from operation of a business or profession or from rental of real or personal property: (c) interest and dividends: (d) periodic payments from social security. annuities, insurance policies, retirement funds, pensions, disability or death benefits and other similar types of periodic payments. (e) payments in lieu of earnings, such as unemployment and disability compensation, worker's compensation and severance pay; (f) public assistance income, where payments include amounts specifically designated for shelter and utilities: r B.1 (g) periodic and determinable allowances, such as alimony and child support, and regular contributions or gifts from persons not residing in the dwelling and (h) all regular and special pay and allowances of members of the Armed Forces (whether or not living in the dwelling) who are the head of the family or spouse. You may, however, exclude the following items froin total anticipated annual income: (a) casual, sporadic or irregular gifts: (b) amounts specifically for or in reirnbursement of medical expenses: (c) lump -sum additions to family assets, such as inheritances, insurance payments (including payments under health and accident insurance and workmen's compensation), capital gams, and settlement for personal or property losses. (However, where a family has "net family assets" in excess of S5.000, income shall include the actual amount of income, if any, derived from all of the net family assets or 10% of the value of all such assets, whichever is greater.) "Net family assets" means the value of equity in real propt3r;y, savings, stocks. bonds and other forms of capital investment. The value of necessary items such as furniture and automobiles is excluded: (d) educational scholarships paid directly to the student or educational institution and amounts paid by the government to a veteran for use in meeting costs of tuition, fees, books and equipment. (Any amounts which are not used for the above purposes and which are available for subsistence, are to be included in income): (e) special pay to a serviceman (who is head of a family) away from home and exposed to hostile fire: (f) relocation Payments made pursuant to Title II of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, (g) foster child care payments: (h) the value of coupon allotments for the purchase of food pursuant to the Food Stamp Act of 1964 which is in excess of the amount actually charged for the same. and (r) Payments received pursuant to participation in the following volunteer programs under the ACTION agency: (1) National Volunteer Antipoverty Programs including VISTA, Service Learning Programs and Special Volunteer Programs. (2) Naticnal Older American Volunteer Programs for persons aged 60 and over including Retired Senior Volunteer Programs, Foster Grandparent programs. Older American Community Services Program, and National Volunteer Program to Assist Small Business Experience, SCORE and ACE. TENANT'S STATEMENT: The information on this form is to be used to determine maximum income for eligibility for occupancy of an apartment unit. I We have provided either an Employer's Verification of current anticipated annual income for each person set forth in Section 2 or copies of their most recent federal income tax returns. I We certify that the statements above are true and complete to the best of my our knowledge and belief and are given under the penalty of perjury. The undersigned hereby consents to the disclosure of any of the information contained on this form to any person interested in the exemption from federal income taxation of interest on the Housing Authority of the City of Huntington Beach Variable Rate Demand Multifamily Housing Revenue Bonds (Mercury Savings and loan Association,Village Partnership Project), 1986 Series A. [Signature of each person whose name appears in Section 2 and who has an annual income reported in Se--tion 21 Date: OWNER,DEVELOPER'S STATEMENT: The person(s) named in Section 2 of the Certification of Tenant Eligibility and Income Verification hereinabove is are eligible under the provisions of the Program Guidelines to live in a unit in the Project, as defined in the Agreement, between the Developer and the Housing Authority of the City of Huntington Beach, and, based upon the aggregate anticipated annual income set forth in Section 2 above, constitutes a Low or Moderate Income Tenant. Date: Signature of Developer's Agent MR EXHIBIT C COMPLETION CERTIFICATE TO: City of Huntington Beach 2000 Main Street Huntington Beach, California 92648 Attention: Prinicipal Redevelopment Specialist Seattle -First National Bank 1001 Fourth Avenue Seattle, WA 98154 (delivery) P.O. Box 3586 Seattle. WA 98124 (mail) Attention: Bond Trustee Services, 9th Floor The undersigned hereby certify that all portions of the Project were substantially completed and available either for occupancy or use by tenants in the Project as of (the "Completion Date"). VILLAGE PARTNERSHIP By:.__, Name: Title: The undersigned hereby certify that: (1) 7he aggregate amount disbursed on the Developer Loan as of the Completion Date is 5 : (2) 141 amounts disbursed on the Developer Loan have been applied to pay or reimburse the undersigned for the payment of Project Costs and none of the amounts disbursed on the Developer Loan have been applied to pay or reimburse any party for the payment of costs or expenses other than Project Costs: and (3) At lea! s '15% of the amounts disbursed on the Developer Loan, less the amounts applied pursuant to the Indenture to pay for the costs of issuing the Bonds, have been applied to pay or reimburse the Developer for the payment of Qualified Project Costs (as that term is defined in the Regulatory Agreement). C-t VILLAGE M PARTNERSHIP 0 . Title: MERCURY SAVINGS AND LOAN ASSOCIATION By: Name: Title: r; EXHIBIT D PROMISSORY NOTE SECURED BY DEED OF TRUST 57,700000 as of. August '1, .1986 Huntington Beach, Califo hla FOR VALUE RECEIVED, the undersigned (the "Maker") promises to pay to Seattle -First National Bank (the "Payee") not individually. but as Trustee under a certain Indenture dated as of August 1, 1986 (the "Indenture") between the Payee and the Housing Authority of the City of Huntington Beach, California, or order, at Bond Trustee Services. P. O. Box 3586. Seattle. Washington 98124 (mail) or 1001 Fourth Avenue, Seattle, Washington 98154 (delivery) or at such other place as the holder hereof may from time to time designate, a principal sum equal to Seven Million Seven Hundred Thousand (57,700,000), with interest on the unpaid principal balance from time to time outstanding, at the rates set forth below, payment of principal and interest to be made in the lawful money of the United States of America that is legal tender for public and private debts at the time of payment. All terms not specifically defined herein shall have the same meaning as ascribed to them in the Indenture. Principal and interest shall be payable as follows: 1. (a) This Note shall bear interest at the Bond Rate (as defined in the Loan Agreement). (b) Interest -only payments shall be paid quarterly by the f.laker on the first day of December, March, June and September, commencing on March 1. 1967 and continuing until the date required under the Loan Agreement: provided that if the entire outstanding principal balance of this Note is not prepa,d as hereinafter provided. the htaker shall make the payment of principal on September 1. 2016 (the "Maturity Date") on which date the entire outstanding principal balance of this Note, together with all accrued but unpaid interest, shalt be applied first to any interest that has accrued on this Note, and the balance, if any, shall be applied to the outstanding principal balance hereof. .00 2. (a) On any date that the Letter of Credit or any substitute Letter of Credit or Alternate Credit Facility expires in accordance with its terms. the Maker shall prepay, without premium or penalty e.,icept as provided below, the entire outstanding principal balance of this Noto. together with all accrued but unpaid interest due thereon, unless a new Letter of Credit or Alternate Credit Facility is delivered to the Payee in compliance with the provisions of Section 5.8 of the Loan Agreement. (b) This Note may be prepaid in accordance with Section 8 1(b) of the Loan Agreement. (:j This Note is subject to mandatory prepayment as provided in Section 8.1(a) of the Loan Agreement. 3. (a) The Payee consents and agrees that during the period between the date horeut and that date which is the earlier to occur of the completion of construction of the Project or July 1. 1989. the Association shall be entitled to reimburse itself from the Disbursement Account in an amount equal to all interest and principal payments made on the Bonds that are funded from draws by the Payee on the Letter of Credit. To the extent that the Association reimburses itself from the Disbursement Account, the Maker shall be deemed to receive an automatic credit against its payment obligations hereunder for all sums that are so reimbursed to the Association. (b) From and after the earlier to occur of the completion of construction of the Project or July 1, 1989. the Payee consents and agrees that the Association sha'I be entitled to reimburse D-1 itself from any payments made by the Maker hereunder for any sums of principal and or interest that are paid on the Bonds from draws upon the Letter of Credit. 4. Notwithstanding anything to the contrary contained herein, the entire unpaid principal balance hereof, together with all accrued but unpaid interest thereon, shall become due and payable at the option of the Payee upon the occurrence of any default on the part of the Maker under the Regulatory Agreement. 5. At the option of the holder hereof, the entire principal balance hereof, together with all accrued but unpaid principal thereon. shall be immediately due and payable, without notice or demand, upon the occ ir►ence of any of the following events: (a) Failure to pay when due any payment of principal or interest due hereunder or under the Developer Loan Documents: or (b) Failure to perform or observe the terms and conditions of the deed of trust or other agreement securing this Note (the "Security Instruments"). beyond any applicable grace period; or (c) Default in the payment or performance of any other term or condition hereof on the part of the Maker, for 30 days after receipt of written notice: or (d) The making of any assignment for the benefit of creditors by the Maker, or the voluntary appointment (at the request of the Maker or with the consent of the Maker) of a receiver, custodian, liquidator or trustee in bankruptcy of the Maker's property or the filing by the Maker of a petition in bankruptcy or other similar proceeding under law for relief of debtors: or (e) The filing against the Maker of a petition in bankruptcy or other similar proceedrnq under law for relief of debtors, or the involuntary appointment of a receiver, custodian, liquidator or trustee in bankruptcy of the property of the Maker and such petition or appointment is not _vacated or discharged within sixty (60) calendar days after the filing or making thereof. 6. Neither the Maker nor any of its partners or employees shall be deemed to have any personal liability for the payments of any amounts that are due or shall become due pursuant to this Note. The Payee shail not exercise any rights or institute any action against the Maker or any of its partners or employees for the payments of any sum of money that is or may become payable under this Note or any Security Instrument securing the same other than the right to foreclose such Security Instrument and the right to realize upon any collateral given as security for the payment of this Note in addition to the property given under such Security Instrument. The Payee shall not seek against the Maker or any of as partners or employees any judgment for a deficiency in any action to foreclose such Security Instrument or to realize upon such collateral. provided, however, that nothing contained herein shall be or be doomed to be a release or impairment of such indebtedness or of such Security Instrument or of any security interest in any collateral pledged to secure the indebtedness evidenced by this Note. or preclude the Payee from foreclosing such Security Instrument or realizing upon any such collateral upon the happening of any event of default under this Note, such Security Instrument or any other documents executed in connection therewith. Further, nothing contained in the foregoing shall in any way limit or affect the personal liability of the Developer for the performance and fulfillment of any and all of the covenants and agreements of the Developer under the Security Instruments. 7. If this Note is not paid when due, whether at maturity or by acceleration, the Maker shall pay all costs of collection, including without limitation reasonable attorneys' fees and all expenses in connection with the protection or realization of the collateral securing this Note incurred by the holder hereof on account of such collection, whether or not suit rs rfrled hereon. Such costs and D expenses shall include without limitation all costs, attorneys' fees and expenses incurred by the holder hereof in connection with any insolvency, bankruptcy, reorganization, arrangement or other similar proceedings involving the Maker, that in any way affects the exercise by the holder hereof of its rights and remedies under this Note or under any of the Security Instruments. Should interest not be paid when due, it shall thereafter bear interest at the rate for unpaid principal. Nothing in this Section 7 shall preclude the Payee from proceeding directly against the Maker in connection with the obligation of the Maker to indemnify the Payee under Sections 9.2 and 9.3 of the Loan Agreement acid Section 6 of the Regulatory Agreement or to make any payment to the Maker or to any Paying Agent required to be paid by the Maker pursuant to the provisions of Sections 4.3 and 19 of the Loan Agreement. 8. Presentment, demand, protest, notices of protest, dishonor and nonpayment of this Note are hereby waived. To the extent permitted by applicable law, the defense of the statute of limitation is hereby waived. 9. No single or partial exercise of any power hereunder or any Security Instrument shall preclude other or further exercise thereof or the exercise of any other power. The holder hereof shall at all times have the right to proceed against any portion of the security held herefor in such order and in such manner as the holder may deeni fit. without .-awing any rights with respect to any other security. No delay or omission on the part of the holder hereof in exercising any right hereunder shall operate as a waiver of such right or any other right under this Note. The release of any party liable on this Note shall not operate to release any other party liable hereon. 10. This Note will be secured by a Deed of Trust for the benefit of the Payee and the Association. which Deed of Trust contains provisions for the acceleration of the Maturity Date hereof upon Lie happening of certain stated events. 11. The Loan evidenced by this Note is made pursuant to and shall be construed and governed by the laws of the State of California. 12. It is the Intent of the Maker and the Payee in the execution of this Note and all other instruments securing this Note to contract in strict compliance with the usury laws of the State of R:alifornia governing the loan evidenced by this Note. In furtherance thereof, the.Payee and the Ma'<er stirulate and agree that none of the terms and provisions contained in this Note or in any other document or instrument shall ever be construed to create a contract for the use, forbearance or detention of money requiring payment of interest at a rate in excess of the maximum interest rate permitted to be charged by the laws of the State of California governing the Loan evidenced by this Note. The Maker shall never be Fable for unearned interest on this Note and shall never be required to pay interest on this Note at a rate in excess of the maximum interest that may be lawfully charged under the laws of the State of California. The provisions of this paragraph shall control over all other provisions hereof and over any other instrument executed in connection herewith that may be in apparent conflict herewith. If any holder hereof shall collect moneys that are deemed to constitute interest that would otherwise increase the effective rate on this Note to a rate in excess of that permitted to be charged by the lairs of the State of California. all such sums doomed to constitute interest in excess of the legal rate shall be immediately returned to the Maker upon such determination. VILLAGE PARTNERSHIP By: Title: D•3 1do19 14 J14HOV EVf &D 07 nt fi N2161 om o7 Ub RECORDING REQUESTED BY A14D WHEN RECORDED RETURN TO: Edsett M. Eacy, Jr., Esq. Jones Hatt Hitt d White, A Professkonal Law Corporation Four Ernwi cadero Center. Suite 1950 San Francisco, Cafilafnia 94111 REGULATORY AGREEMENT A11 ND DECLARATION OFRESTRICTIVE COVENANTS by and among the CITY OF HUNTINGTON BEACH and SEATTLE-FIRST NATIONAL BANK, TRUSTEE and MERCURY SAVINGS Ali. LOAN ASSOCIATION and VILLAGE PARTNERSH+ Dated as of August 1, 1986 Relating to S71700,000 CITY OF HUNTINGTON BEACH, CALIFORNIA VARIABLE RATE DEMAND MULTIFAMILY HOUSING REVENUE BONDS NG (MERCURY SAVINGSAND LOAN ASSOCIATION' VILLAGE PARTNERSHIP PROJECT) 1986 SERIES A 0 P2163.TOC TABLE OF CONTENTS E •..: Section 1. Definitions and Interpretation..................................................................... 2 Section 2. Construction. Acquisition and Completion of the Project ........................... Section 3. Residential Rental Pruject.............................................................................. 7 Section 4. Low or Moderate Income Tenants ... ....................................................... I......... 8 Section 5. Tax•Exempt Status of Bonds Section 6. Indemnification of Issuer, Association and Trustee ............................................... Section7. Consideration......................................................................................................... 11 Section8. Reliance................................................................................................................ i t Section 9. Project Location................................................................................................... 11 Section 10. Sale or Transfer of Project: Syndication............................................................. 1 1 Section 11. Involuntary Substantial Loss or Substantial Destruction ...................................... 12 Section 12. Covenants to Run With the Land......................................................................... 12 Section13. Burden and Benefit............................................................................................. 12 Section 14. Uniformity: Common Plan.................................................................................... 13 Section15. Term................................................................................................................... 13 Section 16. Events of Default: Enforcement.......................................................................... 13 Section17. Governing Law..................................................................................................... 14 Section18. Amendments................................................................................................ I......1 14 Section 19. Payment of Trustee's and Issuer's Fees............................................................ 14 Section20. Severability.......................................................................................................... 14 Section 21. Time of the Essence............................................................................................ 15 Section 22. Recording and Filmg........................................................................................ 15 Section23. Notice............................................................................................................. 15 Section 24. Compliance by Developer ............................................................................... 16 EXHIBIT "A" DESCRIPTIC, , OF PROJECT S17 E.............................................. 18 , REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE COVENANTS THIS REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE COVENANTS is made and entered into as of August 1, 1986, by and among the City of Huntington Beach, a municipal corporation and .:hailer city orgarnzed and existing under the laws of the State of California (the "Issuer"), Seattle -First Nationa, Bank, a duly organized, existing and authorized national bank having its principal offices in Seattle, Washington (the "Trustee"), Mercury Savings and Loan Association, a state -chartered savings and loan association organized under the laws of the State of California (the "Association") and Village Partnership, a California general partnership (the "Developer"). PREAMBLE WHEREAS, the Developer proposes to construct a multifamily rental housing development (the "Project") located within the City of Huntington Beach (the "City") to be occupied partially (at least 200a) by individuals of low and moderate income within the meaning of Sec'ion 103(b)(12)(C) of the Internal Revenue Code of 1954, as amended (the "Code"). and partially (at least t Wo) by individuals of very low income within the meaning of the Act (as defined below), all for the public purpose of assisting individuals of tow and moderate income and very low income within the City !o obtain decent. safe and sanitary housing at rentals they can afford. and WHEREAS, pursuant to Chapter 7 of Part 5 of Division 31 of the Health and Safety Code of the State of California (the "Act"), the Is_uer has entered into an Indenture of Trust dated as of August 1, 1986, by and between the issuer and the Trustee (the -Indenture"): and WHEREAS, pursuant to the Act and the Indenture, the Issuer proposes to issue its Variable Rate Demand Multifamily Housing Revenue Bonds (Mercury Savings and loan Village Partnership Project), 1986 Series A (the "Bonds-) in the aggregate principal amount of S7,700.000, the proceeds of which will be used to make a loan to the Developer (the "Developer Loan") in the principal amount of S7,700.000, to provide corstr,rctron and permanert hnarcing for the Protect: and WHEREAS, the Code, the regulations and rulings promulgated voth respect thereto and the Act •• prescribe that the financing, use and operation of the Protect be restricted in certain respects and in order to ensure that the Protect will be financed. used and operated in accordance with the Cade. such regulations and rulings and the Act, the Issuer. ,he Trustee, the Association and the Developer have determined to enter into this Regulatory Agreement: NOW, THEREFORE, in consideration of the mutual covenants and undertakings set forth herein, and other good and valuable considnranon, the receipt and sufficiency of which is hereby acknowledged. the Issue% the Trustee. the Association and the Developer do hereby contract and agree as follows: AGREEMENT Section 1. Definitions and Interpretation. Unless otherwiso expressly provided herein or unless the context clearly requires otherwise, the following terms shall have the respec'ive meanings set forth be!ow for all purposes of this Regulatory Agreement: "Act" shall mean Chapter 7 of Part 5 of Division 31 of the Health and Safety Code of the State of California, as amended. "Adjusted 'Famity Income" shall mean the anticipated annual income of a person (together with the anticipated annual income of all persons :=rho intend to reside with such person in one residential unit), as calculated in accordance with Treasury Regulation 1.167(k)-3(b)(3). "Affiliated Party" of a person shall mean a person such that (i) the relationship between such persons 'woufd result in a disallowance of losses under Section 267 or Section ; 07(b) of the Code or (ii) such persons are inembers of the same controlled group of corporations (as defined in Section 1563(a) of the Code, except that "more than 50 percent" shall be substituted for "at ieast 80 percent" each place it appears therein). "Affordable Rents" shall mean, for any unit, a monthly rental for a unit of the applicable size which does not exceed 1/12 of 30110, of the ## Adjusted Family Income permitted for Very Low Income Tenants in such unit. "Association" shall mean Mercury Savings and Loan Association, a state -chartered savings and loan association organized under the laws of the State of California. and its successors and assigns. "Bond Counsel" shall mean an attorney at law or a firm of attorneys acceptable to the Issuer and the Trustee of nationally recognized standing in matters pertaining to the 'ax-exempt nature or interest on bonds issued by states and their political subdivisions duly admitted to the practice of law before the highest court of any state of the United States of America. or the District of Columbia. "Bonds" shall mean tha Issuer's Variable Rate Demand Multifamily Housing Revenue Bonds (Mercury Savings and Loan Village Partnership Protect), 1986 Series A. to be issued pursuant to the Indenture. "Code" shad mean the Internal Revenue Code of 1954, as amended, or any successor statute thereto, as in effect on the date in question, together with corresponding and applicable final. temporary or proposed regulations and revenue rulings issued — amended with respect thereto by the Treasury Department or Internal Revenue Service of the United States. All references herein to sections. paragraphs or other subdivisions of the Code or the regulations promulgated thereunder shall be deemed to be references to correlative provisions of any successor code or regulations promulgated thereunder. "Collateral Agent" shall mean First Interstate Bank of California, and its successors and assigns. "Collateral Pledge Agreement" shall rnea:, the collateral pledge agreornent dated as of even date herewith by and among the Issuer, the Tnlstee, the Association and First Interstate Bank of California as Collateral Agent whmounder the Association secures its payr*-ants under the Letter of Credit thrcugh the pledge of certain collateral. "Completion Certificate" shall mean the certificate of completion of the Project required to be delivered by the Developer to the Issuer, the Trustee and the Association pursuant to Section 2(g) hereof, which shall be substantially in the form attached to the Loan Agreement as Exhibit C. .2. �s s "Completion (late" shall mean the date of substantial completion of the Project as set forth in the Completion Certificate. "Delivery Date" shall mean the date of delivery of the Bonds to the initial purchaser or purchasers thereof. "Deterininatlan of Taxability" means the enactment of applicable legislation, or a judgment or order of a court of original or appellate jurisdiction, or a final ruling or decision of the Internal Revenue Service, in either case to the effect that the interest on the Bonds (other than interest on any Bond for any period during which such Bond is field by a "substantial user" of any facility financed with the proceeds of the Bonds or a "related person", as such terms are used in Section 103(b) of the Code) is includable for federal income tax purposes in the gross incomes of all recip ents tnereof subject to federal inccme taxes or the filing v:ith the Trustee of an opinion by Bond Cowsel to suwh effegt. A judgment or order of a court of original jurisdiction or a ruling or decision of the Internal Revenue Service shall be considered final only if no appeal or action for judicial re,:.-ew has been filed and the time for filing such appeal or action has expi,ed. "Developer" shall mean Village Partnership, a California general partnership, and its successors and assigns. "Developer Loan" shall n►ean the loan in the amount of 57,700,000, secured by a deed of trust. to be originated by the Association pursuant to the Loan Agreement on behalf of the Issuer to the Developer to provide :onstruct►on and permanent financing for the Project. "Developer Loan Documents" shill mean this Regulatory Agreement, the Reimbursement .Agreement dated as of August 1. 1986. among the Developer. the Trustee and the Association; OR th:4 Loan Agreement; the Certificate of Continuing Program Compliance (from and after the date such certificate -s firs: required); the Developer Mortgage, and al► ether documents related to the Developer Loan executed by the Developer. "Developer Mortgage" means the Deed of Trust with rr# Assignment of Rents and Security Agreement w-th Fixture Fling (Construction and Permanent Loan) granting a mortgage on. and security interest in. the land, h-J►Idings and epu►pme-it comprising the Project. in substantially the form required by the Loan Agreement. made from the Developer to a trustee for the benefit of the Trustee, securing the repayment of the Developer Loan. "Developer Note" means the promissory note executed by the Developer pursuant to the. Loan Agreement. "Developer Representative" shall mean the person or persons (who may be Ainployees of the Developer► designated from time to time to act on behalf of the Developer in a wrmen certificate furnished to the Issuer, the Association and the Trustee containing the specimen s►grature of such person or persons and signed on behalf of the Developer by an authorized officer thereof. "Indenture" shall mean that certain Indenture cf Trust dated a= of August 1. 1986, b.: and between the Issuer and the Trustee, pursuant to which the Bonds are issued and secured. "Issuer" shall mean the City of Huntington Beach, California, being a municipal comoration and charter city duly organized and existing under the laws of the State of California, and ►t iuccessors and assigns and any body resulting from or surviving any consolidation or merger to which it or its successors may be a party. "Loan Agreement" shall mean the Loan Origination and Servicing Agreement dated as of August 1. 1996, by and among the Issuer, the Developer, the Trustee and the Association. .3- "Low or Moderate Income Tenant" shall mean the occupant or occupants of a residential unit in the Project whose aggregate Adjusted Family Income does not exceed 70 percent of the Median Gross Income for the Area. If all the occupants are students (as defined in under Section 151(e)(4) of the Code), no one of whom is entitled to file a joint return under Section 6013 of the Code, such occupants shall not qualify as Low or Moderate Income Tenants. Tile determination of an occupant's status as a Low or Moderate Income Tenant snrll be made at the commencement of such occupant's occupancy of a unit in the Project and annually thereafter pursuant to Section 4 hereof. "Low and Moderate Units" shall mean the residential units in the Project designated for occupancy by the Low or Moderate Income Tenants or the Very Low Income Tenants. "Median Gross Income • for the Area" shall mean the median income for households of an applicable size in the Primary Metropolitan Statistical Area which ;-icludes the City, most recently determined by the Department of Housing and Urban Development under Section 8(f)(3) of the United States Housing Act of 1937, as amended, or if programs under Section 8(f) are terminated, median income determined under the method used by snid Department prior to the termination, in each case as adjusted for family size in accordance with the applicable unit size as set forth in the following table: Unit Size (Bedroom) Family Size 15 (studio) 1 1 2 2 3 3 4 4 or more 5 "Program" shalt mean the Issuer's multifamily housing program. as set forth in the Indenture. "Program Administrator" shall mean the administrator of compliance of the Project with this Ag,--- anent. who shall be appointed by flit Developer with the consent of the Issuer not later than the date on which dv first unit within the Project is initially occupied. "Project" shall mean the parcel of real property described in EYhibit A hereto. and all rights and appurtenances appertaining thereto, and the buildings. structures and other improvements to be constructed thereon, including ail fixtures and other property owned, leased or licensed by the Developer and located on, or used in connection with. such bUnld►ngs. structures or other improvements, all of which shall be constructed and operated by the Ueveloper in accordance with the restrictions se? forth in this Regulatory Agreement. Section 1031b) of the Code and Section 1.1031 8(b)(4) of the R. tgulations promulgated thereunder. "Project Costs" shall mean, to the extent authorized by the Code and the Regulations, any and ail costs incurred by the Issuer or the Developer with respect to the construction, and equipping, as the case may be, of the Project, whether paid or incurred prior to or after the date of execution of this Regulatory Agreement, including, without limitation, costs for site preparation, the planning of housing and improvements, the acquisition, of property, the removal or demolition of existing structures, the construction and purchase of housing, related facilities and improvements, and all other work in connection therewith, and all costs of financing, includiog, without limitation, the cost of consultant, accounting and legal services, other expenses necessary or incident to determining the feasibility of the Project, administrative and other expenses necessary or incident to the Project and the financing thereof (including reimbursement to any municipality, county or entity for expenditures made, with the approval of the City, for the Project), interest accrued during construction and prior to the Completion Date and all other costs approved by Bond Counsel. -4- • "4,alkied Project Costs" shall mean Project Costs incurred by the Developer in connection with the construction of the Project, but on!y.to the extent that (1) such costs were not paid or incurred by the Developer prior to May 19, 1986, the date of the official action by the City Council of the 'City identifying the Project as a project within the Program, (ii) such costs are chargeable to the Project's capital account or would be so chargeable either with a proper election by the Developer to capitalize such costs or but for a proper election by the Developer to deduct such costs, within the meaning of Treasury Regulation 1.103.8(a)(1), and (iii) such costs are made exclusively with respect to residential units together with any functionally related and subordinate facilities, provided, however, that if any portion of the Project is being constructed by an Affiliated Party of the Developer (whether as a general contractor or a subcontractor), "Duatified Project Costs" shall include only (a) the actual out-of-pocket costs incurred by such Affiliated Party in constructing the Project (or any portion thereof), (b) any reasonable fees for supervisory services actually rendered by the Affiliated Party, and (c) any overhead expenses incurred by the Affiliated Party which are directly attributable to the work performed on the Project, and shall not include, for example, intercompany profits resulting from members of an affiliated group (within the meaning of Section 1504 of the Code) participating in the construction of the Project or payments receNed by such Affiliated Party due to early completion of the Project (or any portion thereof). "Qualified Project Period" means a period beginning on the Eater of (a) the first day on Which at least ten percent (10%) of the residential units in the Project are first occupied. or (b) the Delivery Date, and ending on the latest of: (i) the date of retirement'of all of the Bonds, (ii) the date which is twelve years after the date on which at least fifty percent (5000) cf the residential units in the Project are first occupied. (6) the date which is a Qualified Number of Days after the date on which any of the residential units in the Project is first occupied, or (iv) the date on which any assistance provided with respect to the Project under Section 8 of the Un►trtd States Housing Act of 1937 terrn►nates. • "Qualified Number of Days" means 50 percent of the longest term Ur' any Bond, or in the case of a refunding of the Bonds. 50 percent of the sum of the period the Bonds were outstanding plus the longest term of any refunding obligations "Regulatory Agreement" shall mean this Regulatory Agreement and Declaration of Restrictive Covenants by and aniong the Issuer, the Developer. the Association and the Trustee, pertaining to the Project. "Trustee" shall mean Seattle -First National Bank. or its successors in trust under the Indenture. "Very Low Income Tenants" shall have the same meaning as that given to the term "Low or Moderate Income Tr,nant" herein, except that "70"0" in the definition of said term shall be "50 for Very Low Income Tenants. Unless the cortext clearly requires otherwise, words of the masculine gender shalt be construed to include correlative Nords of the feminine and neuter genders. and vice versa. and words of the singular number shall be construed to include correlative words of the plural number, and vice versa. This Regulatory Agreement and all the terms and provisions hereof shall be construed to effectuate the purposes set forth herein and to sustain the validity hereof. The terms and phrases used in the recitals of this Regulatory Agreement have been included For convenience of reference only, and the meaning, construction and interpretation of all such terms and phrases for purposes of this Regulatory Agreement shall be determined by references to this Section. The titles and headings of the sections of this Regulatory Agreement have been inserted for convenience of reference only and are not to be considered a part hereof and shall not in any way modify or restrict any of the terms or provisions hereof and shall never be considered or given any effect in construing this Regulatory Agreement or any provision hereof or in ascertaining intent, if any question of intent shall arise. •5- Section 2. Construction, Acquisition and Completion of the Project. The Developer hereby represents, covenants and agrees as follows: (a) The Developer has incurred a substantial binding obligation to commence the construction of the Project, pursuant to which the Developer is or will be obligated to expend at least the lesser of S100,000 or 2.1,2% of the principal amount of the Developer Loan; (b) The Developer's reasonable expectations respecting the total Project Costs are accurately set forth in the Developer's Certificate Regarding Use of Proceeds which has been delivered to the Issuer and the Trustee; (c) The Developer has commenced the construction and equipping of the Project, or will commence the same within two (2) months from the date hereof, and will proceed to complete the same with due diligence, absent the occurrence of an incident of force majeure, to complete the same; (d) The Developer reasonably expects to complete the construction and acquisition of the Project and to ►axpend the full amount of the proceeds of the Developer Loar, for Project Costs before August 1, 1989; (o) At least ninety-five percent (95116) of the proceeds of tfte Developer Loan, exclusive of proceeds used to pay the costs of issuing the Bonds, shall be applied to pay or reimburse the Developer for Oualif►pd Project Costs, and none of the proceeds of the Developer Loan shall be applied to pay or reimburse costs or expenses other than Protect Costs: (1) The Developer shall submit to the Association and the Trustee prior to or upon the date of each advance under the Developer Lnan a funding requisition, such form as may be approved by the Association, Lert►fymg that at least ninety-five percent (9520) of all advances under the Developer Loan to date, exclusive of proceeds used to pay the costs of issuing the Bonds. will have been applied to pay or reimburse the Developer for Oualrf►ed Project Costs and that all of the advances will be used to pay or reimburse the Developer for Project Costs. and (g) Upon the Completion Date, the Developer shall submit to the Issuer. the Association, and the Trustee a Completion Certificate substantially in the form attached to the Loan Agreement as Exhibit C, containing the following. (i) the Deve!mir's statement that the Project has been substantially completed and is ready and available for occupancy as of a specified date ,which shall be the Completion Date); (n) the Developer's statement, confirmed by the Association. of the aggregate amount advanced against the Developer Note prior to and upon the Completion Date: (ni) the Developer's certification that at least ninety-five percent (950o ) of the proceeds of the Developer Loan, exclusive of proceeds used to pay the costs of issuing the Bonds. have been applied to pay or reimburse the Developer for Oualitied Project Costs: and (►v) that all of the amounts disbursed on the Developer Loan have been used to pay or reimburse the Developer for Protect Costs. and (h) Upon any prepayment of the Developer Loan, the Developer will submit to the Trustee a written notice of such prepayment, stating the amount and date of such prepayment and the amount remaining unpaid on the Developer Loan; and (1) Re DGvelope. does not own ary buildings or structures which are proximate to the Project other than those builo,ngs or structures which comprise the Project. which are being 'financed pursuant to,, a common plan under which the Project is also being financed; and 6) Less than twenty-five percent (25901) of the proceeds of the Developer Loan will be used, directly or indirectly, for the acquisition of land, or any interest therein; and Ifs (k) No portion of the proceeds of the Developer Loan will be used for acquisition of any property (or any interest therein) unless the first use of such property is pursuant to such acquisition, except with respect to any building and the equipment therefor if the rehabilitation expenditures with respect to such building equal or exceed 1596 of the cost of acquiring such building or equipment. (1) The Developer will own and operate `the Project in a manner which complies with the Act, and in connection with the construction of the Project, the Developer will comply with all requirements of the Act. (in) All statements made in the various certificates delivered by the Developer to the Issuer on the Delivery Date are true and correct. Section 3. Residential Rental Project. The Issuer and the Developer hereby declare their understanding and intent that the Project is to be owned, managed and operated, for so long as any Bonds remain outstanding under the Indenture, but in any event at least for the Qualified Project Period, as "residential rental property" as such phrase is utilized in Section 103(b)(4)(A) of the Code. To that end, the Developer hereby represents, covenants, warrants and agrees as follows: (a) That the Project is being acquired and constructed for the purpose of providing residential rental properly, and the Project is to be owned, managed and operated as a residential rental project comprised of several interrelated buildings and structures, each consisting of more than one residential dwelling unit. together with facilities functionally related and subordinate thereto, in accordance with the applicable provisions of Section 103(b)(4);A) of the Code and Treasury Regulation Section 1.103.9(b), as the same may be amended from time to time; (b) That once each residential unit in the Project is mailable for occupancy, such unit will bR rented or available for rental on 3 continuous basis: (c) That all of the residential units in the Projrct will be similarly constructed and shall contain separate and complete facilities for living. sleeping, eating, cooking and sanitation for a single person or a family, including a sleeping area. bathing and sanitation facilities. and cooking facilities equipped with a cooking range, refrigerator and sink. (d) That none of the residential units in the Project shall at any time be utilized on a transient basis: and tl.at neither the Project nor any portion thereof shall ever be used as a hotel, motel. dormitory, fraternity house, sorority house, rooming house, hospital, nursing home. sanitarium, rest home or trader park or court; (e) That all of the residential units in the Project will be available for rental on a continuous basis to members of the general public: at least 20 percent of the residential units in the Project will be leased or rented, or available for lease or rental, to Low or Moderate Income Tenants on a continuous basis for the Qualified Project Period (and not less than 10 percent of such units will be leased or rented, or available for lease or rental, to Very Low Income Tenants at Affordable Rnnts): and the Developer wili not give preference to any particular class or group in renting the dwelling units in the Project, except to the extent that dwelling uit a required to be leased or rented to Low or Moderate Income Tenants or Very Low Income Tenants. The units to be occupied by Low or Moderate Income Tenants and Vera Low Income Tenants will be intermingled with all other dwelling units in the Project and will be of a quality, and offer a range of sizes and number of bedrooms, comparable to the other units in the Project. Low or Moderate Income Tenants will have equal access and enjoyment to all common lacildies of the Project. (f) That the Developer shall not discriminate on the basis of race, creed, co!cr. sex, age or national origin in the lease, use or occupancy of the Project or in connection with the employment or application for employment of persons for the operation and management of the Project: .7. (g) That the Developer will accept as tenants, on the same basis as all other prospective tenants, low-income persons who are holders of certificates for federal housing assistance payments for existing housing pursuant to Section 8 of the United States Housing Act of 1937 or a successor federal program; and, in cennection therewith, the Developer will not apply !cnant selection criteria to such Section 8 certificate holders which are more burdensome than the criteria applied to any other prospective tenants; (h) That the Project consists of a parcel or parcels of i:.ad that are contiguous except for the interposition of a road, street or stream, and all of the builoings and structures in the Project comprise a single geographically and functionally integrated project for residential rental property. as evidenced by the ownership, management, accounting and operation of the Project; (i) That one or ' more residential units in any building in the Project containing more than five residential units may be occupied by a resident manager or maintenance personnel who also may be the Developer of the Project; 0) That within thirty (30) days after the date on which 10 percent and 50 percent of ;he dwelling units in the Project are first occupied, the Developer shall prepare and mail to the Issuer. the Trustee and the Association, return receipt requested, a certificate identifying such date. The Developer may record a copy of said certificate in the Office of the County Recorder of Orange County; (k) That no part of the Project will at any time be owned or used by a cooperative housing corporation: and (1) That. other than obtaining the final map approval and the Final Subdivision Public Report from the California Department of Real Estate, the Developer will not convert the Project to condominium ownership during the term of this agreement without first obtaining an opinion of Bond Counsel that such condom►niLIM conversion will not adversely affect the ekemat►on from Federal income taxation and State personal income taxation of interest on the Bonds. Unless the provisions of this Section 3 are amended as permitted under Section 18 hereof. the provisions of this Section 3 shall remain in eifect for the lonqer of (a) the period during which any of the Bonds are outstanding under the Indenture. and (b) the Qualified Project Period: provided, however. that after repayment in full of the Developer Loan. the Developer may be discharged from its obligations under this Section 3 to the extent that the same are assumed by any successor in interest to the Developer. Section a. Low or Moderate Income Tenants. To the end of satisfying the requirements of Section 103(b)(4)(A) of the Code and of the Act, for the full Qualified Protect Period, the Developer hereby represents, warrants, covenants and agrees as follows: (a) Throughout the Qualified Project Period. (0 at least twenty /I1 percent (2a"o) of the completed dwelling units in the Project shall be oc;.up►ed by Low or Moderate Income Tenants (and at least ten percent (1006) of such units shall be occupied by Very Low !ncome Tenants at Affordable Rents), prior to the satisfaction of which no additional units shall be rented or leased to any other tenants, and (it) after initial rental occupancy of dwelling units by Low or Moderate Income Tenants, at least twenty ## percent (2W*) of the completed dwelling units in the Project (and at least ten percent (10%) of such units shall be i-ccup►ed by Very Low Income Tenants at Affordable Rents), at all times shall be rented to and occupied (or held available for rent if previously rented to and occupied by a Low o: Moderate Income Tenant) by Low or Moderate Income Tenants as required by Section 103(b)(4)(A) of the Code or if vacant, shall have last been occupied for a term of not le .s than 32 consecutive days by Low or hoderate Income Tenants and be avaiiable to- occupancy by Low or Moderate Income Tenants. For purposes of satisfying the requirement tha' not less than twenty " percent (2(ra) of the residential units be occupied by Low or Moderate Income Tenants, no Low or Moderate Income Tenant shall be denied continued occupancy because, after admission, the Low or Moderate Income Tenant's family income exceeds the applicable qualifying income level (provided, however, that such tenant shall no winger be counted as a Low er Moderate Income Tenant as of any date upon which such tenant's family income eiiceeds one hundred twenty percent (1209a) of such level) set forth in the definition of "Low or H.-Werate Income Tenant" herein; provided. however, that the Developer shall maintain the percentage requirements of this Regulatory Agreement by providing the next available units to Low or Moderate Income Tenants (or Very Low Income Tenants, if requiredl as needed to achieve r.pmpliance with the foregoing requirements. Any tenant who is a Very Low Income Tenant will be .)unted as a Low or Moderate Income Tenant for the purposes of the requirements relating to Low or Moderate Income Tenants. The provisions of this paragr2oh shall terminate upon the expiration of the Qualified Project Period. (b) To obtain and maintain on file from each Low or Moderate Income Tenant and Very Low Inco•ne Tenant residing in the Project a copy of such tenant's executed Certification of Tenant Elrgitility and Income Verification in the form and manner required by Treasury Regulation 1.167(k)- 3(b) and in substantially the form attached as Exhibit 8 to the Loan Agreement, and (c) To permit any duly authorizes; representative of the Issuer. the Association, the Proor. m Administrator, the Trustee or the Internal Revenue Service to inspect the books and records of the Developer pertaining to the incomes of Low or Moderate Income Tenants and Very Low Income Tenants residing in the Project: (d) To obtain and maintain on file from each Low or Moderate Income Tenant residing in the Project a copy of such Low or Moderate Income Tenant's federal income tax return for the taxaLle year immediately preceding such Low or Moderate Income Tenant's initial occupancy in the Project and annually thereafter or, if a Low or Moderate Income Tenant certifies that he or she did not file or did not retain a copy of sucn tax return. olnut satisfactory evioence of income for such year such as wage statements or employer records. (e) To prepare and submit to the issuer. the Program Administrator, the Association. and the Trustee each quarter during the Qualified Project Period a Certification of Continuing Program Compliance. in substantially the form attached to the Loan Agreement as Exhibit X executed by the Developer. and including the percentage of the residential units of the Project which were occupied by Low or Moderate Income Tenants and by Very Low Income Tenants at all rmes during the period since the filing of the last Certification of Continuing Program Compliance. The Developer will attach to the Issuer's and the Trustee's copies of the Certification of Continuing Program Compliance the Certifications of Tenant Eligibility and Income Verification and any tax returns received from Low or f.toderate Income Tenants and from Very Low Income Tenants occupying units in the Project which have not previously been furnished to the Trustee. (f) To prepare and submit to the Issuer, the Trustee. the Program Administrator, the United States Department of the Treasury and the Association within 30 days after each anniversary of the Completion Date, a certificate executed by the Developer stating (i► the lowest percentage of the dwelling units in the Project .which were occupied, or held vacant for occupancy, by Low or Moderate Income Tena is and by Very Low Income Tenants during such period. and (n) that no default has occurred under this Agreement; and (g) The form of Nase to be used by the Developer in renting any units in the Project to Low or Moderate Income Tenants or Very Low Income Tenants shall provide for termination of the lease and consent by such person to immediate eviction for failure to qualify as a Low or Moderate Income Tenant or Very Low Income Tenant. as applicable, as a result of any material misrepresentation made by such person with respect to his or her income and income verification. 11 The Issuer hereby elects pursuant to the C,.)de to apply the occupancy requirements for Low and • Moderate Income Tenants set forth in paragraph (a) above to the Bonds. Section 5. tax -Exempt Status of Bonds. (1) The Issuer hereby represents, covenants and agrees as follows: (a) That the Issuer will not knowingly take or fail to take or permit any action to be taken that would adversely affect the exemption from federal income taxation or state personal income taxation c l the interest on the Bonds and, if it should take or permit any such action. the Issuer shall take all lawful actions that it can take to rescind such actions promptly upon having knowledge thereof. and (b) That the Issuer will take such action or actions, including without limitation amendment of the Developer Loan Documents or the Collateral Pledge Agreement, as may be necessary, in the opinion of Bond Counsel, to comply fully with all applicable rules, rulings, regulations, policies, procedures or other official statements promulgated or proposed by the United States Department of the Treasury or the Internal Revenue Service pertaining to obligations issued under Section 103(b)(4)(A) of the Code. (2) The Developer hereby covenants, represents and agrees as follows: (a) That the Developer will not knowingly take or fail to take or permit any action to be taken that would adversely affect the exemption from federal income to ration or state personal income taxation of the interest on the Bonds and. if it should take or permit any such action. the Developer shall take all lawful actions that it can take to rescind such action promptly upor, having knowledge thereof. and (b) That the Developer will take such action or actions. as may be reasonably necessary, in the opinion of Bond Counsel, to comply fully with all applicab-le rules, rulings, regulations, policies, procedures or other official statements promulgated or proposed by the United States Department of the Treasury or the Internal Revenue Service pertaining t�) obligations issued under Section 103(b)(4)(A) of the Code. (3) The Association hereby covenants. represents and agrees as follows: (a) That the Association will not knowingly take or fail to take or permit any action to be taken that would adversely affect the exemption from federal income taxation or state personal income taxation of the interest on the Bonds and. if it should take or permit any such action. the Association shall take all lawful actions that it can take to rescind such action promptly upon having knowledge thereof. and (b) That the Association will take such action or actions, as may be necessary. in the opinion of Bond Counsel, to comply fully with all applicable rules. rulings. regulations, policies. procedures or other official statements promulgated or proposed by the United States Department of the Treasury or the Intemal Revenue Service perla-ning to obligations Issued under Section 103(b)(4)(A) of the Code. Section 6. Indemnification of Issuer, Association and Trustee. The Developer shall indemnify. hold harmless and defend the Issuer, the Association and the Trustee and the respective councrlmembers, officers, members. directors, officials and employees and each of them (a) from and against any and all claims by or on behalf of any person arising from any cause whatsoever in connection with the approval of tax-exempt financing for the Project or the making of the Developer Lean, (b) against. all loss, costs, damages, expenses. suits. judgments, actions and liabilities of whatever nature (including, without limitation, attorneys' fees. litigation and court costs, amounts paid in .10• settlement, and amounts paid to discharge judgments) directly or indirectly resu!ting from or arising out of or related to (i) the design, construction, installation, operation, use, occupancy. maintenance, or ownership of the Project (including compliance with laws, ordinances and rules and regulations of public authorities relating thereto); or (ii) any written statements or representations with respect to the Developer, the Project or the` Bonds made or given to the Issuer, the Association or the Trustee. or any underwriters or purchasers of any of the Bonds, by the Developrr, or any of its partners, agents or employees, including, but not limited to, statements or representations of facts, financial information or partnership affairs. The Developer also shall pay and discharge and shall indemnify and hold harmless the Issuer. the Association and the Trustee from (x) any lien or charge upon payments by the Developer to the Issuer and the Trustee 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 Issuer or the Trustee shall give prompt notice to the Developer and the Developer 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: provided that the Issuer and the Trustee shall have the right to review and approve or disapprove any such compromise or settlement. In addition thereto, the Developer shall pay upon demand all of the fees and expenses paid or incurred by the Trustee and or the Issuer and or the Association in enforcing the provisions hereof. Section 7. Consideration. The Issuer has determined to adopt and implement the Program and to issue the Bonds to obtain moneys to carry out the Program for the purpose. among others, of inducing the Developer to construct and operate the Project as a project for Low or Moderate Income Tenants and Very Low Income Tenants. In consideration of the adoption and implementation of the Program and the issuance of the Bond, by the Issuer, the Association and the Developer hhve entered into this Regulatory Agreement. Section 8. Reliance. The Issuer, the Association and the Developer hereby recognize and agree that the representations and covenants set forth herein may be relied upon by all persons interested in thu legality and validity of the Bonds and in the exemption from federal income taxation and state personal income taxation of the interest on the Bonds including, without limitation, the Trustee for the benefit of the owners of the Bonds. In performing their duties and obligations hereunder, the Issuer. the Association and the Trustee may rely upon statements and certificates of the Developer and Low or Moderato Income Tenants and Very Low Income Tenants believed to be genuine and to have been executed by the proper person or persons, and upon audits of the books and records of the Developer pertaining to occupancy of the Project. In addition, the Issuer, the Association and the Trustee may consult with counsel, and the opinion of such counsel shall be full and complete authorization and protection ;n respect of any action taken or suffered by the Issuer. the Association or the Trustee hereunder in goof faiih and in conformity with the opir►► ,r, of such counsel. In determining whether any default or lack of compliance by the Developer e•ists under this Regulatory Agreement. the Trustee and the Issuer shall not be required to conduct any investigation into or revie%% of the operations or records of the Developer and may rely solely upon any notice or certificate delivered to the Trustee by the Develooe: or the Association with respect to the occurrence or absence of a default. Section 9. Project Location. The Developer hereby represents and warrants that the Project will be located entirely within the territorial limits of the Issuer. Section 10, Sale or Transfer of Project; Syndication. The Developer hereby covenants and agrees not to sell, transfer or otherwise dispose of the Project or any interest therein (other than the making of leases for the units to members of the general public) without obtaining the prior written consent of the Issuer, which shall be conditioned solely upon receipt of evidence satisfactory to the Issuer that the Developer's purchaser or transferee (1) has assumed in writing and in full the Developer's duties and obligations under this Regulatory Agreement and the Developer Loan Documents, and (ii) has delivered an opinion of counsel to such party that such party has assumed the obligations of Developer hereunder and that the obligations assumed are binding on such party. Any sale, transfer or other disposition of the Project in violation of this Section shall be ineffective to relieve the Developer of its obligations under this Regulatory Agreement. The prior approval of the Association shall be -eauired before any sale or- transfer of the Proje;:l under the terms of its agreements with the Developer. Not less than 20 days prior to consurnmating any sale, tran,,!er or disposition of any interest in the Project, the Developer shall deliver to the Issuer, the Association and the Trustee a notice in writing explaining the nature. of the transfer. The Developer shall not syndicate the Project without the prior written approval of the Issuer; provided, however, that the Issuer shall not withhold such approval if the Issuer determines that such syndication rrepts the requirements of Section 52080(e) of the Act or any successor provision. The Issuer shall make such determination upon receipt of an opinion of counsel for the Developer acceptable to the Issuer to the effect that (i) the terms and conditions of the syndication do not reduce or limit any of the ► equirements of the Act or regulations adopted or documents executed pursuant to the Act, (4) no requirements o! the Issuer shall be subordinated to the syndication agreement and (iii) the syndication shall not result in the provision of fewer assisted units, or the reduction of any trenefits or services, than were in existence prior to the syndication agreement. Section 11. Involuntary Substantial Loss or Substantial Destruction. Upon evidence satisfactory to the Issuer that compliance with the provisions of this Regulatory Agreement is no longer possible due to the involuntary loss or substantial destruction of the Project as a : asult of unforeseen events which prevent compliance hereunder (e.g.. a fire, seizure, requisition, changes in a federal law or an action of a federal agency after the Delivery Date or condemnation) cr due to a foreclosure by the Association of the lien of the Developer t lortgage or delivery of a deed in lieu of foreclosure whereby a party other than the Developer or an Affiliated Party ,hall take possession of the Project. the Project shall not be subject to the terms and provisions of this Regulatory agreement prt;vrded that fit all Bonds outstanding pursuant to the Indenture are redeemed within a reasonable period and (ii) an opinion from Bosid Counsel is received stating that noncompliance with the provisions hereof as a result of such involuntary loss or substantial destruction resenting fro-n an unforeseen event will not adversely affect the exemption from federal income taxation or state personal income taxation of the interest on the Bonds. Notwithstanding the foregoing, the provisions of this Regulatory Agreement and the terms and provisions hereof shalt remain in force and effect as though the provisions hereof had never ceased to apply to the Protect (e) if. after a foreclosure or the delivery of a deed in lieu of foreclosure. the Developer or an Affiliated Party shall acquire an ownership interest (for federal income tax purposes) in the Project subsequent td such event or (ul if the Association upon acquiring title by foreclosure or a deed in lieu of foreclosure does not prepay thc- Developer Loan in full. Upon acquiring title to the Project pursuant to a foreclosure or a deed in lieu of foreclosure, the Association may. in its discretion, convey tale to the Project to a subsequent purchaser, provided such subsequent purchaser assumes the Developer's duties and obligations under the Regulator; Agreement in accordance with Section 10 hereof. Scvtcrt 12. Covenants to Run With the Land. The Developer hereby subjects the Project and the land described in Exhibit "A" hereto to the covenant.;, reservations and restrictions set forth in this Regulatory Agreement. The issuer, the Trustee. the Association and the Developer hereby declare their specific intent that the covenants, reservations and restrictions sel forth her em shall be deemed covenants running with the land and shall pass to and be binding upon the Developer's successors in title to the Project: provided. however. that on the termination of this ►iegulatcry agreement said covenants, reservations and restrictions shall exp-re. Each and every contract, deed or other instrument hereafter executed covering or conveying the Project or any portion thereof shall conclusively be held to have been executed, delivered and accepted subject to such covenants, reservations and restrictions, regardless of whether such covenants, reservations and restrictions are set forth in such contract, deed or other instruments. Section 13. Burden and Benelit. The Issuer, the Trustee, the Association and the Developer hereby declare their understanding and intent that the burden of the covenants set forth herein touch and concern the land in that the Developer's legal interest in the Project is rendered less valuable thereby. The Issuer, the Trustee, the Association and the Developer hereby further declare their .12. understanding and intent that the benefit of such covenants touch and concern the land by enhancing and increasing the enjoyment and use of the Project by Low or Moderate Income Tenants and by Very Low Income Tenants, the intended beneficiaries of such covenants, reservations and restrictions, and by furthering the public purpose for which the Bonds were issued. Section 14. Uniformity; Common Plan. The covenants, reservations and restrictions hereof shall apply uniformly to the entire Project in order to establish and carry out a common plan for the use, development and improvement of the land on which it is to be constructed. Section 15. Term. This Regulatory Agreement shall become effective upon its execution and delivery. Except as provided in the immediately following paragraph and as otherwise provided in Section 11 hereof, this Regulatory Agreement shall remain in full force and effect for so long as any Bonds are Outstanding under the Indenture but in any case at least for the Qualified Project Period, it being expressly agreed and understotd that the provisions hereof (other than the provisions of Section 4 hereof which in any case will remain in effect until the date provided in or determined in the manner provided in that Section) are intended to survive the expiration of the Developer Loan Document!, and the Collateral Pledge Agreement. Notwithstanding any other provisicios of this Regulatory Agreement, this entire agreement, or any of the provisions or Sections hereof, may be terminated upon agreement by the Issuer. the Trustee, the Association and the Developer if there shall have been received an opinion of Bond Counsel that such termination will not adversely affect the exemption from federal income taxation or state personal income taxation of the interest on the Bonds. The Developer shall provide notice of any termination of this Regulatory Agreement to ;he Associat.on. Section 16. Events of Default; Enforcement. !f the Developer defaults in the performance or observance of any covenant, agreement or obligation of the Developer set forth in this Regulatory Agreement, and if such default remains uncured for a period of forty-five (45) days after notice thereof shall have been given by the Issuer or the Trustee to the Developer, with a copy of such notice to the Association (ur for a period of sixty (60) days after such notice if such default is curable but requires acts to be done or conditions to be rernedied which, by their nature, cannot be done or remedied within such 45•day period, and if the Developer commences to remedy the default within such 45-day period and thereafter diligently and continuously prosecutes the same to completion within such 60-day period), or such longer period as may be approved by Bcnd Counsel, then the Issuer (or the Trustee, acting on behaif cf the Issuer) may, and in the case of a default affecting the federal or state income taxation of interest on the Bonds shall, declare that an Event of Default has occurred hereunder and may take any one or more of the following steps, at its option: (a) By mandamus or other suit, action or proceeding at law or in equity, require the Developer to perform its obligations and covenants hereunder, or enjoin any acts or things which may be unlawful or in violation of the rights of the Issuer, the Association or the Trustee hereunder, (b) Have access to and inspect, examine and make copes of all of the books and records of the Developer pertaining to the Project. (c) Take whatever other action at law or in equity may appear necessary or destrab!e to enforce the obligations, covenants and agreements of the Developer hereunder: and (d) Subject to the provisions of Section 802 of the Indenture, declare a default under the Developer Mortgage, accelerate the Coveloper Loan, and proceed with foreclosure and the exercise of all other rights. and remedies under the Developer Mortgage if such indebtedness is not paid, The Trustee and the Association shall have the right. in accordance with this Section and the provisions of the Indenture, without the prior consent or approval of the Issuer, to exercise any or all of 13 the Issuer's rights or remedies hereunder; provided that prior to taking any such enforcement action the Trustee or the Association, as the case may be, shall notify the Issuer in writing of its intended action. Notwithstanding any provision to the contrary contained herein, each of the Trustee, the Association and the Issuer shall have the right to enforce this Regulatory Agreement and require curing of defaults in such shorter periods than specified above as it may reasonably deem necessary to insure compliance with Section 103(b)(4)(A) of the Code. No delay in enforcing the provisions hereof as to any breach or violation shall impair, damage or waive the right of any party entitled to enforce the same or to obtain relief against or recover for the continuation or repetition of such breach or violation or any similar breach or violation thereof at any later time or times. Section 17. Governing Law. This Regulatory Agreement shall be governed by the laws of the State of California. Section 18. Amendments. Except as provided in the next succeeding paragraph, this Regulatory Agreement shall be amended only by a written instrument executed by the parties hereto and only upon an opinion of Bond Counsel that such amendment o, revision will not adversely affect the exemption from federal income taxation or state pprsonal income taxation of interest on the Bonds. The agreement of the Issuer, the Association and the Trustee to any amendment to this Regulatcry Agreement shall be given only in accordance with the provisions of Article XII of the Indenture or. if the Bonds are no longer outstanding, upon receipt of an opinion of Bond Counsel that such amendments or revision will not adversely affect the exemption from federal income taxation or state personal income taxation of interest on any of the Bonds. To the extent any amendments to the Act, the final Regulations or the Code shall, in the written opinion of Bond Counsel Bled with the Issuer and the Trustee. impose requirements upon the ownership or operation of the Project more restrictive than those imposed by this Regulatory Agreement, this Regulatory Agreement shalt be deemed to be automatically amended to impose Stich additional or more restrictive requirernerat . Section 19. Payment of Trustee's and Issuer's fees. In the event that a part;, to this Regulatory Agreement brings an action against any other party to this Regulatory Agreement by reason of the breach of any condition or covenant. representation or warranty in this Regulatory Agreement, or otherwise arising out of this Regulatory Agreement, the prevailing party in such action shall be entitled to recover from the other reasonable attorneys' fees to be fixed by the court which shall render a judgment, as well as the costs of suit. The Developer hereby covenants and agrees to pay to the Issuer its fees and expenses Incurred to connection with the Bonds and its administration of the Project and to pay to the Trustee and any Paying Agent any arnounts owing Icr Ciper3ttng Expenses, as that term is defined in the Indenture. Such fees and expenses shall be paid by the Developer to the Trustee for deposit into the General Fund created pursuant to the Indenture, within 30 days of receipt of an invoice from the Issuer, the Trustee or any paying agent. Section 20. Severability. If any provision of this Regulatory Agreement shall be invalid, inoperative or unenforceable as applied in any particular case in any jurisdiction or jurisdictions or in all jurisdictions, or in all cases because it conflicts with any other provision or provisions hereof or any constitution or statute or rule of public policy, or for any other reason, such circumstances shall not have the effect of rendering the pro ion in question inoperative or unenforceable in any other case or circumstance, or of rendering any other provision or provisions herein contained invalid, inoperative, or unenforceable to any extent whatever. j .t4 The invalidity of any one or more phrases, sentences, clauses or Sections contained in this Regulatory Agreement shall not affect the rernaining portions of this Regulatory Agreement, or any part hereof. Section 21. Time of the Essence. In each provision of this Regulatory Agreement which states a specific amount of time within which the requirements thereof are to be satisfied, time shall be deemed to be of the essence. Section 22. Recording anti Filing. The Developer shall cause this Regulatory Agreement and all amendments and supp!emems hereto to be recorded and filed in the real property records in the office of the County Recorder of Orange County and in such manner and in such place as the City or the Trustee may reasonably request, and shall pay all fees and charges incurred in connection therewith. Upon the latest to occur of the termination of this Agreement, the expiration of the Oualified Pwiect Period and the final payment of all of the Bonds, the Issuer stuill cooperate with the Developer, at the sole expense . of ttva Developer, in the recording of such instrument or instruments of release or termination with respect to this Agreement as the Developer may reasonably request; provided, however, that this provision shall not be implemented unless the Issuer receives an opinion of Bond Counsel to the effect that such instrument or instniments may be executed and recorded without in and 'of themselves having an adverse effa.t upon the exemption of interest on the Bonds from Federal income taxation or California personal income taxation. Section 23. Notice. The trustee and the Developer shall provide a copy of any notice provided under this Regulatory Agreement to the Association and the Issuer. Any notr,,e required to be given hereunder shall be given by personal delivery or by registered or certified mail at the addresses specified below or at such other addresses as may be specified in w,-ting by the parties hereto: If to the Issuer: City of Huntington Beach 2000 Main Street Huntington i3eacn, California 92648 Attention: Principa.1 Redevelopment Specialist If to the Trustee: Seattle -Fast National Bart` 1001 Fourth Avenue Seattle. WA 98154 (delivery) P.O. Box 3586 Seattle, OVA 98124 (mail) Attention. Bond Trustee Services. 9th Floor If to the Developer: Wlage Partnership 1810 • 14th Street Suite 207 Santa Monica, California 90404 Attention: T. Daniel Meveau If to the Association: Mercury Savings and Loan Association 7812 Edinger Avenue Huntington Beach. California 92647 Attention: Chief Financial Officer .15• With a copy to'. Pettit R Martin 101 California Street, 35th Floor San Francisco, California 04111 Attention: Arnold P. Schuster, Esq. '(the delivery of such copy shall not constitute the delivery of notice hereunder) Notice shall be deemed given three (3) business days after the date of mailing, or, if personally delivered, when received. Section 24. Compliance by. Developer. The Trustee shall not be responsible for mairmunining or ,verifying compliance by the Developer with its )bl)gations under this Regulatory Agreement. The Program Administrator shall assume#/ such responsibilities under the terms of an Administration Agreement " among the Program Administrator, the Issuer and the Deve000er, to be entered into not later titan the date on rdiicti the first unit within the Project is initially occupied. •16- IN WITNESS WHEREOF, the Issuor, the Trustee, the Association and the Developer have caused this Agreement to be signed, acknowledged and attestEd on their behalf by duly authorized repress tatives, all as of the date first written herainabove. ATTEST: City Clerk CITE' OF HUNTINGTON BEACH By: City Administrator MERCURY SAVINGS AND LOAN AS SOC!ATiON -32 Vice President VILLAGE PARTNERSHIP B, : General Partner fay. General Partner SEATTLE•FIRST NATIONAL BANK. as Trustee By - Its: -17- The land referred to in this report is situated in the Comity of Orange, State of California, and is described as follows: The East 4.00 acres of the South Nall of tho Northeast Quarter of the Northeast Quarter of Section 21, Township 5 South, Range 11 West, in the Rancho La Balsa Chica, in the City of Huntington Beech, County of Orange, State 'of California, as per map recorded in Book 51, Page 13 of Miscellaneous Maps, in the Office of the County Recorder of said County. Excepting therefrom the North 150.00 feet thereof, said land is also known as Parcel One of that certain Parcel Map recorded October 17, 1969, as Parcel Map No. 11565 in Book 25 Page 11 of Parcel Maps, in the Office of the County Recorder of Orange County, State of Califomia. STATE OF CALIFORNIA ) )SS. COUNTY OF ORANGE ) On this day of August, in the year 1986, before me , a Notary Public, personally appeared _, personally known to me to be the person who executed this instrument as the City Administrator of the City of Huntington Beach, and acknowledged to me that the City of Huntington Beach executed it. WITNESS MY HAND AND OFFICIAL SEAL. Notary Public for the State of California Commission Expires: 19_ .19. On this day of August, in the year 1985, before me, a Notary Public. personally appeared and ,personally known to me to be the managing general partners of Villagp Partnership, a California general partnership, said persons being personally known to me to be the sole general partner of Village Partnership, a California general partnership, the persons who executed the within instrument and acknowledged to me that they executed the same as a general partners of the partnership first above named, that said partnership executed the same as the general partners of Village Partnership, a California genera; partnership, and that said last named partnership executed the same. WITNESS MY HAND AND OFFICIAL SEAL. Notary Public for the State of California Commission Expires: 19__ 0 -20• STATE OF CALIFORNIA ) r )ss. COUNTY OF ORANGE ) On this day of August, in the year 1986, before me, the undersigned a Notary Public, personally appeared , personally known to me to be the person whose name is subscribed to this instrument as the Trust Officer of Seattle -First . National Bank, a bank organized under ' the laws of the State of California and acknowledged to me that such association executed the same. WITNESS MY NAND AND OFFICIAL SEAL. Notary Public for the State of California Commission Expires: 19_