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Home My WebLink AboutFive Point Senior Villas - Res No 6330 - Adopted Multi-Fami NONE S HALL A PROFESSIONAL LAW CORPORATION ATTORNEYS AT LAW CHARLES F.ADAMS 650 CALIFORNIA STREET STEPHEN R.CASALEGGIO EIGHTEENTH FLOOR THOMAS A.DOW NEY SAN FRANCISCO.CA 94108 ANDREW C.HALL,JR. COVRTNEY L.JONES TELEPHONE WILLIAM J.KADI (415)391-5780 CHRISTOPHER K.LYNCH FACSIMILE WILLIAM H.MADISON (415)391.5784 DAVM J.OSTER DAVID A.WALTON MEMORANDUM HOMEPAGE:hap://www.fthhw.com KENNETH I.JONES.of COUNSEL TO: Stephen Kohler,Project Manager RECEIVED City of Huntington Beach Scott Field, Esq.,Deputy City Attorney 1999 City of Huntington Beach 1)EPARTk4F-NT OF David Michelson,Director of Acquisitions `MONO-mid U)NELOPME,NT Five Points Seniors, LP Norman Ward Wardfam Corporation Bret Reed Bret H. Reed,Jr.,A Law Corporation Louis Louis Standard &Poor's FROM: Thomas A. Downey, Esq. DATE: March 12, 1999 RF- Ciiy of Huntington Beach Multifamily Housing Revenue Bonds (Five Points Seniors Project)Series A of 1991 Enclosed please find for your review and comments, revised drafts of the following legal documents with respect to the above referenced transaction: 1. Amended and Restated Indenture of Trust; 2. Amended and Restated Loan Agreement; 3. First Amendment to Regulatory Agreement;and 4. First Amendment to Affordable Housing Agreement. All other parties have received these documents by email distribution. If you have any questions or comments regarding the enclosed, I can be reached at (415) 391- 5780. TAD:ams Enclosures 18019-48 JH:TAD:ams 3/12/99 CITY OF HUNTINGTON BEACH VARIABLE RATE DEMAND MULTIFAMILY RENTAL HOUSING REVENUE BONDS (FIVE POINTS SENIORS PROJECT) SERIES A OF 1991 DISTRIBUTION LIST ISSUER Norman Ward Stephen Kohler Wardfam Corporation Project Manager 4 White Cliff Scott Field Laguna Niguel, CA 92677 Deputy City Attorney 949-496-5144 City of Huntington Beach 949-496-5277- Fax 2000 Main Street Huntington Beach, CA 92648 OWNER'S COUNSEL 714-536-5457 (Stephen Kohler) Bret Reed(HARD COPIES ONLY) 714-375-5087—Fax Bret H. Reed, Jr., A Law Corporation 714-536-5662 (Scott Field) 200 Garnet Avenue 714-374-1590 - Fax Balboa Island, CA 92662 949-955-9150 BOND COUNSEL 949-673-9265 - Fax Tom Downey, Esq. David Walton, Esq. (Tax Attorney) CREDIT ENHANCEMENT PROVIDER Jones Hall, A Professional Yasmin Tong Law Corporation Fannie Mae 650 California Street, 18`' Floor 135 N. Los Robles, Suite 300 San Francisco, CA 94108 Pasadena,CA 91101 415-391-5780 626-396-5100 415-391-5784 —Fax 626-396-5411 tdowney@jhhw.com yasmin tonafanniemae.com OWNER CREDIT ENHANCEMENT COUNSEL David Michelson Outside Counsel Director of Acquisitions David Dubrow Five Points Seniors,LP Evan Sils 15707 Rockfield Blvd.,Suite 255 Haythe & Curley Irvine, CA 92618 237 Park Avenue, 20t'Floor 949-462-9040 New York, NY 10017 949-462-9044—Fax 212-880-6115 212-682-0200—Fax ddubrow@haythecurley.com and also esils@haythecurley.com Huntington Beach Distribution List Page 2 FANNIE MAE DUS LENDER NEW REMARKETING AGENT Anthony D. Cinquini Anthony D.Cinquini Banc One Capital Funding Corporation Laura K. Kaak 8730 Sunset Blvd.,Suite 210 Banc One Capital Funding Corporation Los Angeles, CA 90069 8730 Sunset Blvd., Suite 210 310-854-5444 Los Angeles,CA 90069 310-854-5808—Fax 310-854-5444—Cinquini adcinquini@bocc.com adcinquini@bocc.com 310-854-1105—Kaak Ken Bowen Ikkaak@bocc.com Jerry Johnson 310-854-5808—Fax Amy Baker Banc One Capital Funding Corporation REMARK PING AGENT'S COUNSEL 150 East Gay Street, 22nd Floor Jerre Trisch,Esq. Columbus, Ohio 43215 Randy Putnam,Esq. 614-217-1558—Bowen Patricia Ryan,Esq. khbowen@bocc.com Kutak Rock 614-217-1586 —Johnson The Omaha Building, 1650 Farnam jxjohnson@bocc.com Omaha,NE 68102 614-217-1820 —Baker 402-346-6000 albaker@bocc.com 402-346-1148—Fax 614-217-0129—Fax ;erre.tritsch@kutakrock.com randal.putnam@kutakrock.com FANNIE MAE DUS LENDER COUNSEL patricia.ryan@kutakrock.com Charles Moran Thomas A. Hauser TRUSTEE Ballard,Spahr,Andrew &Ingersoll,LLP Tom Orlina(HAtD copiEs oNLY) 300 East Lomard St.,Suite 1900 Trust Division Baltimore, MD 21202 Dai-Ichi Kangyo Bank 410-528-5689 -Moran 555 W. 5th Street, 5th Floor moran@ballardspahr.com Los Angeles,CA 90013 410-528-5691 —Hauser 213-243-4700 hauser@ballardspahr.com 213-624-5258—Fax 410-528-5650 torlina@dkb.com TRUSTEE COUNSEL Philip Jensen,Esq. Jensen Law Offices 220 Montgomery Street, Suite 394 San Francisco,CA 94104 415-986-6520 415-986-6993—Fax 12kjensen@worldnet.att.net Huntington Beach Distribution List. Page 3 OLD LETTER OF CREDIT PROVIDER Katherine Reid Lisa Cohen Wells Fargo Bank,N.A. Real Estate Industries Group Community Affairs 2030 Main Street Irvine, CA 92614 949-251-4363—Reid reidke@wellsfargo.com 949-251-4326 —Cohen cohenl@wellsfargo.com 949-851-9533 - Fax OLD LETTER OF CREDIT PROVIDER'S COUNSEL Richard M. Johnson,Jr. Attorney at Law 280 South Beverly Drive,Suite 206 Beverly Hills,CA 90212 310-247-0438 310-274-2351 —Fax rmjjrlaw@aol.com RATING AGENCY Louis Louis Standard &Poor's 25 Boradway, 21" Floor New York, NY 10004 212-208-1608 212-412-0393 - Fax RCA ROUTING SHEET INITIATING DEPARTMENT: Economic Development SUBJECT: Amended Financing Documents & Affordable Housing Agreement -- Five Points Senior Project COUNCIL MEETING DATE: March 15, 1999 RCA ATTACHMENTS STATUS Ordinance (w/exhibits & legislative draft if applicable) Not Applicable Resolution (w/exhibits & legislative draft if applicable) Attached Tract Map, Location Map and/or other Exhibits Not Applicable Contract/Agreement (w/exhibits if applicable) (Signed in full by the City Attorne ) Attached Subleases, Third Party Agreements, etc. (Approved as to form by City Attorne Not Applicable Certificates of Insurance (Approved by the CityAttomey) Not Applicable Financial Impact Statement (Unbud et, over $5,000) Not Applicable Bonds (If applicable) Not Applicable Staff Report If applicable) Attached Commission, Board or Committee Report (If applicable) Not Applicable Findings/Conditions for Approval and/or Denial Not Applicable EXPLANATION FOR MISSING ATTACHMENTS REVIEWED RETURNED FORWARDED Administrative Staff Assistant City Administrator Initial City Administrator Initial o City Clerk EXPLANATION FOR RETURN OF ITEM: (Below Space For City Clerk's Use • RCA Author: SVK fSph/cue - Ee De✓. y �t3i6 r"s Council/Agency Meeting Held: Deferred/Continued to: ❑ A proved ❑ Conditional) Approved ❑ Denied — .^ o • fv/,'e l�f�iJ7� C ty Clerk's Signature e� Council Meeting Date: March 15, 1999 Department ID Number: ED 99-13 CITY OF HUNTINGTON BEACH REQUEST FOR COUNCIUREDEVELOPMENT AGENCY ACTION SUBMITTED TO: HONORABLE MAYOR/CHAIRMAN AND CITY COUNCIL e �qd MEMBERS/REDEVELOPMENT AGENCY MEMBERS &.11 SUBMITTED BY: RAY SILVER, City Administrator/Executive Director-- 39EPARED BY: David C. Biggs, Director of Economic Development 0�yo SUBJECT: Approval of Documents for the Reissuance of $9,500,000 City of Huntington Beach Variable Rate Demand Multifamily Housing Revenue Bonds (Five Points Senior Project) Series A of 1991 Statement of Issue,Funding Source,Recommended Action,Alternative Action(s),Analysis, Environmental Status,Attachment(s) Statement of Issue: In 1991, the city issued the captioned securities to finance the Five Points Senior Villas. The structure of the financing included a Wells Fargo Bank Letter of Credit as a guarantee of payments to bondholders. The Borrower now wishes to replace this credit facility with the participation of Fannie Mae. Funding Source: Proceeds of the Bonds Recom.nended Action: i) Open the public hearing and receive public testimony. 2) Close the public hearing. 3) After consideration of the testimony, A CITY COUNCIL MOTION TO: Approve the attached resolution authorizing amended documents for $9,500,00 CITY OF HUNTINGTON BEACH VARIABLE RATE DEMAND MULTIFAMILY HOUSING REVENUE BONDS (Five Points Senior Project) SERIES A OF 1991 permitting the substitution of a Fannie Mae pledge of collateral in lieu of the Wells Fargo Bank Letter of Credit and A REDEVELOPMENT AGENCY MOTION TO: Approve the attached resolution approving the amended Housing Agreement between the Redevelopment Agency and Five Points Seniors, LP, which permits a reduction in the project's amenity budget. Alternative Action(s): Do not approve the amended financing documents or the Amended Housing Agreement REQUEST FOR COUNCIUREDEVELOPMENT AGENCY ACTION MEETING DATE: March 15, 1999 DEPARTMENT ID NUMBER: ED 99-13 Analysis: In the city's continuing program of tax exempt financing for multifamily housing that provides affordable units, the Five Points Senior Villas (as it is now called) was financed in 1991. The structure of the financing included a letter of credit from Wells Fargo Bank to guarantee payments to bond holders if the project owner should default on debt service. The owner paid the bank a fee for its provision of a "Stand-by Letter of Credit" and the bank took a security interest in the project as recourse in the event the owner defaulted. At this time the owner wishes to amend the financing documents to replace the Wells Fargo Letter of Credit with a credit facility from the federal Fannie Mae. In this structure, Fannie Mae pledges a pool of mortgages as collateral to guarantee payments to bond holders. If the owner defaults, the Trustee is empowered to sell a portion of the pledged collateral to continue interest payments to bond holders. Like the bank, Fannie Mae collects a fee for this service and takes a security interest in the project as its ultimate recourse. In every way, this structure functions like the original and subjects the city to no greater risk nor any financial obligation and it may also improve the rating on the bonds to AAA (the actual rating has not yet been assigned by Standard and Poor's). Therefore, approval of the attached resolution approving the amended documents and authorizing the appropriate city officials to execute them is recommended. In addition,a requirement of the federal tax code requires that projects benefiting from tax exempt financing provide at least twenty percent of units as affordable to "low- and moderate income households" as defined by HUD. For this project, the Agency choose to reach additional households in the "very low income" category. To facilitate this, the Agency provided financial assistance to the project owner in the form of a $250,000 loan and a $500,000 grant (payable in annual installments of $100,000). All the grant payments have been made to the project owner and the owner is current in its repayment of the loan. These terms were memorialized in an Affordable Housing Agreement. This Agreement also stipulated minimum amounts to be spent on payroll, activities, insurance, auto/van, advertising and management. This was done to assure that adequate resources were devoted to the operation of a facility in which the Agency had invested. This operating budget exceeds that allowed by Fannie Mae for projects it is guaranteeing. Therefore the owner has requested a reduction in the previously stipulated amounts (from $311,600/yr. To $266,000/yr.). Because the reduced operational budget is justified by the real world experience in operating the project for the last eight years, the amendment to the Affordable Housing Agreement is recommended. THE COMPLETE TRANSCRIPT FOR THIS FINANCING, IS AVAILABLE FOR COUNCIL OR PUBLIC VIEW IN THE OFFICE OF THE CITY CLERK. Environmental Status: NA Attachment(s): City Clerk's . . - Number No. Description Resolution Approving Financing Agreement and Amended & Restated Indenture of Trust and Authorizing the Execution and Delivery Thereof MAR99RCA -2- 03/09/99 1:37 PM REQUEST FOR COUNCIUREDEVELOPMENT AGENCY ACTION MEETING DATE: March 15, 1999 DEPARTMENT ID NUMBER: ED 99-13 II 2 I Resolution Approving the Amended Affordable Housing Agreement I RCA Author: SVK MAR99RCA -3- 03/09/99 1:37 PM City Council Resolution Approving and Authorizing the Execution of a Financing Agreement and an Amended and Restated Indenture (Five Points Senior Project) RESOLUTION NO. 99-21 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH APPROVING AN AMENDED AND RESTATED INDENTURE OF TRUST, AN AMENDED AND RESTATED LOAN AGREEMENT, A FIRST AMENDMENT TO REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE COVENANTS AND AN ASSIGNMENT AND INTERCREDITOR AGREEMENT,AND AUTHORIZING THE EXECUTION AND DELIVERY THEREOF, AND OTHER AGREEMENTS IN CONNECTION THEREWITH, AND AUTHORIZING AND DIRECTING THE EXECUTION AND DELIVERY OF DOCUMENTS AND ACTIONS TAKEN IN CONNECTION THEREWITH, ALL WITH RESPECT TO THE FIVE POINTS SENIORS PROJECT WHEREAS, the City of Huntington Beach (the "City") has issued its City of Huntington Beach Variable Rate Demand Multifamily Housing Revenue Bonds (Five Points Seniors Project), Series A of 1991 in the aggregate principal amount of$9,500,000 (the "Bonds") pursuant to an Indenture of Trust (the "Indenture"), dated as of December 1, 1991, by and between the City and Dai-Ichi Kangyo Bank of California, as trustee (the"Trustee"); and The proceeds of the Bonds were used by the City to fund a loan to provide financing with respect to a multifamily rental housing development owned by Five Points Seniors, L.P. (the "Borrower"); and The Bonds are secured by a letter of credit (the "Letter of Credit") issued by Wells Fargo Bank, N.A. ("Wells Fargo"); and The Borrower has requested that substitute credit enhancement and liquidity be provided for the Bonds; and Fannie Mae has agreed to provide substitute credit enhancement and liquidity for the Bonds; and To accomplish the substitution of Fannie Mae's credit enhancement for the Letter of Credit, the City must amend and restate the Indenture and the Loan Agreement (as defined in the Indenture), amend the Regulatory Agreement (as defined in the Indenture), and execute and deliver an Assignment and Intercreditor Agreement; and All actions to be taken or consents to be given prior to the execution and delivery of an amended and restated Loan Agreement and Indenture, an amendment to Regulatory Agreement prior the effective dates thereof, and the execution and delivery of such Assignment Agreement, shall be taken or given as required by the Loan Agreement, the Indenture, the Regulatory Agreement and such Assignment Agreement, respectively. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Huntington Beach as follows: SECTION 1. The Amended and Restated Indenture of Trust (the "Amended Indenture") between the City and the Dal-Ichi Kangyo Bank of California, as trustee (the "Trustee"), in the form on file with the City Clerk is hereby approved. The Mayor is hereby authorized and directed, for and in the name and on behalf of the City, to execute and deliver the Amended Indenture, and the City Clerk is hereby authorized to attest the signature of the Mayor, in substantially said form, with such additions thereto or changes therein as are recommended or approved by the City Administrator or the Director of Administrative Services (the "Designated Officers") upon consultation with bond counsel to the City, including such additions or changes as are necessary or advisable in accordance with Section 5 hereof, the approval of such additions or changes to be conclusively evidenced by the execution and delivery by the City of the Amended Indenture. SECTION 2. The Amended and Restated Loan Agreement (the "Amended Loan Agreement") between the City and the Borrower, in the form on file with the City Clerk, is hereby approved. The Mayor is hereby authorized and directed, for and in the name and on behalf of the City, to execute and deliver the Amended Loan Agreement, and the City Clerk is hereby authorized to attest the signature of the Mayor, in substantially said form, with such additions thereto or changes therein as are recommended or approved by said Designated Officers upon consultation with bond counsel to the City, including such additions or changes as are necessary or advisable in accordance with Section 5 hereof, the approval of such additions or changes to be conclusively evidenced by the execution and delivery by the City of the Amended Loan Agreement. SECTION 3. The First Amendment to Regulatory Agreement and Declarations of Restrictive Covenants (the "First Amendment to Regulatory Agreement") among the City, the Trustee and the Borrower, in the form on file with the City Clerk, is hereby approved. The Mayor is hereby authorized and directed, for and in the name and on behalf of the City, to execute and deliver the First Amendment to Regulatory Agreement, and the City Clerk is hereby authorized to attest the signature of the Mayor, in substantially said form, with such additions thereto or changes therein as are recommended or approved by the Designated Officers upon consultation with bond counsel to the City, including such additions or changes as are necessary or advisable in accordance with Section 5 hereof, the approval of such additions or changes to be conclusively evidenced by the execution and delivery by the City of the First Amendment to Regulatory Agreement. SECTION 4. The Assignment and Intercreditor Agreement (the "Assignment Agreement"), dated as of April 1, 1999, among the City, the Trustee and Fannie Mae, in the form on file with the City Clerk, is hereby approved. The Mayor is hereby authorized and directed, for and in the name and on behalf of the City, to execute and deliver the Amended Loan Agreement, and the City Clerk is hereby authorized to attest the signature of the Mayor, in substantially said form, with such additions thereto or changes therein as are recommended or approved by said Designated Officers upon consultation with bond counsel to the City, including such additions or changes as are necessary or advisable in accordance with Section 5 hereof, the approval of such additions or changes to be conclusively evidenced by the execution and delivery by the City of the Assignment Agreement. SECTION 5. The Designated Officers and any and all other officials of the City or such other person designated by the City are hereby directed, for and on behalf of the City, to do any and all things and take any and all actions, including, without limitation, the execution and delivery of any and all amendments or supplements to the documents executed and delivered by the City in connection with the issuance of the Bonds, including, but not limited to, any supplements or amendments to the Indenture and the Loan Agreement necessary to receive a rating on the Bonds, any and all amendments to the -2- SF-99Resol:5Points RLS 99-141 03/08/99-#1 regulatory agreement and declaration of restrictive covenants executed in connection with the issuance and delivery of the Bonds in order to conform such document to the provisions of the Indenture, any and all assignments, certificates, agreements, including, but not limited to an Assignment Agreement, notices, consents, instruments of conveyance and other documents, which they, or any of them, on the advice of bond counsel to the City, may deem necessary or advisable in order to effect the amendment and restatement of the Indenture and the Loan Agreement, and the provisions of the First Amendment of Regulatory Agreement and the Assignment Agreement, as provided herein, and any and all assignments, certificates, agreements, notices, consents, instruments of conveyance and other documents which may be required by the Internal Revenue Code of 1986, which they, or any of them, on the advice of bond counsel to the City, may deem necessary or advisable in connection with the execution of the Amended Loan Agreement, the First Amendment to Regulatory Agreement, the Assignment Agreement and the Amended Indenture, as provided herein. PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a regular meeting thereof on the 15th day of March , 1999. Mayor ATTEST: APPROVED AS TO FORM: ��s�rsrtli Clerk -City Attorney Al"a aq City Cle REVIEWED AND APPROVED: INIT ED A APPROVED: City Admin trator Director o Economic eve op ent -3- SF-99Resol:5Points RLS 99-141 03/08/99-#1 Redevelopment Agency Resolution Approving The First Amendment to the Affordable Housing Agreement — Five Points Senior Project RESOLUTION NO. 296 A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH APPROVING A FIRST AMENDMENT TO AFFORDABLE HOUSING AGREEMENT AND AUTHORIZING THE EXECUTION AND DELIVERY THEREOF, AND AUTHORIZING AND DIRECTING THE EXECUTION AND DELIVERY OF DOCUMENTS AND ACTIONS TAKEN IN CONNECTION THEREWITH, ALL WITH RESPECT TO THE FIVE POINTS SENIORS PROJECT WHEREAS, the City of Huntington Beach (the "City") has issued its City of Huntington Beach Variable Rate Demand Multifamily Housing Revenue Bonds (Five Points Seniors Project), Series A of 1991 in the aggregate principal amount of$9,500,000 (the "Bonds") pursuant to an Indenture of Trust (the "Indenture"), dated as of December 1, 1991, by and between the City and Dai-Ichi Kangyo Bank of California, as trustee (the "Trustee"); and The proceeds of the Bonds were used by the City to fund a loan to provide financing with respect to a multifamily rental housing development (the "Project") owned by Five Points Seniors, L.P. (the "Borrower"); and In connection with the financing of the Project with the proceeds of the Bonds, the Redevelopment Agency of the City of Huntington Beach (the "Agency") entered into an Affordable Housing Agreement (Five Points Senior Villas), dated as of November 18, 1991, by and between the Agency and the Borrower(the "Affordable Housing Agreement"); and The Bonds are secured by a letter of credit (the "Letter of Credit") issued by Wells Fargo Bank,N.A. ("Well Fargo"); and The Borrower has requested that substitute credit enhancement and liquidity be provided for the Bonds; and Fannie Mae has agreed to provide substitute credit enhancement and liquidity for the Bonds; and To accomplish the substitution of Fannie Mae's credit enhancement for the Letter of Credit, the Agency has been requested to amend the Affordable Housing Agreement and execute and deliver a First Amendment to Affordable Housing Agreement by and between the Agency and the Borrower(the "First Amendment to Affordable Housing Agreement"); and All actions to be taken or consents to be given prior to the execution and delivery of the First Amendment to Affordable Housing Agreement, shall be taken or given as required by the Loan Agreement, the Regulatory Agreement and the Indenture, respectively, 1 SF-99Resolutions:FivePSP RLS 99-141 03/09/99-#1 NOW, THEREFORE, BE IT RESOLVED by the Redevelopment Agency of the City of Huntington Beach as follows: SECTON 1. The First Amendment to Affordable Housing Agreement (the"First Amendment to AHA"), dated as of April 1, 1999, between the Redevelopment Agency of the City of Huntington Beach (the "Agency") and the Borrower, in the form on file with the Secretary, is hereby approved. The Chairperson is hereby authorized and directed, for and in the name and on behalf of the Agency, to execute and deliver the First Amendment to AHA, and the Secretary is hereby authorized to attest the signature of the Chairperson, in substantially said form, with such additions thereto or changes therein as are recommended or approved by the Executive Director and the Director of Administrative Services of the Agency (the "Designated officers"), upon consultation with bond counsel to the Agency, including such additions or changes as are necessary or advisable in accordance with Section 2 hereof, the approval of such additions or changes to be conclusively evidenced by the execution and delivery by the Agency of the First Amendment to AHA. SECTION 2. The Designated officers are hereby directed, for and on behalf of the Agency, to do any and all things and take any and all actions, including, without limitation, the execution and delivery of any and all amendments or supplements to the documents executed and delivered by the City in connection with the issuance of the Bonds, including,but not limited to, any supplements or amendments to the Affordable Housing Agreement in order to conform such document to the provisions of the Indenture, any and all assignments, certificates, agreements, including, but not limited to an Assignment Agreement, notices, consents, instruments of conveyance and other documents, which they, or any of them, on the advice of bond counsel to the Agency, may deem necessary or advisable in order to effect the amendment of the Affordable Housing Agreement. PASSED AND ADOPTED by the Redevelopment Agency of the City of Huntington Beach at a regular meeting thereof held on the 15th day of March , 1999. r-- Chairman ATTEST: APPROVED AS TO FORM /,Agency CounselAgency Clerk r� REVIEWED AND APPROVED: INJTIATED AND APPROVED: AY Executi e Director hired6r of Economic Devel pment 2 SF-99ResolutionsTivePSP RLS 99-141 03/09/99-#1 ; � Fw�;=Pt�in�s Se,n��r Project .� PiJv+�f Po��nts S�nio�Pro'ect ` To substitute c_ °�`� Fannie Mae �T_�. securities "�'" Letter of Credit Five Points Senior'Project Flow of Funds Now Bondholders Owner �� Trustee «� Bank . Fiv�f=Pa�i�nts S�n,iol�Project The role of Bank is to make payments to Bond holders if owner defaults N Five Points SeniorProject 2 fi C -.-- f iv��-Po��nts Senior'Project Flow of Funds with Fannie Mae Bondholders T Owner ••► Trustee Fannie Mae Mortgages ,�.. f iv� $Pt �nts S�no�Project Trustee has power to sell Fannie Mae collateral IF owner defaults 4 ,1 PointsFive Senior Project -..- f iv�'"Po��nts Sen,ior'Project Proceeds from the sale of Fannie Mae collateral are used to pay Bond holders. .�. f iw+��"t��nts Senio�Pro'ect Bonds are NQT an obligation of City Five Points SeniorProject -_ Five =�Po��nts Senr�o�Project Bond holder recourse is limited to value of Fannie Mae collateral. .�� fw�APo��nts S�n�o�Project Fannie Mae can foreclose on project if owner defaults r�� I, five=Pa�=��nts Senr�or Project • Fannie Mae demands amendment to Housing Agreement to reduce required operating expenses for services by $45,600 to $266,000. • Reduction reviewed and recommended by economic advisor & staff . .�- Five=Pc��nts Se�n,io�`Project Tonight's Procedure: 1 . Open Public Hearing 2. Take Testimony 3. Close Hearing 4. Entertain Motions Fiv�`pPa��ts S�n.�o�Project Two Actions: 1 . Approve City Resolution approving amended documents; 2. Approve Agency Resolution approving amended Housing Agreement. PointsFive Senior Project PROOF OF PUBLICATION STATE OF CALIFORNIA) SS. County of Orange ) am a Citizen of the United States and a NOTICE OF resident of the County aforesaid; I am PUBLIC HEARING NOTICE IS HEREBY GIVEN that the City Coun- over the age of eighteen years, and not a ciloftheCityofHuntington Beach,at its regular meet- party to or interested In the below holdon March a publclhearing and entitled matter. I am a principal clerk of consider approval by the oCity reissuance by the City of the HUNTINGTON BEACH INDEPENDENT, a Huntington Beach of its Variable Rate Demand ne`vspa er of general circulation, printed Multifamily Housing Rev- enue Bond (Five Points and pu lished In the Clty of Huntington Seniors Project) Series of o in n amount not exceed eed Nine Million Five- Beach, County of Oran e Statf Hundred Thousand Dollars g , e Q ($9,500,000), originally is- California, and that attached Notice is a suedgfonhtheufnancng of sistin true and complete copy as was printed the acquevel, centofa lion and development of a multifamily rental housing an published it the Huntington Beach development in the Cit of Huntington Beach (the and Fountain Valley issues of said Pre Pr'. The Project consists of newspaper to wit the issue(s) of: 1.8 units and is located on 19 acres located at 18660 Main Street in the City of Huntington Beach, California. The owner of the project is Five Points Seniors,L.P. All those interested in matters related to the is- February 18 , 1999 suance of said bonds are invited to attend and be heard at the meeting which will commence at 7:00 p.m., or as soon as prac- ticable thereafter and will I declare, under penalty of f be held in the City Council p perjury,u ry, that Chambers,City Hall, 2000 Main Street, Huntington the foregoing is true and correct. have an question If you y questions regard- ing the public hearing, please contact Stephen Kohler, Project Manager, City of Huntington Beach, Executed on February 18 9 at(714)536-5457. , 1999 By,Connie Brockway at Costa Mesa, California. City Clerk City of Huntington Beach Published Huntington Beach-Fountain Valley Independent February 18, 1999 ------ 023_578 Signature FAX FROM: rNTNII BROCKWAY, CITY CLERK JJ ITY CLERK'S OFFICE OF HUNTINGTON BEACH �%-— Box 19012000 Main Street tington Beach CA 92648 HUNTINGTON BEACH (714) 536-5227 (714) 374-1557 FAX Fax #: Date: Number of Pages (including cover page): By. Deputy City Clerk To: INTERNET ADDRESS: http://www.cl.huntington-beach.ca.us OR httpl/www.hbsurf city.com/clerk Phone: 374-480 Remarks' urgent T For your review Reply ASAP Please comment Per your request 02/11/99 15:45 FAX 415 391 5774 JONES HALL 0 002 i y� B NOTICE ECE OF PUBLIC HEARING NOTICE IS HEREBY GIVEN that the City Council of the City of Huntington Beach, at its regular meeting on March 15, 1999, will hold a public hearing and consider approval of the reissuance by the City of Huntington Beach of its Variable Rate Demand Multifamily Housing Revenue Bond (Five Points Seniors Project) Series A of 1991 in an amount not to exceed Nine Million Five-Hundred Thousand Dollars ($9,500,000), originally issued for the purpose of assisting in the financing of the acquisition, construction and development of a multifamily rental housing development in the City of Huntington Beach(the"Project"). The Project consists of 164 units and is located on 1.89 acres located at 15660 Main Street in the City of Huntington Beach,California. The owner of the Project is Five Points Seniors,L.P. All those interested in matters related to the issuance of said bonds are invited to attend and be heard at the meeting which will commence at 7:00 p.m., or as soon as practicable thereafter and will be held in the City Council Chambers, City Hall, 2000 Main Street, Huntington Beach, California. If you have any questions regarding the public hearing, please contact Stephen Kohler,Project Manager,City of Huntington Beach,at(714) 536-5457. By: Connie Bro kw y City Clerk City of Huntington Beach [To be published no later than fifteen days before hearing date] +d . NOTICE OF PUBLIC HEARING / �s t.�r n c� .� J-►c,ti,t,ul'r � ,:.a-I S NOTICE IS HEREBY GIVEN that the City Council of the City of Huntington Beach, at its regular meeting on November 4, 1991, will hold a public hearing and consider approval of the issuance by the City of Huntington Beach of revenue bonds in an amount not to exceed Nine Million Five-Hundred Thousand Dollars ($9,500,000) for the purpose of assisting in the financing of the acquisition, construction and development of a multifamily rental housing development in the City of Huntington Beach (the "Project"). The Project consists of 164 units and is located on 1.89 acres located at 18660 Main Street in the City of Huntington Beach, California. The owner of the Project is Five Points Seniors, a California general partnership. All those interested in matters related to the issuance of said bonds are invited to attend and be heard at the meeting which will commence at 7:00 p.m. and will be held in the City Council Chambers, City Hall, 2000 Main Street, Huntington Beach, California. If you have any questions regarding the public hearing, please contact Barbara Kaiser, Deputy City Administrator, City of Huntington Beach, at (714) 536-5582. Michael T. Uberuaga, City Administrator, City of Huntington Beach By: Connie Brockway, City Clerk S1 Publish in Huntington Beach Independent October,$, 1991. 0524y 1 0 I V "STATE OF CALIFORNIA County of Orange I am a Citizen of the United States and a resident of the County aforesaid; I am over the age of eighteen years, and not a party to or interested in the below entitled matter. I am aOF PUBLIC NOTICE principal clerk of the HUNTINGTON BEACH PU NOTICE BLIC HEARING INDEPENDENT, a newspaper g a of general cltof P P Huntingtoonn Beach circulation, printed and published in the City of Five Points Senior Villas Huntington Beach, County of Orange, State of Issuance of California, and that attached Notice is a true and Revenue Bonds complete co as was printed and published in NOTICE IS HEREBY P PY P P GIVEN that the City Council the Huntington Beach and Fountain Valley of the City of Huntington Beach, at is regular meet- issues of said newspaper to wit the issue(s) of: ing on Nov. 18, 1991, will hold a public hearing and consider approval of the is- November 14, 1991 suance by the City of Hun-1 tington Beach of Revenuel bonds in an amount not to exceed Nine Million Five- Hundred Thousand Dollars ($9,500,000) for the pur- pose of assisting in the fi- nancing of the acquisition, construction and develop- ment of a multifamily rental housing development in the City of Huntington Beach (the"Project'). The Project consists of 164 units and is located on 1.89 acres located at 18660 Main Street in the City of Huntington Beach, Califor- nia. The owner of the Project is Five Points Se- niors, a California general partnership. All those interested in matters related to the is- suance of said bonds are invited to attend and be heard at the meeting which will commence at 7:00 p.m. and will be held in the City I declare, under penalty of perjury, that the Council Chambers, City Hall, 2000 Main Street, foregoing is true and correct• Huntington Beach, Califor- nia. If you have any ques- tions regarding the public hearing, please contact Executed on November 14, , 199 1 Barbara Kaiser, Deputy City Administrator, City of Huntington Beach, at (714) at Costa Mesa, Califomia 536.5582. Michael T. Ube-I ruaga, City Administra• y. s✓ tor, City of Huntington Beach Signature BY: Connie Brockway, City Clerk Published Hunington Beach/Fountain Valley In- dependent November 14, 1991. 112-890 PROOF OF PUBLICATION REQUEST FOR CITY COUNCIL ACTION RH 91-78 Date November 18, 1991 Submitted to: AppROVED BY CITY COUNCIL Honorable Mayor and City Council Members Submitted by: �� -----19`4 Michael T. Uberuaga, City Administrato Prepared b 7 ------"" p y: Barbara A. Kaiser, Deputy City Administrator/Economic Subject: APPROVAL OF $9.5 MILLION SERIES A MULTIFAMILY HOUSING REVENUE BONDS: FIVE POINTS SENIOR PROJECT Consistent with Council Policy? Yes ( ] New Policy or Exception ,p #. 63 3 Q Statement of Issue, Recommendation, Analysis, Funding Source,Alternative Actions, Attachments: STATEMENT OF ISSUE: On July 29, 1991, the City Council approved an inducement resolution for the issuance and sale of $9.5 million in revenue bonds for the construction of a senior rental housing development on the partially improved site at Main Street and Five Points Street. The bond documents have been prepared and are ready for approval. RECOMMENDATION: After conducting the required TEFRA public hearing, approve the attached Resolution No. 6330, bond documents, and authorize the City Clerk and City Attorney to execute those documents in coordination with Jones Hall Hill & White, the City's bond counsel. ANALYSIS: As mentioned above, an authorization to issue and sell revenue bonds was approved by the City Council in support of the Five Points Senior Villas project. Approval of the finalized version of the bond documents are attached for your review and approval. Although the inducement resolution states that the amount of the bonds to be issued was $10 million, the actual amount of the bond issuance was $9.5 million. FUNDING SOURCE: The required 1% fee was deposited with the City from the developer in the form of a standing letter-of-credit. ALTERNATIVE ACTION: Do not approve the resolution and bond documents. ATTACHMENTS: 1. Resolution No. 6330 2. Bond Documents. 3. RCA dated July 29, 1991. MTU/BAK/GB:sar 0576y P10 5/85 REQUES _ FOR CITY COUNCt_ ACTIONH 91-53 July 29, 1991 Date IL APPROVED BY CITY Submitted to: Honorable Mayor and City Council Members Submitted by: Michael T. Uberuaga, City Administrator �. �u JU�� CIT CLt.XK Prepared by: Barbara A. Kaiser, Deputy City Administrator/Economic D Subject: INDUCEMENT RESOLUTION: FIVE POINTS SENIOR HOUSING PROJECT REVENUE BONDS Consistent with Council Policy? Yes [ ] New Policy or Exception 3 09 Statement of Issue, Recommendation,Analysis, Funding Source,Alternative Actions,Attachments: STATEMENT OF ISSUE: Five Points Seniors, a California General Partnership, has asked the City to issue and sell revenue bonds for financing the acquisition of land, and for the construction of an 164 (proposed) unit rental housing development on the partially improved site at Main Street and Five Points Street. RECOMMENDED ACTION: Approve Resolution No. (--109 authorizing the City to issue and sell $10 million in revenue bonds to provide financing for this project, as delineated by Chapter 7 of Part 5 of Division 3-1 of the Health and Safety Code. ANALYSIS: A 164 unit rental housing development for seniors has been proposed for the 1.89 acre site located at 18660 Main Street. The developer, Five Points Seniors, has requested that the City issue revenue bonds in the amount of $10 million for land acquisition and development. The developer will pay all costs associated with the issuance of the bonds, including the 1% commitment fee ($100,000). These bonds do not constitute a debt or obligation of the City. The developer has been negotiating with the Redevelopment Agency for other financial assistance for this project, however, to date there has been no commitment made, other than an agreement to bring an inducement resolution to the City Council for consideration. FUNDING SOURCE: Not applicable. Any unforseen expense could be covered by housing set aside funds, if needed. ATTACHMENT: 1. Resolution No. L- 3t'i MTU/BAK/GAB:sar I a/ 0378y is RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH AUTHORIZING THE ISSUANCE OF REVENUE BONDS FOR THE PURPOSE OF PROVIDING FINANCING FOR A MULTIFAMILY RENTAL HOUSING DEVELOPMENT WHEREAS, the City of Huntington Beach (the "City" ) is authorized by Chapter 7 of Part 5 of Division 31 of the California Health and Safety Code, as amended (the "Act" ) , to issue and sell its revenue bonds for the purpose of financing the construction and development of multifamily rental housing facilities located within the City; and Five Points Seniors , a California General Partnership has applied to the City to issue and sell revenue bonds for the purpose of financing the acquisition of land and construction thereon of an approximately 164-unit rental housing development to be located on 1 . 89 acres located at 18660 Main Street in the City of Huntington Beach (the "Project" ) ; and The City wishes to induce the Developer (as defined below) to acquire and construct the Project and, in particular, to do so at such location; and. It is in the public interest , for the public benefit and in furtherance of the public purposes of the City to finance the construction and development of multifamily rental housing facilities located within the City which facilities will include affordable housing and that the City authorize revenue bonds for the aforesaid purposes ; - 1 - NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Huntington Beach as follows : Section 1. The City Council hereby authorizes the issuance and sale of multifamily housing revenue bonds (the "Bonds" ) of the City pursuant to the Act in a principal amount of not to exceed Ten Million Dollars ($10 , 000 , 000) for the purpose of providing financing to Five Points Seniors , a California General Partnership, or its successors and assigns (the "Developer" ) , for the acquisition, construction and development of the Project . Section 2 . The issuance and sale of the Bonds shall be upon such terms and conditions as may be mutually agreed upon by the City, the Developer and the purchaser of the Bonds and subject to completion of proceedings for the issuance, sale and delivery of the Bonds to the City. Section 3 . The proceeds of the Bonds shall include such related and necessary issuance expenses , administrative costs , debt service reserves and interest payments as may be required successfully to accomplish the financing of the Project . Section 4 . The City Council hereby finds that the issuance of the Bonds is a substantial inducement to the Developer to acquire, construct and develop the Project . Section 5 . The Developer shall be responsible for the payment of all present and future costs in connection with the issuance of the Bonds , including , but not limited to, any fees and expenses incurred by the City in anticipation of the - 2 - issuance of the Bonds , the cost of printing any official statement , rating agency costs , bond counsel fees and expenses , underwriting discount and costs , trustee fees and expenses , and the cost of printing the Bonds . The Bonds shall not constitute a debt or obligation of the City. Section 6 . The law firm of Jones Hall Hill & White, A Professional Law Corporation, is hereby named as bond counsel to the City in connection with the issuance of the Bonds . The fees and expenses of bond counsel in connection with the issuance of the Bonds are to be paid solely from the proceeds of the Bonds or directly by the Developer . Section 7 . The appropriate officers or staff of the City are hereby authorized, for and in the name of and on behalf of the City, to make an application to the California Debt Limit Allocation Committee for an allocation of Private Activity Bonds for a multifamily rental housing bond project to enable the City to issue bonds for the financing of the Project and to execute and deliver fee agreement for bond counsel services by and between the City and Jones Hall Hill & White, a Professional Law Corporation, so long as such agreement has been approved by the City Attorney. 3 - PASSED AND ADOPTED this day of , 1991 . Mayor ATTEST: APPROVED AS TO FORM: �h City Clerk City Attor ey REVIEWED AND APPROVED: INITIATED AND APPROVED: City Administrator Director of Economic Development - 4 - CITY OF HUNTINGTON BEACH INTER-DEPARTMENT COMMUNICATION HUNTINGTON BEACH To Barbara Kaiser, Director From Gail Hutton Economic Development City Attorney Subject Five Points Senior Project Date October 4, 1991 Bond Documents RLS 91-551 Pursuant to your request, the above referenced documents have been reviewed and ar approved as to form. Gail Hutton City Attorney Attachment 1801948 JRTAD:ams 3/2/99D ill f 3/12/99D �J AMENDED AND RESTATED LOAN AGREEMENT among between CITY OF HUNTINGTON BEACH, as Issuer and FIVE POINTS SENIORS, L.P., as Borrower Relating to $9,500,000 CITY OF HUNTINGTON BEACH VARIABLE RATE DEMAND MULTIFAMILY RENTAL HOUSING REVENUE BONDS (FIVE POINTS SENIORS PROJECT) SERIES A OF 1991 Dated as of April 1, 1999 TABLE OF CONTENTS ARTICLE I DEFINITIONS AND INTERPRETATION Section1.1. Definitions.....................................................................................................................................2 Section1.2. Rules of Construction..................................................................................................................3 Section1.3. Effective Date................................................................................................................................4 ARTICLE II REPRESENTATIONS,WARRANTIES AND COVENANTS Section 2.1. Representations,Warranties and Covenants by the Borrower...........................................5 Section 2.2. Representations,Warranties and Covenants of the Issuer..................................................8 ARTICLE III THE BONDS AND THE PROCEEDS THEREOF Section3.1. Bonds............................................................................................................................................10 Section3.2. Use of Proceeds..........................................................................................................................10 Section3.3. Credit Facility.............................................................................................................................10 ARTICLE IV THE MORTGAGE LOAN Section4.1. [Reserved]...................................................................................................................................12 Section 4.2. Terms of the Mortgage Loan...................................................................................................12 Section 4.3. Payment of Fees and Expenses...............................................................................................12 ARTICLE V COVENANTS,UNDERTAKINGS AND OBLIGATIONS OF THE BORROWER Section5.1. Compliance With Laws.............................................................................................................14 Section 5.2. Maintenance of Legal Existence..............................................................................................14 Section 5.3. Access to Project and Records;Reports.................................................................................14 Section5.4. Operation of Project..................................................................................................................15 Section5.5. Tax Covenants............................................................................................................................15 Section 5.6. Further Assurances and Corrective Instruments.................................................................15 Section 5.7. Approval of Other Documents........................................................................................ Section 5.8. Notice of Certain Events...........................................................................................................15 Section5.9. Indemnification..........................................................................................................................16 Section 5.10. Obligations of the Borrower Unconditional.........................................................................17 Section 5.11. Unsecured General Obligation;Non-Recourse....................................................................17 Section5.12. Cap Agreement..........................................................................................................................18 Section5.13. Continuing Disclosure..............................................................................................................18 ARTICLE VI MORTGAGE LOAN DOCUMENTS Section6.1. Assurances..................................................................................................................................19 Section 6.2. Assignment of Certain Rights.................................................................................................19 Section 6.3. Financial Obligations Personal to the Borrower..................................................................19 ARTICLE DC VII THE PROJECT Section7.1. Regulatory Agreement. ............................................................................................................20 Section 7.2. Right to Enforce Compliance....................................................................................................20 i ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES Section8.1. Events of Default........................................................................................................................21 Section 8.2. Remedies upon an Event of Default.......................................................................................21 Section 8.3. Limitation on Waivers..............................................................................................................23 ARTICLE IX MISCELLANEOUS Section9.1. Notices.........................................................................................................................................24 Section9.2. Amendment................................................................................................................................24 Section9.3. Entire Agreement.......................................................................................................................24 Section9.4. Binding Effect.............................................................................................................................24 Section95. Severability.................................................................................................................................24 Section 9.6. Execution in Counterparts.......................................................................................................25 Section9.7. Governing Law..........................................................................................................................25 Section9.8. Waiver Of jury Trial..................................................................................................................25 Section9.9. Limited Liability........................................................................................................................25 Section 9.10. Term of this Amended and Restated Agreement.................................................................26 Section 9.11. References to the Credit Facility Provider............................................................................26 ii AMENDED AND RESTATED LOAN AGREEMENT This AMENDED AND RESTATED LOAN AGREEMENT (this "Amended and Restated Agreement"), is dated as of [DATE], and entered into by and between the CITY OF HUNTINGTON BEACH, a municipal corporation and charter city organized and existing under the laws of the State of California (the "Issuer") and FIVE POINTS SENIORS, L.P., a limited partnership organized and existing under the laws of the State of California (together with its successors and assigns,the "Borrower"). RECITALS: A. As more fully set forth in the Trust Indenture (the "Indenture"), of even date herewith, between the Issuer and , Dai-Ichi Kangyo Bank of California, as Trustee (together with its successors and assigns, the "Trustee"), the Issuer is iss s its City of Huntington Beach variable Rate Demand Multifamily Rental Housing Revenue Bonds (Five Points Seniors Project) Series A of 1991 in the aggregate principal amount of {$ "*" 9,5QQ=(herein the 'Bonds"). B. The parties hereto acknowledge the matters set forth in the Recitals to the Indenture. NOW, THEREFORE, the parties hereto, in consideration of the premises and the mutual covenants and commitments of the parties set forth herein, the receipt and sufficiency of which are hereby acknowledged by the parties hereto,hereby agree as follows: 1 ARTICLE I DEFINITIONS AND INTERPRETATION Section 1.1. Definitions. Capitalized terms used herein without definition shall have the respective meanings set forth in the Indenture. In addition to the terms elsewhere defined in this Amended and Restated Agreement, the following terms used in this Amended and Restated Agreement (including the recitals) shall have the following meanings unless the context indicates another or different meaning or intent, and such definitions shall be equally applicable to both the singular and plural forms of any of the terms herein defined: "Ancillary Collateral Agreement" has the meaning assigned to that term in the Mortgage Note. "Assignment" means that certain Assignment and Intercreditor Agreement dated as of the date hereof , by and among the Issuer , the Trustee and the Credit Facility Provider, and acknowledged; accepted to by the Borrower, as such Assignment may be amended,restated,supplemented or otherwise modified from time to time. "Credit Facility Provider Documents" means the Collateral Agreement and the Reimbursement Agreement. "Event of Default" means any event of default specified and defined in Section 8.1(a) of this Amended and Restated Agreement. "Facility Fee"has the meaning assigned to that term in the Mortgage Note. "Immediate Notice" means personal delivery of a written notice or written notice given by telecopier or other telecommunication device or by messenger service promptly followed by a duplicate or "hard copy" of such written notice sent by certified mail, return-receipt requested. "Key Principal"has the meaning assigned to that term in the Mortgage. "Mortgage Loan Documents" means the Mortgage Note, the Mortgage, the Ancillary Collateral Agreements and all other documents evidencing, securing or otherwise relating to the Mortgage Loan, including all amendments, supplements and restatements thereof, excluding,however,the Bond Documents. "Mortgage Note Rate" shall mean a per annum rate of interest calculated in accordance with the Mortgage Note. "Pass-Through Rate" shall have the meaning assigned to that term in the Mortgage Note. "Permitted Liens" has the meaning assigned to that term in the Reimbursement Agreement. "Principal Reserve Fund" means the Principal Reserve Fund held by the Trustee in accordance with the provisions of Section 404 of the Indenture. 2 "Required Fannie Mae Payment" has the meaning assigned to that term in the Collateral Agreement. "Required Mortgage Payment" has the meaning assigned to that term in the Collateral Agreement. "Servicing Agreement" has the meaning assigned to that term in the Collateral Agreement. "State"means the State of California. Section 1.2. Rules of Construction. (a) The singular form of any word used herein, including the terms defined in Section 1.1, shall include the plural, and vice versa, unless the context otherwise requires. The use herein of a pronoun of any gender shall include correlative words of the other genders. (b) All references herein to "Articles," "Sections" and other subdivisions hereof are to the corresponding Articles, Sections or subdivisions of this Amended and Restated Agreement as originally executed; and the words "herein," "hereof," "hereunder" and other words of similar import refer to this Amended and Restated Agreement as a whole and not to any particular Article,Section or subdivision hereof. (c) The headings or titles of the several Articles and Sections hereof, and any table of contents appended to copies hereof, shall be solely for convenience of reference and shall not limit or otherwise affect the meaning, construction or effect of this Amended and Restated Agreement or describe the scope or intent of any provisions hereof. (d) All accounting terms not otherwise defined herein have the meanings assigned to them in accordance with applicable generally accepted accounting principles as in effect from time to time. (e) Every "request," "order," "demand," "application," "appointment," "notice," "statement," "certificate," "consent," or similar action hereunder by any party shall, unless the form thereof is specifically provided, be in writing signed by a duly authorized representative of such party with a duly authorized signature. (f) The parties hereto acknowledge that each such party and their respective counsel have participated in the drafting and revision of this Amended and Restated Agreement and the Indenture. Accordingly, the parties agree that any rule of construction which disfavors the drafting party shall not apply in the interpretation of this Amended and Restated Agreement or the Indenture or exhibit hereto or thereto. (g) Whenever the Credit Facility Provider is required to give its consent or approval to any matter, whether stated as "consent," "written consent," "prior written consent," "approval," "written approval," "prior written approval," or otherwise, the giving of such consent or approval by the Credit Facility Provider shall be in its sole and absolute discretion. (h) Whenever the Credit Facility Provider shall have any right or option to exercise any discretion, to determine any matter, to accept any presentation or to 3 approve or consent to any matter, such exercise, determination, acceptance, approval or consent shall, without exception, be in the Credit Facility Provider's sole and absolute discretion. Section 1.3. Effective Date. The provisions of this Amended and Restated Agreement shall be effective on and as of the Effective Date, immediately upon the effectiveness of the Indenture[**, and as of such date shall supersede and replace the loan agreement relating to the Prior Loan,which shall be terminated as of such date**]. 4 ARTICLE II REPRESENTATIONS,WARRANTIES AND COVENANTS Section 2.1. Representations, Warranties and Covenants by the Borrower. The Borrower represents,warrants and covenants as follows: (a) The Borrower is a limited partnership and is qua jed-duthorized to do business in the State and in every other state in which the nature of its business requires such qualification. The Borrower has full power and authority to own its properties and to carry on its business as now being conducted and as contemplated to be conducted with respect to the Project, and to enter into, and to perform and carry out the transactions provided for in this Amended and Restated Agreement, all other Bond Documents contemplated hereby to be executed by the Borrower and the Mortgage Loan Documents. This Amended and Restated Agreement, the other Bond Documents to which the Borrower is a party, the Mortgage Loan Documents and all other documents to which the Borrower is a party and contemplated hereby or thereby have been duly authorized, executed and delivered by the Borrower and constitute the legal, valid and binding obligations of the Borrower, enforceable against the Borrower in accordance with their respective terms, subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting the rights of creditors generally and general equitable principles. (b) Neither the execution and delivery of this Amended and Restated Agreement, all other Bond Documents to be executed by the Borrower, the Mortgage Loan Documents or any other documents contemplated hereby or thereby, the consummation of the transactions contemplated hereby or thereby, nor the fulfillment of or compliance with the terms and conditions of this Amended and Restated Agreement, all other Bond Documents to be executed by the Borrower, the Mortgage Loan Documents or any other documents contemplated hereby or thereby, will violate any provision of law, any order of any court or other agency of government, or any of the organizational or other governing documents of the Borrower, or any indenture, agreement or other instrument to which the Borrower is now a party or by which it or any of its properties or assets is bound, or be in conflict with, result in a breach of or constitute a default (with due notice or the passage of time or both) under any such indenture, agreement or other instrument or any license, judgment, decree, law, statute, order, rule or regulation of any governmental agency or body having jurisdiction over the Borrower or any of its activities or properties, or, except as contemplated hereunder, result in the creation or imposition of any lien, charge or encumbrance of any nature whatsoever upon any of the property or assets of the Borrower, except for Permitted Liens. (c) The Borrower has and will have fee simple title to the Project, subject to the Permitted Liens. The Borrower is the sole borrower under the Mortgage Loan. (d) No litigation or proceeding is pending or, to the knowledge of the Borrower, any general partner of the Borrower or the Key Principal, threatened against the Borrower or its general partners or with respect to the Project which has a reasonable probability of having a material adverse effect on its financial condition or business, or the transactions contemplated by this Amended and Restated Agreement, the Indenture, the other Bond Documents or the Mortgage Loan Documents, or which in any way would adversely affect the validity or enforceability of the Bonds, the Indenture, this Amended and Restated Agreement, the other Bond Documents or the Mortgage Loan Documents, or the ability of the Borrower to perform its obligations under this Amended and Restated Agreement, the other Bond Documents or the Mortgage Loan Documents executed by the Borrower. 5 (e) The Project conforms in all material respects with all applicable zoning, planning, building and environmental laws, ordinances and regulations of governmental authorities having jurisdiction over the Project, all necessary utilities are available to the Project, and the Borrower has or will obtain all requisite zoning, planning, building and environmental and other permits which are or may become necessary with respect to the Project. The Borrower has obtained all licenses, permits and approvals necessary for the ownership, operation and management of the Project, including all approvals essential to the transactions contemplated by this Amended and Restated Agreement, the Indenture, the other Bond Documents, the Mortgage Loan Documents and any other documents contemplated hereby or thereby. (f) The financial statements which have been furnished by or on behalf of the Borrower to the Issuer, the Servicer or the Credit Facility Provider are complete and accurate in all material respects and present fairly the financial condition of the Borrower as of their respective dates in accordance with generally accepted accounting methods, applied by the Borrower on a consistent basis, and since the date of the most recent of such financial statements there has not been any material adverse change, financial or otherwise, in the condition of the Borrower, and there has not been any material transaction entered into by the Borrower other than transactions in the ordinary course of business, and the Borrower does not have any material contingent obligations which are not otherwise disclosed in its financial statements. There (i) is no completed, pending or threatened bankruptcy, reorganization, receivership, insolvency or like proceeding, whether voluntary or involuntary, affecting the Project, the Borrower, any Key Principal or any general partner of the Borrower and (ii) has been no assertion or exercise of jurisdiction over the Project, the Borrower, any Key Principal or any general partner of the Borrower by any court empowered to exercise bankruptcy powers. (g) No event has occurred and no condition exists with respect to the Borrower or the Project that would constitute an Event of Default or which, with the lapse of time, if not cured, or with the, giving of notice or both, would become an Event of Default. The Borrower is not in default under the r-,Eegulatory aAgreement relating to the Bonds. (h) The Borrower has not taken and will not take any action, or permit any action that is within the Borrower's control to be taken, that would impair the exclusion from gross income for federal income tax purposes of the interest payable on the Bonds. As of the Effective Date, the Borrower is in compliance with all requirements of the Tax Certificate. The Borrower has complied and will comply with all the terms and conditions of the Tax Certificate,including the terms and conditions of the exhibits thereto, and the representations set forth in the Tax Certificate pertaining to the Borrower and the Project are true and accurate. (i) The Project has been, as of the date of the original issuance and delivery of the Bonds, and is in compliance with all requirements of the Regulatory Agreement, including all applicable requirements of the Act and the Code. The Borrower intends to cause the residential units in the Project to be rented or available for rental on a basis which satisfies the requirements of the Regulatory Agreement, including all applicable requirements of the Act and the Code. All leases will comply with all applicable laws and the Regulatory Agreement. The Project meets the requirements of this Amended and Restated Agreement, the Regulatory Agreement,the Act and the Code with respect to multifamily rental housing. (j) No information, statement or report furnished in writing to the Issuer,the Credit Facility Provider, the Servicer or the Trustee by the Borrower in connection with this Amended and Restated Agreement, the other Bond Documents, the Mortgage Loan Documents or the Credit Facility Provider Documents or the consummation of the transactions contemplated hereby and thereby (including, without limitation, any information furnished by the Borrower in connection with the preparation of any materials related to the issuance delivery or offering 6 of the Bonds on the Effective Date) contains any material misstatement of fact or omits to state a material fact necessary to make the statements contained therein, in the light of the circumstances under which they were made, not misleading; and the representations and warranties of the Borrower and the statements, information and descriptions contained in the Borrower's closing certificates, as of the Effective Date, are true, correct and complete, do not contain any untrue statement or misleading statement of a material fact, and do not omit to state a material fact required to be stated therein or necessary to make the certifications, representations, warranties, statements, information and descriptions contained therein, in the light of the circumstances under which they were made, not misleading; and the estimates and the assumptions contained herein and in any certificate of the Borrower delivered as of the Effective Date are reasonable and based on the best information available to the Borrower. (k) To the best knowledge of the Borrower,no member, officer, agent or employee of the Issuer has been or is in any manner interested, directly or indirectly, in that person's own name or in the name of any other person, in the Bonds, the Bond Documents, the Mortgage Loan Documents, the Borrower or the Project, in any contract for services or materials to be furnished or used in connection with the Project, or in any aspect of the transactions contemplated by the Bond Documents or the Mortgage Loan Documents. (1) No authorization, consent, approval, order, registration declaration or withholding of objection on the part of or filing of or with any governmental authority not already obtained or made (or to the extent not yet obtained or made the Borrower has no reason to believe that such authorizations, consents, approvals, orders, registrations or declarations will not be obtained or made in a timely fashion) is required for the execution and delivery or approval, as the case may be, of this Amended and Restated Agreement, the other Bond Documents, the Mortgage Loan Documents or any other documents contemplated by this Amended and Restated Agreement or the other Bond Documents or the Mortgage Loan Documents,or the performance of the terms and provisions hereof or thereof by the Borrower. (m) The Borrower is not presently under any cease or desist order or other orders of a similar nature, temporary or permanent, of any federal or state authority which would have the effect of preventing or hindering performance of its duties hereunder, nor are there any proceedings presently in progress or to its knowledge contemplated which would, if successful, lead to the issuance of any such order. (n) The Borrower acknowledges, represents and warrants that it understands the nature and structure of the transactions relating to the refinancing of the Project; that it is familiar with the provisions of all of the documents and instruments relating to such financing to which it or the Issuer is a party or of which it is a beneficiary; that it understands the risks inherent in such transactions, including, without limitation, the risk of loss of the Project; and that it has not relied on the Issuer, the Servicer or the Credit Facility Provider for any guidance or expertise in analyzing the financial or other consequences of the transactions contemplated by this Amended and Restated Agreement and the Indenture or otherwise relied on the Issuer, the Servicer or the Credit Facility Provider in any manner. (o) The Borrower has not received any notice that it is not in compliance with all provisions of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended ("CERCLA"); the Resource Conservation and Recovery Act; the Superfund Amendments and Reauthorization Act of 1986; the Toxic Substances Control Act and all environmental laws of the State (the "Environmental Laws"), or with any rules, regulations and administrative orders of any governmental agency, or with any judgments, decrees or orders of any court of competent jurisdiction with respect thereto; and the Borrower has not received any assessment, notice (primary or secondary) of liability or financial responsibility, and no notice 7 of any action, claim or proceeding to determine such liability or responsibility, or the amount thereof, or to impose civil penalties with respect to a site listed on any federal or state listing of sites containing or believed to contain "hazardous materials" (as defined in the Environmental Laws), nor has the Borrower received notification that any hazardous substances (as defined under CERCLA) that it has disposed of have been found in any site at which any governmental agency is conducting an investigation or other proceeding under any Environmental Law. (p) The Borrower has not received any notice that it is not in compliance with ERISA and Department of Labor regulations thereunder, with the 1986 Code and Treasury Regulations thereunder and with terms of such plan or plans with respect to each pension or welfare benefit plan to which the Borrower is a party or makes any employer contributions with respect to its employees,for the current or prior plan years of such plans. (q) The average maturity of the Bonds does not exceed 120% of the average reasonably expected economic life of the facilities of the Project financed with the original net proceeds. (r) The Bonds are not and shall not be "federally guaranteed" as defined in Section 149(b) of the Code. (s) The Borrower intends to hold the Project for its own account and has no current plans to sell and has not entered into any agreement to sell any of the Project. (t) The Borrower agrees to immediately notify the Trustee, the Credit Facility Provider, the Servicer and the Issuer in writing of any Event of Default as such term is defined under or any event which with notice or the passage of time would constitute an Event of Default as such term is defined under this Amended and Restated Agreement, the other Bond Documents, the Mortgage Loan Documents or any other documents contemplated by this Amended and Restated Agreement or the other Bond Documents or the Mortgage Loan Documents. (u) No money on deposit in any fund or account in connection with the Bonds, whether or not such money was derived from other sources, has been used by or under the direction of the Borrower in a manner which would cause the Prior Bonds to be "arbitrage bonds"within the meaning of the Code. Section 2.2. Representations, Warranties and Covenants of the Issuer. The Issuer represents,warrants and covenants as follows: (a) The Issuer is a municipal corporation and charter city, duly organized and existing under the Constitution and laws of the State. The Issuer has the full legal right, power and authority to execute and deliver this Amended and Restated Agreement, the Regulatory Agreement, the Tax Certificate and the Indenture and the Mortgage Loan Documents to which it is a party, and to carry out its obligations hereunder and thereunder. The execution, delivery and performance of this Amended and Restated Agreement, the Indenture, the Tax Certificate and the Regulatory Agreement (including the issuance of the Bonds) and the Mortgage Loan Documents to which it is a party have been duly authorized by the Issuer, and each of the foregoing has been duly executed and delivered by the Issuer and is a legal, valid and binding obligation of the Issuer, enforceable against the Issuer in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting the rights of creditors generally and general equitable principles. 8 (b) Neither the execution and delivery of the Bonds, this Amended and Restated Agreement, the Regulatory Agreement, the Tax Certificate, the Indenture or the Mortgage Loan Documents to which it is a party, the consummation of the transactions contemplated hereby and thereby, nor the fulfillment of or compliance with the terms, conditions or provisions of the Bonds, this Amended and Restated Agreement, the Regulatory Agreement, the Tax Certificate, the Indenture and the Mortgage Loan Documents to which it is a party conflicts in any material respect with or results in a material breach of any of the terms, conditions or provisions of any constitution or statute of the State, or of any agreement, instrument, judgment, order or decree to which the Issuer is now a party or by which it is bound or constitutes a material default under any of the foregoing. (c) Except as otherwise provided in the Indenture and Assignment, the Issuer has not created and will not create any debt, lien or charge upon the Trust Estate, and has not made and will not make any pledge or assignment of or create any encumbrance thereon, other than the pledge and assignment thereof under the Indenture. (d) The Issuer has complied and will comply with all material provisions of the Act applicable to the Bonds and the transactions contemplated by this Amended and Restated Agreement and the other Bond Documents. (e) No litigation or administrative action of any nature has been served on it and is now pending (i) seeking to restrain or enjoin the execution and delivery of the Indenture or this Amended and Restated Agreement, or in any manner questioning the proceedings or authority relating thereto or otherwise affecting the validity of the Bonds or (ii) as to the existence or authority of the Issuer or that of its present or former members or officers and, to the best knowledge of the Issuer,none of the foregoing are threatened. 9 ARTICLE III THE BONDS AND THE PROCEEDS THEREOF Section 3.1. Bonds. The Issuer has issued the Bonds in the aggregate principal amount of $9,500,000 and Bonds in such amount shall be issued and Outstanding as of the Effective Date. The proceeds of the Bonds have been deposited and expended in accordance with the Indenture. Neither the Issuer, the Servicer, the Trustee nor the Credit Facility Provider shall have any liability for any fees, costs or expenses, including, without limitation, issuance costs relating to the Bonds;all of such fees,costs and expenses shall be paid by the Borrower. Section 3.2. Use of Proceeds. The Borrower shall make no use of the proceeds of the Bonds, or of any other funds which may be deemed to be proceeds of the Bonds pursuant to Section 148 of the Code and the applicable regulations thereunder, which will cause the Bonds to be "arbitrage bonds" within the meaning of such Section and such regulations, and will comply with the requirements of such Section and such regulations throughout the term of the Bonds. Section 3.3 Credit Facility. The Borrower may on any Interest Payment Date during a Weekly Variable Rate Period and on any Adjustment Date (but not later than an Extension Date unless a commitment to extend the existing Credit Facility has been delivered pursuant to Section 702 of the Indenture, if applicable), and subject to the terms of the existing Credit Facility Agreement, arrange for the delivery to the Trustee of an Alternate Credit Facility in substitution for the Credit Facility then in effect, including, without limitation, a letter of credit, a surety bond, an insurance policy, a standby purchase agreement, a collateral purchase agreement on terms similar to the Collateral Agreement, a mortgage backed security or other credit or liquidity facility issued by a financial institution (including without limitation Fannie Mae), or any combination thereof, which provides security for payment of the principal of and interest on the Bonds when due (referred to in this Section 3.3 as "credit support") and, if applicable, for payment of the purchase price of Bonds delivered or deemed delivered in accordance with Article X of the Indenture (referred to in this Section 3.3 as "liquidity support"); provided that, without the consent or direction of the Borrower, the Credit Facility Provider may provide any other form of credit or liquidity facility (or combination thereof) issued by the Credit Facility Provider in substitution for the Collateral Agreement (or any successor Credit Facility Agreement) solely if (i) each Rating Agency confirms in writing that such substitution will not adversely affect such Rating Agency's rating of the Bonds, (ii) the Credit Facility Provider delivers to the Issuer and the Trustee an Opinion of Counsel satisfying the requirements of paragraph (c) of this Section 3.3 and (iii) such substitute credit or liquidity facility (or combination thereof) does not increase the amounts required to be paid by, or other obligations of, the Borrower. Any Alternate Credit Facility, provided at the direction of the Borrower,shall satisfy the following conditions,as applicable: (a) Prior to the Conversion Date, any Credit Facility may be issued to provide only credit support or only liquidity support so long as a separate Credit Facility provides at all times while such Credit Facility is in effect complementary credit support or liquidity support, as the case may be, so that at all times while any of the Bonds bear interest at the Weekly Variable Rate or the Reset Rate such Bonds shall be entitled to credit support and to the liquidity support required by such Mode; provided that in no event shall Fannie Mae provide only liquidity or credit support if any Person other than Fannie Mae provides either liquidity or credit support. During the Fixed Rate Period,the Bonds shall be entitled to credit support only. Notwithstanding the foregoing, prior to the commencement of the Fixed Rate Period, the Issuer may, in its sole discretion, waive the requirement that a Credit Facility be provided during the Fixed Rate Period. 10 (b) The Credit Facility shall (i) be in an amount equal to the aggregate principal amount of the Bonds Outstanding from time to time plus the Interest Requirement; (ii) provide for payment in immediately available funds to the Trustee,upon receipt of the Trustee's request for such payment with respect to any Interest Payment Date, purchase date (if applicable) or mandatory redemption date pursuant to the Indenture; (iii) if the Credit Facility is provided to secure Bonds during a Reset Period, provide an expiration date no earlier than the earliest of (1) the day following the Adjustment Date immediately succeeding the Reset Period; (2) ten (10) days after the Trustee receives notice from the Credit Facility Provider of an Event of Default hereunder or a default under and as defined in the Credit Facility Agreement and a direction to redeem all Outstanding Bonds; (3) the date on which all Bonds are paid in full and the Indenture is discharged in accordance with its terms; and (4) the date on which the Bonds become secured by an Alternate Credit Facility in accordance with the terms of the Indenture and the Credit Facility Agreement; and (iv) unless waived by the Issuer in its sole discretion, result in the Bonds receiving a long-term raring or short-term rating, or both, as applicable for the Mode then in effect,in one of the two highest rating categories of each Rating Agency. (c) In connection with such substitution, the Trustee must receive (i) an Opinion of Counsel to the Credit Facility Provider issuing the Alternate Credit Facility, in form and substance satisfactory to the Issuer and the Trustee, relating to the due authorization and issuance of the Alternate Credit Facility and its enforceability and (ii) an opinion of Bond Counsel to the effect that the substitution of such Alternate Credit Facility will not adversely affect the exclusion from gross income, for federal income tax purposes, of the interest payable on the Bonds. 11 ARTICLE IV THE MORTGAGE LOAN Section 4.1 (Reservedl. Section 4.2. Terms of the Mortgage Loan. The Mortgage Loan shall be evidenced by the Mortgage Note and shall be payable pursuant to the terms and provisions of the Mortgage Note. The Mortgage Note shall bear interest at the rates and on the terms provided therein. Section 4.3. Payment of Fees and Expenses. In addition to all fees, costs, expenses and other amounts required to be paid by the Borrower under the Mortgage Note, the Reimbursement Agreement, and the Servicing Agreement, the Borrower shall pay, without duplication,the following fees and expenses: (a) All amounts required to (i) pay the fees of the Trustee for its duties and services as Trustee in connection with the Bonds and the fees of the Tender Agent for its duties and services as Tender Agent in connection with the Bonds (as such respective duties and services are set out in the Indenture) and (ii) reimburse the Trustee and the Tender Agent for all out-of- pocket expenses, fees, costs and other charges, including counsel fees and taxes (excluding income, value added and single business taxes), reasonably and necessarily incurred by the Trustee or the Tender Agent in performing its duties as Trustee or Tender Agent, respectively, under the Indenture and for performing under the Indenture, the Pledge Agreement, the Regulatory Agreement and the Credit Facility Agreement. All payments for fees and expenses shall be made by the Borrower not later than ten (10) days after receipt of invoices or other statements rendered to the Borrower by the Trustee or the Servicer. (b) The Issuer's annual fee in an amount equal to one-eighth of one percent (.125%) per annum and all amounts required to pay to the Issuer or to any payee designated by the Issuer, all expenses of the Issuer incurred at any time related to the Project or the refinancing thereof which are not paid from the amounts held under the Indenture, including, without limitation, legal fees and expenses incurred in connection with the interpretation, performance, enforcement or amendment of any documents relating to the Project or the Bonds or in connection with questions or other matters arising under such documents, which amounts shall be paid within thirty (30) days after receipt of request for payment thereof. (c) The Remarketing Agent's fee for its services as Remarketing Agent in connection with the Bonds while the Bonds bear interest at the Weekly Variable Rate and, upon receipt of an appropriately completed invoice,all out-of-pocket expenses, fees, costs and, other charges of the Remarketing Agent properly chargeable under the Remarketing Agreement. (d) The fees of the rebate monitor as required by the Tax Certificate and, upon receipt of an appropriately completed invoice,all out-of-pocket expenses of the rebate monitor. (e) The annual rating maintenance fee of any Rating Agency then rating the Bonds. (f) All costs and expenses of issuing the Bonds, including,but not limited to, Rating Agency fees, printing expenses, attorneys' fees and underwriters' fees, and all expenses of originating the Mortgage Loan and assigning and delivering the Mortgage Loan to the Trustee, and to the Credit Facility Provider as their interests may appear, the Borrower acknowledging that all such fees costs and expenses (excluding the Facility Fee, and the Issuer's fee) must be 12 paid by the Borrower separate and apart from payments due under the Mortgage Loan and will not be included in the Mortgage Note. (g) The Costs of Issuance Deposit to be made to the Costs of Issuance Fund on the Effective Date. (h) An amount equal to the Interest Reserve Requirement to be made to the Interest Reserve Account on the Effective Date. The Borrower further acknowledges and agrees that (i) all fees, costs and expenses involved in any adjustment or conversion of the interest rate on the Bonds and, therefore, of the Pass-Through Rate under the Mortgage Note and (ii) all fees, costs and expenses involved in any tender, purchase, remarketing or reoffering of Bonds are obligations solely of the Borrower and must be paid by the Borrower separate and apart from payments due under the Mortgage Loan and shall not be provided for in any of the Mortgage Loan Documents, or reflected in the Mortgage Note Rate. The fees, costs and expenses of any remarketing or reoffering of Bonds other than as provided for in subsection (i) must be paid by the Borrower in advance in accordance with the Remarketing Agreement or other agreement relating to the reoffering of the Bonds. Neither the Servicer, the Trustee, the Issuer nor the Credit Facility Provider shall have (1) any liability, responsibility or accountability for the payment, remittance or handling of any such fees,costs or expenses or (2) any obligation to pay any such fees,costs or expenses. The fees, costs and expenses as provided in subsections (a), (b), (c) and (d), although not included in the Pass-Through Rate under the Mortgage Note, shall nonetheless be paid by the Borrower to the Servicer and from the Servicer to the Trustee for deposit in the Fees Account of the General Receipts Fund. The Borrower shall give notice to the Servicer of the payment of all fees and expenses not included in the Mortgage Note. All fees and expenses included herein but not included in the Mortgage Note or the Reimbursement Agreement shall not be secured by the Mortgage or constitute a lien on the Project in any manner (unless the Servicer or Fannie Mae shall in its discretion advance such fees and expenses), shall be unsecured personal obligations of the Borrower and shall be subordinate to the Borrower's obligations under the Mortgage Loan and the Reimbursement Agreement in all respects. Scene: 4.4 cer-fain Natiees From T-F+tstee The :ccciye any stieh pa3'ffi.eitt 4A4;P3l due The Tnistee shall, ,a . with the tei:ffisnd eenditions of the-Gfedit Faeil4ty Agfeemei t, timely g4�ve FaEAity / / iykheut / Mer-tgage Nate. h; —ad—Elitien, the TFU54pp ;I;all s reen as prae4eable but net later- than the last Wednesday of eaeh the next / / siieeeeding gtisiness Day, g4ve Hetiee to the Sef-vieef of the amount ef the interest payment r-equ4ed to be made by the Beff eiven 13 ARTICLE V COVENANTS,UNDERTAKINGS AND OBLIGATIONS OF THE BORROWER Section 5.1. Compliance With Laws. The Borrower shall, throughout the term of this Amended and Restated Agreement and at no expense to the Issuer, the Servicer, the Trustee or the Credit Facility Provider, promptly comply or cause compliance with all laws, ordinances, rules, regulations and requirements of duly constituted public authorities which may be applicable to the Project or to the repair and alteration thereof, or to the use or manner of use of the Project, including, but not limited to, the Americans With Disabilities Act and all federal, State and local environmental,labor,health and safety laws,rules and regulations. Section 5.2. Maintenance of Legal Existence. During the term of this Amended and Restated Agreement, the Borrower shall maintain its existence as set forth in Section 2.1(a) and shall not terminate, dissolve, or dispose of all or substantially all of its assets; provided, however, that the Borrower may, with the written permission of the Issuer, consolidate with or merge into another entity or permit one or more other entities to consolidate with or merge into it, or transfer all or substantially all of its assets to another entity,but only on the condition that the assignee entity or the entity resulting from or surviving such merger or consolidation (if other than the Borrower), or the entity to which such transfer shall be made, shall be duly organized and existing, in good standing and qualified to do business under the laws of the State, shall remain so continuously during the term hereof, and shall expressly assume in writing and agree to perform all of the Borrower's obligations hereunder and under all other documents executed by the Borrower in connection with the issuance of the Bonds; vrovided, further, that (i) the Borrower delivers an opinion of Bond Counsel to the effect that such consolidation or merger will not cause interest on the Bonds to be included in gross income for federal income tax purposes and (ii) any transfer of the Project shall be effected in accordance with the Regulatory Agreement and Mortgage Loan Documents. Nothing in this Section 5.2 shall be deemed to relieve the Borrower of its obligations to comply with the provisions of the Mortgage Loan Documents. Section 5.3. Access to Project and Records; Reports. (a) Subject to reasonable notice, the Issuer, the Credit Facility Provider, the Trustee and the Servicer, and the respective duly authorized agents of each, shall have the right at all reasonable times and during normal business hours to enter the Project and any other location containing the records relating to the Project, the Mortgage Loan,the Indenture, the Regulatory Agreement, this Amended and Restated Agreement and the Borrower and to inspect and audit the same, and shall have the right at all such reasonable times to make copies of any records that the Credit Facility Provider, the Trustee, the Issuer or the Servicer, or their respective duly authorized agents, may reasonably require. The Borrower shall make available to the Issuer, the Trustee, the Credit Facility Provider and the Servicer such information concerning the Project, the Mortgage Loan, the Indenture, the Regulatory Agreement and this Amended and Restated Agreement as any of them may reasonably request. (b) The Borrower shall file such certificates and other reports with the Servicer, the Issuer, the Trustee and the Credit Facility Provider as are required by the Regulatory Agreement. (c) The Borrower agrees to provide to the Issuer all information necessary to enable the Issuer to complete and file all forms and reports required by the laws of the State and the Code in connection with the Project and the Bonds. 14 Section 5.4. Operation of Project. The Borrower will not sell, transfer or otherwise dispose of the Project except as provided in the Regulatory Agreement, the Mortgage and Section 5.2 of this Amended and Restated Agreement. Section 5.5. Tax Covenants. The Borrower covenants that it will comply with the requirements and conditions of the Tax Certificate and the Regulatory Agreement. Without limiting the foregoing, the Borrower covenants that, notwithstanding any provision of this Amended and Restated Agreement or the rights of the Borrower hereunder, it will not take, or permit to be taken on its behalf, any action which would cause interest on the Bonds to be included in gross income for federal income tax purposes and that it will take such reasonable action as may be necessary to continue such exclusion from gross income, including, without limitation, (a) compliance with the requirements contained in Section 3.2 hereof; (b) the preparation and filing of any statements required to be filed by it in order to maintain such exclusion; and (c) the payment to the United States of any amount required to be paid by the Issuer or the Borrower pursuant to Section 148(f) of the Code and the regulations thereunder, including, to the extent applicable,Section 1.148-3 of the Treasury Regulations on Income Tax or subsequent applicable Treasury Regulations, at the times, in the amounts and at the places required thereby in order to maintain the exclusion of interest on the Bonds from gross income for federal income tax purposes; and the Borrower hereby irrevocably authorizes and directs the Issuer and the Trustee (and any other agent designated by the Issuer) to make payment of such amounts from funds of the Borrower, if any, held by the Issuer, the Trustee, or any agent of the Issuer or the Trustee. The Borrower further covenants and agrees that, pursuant to the requirements of the Treasury Regulations Section 1.148-1(b), it (or any related person contemplated by such regulations) will not purchase Bonds in an amount related to the amount of the Mortgage Loan, other than Purchased Bonds. Section 5.6. Further Assurances and Corrective Instruments . The parties hereto agree that they will, from time to time, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such supplements hereto and to the other documents contemplated hereby as may reasonably be required to carry out the intention of or to facilitate the performance of this Amended and Restated Agreement, the Mortgage Loan Documents or the other Bond Documents or to perfect or give further assurances of any of the rights granted or provided for herein,in the Mortgage Loan Documents or in the other Bond Documents. Section 5.7. Approval of Other Documents. The Indenture and the Collateral Agreement have been submitted to the Borrower for examination, and the Borrower, by execution of this Amended and Restated Agreement, acknowledges and agrees that it has participated in the drafting of the Indenture and the Collateral Agreement, that it has approved and agreed to each of the provisions of the Indenture and the Collateral Agreement and that it is bound by, shall adhere to the provisions of, and shall have the rights set forth by the terms and conditions of,the Indenture. Section 5.8. Notice of Certain Events. The Borrower hereby covenants to advise the Servicer, the Issuer, the Trustee and the Credit Facility Provider promptly in writing of the occurrence of any default by the Borrower in the performance or observance of any covenant, agreement, representation, warranty or obligation of the Borrower set forth in this Amended and Restated Agreement, in any of the other Bond Documents, in any of the Mortgage Loan Documents or any other documents contemplated hereby or thereby, or of any Event of Default hereunder known to it or of which it has received notice, or any event which, with the passage of time or service of notice, or both, would constitute an Event of Default hereunder, specifying 15 the nature and period of existence of such event and the actions being taken or proposed to be taken with respect thereto. Such notice shall be given promptly, and in no event less than ten (10) Business Days after the Borrower receives notice or has knowledge of the occurrence of any such event. The Borrower further agrees, that it will give prompt written notice to the Trustee and the Servicer if insurance proceeds or condemnation awards are received with respect to the Project and are not used to repair or replace the Project, which notice shall state the amount of such proceeds or award. Section 5.9. Indemnification. The Borrower hereby releases the Issuer and its officers and employees from, and covenants and agrees to indemnify, hold harmless and defend the Issuer, the Trustee, the Tender Agent and their respective officers, members, directors, officials, agents and employees and each of them (each an "indemnified party") from and against, (a) any and all claims,joint or several,by or on behalf of any person arising from any cause whatsoever in connection with transactions contemplated hereby or otherwise in connection with the Project, the Bonds or the execution or amendment of any document relating thereto; (b) any and all claims, joint or several, arising from any cause whatsoever in connection with the approval of refinancing for the Project or the making of the Mortgage Loan; (c) any and all claims,joint or several, arising from any act or omission of the Borrower or any of its agents, servants, employees or licensees, in connection with the Mortgage Loan or the Project; (d) all reasonable costs, counsel fees, expenses or liabilities incurred in connection with any such claim, or proceeding brought thereon; (e) any and all claims arising in connection with the issuance and sale, resale or remarketing of any Bonds or any certifications or representations made by any person other than the Issuer or the party seeking indemnification in connection therewith and the carrying out by the Borrower of any of the transactions contemplated by the Bonds, the Indenture, the Regulatory Agreement, the Collateral Agreement and this Amended and Restated Agreement; (f) any and all claims arising in connection with the operations of the Project, or the conditions, environmental or otherwise occupancy, use, possession, conduct or management of work done in or about, or from the planning, design, acquisition, installation or construction of, the Project or any part thereof; and (g) any and all losses, claims, damages, liabilities or expenses,joint or several, arising out of or connected with the Trustee's acceptance or administration of the trusts created by the Indenture and the exercise of its powers or duties thereunder or under this Amended and Restated Agreement, the Regulatory Agreement, the Collateral Agreement or any other agreements in connection therewith to which it is a party; except W in the case of the foregoing indemnification of the Trustee, the Tender Agent or any of their respective officers, members, directors, officials and employees, to the extent such damages are caused by the negligence or willful misconduct of such Person; or (ii) in the case of the foregoing indemnification of the Issuer or any of its officers, members, directors, officials and employees, to the extent such damages are caused by the gross negligence or willful misconduct of such Person. In the event that any action or proceeding is brought against any indemnified party with respect to which indemnity may be sought hereunder, the Borrower, upon written notice from the indemnified party, shall assume the investigation and defense thereof, including the employment of counsel selected by the Borrower, subject to the approval of the indemnified party in such party's sole discretion, and shall assume the payment of all expenses related thereto, with full power to litigate, compromise or settle the same in its sole discretion; Drovided that the Issuer, the Trustee or the Tender Agent, shall have the right to review and approve or disapprove any such compromise or settlement. In the event of a conflict between the interest of the Borrower and the interests of an indemnified ap rtv" £ieach indemnified party shall have the right to employ separate counsel in any such action or proceeding and participate in the investigation and defense thereof, and the Borrower shall pay the reasonable fees and expenses of such separate counsel; provided, however, that unless such separate counsel is employed with the approval of the Borrower, which approval shall not be unreasonably withheld, the Borrower shall not be required to pay the fees and expenses of such separate counsel. 16 Notwithstanding any transfer of the Project to another owner in accordance with the provisions of the Regulatory Agreement, the Borrower shall remain obligated to indemnify each indemnified party pursuant to this Section if such subsequent owner fails to indemnify any party entitled to be indemnified hereunder, unless such indemnified party has consented to such transfer and to the assignment of the rights and obligations of the Borrower hereunder. During any period that the Credit Facility Provider or any other party (a "Subsequent Owner") owns the Project and that this Section 5.9 is applicable to the Credit Facility Provider or such Subsequent Owner, the Credit Facility Provider's or such Subsequent Owner's obligations under this Section 5.9 shall be limited to acts and omissions of the Credit Facility Provider or such Subsequent Owner, respectively occurring during the period of the Credit Facility Provider's or such Subsequent Owner's ownership of the Project. Section 5.10. Obligations of the Borrower Unconditional. Subiect to the provisions of Section 5.11 hereof, 4�lhe obligation of the Borrower to perform its obligations under this Amended and Restated Agreement, including without limitation , its obligations to make the payments required by Section 4.3 of this Amended and Restated Agreement, to provide indemnification pursuant to Section 5.9 hereof and to make any and all other payments required by this Amended and Restated Agreement, the Indenture or any other documents contemplated hereby or thereby shall be absolute and unconditional and shall not be subject to diminution by set-off, recoupment, counterclaim, abatement or otherwise. Until the Bonds have been fully paid (or provision made therefor) in accordance with the Indenture (and longer if required by the terms of this Amended and Restated Agreement or any Mortgage Loan Document), the Borrower (a) shall continue to have the obligation to repay the Mortgage Loan , (b) shall perform and observe all of its other obligations contained in this Amended and Restated Agreement, the Reimbursement Agreement, the Indenture and all other documents contemplated hereby or thereby, and (c) shall not terminate this Amended and Restated Agreement for any cause, including, without limiting the generality of the foregoing, defect in title to the Project, any acts or circumstances that may constitute failure of consideration, destruction of, damage to or condemnation of the Project, commercial frustration of purpose, any change in the tax or other laws of the United States of America or of the State or any political subdivision of either, or any failure of the Issuer to perform and observe any of its obligations arising out of or connected with this Amended and Restated Agreement. Neither (A) payment made by the Credit Facility Provider under the Credit Facility with respect to the payment of the principal and interest on the Mortgage Loan, to facilitate the purchase of Tendered Bonds, to redeem Pledged Collateral or otherwise nor (B) the Trustee's use of any funds on deposit in the Principal Reserve Fund to reimburse the Credit Facility Provider for advances made under the Credit Facility or to pay principal of or interest on the Bonds or the purchase price of Tendered Bonds, shall relieve the Borrower of any of its obligations under the Mortgage Loan Documents, this Amended and Restated Agreement or, to the extent applicable,the Indenture. Section 5.11. Unsecured General Obligation;Non-Recourse. (a) All obligations of the Borrower under this Amended and Restated Agreement and the Regulatory Agreement shall be unsecured general obligations of the Borrower and shall be subordinate and junior in priority, right of payment and all other respects to any and all obligations of the Borrower to the Credit Facility Provider under or in respect of the Reimbursement Agreement,Bond Documents and Mortgage Loan Documents. 17 (b) No partner of the Borrower shall have any personal liability in respect of any of the obligations of the Borrower under this Amended and Restated Agreement and the Regulatory Agreement; provided, however, that the obligations of the Borrower under this Amended and Restated Agreement and the Regulatory Agreement shall be recourse as to any general partner of the Borrower and any Key Principal on a joint and several basis, in the manner and to the extent as if the provisions of Section 11 of the Mortgage Note were applicable to such obligations; provider, further however, that, to the extent that such obligations shall be recourse to the general partner of Borrower or a Key Principal pursuant to this Section 5.11(b), such obligations shall be subordinate and junior in priority, right of payment and all other respects to any and all obligations of the general partner of the Borrower and the Key Principal to the Credit Facility Provider under or in respect of the Reimbursement Agreement, Bond Documents and Mortgage Loan Documents. (c) Nothing contained in this Section 5.11 shall be deemed to mean that the Borrower's obligations to pay amounts due under the Mortgage Note , to repay advances made by Fannie Mae pursuant to the Mortgage Loan Documents or to make payments under the Reimbursement Agreement,are not secured by the Mortgage on the Project. Section 5.12. Cap Agreement. The Borrower hereby acknowledges that all amounts payable under the Cap Agreement shall, pursuant to the Hedge Assignment and the Indenture, be deposited into the Cap Account of the General Receipts Fund pursuant to Section 401 of the Indenture and shall be applied as provided in the Indenture. Section 5.13. Continuing Disclosure. The Borrower hereby covenants and agrees that it will comply with and carry out all of the provisions of any Continuing Disclosure Agreement. Notwithstanding any other provision of this Amended and Restated Agreement, failure of the Borrower to comply with the Continuing Disclosure Agreement shall not be considered an Event of Default; however, the Trustee, at the written request of any underwriter of the Bonds required to comply with Securities and Exchange Commission Rule 15c2-12(b)(5) or the holders or Beneficial Owners of at least 25% aggregate principal amount in Outstanding Bonds or the Credit Facility Provider shall, but only to the extent indemnified to its satisfaction, or any Bondholder may take such actions as may be necessary and appropriate, including seeking specific performance by court order, to cause the Borrower to comply with its obligations under this Section 5.13. 18 ARTICLE VI MORTGAGE LOAN DOCUMENTS Section 6.1. Assurances. The Borrower and the Issuer agree that neither party hereto shall enter into any, contracts or agreements or perform any acts, or request the other party hereto to enter into any contracts or agreements or perform any acts, which shall adversely affect the Mortgage Loan Documents. Section 6.2. Assignment of Certain Rights. Pursuant to and subject to the terms of the Assignment, the Borrower acknowledges and agrees to the assignment by the Issuer of the Mortgage Note , the Mortgage and the other Mortgage Loan Documents to the Trustee and the Credit Facility Provider as their interests may appear. Section 6.3. Financial Obligations Personal to the Borrower. The Issuer acknowledges that the Project shall be encumbered by the Mortgage Loan Documents. Notwithstanding any provisions of this Amended and Restated Agreement or the Regulatory Agreement to the contrary, all obligations of the Borrower under this Amended and Restated Agreement and the Regulatory Agreement for the payment of money and all claims for damages against the Borrower by the Issuer occasioned by breach or alleged breach by the Borrower of the Reserved Rights under the Regulatory Agreement or this Amended and Restated Agreement, including indemnification obligations, shall not be secured by or in any manner constitute alien on the Project and the Issuer shall not have the right to enforce Reserved Rights other than directly against the Borrower. No subsequent owner of the Project shall be liable or obligated for the breach or default of any obligation of any prior owner under the Regulatory Agreement or this Amended and Restated Agreement, including but not limited to any payment or indemnification obligation. The owner of the Project at the time the default or breach occurred shall remain liable for any and all damages occasioned thereby even after such Person ceases to be the owner and the Issuer upon seeking to collect such damages shall have no recourse and shall have no right to levy against or otherwise collect on any judgment from the Project. 19 ARTICLE VII THE PROJECT Section 7.1. Regulatory Agreement. The covenants of the Borrower in the Regulatory Agreement shall be deemed to constitute covenants of the Borrower running with the land and an equitable servitude for the benefit of the owners of the Bonds and shall be binding upon any owner of the Project until (i) such time as such restrictions expire under their own terms, or (ii) the Issuer (in its sole and absolute discretion) and the Trustee (as provided in the Indenture) consent to the release of such restrictions, or (iii) the Regulatory Agreement is otherwise terminated by its terms. The Borrower hereby covenants to file of record the Regulatory Agreement and such other documents and take such other steps as are necessary in order to assure that the restrictions contained in the Regulatory Agreement will be binding upon all owners of the Project. The Borrower hereby covenants to include such restrictions in any documents transferring any interest in the Project to another to the end that such transferee has notice of,and is bound by,such restrictions. Section 7.2 Right to Enforce Compliance. Subject to Article VIII of this Agreement the Assianment, the Issuer, the Trustee, the Servicer and the Credit Facility Provider shall have the right, but not the obligation, to enforce compliance by the Borrower and its successors as subsequent owners of the Project with the requirements contained in this Article VII and the requirement of the Regulatory Agreement. 20 ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES Section 8.1. Events of Default. (a) Each of the following shall constitute an event of default under this Amended and Restated Agreement, and the term "Event of Default" shall mean, whenever used in this Amended and Restated Agreement,any one or more of the following events: (i) Failure by the Borrower to pay any amounts due under this Amended and Restated Agreement at the times and in the amounts required hereby;or (h) Failure by the Borrower to observe or perform any covenants, agreements or obligations in this Amended and Restated Agreement on its part to be observed or performed (other than as provided in clause (i) above) for a period of thirty (30) days after receipt of written notice specifying such failure and requesting that it be remedied, given to the Borrower by the Issuer,the Servicer or the Credit Facility Provider; or (iii) An Event of Default declared pursuant to paragraph (b) of this Section 8.1; (b) The occurrence of an Event of Default as defined in the Reimbursement Agreement or a default under any of the Mortgage Loan Documents shall, at the option of the Credit Facility Provider, in its sole and absolute discretion, constitute an Event of Default under this Amended and Restated Agreement, and the occurrence of an Event of Default under this Amended and Restated Agreement shall, at the option of the Credit Facility Provider, in its sole and absolute discretion, constitute, an Event of Default under the Reimbursement Agreement and a default under the Mortgage Loan Documents. Nothing contained in this Section 8.1 is intended to amend or modify any of the provisions of the Mortgage Loan Documents or the Reimbursement Agreement nor to bind the Servicer or Fannie Mae to any notice and cure periods other than as expressly set forth in the Mortgage Loan Documents and the Reimbursement Agreement. Section 8.2. Remedies upon an Event of Default. (a) Whenever any Event of Default shall have occurred and be continuing, the Issuer may take one or any combination of the following remedial steps: (i) By written notice to the Borrower, declare all amounts then due and payable on the Note to be immediately due and payable whereupon the same shall become immediately due and payable; (ii) Exercise any of the rights and remedies provided in the Mortgage Loan Documents or Bond Documents; or 21 (iii) Take whatever action at law or in equity may appear necessary or desirable to collect the amounts then due and thereafter to become due, or to enforce performance and observance of any obligation, agreement or covenant of the Borrower under this Amended and Restated Agreement. (b) Pursuant to the assignment of this Amended and Restated Agreement to the Trustee and the Credit Facility Provider, as their interests may appear, pursuant to the Assignment, the Credit Facility Provider or the Trustee shall have the right to exercise the remedies set forth in Section 8.2(a) of this Amended and Restated Agreement. Notwithstanding the assignment of this Amended and Restated Agreement (and the right to exercise the remedies set forth in Section 8.2(a) of this Amended and Restated Agreement) to the Trustee and the Credit Facility Provider, as their interests may appear,pursuant to the Assignment, the Issuer shall retain the right to remedy a violation of its Reserved Rights subject to the provisions of the Assignment and the following sentence. Neither the Issuer nor any party seeking to enforce the Reserved Rights shall have any right to collect or enforce any obligations against the Project or any other assets of the Borrower upon which the Trustee and/or Credit Facility Provider has a security interest or lien (the "Assets") and in no event shall they levy, execute, enforce or otherwise collect on any judgment in respect of such obligations from or against the Project or the Assets. (c) The provisions of subsection (a) hereof are subject to the condition that if, after any Event of Default (i) all amounts which would then be payable hereunder by the Borrower if such Event of Default had not occurred and was not continuing shall have been paid by or on behalf of the Borrower, and (ii) the Borrower shall have also performed all other obligations in respect of which it is then in default hereunder and shall have paid the reasonable charges and expenses of the Issuer, the Trustee, the Servicer and the Credit Facility Provider, including reasonable attorney fees and expenses paid or incurred in connection with such default, then and in every such case, such Event of Default may be waived and annulled by the Issuer, but no such waiver or annulment shall extend to or affect any subsequent Event of Default or impair any right or remedy consequent thereon. (d) No remedy herein conferred upon or reserved to the Issuer is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement or now or hereafter existing at law or in equity. No delay or omission to exercise any right or power accruing upon any Event of Default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right or power may be exercised from time to time and as often as may be deemed expedient. In order to entitle the Issuer 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 expressly required in this Article or by the provisions of any of the other Mortgage Loan Documents or Bond Documents. Such rights and remedies as are given the Issuer hereunder shall also extend to the Initial Credit Facility Provider and the Trustee as provided in the Assignment, and the Initial Credit Facility Provider and the Trustee, for the benefit of the Bond owners, subject to the provisions of the Resolution and the Assignment, shall be entitled to the benefit of all covenants and agreements herein contained. (e) In the event the Borrower should default under any of the provisions of this Amended and Restated Agreement and the Issuer should employ attorneys or incur other expenses for the collection of payments required hereunder or the enforcement of performance or observance of any obligation or agreement on the part of the Borrower herein contained, the Borrower agrees that it will pay, on demand therefor, to the Issuer the reasonable fees of such attorneys and such other expenses so incurred by the Issuer. 22 Section 8.3. Limitation on Waivers. No delay or omission to exercise any right or power occurring upon any Event of Default shall impair any such right or power or shall be construed to be a waiver thereof,but any such right and power may be exercised from time to time and as often as may be deemed appropriate. 23 ARTICLE IX MISCELLANEOUS Section 9.1. Notices. All notices, certificates or other communications herein provided shall be given in writing to the Issuer, the Borrower, the Trustee, the Credit Facility Provider and the Servicer, and shall be sufficiently given and shall be deemed given if given in the manner provided in Section 1103 of the Indenture. Copies of each notice, certificate or other communication given hereunder by either party hereto shall be given to the other hereto. By notice given hereunder, either party may designate further or different addresses to which subsequent notices, certificates or other communications are to be sent. A duplicate copy of each notice, certificate, request or other communication given hereunder to the Issuer, the Borrower,the Servicer or the Trustee shall also be given to the Credit Facility Provider. Section 9.2. Amendment. No amendment to this Amended and Restated Agreement shall be binding upon the Issuer or the Borrower until such amendment is reduced to writing and executed by such parties ; provided that no amendment, supplement or other modification to this Amended and Restated Agreement or any other Bond Document shall be effective without the prior written consent of the Credit Facility Provider, subject to the provisions of Section 9.11 hereof. Section 9.3. Entire Agreement. Except as provided in the other Bond Documents, the Reimbursement Agreement and the Mortgage Loan Documents, this Amended and Restated Agreement contains all agreements between the parties hereto, and there are no other representations, warranties, promises, agreements or understandings, oral, written or implied, between the parties hereto, unless reference is made thereto in this Amended and Restated Agreement or the Indenture. Section 9.4. Binding Effect. This Amended and Restated Agreement is a continuing obligation and shall (a) be binding upon the Borrower , the Issuer and their successors and assigns and (b) inure to the benefit of and be enforceable by the Issuer and the Borrower and their respective successors, transferees and assigns; provided that neither the Borrower nor the Issuer may assign all or any part of this Agreement without the prior written consent of the Issuer. The Issuer may assign, negotiate, pledge or otherwise hypothecate all or any portion of this Amended and Restated Agreement, or grant participations herein and in the Issuer's rights hereunder. All documentation, financial statements, appraisals and other data, or copies thereof, relevant to the Borrower may be exhibited to and retained by any such assignee, prospective assignee, participant or prospective participant, provided the Issuer shall endeavor to cause such parties to keep the same confidential. Notwithstanding anything herein to the contrary, to the extent the Credit Facility Provider or its designee shall become the owner of the Project as a result of a foreclosure or a deed in lieu of foreclosure or similar conveyance, the Credit Facility Provider and its designee, if applicable, shall not be liable for any breach or default or any of the obligations of any prior owner of the Project under this Amended and Restated Agreement, and shall only be responsible for defaults and obligations incurred during the period the Credit Facility Provider or its designee,if applicable,is the owner of the Project. Section 9.5. Severability. Should any provision of this Amended and Restated Agreement be held by a court of competent jurisdiction to be enforceable only if modified, such holding shall not affect the validity of the remainder of this Amended and Restated Agreement, the balance of which shall continue to be binding upon the parties hereto with any such modification to become a part hereof and treated as though originally set forth in this Amended 24 and Restated Agreement. The parties further agree that any such court is expressly authorized to modify any such unenforceable provision of this Amended and Restated Agreement in lieu of severing such unenforceable provision from this Amended and Restated Agreement in its entirety, whether by rewriting the offending provision, deleting any or all of the offending provision, adding additional language to this Amended and Restated Agreement, or by making such other modifications as it deems warranted to carry out the intent and agreement of the parties as embodied herein to the maximum extent permitted by law. The parties expressly agree that this Amended and Restated Agreement as so modified by the court shall be binding upon and enforceable against each of them. In any event, should one or more of the provisions of this Amended and Restated Agreement be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions hereof, and if such provision or provisions are not modified as provided above, this Amended and Restated Agreement shall be construed as if such invalid, illegal or unenforceable provisions had never been set forth herein. Section 9.6. Execution in Counterparts . This Amended and Restated Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. Section 9.7. Governing Law. This Amended and Restated Agreement shall be construed, and the obligations, rights and remedies of the parties hereunder shall be determined, in accordance with the laws of the State without regard to conflicts of laws principles, except to the extent that the laws of the United States of America may prevail. Section 9.8. Waiver Of T11a Trial THE BORROWER AND THE ISSUER(I) COVENANT AND AGREE NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING UNDER THIS AMENDED AND RESTATED AGREEMENT TRIABLE BY A JURY AND (II) WAIVE ANY RIGHT TO TRIAL BY JURY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN, KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL BY THE BORROWER, AND THIS WAIVER IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A JURY TRIAL WOULD OTHERWISE ACCRUE. FURTHER, THE BORROWER HEREBY CERTIFIES THAT NO REPRESENTATIVE OR AGENT OF THE ISSUER (INCLUDING, BUT NOT LIMITED TO, THE ISSUER'S COUNSEL) HAS REPRESENTED, EXPRESSLY OR OTHERWISE, TO THE BORROWER THAT THE ISSUER WILL NOT SEEK TO ENFORCE THE PROVISIONS OF THIS SECTION 9.8. Section 9.9. Limited Liability. All obligations of the Issuer incurred hereunder, under the Regulatory Agreement, the Tax Certificate and the Indenture shall be limited obligations of the Issuer, payable solely and only from Bond proceeds, revenues and other amounts derived by the Issuer from the Trust Estate and from the Credit Facility. The Bonds shall be payable solely from the revenues and other funds and property pledged under the Indenture for the payment of the Bonds, and no owner or owners of any of the Bonds shall ever have the right to compel any exercise of the taxing power of the State or any political subdivision or other public body thereof, nor to enforce the payment thereof against any property of the State or any such political subdivision or other public body, including the Issuer except as provided in the Indenture. No member, officer, agent, employee or attorney of the Issuer, including any person executing this Amended and Restated Agreement, shall be liable personally hereunder or for any reason relating to the issuance of the Bonds. No recourse shall be had for the payment of the principal of or the interest on the Bonds, or for any claim based therein, or otherwise in 25 s respect thereof, or based on or in respect of this Amended and Restated Agreement or any amendment hereto, against any member, officer, employee or agent, as such, of the Issuer or any successor whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the issue of the Bonds, expressly waived and released. Section 9.10. Term of this Amended and Restated Agreement. This Amended and Restated Agreement shall be in full force and effect from its date to and including such date as all of the Bonds shall have been fully paid or retired (or provision for such payment shall have been made as provided in the Indenture) and all amounts owing to the Credit Facility Provider hereunder or under the Reimbursement Agreement shall have been paid; 1rovided, however, that the provisions of Sections 2.1, 5.5 and 5.9 of this Amended and Restated Agreement shall survive the termination hereof. Section 9.11. References to the Credit Facility Provider. All provisions hereof regarding consents, approvals, directions, waivers, appointments, requests or other actions by the Credit Facility Provider shall be deemed not to require or permit such consents, approvals, directions, waivers, appointments, requests or other actions and shall be read as if the Credit Facility Provider were not mentioned therein (a) during any period during which there is a payment default under the Credit Facility, or (b) from and after the date on which the Credit Facility shall be declared to be null and void by final judgment of a court of competent jurisdiction; 1rovided, however, that the payment of amounts due (including without limitation all indemnity payments) to the Credit Facility Provider pursuant to the terms hereof or the Reimbursement Agreement shall continue in full force and effect. The foregoing shall not affect any other rights of the Credit Facility Provider. All provisions herein relating to the rights of the Credit Facility Provider shall be of no force and effect if the Credit Facility has terminated in accordance with its terms and there are no Purchased Bonds or Bonds in which the Credit Facility Provider has a security interest and all amounts owing to the Credit Facility Provider under the Credit Facility Agreement have been paid. In such event, all references to the Credit Facility Provider shall have no force or effect. Section 912 Control of Borrower and Credit Facility Provider The Borrower hereby renresents that the Credit Facility Provider does not control, either directly or indirectly_. through one or more intermediaries, the Borrower and that the Borrower does not control, either directly or indirectly, thorough one or more intermediaries, the Credit FaCihty Provider. "Control" for this purpose has the meaning given to such term in,Section 2(a)(9) of the Investment Company Act of 1940. The Borrower will give notice to the Trustee and the Remarketing Agent of any transaction that would result in the Borrower controlling or being controlled by the Credit Facility Provider at least 45 days prior to the„date of consummation of such transaction The Trustee will give such notice to the Bondholders within 10 days of recein 26 IN WITNESS WHEREOF, the parties hereto have caused this Amended and Restated Agreement to be executed by their duly authorized representatives as of the date of execution set forth below. CITY OF HUNTINGTON BEACH Mayor ATTEST: City Clerk APPROVED AS TO FORM: APPROVED AS TO FORM: Jones Hall,A Professional Law Corporation, City Attorney's Office Bond Counsel REVIEWED AND APPROVED: INITIATED AND APPROVED: City Administrator Director of Administrative Services FIVE POINTS SENIORS,L.P. By: Norman D. Ward,Trustee of the Ward Family Trust,under the Restated and Amended Declaration of Trust dated as of 3/6/90, as amended Its: General Partner DAI-ICHI KANGYO BANK OF CALIFORNIA,as Trustee By: 27 i` l 18019.48 JH:TAD:ams 2/12/99D-emailed cep 2/26/99D arcs 3/12/99D i AMENDED AND RESTATED INDENTURE OF TRUST Between CITY OF HUNTINGTON BEACH,, and DAI-ICHI KANGYO BANK OF CALIFORNIA, as Trustee Relating to $9,500,000 CITY OF HUNTINGTON BEACH VARIABLE RATE DEMAND MULTIFAMILY RENTAL HOUSING REVENUE BONDS (FIVE POINTS SENIORS PROJECT) SERIES A OF 1991 DATED AS OF APRIL 1, 1999 Amending and Restating that certain Indenture of Trust, dated as of December 1, 1991, by and between the City of Huntington Beach and Dai-Ichi Kangyo Bank of California, as trustee TABLE OF CONTENTS ARTICLE I DEFINITIONS AND INTERPRETATION Section101. Definitions.....................................................................................................................................5 Section102. Rules of Construction................................................................................................................18 Section 103. Content of Certificates and Opinions.....................................................................................19 Section104. Effective Date..............................................................................................................................19 ARTICLE II THE BONDS Section 201. Authorized Amount of Bonds.................................................................................................20 Section202. Issuance of Bonds......................................................................................................................20 Section 203. Weekly Variable Rate Mode....................................................................................................20 Section204. Reset Rate Mode.........................................................................................................................21 Section205. Fixed Rate Mode........................................................................................................................23 Section 206. Credit Facility Requirement.....................................................................................................24 Section 207. Certain General Provisions Concerning Modes,Interest Rates and Interest Rate Periods..........................................................................................................................................24 Section 208. Execution;Authentication........................................................................................................26 Section 209. Form of Bonds;Temporary Bonds.........................................................................................27 Section 210. Mutilated,Lost,Stolen or Destroyed Bonds.........................................................................27 Section 211. Exchangeability and Transfer of Bonds;Persons Treated as the Bondholders..............27 Section212. Cancellation................................................................................................................................29 Section213. Ratably Secured..........................................................................................................................29 Section214. Redemption of Bonds................................................................................................................29 Section 215. Notice of Redemption;Cancellation......................................................................................33 Section 216. Book-Entry Only System..........................................................................................................34 Section 217. Successor Securities Depository;Transfers Outside Book-Entry Only System.............35 Section 218. Conditions for Reissuance of Bonds........................................................................................36 Section219. Limited Obligations...................................................................................................................37 Section220. Continuing Disclosure..............................................................................................................37 ARTICLE III SECURITY Section 301. Security and Pledge of Security..............................................................................................38 Section 302. Payment of Bonds and Performance of Covenants.............................................................38 Section 303. Further Assurances....................................................................................................................38 Section 304. Preservation of Security............................................................................................................39 Section 305. Inspection and Examination....................................................................................................39 Section 306. No Disposition of Mortgage Note or Mortgage;Excepted Assignments; Substitution..................................................................................................................................39 Section 307. Initial Credit Facility;No Disposition of Credit Facility or Pledged Collateral.............40 Section 308. Accounts and Reports...............................................................................................................40 Section 309. Enforcement of Obligations.....................................................................................................41 Section 310. Maintenance of Lien on Trust Estate......................................................................................41 Section 311. No Modification of Security;No Additional Indebtedness...............................................42 ARTICLE IV FUND Section 401. General Receipts Fund..............................................................................................................43 Section 402. Costs of Issuance Fund.............................................................................................................45 Section403. Bond Purchase Fund.................................................................................................................45 Section 404. Principal Reserve Fund.............................................................................................................45 Section 405. Reserved..................................................................................Error!Bookmark not defined. i 5ection406. Cap Reserve Fund......................................................................................................................47 Section407. Investments.................................................................................................................................48 Section408. General Tax Covenant..............................................................................................................49 Section 409. Compliance with Tax Certificate;Rebate Fund...................................................................49 Section 410. Nonpresentment of Bonds.......................................................................................................50 Section411. Records........................................................................................................................................50 Section412. Final Fund Balances...................................................................................................................50 Section413. Sinking Fund..............................................................................................................................51 ARTICLE V DISCHARGE OF LIES, Section 501. Discharge of Lien and Security Interest................ ..............................................................53 Section 502. Provision for Payment of Bonds.............................................................................................54 Section 503. Discharge of this Indenture.....................................................................................................55 ARTICLE VI DEFAULT PROVISIONS AND REMEDIES Section601. Events of Default........................................................................................................................56 Section602. Acceleration................................................................................................................................56 Section 603. Other Remedies;Rights of Bondholders...............................................................................57 Section 604. Right of Bondholders and the Credit Facility Provider to Direct Proceedings..............58 Section 605. Discontinuance of Default Proceedings................................................................................59 Section606. Waiver..........................................................................................................................................59 Section607. Application of Moneys.............................................................................................................59 Section 608. Preservation of Security and Remedies if Payment Under Credit Facility is Not Made or is Insufficient;Rights of Bondholders.....................................................................60 Section 609. Non-Default and Prohibition of Mandatory Redemption Upon Event of Taxability......................................................................................................................................61 ARTICLE VII CREDIT FACILITY;ALTERNATE CREDIT FACILITY Section 701. Payment Under the Credit Facility 62 Section 702. Transfer of Credit Facility;Extension....................................................................................64 Section 703. Alternate Credit Facility 64 ........................................................................................................... Section 704. Rights of the Credit Facility Provider....................................................................................65 Section 705. Certain Notices to Credit Facility Provider...........................................................................65 Section 706. Assignment of Mortgage;Liability of Credit Facility Provider........................................65 ARTICLE VIII THE TRUSTEE AND TENDER AGENT Section 801. Appointment of Trustee;Duties.............................................................................................66 Section802. Fees;Expenses............................................................................................................................68 Section 803. Intervention in Litigation.........................................................................................................69 Section 804. Resignation of Trustee............................................................:.................................................69 Section805. Removal of Trustee....................................................................................................................70 Section 806. Instruments of Bondholders....................................................................................................70 Section 807. Power to Appoint Co-Trustees................................................................................................70 Section 808. Filing of Financing Statements................................................................................................72 Section809. Tender Agent..............................................................................................................................72 Section 810. Resignation of Tender Agent...................................................................................................73 Section 811. Removal of Tender Agent........................................................................................................73 ARTICLE IX SUPPLEMENTAL INDENTURES;AMENDMENT Section 901. Supplemental Indentures Not Requiring Bondholder Consent.......................................75 Section 902. Supplemental Indentures Requiring Bondholder Consent...............................................76 11 Section 903. Amendments,Changes and Modifications to the Credit Facility and Regulatory Agreement....................................................................................................................................76 Section 904. Notice to and Consent of Bondholders..................................................................................77 Section905. Waiver..........................................................................................................................................77 Section906. Required Approvals..................................................................................................................77 Section907. Opinions of Counsel..................................................................................................................77 Section908. Certificate of Borrower.............................................................................................................78 Section 909. Notation of Modification on Bonds;Preparation of New Bonds.....................................78 Section 910. Modification of the Tax Certificate.........................................................................................78 ARTICLE X PURCHASE AND REMARKETING OF BONDS Section 1001. Purchase of Bonds on any Business Day...............................................................................79 Section 1002. Mandatory Tender and Purchase...........................................................................................81 Section1003. Remarketing of Bonds...............................................................................................................82 Section1004. Purchased Bonds........................................................................................................................85 Section 1005. No Sales After Default;No Purchase After Acceleration...................................................85 Section 1006. Tender Agent Acting Pursuant to Tender Agent Agreement...........................................86 ARTICLE XI MISCELLANEOUS Section1101. Limitation of Rights...................................................................................................................87 Section1102. Severability.................................................................................................................................87 Section1103. Notices.........................................................................................................................................87 Section 1104. Payments Due on Days That Are Not Business Days........................................................90 Section1105. Binding Effect.............................................................................................................................90 Section1106. Governing Law...........................................................................................................................90 Section 1107. No Personal Liability;No Recourse.......................................................................................91 EXHIBIT A—FORM OF BOND iii f AMENDED AND RESTATED INDENTURE OF TRUST This AMENDED AND RESTATED INDENTURE OF TRUST, dated as of April 1, 1999 (the "Indenture"), is made and entered into by and between the City of Huntington Beach, a chartered city of municipal corporation, organized and existing under the laws of the State of California, (together with its permitted successors and assigns, the "Issuer"), and Dai-Ichi Kangyo Bank of California, a state banking corporation, and duly authorized to accept and exercise trust powers hereunder, as trustee (together with its permitted successors and assigns, the "Trustee"). RECITALS WHEREAS, pursuant to that certain Indenture of Trust,dated as of December 1, 1991 (as amended and supplemented to the date hereof, the "Original Indenture"), by and between the Issuer and Dai-Ichi Kangyo Bank of California, as trustee (the "Trustee"), the Issuer has previously issued its $9,500,000 City of Huntington Beach Variable Rate Demand P.4ukifawdly Housing Reven+ie BondsMultifamily Rental Housing Revenue Bonds (Five Points Seniors Project), Series A of 1991 (the 'Bonds"), and Bonds in an aggregate principal amount of $9,500,000 remain outstanding on the effective date hereof; WHEREAS, the proceeds of the Bonds were used by the Issuer to fund a loan (the "Mortgage Loan") to provide financing with respect to a multifamily rental housing development owned by Five Points Seniors, L.P. (the "Borrower") pursuant to that certain Loan Agreement dated as of December 1, 1991 (said loan agreement, as amended and supplemented to the date hereof, being the "Loan Agreement") by and among the Issuer, the Trustee and the Borrower; WHEREAS, the obligations of the Borrower under the Loan Agreement are secured by that certain Construction Deed of Trust, Assignment of Rents and Fixture Filing, dated as of December 1,1991 (as amended and supplemented to the date hereof,the "Prior Mortgage"); WHEREAS, subject to certain limited exceptions, the Issuer's rights under the Loan Agreement and the Prior Mortgage were assigned to the Trustee pursuant to the Original Indenture; WHEREAS,th,-- Fannie Mae has agreed to secure payments under a new mortgage note, which, in turn, will provide credit enhancement and liquidity for the Bonds, by pledging and granting to the Trustee a security interest in certain mortgage loans and other collateral owned by Fannie Mae ("Pledged Collateral') pursuant to that certain Collateral Agreement of even date herewith between Fannie Mae and the Trustee (said collateral agreement, as amended, supplemented or otherwise modified from time to time, being the "Collateral Agreement"), in substitution for the existing credit enhancement and liquidity in effect with respect to the Bonds; WHEREAS, in connection with the provision by Fannie Mae of credit enhancement and liquidity for the Bonds, the Issuer and the Trustee have agreed, with the consent of the Borrower and upon satisfaction of the other conditions set forth in the Original Indenture, to amend and restate the Original Indenture on the terms and conditions provided herein; WHEREAS, concurrently herewith the Issuer, the Trustee and the Borrower are entering into that certain Amended and Restated Loan Agreement of even date herewith (said agreement, as amended, supplemented or otherwise modified from time to time, being the "Financing Agreement"), and the Borrower is executing&L.Aamended and Rrestated Mortgage Note and a neian amended and restated Mortgage,each as defined herein; WHEREAS, the Trustee has the power and authority to enter into this Indenture, to accept trusts and to execute the trusts hereby created, and has accepted the trusts so created, and in evidence thereof has joined in the execution hereof;and NOW, THEREFORE, in consideration of the premises, the acceptance by the Trustee of its obligations hereunder, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, in order to secure the payment of the principal of, redemption premium, if any, and interest on, and the purchase price of, the Bonds according to their tenor and effect, to secure all obligations owed to the Credit Facility Provider (as hereinafter defined) under the Credit Facility Agreement (as hereinafter defined), and to secure the performance and observance by the Issuer of all the covenants expressed or implied herein and in the Bonds, the Issuer does hereby bargain, sell, convey, pledge, assign and grant a security interest (i) unto the Trustee for the benefit of the Bondholders and unto the Credit Facility Provider, as their interests may appear, and in accordance with the terms of the Assignment in and to the following under I below and (ii) unto the Trustee for the benefit of the Bondholders and for the benefit of the Credit Facility Provider, as their interests may appear, in and to the following under II and III below, subject only to the Assignment (as hereinafter defined) and the provisions of this Indenture permitting the application thereof to the purposes and on the terms and conditions set forth herein,to wit: 2 GRANTING CLAUSES I. All right, title and interest of the Issuer in and to the Financing Agreement, the Mortgage Loan, including the Mortgage Note, the Mortgage and the other Mortgage Loan Documents, and all amendments, modifications, supplements, renewals and restatements of the foregoing, including but not limited to all rights to receive payments on the Mortgage Note and under the other Mortgage Loan Documents, including all proceeds of insurance or condemnation awards, reserving,however,the Reserved Rights(as hereinafter defined); II. All right, title and interest of the Issuer in and to the proceeds of the Bonds and all funds and accounts under this Indenture (including, without limitation,amounts held in the Principal Reserve Fund, the Cap Reserve Fund and amounts, documents, instruments and general intangibles on deposit, or otherwise held in the Cap Account of the General Receipts Fund), except as otherwise provided herein, including investment income,but excluding all moneys in the Rebate Fund, the Costs of Issuance Fund and the Bond Purchase Fund (each as hereinafter defined) subject only to the provisions of this Indenture and the Assignment permitting the use and application thereof for or to the purposes and on the terms and conditions herein and therein set forth, including payment to the Credit Facility Provider, as provided herein and therein;and III. All funds, moneys and securities and any and all other rights and interests in property, whether tangible or intangible,from time to time hereafter by delivery or by writing of any kind conveyed, mortgaged, pledged, assigned or transferred as and for additional security hereunder for the Bonds by the 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 property at any and all times, and to hold and apply the same subject to the terms hereof; TO HAVE AND TO HOLD all the same with all privileges and appurtenances hereby conveyed and assigned, or agreed or intended so to be, to the Trustee and its successors in said trust and to the Credit Facility Provider, as their interests may appear, subject to the further provisions of the Assignment and to them and their assigns forever; IN TRUST, NEVERTHELESS, upon the terms and trusts herein set forth for the equal and proportionate benefit, security and protection (subject to the terms hereof) of (a) all registered owners of the Bonds, without privilege, priority or distinction as to the lien or otherwise of any of the Bonds over any of the others of the Bonds, and (b) the Credit Facility Provider to secure the payment of all amounts owed to the Credit Facility Provider under the Financing Agreement and the Credit Facility Agreement; PROVIDED, HOWEVER, that, as set forth in the Assignment, Fannie Mae shall control and shall have the right to exercise the Mortgage Rights (as defined in the Assignment) and Fannie Mae may direct the Trustee to assign the Trustee's interest in the Mortgage Loan, including the Mortgage Note, the Mortgage, the other Mortgage Loan Documents and the Financing Agreement, to Fannie Mae, at any time, subject to reassignment to the Trustee, as provided in the Assignment. 3 PROVIDED, FURTHER HOWEVER, that if the Issuer or its successors or assigns shall pay or cause to be paid to the registered owners of the Bonds the principal, redemption premium, if any,and interest to become due thereon at the times and in the manner provided in Article V hereof, and if no amount shall be owing by the Borrower to the Issuer or the Trustee under the Financing Agreement or to the Credit Facility Provider under the Credit Facility Agreement, and if the Issuer shall keep, perform and observe, or cause to be kept, performed and observed, all of its covenants, warranties and agreements contained herein, this Indenture and the estate and rights hereby granted shall cease and be discharged, and thereupon the Trustee shall cancel and discharge the lien of this Indenture and execute and deliver to the Issuer such instruments in writing as shall be requisite to satisfy the lien hereof, and, subject to Section 502 hereof, reconvey to the Issuer any property at the time subject to the lien of this Indenture which may then be in its possession, except amounts held by the Trustee for the payment of principal of, redemption premium, if any, and interest on the Bonds, or moneys held in the Rebate Fund for payment to the United States Government; otherwise this Indenture shall be and remain in full force and effect,and upon the trusts and subject to the covenants and conditions hereinafter set forth. 4 ARTICLE I DEFINITIONS AND INTERPRETATION Section 101. Definitions. In addition to terms elsewhere defined in this Indenture (including the recitals to this Indenture set forth above), the following words and terms as used in this Indenture and the preambles hereto and in the Financing Agreement shall have the following meanings unless the context or use clearly indicates another or different meaning or intent. All capitalized terms not otherwise defined herein shall have the meaning provided for them in the Financing Agreement. "Act" means Chapter 7 of Part 5 of Division 31 of the Health and Safety Code of the State of California as in effect at the time of the issuance and delivery of the Bonds and as it may from time to time thereafter have been or be amended or supplemented. "Act of Bankruptcy" means any proceeding instituted under the Bankruptcy Code or other applicable insolvency law by or against the Issuer. "Adjustment Date" means any Interest Payment Date on which the interest rate on the Bonds is adjusted to a different Mode or to a different Reset Rate,including any Reset Date,a-Rd the Conversion Date and any day immediately following any Reset Period. An Adjustment Date may only occur on any Interest Payment Date during the Weekly Variable Rate Period, or it such date is not a Business Day, the next succeeding Business Day and shall be the day iRzffnediately felleiving any Reset Period. "Alternate Credit Facility" means a letter of credit, surety bond, insurance policy, standby purchase agreement, collateral purchase agreement, mortgage backed security or similar agreement, instrument or facility (other than the Collateral Agreement) provided in accordance with Section 3.3 of the Financing Agreement. "Assignment' means the Assignment and Intercreditor Agreement, dated the date thereof, among the Issuer, the Trustee and Fannie Mae, and acknowledged and agreed to by the Borrower,as it may be amended,modified,supplemented or restated from time to time. "Authorized Borrower Representative" means any person who at the time and from time to time may be designated as such by written certificate furnished to the Issuer, the Servicer, the Credit Facility Provider and the Trustee containing the specimen signature of such person and signed on behalf @ the Borrower eer-per-atiee, which certificate may designate an alternate or alternates, or in the event that such term shall refer to successors or assigns of the Borrower, an authorized officer, in case the successor or the assignee is a corporation, or an authorized general partner, in case the successor or the assignee is a general or limited partnership. "Authorized Denomination" means, (a) during any Weekly Variable Rate Period, $100,000 or any integral multiple thereof, without regard to how DTC or any successor securities depository records interests in the Bonds; and (b) during any Reset Period or the Fixed Rate Period,$5,000 or any integral multiple thereof. "Authorized Officer" means the Mayor,City Administrator or Finance Director, and any other officer or employee of the Issuer designated by certificate of any of the foregoing as authorized by the Issuer to perform a specified act or sign a specified document. 5 r "Available Moneys" means with respect to any date of determination (a) remarketing proceeds received from the Remarketing Agent or purchaser (other than funds provided by the Borrower, any partner of the Borrower or the Issuer), (b) proceeds received pursuant to the Credit Facility, (c) proceeds from the investment or reinvestment of moneys described in clauses (a) and (b) above, and/or (d)any other amounts, including the proceeds of refunding bonds, for which, in each case, the Trustee has received an Opinion of Counsel experienced in bankruptcy matters to the effect that the use of such amounts to make payments on the Bonds would not violate Section 362(a) of the Bankruptcy Code (or that relief from the automatic stay provisions of such Section 362(a) would be available from the bankruptcy court) or be avoidable as preferential payments under Section 544, 547 or 550 of the Bankruptcy Code should the Issuer, the Borrower, any joint venturer in or general partner of the Borrower, or any general partner in any joint venturer in or general partner of the Borrower, become a debtor in proceedings commenced thereunder. "Bankruptcy Code" means Title 11 of the United States Code entitled "Bankruptcy," as now and hereafter in effect,or any successor statute. "Beneficial Owner" means the beneficial owner of Bonds held in book-entry form or the registered owner of Bonds held in certificated form. "BMA Index Rate" means a rate determined on the basis of an index of the weekly interest rate resets of tax-exempt variable rate issues included in a database maintained by Municipal Market Data a Thompson Financial Services Coml2any, or its successors, which meet specific criteria established by the Bond Market Association. "Bond" or `Bonds" means any of the Bonds issued under this Indenture. "Bond Counsel" means any attorney at law or firm of attorneys, selected by the Issuer with the consent of the Credit Facility Provider, of nationally recognized standing in matters pertaining to the exclusion from gross income for federal income tax purposes of the interest payable on bonds issued by states and political subdivisions. "Bond Documents" means the Bonds, the Indenture, the Financing Agreement, the Assignment, the Regulatory Agreement, the Credit Facility Agreement, the Tax Certificate, the Remarketing Agreement, any Tender Agent Agreement, the Hedge Documents, the Hedge Assignment and all other documents, instruments and agreements (a) executed and delivered in connection with the issuance, sale, delivery and/or remarketing of the Bonds, and (b) that may evidence, secure or otherwise relate to the Collateral Agreement and/or the Reimbursement Agreement, as each such agreement or instrument may be amended, modified or supplemented from time to time. "Bondholder," "holder," "owner" or "registered owner" means the registered owner of any Bonds. "Bondholder Tender Notice" means a written notice meeting the requirements of Section 1001 of this Indenture. "Bond Purchase Fund" means the Bond Purchase Fund created by Section 403 of this Indenture. 6 r "Bond Resolution" means the resolution, adopted by the Issuer on November 18, 1991, authorizing and approving the issuance and sale of the Bonds and the resolution, adopted by the Issuer on , March 15, 1999, authorizing and approving the execution and delivery of this Indenture and the Financing Agreement and certain other documents, making certain appointments and determining certain details with respect to the Bonds. "Borrower"has the meaning assigned that term in the recitals to this Indenture. "Business Day" means a day other than (a) a Saturday or a Sunday, (b) any day on which banking institutions located in the City of New York, New York, or the city or cities in which the Principal Office of the Trustee or the Servicer is located are required or authorized by law to close, (c) prior to the Conversion Date, a day on which the New York Stock Exchange is closed or(d)any day on which the Credit Facility Provider is closed. "Cap Account" means the Cap Account of the General Receipts Fund created by Section 401 of this Indenture. "Cap Agreement" means that certain Rate Cap Agreement dated as of between the Borrower and , as such agreement may be amended, restated, supplemented or otherwise modified from time to time, and any successor interest rate cap agreement approved in writing by the Credit Facility Provider. "Cap Reserve Fund" means the Cap Reserve Fund created by Section 406 of this Indenture. "Code" means the Internal Revenue Code of 1986, as amended (herein the "1986 Code"), and with respect to a specific section thereof such reference shall be deemed to include (a) the applicable regulations promulgated or proposed under such section or any previous corresponding section, (b)any successor provision of similar import hereafter enacted, (c) any corresponding provision of any subsequent Internal Revenue Code and (d) the applicable regulations promulgated or proposed under the provisions described in(b)and (c). "Collateral Agreement" has the meaning assigned that term in the recitals to this Indenture. "Conversion Date" means the date on which the interest rate on the Bonds converts from the Weekly Variable Rate or a Reset Rate to the Fixed Rate pursuant to Section 205 hereof. "Conversion Option" means the option granted to the Borrower in Section 205 hereof pursuant to which the interest rate on the Bonds is converted to the Fixed Rate on the Conversion Date. "Costs of Issuance" means (a) the fees and expenses of the Issuer, the Issuer's counsel and financial advisor, Bond Counsel, the Trustee and its counsel, the Remarketing Agent and its counsel, the Tender Agent, the Rating Agency and the Credit Facility Provider and its counsel, (b) the costs of printing the offering document relating to the remarketing of the Bonds and (c) all other costs and expenses directly associated with remarketing of the Bonds. "Costs of Issuance Deposit" means the deposit to be made by the Borrower with the Trustee on the Effective Date,which deposit shall equal$ 7 "Costs of Issuance Fund" means the Costs of Issuance Fund created by Section 402 of this Indenture. "Counterparty" shall have the meaning given to such term in the Reimbursement Agreement. "Credit Facility" means the Collateral Agreement or any Alternate Credit Facility at the time in effect. "Credit Facility Account" means the Credit Facility Account within the General Receipts Fund created by Section 401 of this Indenture. "Credit Facility Agreement" means, individually and collectively, the Collateral Agreement, the Reimbursement Agreement, all other agreements and documents securing the Credit Facility Provider or otherwise relating to the provision of the Collateral Agreement and the Reimbursement Agreement, and, to the extent applicable, the Financing Agreement and the Pledge Agreement or, at the time that any Alternate Credit Facility is in effect, the agreement or agreements pursuant to which the Credit Facility Provider agrees to issue the Alternate Credit Facility and/or the Borrower agrees to reimburse the Credit Facility Provider for payments made under the Alternate Credit Facility, as any such agreement may be amended, restated, modified or supplemented from time to time. "Credit Facility Provider" means, so long as the Collateral Agreement is in effect, Fannie Mae, or so long as any Alternate Credit Facility is in effect, the Credit Facility Provider then obligated under the Alternate Credit Facility. "DTC" means The Depository Trust Company and any successor thereto or any nominee thereof. "DTC Participant", "Indirect Participant" and "DTC System" have the meanings assigned thereto in Section 216 of this Indenture. "Effective Date" means the date on which this Indenture and the Financing Azreement become effective in accordance with their respective terms,which shall be, lim. "Electronic Means" means telecopy or facsimile transmission or other similar electronic means of communication approved in writing by the Credit Facility Provider. "Event of Default"means any of the events specified in Section 601 hereof. "Extension Date" means, with respect to any Alternate Credit Facility, the date which is five (5) days prior to the expiration date of the Alternate Credit Facility then in effect if no binding commitment to extend the existing Alternate Credit Facility has been delivered to the Trustee. "Fair Market Value" means the price at which a willing buyer would purchase the investment from a willing Geller in a bona fide arm's lenZth transaction (determined as of the date the contract to purchase or sell the investment becomes binding) if the investment is traded on an established securities market (within the meaning of section 1273 of the Code) and. otherwise the term "Fair Market Value" means the acquisition price in a bona fide arm's length transaction (as referenced above) if (i) the investment is a certificate of deposit that is acquired in accordance with applicable regulations under the Code, (ii) the investment is an agreement with specifically negotiated withdrawal or reinvestment provisions and a specifically negotiated interest rate (for example. guaranteed investment contract, a forward supply 8 contract or other investment agreement) that is acquired in accordance with ap�nlicable regulations under the Code. (iii) the investment is a United States Treasury Security--State and_ Local Government Series that is acquired in accordance with applicable regulations of the United States Bureau of Public Debt or (iv) any commingled investment fund in which the Issuer and related parties do not own more than a ten percent (10%)beneficial interest therein f the return paid by the fund is without regard to the source of the investment. "Fannie Mae" means Fannie Mae, a chartered and stockholder-owned corporation duly organized and existing under the Federal National Mortgage Association Charter Act, 12 U.S.C., § 1716 et seq., and its successors and assigns. "Fees Account" means the Fees Account within the General Receipts Fund created and established by Section 401 of this Indenture. "Financing Agreement" has the meaning assigned to that term in the recitals to this Indenture. "Fixed Rate" means the rate of interest borne by the Bonds as determined in accordance with Section 205 of this Indenture. "Fixed Rate Period" means the period of time beginning on the Conversion Date and ending on the Maturity Date. "Fund" means any of the funds created under Article IV of this Indenture. "General Receipts Fund" means the General Receipts Fund created by Section 401 of this Indenture. "Government Obligations" means direct obligations of, and obligations on which the full and timely payment of principal and interest is unconditionally guaranteed by, the full faith and credit of the United States of America. "Hedge"shall have the meaning given to such term in the Reimbursement Agreement. "Hedge Assignment" shall have the meaning given to such term in the Reimbursement Agreement. "Hedge Documents" shall have the meaning given to such term in the Reimbursement Agreement. "Improvements" means the improvements made upon the Land. "Indenture" means this Amended and Restated Indenture of Trust, as amended, restated,supplemented or otherwise modified from time to time as permitted hereby. "Interest Account" means the Interest Account within the General Receipts Fund created by Section 401 hereof. "Interest Accrual Period" means the period from and including an Interest Payment Date (or the Effective Date)to but excluding the next succeeding Interest Payment Date. 9 "Interest Payment Date" means (a)during the Weekly Variable Rate Period, the fifteenth (15th) day of each calendar month commencing April 15, 1999; (b)during any Reset Period each April 15 and October 15 following the Adjustment Date, provided that the first Interest Payment Date may only occur on a date which is at least 30 days after the Adjustment Date; (c) during the Fixed Rate Period, each April 15 and October 15 following the Conversion Date, provided that the first Interest Payment Date may only occur on a date which is at least 30 days after the Conversion Date; (d)each Adjustment Date;and(e) the Maturity Date. "Interest Requirement" means (a) during the Weekly Variable Rate Period, 35 days' interest on the Bonds at the Maximum Rate, and (b) during a Reset Period or the Fixed Rate Period, 210 days' interest at, respectively, the Reset Rate or the Fixed Rate, as the case may be; or, in the case of either (a) or (b), such lesser number of days as may be acceptable to the Rating Agency. "Interest Reserve Requirement" means an amount, which amount shall be held in the Interest Account of the General Receipts Fund, equal to the amount of interest payable on the aggregate principal amount of Bonds then outstanding calculated at (a) the Maximum Rate for a period of fifteen (15) days during any Weekly Variable Rate Period or Reset Period and (b) the applicable Fixed Rate for a period of fifteen(15)days during any Fixed Rate Period. "Investment Income" means the earnings, profits and accredited value derived from the investment of moneys pursuant to Section 407 hereof. "Issuer" has the meaning assigned to that term in the introductory paragraph to this Indenture. "Land" means the real property described in the Mortgage. "Mandatory Tender Date" means any date on which Bonds are required to be tendered pursuant to Section 1002 hereof, including any Adjustment Date, Substitution Date, Extension Date,or date specified by the Trustee as provided in Section 1002(b). "Maturity Date" means April 15,2029. "Maximum Rate" means twelve percent (12%) per annum; provided that the Maximum Rate may be increased if there shall have been delivered to the Trustee (a) the written consent of the Credit Facility Provider to a specified higher Maximum Rate not to exceed fifteen percent (15%) per annum, (b) an opinion of Bond Counsel to the effect that such higher Maximum Rate is permitted by law and will not adversely affect either the validity of the Bonds or the exclusion of the interest payable on the Bonds from gross income for federal income tax purposes, (c) a new or amended Credit Facility in an amount equal to the sum of (i) the then outstanding principal amount of the Bonds and (ii) the new Interest Requirement calculated using the new Maximum Rate and (d) the amount by which the Interest Reserve Requirement will be increased by reason of the increase in the Maximum Rate; provided that the Maximum Rate shall never exceed the maximum rate permitted by law to be paid on the Bonds or to be charged on the Mortgage Loan. "Mode" means, with respect to the Bonds, any interest rate mode permitted by this Indenture,specifically the Weekly Variable Rate,the Reset Rate and the Fixed Rate. 10 "Moody's" means Moody's Investors Service Inc., a corporation organized and existing under the laws of the State of Delaware, and its successors and assigns, if such successors and assigns shall continue to perform the functions of a securities rating agency. "Mortgage" means the Amended and Restated Construction Deed of Trust, Assignment of Rents and Fixture Filing (together with all riders thereto) securing the Mortgage Note, executed by the Borrower with respect to the Project, as it may be amended, restated, supplemented or otherwise modified from time to time to the extent permitted herein. "Mortgage Loan" means the loan made by the Issuer to the Borrower pursuant to the terms and provisions of the Financing Agreement and the Mortgage Note for the purpose of providing funds to the Borrower to refinance the acquisition of the Project. "Mortgage Loan Documents" has the meaning assigned to that term in the Financing Agreement. "Mortgage Loan Fund" means the Mortgage Loan Fund created by Section 405 of this Indenture. "Mortgage Note" means the Amended and Restated Multifamily Note (together with all addenda thereto) dated as of the date her- efAnril . 12,a executed by the Borrower in favor of the Issuer, as the same may be amended, restated, supplemented or otherwise modified from time to time to the extent permitted herein or any mortgage note executed in substitution therefor in accordance with the terms of the Bond Documents, as such substitute note may be amended, restated, supplemented or otherwise modified from time to time to the extent permitted herein. "Mortgage Rights "has the meaning assigned to that term in the Collateral Agreement. "Opinion of Counsel" means a written opinion of legal counsel, acceptable to the recipient(s) of such opinion. "Outstanding" means, when used with reference to the Bonds at any date as of which the amount of Outstanding Bonds is to be determined,all Bonds which have been authenticated and delivered hereunder except: (a) Bonds cancelled or delivered for cancellation at or prior to such date; (b) Bonds deemed to be paid in accordance with Section 502 hereof;and (c) Bonds in lieu of which others have been authenticated under Sections 210,211 and 212 hereof. In determining whether the owners of a requisite aggregate principal amount of Outstanding Bonds have concurred in any request, demand, authorization, direction, notice, consent or waiver under the provisions of this Indenture, Bonds which are owned or held by the Borrower and Purchased Bonds shall be disregarded and deemed not to be Outstanding under this Indenture for the purpose of any such determination unless all Bonds are owned or held by the Borrower. In determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Bonds which are (i) registered in the name of the Borrower and (ii) Purchased Bonds shall be disregarded. 11 "Pass-Through Rate" shall have the meaning given to that term in the Mortgage Note. "Permitted Investments" means, to the extent authorized by law for investment of moneys of the Issuer, (a) Government Obligations; (b) direct obligations of, and obligations on which the full and timely payment of principal and interest is unconditionally guaranteed by, any agency or instrumentality of the United States of America (other than the Federal Home Loan Mortgage Corporation) or direct obligations of the World Bank, which obligations shall be rated in the highest rating category by Moody's and S&P; (c) obligations of any state or territory of the United States of America, or any agency, instrumentality, authority, political subdivision thereof or public benefit or municipal corporation, the interest on which is payable on a current basis, which obligations shall be rated in the highest rating category by Moody's and S&P; (d) any written repurchase agreement entered into with a Qualified Financial Institution whose unsecured short-term obligations are rated A-1+ by S&P and in the highest rating category by Moody's; (e) commercial paper rated A-1+ by S&P and in the highest rating category by Moody's; (f) (i) interest-bearing negotiable certificates of deposit, interest-bearing time deposits, interest-bearing savings accounts or bankers' acceptances, issued by a Qualified Financial Institution whose unsecured short-term obligations are rated A-1+ by S&P and in the highest rating category by Moody's, or (ii) interest-bearing negotiable certificates of deposit, interest-bearing time deposits or interest-bearing savings accounts, issued by a Qualified Financial Institution if such deposits or accounts are fully insured by the Federal Deposit Insurance Corporation; (g) an agreement for the investment of moneys at a guaranteed rate held by the Trustee with (i) a Qualified Financial Institution .whose unsecured long-term obligations are rated AAA by S&P and in the highest rating category by Moody's; provided that such agreement shall be in a form acceptable to Credit Facility Provider; provided further that such agreement shall include, without limitation, the following restrictions: (1) the invested funds shall be available for withdrawal without penalty or premium, at any time that (A) the Trustee is required to pay moneys from the Fund(s) established under this Indenture to which the agreement is credited, or (B) any Rating Agency indicates that it will lower or actually lowers the rating on the Bonds on account of the rating of the Qualified Financial Institution providing the agreement; (2) the investment agreement shall be the unconditional and general obligation of, and shall not be subordinated to any other obligation of, the provider thereof; 12 (3) the Trustee shall receive an opinion of counsel that such agreement is legal, valid, binding and enforceable upon the provider in accordance with its terms;and (4) the agreement shall provide that if during its term the provider's rating by either Moody's or S&P is withdrawn or suspended or falls below the second highest rating category, the provider must, at the direction of the Trustee (who shall give such direction if so directed by Credit Facility Provider), within 10 days of receipt of such direction, either (A) post collateral of the type described in subparagraph (a) or (b) above with the Trustee or a third party custodian, in an amount sufficient to retain the then current rating on the Bonds, if the agreement is not already so collateralized, or (B) repay the principal of and accrued but unpaid interest on the investment, in either case with no penalty or premium to the Trustee; or (ii) Credit Facility Provider. (h) money market mutual funds (including those of the Trustee and its affiliates) registered under the Investment Company Act of 1940, as amended, that have been rated AAAm-G or AAAm by S&P and Aaa by Moody's; provided that the portfolio of such money market mutual fund is limited to obligations described in (x) subparagraph (a) above and to agreements to repurchase such obligations, or (y) subparagraphs(b)-(c)above and approved in writing by Credit Facility Provider;and (i) any other investment authorized by the laws of the State, if such investments are approved in writing by Credit Facility Provider and each Rating Agency; provided that Permitted Investments shall not include the following: (s) any investments with a final maturity or any agreements with a term greater than 6 months from the date of the investment (except (i) obligations that provide for the optional or mandatory tender, at par,by the holder thereof at least once within 365 days of the date of purchase, (ii) any investments listed in subparagraph (a) above that are irrevocably deposited with the Trustee for payment of Bonds pursuant to Section 5.02, and (iii) agreements listed in subparagraph (g) above), (t) any obligation with a purchase price greater or less than the par value of such obligation (except for obligations described in subparagraphs (a) and N above), (u) mortgage backed securities, real estate mortgage investment conduits or collateralized mortgage obligations, (v) interest-only or principal-only stripped securities, (w) obligations bearing interest at inverse floating rates, (x) investments which may be prepaid or called at a price less than its purchase price prior to stated maturity (y) any investment the interest rate on which is variable and is established other than by reference to a single index plus a fixed spread, if any, and which interest rate moves proportionately with that index, or (z) an investment described in subparagraph (d) or (g) above with a Qualified Financial Institution described in clause (d) of the definition thereof if such institution does not agree to submit to jurisdiction, venue and service of process in the United States of America in the agreement relating to the investment; and provided further that if any such investment described in subparagraphs N through (i) above is required to be rated, such rating requirement will not be satisfied if such rating is evidenced by the designation of an "r" highlighter affixed to its rating. "Person" means any natural person, firm, partnership, association, corporation or public body. 13 "Pledge Agreement" means the Pledge, Security and Custody Agreement dated as of the date hereof, by and among the Borrower, the Trustee, as collateral agent for the Credit Facility Provider and Fannie Mae, as such agreement may be amended, supplemented or otherwise modified from time to time. "Principal Amount" means $9,500,000, the principal amount of the Bonds as of the Effective Date. "Pledged Collateral" has the meaning assigned to that term in the Collateral Agreement. "Principal Office" of the Trustee, the Tender Agent or the Remarketing Agent means, respectively, the office of the Trustee, the Tender Agent or the Remarketing Agent at the respective address set forth in Section 1103 hereof or at such other address as may be specified in writing by the Trustee, the Tender Agent or the Remarketing Agent, as applicable, as provided in said Section. "Principal Reserve Amount" means$1,900,000. "Principal Reserve Fund" means the Principal Reserve Fund created and established pursuant to Section 404 of this Indenture. "Project" means the Land and the Improvements. Data,"PSA inde* Rate" mealls a rate deter-Enined en the basis ef an index of the week1y inter-est rate fesets of ta* exempt Nxar-iable rate issiaes ineluded in a database maintained b-y Thompson Finaneial Sefviees Company, or- its i whieh meet. "Purchased Bond" means any Bond during the period from and including the date of its purchase by the Trustee on behalf of and as agent for the Borrower with amounts on deposit in the Principal Reserve Fund and available,by written direction of the Credit Facility Provider, to the Trustee, or with amounts provided by the Credit Facility Provider under the Credit Facility, to, but excluding, the date on which such Bond is remarketed to any person other than the Credit Facility Provider,the Borrower,any partner of the Borrower or the Issuer. "Qualified Financial Institution" means any (i) bank or trust company organized under the laws of any state of the United States of America, including the Trustee and its affiliates, (ii) national banking association, (iii) savings bank, savings and loan association, or insurance company or association chartered or organized under the laws of any state of the United States of America, (iv) federal branch or agency pursuant to the International Banking Act of 1978 or any successor provisions of law, or domestic branch or agency of a foreign bank which branch or agency is duly licensed or authorized to do business under the laws of any state or territory of the United States of America, including the Trustee and its affiliates, (v) government bond dealer reporting to, trading with, and recognized as a primary dealer by the Federal Reserve Bank of New York, or (vi) securities dealer approved in writing by the Credit Facility Provider the liquidation of which is subject to the Securities Investors Protection Corporation or other similar corporation. "Rate Determination Date" means (a) with respect to the Weekly Variable Rate, Tuesday _Wednesday of each week, or if such Tuesda�-Wednesday is not a Business Day the immediately succeeding day or if such immediately succeeding day is not a Business Day, then the first Business Day preceding such Wednesday; provided that upon any adjustment to the 14 r Weekly Variable Rate Mode from a Reset Rate, the first Rate Determination Date shall be the Business Day prior to the Adjustment Date,and (b) with respect to any Reset Rate and the Fixed Rate, the date selected by the Remarketing Agent which date shall be a Business Day not less than five (5)Business Days prior to the Adjustment Date. "Rate Period" means any period of time during which the interest rate with respect to the Bonds is determined by the Remarketing Agent. "Rating Agency" means each national rating agency then maintaining a rating on the Bonds. "Rating Category" means one of the generic rating categories of the Rating Agency. 'Rebate Analyst' means a Person, chosen by the Borrower, qualified and experienced in the calculation of rebate payments under Section 148 of the Code and compliance with the arbitrage rebate regulations promulgated under the Code, which is engaged for the purpose of determining the amount of required deposits to the Rebate Fund,if any. "Rebate Fund" means the Rebate Fund created under Section 409 of this Indenture. "Record Date" means, with respect to any Interest Payment Date, (a) if the Bonds bear interest at the Weekly Variable Rate, the Business Day preceding the Interest Payment Date and N if the Bonds bear interest at a Reset Rate or the Fixed Rate, the first (1st) day of the month in which the Interest Payment Date occurs. "Redemption Account' means the Redemption Account within the General Receipts Fund created under Section 401 hereof. "Redemption Date" means any date upon which Bonds are to be redeemed pursuant to this Indenture (including without limitation any optional redemption pursuant to Section 214(a) of this Indenture). "Register" means the bond register maintained by the Trustee pursuant to Section 211 hereof. "Regulatory Agreement" means the Regulatory Agreement and Declaration of Restrictive Covenants relating to the Project, dated as of December 1, 1991, by and among the Issuer, the Trustee, and the Borrower, as amended by that certain First Amendment to Regulatory Agreement and Declaration of Restrictive Covenants, dated as of April 1. 1999, by and among the Issuer; the Trustee and the Borrower, as hereafter amended, restated, supplemented or otherwise modified from time to time to the extent permitted herein. "Reimbursement Agreement" means the Reimbursement Agreement, dated as of the date hereof, between the Credit Facility Provider and the Borrower, as amended, restated, supplemented or otherwise modified from time to time to the extent permitted herein, or any agreement entered into in substitution therefor. 'Remarketing Agent' means ' ' iall Banc One Capital Markets, Inc. or any successor as Remarketing Agent hereunder in accordance with Article X of this Indenture. "Remarketing Agreement" means the Remarketing Agreement, dated as of the date hereof, the Remarketing Agent, the lssucr and the Borrower, as 15 t amended, restated, supplemented or otherwise modified from time to time to the extent permitted herein,or any agreement entered into in substitution therefor. "Reserved Rights" means those certain rights of the Issuer under the Financing Agreement to indemnification and to payment or reimbursement of fees and expenses of the Issuer included in the Financing Agreement , as well as fees and expenses of its counsel, its rights to give and receive notices and to enforce affd-AWeporting requirements and restrictions on transfer of ownership of the Project, its right to inspect and audit the books, records and premises of the Borrower and of the Project, its right to collect attorneys' fees and related expenses, its right to specifically enforce the Borrower's covenant to comply with applicable federal tax law and State law (including the Act and the rules or requirements of the Issuer, if any,.' ), and its right to receive notices under the Financing Agreement and its rights to give or withhold consent to amendments, changes, modifications and alterations to the lnde„`ur-e, the Financing Agreement and the Regulatory pursuant to the provision thereof with resi ect to the Reserved "Reset Date" means any date upon which the Bonds begin to bear interest at a Reset Rate for the Reset Period then beginning. "Reset Period" means each period of ten years or more selected by the Borrower, or such shorter period as may be selected by the Borrower with the prior written consent of the Credit Facility Provider,during which the Bonds bear interest at a Reset Rate. "Reset Rate" means the rate of interest borne by the Bonds as determined in accordance with Section 204 of this Indenture. "Responsible Officer" means any officer of the Trustee assigned to administer the duties hereunder. "Security" means the Trust Estate and the Credit Facility. "Servicer" means the initial Servicer under the Servicing Agreement,dated as of the date hereof, between the Servicer and the Credit Facility Provider and any successor Servicer appointed by the Credit Facility Provider. "Servicing Agreement" means any agreement with respect to the servicing of the Mortgage Loan between the Credit Facility Provider and the entity designated from time to time by the Credit Facility Provider as the Servicer of the Mortgage Loan, as each such agreement may be amended, restated, supplemented or otherwise modified from time to time; provided that the Servicing Agreement may be the DUS Guide (as defined in the Collateral Agreement) as made applicable to the Mortgage Loan by an agreement between the Credit Facility Provider and the Servicer. "Sinking Fund Payment" means, as of any particular date of calculation, the amount required to be paid by the Issuer on a single future date for the retirement of Outstanding Bonds which mature after said future date, but does not include any amount payable by the Issuer by reason of the maturity of a Bond or by calls for redemption at the election of the Issuer. "Sinking Fund Schedule" means a schedule of principal amounts of Bonds to mature or be subject to redemptions through application of Sinking Fund Payments on the dates specified 16 by the Issuer at the direction of the Borrower with the prior written consent of the Credit Facility Provider. "Set Rate" has the meaning assigned to that term in the Mortgage Note. "S&P" means Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc., and its successors and assigns, if such successors and assigns shall continue to perform the functions of a securities rating agency. "State"means the State of California. "Subsequent Hedge" shall have the meaning given to such term in the Reimbursement Agreement. "Substitution Date" means the date upon which an Alternate Credit Facility is to be substituted for the Credit Facility then in effect, which date must be a Business Day and which Business Day must be a date on which the Credit Facility for which substitution is being made is available to be accessed or drawn upon. With respect to any Reset Period,a Substitution Date may only occur on the Adjustment Date which immediately follows such Reset Period. "Tax Certificate" means the Certificate As To Arbitrage, dated the Effective Date, executed and delivered by the Issuer and the Borrower, as amended, supplemented or otherwise modified from time to time. "Tax Event" has the means ascribed to such term in Section 609 of this Indenture. "Tender Agent" means the Tender Agent named in Article VIII of this Indenture or its successor as Tender Agent hereunder named in accordance with such Article. "Tender Agent Agreement " means any Tender Agent Agreement to be entered into by the Issuer, the Trustee and the Tender Agent in the event that the Trustee does not serve as Tender Agent hereunder. "Tender Agent Time"means prevailing time in the Eastern Time Zone. "Tender Date" means any Mandatory Tender Date or any other date on which Bondholders are permitted hereunder to tender their Bonds for purchase. "Tendered Bonds" means Bonds which have been tendered to the Tender Agent for purchase pursuant to Sections 1001 or 1002 of this Indenture. "Third Party Fees" has the meaning assigned to that term in Section 401 of this Indenture. "207(f) Notice Parties" has the meaning assigned to that term in Section 207(f) of this Indenture. "Trust Estate" means the property, rights, money, securities and other amounts pledged and assigned pursuant to the Granting Clauses of this Indenture and pledged and assigned by the Borrower to the Trustee and Fannie Mae pursuant to the Hedge Assignment. 17 "Trustee" has the meaning assigned to that term in the introductory paragraph to this Indenture. "Trustee Time" means Pacific Standard Time. "U.C.C." means the Uniform Commercial Code of the State as now or hereafter amended, whether or not such Uniform Commercial Code is applicable to the parties or the transactions. "Weekly Variable Rate" means the variable rate of interest per annum for the Bonds determined,for each Weekly Variable Rate Period,in accordance with Section 203 hereof. "Weekly Variable Rate Period" means the period of time commencing on the Effective Date or the Adjustment Date on which the interest rate on the Bonds is adjusted from the Reset Rate to the Weekly Variable Rate and ending on the day preceding the next succeeding Adjustment Date or the Maturity Date during which the Weekly Variable Rate will be in effect for seven (7) day periods commencing on Wednesday ur a of each week and ending on esc �Wednesdav of the following week (except for the initial period which shall commence on the Effective Date or the Adjustment Date and end on the next succeeding T-aesday Wednesday and the last period which shall commence on the next preceding Wednesday Thursday and end on the next succeeding Adjustment Date) or, if earlier the Maturity Date, except as provided in Section 203(b) hereof. Section 102. Rules of Construction. (a) The singular form of any word used herein, including the terms defined in Section 101, shall include the plural, and vice versa, unless the context otherwise requires. The use herein of a pronoun of any gender shall include correlative words of the other genders. (b) All references herein to "Articles," "Sections" and other subdivisions hereof are to the corresponding Articles, Sections or subdivisions of this Indenture as originally executed; and the words "herein," "hereof," "hereunder' and other words of similar import refer to this Indenture as a whole and not to any particular Article,Section or subdivision hereof. (c) The headings or titles of the several Articles and Sections hereof, and any table of contents appended to copies hereof, shall be solely for convenience of reference and shall not limit or otherwise affect the meaning, construction or effect of this Indenture or describe the scope or intent of any provisions hereof. (d) All accounting terms not otherwise defined herein have the meanings assigned to them in accordance with applicable generally accepted accounting principles as in effect from time to time. (e) Every "request," "order," "demand," "application," "appointment," "notice," "statement," "certificate," "consent," or similar action hereunder by any party shall, unless the form thereof is specifically provided, be in writing signed by a duly authorized representative of such party with a duly authorized signature. (f) If any provision of this Indenture calls for the prior approval or consent of the Credit Facility Provider or any waiver by the Credit Facility Provider and if a basis for the Credit Facility Provider granting such approval, consent or waiver is not otherwise stated, then it is understood and agreed that such approval or consent will be given by the Credit Facility 18 Provider in its discretion. Whenever the Credit Facility Provider shall have the right or option in this Indenture, to exercise any discretion, to determine any matter, to accept any presentation or to approve any matter, such exercise, determination, acceptance or approval shall, without exception,be in the Credit Facility Provider's sole and absolute discretion. Section 103. Content of Certificates and Opinions. Every certificate or opinion with respect to compliance by or on behalf of any party with a condition or covenant provided for in this Indenture or the Financing Agreement shall include (a) a statement that the person or persons making or giving such certificate or opinion have read such covenant or condition and the definitions herein relating thereto; (b) 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; (c) a statement that, in the opinion of the signers, they have made or caused to be made such examination or investigation as is necessary to enable them to express an informed opinion as to whether or not such covenant or condition has been complied with; and (d) a statement as to whether, in the opinion of the signers, such condition or covenant has been complied with. Any such certificate or opinion made or given by an officer of any party may be based, insofar as it relates to legal matters, upon a certificate or opinion of or representations by counsel,unless such officer knows that the certificate or opinion or representations with respect to the matters upon which his or her certificate or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should have known that the same were erroneous. Any such certificate or opinion made or given by counsel may be based, insofar as it relates to factual matters (with respect to which information is in the possession of a party), upon the certificate or opinion of or representations by an officer of such party, unless such counsel knows that the certificate or opinion or representations with respect to the matters upon which his or her opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should have known that the same were erroneous. Section 104. Effective Date. The provisions of this Indenture shall be effective on and as of the Effective Date,concurrently with the execution and delivery of the Collateral Agreement. 19 ARTICLE II THE BONDS Section 201. Authorized 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 and outstanding hereunder is expressly limited to the Principal Amount. Section 202. Issuance of Bonds. The Bonds (a) are designated "City of Huntington Beach Variable Rate Demand Multifamily Rental Housing Revenue Bonds (Five Points Seniors,Project) Series A of 1991", (b) were issued in the Principal Amount, (c) are dated the original date of issuance and delivery of the Bonds, (d)bear interest from the Effective Date at the rates determined as provided in Sections 203, 204 and 205 of this Indenture, payable on each Interest Payment Date and upon redemption, tender or acceleration of the Bonds, and (e) mature, subject to prior redemption as set forth therein, on the Maturity Date,on which date all unpaid principal and interest on the Bonds shall be due and payable. The Bonds were and shall be issued as registered bonds without coupons in Authorized Denominations. The Bonds shall be numbered consecutively from 1 upwards,bearing numbers not then contemporaneously outstanding(in order of issuance)according to the Register. The principal of and the interest on the Bonds shall be payable in lawful money of the United States of America. The principal of all Bonds shall be payable by check at the Principal Office of the Trustee upon the presentation and surrender of the Bonds as the same become due and payable. Regularly scheduled interest on the Bonds shall be paid by check drawn upon the Trustee and mailed by first class mail on the Interest Payment Date to the persons in whose names the Bonds are registered on the Register at the close of business on the Record Date, except that if a Bondholder holds Bonds in the aggregate principal amount of at least $1,000,000, any regularly scheduled interest payment on a Bond owned by such Bondholder shall be made by wire transfer of federal reserve funds to any account in the United States of America designated by such Bondholder if such Bondholder, at its expense (a) so directs by written notice delivered to the Trustee at least five (5) Business Days before the date upon which such wire transfer is to be made and (b) otherwise complies with the reasonable requirements of the Trustee. Section 203. Weekly Variable Rate Mode. (a) Weekly Variable Rate. Except during a Reset Period or a Fixed Rate Period, the Bonds shall bear interest at the Weekly Variable Rate, determined pursuant to Section 203(b) of this Indenture. During the Weekly Variable Rate Period, interest shall accrue during each Interest Accrual Period and shall be (i) payable on each Interest Payment Date and (ii) computed on the basis of a 365- or 366-day year, as applicable, for the actual number of days elapsed. (b) Determination of Weekly Variable Rate. The Weekly Variable Rate shall be determined by the Remarketing Agent not later than 4:00 p.m. Tender Agent Time on the applicable Rate Determination Date and shall be the minimum rate of interest necessary, in the best professional judgment of the Remarketing Agent, taking into consideration prevailing market conditions, to enable the Remarketing Agent to remarket all of the Bonds on the applicable Rate Determination Date at par plus accrued interest thereon; and the Weekly Variable Rate so determined shall be effective for the weekly period beginning on Wednesday 20 Hof each week through and including the following TuesdayWednesdav; except that the initial period shall commence on the Effective Date and end on the following �Wednesdav; any initial period following an Adjustment Date shall commence on such Adjustment Date and end on the next succeeding Tuesday; and any period ending immediately before an Adjustment Date shall commence on the next preceding Wednesday land end on the day before such Adjustment Date. The Remarketing Agent shall provide notice of the Weekly Variable Rate (i) after 4:00 p.m.,New York time, on the Rate Determination Date by telephone to any Beneficial Owner upon request and to the Servicer, and (ii) not later than the Business Day next succeeding such Rate Determination Date, to the other 207(f) Notice Parties by Electronic Means. The Weekly Variable Rate so determined by the Remarketing Agent shall be conclusive and binding upon the other 207(f) Notice Parties and the holders of the Bonds. (c) Adjustment; Conversion. The interest rate on Bonds bearing a Weekly Variable Rate may be adjusted to a Reset Rate pursuant to Section 204(c)(1) hereof and may be converted to a Fixed Rate pursuant to Section 205(c) hereof. In addition, the interest rate on Bonds bearing a Reset Rate may be adjusted to a Weekly Variable Rate pursuant to Section 204(c)(2). Section 204. Reset Rate Mode. (a) Reset Rate. During each Reset Period, the Bonds shall bear interest at the Reset Rate determined pursuant to Section 204(b) of this Indenture. During each Reset Period, interest shall accrue during each Interest Accrual Period, and shall be (i) payable on each Interest Payment Date,beginning on the first Interest Payment Date after the Reset Date,and (ii) computed on the basis of a year of three hundred and sixty (360) days of twelve (12) thirty (30) day months. (b) Determination of Reset Rate. The Reset Rate shall be determined by the Remarketing Agent not later than 4:00 p.m. Tender Agent Time on the applicable Rate Determination Date and shall be the minimum rate of interest necessary, in the best professional judgment of the Remarketing Agent, taking into consideration prevailing market conditions, to enable the Remarketing Agent to remarket all of the Bonds on the applicable Rate Determination Date at par for the applicable Reset Period. Upon determining such rate, the Remarketing Agent shall notify (i) the Servicer of such rate by telephone on the Rate Determination Date and (ii) the other 207(f) Notice Parties of such rate by Electronic Means not later than the Business Day next succeeding such Rate Determination Date. The Reset Rate so determined by the Remarketing Agent shall be conclusive and binding upon the other 207(f) Notice Parties and the holders of the Bonds. (c) Adjustment;Conversion. (1) Adjustment to Reset Rate from Weekly Variable Rate or from prior Reset Rate. At the option of the Borrower, the interest rate on all Outstanding Bonds may, on any Interest Payment Date designated by the Borrower, be adjusted from the Weekly Variable Rate to a Reset Rate for a Reset Period specified by the Borrower. In addition, the interest rate on all Outstanding Bonds may be adjusted from a prior Reset Rate to a new Reset Rate on the Adjustment Date. Each such adjustment shall be made only in accordance with and subject to the following conditions precedent: (i) the Borrower shall, at least forty-five (45) days before the proposed Reset Date, deliver written notice thereof to the other 207(f) Notice Parties, designating the proposed Reset Date and the duration of the Reset Period to commence on such Reset Date; 21 (ii) the Trustee shall, not later than thirty (30) days before the proposed Reset Date, give written notice (together with the notice required by Section 1002(a)(i) hereof) to the Bondholders, which shall state in substance the following: (A) the proposed Reset Date; (B) that from and after the proposed Reset Date, if the conditions specified in this Indenture to such adjustment are satisfied, the Bonds will bear interest at a Reset Rate (which rate need not be stated); and (C) that all Bonds are subject to mandatory tender and purchase on the proposed Reset Date, whether or not such conditions are satisfied, and the holders thereof shall not have the right to elect to retain such Bonds; (iii) on or prior to the Reset Date, the Borrower shall deliver (A) to the Trustee, written notice from the Credit Facility Provider consenting to the adjustment to the Reset Rate, together with confirmation that the Credit Facility will be sufficient in amount and term to satisfy the requirements of Section 206 hereof and (B) to the other 207(f) Notice Parties, an opinion of Bond Counsel to the effect that the adjustment of the interest rate on the Bonds to the Reset Rate is authorized and permitted by this Indenture and the laws of the State (including the Act),and will not adversely affect the exclusion from gross income for federal income tax purposes of the interest payable on the Bonds;and (iv) on or prior to the Adjustment Date, the Remarketing Agent shall have given notice pursuant to Section 1003 hereof to the effect that all Bonds have been remarketed for the Reset Period at the Reset Rate determined pursuant to Section 204(b)hereof. (2) Adjustment from Reset Rate to Weekly Variable Rate. At the option of the Borrower, the interest rate on all Outstanding Bonds may be adjusted from a Reset Rate to the Weekly Variable Rate on the Interest Payment Date next succeeding the last day of the Reset Period during which such Reset Rate has been in effect, but only in accordance with and subject to the following conditions precedent: (i) the Borrower shall at least forty-five (45) days before the proposed Adjustment Date, deliver written notice thereof to the other 207(f) Notice Parties designating the proposed Adjustment Date; (ii) the Trustee shall, not later than thirty (30) days before the proposed Adjustment Date, give written notice (together with the notice required by Section 1002(a)(i) hereof) to the Bondholders, which shall state in substance the following: (A) the proposed Adjustment Date; (B) that from and after the proposed Adjustment Date the Bonds will bear interest at the Weekly Variable Rate (which rate need not be stated); and (C) that all Bonds are subject to mandatory tender and purchase on the proposed Adjustment Date, and that the holders thereof shall not have the right to elect to retain such Bonds; (iii) on or prior to the Adjustment Date, the Borrower shall deliver (A) to the Trustee written notice from the Credit Facility Provider consenting to the adjustment to the Weekly Variable Rate, and (B) to the other 207(f) Notice Parties, an opinion of Bond Counsel, with a copy to the Servicer, to the effect that the adjustment of the interest rate on the Bonds to the Weekly Variable Rate is authorized and permitted by this Indenture and the laws of the State, and will 22 not adversely affect the exclusion from gross income for federal income tax purposes of the interest payable on the Bonds;and (iv) on or prior to the Adjustment Date, the Remarketing Agent shall have given notice pursuant to Section 1003 hereof to the effect that all Bonds have been remarketed for the applicable seven-day period in the Weekly Variable Rate Period determined pursuant to Section 203(b) hereof. (3) Conversion to Fixed Rate. The interest rate on Bonds bearing a Reset Rate may be converted to a Fixed Rate pursuant to Section 205(c) hereof. Section 205. Fixed Rate Mode. (a) Fixed Rate. During the Fixed Rate Period, the Bonds shall bear interest at the Fixed Rate determined pursuant to Section 205(b) of this Indenture. During the Fixed Rate Period, interest shall accrue during each Interest Accrual Period and shall be (i) payable on each Interest Payment Date and (ii) computed on the basis of a year of three hundred sixty (360) days of twelve (12) thirty(30)day months. (b) Determination of Fixed Rate. The Fixed Rate shall be determined by the Remarketing Agent not later than 4:00 p.m. Tender Agent Time on the applicable Rate Determination Date and shall be the minimum rate of interest necessary, in the best professional judgment of the Remarketing Agent, taking into consideration prevailing market conditions, to enable the Remarketing Agent to remarket all of the Bonds on the Rate Determination Date at par for the Fixed Rate Period. Upon determining such rate, the Remarketing Agent shall notify (i) the Servicer of such rate by telephone on the Rate Determination Date and (ii) the other 207(f) Notice Parties of such rate by Electronic Means not later than the Business Day following the Rate Determination Date. The Fixed Rate so determined by the Remarketing Agent shall be conclusive and binding upon the other 207(f)Notice Parties and the holders of the Bonds. (c) Conversion to Fixed Rate. At the option of the Borrower, the interest rate on all Outstanding Bonds may be converted to the Fixed Rate (i) from the Weekly Variable Rate on any Interest Payment Date designated by the Borrower, or (ii) from a Reset Rate (1) on the day next succeeding the last day of the Reset Period during which such Reset Rate was in effect or (2) on any Interest Payment Date during such Reset Period on which the Bonds are subject to redemption pursuant to Section 214(a)(ii) hereof at a redemption price equal to 100% of the principal amount of the Bonds, but only in accordance with and subject to the following conditions precedent: (i) the Borrower shall, at least forty-five (45) days before the proposed Conversion Date, deliver written notice thereof to the other 207(f) Notice Parties designating the proposed Conversion Date; (ii) the Trustee shall, not later than thirty (30) days before the proposed Conversion Date, give written notice thereof (together with the notice required by Section 1002(a)(i) hereof) to the Bondholders which shall state in substance the following: (A) the proposed Conversion Date; (B) that if the conditions specified in this Indenture to such conversion are satisfied, from and after the proposed Conversion Date the Bonds will bear interest at the Fixed Rate (which rate need not be stated); and (C) that all Bonds are subject to mandatory tender and purchase on the proposed Conversion Date, whether or not such conditions are satisfied and the holders thereof shall not have the right to elect to retain such Bonds; 23 (iii) on or prior to the proposed Conversion Date, the Borrower shall deliver (1) to the Trustee, either (A) written notice from the Credit Facility Provider consenting to the conversion to the Fixed Rate, together with confirmation that the Credit Facility will be sufficient in amount and term to satisfy the requirements of the Financing Agreement or (B) a written waiver from the Issuer of the requirement for a Credit Facility during the Fixed Rate Period so long as the Credit Facility then in effect shall remain in effect for the mandatory tender of the Bonds on the proposed Conversion Date (which waiver shall acknowledge that the Rating Agency has been notified not less than ten (10) days prior to the Conversion Date that the Credit Facility will be terminated on the Conversion Date); and (2) to the other 207(f) Notice Parties, an opinion of Bond Counsel to the effect that the conversion of the interest rate on the Bonds to the Fixed Rate is authorized and permitted by this Indenture and the laws of the State (including the Act), and will not adversely affect the exclusion from gross income for federal income tax purposes of the interest payable on the Bonds;and (iv) on or prior to the proposed Conversion Date, the Remarketing Agent shall be given notice pursuant to Section 1003 hereof to the effect that all Bonds have been remarketed for the Fixed Rate Period at the Fixed Rate determined pursuant to Section 205(b) hereof. (d) Sinking Fund Schedule. Upon the conversion of the rate of interest on the Bonds to the Fixed Rate, the Issuer,at the direction of the Borrower and with the prior written consent of the Credit Facility Provider, upon receipt by the Issuer, the Credit Facility Provider and the Trustee of an opinion of Bond Counsel to the effect that establishing a Sinking Fund Schedule will not adversely affect the exclusion of interest on the Bonds from gross income for federal income tax purposes and upon the amendment of the Mortgage Note with the prior written consent of the Credit Facility Provider may, by notice to the Trustee, establish a Sinking Fund Schedule. Section 206. Credit Facility Requirement. So long as the Bonds bear interest at the Weekly Variable Rate or at a Reset Rate, one or more Credit Facilities providing credit support and liquidity support shall be in effect with respect to the Bonds. If the Bonds bear interest at the Fixed Rate, one or more Credit Facilities providing credit support shall be in effect with respect to the Bonds, unless such requirement has been expressly waived in writing by the Issuer. In addition, it shall be a condition precedent to any change in Mode that the requirements of this Section be satisfied and that the Credit Facility meets the Interest Requirement on or prior to any Adjustment Date or Conversion Date. Section 207. Certain General Provisions Concerning Modes, Interest Rates and Interest Rate Periods. (a) Failure to Satisfy Conditions Precedent to Mode Change. If the conditions precedent to a change in Mode set forth in Sections 204(c), 205(c) and 206, have not been satisfied,then, (i) the new Mode shall not take effect; (ii) the Bonds shall be subject to mandatory tender on the proposed Adjustment Date and the holders of the Bonds shall not have the right to elect to retain their Bonds; 24 f (iii) if the interest rate on the Bonds had been the Weekly Variable Rate immediately prior to the proposed Adjustment Date, the interest rate on the Bonds shall remain in the Weekly Variable Rate on the proposed Adjustment Date, without any further action by any party; (iv) if the Bonds had been in a Reset Period immediately prior to the proposed Adjustment Date, the interest rate on the Bonds shall be adjusted to the Weekly Variable Rate so long as the Trustee receives an opinion from Bond Counsel to the effect that the change to a Weekly Variable Rate will not adversely affect the exclusion of interest on the Bonds from gross income for federal income tax purposes; provided that if said opinion cannot be delivered, the interest rate on the Bonds shall be adjusted to a new Reset Rate for the shortest Reset Period which would allow the Remarketing Agent to remarket the Bonds at par with the Bonds bearing interest at the lowest possible rate but in no event greater than [the Underwriting Rate] on the proposed Adjustment Date, without any further action by any party other than the selection of the Reset Period and the remarketing of the Bonds so long as the Trustee receives an opinion from Bond Counsel to the effect the change to such Reset Period will not adversely affect the exclusion of the interest on the Bonds from gross income for federal income tax purposes or,if such Reset Period opinion cannot be delivered or if the. Bonds can be remarketed only at a rate greater than 7%, the Bonds shall not be remarketed and shall remain in the Reset Rate, with a Reset Period equal to the Reset Period previously in effect;and (v) the Remarketing Agent shall remarket the Bonds on the Adjustment Date as Weekly Variable Rate Bonds or as Reset Bonds as applicable. (b) [Reserved.] (c) Failure by Remarketing Agent to Determine Weekly Variable Rate. If the Remarketing Agent shall fail or refuse to determine the Weekly Variable Rate applicable for any period during the Weekly Variable Rate Period, the interest rate to be borne by the Bonds during such period beginning on and including -Thursday-of each week to and including the following Taesda�-Wednesday shall be the latest PSA Index Rate published on or before the Rate Determination Date. (d) Mandatory Tender. The Bonds are subject to mandatory tender and purchase on each Adjustment Date, and the Bondholders shall have no right to retain Bonds subject to mandatory tender. (e) Maximum Interest Rate. Notwithstanding any other provision of this Indenture, the interest rate on the Bonds shall not exceed the Maximum Interest Rate. (f) Notice Parties. For purposes of Sections 203, 204 and 205 hereof and Section 1003 hereof relating to the remarketing of Bonds, (i) the term "207(f) Notice Parties" shall include the Borrower, Issuer, Trustee, Tender Agent, Remarketing Agent, Credit Facility Provider, and Servicer at their respective addresses set forth in Section 1103 hereof, and (ii) written notices required to be sent by the Trustee to Bondholders shall, except as otherwise specified,be by first class mail, which shall be conclusively presumed to have been duly given and received when given in such manner,whether or not any holder actually receives the notice. (g) No Extinguishment. The purchase and remarketing of the Bonds, including any purchase from amounts on deposit in the Principal Reserve Fund or amounts advanced by the 25 Credit Facility Provider, shall not result in the extinguishment or the reissuance of the Bonds, but shall be solely for the benefit of the Borrower and the owners of the Bonds. (h) Alternate Credit Facility. Notwithstanding anything to the contrary herein, the consent of the Credit Facility Provider to a change in Mode shall not be required if (A) an Alternate Credit Facility satisfying the requirements of Section 206 will be in effect on the Adjustment Date and (B) the Credit Facility then in effect will remain available for mandatory tenders of Bonds on the Adjustment Date. Each opinion of Bond Counsel relating to a change in Mode required to be delivered to the Credit Facility Provider shall also be delivered to the Alternate Credit Facility Provider. (i) Reimbursement Agreement Default. Notwithstanding anything to the contrary contained herein, in the event that the Credit Facility Provider gives written notice to the Issuer and the Trustee that the Borrower has defaulted in performing its obligations under Section 4.10) or Section 4.3 of the Reimbursement Agreement, then the Credit Facility Provider shall be entitled to exercise all rights of the Borrower with respect to adjusting or converting the interest rate Mode on an Adjustment Date and the Borrower shall not be entitled to exercise any such rights unless and until the Borrower gives written notice, acknowledged by the Credit Facility Provider, to the Issuer and the Trustee that either (i) such default has been cured or waived or (ii) the Credit Facility Provider.consents to the Borrower's exercise of such rights, in which event the Credit Facility Provider shall no longer be entitled to exercise such rights and the Borrower will again be entitled to exercise such rights. Any notice from the Credit Facility Provider to the Issuer and the Trustee of a default under the Reimbursement Agreement as set forth in this Section 207(i) shall state whether or not it is also intended to constitute a notice described in Section 601(d) of this Indenture. Section 208. Execution; Authentication. The Bonds shall be executed on behalf of the Issuer by the manual or facsimile signature of its Mayor and attested by the manual or facsimile signature of its City Clerk. Any facsimile signatures shall have the same force and effect as if said officers had manually signed the Bonds. Any reproduction of the official seal of the Issuer on the Bonds shall have the same force and effect as if the official seal of the Issuer had been manually impressed on the Bonds. In case any officer whose signature or a facsimile of whose signature shall appear on any Bonds shall cease to be such officer before the delivery of such Bonds, such signature or such facsimile shall nevertheless be valid and sufficient for all purposes as if such officer had remained in office until delivery. Only such Bonds as shall have endorsed thereon a certificate of authentication substantially in the form set forth in Exhibit A hereto duly executed by the Trustee or the Tender Agent shall be entitled to any right or benefit under this Indenture. No Bond shall be valid or obligatory for any purpose unless and until such certificate of authentication shall have been duly executed by the Trustee or the Tender Agent; and such executed certificate upon any such Bond shall be conclusive evidence that such Bond has been authenticated and delivered under this Indenture. The Trustee's or Tender Agent's certificate of authentication on any Bond shall be deemed to have been executed by it if signed by an authorized representative of the Trustee or the Tender Agent, but it shall not be necessary that the same person sign the certificates of authentication on all of the Bonds. Section 209. Form of Bonds; Temporary Bonds. The Bonds, the certificate of authentication and the form of assignment shall be in substantially the forms hereinafter set forth in Exhibit A hereto with such appropriate variations, omissions, substitutions and 26 insertions as are permitted or required hereby or are required by law, and may have such letters, numbers or other marks of identification and such legends and endorsements placed thereon as may be required to comply with any applicable laws or rules or regulations, or as may, consistently herewith, be determined by the officers executing such Bonds, as evidenced by their execution of the Bonds. Any portion of the text of any Bond may be set forth on the reverse thereof, with an appropriate reference thereto on the face of such Bond. Bonds may be typewritten,printed,engraved,lithographed or otherwise reproduced. Until definitive Bonds are ready for delivery, there may be executed, and upon the request of the Issuer, the Trustee shall authenticate and deliver, in lieu of definitive Bonds, one or more temporary typewritten, printed, or lithographed Bonds, in any appropriate denomination, in fully registered form, and in substantially the tenor hereinabove set forth and with such appropriate omissions, insertions and variations as may be required. If temporary Bonds shall be issued, the Issuer shall cause the definitive Bonds to be prepared and to be executed and delivered to the Trustee or the Tender Agent, and the Trustee or the Tender Agent, upon presentation to it of any temporary Bond, shall cancel the same and authenticate and deliver in exchange therefor, without charge to the owner thereof, a definitive Bond or Bonds of an equal aggregate principal amount of Authorized Denominations, of the same maturity and series,and bearing interest at the same rate as the temporary Bond surrendered. Until so exchanged, the temporary Bonds shall in all respects be entitled to the same benefit and security of this Indenture as the definitive Bonds to be issued and authenticated hereunder. Interest on temporary Bonds; when due and payable, if the definitive Bonds shall not be ready for exchange, shall be paid on presentation of such temporary Bonds for notation of such payment thereon by the Trustee. Section 210. Mutilated, Lost, Stolen or Destroyed Bonds. If any Bond is mutilated, lost, stolen or destroyed,the Issuer may execute and the Trustee may authenticate and deliver a new Bond of the same maturity, interest rate, principal amount, series and tenor in lieu of and in substitution for the Bond mutilated, lost, stolen or destroyed; provided that in the case of any mutilated Bond, such mutilated Bond shall first be surrendered to the Trustee, and in the case of any lost, stolen or destroyed Bond, there shall be first furnished to the Trustee evidence satisfactory to it of the ownership of such Bond, and of such loss, theft or destruction, together with indemnity satisfactory to the Trustee and the issner—and compliance with such other reasonable regulations as the issuer--and-Trustee may prescribe. If any such Bond shall have matured or will mature within the ensuing 60 day period, or if such Bond shall have been called for redemption or a redemption date pertaining thereto shall have passed, instead of issuing a new Bond the Trustee may pay the same without surrender thereof. The Issuer and the Trustee may charge the holder of such Bond with their reasonable fees and expenses in this connection. Section 211. Exchangeability and Transfer of Bonds; Persons Treated as the Bondholders. The Issuer shall cause books for the registration of the Bonds and for the registration of transfer of the Bonds as provided herein to be kept by the Trustee, which is hereby constituted and appointed the bond registrar for the Bonds. . At any time other than the period between and including the Record Date and the following Interest Payment Date and subject to the express limitations contained in this Section 211, any holder of a Bond or its duly authorized attorney may transfer title to such Bond on the Register kept by the Trustee, upon surrender thereof at the Principal Office of the Trustee, together with a written instrument of transfer (in substantially the form of assignment, including signature guarantee, attached to the Bond) executed by the holder or its duly authorized attorney, and upon surrender for registration of transfer of any Bond, the Issuer shall execute and the Trustee shall authenticate and deliver in the name of the transferee or 27 transferees a new Bond or Bonds of the same aggregate principal amount, rate, maturity, series and tenor as the Bond surrendered and of any Authorized Denomination; provided that, notwithstanding anything to the contrary contained in this Indenture, any purported transfer to Fannie Mae (other than a transfer of Purchased Bonds if Fannie Mae has become the owner of the Project and would be required to advance funds under the Collateral Agreement in connection with a mandatory purchase of Bonds or amounts on deposit in the Principal Reserve Fund would be used to fund such purchase) shall be accompanied by the written consent of the General Counsel and the Controller of Fannie Mae; provided further, that if the Bonds are maintained in a book-entry only system, no transfer of an interest in the Bonds shall be in a principal amount other than an Authorized Denomination. Subject to the express limitations contained in this Section 211, Bonds may be exchanged upon surrender thereof at the Principal Office of the Trustee with a written instrument of transfer (in substantially the form of assignment, including a signature guarantee satisfactory to the Trustee, attached to the Bond) executed by the Bondholder or its attorney duly authorized in writing, for an equal aggregate principal amount of Bonds of the same aggregate principal amount, rate, maturity, series and tenor as the Bonds being exchanged and of any Authorized Denomination. The Issuer shall execute and the Trustee shall authenticate and deliver Bonds which the Bondholder making the exchange is entitled to receive, bearing numbers not contemporaneously then outstanding. Such registrations of transfers or exchanges of Bonds shall be without charge to the holders of such Bonds, but any taxes or other governmental charges required to be paid with respect to the same shall be paid by the holder of the Bond requesting such registration of transfer or exchange as a condition precedent to the exercise of such privilege. Any service charge made by the Trustee for any such registration, transfer or exchange shall be paid by the Borrower. Except as provided in Section 1001 hereof, the Trustee shall not be required to register any transfer or exchange of any Bond (or portion thereof) during the fifteen-day period next preceding the selection of Bonds for redemption, and from and after notice calling such Bonds (or portion thereof) for redemption or partial redemption has been given and prior to such redemption. The person in whose name any Bond shall be registered on the registration books of the Trustee shall be deemed and regarded as the absolute owner thereof for all purposes, and payment of or on account of either principal or interest shall be made only to or upon the order of the registered owner thereof or its duly authorized attorney, but such registration may be changed as hereinabove provided. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so paid. Notwithstanding anything to the contrary contained in this Indenture (including without limitation the purchase of Bonds from the proceeds of the redemption of Pledged Collateral under the Collateral Agreement), in no event shall Fannie Mae be deemed to be the owner of any Bonds unless such Bonds have been transferred to, and registered in the name of, Fannie Mae in accordance with the provisions of this Section 211 (including without limitation the provision requiring the written consent of the General Counsel and the Controller of Fannie Mae except with respect to a transfer of Purchased Bonds if Fannie Mae has become the owner of the Project and would be required to advance funds under the Collateral Agreement in connection with a mandatory purchase of Bonds or amounts on deposit in the Principal Reserve Fund would be used to fund such purchase). 28 All Bonds issued upon any registration of transfer or exchange of Bonds shall be legal, valid and binding limited obligations of the Issuer, evidencing the same debt, and entitled to the same security and benefits under this Indenture, as the Bonds surrendered upon such transfer or exchange. In executing any Bond upon any exchange or registration of transfer provided for in this Section, the Issuer may rely conclusively on a representation of the Trustee that such execution is required. Section 212. Cancellation. All Bonds which have been surrendered pursuant to Section 202 or 214 of this Indenture for payment upon maturity or redemption prior to maturity shall be cancelled by the Trustee and shall not be reissued. Cancelled Bonds shall be destroyed by the Trustee unless the Trustee receives contrary instructions from the Issuer with respect to the disposition of such cancelled Bonds. Section 213. Ratably Secured. Except as otherwise provided herein with respect to Purchased Bonds, all Bonds issued hereunder are and are to be, to the extent provided in this Indenture, equally and ratably secured by this Indenture without preference, priority or distinction on account of the actual time or times of the authentication or delivery or maturity of the Bonds so that, except as aforesaid, all Bonds at any time outstanding hereunder shall have the same right,lien and preference under and by virtue of this Indenture and shall all be equally and ratably secured hereby with like effect as if they had all been executed, authenticated and delivered simultaneously on the Effective Date, whether the same, or any of them, shall actually be disposed of at such date, or whether they, or any of them, shall be disposed of at some future date. Section 214. Redemption of Bonds. (a) Optional Redemption. To the extent prepayment of the Mortgage Loan is permitted by the terms of the Mortgage Loan Documents, the Bonds shall be subject to redemption, in Authorized Denominations only, in (i) whole, upon optional prepayment by the Borrower of the Mortgage Loan in whole or (ii) corresponding part, upon optional prepayment by the Borrower of the Mortgage Loan in part. Notwithstanding anything to the contrary contained in the Mortgage Loan Documents, the Bonds shall be subject to redemption in whole upon the request of the Issuer, at the direction of the Borrower but only with the prior written consent of the Credit Facility Provider and upon the satisfaction of all conditions precedent, if any. Redemptions pursuant to this Section 214(a) shall be made, at the following times and at the following prices: (1) on any Interest Payment Date during the Weekly Variable Rate Period and on the Adjustment Date following any Reset Period, at a redemption price equal to one hundred percent (100%) of the principal amount redeemed plus accrued interest to the redemption date; (2) during any Reset Period, on any date during the periods set forth in the table below and at the respective redemption prices set forth in the table below expressed as percentages of the principal amounts of the Bonds called for redemption, such redemption prices declining .5% each year until such redemption price equals 100% of the principal amount of the Bonds, plus accrued interest, if any, to the redemption date: 29 [SUBJECT TO REVISION BASED ON RECOMMENDATION OF BORROWER AND REMARKETING AGENT] Redemption Term of Reset Period No-Call Period Price No Premium 7 or more years First 5 years after Reset 101.5% 9th year and Date thereafter 5 years or more (but less First 3 years after Reset 101.0% 6th year and than 7) Date thereafter More than 2 years(but Period up to 2nd year 100.5% Final year less than 5) preceding end of Reset Period 2 years or less Up to one year before end 100% Final year of Reset Period provided that, notwithstanding the foregoing, the Borrower and the Remarketing Agent may, not later than fifteen (15) days before any Reset Date, give notice to the Issuer, the Servicer and the Trustee setting forth a redemption schedule different from that set forth in this paragraph, accompanied by (A) the written consent of the Credit Facility Provider, if any, to be in effect for the ensuing Rate Period, and (B) an opinion of Bond Counsel to the effect that such change will not adversely affect the exclusion of the interest payable on the Bonds from gross income for federal income tax purposes; and upon such notice and delivery of the consent and the opinion, such different redemption schedule shall apply to any redemption pursuant to this paragraph for such Rate Period,without further action by any party; (3) during the Fixed Rate Period, on any date during the periods set forth in the table below and at the respective redemption prices set forth below expressed as percentages of the principal amounts of the Bonds called for redemption, such redemption prices declining .5% each year until such redemption price equals 100% of the principal amount of the Bonds,plus accrued interest,if any,to the redemption date: [SUBJECT TO REVISION BASED ON RECOMMENDATION OF BORROWER AND REMARKETING AGENT] Term of Fixed Rate Redemption Period No-Call Period Price No Premium 7 or more years First 5 years after 101.5% 9th year and Conversion Date thereafter 5 years or more (but less First 3 years after 101.0% 6th year and than 7) Conversion Date thereafter More than 2 years (but Period up to 2nd year 100.5% Final year less than 5) before Maturity Date 2 years or less Up to one year before 100% Final year MaturitX Date provided that, notwithstanding the foregoing, the Borrower and the Remarketing Agent may, not later than fifteen (15) days before the Conversion Date, give notice to the Issuer, the Credit 30 Facility Provider, the Servicer, and the Trustee setting forth a redemption schedule different from that set forth in this paragraph, accompanied by (A) the written consent of the Credit Facility Provider, if any, to be in effect for the ensuing Fixed Rate Period, and (B) an opinion of Bond Counsel to the effect that such change will not adversely affect the exclusion of interest payable on the Bonds from gross income for federal income tax purposes; and upon such notice and delivery of the consent and the opinion, such different redemption schedule shall apply to any redemption pursuant to this paragraph for such Fixed Rate Period, without further action by any party. (b) Mandatory Redemption. The Bonds are subject to mandatory redemption at any time at a redemption price equal to one hundred percent (100%) of the principal amount of the Bonds to be redeemed plus accrued.interest thereon to the redemption date, without premium, in each case in Authorized Denominations as follows: (i) in whole or in part, on the earliest practicable date to the extent proceeds of insurance or condemnation of the Project are not applied in accordance with the Mortgage Loan Documents to the rebuilding or restoration or replacement of the Project or the reimbursement of amounts owed to the Credit Facility Provider pursuant to the Reimbursement Agreement or, with the prior written consent of the Credit Facility Provider, otherwise used for improvements to the Project; provided that, upon a complete or near complete destruction or condemnation of the Project, in the event the Bonds are redeemed in full the Trustee shall access and be entitled to payment under the Credit Facility,in accordance with its terms, to the extent the insurance or condemnation proceeds, as applicable, and moneys on deposit in the Principal Reserve Fund (if directed to be used by the Credit Facility Provider) are insufficient to redeem the Bonds in full; (ii) on each Adjustment Date if and to the extent that amounts are transferred on such Adjustment Date from the Principal Reserve Fund to the Redemption Account in accordance with Sections 404(c); (iii) during any Reset Period or the Fixed Rate Period, on each Interest Payment Date occurring during such Reset Period or Fixed Rate Period, as the case may be, in an amount (rounded downward to the nearest multiple of $5,000) equal to the aggregate amount on deposit in Principal Reserve Fund on the first day of the month prior to the Interest Payment Date with respect to which such mandatory redemption relates, as provided in 404(e); provided that in no event shall funds be advanced under the Collateral Agreement to redeem Bonds pursuant to this subsection 214(b)(iii); (iv) on the earliest practicable date in whole or in part in an amount specified by the Credit Facility Provider at the direction or with the prior written consent of the Credit Facility Provider following any Event of Default as defined under the Reimbursement Agreement or the Financing Agreement (including any Event of Default under the Reimbursement Agreement or the Financing Agreement caused by a default under any Mortgage Loan Document); (v) on any Interest Payment Date if and to the extent amounts are transferred from the Principal Reserve Fund to the Redemption Account on the first day of the month prior to such Interest Payment Date as provided in Section 404(d);{and} (vi) during the Fixed Rate Period, if the Issuer shall have established a Sinking Fund Schedule, in part through application of Sinking Fund Payments as 31 provided in Section 413(c) of this Indenture at the times and in the amounts set forth in the Sinking Fund Schedule (subject to the provisions of Section 413(b) permitting amounts to be credited toward part or all of any one or more Sinking Fund Payments), in each case equal to the principal amount of each Bond or portion thereof to be redeemed,together with interest accrued to the Redemption Date. (c) If less than all the Outstanding Bonds shall be called for redemption, the Trustee shall select by lot, in such manner as it shall in its discretion determine, the Bonds, or portions thereof in Authorized Denominations, to be redeemed except that, notwithstanding the foregoing, (a) any Purchased Bonds Outstanding shall be called for redemption before any other Bonds are selected for redemption and (b) if a Sinking Fund Schedule is established in accordance with Section 2.05 with maturity dates for any Bonds earlier than the Maturity Date, the Bonds with the highest interest rate shall be called for redemption before any other Bonds are selected for redemption. If there shall be called for redemption less than the entire principal amount of a Bond, the Issuer shall execute and the Trustee shall authenticate and deliver, upon surrender of such Bond, without charge to the holder thereof, in exchange for the unredeemed principal amount of such Bond, at the option of such holder, Bonds of the same maturity, interest rate,principal amount,series and tenor in any Authorized Denomination. (d) The Bonds are subject to extraordinary mandatory redemption in whole at any time at a redemption price equal to one hundred percent (100%) of the aggregate principal amount thereof plus accrued interest thereon to the redemption date, without Premium,in each case in Authorization Denominations,but in each case only at the direction of the Credit Facility Provider upon the occurrence of a Tax Event. (e) Purchase of Bonds in Whole in Lieu of Redemption. Notwithstanding anything in this Indenture to the contrary, at any time the Bonds are subject to redemption pursuant to the provisions of this Indenture all (but not less than all) of the Bonds to be redeemed may be purchased by the Trustee (for the account of the Borrower or the Credit Facility Provider or their respective designee, as directed by such party) on the date which would be the redemption date at the direction of the Credit Facility Provider or the Borrower (except in the case of a redemption resulting from the occurrence of an Event of Default as defined herein or in the Reimbursement Agreement, in which case only at the direction of the Credit Facility Provider or at the direction of the Borrower with the written consent of the Credit Facility Provider) who shall give the Trustee at least one Business Day's notice prior to such redemption date, at a purchase price equal to the redemption price which would have been applicable to such Bonds on the redemption date. The Bonds shall be purchased in lieu of redemption only from (i) Available Moneys or (ii) other funds, (but only with the prior written consent of the Credit Facility Provider and written confirmation from the Credit Facility Provider to the Trustee that disgorgement provisions of the Collateral Agreement apply to such other funds). In the event the Trustee is so directed to purchase Bonds in lieu of redemption, no notice to the holders of the Bonds to be so purchased (other than the notice of redemption otherwise required hereunder) shall be required, and the Trustee shall be authorized to apply to such purpose the funds in the Redemption Account which would have been used to pay the redemption price, as the case may be, for such Bonds if such Bonds had been redeemed rather than purchased. In no event shall Fannie Mae in its capacity as Credit Facility Provider purchase Bonds for its own account in lieu of redemption without the prior written consent of the General Counsel to Fannie Mae. Such Bonds so purchased for the account of the Borrower shall for purposes under this Indenture constitute Purchased Bonds. Section 215. Notice of Redemption; Cancellation. Except as provided below, notice of redemption shall be given by the Trustee not less than thirty (30) nor more than forty-five (45) 32 r r days prior to the date fixed for redemption by first class mail, postage prepaid, to the registered owner of each Bond to be redeemed, at the address of such registered owner shown on the Register; and a second notice of redemption shall be sent by first class mail, postage prepaid, on the sixtieth (60th) day following the date fixed for redemption of such Bonds, at such address, to any Bondholder who has not submitted its Bond to the Trustee for payment on or before the sixtieth (60th) day following the date fixed for redemption of such Bond, in each case stating: (a) the numbers of the Bonds to be redeemed, by giving the individual certificate number of each Bond to be redeemed (or stating that all Bonds between two stated certificate numbers,both inclusive, are to be redeemed, or that all of the Bonds of one or more maturities have been called for redemption); (b) the CUSIP numbers of all Bonds being redeemed; (c) in the case of a partial redemption of Bonds, the principal amount of each Bond being redeemed; (d) the date of issue of the Bond as originally issued and the complete official name of the Bonds, including the series designation; (e) the rate or rates of interest borne by each Bond being redeemed (or that such interest is variable); (f) the maturity date of each Bond being redeemed; (g) the place or places where amounts due upon such redemption will be payable; (h) the pubheation dalle, redemption date and redemption price; (i) the name, address, telephone number and contact person at the office of the Trustee with respect to such redemption; and (j) any conditions precedent to such redemption. The notice shall require that such Bonds be surrendered at the Principal Office of the Trustee for redemption at the redemption price and shall state that interest on such Bonds will not accrue from and after the redemption date. CUSIP number identification with appropriate dollar amounts for each CUSIP number also shall accompany all redemption payments. On the same date notice is mailed to registered owners, notice of such redemption also shall be sent by the Trustee by first class mail, overnight delivery service or other secure overnight means, postage prepaid, to any registered owner of $1,000,000 or more in aggregate principal amount of Bonds to be redeemed, to certain municipal registered Securities Depositories (described below) which are known to the Trustee, on the second Business Day prior to the date the notice of redemption is mailed to the Bondholders, to be holding Bonds, and at the same time notice is mailed to the registered owners, to at least two (2) of the national Information Services (described below) that disseminate securities redemption notices which notices must state,if applicable,any conditions precedent to redemption. Neither failure to receive notice, as described in either of the two preceding paragraphs, nor any defect in any notice so mailed shall affect the sufficiency of the proceedings for the redemption of such Bonds. Anything to the contrary herein notwithstanding, (a) in the case of a redemption of the Bonds pursuant to Section 214(b)(iii), 214(b)(iv), 214(b)(v) or 214(b)(vii), the Trustee shall give notice of redemption not less than ten (10) days prior to the date fixed for redemption, (b) in the case of any redemption of Bonds pursuant to Section 214(b)(ii), 214(b)(iv) or 214(b)(vi) no notice of redemption shall be given, (c) in the case of a redemption of the Bonds pursuant to Section 214(a), the Trustee shall not give notice of redemption of the Bonds unless and until the Trustee has received either (i)Available Moneys, from a source other than the Credit Facility, sufficient to pay the redemption price of the Bonds to be redeemed (with interest calculated at the Maximum Rate so long as the Bonds bear interest at the Weekly Variable Rate), or (ii) with the prior written consent of the Credit Facility Provider, other funds sufficient to pay the redemption price of the Bonds to be redeemed, and (d) in the case of any redemption pursuant to Section 214(b)(vii)(viii), the Trustee shall give notice of redemption as provided in Section 413(c). Any prepayments on the Mortgage Loan received for the redemption of Bonds shall be held in the Redemption Account exclusively for the payment of the redemption price of the Bonds to be redeemed. Moneys on deposit in the Redemption Account shall be invested only in 33 r , Government Obligations with a term not exceeding the earlier of thirty (30) days from the date of investment of such moneys or the date or dates that moneys therefrom are anticipated to be required. Notwithstanding anything herein to the contrary, the Trustee shall not send any notice of redemption pursuant to Section 214(a) unless the Trustee has on deposit Available Moneys in an amount equal to any premium to be paid in connection with such redemption. Securities Depositories include: The Depository Trust Company, 711 Stewart Avenue, Garden City, New York 11530, Fax-(516) 227-4039 or 4190; Midwest Securities Trust Company, Capital Structures-Call Notification, 440 South LaSalle Street, Chicago, Illinois 60605, Fax-(312) 663-2343; Philadelphia Depository Trust Company, Reorganization Division, 1900 Market Street, Philadelphia, Pennsylvania 19103,Attention: Bond Department, Fax-(215) 496-5058; or, in accordance with the then current guidelines of the Securities and Exchange Commission, such other addresses and/or such other securities depositories or any such other depositories as the Issuer may designate in writing to the Trustee. Information Services include: Financial Information, Inc. "Daily Called Bond Service," 30 Montgomery Street, loth Floor, Jersey City, New Jersey 07302, Attention: Editor; Kenny Information Services, "Called Bond Service," 65 Broadway, 16th Floor, New York, New York 10004; Moody's Investors Service "Municipal and Government," 99 Church Street, 8th Floor, New York, New York 10007, Attention: Municipal News Reports; and Standard and Poor's Ratings Group "Called Bond Record," 25 Broadway, New York, New York 10004; or, in accordance with then current guidelines of the Securities and Exchange Commission, such other addresses and/or such other services providing information with respect to called bonds, or any other such services as the Issuer may designate in writing to the Trustee. Notice of redemption having been given in the manner provided above, and money sufficient for the redemption being held by the Trustee for that purpose, and all conditions precedent to redemption having been satisfied, the Bonds so called for redemption shall become due and payable on the redemption date, and interest thereon shall cease to accrue from and after the redemption date; and the holders of the Bonds so called for redemption shall thereafter no longer have any security or benefit under this Indenture except to receive payment of the redemption price for such Bonds upon surrender of such Bonds to the Trustee. Notwithstanding notice having been given in the manner provided above, any optional redemption of Bonds shall be cancelled with the consent of or at the direction of Fannie Mae if any event of default under the Reimbursement Agreement has occurred and Fannie Mae has so notified the Trustee in writing,if,as of the date fixed for redemption, the Trustee does not have Available Moneys on deposit sufficient and available to pay the redemption price of such Bonds. Section 216. Book-Entry Only System_ . It is intended that the Bonds be registered so as to participate in a securities depository system with DTC (the "DTC System"), as set forth herein. The Bonds shall be initially issued in the form of a separate single fully registered Bond for each of the maturities of the Bonds. The Issuer and the Trustee are authorized to execute and deliver such letters to or agreements with DTC as shall be necessary to effectuate the DTC System, including a representation letter in the form required by DTC (the "Representation Letter"). In the event of any conflict between the terms of any such letter or agreement, including the Representation Letter, and the terms of this Indenture, the terms of this Indenture shall control. DTC may exercise the rights of a Bondholder only in accordance with the terms hereof applicable to the exercise of such rights. 34 With respect to Bonds registered in the Register in the name of Cede & Co., as nominee of DTC, the Issuer, the Trustee, the Credit Facility Provider, the Tender Agent and the Borrower shall have no responsibility or obligation to any broker-dealer,bank or other financial institution for which DTC holds Bonds from time to time as securities depository (each such broker-dealer, bank or other financial institution being referred to herein as a "DTC Participant") or to any person on behalf of whom such a DTC Participant directly or indirectly holds an interest in the Bonds (each such person being herein referred to as an "Indirect Participant"). Without limiting the immediately preceding sentence, the Issuer, the Trustee, the Credit Facility Provider, the Tender Agent, the Remarketing Agent and the Borrower shall have no responsibility or obligation with respect to (a) the accuracy of the records of DTC, Cede & Co. or any DTC Participant with respect to any ownership interest in the Bonds, (b) the delivery to any DTC Participant or any Indirect Participant or any other person, other than a Bondholder, as shown in the Register, of any notice with respect to the Bonds, including any notice of redemption, (c) the payment to any DTC Participant or Indirect Participant or any other Person, other than a Bondholder, as shown in the Register, of any amount with respect to principal of, premium, if any, or interest on, the Bonds or (d) any consent given by DTC as registered owner. So long as certificates for the Bonds are not issued pursuant to Section 217 and the Bonds are registered to DTC, the Issuer, the Borrower, the Credit Facility Provider, the Tender Agent, the Remarketing Agent and the Trustee shall treat DTC or any successor securities depository as, and deem DTC or any successor securities depository to be, the absolute owner of the Bonds for all purposes whatsoever, including without limitation (i) the payment of principal and interest on the Bonds, (ii) giving notice of redemption and other matters with respect to the Bonds, (iii) registering transfers with respect to the Bonds and (iv) the selection of Bonds for redemption. While in the DTC System, no person other than Cede & Co., or any successor thereto, as nominee for DTC, shall receive a Bond certificate with respect to any Bond. Notwithstanding any other provision of this Indenture to the contrary, so long as any of the Bonds are registered in the name of Cede & Co., as nominee of DTC, all payments with respect to principal of, premium, if any, and interest on such Bonds and all notices with respect to such Bonds shall be made and given, respectively, in the manner provided in the Representation Letter. Upon delivery by DTC to the Trustee of written notice to the effect that DTC has determined to substitute a new nominee in place of Cede &Co.,and subject to the provisions in this Indenture with respect to interest checks being mailed to the registered owner at the close of business on the Record Date applicable to any Interest Payment Date, the name "Cede &Co." in.this Indenture shall refer to such new nominee of DTC. Section 217. Successor Securities Depository; Transfers Outside Book-Entry Only System. DTC may determine to discontinue providing its services with respect to the Bonds at any time by giving written notice to the Issuer, the Remarketing Agent, the Tender Agent and the Trustee and discharging its responsibilities with respect thereto under applicable law. The Issuer or the Borrower, with the consent of the other, but without the consent of any other person, may terminate the services of DTC with respect to the Bonds. If the Borrower is in default under any of the Bond Documents or Mortgage Loan Documents, the Issuer shall not be required to obtain the consent of the Borrower if it elects to terminate the services of DTC. Without the consent of or other action by the Issuer, the Borrower may terminate the services of DTC if the Tender Agent ceases to be a DTC Participant and is not replaced by a Tender Agent which is a DTC Participant. Upon the discontinuance or termination of the services of DTC with respect to the Bonds pursuant to the foregoing provisions, unless a substitute securities depository is appointed to undertake the functions of DTC hereunder, the Issuer, at the expense of the Borrower, is obligated to deliver Bond certificates to the Beneficial Owners of the Bonds, as described in this Indenture,and the Bonds shall no longer be restricted to being registered in 35 the Bond Register in the name of Cede & Co. as nominee of DTC, but may be registered in whatever name or names Registered Owners transferring or exchanging Bonds shall designate to the Trustee in writing, in accordance with the provisions of this Indenture. The Issuer may determine that the Bonds shall be registered in the name of and deposited with a successor depository operating a securities depository system,qualified to act as such under Section 17(a) of the Securities Exchange Act of 1934, as amended, as may be acceptable to the Issuer, or such depository's agent or designee. Section 218. Conditions for Reissuance of Bonds. Upon the execution and delivery hereof, the Issuer shall execute and deliver to the Trustee, and the Trustee shall authenticate, the Bonds in the form attached hereto as Exhibit A and deliver as directed by the Issuer; provided, however, that prior to delivery of the Bonds there shall be delivered to the Trustee the following: (a) a certified copy of the Bond Resolution authorizing the execution and delivery on behalf of the Issuer of the Bond Documents to which it is a party and the Representation Letter; (b) executed original counterparts of this Indenture, the Financing Agreement, the Collateral Agreement, the Reimbursement Agreement, the Assignment, the Mortgage, the Mortgage Note, the Tax Certificate, the Regulatory Agreement, the Pledge Agreement, the Remarketing Agreement and the Tender Agent Agreement; (c) an opinion of Bond Counsel in form and substance satisfactory to the Issuer, the Remarketing Agent and the Credit Facility Provider to the effect that the Bonds have been duly and validly authorized, issued and delivered and constitute valid and binding obligations of the Issuer, enforceable against the Issuer in accordance with their terms, that the interest payable on the Bonds is excludable from gross income for federal income tax purposes and that the Bond Documents have been duly and validly authorized, executed and delivered and constitute the legal, valid and binding obligations of the Issuer, enforceable against the Issuer in accordance with their respective terms,subject to customary qualifications on enforceability; (d) receipt from the Borrower of the Costs of Issuance Deposit; (e) evidence of proper recordation of the Mortgage or a title insurance binder acceptable to the Credit Facility Provider insuring the gap in a manner acceptable to the Credit Facility Provider; such acceptability to be evidenced by the execution and delivery of the Collateral Agreement;and (f) receipt from the Borrower of an amount equal to the Interest Reserve Requirement for deposit into the Interest Account. Section 219. Limited Obligations. The Bonds and the interest thereon are special, limited obligations of the Issuer, payable solely from the revenues, receipts and security pledged therefor hereunder. The Bonds shall not be a debt of the State or of any other political subdivision thereof, and neither the State nor any other political subdivision thereof shall be liable thereon. The faith and credit of the Issuer,the State or of any political subdivision thereof are not pledged to the payment of the principal or of interest on the Bonds. Section 220. Continuing Disclosure. Pursuant to Section 5.13 of the Financing Agreement, the Borrower has undertaken all responsibility for compliance with continuing disclosure requirements, if applicable, and the Issuer shall have no liability to the holders or Beneficial Owners of the Bonds or any other person with respect to such disclosure matters. 36 f Notwithstanding any other provision of this Indenture, failure of the Borrower to comply with any Continuing disclosure requirements shall not be considered an Event of Default; however, the Trustee, at the written request of any Remarketing Agent required to comply with Securities and Exchange Commission Rule 15c-2-12(b)(5) or the holders of at least 25% aggregate principal amount of Outstanding Bonds, shall, but only to the extent indemnified to its satisfaction or any Bondholder or Beneficial Owner may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Borrower to comply with its obligations under Section 5.13 of the Financing Agreement. 37 ARTICLE III SECURITY Section 301. Security and Pledge of Security. The Bonds and the interest thereon shall be special, limited obligations of the Issuer as provided in Section 219 of this Indenture, and shall be secured by and payable only from (a) the Trust Estate, and (b) the Credit Facility; provided, however, that the Credit Facility and the proceeds thereof shall not secure or provide liquidity for Bonds during any period they are Purchased Bonds; and provided further, that Trustee's interest in the Mortgage Loan, including the Mortgage Note, the Mortgage and the other Mortgage Loan Documents is, at the direction of the Credit Facility Provider, subject to assignment to the Credit Facility Provider pursuant to the terms of the Assignment. The pledge of this Indenture shall be valid and binding from and after the date of execution of this Indenture and the Security hereby pledged shall immediately be subject to the lien of such pledge without any physical delivery thereof or further act and the lien of such pledge shall be valid and binding as against all parties having claims of any kind in tort, contract or otherwise against the Issuer,irrespective of whether such parties have notice thereof. Section 302. Payment of Bonds and Performance of Covenants. The Issuer shall promptly pay or cause to be paid, but only out of the Security, the principal of, redemption premium if any,and interest on the Bonds at the place, on the dates and in the manner provided in the Bonds. The Issuer shall promptly perform and observe all covenants, undertakings and obligations set forth herein, in the Financing Agreement or in the Bonds on its part to be performed or observed. The Issuer agrees that the Trustee or the Credit Facility Provider in its name or in the name of the Issuer may enforce against the Borrower or any Person any rights of the Issuer under or arising from the Bonds or the Bond Documents whether or not the Issuer is in default hereunder or under the Financing Agreement,but neither the Trustee nor the Credit Facility Provider shall be deemed to have hereby assumed the obligations of the Issuer under the Financing Agreement,but rather shall have no obligations under the Financing Agreement except as specifically provided therein. The Issuer shall fully cooperate with the Trustee or the Credit Facility Provider in the enforcement by the Trustee or the Credit Facility Provider of any such rights. At the request of the Trustee or the Credit Facility Provider, the Issuer, upon being indemnified to its reasonable satisfaction against all liability, costs and expenses by the Borrower which may be incurred in connection therewith, shall in its name commence legal action or take such other actions as the Trustee or the Credit Facility Provider shall reasonably request to enforce the rights of the Issuer or the Trustee under or arising from the Bonds or the Bond Documents. Notwithstanding any provision contained in this Indenture, the Bonds, the Mortgage Loan Documents, the Financing Agreement or any related document, the Issuer shall not be required to advance any moneys derived from any source other than the Security for any of the purposes of this Indenture, the Bonds, the Mortgage Loan Documents, the Financing Agreement or any such related document, whether for the payment of the principal or redemption or purchase price of, or interest on, the Bonds, the payment of administrative expenses (including Trustee's fees and expenses) or for any other purpose of this Indenture, the Bonds,the Mortgage Loan Documents,the Financing Agreement or any such related document. Section 303. Further Assurances. The Issuer covenants that it will, at the sole expense of the Borrower, cooperate to the extent necessary with the Borrower, the Trustee and the Credit Facility Provider (subject to Section 704 hereof) in their defenses of the Security against the claims and demands of all Persons, and will, to the extent permitted under the Act, do, execute, acknowledge and deliver, or cause to be done, executed, acknowledged and delivered, such 38 indentures supplemental hereto and such further acts, financing statements, documents, instruments and transfers as the Trustee or the Credit Facility Provider may reasonably request to perfect and maintain perfected the security interest in the Security. The Issuer shall not agree to any amendment, modification, supplement, waiver or consent with respect to the Financing Agreement without the prior written consent of the Trustee and the Credit Facility Provider (subject to Section 704 hereof),which consent shall be governed by Article IX of this Indenture. The Issuer shall execute and the Trustee shall do, execute, acknowledge and deliver, such indentures supplemental hereto, and such further acts, instruments and transfers as the Trustee may reasonably require for the better assuring, transferring, conveying, pledging, assigning and confirming unto the Trustee all of its interest in the property herein described and the revenues, receipts and other amounts pledged hereby to the payment of the principal of, premium, if any, and interest on the Bonds. Any and all interest in property hereafter acquired which is of any kind or nature herein provided to be and become subject to the lien hereof, including, without limitation, the Mortgage Loan, shall and without any further conveyance, assignment or act on the part of the Issuer or the Trustee,become and be subject to the lien of this Indenture as fully and completely as though specifically described herein, but nothing contained in this sentence shall be deemed to modify or change the obligations of the Issuer under this Section 303. Section 304. Preservation of Security. The Issuer covenants that, except as otherwise provided herein, in the Financing Agreement and in the Assignment, it will not sell, convey, mortgage,encumber or otherwise dispose of any portion of the Security. Section 305. Inspection and Examination. The Trustee covenants and agrees that all books and documents in its possession relating to the Mortgage Loan, the Financing Agreement, the Regulatory Agreement and this Indenture and all records and accounts regarding the receipt and distribution of payments on the Mortgage Loan and the Borrower's compliance with the terms and conditions of the Mortgage Loan Documents, the Financing Agreement, the Regulatory Agreement and this Indenture shall be open to inspection, examination and audit at reasonable times and upon reasonable notice by the Issuer, the Borrower, the Credit Facility Provider and the Servicer or by such accountants or other agents as the Issuer, the Borrower, the Credit Facility Provider or the Servicer may from time to time designate. Section 306. No Disposition of Mortgage Note or Mortgage; Excepted Assignments; Substitution. (a) The Trustee shall not, without the prior written consent of the Credit Facility Provider, dispose of the Mortgage Note or Mortgage or any interest in the Mortgage Note or Mortgage other than to the Credit Facility Provider as provided in the Assignment and other than as provided in paragraphs (b)and (c) of this Section 306. (b) Upon receipt of written direction from the Credit Facility Provider, the Trustee shall exchange the Mortgage Note and Mortgage for a new mortgage note and mortgage on the Project which may be executed by a person other than the Borrower (the "New Borrower"). Except in the event of a transfer of the Project to the Credit Facility Provider, prior to accepting a new mortgage note and mortgage, the Trustee shall have (i)received written evidence that the New Borrower shall have executed and recorded a document substantially in the form of the Regulatory Agreement (or executed and recorded an assumption of all of the Borrower's obligations under the Regulatory Agreement) and that the Credit Facility Agreement and the Credit Facility, if required, have been modified to be applicable to the new mortgage loan, 39 (ii)received an opinion of Bond Counsel, to the effect that such exchange and modification, in and of itself, shall not affect the exclusion of the interest payable on the Bonds from gross income for federal income tax purposes and (iii) received from the Issuer, the consent (if any) required by the Regulatory Agreement or the Financing Agreement. In addition, if the substitution has resulted in an amendment of (or other modification to) the Credit Facility Agreement or the Credit Facility, the Trustee shall receive from the Credit Facility Provider an opinion of counsel to the Credit Facility Provider, who may be an employee of the Credit Facility Provider, to the effect that the modified Credit Facility Agreement and Credit Facility are valid and binding obligations of the Credit Facility Provider, subject to any applicable bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting the rights of creditors' generally, and general equitable principles and shall receive a confirmation of the rating on the Bonds from the Rating Agency. (c) The Trustee and the Issuer acknowledge the Trustee's obligation to assign its interest in the Mortgage and the Mortgage Note to the Credit Facility Provider and the control of the Mortgage Rights by the Credit Facility Provider under, and on the terms provided in, the Assignment. Section 307. Initial Credit Facility; No Disposition of Credit Facility or Pledged Collateral. (a) On the Effective Date, the Trustee shall enter into the Collateral Agreement with the Credit Facility Provider. (b) The Trustee shall not, without the prior written consent of the owners of all of the Bonds then Outstanding, transfer, assign or release the Credit Facility except (i) to a successor Trustee, or (ii) to the Credit Facility Provider either (1) upon receipt of an Alternate Credit Facility, or (2)upon expiration or other termination of the Credit Facility in accordance with its terms, including termination on its stated expiration date or upon payment thereunder of the full amount payable thereunder. Except as aforesaid, the Trustee shall not transfer, assign or release the Credit Facility until the principal of and interest on the Bonds shall have been paid or duly provided for in accordance with the terms of this Indenture. (c) Except as expressly provided in the Collateral Agreement, the Trustee shall not dispose of any of its interest in the Pledged Collateral (as defined in the Collateral Agreement) unless the Credit Facility Provider shall have defaulted in payment under the Collateral Agreement. Section 308. Accounts and Reports. (a) The Trustee, on behalf of the Issuer, shall keep, or cause to be kept, proper books of record and account in which complete and accurate entries shall be made of all of its transactions relating to the Bonds, the Mortgage Loan, the Credit Facility and all Permitted Investments, including, without limitation, payments made under the Mortgage Loan and all funds and accounts established by or held pursuant to this Indenture, which shall at all reasonable times be subject to the inspection of the Issuer, the Credit Facility Provider, the Borrower, the Servicer (as to the Mortgage Loan only) or Bondholders holding an aggregate principal amount of not less than ten percent (10%) of Bonds then Outstanding or their representatives duly authorized in writing. (b) The Trustee shall comply with any reasonable request in writing by a Rating Agency for information in its possession regarding the Bonds which such Rating Agency 40 requests in order to review its rating on the Bonds. Further, the Trustee shall comply with any reasonable request by Bondholders holding not less than ten percent (10%) of the principal amount of the Bonds then Outstanding for information in its possession regarding the Bonds, the Mortgage Loan, the Credit Facility or the Project. Any expense incurred by the Trustee pursuant to this Section 308(b) shall be borne by the Borrower. (c) Pursuant to Section 715 of the Financing Agreement the Borrower has undertaken all responsibility to comply with the continuing disclosure requirements of Section (b)(5)(i) of Securities and Exchange Issuer Rule 15c2-12 under the Securities Exchange Act of 1934 as amended (the "Rule") The Issuer shall have no liability to the Owners of the Bonds or any other Person with respect to such disclosure matters. Notwithstanding any other provision of this Indenture failure of the Borrower to comply with Section 7.15 of its Financing Agreement shall not be considered an Event of Default under this Indenture; however the disclosure agent may (and at the request of the owners of at least a majority in aggregate principal amount of the Bonds Outstanding and payment of its fees and expenses: including attorneys' fees shall) or any Bondowner may, take such actions as may be necessary and appropriate, including seeking specific performance by court order to cause the Borrower or the disclosure agent. to comply with its obligations under Section 7.15 of the Financing AgreernenL Section 309. Enforcement of Obligations. (a) Subject to the provisions of Section 306 and Article VI of this Indenture,upon the occurrence of an Event of Default hereunder, the Trustee, on behalf of the Issuer, if the same is in the best interests of the Bondholders, or on behalf of the Bondholders, shall diligently enforce any and all rights and take all reasonable steps, actions and proceedings as the Trustee in its sole judgment shall deem necessary and reasonable to enforce the terms, covenants and conditions of the Credit Facility, the Regulatory Agreement and the Financing Agreement. All affidavits, notices, certificates and schedules received by the Trustee from the Borrower may in good faith be relied upon by the Trustee and shall be maintained in its possession subject at all times during normal business hours to inspection by the Issuer and the Credit Facility Provider. (b) The Trustee shall abide by and take all actions required of the Trustee under the Collateral Agreement. Section 310. Maintenance of Lien on Trust Estate. The Trustee, upon the direction of the Credit Facility Provider and at the expense of the Borrower, will cause financing statements and continuation statements with respect to the Trust Estate to be at all times filed in such manner and in such places, if any, as may be required by law. To the extent possible under applicable law, as in effect in the jurisdiction(s) in which the Trust Estate is located, the Issuer will maintain the priority of the security interest herein created in the Trust Estate as a first lien thereon, and warrant, protect, preserve and defend its interest in the Trust Estate and the security interest of the Trustee therein and all rights of the Trustee under this Indenture against all actions, proceedings, claims and demands of all Persons, all paid for solely from the Trust Estate. Notwithstanding the foregoing, so long as the Credit Facility Provider has not defaulted in payment under the Collateral Agreement, the Trustee shall not take any action pursuant to this Section 310 with respect to its interest in the Pledged Collateral. Section 311. No Modification of Security; No Additional Indebtedness. The Issuer expressly reserves the right to adopt one or more general or special bond resolutions or to enter into one or more other indentures for any of its purposes including the issuance of bonds for other multifamily rental housing developments similar to the Project and reserves the right to 41 issue other obligations so long as any such resolution, indenture or obligation is not a charge or lien prohibited by this Indenture. The Issuer shall not, without the prior written consent of the Trustee and the Credit Facility Provider, alter, modify or cancel, or agree to consent to alter, modify or cancel any agreement which relates to or affects the Security. Without the prior written consent of the Credit Facility Provider, the Issuer shall not incur any additional indebtedness having a lien on the Security. 42 ARTICLE IV FUNDS Section 401. General Receipts Fund. There is hereby created and established with the Trustee a fund to be designated the "General Receipts Fund." There are hereby established and created within the General Receipts Fund, and the General Receipts Fund shall comprise, five (5) separate accounts, designated the "Credit Facility Account," the "Interest Account", the "Redemption Account", the "Fees Account" and the "Cap Account." Except as provided in Section 403 hereof, all amounts derived from the Credit Facility shall be deposited in the Credit Facility Account, except that amounts representing payments of the Issuer fees derived from the Credit Facility shall be deposited into the Fees Account. No other moneys shall be deposited in the Credit Facility Account. There shall be deposited into the Interest Account any interest earned on or profits realized from Permitted Investments (except for Permitted Investments with respect to the Rebate Fund, the Costs of Issuance Fund and the Principal Reserve Fund, which interest and profits shall remain in such Funds, subject to release as provided in this Indenture), the portion of the interest payments on the Mortgage Loan representing the Pass- Through Rate, and any other moneys made available for deposit in such account from any other source (including any amounts deposited in respect of the Interest Reserve Requirement). Amounts on deposit in the General Receipts Fund shall be invested as provided in Section 407. Payments and prepayments of principal on the Mortgage Loan, and all amounts required to be transferred pursuant to the terms of this Indenture from the Principal Reserve Fund to the Redemption Account and all amounts to be deposited as Sinking Fund Payments pursuant to Section 413 hereof shall be deposited into the Redemption Account. There shall be deposited in the Cap Account all payments received under the Cap Agreement. There shall be deposited in the Fees Account the (i) payments made by the Borrower under the Financing Agreement attributable to the Issuer fees, and the fees and expenses of the Trustee, the Tender Agent, the Remarketing Agent and the Rebate Analyst (all such fees and expenses, the "Third Party Fees"), and (ii) amounts derived from the Credit Facility for the payment of the Issuer fees. Moneys in the accounts of the General Receipts Fund and the accounts therein shall be applied in the following manner and order of priority: (a) On each Interest Payment Date, Redemption Date or date of acceleration of the Bonds, the Trustee shall withdraw from the Interest Account an amount equal to the amount of interest due on the Bonds on such date, and shall cause such amount to be applied to the payment of such interest so due. On each Redemption Date, date of acceleration of the Bonds and Maturity Date, the Trustee shall withdraw from the Redemption Account an amount equal to the amount of principal due on the Bonds on such date (including any payment due upon a mandatory redemption pursuant to Section 214(b)(iii) hereof), and shall cause such amount to be applied to the payment of such principal so due. Should the amount in the Interest Account or the Redemption Account, as the case may be, be insufficient to pay the amount due on the Bonds, the Trustee shall (unless and to the extent that the Credit Facility Provider has directed the application of amounts on deposit in the Principal Reserve Fund for such purpose) apply amounts in the Credit Facility Account for such purpose; provided, that if there are any Purchased Bonds, amounts in the Interest Account and Principal Reserve Fund shall be applied first to the Bonds other than the Purchased Bonds and thereafter to the Purchased Bonds; provided further that in no event shall amounts in the Credit Facility Account be applied to the payment of principal of,or interest on,any Purchased Bonds. 43 (b) On any date on which any amounts are required by applicable federal tax law to be rebated to the federal government, amounts shall, on the written request of-the Borrower, be withdrawn by the Trustee from the Interest Account and deposited into the Rebate Fund for such purpose. (c) On any date on which any amounts are required to pay any Third Party Fees, such amounts shall be withdrawn by the Trustee from the Fees Account for payment to the appropriate party, provided, that amounts derived from the Credit Facility and deposited into the Fees Account shall only be used to pay Issuer fees. In the event the amount in the Fees Account is insufficient to pay such fees and expenses, the Trustee shall inform the Servicer and make demand on the Borrower for the amount of such insufficiency. On each date on which the entire payment on the Mortgage Loan representing the Pass Through-Rate and the entire Principal Reserve Fund payment for the preceding month is received by the Trustee on a timely basis, all amounts on deposit in the Cap Account after all payments required to be made to Bondholders pursuant to the terms of this Indenture have been made, shall be paid (i) to the Borrower; provided that no Event of Default as defined under the Reimbursement Agreement or any Bond Document or any default under any Mortgage Loan Document shall have occurred and be continuing or (ii) to the Credit Facility Provider, provided, that (A) payment cannot be made to the Borrower pursuant to clause (i) above, (B) the Credit Facility Provider has made a payment pursuant to Section 701 hereof and (C) an Event of Default under Section 601(f) has not occurred and is not continuing or (iii) in the event payment of such funds may not be made to either the Borrower or the Credit Facility Provider pursuant to the provisions of subclauses (i) and (ii) above, retained in the Cap Account by the Trustee, provided that in the event the default or event of default which prohibited the Trustee from making a payment to the Borrower under clause (i) above shall be cured and no payment to the Credit Facility Provider pursuant to clause (ii) above shall have been made, upon receipt of notice thereof delivered to the Trustee by the Servicer of the cure of such default, the Trustee shall pay all such funds to the Borrower. Notwithstanding anything to the contrary, no moneys from the Cap Account shall be used to make any payments due on the Bonds; provided, however, if an Event of Default under Section 601(f) occurs and is continuing, the Trustee shall use amounts in the Cap Account to make any payments due on the Bonds. Any interest earned on or profits realized from amounts on deposit in the Interest Account shall be deposited into the Interest Account, and provided there is no deficiency in the Interest Reserve Requirement, the Principal Reserve Fund or the Rebate Fund, and provided no default exists under the Reimbursement Agreement, any Mortgage Loan Document or any Bond Document, shall be paid to the Borrower on the Interest Payment Date following receipt by the Trustee. Provided that the rebate requirements referenced in the Tax Certificate are first satisfied, any amounts remaining in the General Receipts Fund or the Principal Reserve Fund after payment in full of the principal and interest on the Bonds shall be applied to pay (i) first to the Credit Facility Provider any amounts certified by the Credit Facility Provider to be due and owing to the Credit Facility Provider and unpaid under the Credit Facility Agreement or the Financing Agreement, (ii) second to the person or persons entitled thereto, all other amounts required to be paid under this Indenture or the Financing Agreement, and (iii) third to the Borrower the balance upon the expiration or sooner cancellation or termination of the term of the Financing Agreement as provided in the Financing Agreement. With respect to amounts required to be paid to the Credit Facility Provider under the Credit Facility Agreement or the Financing Agreement, amounts remaining in the General Receipts Fund shall be paid to the Credit Facility Provider up to an amount equal to the amount set forth in a written certification 44 from the Credit Facility Provider to the Trustee stating the amount due and owing to the Credit Facility Provider under the Credit Facility Agreement or the Financing Agreement. Section 402. Costs of Issuance Fund. There is hereby created and established with the Trustee a special fund to be designated the "Costs of Issuance Fund". Moneys on deposit in the Costs of Issuance Fund shall not be part of the Trust Estate and shall be used solely to pay Costs of Issuance. On or before the Effective Date the Trustee shall be in receipt from the Borrower of the Costs of Issuance Deposit which shall be held in a temporary account of the Trustee until the Effective Date. On the Effective Date, the Trustee shall transfer the Costs of Issuance Deposit into the Costs of Issuance Fund. Moneys on deposit in the Costs of Issuance Fund shall be disbursed by the Trustee, pursuant to requisitions executed by the Borrower, to pay Costs of Issuance. The Trustee may conclusively rely on such requisitions for purposes of making such disbursements. Any moneys remaining in the Costs of Issuance Fund six (6) months after the Effective Date and not needed to pay still unpaid Costs of Issuance shall be returned to the Borrower. Section 403. Bond Purchase Fund. The Trustee shall cause the Tender Agent to establish and maintain, so long as any Bonds are Outstanding and have not been converted to the Fixed Rate, a separate fund to be known as the `Bond Purchase Fund." Subject to the provisions of Sections 404 and 1004, there shall be deposited into the Bond Purchase Fund from time to time the following: (a) remarketing proceeds received upon the remarketing of Tendered Bonds to any person; (b) amounts transferred from the Principal Reserve Fund at the written direction of the Credit Facility Provider to the extent that moneys obtained pursuant to (a) above are insufficient on any date to pay the purchase price of Tendered Bonds which amounts the Trustee shall transfer to the Tender Agent on or before 3:00 p.m. Tender Agent Time, on each Tender Date; (c) moneys obtained by the Trustee pursuant to the Credit Facility then in effect to enable the Trustee to pay the purchase price of Tendered Bonds to the extent that moneys obtained pursuant to (a) or (b) above are insufficient on any date to pay the purchase price of Tendered Bonds which amounts the Trustee shall transfer to the Tender Agent on or before 3:00 p.m.Tender Agent Time,on each Tender Date;and Subject to the provisions of Section 701(e) of this Indenture permitting reimbursement of amounts owed to the Credit Facility Provider, moneys in the Bond Purchase Fund shall be held uninvested and exclusively for the payment of the purchase price of Tendered Bonds. Amounts held to pay the purchase price for more than two (2) years shall be applied in the same manner as provided under Section 410 hereof with respect to unclaimed payments of principal and interest. Section 404. Principal Reserve Fund. (a) There is hereby created and established with the Trustee a special fund to be designated the "Principal Reserve Fund." The Trustee shall establish an account on its records with respect to the Bonds to deposit, hold, invest and disburse all funds received by it for deposit into the Principal Reserve Fund. There shall be deposited into the Principal Reserve Fund all of the monthly payments made in accordance with the Principal Reserve Schedule attached to the Mortgage Note, as such schedule may be amended in accordance with the provisions of the Mortgage Note. Any interest earned on or 45 profits realized from amounts on deposit in the Principal Reserve Fund shall be deposited into the Principal Reserve Fund and, provided there is no deficiency in the Principal Reserve Fund, the Interest Reserve Requirement or the Rebate Fund, and provided no default exists under the Reimbursement Agreement, any Mortgage Loan Document or any Bond Document, shall be paid to the Borrower on the Interest Payment Date following receipt thereof by the Trustee. In addition, remarketing proceeds shall, subject to the priority of payments set forth in Section 3.20) of the Reimbursement Agreement, be deposited into the Principal Reserve Fund as described in Section 1004 hereof, in the event that, at the written direction of the Credit Facility Provider, amounts are withdrawn from the Principal Reserve Fund to purchase Bonds on any optional or mandatory tender date and such Bonds are subsequently remarketed. Amounts on deposit in the Principal Reserve Fund (i) shall be transferred to the Redemption Account of the General Receipts Fund for application to the redemption of the Bonds as provided below and (ii) may be transferred to the Redemption Account of the General Receipts Fund at the direction of the Credit Facility Provider for application to the redemption of the Bonds on any Interest Payment Date pursuant to Section 214(b)(v)as provided in subparagraph(d)below. (b) Amounts on deposit in the Principal Reserve Fund may be used, at the written direction of the Credit Facility Provider, (i) to pay any amounts required to be paid by the Borrower under the Mortgage Loan Documents, the Bond Documents or the Reimbursement Agreement (including without limitation any amounts required to be paid to the Credit Facility Provider) or any amounts required to be paid by the Credit Facility Provider under the Credit Facility Agreement; (ii) with the written consent of the Borrower (so long as the Borrower is not in default under any Bond Document, Mortgage Loan Document or the Reimbursement Agreement) to make improvements or repairs to the Project; (iii) to redeem Bonds as provided herein;and (iv) if a default has occurred and is continuing under the Reimbursement Agreement, any Mortgage Loan Document or any Bond Document or, if a new mortgage and mortgage note have been substituted for the Mortgage and the Mortgage Note in accordance with the Mortgage Loan Documents, or if the Borrower otherwise consents, to any other use approved in writing by the General Counsel of the Credit Facility Provider. (c) On each Adjustment Date amounts on deposit in the Principal Reserve Fund shall be transferred to the Redemption Account of the General Receipts Fund to be applied to the redemption of Bonds in Authorized Denominations pursuant to Section 214(b)(ii); provided that the Trustee shall only be required to use such amounts for redemption to the extent that all Bonds remaining outstanding after such redemption are in Authorized Denominations. (d) On the first day of each month during the period the Bonds bear interest at the Weekly Variable Rate, all or any part of amounts on deposit in the Principal Reserve Fund (rounded downward to the nearest multiple of $100,000) shall, at the written direction of the Credit Facility Provider, be transferred by the Trustee to the Redemption Account of the General Receipts Fund to be applied to the redemption of Bonds in Authorized Denominations pursuant to Section 214(b)(v), provided that the direction of the Credit Facility Provider shall not be required and all amounts in Authorized Denominations in excess of the Principal Reserve Amount shall be transferred to the Redemption Account automatically and used to 46 redeem Bonds on the next Interest Payment Date, if the aggregate amount on deposit in the Principal Reserve Fund exceeds the Principal Reserve Amount on any Interest Payment Date. (e) On the first day of the month prior to each Interest Payment Date during a Reset Period or a Fixed Rate Period, all amounts in the Principal Reserve Fund (rounded downward to the nearest multiple of$5,000) shall be transferred by the Trustee to the Redemption Account of the General Receipts Fund to be applied to the redemption of Bonds in Authorized Denominations pursuant to Section 214(b)(iii). Section 405. RESERVEPIdentification of Moneys. The Borrower and the Servicer, as appropriate shall separately identify to the Trustee all monies to be deposited in the General Receipts Fund and the accounts thereof so as to assure deposit by the Trustee of the rove amounts in the General Receipts Fund and the accounts thereof Section 406. Cap Reserve Fund. (a) There is hereby created and established with the Trustee a special fund entitled the "Cap Reserve Fund." There shall be deposited into the Cap Reserve Fund all of the monthly payments required to be paid by the Borrower for such purpose in accordance with the Mortgage Note, as the amount of such payments may be changed from time to time in accordance with the provisions of the Mortgage Note. V Subject to paragraph (e) below, upon the receipt by the Trustee of a written request from the Borrower, with the written consent of Fannie Mae or the Servicer, the Trustee shall disburse to the Counterparty of the Subsequent Hedge to be acquired by the Borrower, an amount from the Cap Reserve Fund equal to the lesser of (i) the purchase price of such Subsequent Hedge or(ii) the amount then on deposit in the Cap Reserve Fund. (c) Each written request for disbursement from the Cap Reserve Fund shall specify (1) the purchase price of the Subsequent Hedge (the "Purchase Price"); (2) the name, address, contact name, telephone number and wiring instructions of the Counterparty; (3) the date by which the Counterparty requires payment of the Purchase Price (the "Payment Date") and (4) such other information as the Trustee may require. The Trustee shall disburse the Purchase Price from the Cap Reserve Fund to the Counterparty on the Payment Date. (d) Subject to the limitations in subsection (e) of this Section 406,-any balance remaining in the Cap Reserve Fund after payment of the Purchase Price shall be paid to the Borrower on or promptly following the Payment Date. (e) Upon the occurrence of an "Event of Default" under the Reimbursement Agreement, then, the Trustee shall apply amounts in the Cap Reserve Fund in accordance with written directions from Fannie Mae for any purpose, including but not limited to (i) repayment of any indebtedness secured by the Mortgage, including but not limited to principal prepayments and the prepayment premium applicable to such full or partial prepayment (as applicable and any amounts owing under the Reimbursement Agreement); provided, however, that such application of funds shall not cure or be deemed to cure any default; (ii) reimbursement of the Servicer and/or Fannie Mae for all losses and expenses (including, without limitation, reasonable legal fees and expenses) suffered or incurred by the Servicer and/or Fannie Mae as a result of such default; or (iii) payment of any amount expended in exercising all rights and remedies available to Fannie Mae and/or the Servicer at law or in equity or under any of the Mortgage Loan Documents or(iv)purchase of a Subsequent Hedge. 47 (f) Subject to subsection (e) of this Section 406, the Cap Reserve Fund shall be terminated, and the Trustee shall disburse to the Borrower all amounts remaining in the Cap Reserve Fund, upon the later of the following to occur: (i) all sums secured by the Mortgage are paid in full and Fannie Mae and, if applicable, the Trustee have released the lien of the Mortgages; or (ii) the Borrower shall have no further obligation to acquire a Subsequent Hedge, or a Subsequent Hedge no longer is required to be in effect, under the terms and conditions of the Reimbursement Agreement. Section 407. Investments. Moneys held as part of the General Receipts Fund (except as otherwise provided in Section 215 with respect to the Redemption Account), the Costs of Issuance Fund, the Principal Reserve Fund, the Cap Reserve Fund and the Rebate Fund shall be invested and reinvested in Permitted Investments; provided, that such investments shall have maturities equal to the lesser of six (6) months or the dates upon which such moneys will be needed; and provided further, that (i) amounts derived from the Credit Facility must be held uninvested and (ii)amounts on deposit in the Interest Account, the Redemption Account and the Fees Account of the General Receipts Fund shall be invested only in investments described in clauses(a), (b), (c), (f) and (h) of the definition of Permitted Investments. Moneys on deposit in the Bond Purchase Fund shall be held uninvested. Permitted Investments shall be held by or under the control of the Trustee. All interest accruing thereon and any income realized from Permitted Investments (except for Permitted Investments with respect to the Rebate Fund, the Costs of Issuance Fund, the Cap Reserve Fund and the Principal Reserve Fund which interest and income shall remain on deposit in such respective Funds) shall be deposited in the Interest Account of the General Receipts Fund as provided in Section 401 hereof. The Trustee is authorized to cause to be sold and reduced to cash a sufficient amount of Permitted Investments whenever the cash balance is or will be insufficient to make a requested or required disbursement. The Trustee shall not be accountable for any depreciation in the value of any Permitted Investment or for any loss resulting from such sale. The Trustee may trade with itself and its affiliates in the purchase and sale of securities for such investments. The Trustee and its affiliates may act as principal, agent, sponsor, advisor or depository with respect to any investments. All Permitted Investments shall be made by the Trustee in its name, as Trustee, at the written direction of the Borrower, subject to the limitations contained herein. If no direction is provided to the Trustee, the Trustee will invest such moneys in investments described in clause (h) of the definition of Permitted Investments, subject to the limitations contained herein (including, without limitation, the requirements contained in the provisos to the first sentence of this paragraph) For investment purposes only, the funds and accounts established hereunder may be commingled,but each shall be accounted for separately,. In computing the amount in any fund or account held by the Trustee under the provisions of this Indenture, Permitted Investments if purchased at par shall be valued at principal cost plus accrued interest, or, if purchased at other than par, at principal cost plus amortized discount or less amortized premium (amortization to be on a straight-line basis to the date of stated maturity without regard to redemptions or repayments of principal which may occur prior thereto) plus accrued interest, provided, however. (i) except as otherwise rovide in suberaph (ii) below, all investment of amounts deposited in any fund or account created by or pursuant to this Indenture, or otherwise containinegross proceeds of the Bonds (within the meaning of the Code) shall be acquired, disposed of and valued (as of the date that valuation is required by this Indenture or the Code) at Fair Market Value, and (ii) investments in funds and accounts (or portions thereof) that are subject to a yield restriction under applicable ovisions of the Code (unless valuation is undertaken annually) and amounts on deposit in any reserve fund created pursuant to this Indenture shall be valued at their presen value (within the meaning of the Code). 48 1 The Trustee shall take such actions as shall be necessary to assure that Permitted Investments purchased by it hereunder are held pursuant to the terms hereof and are subject to the trusts and security interests herein created. Section 408. General Tax Covenant. (a) The Issuer shall at all times do and perform all acts and things necessary or desirable in order to assure that interest paid on the Bonds shall, for the purposes of federal income taxation, be excluded from the gross income of the owners thereof pursuant to Section 103 of the Code, except in the event where such owner of the Bonds is a "substantial user" of the facilities refinanced with the Bonds or a "related person" within the meaning of the Code. (b) The Issuer shall not take any action which if taken, or fail to take any action which if not taken, would cause the Bonds to violate any of the restrictions contained in the Code which could affect the exclusion of the interest on the Bonds from the gross income of the owners thereof for purposes of federal income taxation pursuant to Section 103 of the Code. (c) The Issuer shall not use, or permit to be used, any proceeds of the Bonds or any other moneys of the Issuer, directly or indirectly, to acquire any securities, obligations or other investment property, the acquisition of which would cause any Bond to be an "arbitrage bond" as defined in Section 148(a) of the Code. (d) The Issuer agrees that it will require the Borrower, pursuant to the terms and provisions of the Tax Certificate, not to commit any act or not to make any use of the proceeds of the Bonds, or any other moneys which may be deemed to be proceeds of the Bonds pursuant to the Code, which would cause the Bonds to be "arbitrage bonds" within the meaning of the Code, and to comply with the requirements of the Code throughout the term of the Bonds. The Trustee covenants that should the Issuer file with the Trustee, or should the Trustee receive, an opinion of Bond Counsel to the effect that any proposed investment or other use of proceeds of the Bonds would cause the Bonds to become "arbitrage bonds," then the Trustee will comply with any written instructions of the Issuer or Bond Counsel regarding such investment or use so as to prevent the Bonds from becoming "arbitrage bonds," and the Trustee will bear no liability to the Borrower, the Bondholders or the Credit Facility Provider for investments made in accordance with such instructions. Section 409. Compliance with Tax Certificate; Rebate Fund. (a) The Issuer and the T4-a5t,., hereby agree,5 to comply with the requirements of the Tax Certificate, which is incorporated herein and made a part hereof as if fully set forth herein, and by its acceptance of this Indenture the Trustee acknowledges receipt of the Tax Certificate and acknowledges its incorporation herein by referenc-. and agrees to eemply with the r The Trustee shall be deemed to comply with sirequirements of the Tax Certificate relating to the Trustee and shall have no liability to the extent it follows the written directions of the Issuer or the Rebate Analyst. This covenant shall survive payment in full or defeasance of the Bonds. (b) There is hereby established and created with the Trustee a special fund designated as the "Rebate Fund" to be held and applied as provided in the Tax Certificate. Within thirty (30) days after the end of every fifth Bond Year (as defined in the Tax Certificate), and within fifty-five (55) days after the date on which no Bonds are outstanding, the Borrower ^r- the Tpa&t ^hall cause the Rebate Analyst to deliver to the Trustee and the Issuer a certificate 49 n stating whether any rebate payment is required to be made, as set forth in the Tax Certificate, and the Borrower shall deliver to the Trustee any amount so required to be paid. Section 410. Nonlresentment of Bonds. In the event any Bonds shall not be presented for payment when the principal thereof becomes due, either at maturity or at the date fixed for redemption thereof or otherwise, if amounts sufficient to pay such Bonds shall have been deposited with the Trustee for the benefit of the holder thereof and shall have remained unclaimed for two (2) years after such principal has become due and payable, such amounts shall, to the extent amounts are owed to the Credit Facility Provider, be paid to the Credit Facility Provider and, to the extent of any excess, to the Borrower; and all liability of the Issuer and the Trustee to the holder thereof for the payment of such Bond shall forthwith cease, determine and be completely discharged; provided, however, that the Trustee, before being required to make any such payment to the Credit Facility Provider or the Borrower, may cause to be published once in a financial newspaper or journal of general circulation in New York, New York, notice that such moneys remain unclaimed and that, after a date specified therein, which shall not be less than thirty (30) days from the date of such publication, any unclaimed balance of such moneys then remaining will be paid to the Credit Facility Provider or the Borrower. The cost of such publication shall be paid from the unclaimed amounts so held by the Trustee. The obligation of the Trustee under this Section to pay any such amounts to the Credit Facility Provider or the Borrower shall be subject to any provisions of law applicable to the Trustee or to such amounts providing other requirements for disposition of unclaimed property. Section 411. Records. The Trustee, with respect to the General Receipts Fund, including the Interest Account, the Fees Account, the Redemption Account, the Cap Account and the Credit Facility Account, the Principal Reserve Fund, the Costs of Issuance Fund, the Cap Reserve Fund and the Rebate Fund, and the Tender Agent with respect to the Bond Purchase Fund shall cause to be kept and maintained adequate records pertaining thereto and all disbursements therefrom. The Trustee and the Tender Agent, as applicable, shall file at least an annual accounting thereof with the Issuer, the Credit Facility Provider, the Servicer and the Borrower. Subject to reasonable notice, the Issuer, the Borrower, the Credit Facility Provider, the Servicer and their duly authorized agents shall have the right at all reasonable times to enter the offices of the Trustee to inspect and audit the books of the Trustee as they relate to the duties and trusts imposed under this Indenture, and the Issuer, the Borrower and the Credit Facility Provider and their duly authorized agents, at their expense, may make copies of any such records. No such statement need be rendered pursuant to the provisions hereof if no activity occurred in the fund or account during such preceding month. Any notices, reports or other information delivered by the Trustee to the Credit Facility Provider with respect to the Principal Reserve Fund or the Cap Account shall also be delivered to the Servicer. Section 412. Final Fund Balances. After payment in full of all principal of, premium, if any, and interest on the Bonds, or provision for the payment of the Bonds having been made pursuant to Article V, payment of all amounts due and owing to the Credit Facility Provider under the Credit Facility Agreement and the payment of all other amounts (including but not limited to the fees and expenses of the Trustee and the Issuer) owing hereunder and under the Financing Agreement, any amounts still remaining in the Funds and accounts hereunder shall be paid to the Borrower. Section 413. Sinking Fund. (a) Upon the request of the Issuer, at the direction of the Borrower and with the prior written consent of the Credit Facility Provider, if the Bonds are in the Fixed Rate Period,and a Sinking Fund Schedule has been created pursuant to Section 205(d) of this Indenture, the Trustee shall deposit all Sinking Fund Payments into the Redemption 50 Account, and shall, hold invest and disburse all funds received by it for deposit as Sinking Fund Payments. Any moneys accumulated in the Redemption Account up to the unsatisfied balance of each Sinking Fund Payment (together with amounts accumulated in the Redemption Account with respect to interest on the Bonds for which such Sinking Fund Payment was established) shall, if so directed in writing by the Issuer, at the direction of the Borrower and with the prior written consent of the Credit Facility Provider, be applied by the Trustee on or prior to the forty-fifth day preceding such Sinking Fund Payment (i) to the purchase of Bonds of the maturity for which such Sinking Fund Payment was established at prices (including any brokerage and other charges) not exceeding the Redemption Price for such Bonds when such Bonds are redeemable by application of such Sinking Fund Payment plus unpaid interest accrued to the date of purchase, such purchases to be made in such manner as the Trustee (after consultation with the Issuer, Borrower and the Credit Facility Provider) shall determine, provided that no notice of redemption has been sent to the Bondholders on or prior to such forty-fifth day preceding the Sinking Fund Payment, or (ii) to the redemption of such Bonds, if then redeemable by their terms,at the Redemption Prices referred to above. (b) Upon the purchase or redemption of any Bond pursuant to subsection (a) of this Section,an amount equal to the principal amount of the Bonds so purchased or redeemed shall be credited toward the next Sinking Fund Payment thereafter to become due with respect to the Bonds of such maturity and the amount of any excess of the amounts so credited over the amount of such Sinking Fund Payment shall be credited by the Trustee against future Sinking Fund Payments in direct chronological order, unless otherwise instructed in writing by an Authorized Officer of the Issuer, at the direction of the Borrower, with the consent of the Credit Facility Provider, at the time of such purchase or redemption. Any such instructions shall be given in such manner as, in the best judgment of the Issuer, in consultation with the Credit Facility Provider, shall provide for the payment of the Sinking Fund Payments thereafter to become due from the remaining Redemption Account amounts to be derived in connection with the Mortgage Loan and any other amounts expected to be available for such payments after considering the amounts payable pursuant to the Mortgage Loan at such time. The portion of any Sinking Fund Payment remaining after the crediting thereto of any such amounts and of any amounts to be credited thereto as provided in Section 401 (or the original amount of any such Sinking Fund Payment if no such amounts shall have been credited toward the same) shall constitute the unsatisfied balance of such Sinking Fund Payment for the purpose of calculating Sinking Fund Payments due on a future date. In the event the Trustee is able to purchase Bonds at a price less than the Redemption Price at which such Bonds were to be redeemed, then, presuming no notice of redemption has been sent to Bondholders, after payment by the Trustee of the purchase price of such Bonds and after payment of any other amounts due on the due date of such Sinking Fund Payment, the Trustee shall pay an amount not greater than the difference between the amount of such purchase price and the amount of such Redemption Price to,or at the direction of,the Issuer. (c) As soon as practicable after the forty-fifth day preceding the due date of any such Sinking Fund Payment, and otherwise as provided in Section 215, the Trustee shall proceed to call for redemption pursuant to Section 214 hereof, on such due date, Bonds in such amount as shall be necessary to complete the retirement of a principal amount of Bonds equal to the unsatisfied balance of such Sinking Fund Payment. The Trustee shall so can such Bonds for redemption whether or not it then has moneys in the Redemption Account sufficient to pay the applicable Redemption Price thereof on the Redemption Date. The Trustee shall pay the amount required for the redemption of the Bonds so called for redemption from the Funds specified in Article IV hereof, in the order of priority indicated, and such amount shall be applied by the Trustee to such redemption. 51 ARTICLE V DISCHARGE OF LIEN Section 501. Discharge of Lien and Security Interest. Upon payment in full of the Bonds or deemed payment in full in accordance with Section 502 hereof, and receipt by the Trustee of a written statement from the Credit Facility Provider stating that all obligations due and owing to the Credit Facility Provider under the Credit Facility Agreement and the Financing Agreement have been paid, fully satisfied, and discharged, the Trustee, upon receipt of an Opinion of Counsel stating that all conditions precedent to the satisfaction and discharge of this Indenture have been complied with, shall (a) cancel and discharge this Indenture and the pledge and assignment hereunder, (b) execute and deliver to the Issuer such instruments in writing prepared by the Issuer or its counsel and provided to the Trustee and the Credit Facility Provider as shall be required to cancel and discharge this Indenture and the pledge and assignment hereunder and (c) reconvey, assign and deliver to the Issuer so much of the Security as may be in its possession or subject to its control, except for (1) the Credit Facility which shall be delivered to the Credit Facility Provider, (2) Available Monies and Government Obligations held in the General Receipts Fund for the purpose of paying Bonds, and (3) moneys and Permitted Investments held in the Rebate Fund pursuant to the Tax Certificate for payment to the United States Government and (4) amounts required to be paid pursuant to Section 503 hereof; provided, however, that in the event that the obligations to the Credit Facility Provider pursuant to the Credit Facility Agreement and the Financing Agreement have not been fully satisfied, paid and discharged at the time this Indenture is to be discharged as confirmed in writing by the Credit Facility Provider to the Trustee, this Indenture may be discharged only if the Trustee shall assign and deliver such amount of the Security to the Credit Facility Provider as is necessary to fully satisfy, pay and discharge all obligations owed to the Credit Facility Provider under the Credit Facility Agreement and the Financing Agreement, as determined by the Credit Facility Provider in its sole and absolute discretion, subject to and effective upon the cancellation and discharge of this Indenture in accordance with the foregoing provisions; and provided, further, that the Trustee agrees to take all action necessary, as promptly as possible after the payment in full of all the Bonds and satisfaction, payment and discharge of all amounts due the Credit Facility Provider (as determined by the Credit Facility Provider in its sole and absolute discretion) under the Credit Facility Agreement and the Financing Agreement (which amounts have not been paid to the Credit Facility Provider), to forgive or cause to be forgiven the outstanding balance of the Mortgage Loan upon receipt of the written consent of the Credit Facility Provider. Notwithstanding the foregoing, the cancellation and discharge of this Indenture shall not (i) reconvey the Security to the Borrower to the extent amounts are owed to the Issuer or the Trustee, the Tender Agent or the Remarketing Agent, or (ii) terminate the powers and rights granted to the Trustee with respect to the payment, transfer and exchange of the Bonds; and provided further that the Reserved Rights of the Issuer shall survive discharge of this Indenture. Notwithstanding anything contained in this Indenture to the contrary, so long as the Credit Facility Provider is obligated under the Credit Facility, and has not defaulted in its obligations thereunder the Trustee shall not transfer the Mortgage Note, the Mortgage or the other Mortgage Loan Documents or any interest in the Mortgage Note, the Mortgage or the other Mortgage Loan Documents or release the Mortgage Loan from the lien of this Indenture without the Credit Facility Provider's prior written consent. 52 Section 502. Provision for Payment of Bonds. During any Weekly Variable Rate Period, Reset Period or Fixed Rate Period, Bonds shall be deemed to have been paid within the meaning of Section 501 hereof if: (a) there shall have been irrevocably deposited with the Trustee either: (i) sufficient Available Moneys (except those described in clause (a) of the definition of such term),or (ii) Government Obligations, which are not subject to early redemption and which are purchased with Available Moneys (except those described in clause (a) of the definition of such term), of such maturities and interest payment dates and bearing such interest as will, without further investment or reinvestment of either the principal amount thereof or the interest earnings thereon (said earnings to be held in trust also), be sufficient, together with any moneys referred to in subsection (i) above, as verified by a written report of an independent certified public accountant, for the payment on their respective maturity dates, or redemption dates prior to maturity, of the principal of such Bonds and redemption premium, if any, and interest to accrue thereon to such maturity or redemption dates; provided, however, that the Trustee shall have received at the expense of Borrower (1) an opinion from bankruptcy counsel as and if required under the definition of "Available Moneys"; and (2) an opinion of Bond Counsel to the effect that such deposit with the Trustee and consequent defeasance of the Bonds does not adversely effect the exclusion of the interest on the Bonds from gross income for federal income tax purposes and conforms with the requirements of this Indenture and provided, further, that in the event the Bonds are in the Weekly Variable Rate Mode, Available Moneys irrevocably deposited with the Trustee as provided above shall be sufficient for payment of the aggregate principal amount of the Bonds Outstanding, together with accrued interest thereon computed at the current Weekly Variable Rate for the number of days remaining to and including the next Rate Determination Date and thereafter at the Maximum Rate, to their respective maturity dates or redemption dates prior to maturity; such Available Moneys shall remain uninvested and any Bonds tendered following such deposit shall not be remarketed and the purchase price thereof shall be paid from such deposit; (b) there shall have been paid all fees and expenses of the Trustee due or to become due or there shall be irrevocably deposited with the Trustee sufficient additional moneys to make said payments;and (c) for any such Bonds to be redeemed on any date prior to their maturity, the Trustee shall have received in form satisfactory to it irrevocable instructions to redeem such Bonds on a date on which the Bonds are subject to redemption, and either evidence satisfactory to the Trustee that all redemption notices required by this Indenture have been given or irrevocable power authorizing the Trustee to give such redemption notices The Trustee shall redeem the Bonds specified by such irrevocable instructions on the date specified by such irrevocable instructions. Notwithstanding anything contained in Section 215 to the contrary, in the event a provision for payment on the Bonds is made pursuant to this Section 502 in connection with any redemption of Bonds pursuant to Section 214(a) hereof during any Weekly Variable Rate Period, the Trustee shall give notice of the redemption to the Bondholders ten (10) days prior to the date fixed for such redemption. 53 Limitations elsewhere specified herein regarding the investment of moneys held by the Trustee, other than with respect to the Tax Certificate, shall not be construed to prevent the .depositing and holding of the obligations described in the preceding subparagraph (a)(ii) for the purpose of providing for the defeasance of the lien of this Indenture as to Bonds which have not yet become due and payable. All income from all Government Obligations in the hands of the Trustee pursuant to this Section 502 which has been identified by an independent certified public accountant as not required for the payment of the Bonds and interest thereon with respect to which such moneys shall have been so deposited shall be deposited with the Trustee as and when realized and collected for use and application as are other moneys deposited with the Trustee. Section 503. Discharge of this Indenture. Notwithstanding the fact that the lien of this Indenture upon the Security may have been discharged and cancelled in accordance with Section 501, this Indenture and the rights granted and duties imposed hereby, to the extent not inconsistent with the fact that the lien upon the Security may have been discharged and cancelled, shall nevertheless continue and subsist after payment in full of the Bonds until the Trustee shall, subject to the rebate requirements of the Tax Certificate, have returned to the Borrower, the Credit Facility Provider or the Issuer, as appropriate, all amounts, if any, held by the Trustee in the General Receipts Fund, the Cap Reserve Fund and the Principal Reserve Fund and shall disburse any amounts remaining in the Funds and accounts hereunder in accordance with Section 412 hereof. 54 ARTICLE VI DEFAULT PROVISIONS AND REMEDIES Section 601. Events of Default. Any one of the following shall constitute an Event of Default hereunder: (a) default in the payment of any interest due on any Bond (other than Purchased Bonds) on any Interest Payment Date or any other date when and as the same shall have become due; (b) default in the payment of (i) the principal of any Bond (other than Purchased Bonds) when and as the same shall become due, whether at the stated maturity thereof or upon any redemption of the Bonds, or (ii) the purchase price of any Bond in the event of the tender of such Bond (other than Purchased Bonds); (c) default in the observance or performance of any other of the covenants, agreements or conditions on the part of the Issuer included in this Indenture or in the Bonds (other than an Event of Default set forth in paragraph (a) or (b) above) and the continuance thereof for a period of thirty (30) days after receipt of written notice to the Issuer, the Credit Facility Provider and the Borrower given by the Trustee; provided that the Credit Facility Provider shall have consented in writing to the same constituting an Event of Default; (d) written notice from the Credit Facility Provider of an Event of Default by the Borrower under the Reimbursement Agreement; (e) an Act of Bankruptcy; provided that the Credit Facility Provider shall have consented in writing to the same constituting an Event of Default; or (f) failure by the Credit Facility Provider to perform its payment obligations under the Credit Facility. Upon the occurrence of any Event of Default, the Trustee shall immediately give written notice of the Event of Default, describing the paragraph in this Section 601 under which the Event of Default has occurred, to the Credit Facility Provider,the Servicer,the Borrower and the Issuer. Section 602. Acceleration. (a) Upon the occurrence of any Event of Default described in Section 601(a), (b), (c), (d) or (e) hereof, the Trustee may, upon receiving prior written consent of the Credit Facility Provider,and shall,upon the written direction of the Credit Facility Provider;or (b) upon the occurrence of an Event of Default described in Section 601(f) hereof,the Trustee may and shall, upon the written direction of owners of 51% or more of Outstanding Bonds, by written notice to the Issuer, the Borrower, the Credit Facility Provider and the Servicer declare the principal of all Bonds then Outstanding (if not then due and payable) and the interest accrued to be due and payable immediately, and, upon declaration of acceleration, such principal and interest shall become and be immediately due and payable. Upon any declaration of acceleration hereunder, the Trustee shall immediately (i) give notice to the Credit 55 Facility Provider and demand payment under the Credit Facility pursuant to Section 701(a)(ii) hereof, or, if the Collateral Agreement is then in effect as the Credit Facility, give notice in accordance with Section 3.8(2)(2) of the Collateral Agreement activating Fannie Mae's obligation to redeem Pledged Collateral pursuant to Section 3.8(2)(2) of the Collateral Agreement, (ii) exercise such rights as it may have under the Mortgage Note to declare all payments thereunder to be immediately due and payable, and (iii) notify the Bondholders of the declaration of acceleration, that the Trustee holds moneys for the payment of the Bonds, that interest on the Bonds will cease to accrue upon such declaration, and that payment of such Bonds will be made upon presentment thereof at the Principal Office of the Trustees such notice shall be sent by registered mail, overnight delivery service or other secure means, postage prepaid,or,at the Trustee's option,may be given by telephone or Electronic Means. If at any time after a declaration of acceleration, and before the payment of any money due to the Bondholders, the Borrower shall pay to or deposit with the Trustee a sum sufficient to pay all principal of the Bonds then due (other than solely by reason of such declaration) and all unpaid installments of interest (if any) upon all the Bonds then due, with interest at the rate borne by the Bonds on such overdue principal and (to the extent legally enforceable) on such overdue installments of interest, and the reasonable expenses of the Trustee shall have been made good or cured or adequate provision shall have been made therefor, and all other defaults hereunder shall have been cured or waived in writing by holders of a majority in aggregate principal amount of the Bonds then Outstanding, then and in every case, the Trustee on behalf of the Bondholders of all the Bonds then Outstanding shall, but only with the prior written consent or at the written direction of the Credit Facility Provider, rescind and annul such declaration and its consequences; but no such rescission and annulment shall extend to or shall affect any subsequent default, nor shall it impair or exhaust any right or power consequent thereon. Section 603. Other Remedies; Rights of Bondholders. Upon the occurrence and continuance of an Event of Default, the Trustee may, with or without taking action under Section 602 hereof,but only with the prior written consent of the Credit Facility Provider, and shall, at the direction of the Credit Facility Provider if the Event of Default occurs under Section 601(c), (d) or (e) hereof, pursue any available remedy to enforce the performance of or compliance with any other obligation or requirement of this Indenture, the Financing Agreement,the Mortgage Loan Documents or the Credit Facility. Subject to the provisions of Sections 604(b) and 606 and the requirement, if any, that the Credit Facility Provider consent in writing to the exercise by the Trustee of any such available remedy, upon the occurrence and continuance of an Event of Default and provided that the Trustee is indemnified as provided in Section 801(i) hereof, the Trustee shall exercise such of the rights and powers conferred by this Section and by Section 602 hereof as the Trustee, being advised by counsel, shall deem most effective to enforce and protect the interests of the Bondholders and, unless an Event of Default under Section 601(f) has occurred, the Credit Facility Provider. No delay or omission to exercise any right or power accruing upon any Event of Default shall impair any such right or power or shall be construed to be a waiver of any such Event of Default or acquiescence therein, and every such right and power may be exercised from time to time and as often as may be deemed expedient. No waiver of any Event of Default, whether by the Trustee or by the Bondholders, shall extend to or shall affect any subsequent Event of Default or shall impair any rights or remedies consequent thereon. 56 The Trustee, as assignee of all right, title and interest of the Issuer in and to the Financing Agreement, shall be empowered to enforce each and every right (except for the Reserved Rights) granted to the Issuer under the Financing Agreement, which enforcement shall be limited as provided therein, and particularly but without limitation as provided in Section 11.2(d) thereof. Section 604. Right of Bondholders and the Credit Facility Provider to Direct Proceedings. (a) The holders of at least a majority in aggregate principal amount of Bonds Outstanding shall, with the written consent of the Credit Facility Provider, and the Credit Facility Provider shall, have the right at any time, by an instrument or instruments in writing executed and delivered to the Trustee, to direct the method and place of conducting all proceedings to be taken in connection with the enforcement of the terms and conditions of this Indenture or any other proceedings hereunder; provided that such direction shall not be otherwise than in accordance with the provisions of law and of this Indenture, and provided that the Trustee shall be indemnified to its satisfaction (except for actions required under Section 602 hereof). No Bondholder shall have the right to institute any proceeding for the enforcement of this Indenture upon an Event of Default unless (i) such Event of Default is an Event of Default described in W of Section 601, (ii) such Bondholder has given the Trustee, the Issuer, the Credit Facility Provider and the Borrower written notice of the Event of Default, (iii) the holders of a majority in aggregate principal amount of the Bonds Outstanding shall have requested the Trustee in writing to institute such proceeding, (iv) the Trustee shall have been afforded a reasonable opportunity to exercise its powers or to institute such proceeding, and there shall have been offered to the Trustee indemnity, where required, and (v) the Trustee shall have thereafter failed or refused to exercise such powers or to institute such proceeding within a reasonable time. Nothing in this Indenture shall affect or impair any right of enforcement conferred on any Bondholder by the Act or other laws of the State to enforce (1)the payment of the principal of and interest on Bonds at and after the maturity thereof, or (2) the obligation of the Issuer to pay the principal of and interest on the Bonds to such Bondholder at the time and place, from the source and in the manner as provided in this Indenture. No Bondholder shall individually have the right to seek to enforce, collect amounts available under, or otherwise realize on, the Credit Facility. (b) Notwithstanding any other provision of the Indenture to the contrary, so long as the Credit Facility is in effect and the Credit Facility Provider is not in default of its payment obligations thereunder, neither the Issuer, the Trustee nor any person under their control shall, without the prior written consent of the Credit Facility Provider, exercise any remedies or direct any proceedings under the Bond Documents or the Mortgage Loan Documents, other than to (i) enforce rights under the Credit Facility, GO enforce the tax covenants in this Indenture and the Financing Agreement, or (iii) enforce rights of specific performance under the Regulatory Agreement; provided, however, that any enforcement under (ii) or (iii) above shall not include seeking monetary damages. Section 605. Discontinuance of Default Proceedings. Prior to a demand for payment under the Credit Facility pursuant to Section 602 hereof, in case the Trustee shall have proceeded to enforce any right under this Indenture by the appointment of a receiver or 57 f otherwise, and such proceedings shall have been discontinued or abandoned for any reason, or shall have been determined adversely, then and in every such case the Issuer, the Credit Facility Provider and the Trustee shall be restored to their former positions and rights hereunder, and all rights, remedies, powers, duties and obligations of the Issuer, the Trustee and the Credit Facility Provider shall continue as if no such proceedings had been taken, subject to the limits of any adverse determination. Section 606. Waiver. To the extent not precluded by law, Section 11.3 of the Financing Agreement or Section 602 hereof, the Trustee,upon notice to and with the prior written consent of the Credit Facility Provider, may waive any Event of Default, except for an Event of Default under Section 601(a) or (b) hereof, and its consequences, and rescind any declaration of acceleration of maturity of principal and shall do so upon the written request of the Credit Facility Provider; provided, however, that there shall be no such waiver or rescission unless the principal and interest on the Bonds in arrears, together with interest thereon (to the extent permitted by law) at the applicable rate or rates of interest borne by the Bonds shall have been paid or provided for by the Borrower in Available Moneys or by the Credit Facility Provider and all fees and expenses of the Trustee shall have been paid or provided for by the Borrower or the Credit Facility Provider. Unless (a) any Rating Agency then rating the Bonds is notified, (b) Bondholders are advised by the Trustee that ratings on the Bonds may be reduced or withdrawn upon the occurrence of such waiver, and (c) one hundred percent (100%) of the Bondholders otherwise approve, the Trustee may not waive any Event of Default hereunder unless the Credit Facility remains fully in effect in an amount equal to the aggregate principal amount of the Bonds Outstanding(other than Purchased Bonds) plus the Interest Requirement. Section 607. Application of Moneys. Amounts derived from payments under the Credit Facility shall be deposited in the Credit Facility Account and applied solely to pay the principal of and interest on the Bonds and shall not be applied to pay any fees or expenses or advances of the Trustee or the Issuer. All other moneys received by the Trustee pursuant to any action taken under this Article VI shall be deposited into the Interest Account of the General Receipts Fund and the Principal Reserve Fund, as applicable, and applied to the payment of the unpaid fees and expenses of the Trustee, including expenses incurred in taking such action. The balance of such moneys, less such amounts as the Trustee shall determine may be needed for possible use in paying future fees and expenses and for the preservation and management of the Project,shall be applied as follows: (a) Unless the principal on all Bonds shall have become or been declared due and payable,all such moneys shall be applied: First — To the payment of amounts, if any, payable to the United States pursuant to the Tax Certificate; Second — To the payment of all installments of interest then due on the Bonds and, if the amount available shall not be sufficient to pay in full any particular installment,then to the ratable payment of the amounts due on such installment; Third — To the payment of the unpaid principal of any of the Bonds which shall have become due (other than Bonds called for redemption for payment of which moneys are held pursuant to the provisions of this Indenture), with interest on such Bonds from the respective dates upon which they became due (at the rate or rates borne by the Bonds, to the extent permitted by law) and, if the amount available shall not be sufficient to pay in full Bonds due on any particular date, together with such interest, then to the ratable payment of the amounts due on such date;and 58 Fourth — To the payment of amounts owed to the Credit Facility Provider under the Credit Facility Agreement and the Financing Agreement, including amounts to reimburse the Credit Facility Provider to the extent it has made payments under the Credit Facility. (b) If the principal of all the Bonds shall have become or been declared due and payable,all such moneys shall be applied first to the payment of amounts, if any, payable to the United States pursuant to the Tax Certificate; second to the payment of the principal and interest then due and unpaid upon the Bonds, without preference or priority of principal over interest or of interest over principal, or of any installment of interest over any other installment of interest, or of any Bond over any other Bond, ratably according to the amounts due respectively for principal and interest to the persons entitled thereto,until all such principal and interest has been paid; third to pay the Credit Facility Provider amounts owed to it under the Credit Facility Agreement and the Financing Agreement, including reimbursement to the extent it has made payments under,the Credit Facility;and fourth to the Borrower. (c) If the principal of all the Bonds shall have been declared due and payable, and if such declaration shall thereafter have been rescinded under this Article, then, in the event that the principal of all the Bonds shall later become or be declared due and payable, the moneys shall be applied in accordance with paragraph (b) of this Section. Whenever moneys are to be applied pursuant to this Section 607, such moneys shall be applied at such times, and from time to time, as the Trustee shall determine, having due regard for the amount of such moneys available for application, the likelihood of additional moneys becoming available for such application in the future, and potential expenses relating to the exercise of any remedy or right conferred on the Trustee by this Indenture. Whenever the Trustee shall apply such moneys, it shall fix the date (which shall be an Interest Payment Date unless it shall deem a different date more suitable)upon which such application is to be made. Section 608. Preservation of Security and Remedies if Payment Under Credit Facility is Not Made or is Insufficient; Rights of Bondholders. Subject always to the provisions of Sections 603 and 701 hereof,upon the occurrence and during the continuance of an Event of Default, the Trustee may, upon failure of the Credit Facility Provider to make payment under the Credit Facility, proceed to pursue any available remedy to enforce the payment of the principal of and interest on the Bonds Outstanding, including, without limitation, mandamus; provided that, upon the occurrence and during the continuance of any Event of Default, then and in every case the Trustee may proceed, and upon the written request of the holders of not less than twenty- five percent (25%) of the aggregate principal amount of the Bonds Outstanding and the receipt of indemnity satisfactory to the Trustee shall proceed, to protect and enforce its rights and the rights of the Bondholders under the Act and under this Indenture forthwith by such suits, actions or special proceedings in equity or at law, or by proceedings in the office of any board or officer having jurisdiction, whether for the specific performance of any covenant or agreement contained in this Indenture or the Financing Agreement, or in aid of the execution of any power granted herein, or in the Financing Agreement or by the Act, or for the enforcement of any legal or equitable right or remedy,as the Trustee,being advised by counsel, shall deem most effective to protect and enforce such rights or to perform any of its duties under this Indenture. Subject always to the provisions of Sections 603, 604(b) and 701 hereof, no remedy by the terms of this Indenture conferred upon or reserved to the Trustee (or the Bondholders) is intended to be exclusive of any other remedy, but each and every such remedy shall be 59 cumulative and shall be in addition to every other remedy given to the Trustee or to the Bondholders hereunder or now or hereafter existing by law. Upon the occurrence and during the continuance of an Event of Default, and upon the filing of a suit or other commencement of judicial proceedings to enforce the rights of the Trustee and of the Bondholders, the Trustee shall be entitled,as a matter of right, (in addition to any other rights available to it under the other Bond Documents or Mortgage Loan Documents) to the appointment of a receiver or receivers of the purchase payments derived from the sale of the Project, together with such other powers as the court making such appointments shall confer. Section 609. Non-Default and Prohibition of Mandatory Redemption Upon Event of Taxability. The occurrence of any event (a "Tax Event") which results in the interest payable on the Bonds being includable, for federal income tax purposes, in the gross income of the owners of the Bonds, including, without limitation, any violation of any provision of the Regulatory Agreement or any of the Bond Documents, shall not constitute a default under the Mortgage Loan Documents or permit or require acceleration of the Mortgage Loan or the acceleration of, or a mandatory redemption of, the Bonds, or give rise to the payment to the owners of the Bonds of any amount denoted as "supplemental interest," "additional interest," "penalty interest," "liquidated damages" or otherwise, in addition to the amounts payable to the owners of the Bonds prior to the occurrence of the Tax Event; unless the Credit Facility Provider, in its sole and absolute discretion, provides written notice to the Trustee that such Tax Event constitutes a default under the Mortgage Loan and, by cross default, a default under the Financing Agreement and in that event such Tax Event shall give rise to a mandatory redemption or'mandatory tender of the Bonds as directed by the Credit Facility Provider under this Indenture. 60 ARTICLE VII CREDIT FACILITY;ALTERNATE CREDIT FACILITY Section 701. Payment Under the Credit Facility. (a) The Trustee shall request payment under the Credit Facility for the benefit of the Bondholders, in accordance with its terms (or take such other steps as shall be necessary to realize amounts thereunder) and to the extent permitted thereby, to receive moneys from the Credit Facility Provider on each Interest Payment Date, mandatory redemption date, date of acceleration of the Bonds and Maturity Date in the amounts and for the purposes specified in subparagraphs (i) and (ii) below, provided that with respect to the Collateral Agreement, the Trustee shall, if it shall not have received a Required Mortgage Payment (as defined in the Collateral Agreement) by the time specified in the Collateral Agreement, in lieu of the foregoing, give notice to the Credit Facility Provider pursuant to Section 3.7(1) of the Collateral Agreement that the Borrower has failed to make a Required Mortgage Payment. The Trustee shall cause such amounts to be applied to the purpose for which they were requested when due on each of the events described below: (i) On each Interest Payment Date, for the payment of interest, in an amount calculated by the Trustee in the manner set forth in Section 3.70)(2) of the Collateral Agreement. (ii) On each mandatory redemption date pursuant to Section 214(b)(i) or Section 214(b)(iv) hereof, or on each mandatory tender date in accordance with Section 1002(b) hereof, or date of acceleration of the Bonds (other than Purchased Bonds), or the Maturity Date for the payment of principal and interest on the Bonds to be redeemed or paid (other than Purchased Bonds), in an amount calculated by the Trustee to be equal to the principal of and interest on the Bonds (other than Purchased Bonds) to be redeemed or all Bonds (other than Purchased Bonds) in the event of an acceleration or mandatory tender, less any amounts on deposit in the Interest Account (other than the Interest Reserve Requirement, unless all Bonds are being paid in the event of an acceleration or redemption), and the Redemption Account and, upon the written direction of the Credit Facility Provider, the Principal Reserve Fund, and available to pay principal of and interest on the Bonds; provided that in the event of a mandatory redemption of the Bonds any such redemption and demand for payment shall occur prior to the fifth day next preceding the expiration of the Credit Facility. (b) The Trustee shall request payment under the Credit Facility for the benefit of the Bondholders in accordance with its terms (or take such other steps as shall be necessary to realize amounts thereunder) and to the extent permitted thereby, to receive moneys from the Credit Facility Provider on each Mandatory Tender Date, and on each purchase date in the amounts and for the purposes specified in subparagraphs (i) and (ii) below; provided, that with respect to the Collateral Agreement,in lieu of the foregoing, the Trustee shall give the notices to Fannie Mae required by Section 3.9 of the Collateral Agreement at such time as required in order to obligate Fannie Mae to redeem Pledged Collateral at the Purchase Price (as such terms are defined in the Collateral Agreement). The Trustee shall cause such amounts to be deposited to the Bond Purchase Fund and applied to the purpose for which they were requested when due on each of the following dates: (i) On each Mandatory Tender Date, for the payment of the principal of and accrued interest on the Bonds (other than Purchased Bonds) which have been tendered 61 and not remarketed by the Remarketing Agent, in an amount calculated by the Trustee to be equal to the principal of and accrued interest on all such Bonds less, if the written direction of the Credit Facility Provider to use such funds has been received by the Trustee,any amounts on deposit in the Principal Reserve Fund. (ii) On any date on which Weekly Variable Rate Bonds are subject to purchase on demand by any Bondholder pursuant to Section 1001 hereof, in an amount equal to the principal of and interest due on the Bonds so tendered which have not been remarketed by the Remarketing Agent less, if the written direction of the Credit Facility Provider to use such funds has been received by the Trustee, any amounts on deposit in the Principal Reserve Fund. (c) In the event of a bankruptcy filing by or against the Borrower of which a Responsible Officer has actual notice, the Trustee shall request payment under the Credit Facility in accordance with its terms. In addition, if the Trustee is prevented from paying any amount due to the Bondholders as a result of the automatic stay imposed by a bankruptcy court under Section 362 of the Bankruptcy Code in a proceeding against the Borrower or any other person making a payment under the Mortgage Note or, a deposit to the Principal Reserve Fund from a source other than the Credit Facility or Available Moneys held by the Trustee under this Indenture, the Trustee shall request payment under the Credit Facility in an amount equal to the amount due and unpaid. (d) All moneys derived from the Credit Facility pursuant to paragraphs (a) and (c) above shall be deposited in the Credit Facility Account of the General Receipts Fund pending their application by the Trustee. All moneys derived from the Credit Facility pursuant to paragraph (b)above shall be deposited in the Bond Purchase Fund. (e) In the event that the Trustee shall have received any payment from the Credit Facility Provider under or pursuant to the Credit Facility, and thereafter amounts shall be received by the Trustee from the Borrower,the Remarketing Agent or other sources, which later received amounts were in payment of amounts satisfied by the payment under or pursuant to the Credit Facility, then such later received amounts shall be promptly reimbursed by the Trustee to the Credit Facility Provider to the extent of the amount so paid by the Credit Facility Provider. W The Trustee shall hold the Credit Facility and shall in its name enforce all rights of the Trustee and all obligations of the Credit Facility Provider under the Credit Facility for the benefit of the Bondholders. (g) The Trustee and Issuer shall promptly notify the Credit Facility Provider of either of the following as to which it has actual knowledge: (i) an Act of Bankruptcy or a bankruptcy filing by or against the Borrower and (ii) the making of any claim in connection with seeking the avoidance as a preferential transfer (a "Preference Claim") of any payment of principal of,or interest on,the Bonds. Each Bondholder,by its purchase of Bonds, the Trustee and the Issuer hereby agree that the Credit Facility Provider may at any time during the continuation of an insolvency proceeding of the Issuer or Borrower (an "Insolvency Proceeding") direct all matters relating to such Bonds in any such Insolvency Proceeding, including, without limitation, (i) all matters relating to any Preference Claim or to the lifting of the automatic stay, (ii) the direction of any appeal of any order relating to any Preference Claim or to the lifting of the automatic stay and (iii) the posting of any surety, supersedeas or performance bond pending any such appeal. 62 K , Fannie Mae shall have the right to contest, directly or indirectly, e.g. through the Trustee, any Preference Claim or the imposition of the automatic stay. The Trustee agrees to promptly notify the Credit Facility Provider of any demand for recovery of a payment. The Trustee further agrees to contest any attempted recovery or stay or to seek to lift or modify the automatic stay at the written direction of the Credit Facility Provider, as well as to cease such actions or settle any claim or contest in accordance with written instructions from the Credit Facility Provider, provided that the Trustee is indemnified by the Credit Facility Provider for all expenses to which it may be put and against any liability, except liability which is adjudicated to have resulted from its own negligence or willful misconduct, by reason of any action so taken, provided further that such indemnification shall not be required if the Trustee fails to timely notify the Credit Facility Provider, as required by the preceding sentence, and such failure is prejudicial to the Credit Facility Provider. In addition, and without limitation of the foregoing, the Credit Facility Provider shall be subrogated to the rights of the Issuer, the Trustee and the Bondholders in any Insolvency Proceeding to the extent it has performed its payment obligations under the Credit Facility,including, without limitation, any rights of any party to an adversary proceeding action with respect to any court order issued in connection with any such Insolvency Proceeding and rights pertaining to the filing of a proof of claim, voting on a reorganization plan and rights to payment thereunder. Section 702. Transfer of Credit Facility; Extension. The Trustee shall not assign or transfer the Credit Facility except to any successor Trustee under this Indenture. If at any time during the term of the Credit Facility, a successor Trustee shall be appointed and qualified under this Indenture and the Credit Facility is not assignable or transferable to the successor Trustee, the resigning Trustee shall request that the Credit Facility Provider enter into a new Credit Facility, substantially identical to the prior Credit Facility, with the successor Trustee for the benefit of the holders of the Bonds, and the resigning Trustee shall continue to serve as Trustee hereunder until such time as the new Credit Facility is delivered to the successor Trustee. If the resigning Trustee fails to make this request, the successor Trustee shall do so before accepting its appointment. Upon issuance of the new Credit Facility to the successor Trustee, the Credit Facility shall be returned to the Credit Facility Provider and cancelled, and the new Credit Facility shall thereafter be subject to all of the provisions hereof relating to the prior Credit Facility,and shall be deemed for all purposes hereof to be the Credit Facility. In the event the term of any Alternate Credit Facility is extended, the Trustee must receive, not later than the Extension Date, (a) the commitment relating to such extension of the Alternate Credit Facility; and (b) an Opinion of Counsel for the Alternate Credit Facility Provider, in substantially the form of the Opinion of Counsel delivered to the Trustee upon the issuance of such Alternate Credit Facility. Upon request of any holder of the Bonds, the Trustee shall promptly furnish such holder with a copy of any commitment to extend or extension of the Credit Facility received by the Trustee. Upon the failure of the Borrower to furnish the Trustee with either a satisfactory commitment to extend the Alternate Credit Facility or an Alternate Credit Facility pursuant to Section 703 hereof and the accompanying Opinion of Counsel on or prior to each Extension Date hereunder, the Bonds shall be subject to mandatory purchase as described in Section 1002 of this Indenture. Section 703. Alternate Credit Facility. The Trustee shall accept any Alternate Credit Facility delivered to the Trustee in accordance with the provisions of Section 3.4 of the Financing Agreement, in substitution for the Credit Facility then in effect, subject to the terms of the Credit Facility Agreement. Not later than the tenth day next preceding any Substitution Date the Trustee shall give notice to each Bondholder of the substitution of such Alternate Credit Facility for the Credit Facility then in effect and that on the Substitution Date the Bonds shall be subject to mandatory purchase as provided in Section 1002 of this Indenture. 63 t Section 704. Rights of the Credit Facility Provider. Notwithstanding anything contained herein to the contrary, all provisions hereof regarding consents, approvals, directions, waivers, appointments, requests or other actions by the Credit Facility Provider shall be deemed not to require or permit such consents, approvals, directions, waivers, appointments, requests or other actions and shall be read as if the Credit Facility Provider were not mentioned therein (a) during any period during which there is a payment default under the Credit Facility, or (b) after the Credit Facility shall be declared to be null and void by final judgment of a court of competent jurisdiction; ,provided, however, that the payment of amounts due to the Credit Facility Provider pursuant to the terms hereof shall continue in full force and effect. The foregoing shall not affect any other rights of the Credit Facility Provider. All provisions herein relating to the rights of the Credit Facility Provider shall be of no force and effect if there is no Credit Facility in effect and there are no Purchased Bonds or Bonds in which the Credit Facility Provider has a security interest pursuant to the Pledge Agreement and all amounts owing to the Credit Facility Provider under the Credit Facility Agreement have been paid. In such event, all references to the Credit Facility Provider shall have no force or effect. Section 705. Certain Notices to Credit Facility Provider. The Trustee agrees to advise the Credit Facility Provider promptly in writing of (a) the occurrence of any Event of Default known to it under this Indenture or under the Collateral Agreement, the Financing Agreement, the Mortgage Note, the Mortgage or any of the other Mortgage Loan Documents, or any event known to it which, with the passage of time or service of notice, or both, would constitute an Event of Default under this Indenture or under the Collateral Agreement, the Financing Agreement, the Mortgage Note, the Mortgage or any of the other Mortgage Loan Documents, specifying the nature and period of existence of such event and the actions being taken or proposed to be taken with respect to such event, (b) the receipt of any prepayment, in whole or in part, with respect to the Mortgage Loan, (c) each proposed redemption of Bonds other than as described in (d) below, such notice to be given at least twenty (20) days prior to the scheduled redemption date and (d) each proposed redemption of Bonds on account of transfers of funds to the Redemption Account from the Principal Reserve Fund pursuant to Section 404(c) of this Indenture,such notice to be given at least five (5)days prior to the proposed transfer. Section 706. Assignment of Mortgage; Liability of Credit Facility Provider. The Trustee and the Issuer acknowledge and agree to the rights of the Credit Facility Provider to control and exercise the Mortgage Rights and to direct the Trustee to assign the Mortgage, the Mortgage Note and the other Mortgage Loan Documents to the Credit Facility Provider as set forth in the Assignment. The Issuer and the Trustee agree that the Credit Facility Provider shall not be liable to the Trustee, the Issuer or any Bondholder for any action taken by the Credit Facility Provider pursuant to the Assignment. 64 4 i ARTICLE VIII THE TRUSTEE AND TENDER AGENT Section 801. Appointment of Trustee; Duties. The Trustee is hereby appointed, and does hereby agree to act in such capacity and to perform the duties of the Trustee under the Financing Agreement and this Indenture, but only upon and subject to the following express terms and conditions (and no implied covenants or other obligations shall be read into this Indenture against the Trustee): (a) The Trustee may execute any of its trusts or powers hereunder and perform any of its duties by or through attorneys, agents or receivers, and shall be entitled to advice of counsel concerning all matters of trust hereunder and the duties hereunder,and may in all cases pay such reasonable compensation and shall be entitled to reimbursement from the Borrower for all such compensation paid to such attorneys, agents and receivers. The Trustee may act upon the opinion or advice of counsel, accountants, or such other professionals as the Trustee deems necessary and selected by it in the exercise of reasonable care. The Trustee shall not be responsible for any loss or damage resulting from any action or nonaction based on its good faith reliance upon such opinion or advice. (b) Except as otherwise specifically provided elsewhere in this Indenture, the Trustee shall not be responsible for any recital herein or in the Bonds (other than in the certificates of authentication appearing thereon), or for the recording, rerecording, filing or refiling of this Indenture,.or for insuring the Security or the Project (other than as provided in Section 310 and Section 808 hereof) or collecting any insurance moneys, or for the validity of this Indenture or of any supplements thereto or instruments of further assurance, or for the sufficiency of the security for the Bonds issued hereunder or intended to be secured hereby, or for the value or title of the Project or otherwise as to the maintenance of the Security, but the Trustee may require (but shall be under no duty to require) of the Issuer or the Borrower full information and advice as to the performance of the covenants, conditions and agreements aforesaid as to the condition of the Project. Except as otherwise provided in Section 602 hereof, the Trustee shall have no obligation to perform any of the duties of the Issuer under the Financing Agreement, and the Trustee shall not be liable for any loss suffered in connection with any investment of amounts made by it in accordance with this Indenture. (c) The Trustee shall not be accountable for the use of any Bonds authenticated or delivered hereunder after such Bonds shall have been delivered in accordance with instructions of the Issuer, or for the use by the Borrower of the proceeds of the Mortgage Loan, or for the use or application of any moneys received by the Trustee, except to the extent that the Trustee is obligated to invest moneys under and in the manner provided in Section 407 hereof and to cause the Tender Agent to invest moneys in the Bond Purchase Fund under and in the manner provided in Section 403 hereof. The Trustee may become the owner of Bonds secured hereby with the same rights as any other Bondholder. (d) The Trustee shall be protected in acting upon Opinions of Counsel and upon any notice, request, consent, direction, requisition, certificate, order, affidavit, letter, telegram or other paper or document believed to be genuine and correct and to have been signed or sent by the proper person or persons. Any action taken by the Trustee pursuant to this Indenture upon the request or authority or consent of any person who at the time of making such request or giving such authority or consent is the owner of any Bond as shown on the Register shall be conclusive and binding upon all future owners or holders of the same Bonds and upon Bonds issued in exchange therefor or in place thereof. 65 (e) The permissive right of the Trustee to do things enumerated in this Indenture or the Financing Agreement shall not be construed as duties until specifically undertaken by the Trustee. The Trustee shall only be responsible for the performance of the duties expressly set forth herein and in the other Bond Documents and shall not be answerable for other than its negligence or willful misconduct in the performance of those express duties. (f) The Trustee shall not be personally liable for any debts contracted or for damages to persons or to personal property injured or damaged, or for salaries or nonfulfillment of contracts,relating to the Project. (g) The Trustee shall not be required to give any bond or surety in respect of the execution of the said trust and powers or otherwise in respect of the premises. (h) Before taking any action requested hereunder (except for acceleration of the Bonds as required by Section 602, or seeking a payment pursuant to Section 701), the Trustee may require satisfactory security or an indemnity bond for the reimbursement of all expenses to which it may be put and to protect it against all liability, except liability which is adjudicated to have resulted from its own negligence or bad faith by reason of any action so taken. (i) Before taking any action requested by a Bondholder or Bondholders under or pursuant to Article VI or VIII hereof, the Trustee may require satisfactory security or an indemnity bond from such Bondholder or Bondholders for the reimbursement of all expenses to which it may be put and to protect it against all liability, except liability which is adjudicated to have resulted from its own negligence or bad faith by reason of any such action so taken. (j) All moneys received by the Trustee, until used or applied or invested as herein provided, shall be held as special trust funds for the purposes specified in this Indenture and for the benefit and security of the holders of the Bonds and the Persons to whom the Specified Fees are owed as herein provided. Such moneys need not be segregated from other moneys except to the extent required by law or as herein provided. The Trustee shall not otherwise be under liability for interest on any moneys received hereunder except such as may be agreed upon. (k) The Trustee shall not be bound to ascertain or inquire as to the performance of the obligations of the Borrower under the Financing Agreement or the Issuer under this Indenture, and shall not be deemed to have, or required to take, notice of default under this Indenture except any default under Section 601(a) or (b) hereof or in the event of written notification of such default by the Credit Facility Provider, the Servicer, any party to the Financing Agreement or the holders of not less than twenty-five percent (25%) of the principal amount of Bonds Outstanding, and in the absence of such notice the Trustee may conclusively presume there is no default except as aforesaid. The Trustee may nevertheless require the Issuer and the Borrower to furnish information regarding performance of their obligations under the Financing Agreement and this Indenture,but is not obligated to do so. (1) The Trustee shall be obligated to perform such duties and only such duties of the Trustee as are specifically set forth in this Indenture and the Financing Agreement. The Trustee shall, during the existence of any Event of Default (which has not been cured), exercise such of the rights vested in it by this Indenture and the Financing Agreement, and use the same degree of care and skill in their exercise, as a reasonable person would exercise or use under the circumstances in the conduct of his own affairs. The foregoing shall not limit the Trustee's obligations under Section 602 hereof. 66 (m) The Trustee shall, if the Bonds are then rated by a Rating Agency and the Trustee has knowledge t� give notice by mail to that Rating Agency at its address promptly upon the occurrence of any of the following: (i) any change in the Trustee serving under this Indenture; (ii) any modifications, amendments, supplements or revisions to this Indenture, the Financing Agreement, the Credit Facility or any Mortgage Loan Document; (iii) the termination of the Credit Facility or the substitution of any Alternate Credit Facility; (iv) an Event of Default hereunder; (v) any Adjustment Date or any revocation thereof; (vi) a redemption or defeasance of the Bonds in whole; (vii) any resignation,removal or replacement of the Remarketing Agent; (viii) any mandatory tender of the Bonds; (ix) execution by the Trustee of an investment agreement;or (x) any change in the provider of an investment agreement. Notwithstanding the foregoing, it is expressly understood and agreed that failure to provide any such notice to any Rating Agency or any defect therein will not affect the validity of any action with respect to which notice is to be given or the effectiveness of any such action and will not result in any liability for the Trustee. (n) The Trustee shall promptly notify the Servicer if the fees and expenses of the Trustee have not been paid under the Financing Agreement. (o) The Trustee is authorized and directed by the Issuer to execute in its capacity as Trustee the Financing Agreement, the Regulatory Agreement, the Collateral Agreement, the Pledge Agreement and any financing statements. The Trustee hereby represents and warrants to the Issuer that it is a bank or trust company organized under the laws of the kJaited States 9i Amer4eaState of California having a combined capital stock,surplus and undivided profits aggregating at least$50,000,000. Section 802. Fees; Expenses. Each of the Trustee and the Tender Agent shall be entitled to payment and/or reimbursement from the Borrower for reasonable fees for its ordinary services rendered hereunder and all advances, counsel fees and other ordinary expenses reasonably made or incurred by the Trustee or the Tender Agent, as applicable, in connection with such ordinary services, and, in the event that it should become necessary that the Trustee or the Tender Agent, as applicable, perform extraordinary services, it shall be entitled to reasonable extra compensation therefor, and to reimbursement for reasonable extraordinary expenses in connection therewith; provided that if such extraordinary services or extraordinary 67 expenses are occasioned by the negligence or willful misconduct of the Trustee or the Tender Agent, as applicable, it shall not be entitled to compensation or reimbursement therefor; provided however, that Borrower's failure to pay amounts owed to the Trustee shall not excuse the Trustee's performance of its obligations hereunder and under the other Bond Documents. Notwithstanding anything herein to the contrary, the Tender Agent and the Trustee shall not be entitled to payment and/or reimbursement from any of the amounts held in any of the funds or accounts of this Indenture other than the Fees Account. Each of the Trustee and the Tender Agent shall also be indemnified by the Borrower as provided in the Financing Agreement. Each of the Trustee and the Tender Agent recognizes that all fees, charges and other compensation to which it may be entitled under the provisions of this Indenture are required to be paid by the Borrower under the terms of the Financing Agreement, and, accordingly, the Trustee and the Tender Agent each agrees that except for moneys that the Issuer may derive from the Borrower for purposes of the foregoing, the Issuer shall not be liable for any such fees,charges and other compensation to which the Trustee or the Tender Agent may be entitled. Any corporation or association into which the Trustee may be converted or merged, or with which it may be consolidated, or to which it may sell or transfer its corporate trust business and assets as a whole or substantially as a whole, or any corporation or association resulting from any such conversion, sale,merger,consolidation or transfer to which it is a party, provided such corporation or association is otherwise eligible under Section 804 of this Indenture, shall be and become successor Trustee hereunder and vested with all of the title to the whole property or trust estate and all the trusts, powers, discretions, immunities, privileges and all other matters as was its predecessor, without the execution or filing of any instrument or any further act, deed or conveyance on the part of any of the parties hereto (other than the provision of notice thereof to the Issuer and the Credit Facility Provider),anything herein to the contrary notwithstanding. Section 803. Intervention in Litigation. In any judicial proceedings to which the Issuer is a party the Trustee may intervene on behalf of Bondholders or the Credit Facility Provider (with the prior written consent of the Credit Facility Provider), and shall, subject to Section 8010) hereof, intervene if requested in writing by the holders of at least twenty-five percent (25%) of the aggregate principal amount of Bonds Outstanding and with the consent of the Credit Facility Provider or if requested in writing by the Credit Facility Provider. Section 804. Resignation of Trustee. The Trustee and any successor Trustee may resign only upon giving sixty (60) days' prior written notice to the Issuer, the Credit Facility Provider, the Servicer, the Borrower and each registered owner of Bonds then outstanding as shown on the records of the Trustee. Notwithstanding such notice, such resignation shall take effect only upon the appointment of a successor Trustee by the Issuer at the request of the Borrower and acceptable to the Issuer and the Credit Facility Provider. If no successor is appointed within sixty (60) days after the notice of resignation, the resigning party shall'appoint a successor with the written consent of the Issuer and the Credit Facility Provider or apply to a court of competent jurisdiction for the appointment of a successor. Upon appointment of a successor Trustee, the resigning Trustee shall assign all of its right, title and interest in the Security, including its right, title and interest in the Credit Facility and this Indenture, to the successor Trustee. The successor Trustee shall be a bank or trust company organized under the laws of the United States of America or any state of the United States of America, having (or its parent having) a combined capital stock, surplus and undivided profits aggregating at least $50,000,000, and shall upon approval of the Issuer accept in writing its duties and 68 responsibilities hereunder and such writing shall be filed with the Issuer, the Credit Facility Provider,the Servicer and the Borrower. Section 805. Removal of Trustee. The Trustee may be removed at any time,upon thirty (30) days' prior to written notice to the Trustee, (i) by the Issuer, with the consent of the Credit Facility Provider, (ii) by an instrument or concurrent instruments in writing delivered to the Issuer, the Credit Facility Provider, the Trustee, the Servicer and the Borrower, signed by the owners of a majority in aggregate principal amount of Bonds then Outstanding, and approved by the Credit Facility Provider, which written instrument shall designate a successor Trustee or (iii) by the Credit Facility Provider so long as such Credit Facility Provider has not defaulted in payment under the Credit Facility. Upon such removal, which shall not be effective until a successor Trustee satisfying the requirements of Section 804 is appointed, the Trustee shall assign to the successor Trustee all of its right, title and interest in the Security in the same manner as provided in Section 804 hereof. Section 806. Instruments of Bondholders. Any instrument required by this Indenture to be executed by Bondholders may be in any number of writings of similar tenor and may be executed by Bondholders in person or by agents appointed in writing. Proof of the execution of any such instrument or of the writing appointing any such agent and of the ownership of Bonds shall be sufficient for any of the purposes of this Indenture if given by a certificate of any officer in any jurisdiction who by law has power to take acknowledgements within such jurisdiction that the person signing such writing acknowledged before him the execution thereof. The Trustee may rely on such an instrument of Bondholders unless and until the Trustee receives written notice that the original of such instrument is no longer valid. In the event that the Trustee shall receive conflicting directions from two groups of Bondholders, each with combined holdings of not less than twenty-five percent (25%) of the aggregate principal amount of Bonds Outstanding, the directions given by the group of Bondholders which hold the largest percentage of Bonds shall be controlling and the Trustee shall follow such directions as elsewhere required herein. Section 807. Power to A112oint Co-Trustees. At any time or times, for the purpose of meeting any legal requirements of any jurisdiction in which any part of the Project may at the time be located, the Issuer (at the request of the Trustee with the prior written consent of the Credit Facility Provider) shall have the power, subject to the approval of the Credit Facility Provider and the Trustee, to appoint one or more persons approved by the Trustee either to act as co-trustee or co-trustees jointly with the Trustee of all or any part of the Project, or to act as separate trustee or separate co-trustees of all or any part of the Project, and to vest in such person or persons,in such capacity, such title to the Project or any part thereof, and such rights, powers, duties, trusts or obligations as the Issuer and the Trustee may consider necessary or desirable, subject to the remaining provisions of this Section. Upon the request of the Trustee or of the holders of not less than a majority of the aggregate principal amount of the Bonds then outstanding, the Issuer shall join with the Trustee in the execution, delivery and performance of all instruments and agreements necessary or proper to effect such appointment. If the Issuer shall not have joined in such appointment within thirty (30) days after the receipt by it of a request so to do, or in case an Event of Default shall have occurred and be continuing, subject to the Credit Facility Provider's right to approve, the Trustee alone shall have the power to make such appointment. 69 The Issuer shall execute, acknowledge and deliver all such instruments as may be required by any such co-trustee or separate trustee for more fully confirming such title, rights, powers,trusts,duties and obligations to such co-trustee or separate trustee. Every co-trustee or separate trustee shall, to the extent permitted by law or any applicable contract,be appointed subject to the following terms,namely: (a) This Indenture shall become effective once executed and delivered by the Issuer and the Trustee and the Bonds have been authenticated and delivered, and thereupon the Trustee shall have all rights, powers, trusts, duties and obligations by this Indenture conferred upon the Trustee in respect of the custody, control or management of moneys,papers, securities and other personal property. (b) All rights, powers, trusts, duties and obligations conferred or imposed upon the trustees shall be conferred or imposed upon and exercised or performed by the Trustee, or by the Trustee and such co-trustee or co-trustees, or separate trustee or separate trustees,jointly, as shall be provided in the instrument appointing such co-trustee or co-trustees or separate trustee or separate trustees, except to the extent that, under the law of any jurisdiction in which any particular act or acts are to be performed, the Trustee shall be incompetent or unqualified to perform such act or acts, in which event such act or acts shall be performed by such co-trustee or co-trustees or separate trustee or separate trustees. (c) Any request in writing by the Trustee to any co-trustee or separate trustee to take or to refrain from taking any action hereunder shall be sufficient warrant for the taking, or the refraining from taking,of such action by such co-trustee or separate trustee. (d) Any co-trustee or separate trustee to the extent permitted by law may delegate to the Trustee the exercise of any right, power, trust, duty or obligation, discretionary or otherwise. (e) The Trustee at any time,by an instrument in writing, with the concurrence of the Issuer evidenced by a resolution, may accept the resignation of or remove any co-trustee or separate trustee appointed under this Section, and, in case an Event of Default shall have occurred and be continuing, the Trustee shall have power to accept the resignation of, or remove,any such co-trustee or separate trustee without the concurrence of the Issuer. Upon the request of the Trustee, the Issuer shall join with the Trustee in the execution, delivery and performance of all instruments and agreements necessary or proper to effectuate such resignation or removal. A successor to any co-trustee or separate trustee so resigned or removed may be appointed in the manner provided in this Section. (f) No trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder. (g) Any demand, request, direction, appointment, removal, notice, consent, waiver or other action in writing executed by any Bondholder and delivered to the Trustee shall be deemed to have been delivered to each such co-trustee or separate trustee. (h) Any moneys, papers, securities or other items of personal property received by any such co-trustee or separate trustee hereunder shall forthwith, so far as may be permitted by law,be turned over to the Trustee. 70 r Upon the acceptance in writing of appointment by any such co-trustee or separate trustee, it, she or he shall be vested with the pledge and assignment of the Security and with such rights, powers, duties, trusts or obligations as shall be specified in the instrument of appointment, jointly with the Trustee (except insofar as local law makes it necessary for any such co-trustee or separate trustee to act alone), subject to all the terms of this Indenture. Every such acceptance shall be filed with the Trustee. In case any co-trustee or separate trustee shall die,become incapable of acting, resign or be removed, the pledge and assignment of the Security and all rights, powers, trusts, duties and obligations of said co-trustee or separate trustee shall, so far as permitted by law, vest in and be exercised by the Trustee unless and until a successor co-trustee or separate trustee shall be appointed in the same manner as provided for with respect to the appointment of a successor Trustee pursuant to Section 804 hereof. Notwithstanding anything else to the contrary in this Article VIII, no successor trustee or any co-trustee or separate trustee shall assume its duties hereunder without the prior written approval of the Issuer. Section 808. Filing of Financing Statements. From time to time, the Trustee, pursuant to instructions of the Borrower as described below and at the expense of the Borrower, shall file or record or cause to be filed or recorded all financing statements which are required to be filed or recorded in order fully to protect and preserve the security interests relating to the Mortgage Loan and the priority thereof and the rights and powers of the Issuer in connection therewith, including without limitation all continuation statements for the purpose of continuing without lapse the effectiveness of(a) those financing statements which shall have been filed at or prior to the Effective Date in connection with the security for the Bonds pursuant to the authority of the U.C.C., and (b) any previously filed continuation statements which shall have been filed as herein required; provided that if the Credit Facility Provider or the Servicer gives written notice to the Trustee that it has filed or recorded all applicable financing statements, the Trustee shall be entitled to rely on such written notice. The Issuer shall sign, and the Trustee or its designee shall obtain from the Borrower, all such financing statements as may be required for the purposes specified in the preceding sentence. Each financing statement so delivered to the Trustee shall be accompanied by a notice from the Borrower instructing the Trustee to file such financing statement in all appropriate places, which places shall be designated in such notice. Upon the filing of any such financing statement the Trustee shall immediately notify the Issuer and the Credit Facility Provider that the same has been accomplished. Section 809. Tender Agent. The Trustee is hereby authorized, with the prior written approval of the Issuer, the Borrower,the Remarketing Agent and the Credit Facility Provider, to appoint the Tender Agent for the Bonds and to remove the Tender Agent and appoint a successor; provided that no removal of the Tender Agent shall be effective until a successor Tender Agent shall have been appointed and shall have accepted such appointment. Any successor Tender Agent appointed pursuant to the provisions of this Section shall be a successor trust company, bank or investment bank in good standing, within or without the State. The Trustee has initially designated, and the Borrower, the Remarketing Agent and the Credit Facility Provider have approved, Dai-Ichi Kangyo Bank of California, as Tender Agent. The Tender Agent shall designate to the Trustee, the Issuer, the Remarketing Agent and the Credit Facility Provider its Principal Office and signify its acceptance of the duties and obligations imposed upon it hereunder by a written instrument of acceptance delivered to the Trustee under which such Tender Agent will agree particularly: 71 (a) to act as agent for the Trustee for the purpose of authenticating, accepting delivery of and delivering Bonds in accordance with the provisions of Section 208, 209, 210, 211 or Section 1001 or other provisions hereof relating to authentication and delivery of Bonds; (b) to forward to the Trustee immediately after completion of such authentication the names, addresses, taxpayer identification numbers or social security numbers of all persons in whose names the Bonds are to be registered; (c) to deliver authenticated and registered Bonds to or to the order of the persons in whose names such Bonds are registered; (d) as agent for the Trustee, to hold all moneys delivered to it for the purchase of Bonds in trust in the Bond Purchase Fund for the account of the person who shall have so delivered such moneys until the Bonds purchased with such moneys shall have been registered, authenticated and delivered to or to the order of such person;and (e) to hold all Bonds delivered to it for purchase in trust for the owner thereof until such owner shall have received the purchase price therefor. The Issuer shall cooperate with the Trustee, the Borrower and the Credit Facility Provider to cause the necessary arrangements to be made and to be thereafter continued whereby amounts from the sources specified herein and in the Financing Agreement will be made available for the purchase of Bonds presented at the Principal Office of the Tender Agent, and whereby Bonds, executed by the Issuer and to be authenticated by the Tender Agent, shall be made available to the Tender Agent to the extent necessary for delivery pursuant to Section 1001 hereof. Any moneys held by the Tender Agent hereunder shall be held uninvested as provided in Section 407 hereof. Section 810. Resignation of Tender Agent. The Tender Agent may resign by giving no less than thirty (30) days' prior written notice to the Borrower, the Trustee, the Credit Facility Provider, the Servicer and the Issuer. If the Tender Agent submits its resignation, the Borrower shall appoint a successor Tender Agent reasonably acceptable to the Credit Facility Provider and the Issuer. Failing such appointment by the Borrower prior to the effective date of the Tender Agent's resignation, the Credit Facility Provider shall have the right to appoint a successor Tender Agent reasonably acceptable to the Issuer. In no event shall the resignation of the Tender Agent take effect prior to the date a successor Tender Agent shall have been appointed as provided in Section 809 and be serving under this Indenture and the Tender Agent Agreement. The provisions of this Section 810 shall apply if the resignation of the Tender Agent is due to the fact that the Tender Agent no longer exists. Any successor Tender Agent appointed pursuant to the provisions of this Section 810 shall be a trust company or bank of investment bank in good standing,within or without the State. Section 811. Removal of Tender Agent. The Tender Agent may be removed by the Borrower with the written approval of the Issuer and the Credit Facility Provider, by an instrument signed by the Borrower stating the reason of such removal filed with the Tender Agent, the Trustee, the Credit Facility Provider and the Issuer. If the Tender Agent fails to perform its duties as Tender Agent under the Tender Agent Agreement (as determined by the Credit Facility Provider in its sole and absolute discretion), the Credit Facility Provider shall have the right to remove the Tender Agent by an instrument in writing filed with the Tender Agent, the Trustee, the Borrower and the Issuer. Notwithstanding anything contained herein to the contrary, no removal of the Tender Agent shall be effective unless the Borrower or the 72 Credit Facility Provider shall have previously designated a successor Tender Agent satisfactory to the Issuer and the Credit Facility Provider. 73 ARTICLE IX SUPPLEMENTAL INDENTURES; AMENDMENTS Section 901. Supplemental Indentures Not Requiring Bondholder Consent. The Issuer and the Trustee, without the consent of or (except as provided in (j) hereof) notice to any Bondholders (but subject to the provisions of Section 906), may enter into an indenture or indentures supplemental to this Indenture for one or more of the following purposes: (a) to cure any ambiguity or to correct or supplement any provision contained herein or in any supplemental indenture which may be defective or inconsistent with any other provision contained herein or in any supplemental indenture; (b) to make such other provisions in regard to matters or questions arising under this Indenture which shall not materially adversely affect the interests of the Bondholders; (c) to'grant to or confer upon the Trustee for the benefit of the Bondholders any additional rights, remedies, powers or authority that may lawfully be granted to or conferred upon the Bondholders or the Trustee, or to grant or pledge to the Trustee for the benefit of the Bondholders any additional security other than that granted or pledged under this Indenture; (d) to modify, amend or supplement this Indenture or any indenture supplemental hereto in such manner as to permit the qualification hereof under the Trust Indenture Act of 1939, as amended, or any similar federal statute then in effect, or to permit the qualification of the Bonds for sale under the securities laws of any of the States of the United States; (e) to appoint a successor trustee, separate trustee, co-trustee or Tender Agent in the manner provided in Article VIII hereof; W to make any change requested by the Credit Facility Provider which is determined by the Trustee not to be materially adverse to the interests of the Bondholders; (g) to comply with requirements of any Rating Agency which are determined by the Trustee not to be materially adverse to the interests of the Bondholders; (h) to comply with regulations or rulings issued with respect to the Code, to the extent determined as necessary or desirable in the opinion of Bond Counsel; (i) in connection with any other change in this Indenture which, in the judgment of the Trustee,is not to the prejudice of the Bondholders; (j) to modify, alter, amend or supplement this Indenture in any other respect, including amendments which would otherwise be described in Section 902 (1) if such amendments will take effect on a Mandatory Tender Date following the purchase of Tendered Bonds or (2) if notice of the proposed supplemental indenture is given to Bondholders (in the same manner as notices of redemption are given) at least thirty (30) days before the effective date thereof and, on or before such effective date, the Bondholders have the right to demand purchase of their Bonds pursuant to Section 1001; or (k) to implement any secondary market disclosure, required under applicable law with respect to the Bonds, the Issuer, the Borrower or the Project or otherwise in connection with the Bonds. 74 When requested by the Issuer or the Borrower, and if all conditions precedent in this Section and in Sections 906 and 907 of this Indenture have been met, the Trustee shall join the Issuer in the execution of any such supplemental indenture. A copy of any such supplemental indenture shall be promptly furnished by the Trustee to the Credit Facility Provider, the Remarketing Agent,the Tender Agent and the Borrower. Section 902. SuIplemental Indentures Requiring Bondholder Consent. Exclusive of supplemental indentures covered by Section 901 hereof and subject to the terms and provisions contained in this Section and in Sections 906 and 907, and not otherwise, the Issuer in its sole discretion and the Trustee may,with the consent of the holders of not less than a majority of the aggregate principal amount of the Bonds then Outstanding and affected by such indenture or indentures supplemental hereto, from time to time, anything contained elsewhere in this Indenture to the contrary notwithstanding, execute an indenture or indentures supplemental hereto for the purpose of modifying, altering, amending, adding to or rescinding, in any particular, any of the terms or provisions contained in this Indenture or in any supplemental indenture; provided, however, that nothing contained in this Section shall permit, or be construed as permitting, (a) an extension of the maturity of the principal of or interest on, or the mandatory redemption date of, any Bond, without the consent of the owners of all of the Bonds then Outstanding; (b) a reduction in the principal amount of, or the rate of interest on, any Bond, without the consent of the owner of such Bond; (c) a preference or priority of any Bond or Bonds over any other Bond or Bonds, without the consent of the owners of all such Bonds; (d)the creation of a lien prior to or on parity with the lien of this Indenture, without the consent of the owners of all of the Bonds then Outstanding, (e) a change in the percentage of Bondholders necessary to waive an Event of Default or otherwise approve matters requiring Bondholder approval hereunder, including consent to any supplemental indenture, without the consent of the owners of all the Bonds then Outstanding, or (f) release of the Credit Facility or the Mortgage Loan, other than as permitted by this Indenture, the Assignment or the Credit Facility, without the consent of the owners of all of the Bonds then Outstanding. The giving of notice to and consent of the Bondholders to any such supplemental indenture shall be obtained as provided in Section 906 hereof. When requested by the Issuer or the Borrower,and if all conditions precedent under this Section and Sections 904, 906, 907 hereof have been met, the Trustee shall join the Issuer in the execution of any such supplemental indenture. A copy of any such supplemental indenture shall be promptly furnished to the Credit Facility Provider, the Remarketing Agent, the Tender Agent and the Borrower by the Trustee. Section 903. Amendments, Changes and Modifications to the Credit Facility and RegulatoryAgreement. Subject to the provisions of Section 906, the Trustee may, without the consent of the owners of the Bonds,consent to any amendment of the Credit Facility which does not prejudice in any material respect the interests of the Bondholders. Except for such amendments, the Credit Facility may be amended only with the consent of the Trustee and the owners of a majority in aggregate principal amount of Outstanding Bonds, except that, without the written consent of the owners of all Outstanding Bonds, no amendment may be made to the Credit Facility which would reduce the amounts required to be paid thereunder or change the time for payment of such amounts; provided that any such amounts may be reduced without such consent solely to the extent that such reduction represents a reduction in any fees payable from such amounts. Section 904. Notice to and Consent of Bondholders. If consent of the Bondholders is required under the terms of this Indenture for any supplement or amendment to this Indenture 75 or the Credit Facility, or for any other similar purpose, the Trustee shall cause notice of the proposed execution of the amendment or supplemental indenture to be given by first class mail to the last known holders of the Outstanding Bonds then shown on the Register. Such notice shall briefly set forth the nature of the proposed amendment, supplemental indenture or other action, and shall state that copies of any such amendment, supplemental indenture or other document are on file at the Principal Office of the Trustee for inspection by all Bondholders. If, within sixty (60) days or such longer period as shall be prescribed by the Trustee following the mailing of such notice, the holders of a majority of the aggregate principal amount of the Bonds Outstanding by instruments filed with the Trustee shall have consented to the amendment, supplemental indenture or other proposed action, then the Trustee may execute such amendment, supplemental indenture or other document or take such proposed action, and the consent of the Bondholders shall thereby be conclusively presumed. The consent of the holder of any Bond shall be binding on any transferee and successor transferees of such Bond. Any other notice required to be delivered to Bondholders pursuant to this Indenture shall be given, or caused to be given, by the Trustee by first class mail to the last known holders of the Outstanding Bonds then shown on the Register. Section 905. Waiver. The Trustee shall not waive, on its own behalf or on behalf of the Issuer, any obligation of the Borrower under the Financing Agreement, the Mortgage Note or the Mortgage without the consent of the Credit Facility Provider (subject to the provisions of Section 704 hereof). Section 906. Required Approvals. Subject to the provisions of Section 704 hereof, and notwithstanding anything herein to the contrary, no amendment, supplement, change or modification may be made to this Indenture, the Credit Facility or any of the other documents executed and delivered in connection with the Bonds without the prior written consent of the Credit Facility Provider. Anything herein to the contrary notwithstanding, a supplemental indenture, amendment or other document described under this Article IX which affects any rights or obligations of the Borrower or the Remarketing Agent shall not become effective unless and until the affected party shall have consented in writing to the execution of such supplemental indenture, amendment or other document provided, however, if the Borrower has defaulted under a Mortgage Loan Document or an Event of Default has occurred and is continuing under any Bond Document or the Reimbursement Agreement, the consent of the Borrower shall not be required in relation to the execution of any supplemental indenture, amendment or other document. The Trustee shall not be required to enter into any supplemental indenture,amendment or other document described under this Article IX which is, in the judgment of the Trustee, to the prejudice of the Trustee. Section 907. Opinions of Counsel. Subject to the provisions of Section 801 hereof, the Trustee may obtain, and shall be fully protected in relying upon, an Opinion of Counsel as conclusive evidence that any supplemental indenture or any amendment to the Credit Facility executed pursuant to the provisions of this Article is authorized and permitted by this Indenture. No supplemental indenture or amendment to the Credit Facility shall be effective until the Issuer and the Trustee shall have received an opinion of Bond Counsel to the effect that such supplemental indenture or such amendment will not adversely affect the exclusion of interest on the Bonds from gross income for federal income tax purposes. 76 Section 908. Certificate of Borrower. In connection with any amendment to the Indenture or any other document requested by the Borrower, the Trustee and the Issuer may obtain and shall be fully protected in relying upon a certificate of the Borrower to the effect that, as of the date of such certificate, the Borrower and the Project are in compliance with all requirements of the Financing Agreement and the Regulatory Agreement (with such exceptions as shall be acceptable to the Issuer in its sole discretion). Section 909. Notation of Modification on Bonds; Preparation of New Bonds. Bonds authenticated and delivered after the execution of any supplemental indenture pursuant to the provisions of this Article may bear a notation, in form approved by the Trustee and the Issuer as to any matter provided for in such supplemental indenture, and if such supplemental indenture shall so provide, new Bonds, so modified as to conform, in the opinion of the Trustee and the Issuer, to any modification of this Indenture contained in any such supplemental indenture, may be prepared by the Issuer, authenticated by the Trustee and delivered without cost to the holders of the Bonds then outstanding, upon surrender for cancellation of such Bonds in equal aggregate principal amounts. Section 910. Modification of the Tax Certificate. The Tax Certificate may be amended or modified without the consent of or notice to the Bondholders in accordance with the Tax Certificate. 77 ARTICLE X PURCHASE AND REMARKETING OF BONDS Section 1001. Purchase of Bonds on any Business Day. (a) Optional Tender. Subject to the provisions of Section 1002 hereof, during any Weekly Variable Rate Period, the Trustee shall purchase on behalf of and as agent for the Borrower,but solely from the sources provided in Section 1001(g), any Bond, on the demand of the Beneficial Owner thereof on any Business Day, at a purchase price equal to one hundred percent (100%) of the principal amount thereof plus accrued interest, if any, to the date of purchase, upon delivery to and receipt by the Tender Agent at its Principal Office, of a Bondholder Tender Notice (accompanied by a guaranty of signature acceptable to the Tender Agent) prior to 3:30 p.m., Tender Agent Time, on a Business Day not later than the seventh day preceding the Business Day designated in such Bondholder Tender Notice as the date of purchase. The Bondholder Tender Notice shall state the following: (i) the number and principal amount (or portion thereof in integral multiples of Authorized Denominations, provided that the portion of the Bond retained is also an integral multiple of an Authorized Denomination) of such Bond; (ii) the name, address and tax identification number of the Beneficial Owner of the Bond demanding such payment;and (iii) the date on which such Bond shall be purchased pursuant to this Section 1001, which date shall be a Business Day not prior to the seventh day next succeeding the date of the delivery of such notice to the Tender Agent. (b) Irrevocability of Tender. By delivering the Bondholder Tender Notice, subject to Section 1001(h), the Beneficial Owner irrevocably agrees to deliver such Bond (with an appropriate transfer of registration form executed in blank and accompanied by a guaranty of signature satisfactory to the Tender Agent) to the Principal Office of the Tender Agent or any other address designated by the Tender Agent at or prior to 10:00 a.m., Tender Agent Time, on the date of purchase specified in the Bondholder Tender Notice. Any election by a Beneficial Owner to tender a Bond or Bonds (or portion thereof) for purchase on a Business Day in accordance with Section 1001(a) shall also be binding on any transferee of the Beneficial Owner making such election. (c) Compliance with Tender Requirements. Bonds shall be required to be purchased pursuant to Section 1001(a) only if the Bonds so delivered to the Tender Agent shall conform in all respects to the description thereof in the Bondholder Tender Notice. The Tender Agent shall determine in its sole discretion whether a Bondholder Tender Notice complies with the requirements of Section 1001(a) and whether Bonds delivered conform in all respects to the description thereof in the Bondholder Tender Notice; such determination is binding on the other 207(f)Notice Parties and the Beneficial Owner of the Bonds. (d) Notice of Bondholder Tender Notice. Immediately upon receipt of a copy of a Bondholder Tender Notice, the Tender Agent shall notify the other 207(f) Notice Parties by telephone, promptly confirmed in writing, of such receipt, specifying the contents of such Bondholder Tender Notice. 78 (e) Untendered Section 1001 Bonds. If after delivery to the Tender Agent of a Bondholder Tender Notice in accordance with Section 1001(a) hereof, the holder making such election shall fail to deliver such Bond or Bonds described in the Bondholder Tender Notice to the Tender Agent on the applicable purchase date as required by Section 1001(b) hereof, the untendered Bond or Bonds or portion thereof (each an "Untendered Section 1001 Bond") described in such Bondholder Tender Notice shall be deemed to have been properly tendered for purchase to the Tender Agent and, to the extent that there shall be on deposit in the Bond Purchase Fund on or before the applicable purchase date an amount sufficient to pay the purchase price thereof, such Untendered Section 1001 Bond or Bonds (or portion thereof) shall from and after such purchase date cease to bear interest and no longer shall be considered to be Outstanding hereunder. The Trustee shall promptly give notice by registered or certified first class mail to each Beneficial Owner of any Bond which has been deemed to have been purchased pursuant to this Section 1001, which notice shall state that interest on such Bond ceased to accrue from and after the date of purchase and that moneys representing the purchase price of such Bond are available against delivery thereof at the Principal Office of the Tender Agent. If for any reason a Beneficial Owner fails to deliver such Bond to the Tender Agent on said purchase date, the Issuer shall execute and the Tender Agent shall authenticate and deliver for redelivery in accordance with Section 211 hereof a new Bond or Bonds in replacement of the Bond not so delivered. The replacement of any such previously Outstanding Bond shall not be deemed to create new indebtedness,but such Bond as is issued in replacement shall be deemed to evidence the indebtedness previously evidenced by the Bond not so delivered. (f) Purchase of Bond in Part. Upon surrender of any Bond for purchase in part only, the Issuer shall execute and the Tender Agent shall authenticate and deliver to the holder thereof a new Bond or Bonds of the same maturity and interest rate of Authorized Denominations, in an aggregate principal amount equal to the unpurchased portion of the Bond surrendered. (g) Payment and Sources of Purchase Price. The Tender Agent shall make payment for Tendered Bonds to the registered owner thereof at or before 4: 00 p.m., Tender Agent Time, on the date for purchase specified in the Bondholder Tender Notice, first from remarketing proceeds on deposit in the Bond Purchase Fund, second, to the extent necessary, from amounts on deposit in the Principal Reserve Fund,but only if and to the extent directed in writing by the Credit Facility Provider, third, from the Borrower, and fourth, from proceeds of a payment under the Credit Facility. (h) Book-entry-only. Notwithstanding the above, during any period that the Bonds are issued in book-entry-only form pursuant to this Indenture, (i)any Bondholder Tender Notice delivered pursuant to Section 1001(a) shall also (A) provide evidence satisfactory to the Tender Agent that the party delivering the notice is the Beneficial Owner of the Bonds or a custodian for the Beneficial Owner referred to in the notice, and (B) if the Beneficial Owner is other than a DTC Participant, identify the DTC Participant through whom the Beneficial Owner will direct transfer; (ii) on or before the purchase date, the Beneficial Owner must direct (or if the Beneficial Owner is not a DTC Participant,cause its DTC Participant to direct) the transfer of said Bonds on the records of DTC to the account of, or as directed by, the Trustee; and (iii) it shall not be necessary for Bonds to be physically delivered on the date specified for purchase thereof, but such purchase shall be made as if such Bonds had been so delivered, and the purchase price thereof shall be paid to DTC. 79 Section 1002. Mandatory Tender and Purchase. (a) Mandatory Tender Dates; Notice. Holders of Bonds shall be required to tender their Bonds to the Tender Agent, for purchase by the Trustee acting on behalf of and as agent for the Borrower,but solely from the sources provided in Section 1002(d) hereof, for a purchase price equal to one hundred percent (100%) of the principal amount thereof plus accrued interest to the applicable Mandatory Tender Date, on each Mandatory Tender Date, and in any such event, the Owners of the Bonds may not elect to retain their Bonds. Mandatory Tender Dates shall include each proposed Adjustment Date, each Adjustment Date, each Substitution Date, and each Extension Date. The Trustee shall give notice of Mandatory Tender Dates as follows: (i) Not less than thirty (30) days before any proposed Adjustment Date, the Trustee shall give notice by mail to the owners of the Bonds stating (A) the proposed Adjustment Date, (B) that the Bonds are required to be tendered for purchase on such date, (C) that the owners thereof shall not have the right to elect to retain such Bonds, and (D) if applicable, any additional information required to be set forth in notices pursuant to Sections 204(c)(1)(ii),204(c)(2)(ii),or 205(c)(ii)hereof. (ii) Not less than ten (10) days before any Substitution Date, the Trustee shall give notice by mail to the owners of the Bonds stating (A) the Substitution Date, (B) that such Bonds are required to be tendered on the Substitution Date, and that (C) the owners thereof shall not have the right to elect to retain such Bonds. (iii) Not less than ten (10) days before any Extension Date, if the Trustee has not received a binding commitment to extend the applicable Alternate Credit Facility, the Trustee shall give notice by mail to the owners of the Bonds stating (A) the Extension Date and that no commitment to extend the Alternate Credit Facility has been received by the Trustee, (B) that such Bonds are required to be tendered on the Extension Date (unless an extension of the Alternate Credit Facility is received prior to the Extension Date), and (C) that the owners thereof shall not have the right to elect to retain such Bonds. (b) Mandatory Tender upon Default; Notice. The Bonds shall be subject to mandatory tender on the earliest practicable date, as determined by the Trustee, which date shall be a Mandatory Tender Date hereunder, after notice thereof has been given to Bondholders (but not less than ten (10) nor more than fifteen (15) days after the giving of such notice) upon receipt by the Trustee of written notice from the Credit Facility Provider directing acceleration of the Mortgage Loan following an Event of Default under this Indenture or Section 11.1 of the Financing Agreement or an Event of Default under the Reimbursement Agreement and requesting that the Bonds be subject to mandatory tender rather than mandatory redemption. Immediately upon receipt by the Trustee of written notice of any of the foregoing events, the Trustee shall give notice by mail to the owners of the Bonds stating (A) that such event has occurred, (B) that such Bonds are required to be tendered on the Mandatory Tender Date specified in such notice,and (C) that the owners thereof shall not have the right to elect to retain such Bonds. (c) Untendered Section 1002 Bond. Any Bond which is not tendered on a Mandatory Tender Date ("Untendered Section 1002 Bond").shall be deemed to have been tendered to the Tender Agent as of such Mandatory Tender Date, and, from and after such Mandatory Tender Date, shall cease to bear interest and no longer shall be considered to be Outstanding hereunder. In the event of a failure by owners to deliver Bonds on the Mandatory Tender Date, such owners shall not be entitled to any payment (including any interest to accrue 80 r from and after the Mandatory Tender Date) other than the purchase price for such Untendered Section 1002 Bonds, and any Untendered Section 1002 Bonds shall no longer be entitled to the benefits of this Indenture, except for the purpose of payment of the purchase price therefor. If for any reason a holder fails to deliver such Bond to the Tender Agent on the Mandatory Tender Date, the Issuer shall execute, and the Tender Agent shall authenticate and deliver to the Remarketing Agent for redelivery to the purchaser, a new Bond or Bonds in replacement of the Bond not so delivered. The replacement of any such previously Outstanding Bond shall not be deemed to create new indebtedness, but such Bond as is issued in replacement shall be deemed to evidence the indebtedness previously evidenced by the Bond not so delivered. (d) Payment and Sources of Purchase Price. The Tender Agent shall make payment for Bonds purchased pursuant to Section 1002(a) at or before 4:00 p.m., Tender Agent Time on the Mandatory Tender Date, first, from remarketing proceeds on deposit in the Bond Purchase Fund, second, to the extent necessary, from amounts on deposit in the Principal Reserve Fund, but only if and to the extent directed in writing by the Credit Facility Provider, third, from proceeds of a payment under the Credit Facility, and fourth, from Available Moneys from the Borrower. (e) Purchase Price Moneys Held in Trust. Following any Mandatory Tender Date, moneys deposited with the Tender Agent for the purchase of Bonds shall be held in trust in the Bond Purchase Fund and shall be paid to the former owners of such Bonds upon presentation thereof at the Principal Office of the Tender Agent. The Tender Agent shall promptly give notice by registered or "certified first class" mail to each registered owner of Bonds whose Bonds are deemed to have been purchased which notice shall state that interest on such Bonds ceased to accrue on the date of purchase and that moneys representing the purchase price of such Bonds are available against delivery thereof at the Principal Office of the Tender Agent. Section 1003. Remarketing of Bonds. (a) Remarketing Agent. (1) Appointment of Remarketing Agent. The Remarketing Agent is appointed pursuant to the Bond Resolution to act in connection with the remarketing of any Bonds tendered pursuant to this Article X hereof in accordance with, and subject to, the terms of the Remarketing Agreement and this Indenture, and as soon as practicable, shall give notice to the other 207(f) Notice Parties of its principal office and signify its acceptance of the duties and obligations imposed upon it hereunder by executing and delivering the Remarketing Agreement. (2) Resignation of Remarketing Agent. The Remarketing Agent may resign by giving no less than thirty (30) days prior written notice to the other 207(f) Notice Parties, but in no event shall such resignation take effect prior to the date a successor Remarketing Agent shall have been appointed and be serving under this Indenture and the Remarketing Agreement. Upon receipt of such notice or upon termination of the Remarketing Agent's corporate existence, the Borrower shall appoint a successor Remarketing Agent, which shall be a trust company or bank or investment bank in good standing, within or without the State, with the prior written consent of the Credit Facility Provider, and if the Borrower fails or refuses to make such appointment prior to the effective date of the resignation set forth in such notice, or upon such termination of existence,the Credit Facility Provider may appoint a successor Remarketing Agent. 81 F i (3) Removal of Remarketing Agent. The Borrower may remove the Remarketing Agent, with the prior written approval of the Credit Facility Provider, which approval shall not be unreasonably withheld or delayed, at any time by an instrument signed by the Borrower and filed with the other 207(f) Notice Parties, but unless specifically approved by the Credit Facility Provider, such removal shall not become effective until a successor Remarketing Agent satisfactory to the Credit Facility Provider shall have been appointed in accordance with paragraph (2) above; provided that, if (i) a default by the Borrower has occurred and is continuing under the Reimbursement Agreement or any Mortgage Loan Document or (ii) the Remarketing Agent has failed to fulfill its duties and obligations, including without limitation failure to give any notice, under the Indenture or the Remarketing Agreement, the Credit Facility Provider may remove the Remarketing Agent by written notice to the other 207(f) Notice Parties and appoint a successor Remarketing Agent. (b) Certain Duties of Remarketing Agent. (1) Best Efforts to Remarket Tendered Bonds. The Remarketing Agent shall, in accordance with the provisions of Section 203, 204, and 205 hereof, offer for sale and use its best efforts to remarket, on or prior to each applicable Tender Date, at a price equal to par plus accrued interest thereon, (i) all Bonds identified in a Bondholder Tender Notice, upon delivery of such notice to the Tender Agent as required under Section 1001(a) hereof; (ii) all Bonds required to be tendered upon delivery of notice pursuant to Section 1002a(i)and a(ii) hereof; OR) all Bonds required to be tendered pursuant to Section 1002(a)(iii) hereof but only if an Alternate Credit Facility shall have been delivered to the Trustee;and (iv) all Bonds required to be tendered upon delivery of notice pursuant to Section 1002(b) hereof,but only if the Credit Facility Provider directs that such Bonds be remarketed. (2) Preliminary Notice of Remarketing. Not later than 4:00 p.m., Tender Agent Time, on the Business Day next preceding each purchase date or Mandatory Tender Date, the Remarketing Agent shall give notice by telephone (immediately confirmed by telecopy) or Electronic Means as follows: (i) to the Trustee, the Tender Agent, the Credit Facility Provider and the Borrower specifying the total principal amount of Tendered Bonds, if any, (A) that have been remarketed for settlement on such purchase date, (B) that remain unremarketed at such time, and (C) that in its best good faith estimate will remain unremarketed as of 9:30 a.m., Tender Agent Time, on the purchase date or Mandatory Tender Date,as the case may be,and (ii) to the Trustee, specifying the name, address and taxpayer identification number of each purchaser as well as the denominations of the Bonds to be issued to such purchaser. 82 Y (3) Final Notice of Remarketing. Not later than 9:30 a.m., Tender Agent Time, on the applicable purchase date designated in a Bondholder Tender Notice or Mandatory Tender Date, the Remarketing Agent shall give notice by Electronic Means to the other 207(f) Notice Parties (which notice shall be immediately confirmed in writing, together with instructions to the Tender Agent as to the manner in which any Bonds that have been remarketed are to be registered) specifying as follows: (i) the principal amount of Bonds remarketed (together with the information required to be specified in Section 1003(b)(2)(ii) hereof if not already provided), (ii) the amount of remarketing proceeds on deposit with the Tender Agent, (iii) the amount required to be paid under the Credit Facility pursuant to Section 701(b),and (iv) the amount of Bonds to be purchased that have not been remarketed at the time of such notice. (4) Payment of Purchase Price. Upon delivery (except as otherwise provided in,but subject to the tendering Beneficial Owners compliance with, the last paragraph of Section 1001) of Tendered Bonds to or upon the order of the Remarketing Agent, the Remarketing Agent shall deliver to the Tender Agent at its Principal Office, in immediately available funds, an amount equal to the purchase price of the total principal amount of Bonds specified in the notice given by the Remarketing Agent pursuant to Section 1003(b)(3),plus accrued interest,if any,thereon. (5) - Prohibited Remarketing. Except as otherwise provided herein, the Remarketing Agent shall not remarket any Bonds directly to the Issuer, the Borrower or any general partner of the Borrower. (6) Remarketing Agent's Own Account. In its capacity as a registered broker-dealer, the Remarketing Agent may, but is not obligated to, acquire for its own account any Bonds delivered to it, but not otherwise remarketed. The Remarketing Agent may purchase and sell Bonds for its own account at any time. (7) Weekly Notice to Credit Facility Provider. The Remarketing Agent shall provide the Credit Facility Provider with a notice, in such form as the Credit Facility Provider shall require by the close of business on the Business Day next succeeding each Rate Determination Date, setting forth the principal amount of Bonds tendered for remarketing pursuant to the Indenture, that remain unremarketed as of the close of business on such Rate Determination Date, or, if no Bonds were so tendered, indicating that no Bonds were tendered unless the Credit Facility Provider shall have waived its rights to receive such notice in writing. (8) Notice of Rate Determination Date. On or before a Rate Determination Date other than during a Weekly Variable Rate Period, the Remarketing Agent shall notify the other 207(f)Notice Parties of the date selected as the Rate Determination Date. 83 (a) The Remarketing Agent shall promptly notify the Servicer if the fees and expenses of the Remarketing Agent have not been paid under the Remarketing Agreement. (c) Duties of Trustee Concerning Remarketed Bonds. The Trustee shall deliver, or cause to be delivered, at the Principal Office of the Tender Agent, Bonds remarketed by the Remarketing Agent, before 1:00 p.m., Tender Agent Time on the applicable purchase date (unless a book-entry only system is then in effect) or Mandatory Tender Date; provided, however, that prior to delivery of the Bonds to such purchasers the amount available under the Credit Facility to secure the Bonds must equal the principal amount of the Bonds outstanding (other than Purchased Bonds)plus the Interest Requirement. Section 1004. Purchased Bonds. (a) Unremarketed Bonds as Purchased Bonds; No Credit Facility Support. Bonds for which the purchase price is funded with moneys provided under the Credit Facility or, at the written direction of the Credit Facility Provider from amounts on deposit in the Principal Reserve Fund and which are not remarketed in accordance with the Remarketing Agreement shall be deemed to be Purchased Bonds. The Credit Facility shall not constitute security or provide liquidity for Purchased Bonds. (b) Ownership and Pledge of Purchased Bonds. Purchased Bonds shall be owned by the Borrower and pledged to the u is under the Pledge Agreement for the benefit of the Credit Facility Provider pursuant to the Pledge Agreement. As set forth in Section 2.40i) of the Pledge Agreement, the Tender Agent shall either (i) ensure that Purchased Bonds are delivered to the custodian under the Pledge Agreement or (ii) if, and only if, delivery of the Bonds is not possible, deliver a written entitlement order to the applicable financial intermediaries on whose records ownership of the Purchased Bonds is reflected directing the intermediaries to credit the security entitlement to the Purchased Bonds to the account of the Custodian for the benefit of the Credit Facility Provider and deliver to the Custodian a written confirmation of such credit, whether or not the Borrower notifies the Remarketing Agent to do SO. (c) Payment Failure Not a Default. Failure to pay interest on Purchased Bonds when due, or failure to pay principal and interest on Purchased Bonds upon any Redemption Date or purchase date or the Maturity Date shall not constitute an Event of Default. Upon the Maturity Date,any Redemption Date (whether by reason of optional or mandatory redemption) or date of acceleration, all Purchased Bonds shall be deemed cancelled. Purchased Bonds shall also be cancelled upon direction of the Credit Facility Provider. (d) Remarketing of Purchased Bonds. At such time as a Purchased Bond is remarketed by the Remarketing Agent,the Trustee or the Tender Agent,as appropriate, shall(a) either remit the proceeds from the remarketing to the Credit Facility Provider or deposit the proceeds into the Principal Reserve Fund to the extent amounts had been withdrawn from the Principal Reserve Fund to purchase such Bonds, and (b) give written notice to the Remarketing Agent, the Borrower and the Credit Facility Provider that such Bond is no longer a Purchased Bond. Section 1005. No Sales After Default: No Purchase After Acceleration. Anything in this Indenture to the contrary notwithstanding, there shall be no sales of Bonds pursuant to this Article X if the Trustee shall have given notice to the Remarketing Agent that there shall have 84 occurred and be continuing an Event of Default under Section 601(f) of this Indenture. There shall be no purchase of Bonds pursuant to this Article X if the Trustee shall have given notice to the Remarketing Agent that there has occurred and is continuing an acceleration of Bonds pursuant to Section 602 hereof. Section 1006. Tender Agent Acting Pursuant to Tender Agent ^ffeemeff denture. All purchases of Bonds and other activities of the Tender Agent under this Article are made and carried out by the Tender Agent pursuant to the terms of the Indenture. 85 ARTICLE XI MISCELLANEOUS Section 1101. Limitation of Rights. With the exception of rights herein expressly conferred,nothing expressed or mentioned in or to be implied from this Indenture or the Bonds is intended or shall be construed to give to any Person other than the parties hereto, the Bondholders, the Credit Facility Provider and the Borrower any legal or equitable right, remedy or claim under or in respect to this Indenture or any covenants, conditions and provisions herein contained; this Indenture and all of the covenants, conditions and provisions herein being intended to be and being for the sole and exclusive benefit of the parties hereto, the Bondholders,the Credit Facility Provider and the Borrower as herein provided. Section 1102. Severability. If any provision of this Indenture is held to be in conflict with any applicable statute or rule of law, or is otherwise held to be unenforceable for any reason whatsoever, such circumstances shall not have the effect of rendering the provision in question inoperative or unenforceable in any other part or circumstance, or of rendering any other provision or provisions herein contained invalid, inoperative or unenforceable to any extent whatsoever. The invalidity of any one or more phrases, sentences, clauses or Sections of this Indenture shall not affect the remaining portions of this Indenture,or any part hereof. Section 1103. Notices. Unless otherwise specified herein, it shall be sufficient service or giving of any notice, request, certificate, demand or other communication if the same shall be sent by, and all notices required to be given by mail shall be given by, first class registered or certified mail, return receipt requested, or by private courier service which provides evidence of delivery, postage or other charges prepaid, or sent by telecopy or other Electronic Means which produces evidence of transmission, confirmed by first class mail, and in each case shall be deemed to have been given on the date evidenced by the postal or courier receipt or other written evidence of delivery or electronic transmission. Unless a different address is given by any party as provided in this Section,all such communications shall be addressed as follows: To the Issuer: City of Huntington Beach 2000 Main Street Huntington Beach,CA 92648 Attention: Department of Economic Development Teleconier: 714-375-5087 To the Trustee: Dai-Ichi Kangyo Bank of California '^'�s're'Blvd.,5 ee 555 West 5`h Street.3`a Floor Los Angeles,CA 9004 20013-3033 Attention: Trust Division Teleconier: 213-612-2877 86 To the Remarketing Agent: 8730 Sunset Blyd.,Stdte 240 Los Angeles,GA 9006-5 Attention—Banc One Capital Markets,Inc. 150 East Gay Street,24` Floor Columbus,OH 43215 Attention: Ms. Peggy Sever Telecopier: To the Borrower: Five Mats c,.. ier-, r n . 498000 McAr^A yd./Stgte 680 ttpnt . David R. * iEhel ^Five Points Seniors, c/o Mr. Norman Ward Wardfam Coro. 4 Whitecliff Laguna Niguel,CA 92671 Telecopier: 949-496-5277 with a copy to: Bret H. Reed,Jr.,A Law Corporation 4300 Dove Street SWt 200 te the Develop 200 Garnet Avenue Balboa Island,CA 92662 (which cols shall not constitute notice to the Borrower) Telecopier: 949-462-9044 To the Tender Agent: Dai-Ichi Kangyo Bank of California 555 West 5` Street,3` Floor Los Angles,CA 90013-3033 Attention:Trust Division Telecopier: 213-612-2877 _ To the Rating Agencies Attention: 87 t To the Credit Facility Fannie Mae Provider: 3900 Wisconsin Avenue,N.W. Washington,D.C. 20016-2899 Attention: Director,Multifamily Operations and Asset Management Telecopier: (202) 752-3542 RE: !Cit ,�v of Huntington Beach-Yariable Rate Demand Multifamily Rental Housing Revenue Bonds(Five Points Seniors Project)Series A of 1991: Banc One Capital Funding Corporation with a copy to: If by messenger: Fannie Mae 4000 Wisconsin Avenue,N.W. Washington,D.C. 20016-2899 Attention: Director,Multifamily Operations-Asset Management Telecopier: (202) 752-3542 Re: ity of Huntington Beach Multifamil Housing Revenue Bonds(Five Points Seniors Project)Series A of 1991•Banc One Capital Fundju Cor orn ation with a copy to: If by mail or overnight courier: Fannie Mae 3900 Wisconsin Avenue,N.W. Washington,D.C.20016-2899 Attention:Vice President,Multifamily Asset Management Telecopier: (202)752-501 Re: sefyiEer-!City of Huntington Beach Variable Rate Demand Multifamily Rental Housing Revenue Bonds(Five Points Seniors Project)Series A of 1991; Banc One Capital Funding Cor orn ation with a copy to: If by messenger: Fannie Mae 3939 Wisconsin Avenue,N.W. Washington,D.C. 20016 Attention:Vice President,Multifamily Asset Management Telecopier: (202) 752-5016 Re: RFansaetien 3Cit �v of Huntington Beach Variable Rate Demand Multifamily Rental Housing Revenue Bonds(Five Points Seniors Project)Series A of 1991; Banc One Capital Funding Corporation 88 To the Servicer: Banc One Capital Funding Corporation 150 East Gay Street.24` Floor Columbus,OH 43215 Telecopier: 612-217-1506 provided that, notwithstanding anything to the contrary set forth above in this Section 1103, any notice required to be delivered to the Credit Facility Provider pursuant to Section 1001, 1002 or 1003 of this Indenture shall be addressed as follows: Fannie Mae 3900 Wisconsin Avenue,N.W. Washington,D.C. 20016-2899 Attention: Director of Fiscal Agency Relations, Treasurer's Office Telephone: 202-752-7916 Telecopier:202-752-6087 with a copy to: Fannie Mae 3900 Wisconsin Avenue,N.W. Washington,D.C. 20016-2899 Attention: Office of the General Counsel- Re: Multifamily Matters Telephone: 202-752-7165 Telecopier:202-752-5023 The Issuer, the Borrower, the Credit Facility Provider, the Tender Agent, the Remarketing Agent, the Servicer and the Trustee,by notice given hereunder,may designate any different addresses to which subsequent notices, certificates, requests, demands or other communications shall be sent, but no notice directed to any one such entity shall thereby be required to be sent to more than two addresses except in the case of Fannie Mae. All approvals required hereunder shall be given in writing. Section 1104. Payments Due on Days That Are Not Business Pus. In any case where the date required for payment of principal of or interest on the Bonds or the date fixed for redemption or mandatory purchase of any Bonds shall not be a Business Day, then payment of such principal, interest or redemption or purchase price need not be made on such date but shall be made on the next succeeding Business Day,with the same force and effect as if made on the due date therefor, and, in the case of such payment, no interest shall accrue for the period from and after such due date. Section 1105. Binding Effect. This Indenture shall from and after the Effective Date be binding upon the Issuer, the Trustee, the Borrower and the Credit Facility Provider and their respective successors and assigns, subject, however, to the limitations contained in this Indenture. Section 1106. Governing Law. This Indenture shall be governed by and interpreted in accordance with internal laws of the State without regard to conflicts of laws principles. 89 Section 1107. No Personal Liability: No Recourse. No member, officer, agent, employee or attorney of the Issuer, including any person executing this Indenture or the Bonds, shall be liable personally on the Bonds or for any reason relating to the issuance of the Bonds. No recourse shall be had for the payment of the principal of or the interest on the Bonds, or for any claim based thereon, or otherwise in respect thereof, or based on or in respect of this Indenture or any indenture supplemental hereto, against any member, officer, employee or agent, as such, of the Issuer or any successor, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the issue of the Bonds, expressly waived and released. 90 i The Issuer has caused this Indenture to be executed, sealed, and attested in its name and on its behalf by its duly authorized officers, and the Trustee has caused this Indenture to be executed in its name by its duly authorized officer, all as of the date of execution set forth below. CITY OF HUNTINGTON BEACH Mayor ATTEST: City Clerk APPROVED AS TO FORM: APPROVED AS TO FORM: Jones Hall,A Professional Law Corporation, City Attorney's Office Bond Counsel REVIEWED AND APPROVED: INITIATED AND APPROVED: City Administrator Director of Administrative Services DAI-ICHI KANGYO BANK OF CALIFORNIA,as Trustee By: Authorized Officer 91 EXHIBIT A [FORM OF BOND] No. $9,500,000 CITY OF HUNTINGTON BEACH VARIABLE RATE DEMAND MULTIFAMILY HOUSING REVENUE BONDS (FIVE POINTS SENIORS PROJECT) SERIES A OF 1991 Maturity Date Date of Original Issue CUSIP REGISTERED OWNER: CEDE &CO. PRINCIPAL AMOUNT: NINE MILLION FIVE HUNDRED THOUSAND DOLLARS FOR VALUE RECEIVED, the City of Huntington Beach the "Issuer"), a public body corporate and public of the State of California (the "State") hereby promises to pay, but only from the sources provided herein, to the Registered Owner specified above, or registered assigns, the Principal Amount specified above on the Maturity Date specified above, unless redeemed prior thereto as hereinafter provided,by check,upon surrender hereof at the office of Dai-Ichi Kangyo Bank of California, as trustee (the "Trustee"), designated pursuant to the Indenture hereinafter identified (the "Principal Office" of the Trustee), and to pay by check mailed by first class mail to the Registered Owner at its address as shown on the registration books of the Issuer as maintained by the Trustee, on the Record Date, interest on such Principal Amount from the Date of Original Issue specified above to the Maturity Date specified above or earlier redemption of this Bond at the interest rate per annum provided for in the Indenture, payable (a)during the Weekly Variable Rate Period, on the fifteenth (15th) day of each calendar month, (b) during a Reset Period and the Fixed Rate Period, on each April 15 and October 15, (c) on each Adjustment Date and (d) on the Maturity Date (collectively, the "Interest Payment Dates"),until the Bonds have been either fully paid or retired. As used herein, `Business Day" means a day other than (a) a Saturday or a Sunday, (b) any day on which banking institutions located in the City of New York, New York, or the city or cities in which the Principal Office of the Trustee or the Servicer is located (if different from the above), are required or authorized by law to close, (c) prior to the Conversion Date, any day on which the New York Stock Exchange is closed,or(d)a day on which the provider of the Credit Facility is closed. The Bonds are issued pursuant to and in compliance with the Constitution and laws of the State, particularly Chapter 7 of Part 5 of Division 31 of the Health and Safety Code of the State of California,as amended and supplemented,and a resolution duly adopted by the Issuer. The Bonds are limited obligations of the Issuer payable solely from revenues and funds pledged therefor under the Indenture. No holder of this Bond shall ever have the right to compel the exercise of the taxing power of the State or any political subdivision thereof to pay the principal A-1 of this Bond or the interest hereon or any other cost incident hereto, or to enforce payment hereof against any property of the State or any political subdivision thereof. THE BONDS SHALL NOT CONSTITUTE A DEBT OF THE ISSUER, THE STATE OR ANY POLITICAL SUBDIVISION THEREOF; AND NEITHER THE ISSUER, THE STATE NOR ANY POLITICAL SUBDIVISION THEREOF SHALL BE LIABLE THEREFOR. NEITHER THE FAITH, REVENUES, CREDIT NOR TAXING POWER OF THE ISSUER, THE STATE OR ANY POLITICAL SUBDIVISION THEREOF SHALL BE PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF OR INTEREST ON THE BONDS. THE BONDS ARE NOT A DEBT OF THE UNITED STATES OF AMERICA OR OF ANY AGENCY THEREOF AND ARE NOT GUARANTEED BY THE FULL FAITH AND CREDIT OF THE UNITED STATES OF AMERICA. THE BONDS ARE A SPECIAL LIMITED OBLIGATION OF THE ISSUER, PAYABLE, AS TO PRINCIPAL AND INTEREST, SOLELY OUT OF THE TRUST ESTATE, WHICH IS THE SOLE ASSET PLEDGED THEREFOR. This Bond is one of a duly authorized issue of bonds of the Issuer designated as "City of Huntington Beach Variable Rate Demand Multifamily Housing Reventie Ban&Multifamily Rental Housing"Revenue Bonds (Five Points Seniors Project) Series A of 1991" limited in aggregate principal amount to $9,500,000 (the "Bonds"). The Bonds are issued under and are equally and ratably secured as to principal and interest by an Amended and Restated Indenture of Trust, dated as of April 1, 1999, between the Issuer and the Trustee (the "Indenture"), to which Indenture and all indentures supplemental thereto (copies of which are on file at the Principal Office of the Trustee) reference is hereby made for a description of the trust estate under the Indenture, the nature and extent of the security and the terms and conditions upon which the Bonds are issued and secured, and the rights of the registered owners thereof. The Bonds are being issued to currently refund the Prior Bonds. Defined terms used herein and not defined herein shall have the meanings assigned to them in the Indenture. The Bonds are initially secured by (i) an assignment of payments under a mortgage note (the "Mortgage Note"), executed and delivered by Five Points Seniors, L.P. (the 'Borrower") to the Issuer and (ii)a Collateral Agreement dated as of April 1, 1999 (the "Collateral Agreement") between the Federal National Mortgage Association ("the Credit Facility Provider") and the Trustee, pursuant to which the Credit Facility Provider has agreed, subject to the terms and conditions of the Collateral Agreement, to provide credit enhancement for the Mortgage Note and liquidity for the Bonds by pledging and granting to the Trustee a security interest in certain mortgage loans and other collateral owned by the Credit Facility Provider (the "Pledged Collateral'). The proceeds of the Pledged Collateral, or other funds of the Credit Facility Provider, will be available to the Trustee under the Collateral Agreement to pay principal of and interest on the Mortgage Loan if any required payment under the Mortgage Loan is not timely received by the Trustee. Payments due under the Mortgage Note will be in amounts sufficient to pay all principal of and interest on the Bonds on the dates due for payment under the Indenture. The Collateral Agreement may be replaced by other facilities for credit or liquidity support (an "Alternate Credit Facility" or, together with the Collateral Agreement, a "Credit Facility"), in accordance with the provisions of the Indenture. The Trustee is required under the Indenture to request payment under the Credit Facility in accordance with its terms in order to receive payment thereunder on the dates specified in the Indenture. THE OBLIGATIONS OF THE CREDIT FACILITY PROVIDER ARE NOT BACKED BY THE FULL FAITH AND CREDIT OF THE UNITED STATES OF AMERICA, BUT BY THE CREDIT OF THE CREDIT FACILITY PROVIDER, A FEDERALLY CHARTERED, STOCKHOLDER OWNED CORPORATION. PAYMENT OF PRINCIPAL AND INTEREST ON A-2 THE BONDS IS NOT GUARANTEED BY THE CREDIT FACILITY PROVIDER. THE CREDIT FACILITY PROVIDER'S SOLE OBLIGATION WITH RESPECT TO THE COLLATERAL AGREEMENT IS TO MAKE CERTAIN PAYMENTS UNDER THE COLLATERAL AGREEMENT IN ACCORDANCE WITH ITS TERMS TO THE TRUSTEE. THE CREDIT FACILITY PROVIDER HAS NO OBLIGATION TO PAY PRINCIPAL, PREMIUM, IF ANY, OR INTEREST ON THE BONDS. THE CREDIT FACILITY PROVIDER HAS NO OBLIGATION TO PURCHASE DIRECTLY OR INDIRECTLY ANY OF THE BONDS. The Bonds are issuable as fully registered Bonds in the "Authorized Denominations" of $100,000 or integral multiples thereof (provided that one Bond may be in a denomination that is an integral multiple of$5,000 in excess of$100,000) during any period the Bonds bear interest at a rate determined weekly (the "Weekly Variable Rate Period"), and $5,000 or integral multiples thereof during any period that the rate of interest on the Bonds is fixed for a period of ten years or more or such shorter period as is approved by the Credit Facility Provider (the "Reset Period") or to the maturity date of the Bonds (the "Fixed Rate Period"). This Bond, upon surrender hereof at the Principal Office of the Trustee with a written instrument of transfer satisfactory to the Trustee executed by the registered owner hereof or an attorney duly authorized in writing, may, at the option of the registered owner hereof, be exchanged for an equal aggregate principal amount of Bonds of any other Authorized Denomination. This Bond is transferable as provided in the Indenture, subject to certain limitations therein contained, only upon the bond register kept by the Trustee, and only upon surrender of this Bond for transfer to the Trustee duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Trustee duly executed by, the registered owner hereof or an attorney duly authorized in writing. Thereupon, one or more new Bonds of Authorized Denominations and in the same aggregate principal amount will be issued to the designated transferee or transferees. Any service charge made by the Trustee for any such registration, transfer or exchange hereinbefore referred to shall be paid by the Borrower. The Trustee or the Issuer may require payment by the registered owner of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Neither the Issuer nor the Trustee shall make any such exchange or registration of transfer of any Bond after notice of redemption or partial redemption of such Bond has been given. Except for transfers in connection with optional tenders of Bonds pursuant to the Indenture, the Trustee is not required to register the transfer or exchange of any Bond (or portion thereof) during the fifteen-day period next preceding the selection of Bonds for redemption, and from and after notice calling such Bonds (or portion thereof) for redemption or partial redemption has been given and prior to such redemption. The Issuer,the Trustee and the Tender Agent,and any agent of the Issuer, the Trustee or the Tender Agent, shall treat the person in whose name this Bond is registered as the absolute owner hereof for any purpose, whether or not this Bond would be overdue, and neither the Issuer, the Trustee, the Tender Agent nor any such agent shall be affected by notice to the contrary. Weekly Variable Rate Period. From the date of issuance of the Bonds (the "Effective Date") to,but excluding, the earlier of the date of adjustment to a Reset Rate or the Fixed Rate (the "Adjustment Date" or the Maturity Date specified above, this Bond shall bear interest at the Weekly Variable Rate determined by Bank One Capital Markets, Inc. or its successor (the "Remarketing Agent"), as provided in the Indenture, for each seven-day period from Wednesday of a calendar week for which the Weekly Variable Rate is to be determined, or the Effective Date if not a Wednesday, to and including Tuesday of the next succeeding calendar week. The first and last week of any Weekly Variable Rate Period may consist of more (but not A-3 more than thirteen) or less than seven days. Interest on the Bonds during the Weekly Variable Rate Period shall be computed on the basis of a 365- or 366-day year, as applicable, for the actual number of days elapsed. Reset Period. The Borrower may, upon compliance with certain conditions of the Indenture, cause the interest rate on the Bonds to be adjusted to a Reset Rate, which shall be determined by the Remarketing Agent as provided in the Indenture. During the Reset Period, the Bonds shall bear interest at the Reset Rate, payable on each Interest Payment Date as defined above (commencing on the first Interest Payment Date occurring at least 30 days after the Adjustment Date) to and including the next succeeding Adjustment Date. Such interest shall be computed on the basis of a year of three hundred and sixty (360) days of twelve (12) thirty (30)day months. Fixed Rate Period. The Borrower may, upon compliance with certain conditions of the Indenture, cause the interest rate on this Bond to be converted to the Fixed Rate, which shall be determined by the Remarketing Agent as provided in the Indenture. From such Conversion Date to, but excluding, the Maturity Date specified above, the Bonds shall bear interest at the Fixed Rate, payable on each Interest Payment Date as specified above (commencing on the first Interest Payment Date occurring at least 30 days after such Conversion Date) to and including the Maturity Date. Such interest shall be computed on the basis of a year of three hundred and sixty(360)days of twelve(12) thirty (30) day months. Purchase of Bonds at Option of Registered Owner. During the Weekly Variable Rate Period, any Bond shall be purchased by the Trustee or its agent, Dai-Ichi Kangyo Bank of California, as the Tender Agent (the "Tender Agent"), on behalf of and as agent for the Borrower, on the demand of the beneficial owner thereof, on any Business Day at a purchase price equal to one hundred percent (100%) of the principal amount thereof plus accrued interest, if any, to the date of purchase upon delivery to the Tender Agent,at its Principal Office specified in the Indenture, of a notice as prescribed by the Indenture (a 'Bondholder Tender Notice"). The date stated in the Bondholder Tender Notice on which such Bonds shall be purchased shall be,a Business Day not prior to the seventh day next succeeding the date of delivery of such notice to the Tender Agent. Mandatory Tender on Certain Dates. The registered owners of the Bonds shall be required to tender their Bonds to the Tender Agent for purchase by the Trustee on behalf of and as agent for the Borrower for a purchase price equal to one hundred percent (100%) of the principal amount thereof plus accrued interest to the applicable purchase date on each proposed Adjustment Date, each Adjustment Date, on the date of any substitution of any Credit Facility pursuant to the Indenture, on the date five days before the expiration of any Credit Facility if the Trustee has not received either a commitment to extend the same or an Alternate Credit Facility, and on any date specified by the Trustee following certain defaults or acts of bankruptcy by the Borrower or the provider of the Credit Facility. Bondholders may not elect to retain their Bonds in any such event. Optional Redemption. The Bonds shall be subject to redemption in whole or in part, at the option of the Borrower with the prior written consent of the Credit Facility Provider, (i) on any Interest Payment Date during the Weekly Variable Rate Period, and on the day after any Reset Period at a redemption price equal to one hundred percent (100%) of the principal amount redeemed plus accrued interest to the redemption date; and (ii) during any Reset Period or the Fixed Rate Period on the respective dates and at the respective prices determined as provided in the Indenture. A-4 Mandatory Redemption. The Bonds are subject to mandatory redemption at any time on the earliest practicable date at a redemption price equal to one hundred percent (100%b) of the principal amount of the Bonds to be redeemed plus accrued interest thereon to the redemption date, from the amounts specified in the Indenture, (a) in part in accordance with the mandatory sinking fund redemption provisions of any supplemental indenture; (b) in whole or in part, as provided in the Indenture,following involuntary destruction or loss of the Project as a result of casualty or condemnation; (c)in whole or in part at the request or with the consent of the Credit Facility Provider following an event of default under the Reimbursement Agreement or the Financing Agreement; (d) in whole or in part on any Adjustment Date if and to the extent amounts are transferred from the Principal Reserve Fund to the Redemption Account pursuant to the provisions of the Indenture; (e) in whole or in part, on any Interest Payment Date, if and to the extent amounts are transferred to the Redemption Account from the Principal Reserve Fund at the direction of the Credit Facility Provider pursuant to the provisions of the Indenture; provided that the direction of the Credit Facility Provider shall not be required if the aggregate amount on deposit in the Principal Reserve Fund exceeds the Principal Reserve Amount (f) immediately prior to the termination of the Credit Facility unless an Alternate Credit Facility shall become effective concurrently with the termination of such Credit Facility; (g) in whole or in part to the extent amounts are transferred from the Principal Reserve Fund to the Redemption Account pursuant to the provisions of the Indenture; and in whole or in part to the extent to the extent amounts are deposited as of Fund Payments into the Redemption Account. Bonds purchased pursuant to the liquidity provisions of the Credit Facility or with certain funds available under the Indenture shall be deemed to have been redeemed under the circumstances set forth in the Indenture. If less than all the outstanding Bonds shall be called for redemption, the Trustee shall select by lot,in such manner as it shall in its discretion determine,the Bonds, or portions thereof in Authorized Denominations, to be redeemed. If there shall be called for redemption less than the entire principal amount of a Bond,the Issuer shall execute and the Trustee shall authenticate and deliver, upon surrender of such Bond, without charge to the registered owner thereof, in exchange for the unredeemed principal amount of such Bond, at the option of such registered owner, a Bond or Bonds in Authorized Denominations equal to that portion of the Bond not so redeemed. Notice of Redemption. In the event of a redemption of the Bonds for any reason, notice thereof shall be given by the Trustee to the holders of the Bonds to be so redeemed in the manner specified in this paragraph. Except as provided below, notice of redemption shall be given not less than thirty (30) nor more than forty-five (45) days prior to the date fixed for redemption by first class mail postage prepaid to the registered owner of each Bond to be redeemed, at the address of such registered owner shown on the Register, setting forth the information prescribed by the Indenture which includes any conditions precedent to redemption; provided, however, that no notice of redemption shall be given with respect to any redemption on an Adjustment Date, and that under certain circumstances provided in the Indenture the notice of redemption may occur not less than ten (10) days prior to the date fixed for redemption. A second notice of redemption is required to be sent by registered or certified mail,at such address, to any registered owner who has not submitted its Bond to the Trustee for payment on the sixtieth (60th) day following the date fixed for redemption of such Bond. Notice of such redemption is also required to be sent by the Trustee to certain municipal registered securities depositories and information services, as set forth in the Indenture. Neither failure to receive any such notice nor any defect in any notice so mailed shall affect the sufficiency of the proceedings for the redemption of such Bonds. Such Bonds called for A-5 i 3 redemption must be surrendered at the Principal Office of the Trustee for redemption at the redemption price, and interest on such Bonds will not accrue from and after the redemption date. If provision is made for the payment of principal of and interest on this Bond in accordance with the Indenture, this Bond shall no longer be deemed Outstanding under the Indenture, shall cease to be entitled to the benefits of the Indenture, and shall thereafter be payable solely from the amounts provided for such payment. Under certain circumstances as described in the Indenture, the principal of all of the Bonds may be declared due and payable in the manner and with the effect provided in the Indenture. Immediately following any such declaration of acceleration, the Trustee shall mail notice of such declaration by first class mail to each registered owner of Bonds at such registered owner's last address appearing on the bond register kept by the Trustee. Any defect in or failure to give such notice of such declaration shall not affect the validity of such declaration. The Indenture permits, with certain exceptions therein provided, the amendment thereof and the modification of the rights and obligations of the Issuer, the Borrower, the provider of the Credit Facility and the registered owners of the Bonds at any time with the consent of the registered owners of a majority in aggregate principal amount of the Bonds at the time outstanding which are affected by such amendment or modification. The Indenture also permits amendments and supplements to the Indenture and Credit Facility without requiring the consent of any Bondholders in certain specifically described instances. The Indenture also contains provisions permitting the Trustee to waive compliance by the Issuer and the Borrower with certain provisions of the Indenture and their consequences, subject to the provisions of the Indenture. Supplements and amendments to the Indenture or the Credit Facility may be made only to the extent and in the circumstances permitted by the Indenture. The registered owner of this Bond shall have no right to enforce the provisions of the Indenture or the Financing Agreement, or to institute action to enforce the covenants therein, or to take any action with respect to a default under the Indenture or the Financing Agreement, or to institute, appear in or defend any suit or other proceedings with respect thereto, except as provided under certain limited circumstances described in the Indenture; provided, however, that nothing contained in the Indenture shall affect or impair any right of enforcement conferred on the registered owner hereof to enforce (a) the payment of the principal of and interest on this Bond at and after the maturity hereof, or (b) the obligation of the Issuer to pay the principal of and interest on this Bond to the registered owner hereof at the time and place, from the sources and in the manner provided in the Indenture. The registered owner of this Bond,by acceptance hereof, consents to all of the terms and provisions of the Indenture, the Financing Agreement, the Assignment, and the Mortgage Loan Documents. No recourse shall be had for the payment of the principal of or the interest on this Bond, or for any claim based hereon, or otherwise in respect hereof, or based on or in respect of the Indenture or any indenture supplemental thereto, against the general credit of the Issuer or against any member, officer, employee or agent, as such, past, present or future, of the Issuer or any successor, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the issue hereof, expressly waived and released. A-6 ti IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts, conditions and things required to exist, happen and be performed precedent to the execution and delivery of the Indenture and the issuance of this Bond and the issue of which it is a part, do exist, have happened and have been timely performed in regular form and manner as required by law,and the issuance of this Bond, together with all other obligations of the Issuer, does not exceed or violate any State constitutional or statutory limitation or any other limitation of the Issuer. This Bond shall not be entitled to any benefit under the Indenture or become valid or obligatory for any purpose until authenticated by the certificate of the Trustee or the Tender Agent endorsed hereon. IN WITNESS WHEREOF the Issuer has caused this Bond to be duly executed in its name by the manual or facsimile signature of its Chairman under its official seal, or a facsimile thereof,and attested by the manual or facsimile signature of its Secretary. CITY OF HUNTINGTON BEACH By: Attest: A-7 � Y i [Form of Certificate of Authentication] Certificate of Authentication This Bond is one of the Bonds described in the within mentioned Indenture. DAI-ICHI KANGYO BANK OF DAI-ICHI KANGYO BANK OF CALIFORNIA,as Trustee CALIFORNIA,as Tender Agent By: By: Authorized Signatory Authorized Signatory Date of Authentication: A-8 `p ASSIGNMENT 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 Attorney,to transfer the said Bond on the Bond Register with full power of substitution in the premises. Dated: Signature guaranteed: NOTICE: The signature to this assignment must correspond with the name of the registered owner as it appears upon the face of the within Bond in every particular, without alteration or enlargement or any change whatever. Signature(s) must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Trustee, which requirements include membership or participation in STAMP or such other "signature guaranty program' as may be determined by the Trustee in addition to or in substitution for STAMP, all in accordance with the Securities Exchange Act of 1934,as amended. A-9 1801948 TAD:ams FINAL FIRST AMENDMENT TO AFFORDABLE HOUSING AGREEMENT (Five Points Senior Villas) by and between the REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, the AGENCY and FIVE POINTS SENIORS, L.P., the DEVELOPER FIRST AMENDMENT TO AFFORDABLE HOUSING AGREEMENT (Five Points Senior Villas) THIS FIRST AMENDMENT TO AFFORDABLE HOUSING AGREEMENT (the "First Amendment") is entered into as of April 1, 1999 by and between the REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body corporate and politic organized and existing under the laws of the State of California (the "Agency") and FIVE POINTS SENIORS, L.P., a California limited partnership (the "Developer") and amends that certain Affordable Housing Agreement (Five Points Senior Villas), dated as of November 18, 1991,by and between the Agency and the Developer(the "Agreement'). Section 1. Amendment. Attachment No. 11 to the Agreement is hereby amended and restated in its entirety to read as set forth in Exhibit A to this Resolution. Section 2. Execution in Several Counterparts. This First Amendment may be executed in any number of counterparts,and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. Section 3. No Other Modifications. Except as expressly set forth herein, the Agreement shall remain in full force and effect in accordance with its respective terms. Section 4. Governing Law. This First Amendment shall be governed by and construed in accordance with the laws of the State of California. Section 5. Incorporation By Reference. The Agency and the Developer hereby agree that the amendments contained in this First Amendment shall be incorporated by this reference into the Agreement to produce a conformed amended and restated Agreement which collectively shall serve as the sole operative Agreement. Section 6. Interpretation. In the event of any conflict between the provisions of the Agreement and the provisions of this First Amendment, the provisions of this First Amendment shall control. Section 7. Severability. If any provision of this First Amendment shall be held or deemed to be or shall, in fact,be illegal, inoperative or unenforceable, the same shall not affect any other provision or provisions herein contained or render the same invalid, inoperative or unenforceable to any extent whatever. 1 IN WITNESS WHEREOF, the Agency and the Developer has signed this First Amendment on the respective dates set forth below. REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body corporation and politic Dated: 1999 By: Chairperson ATTEST: Agency Clerk �- APPROVED AS TO FORM: APPROVED AS TO FORM: Jones Hall,A Professional Corporation Agency Generalounsel Agency Special Counsel REVIEWED AND APPROVED: INITIATED AND APPROVED: ecutive Director Director of Administrative Services —&IDirector of Economic Development FIVE POINTS SENIORS,L.P. Dated: .C.C.:,u-t /y 1999 By` �, '�!`� Orman .Ward,Trustee of the Ward Family Trust,under the Restated and Amended Declaration of Trust dated as of 3/6/90, as amended Its: General Partner 2 "REVISED"ATTACHMENT NO. 11 OPERATING BUDGET Original Budget Revised Budget Payroll $144,400 $101,000 Activities Expense 18,000 44,000 Insurance—Building&Fire& Auto&WC 48,000 25,000 AtI oNan Expense 2,800 Advertising 12,000 24,000 Mattagm-Aent Expense " Woo 70.000 TOW Annual Expense $311,600 $266,900 *Maintenance&Utilities not included 3 j 18019-48 JH:TAD:cco 02/26/99D ams 3/12/99D if RECORDING REQUESTED BY AND WHEN RECORDED RETURN TO: Jones Hall,A Professional Law Corporation 650 California Stree418th Floor San Francisco,California 94108 Attn: Thomas A.Downey,Esq. FIRST AMENDMENT TO REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE COVENANTS by and among the CITY OF HUNTINGTON BEACH, as Issuer and DAI-ICHI KANGYO BANK OF C-ALIFOF24M as Trustee and FIVE POINTS SENIORS,L.P., as Developer Dated as of April 1,1999 Relating to $9,5000,000 CITY OF HUNTINGTON BEACH VARIABLE RATE DEMAND MULTIFAMILY RENTAL HOUSING REVENUE BONDS (FIVE POINTS SENIORS PROJECT),SERIES A OF 1991 This First Amendment to Regulatory Agreement and Declaration of Restrictive Covenants amends that certain Regulatory Agreement and Declaration of Restrictive Covenants, dated as of December 1, 1991, by and among the City of Huntington Beach, as Issuer, Dai-Ichi Kangyo Bank.of California, as trustee, and Five Points Seniors, L.P., as Developer, recorded in the records of the County Recorder of the County of Orange as document numbered 91-676424. FIRST A lENDMIIVT TO REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE COVENANTS THIS FIRST AMENDMENT TO REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE COVENANTS (the"First Amendment"),is made and entered into as of April 1, 1999, by and among the City of Huntington Beach, a chartered city and municipal corporation, organized and existing under the laws of the State of California (together with any successor to its rights,duties and obligations,the "Issuer"), Dai-Ichi Kangyo Bank of California, as trustee (the 'Trustee"), and Five Points Seniors, L.P., a California limited partnership (together with its permitted successors and assigns, the "Developer"), owner of the land described in Exhibit A attached hereto amending that certain Regulatory Agreement and Declaration of Restrictive Covenants, dated as of December 1, 1991, by and among the Issuer, the Trustee and the Developer(the"Regulatory Agreement"). RECITALS WHEREAS, pursuant to that certain Indenture of Trust, dated as of December 1, 1991 (as amended and supplemented to the date hereof, the "Original Indenture"), by and between the Issuer and the Trustee, the Issuer has previously issued its $9,500,000 City of Huntington Beach Variable Rate Demand Multifamily Rental Housing Revenue Bonds (Five Points Seniors Project), Series A of 1991 (the 'Bonds"), which remain outstanding in an aggregate principal amount of$9,500,000 on the effective date hereof; WHEREAS, the proceeds of the Bonds were used by the Issuer to fund a loan (the "Mortgage Loan") to provide financing with respect to a multifamily rental housing development owned by the Developer pursuant to that certain Loan Agreement dated as of December 1, 1991 (said loan agreement, as amended and supplemented to the date hereof, being the "Loan Agreement")by and among the Issuer,the Trustee and the Developer; WHEREAS, the obligations of the Developer under the Loan Agreement are secured by that certain Construction Deed of Trust, Assignment of Rents and Fixture Filing, dated as of December 1, 1991 (as amended and supplemented to the date hereof,the"Prior Mortgage"); WHEREAS, subject to certain limited exceptions, the Issuer's rights under the Loan Agreement and the Prior Mortgage were assigned to the Trustee pursuant to the Original Indenture; WHEREAS, Fannie Mae has agreed to secure payments under an Amended and Restated Loan Agreement,dated as of April 1, 1999,by and among the Issuer, the Trustee and the Developer, which, in turn, will provide credit enhancement and liquidity for the Bonds, by pledging and granting to the Trustee a security interest in certain mortgage loans and other collateral owned by Fannie Mae ("Pledged Collateral") pursuant to that certain Collateral Agreement of even date herewith between Fannie Mae and the Trustee (said collateral agreement, as amended, supplemented or otherwise modified from time to time, being the "Collateral Agreement"), in substitution for the existing credit enhancement and liquidity in effect with respect to the Bonds; ' WHEREAS,in connection with the provision by Fannie Mae of credit enhancement and liquidity for the Bonds, the Issuer and the Trustee have agreed, with the consent of the Developer and upon satisfaction of the other conditions set forth in the Original Indenture, to amend and restate the Original Indenture and the Loan Agreement on the terms and conditions provided herein; WHEREAS, pursuant to Section 19 of the Regulatory Agreement, the Regulatory Agreement may be amended,with the prior written consent of the Bank (as defined therein), by a written instrument executed by the parties thereto, and duly recorded in the real property records of the County of Orange;and WHEREAS, the Bank has consented to the execution and delivery of this First Amendment: NOW, THEREFORE, the parties hereto agree to amend the Regulatory Agreement as follows: Section 1. Recitals. The Issuer and the Developer acknowledge that each of the above recitals is true and correct. All capitalized terms not otherwise defined herein shall have the meanings set forth in the Regulatory Agreement. Section 2. Amendments. (a) The following definitions contained in Section 1 of the Regulatory Agreement are hereby amended and restated in their entirety as follows: "A Bement" means the Amended and Restated Loan Agreement, dated as of April 1, 1999, entered into by the Developer, the Trustee and the Issuer pursuant to which the Issuer has made the Developer Loan, as amended and supplemented from time to time. "Assignment"has the meaning ascribed to that term in the Agreement. "Deed of Trust" means the Amended and Restated Gees iee Multifamily Deed of Trust,Assignment of Rents, Security Agreement and Fixture Filing, executed by the Developer and operating as security interest in the Development to the deed of trust trustee for the benefit of the Trustee and Fannie Mae to service the Developer's obligations under the Developer Note and the Reimbursement Agreement, dated as of April 1, 1999, between the Developer and Fannie Mae. "Developer Note" means the Amended and Restated Multifamily Note in the principal amount equal to the principal amount of the Developer Loan executed by the Developer. "Indenture"means the Amended and Restated Indenture of Trust, dated as of April 1, 1999, between the Issuer and the Trustee, pursuant to which the Bonds have been issued,as amended and supplemented from time to time. (b) The definitions of Lq3afik,—" Letter of Credit," and "Intercreditor Agreement" contained in Section 1 of the Regulatory Agreement is-are hereby deleted in their entirety. 2 (c) The following definitions are hereby added to Section 1 of the Regulatory Agreement: "Developer Loan Documents" or "Mortgage Loan Documents" has the meaning assigned-scribed to that the term "MortQaee Loan Documents" in the F4naneingAgreement. "Fannie Mae" means the t a , ,.Tat4ena *r ....:,...Fannie ciprcca--i�zorco o"� Mae, a federally chartered and stockholder-owned corporation dam-organized and existing under the Federal National Mortgage Association Charter Act, 12 U.S.C., § 1716 et seq., and its successors and assigns. " ryicer"means the initial Servicer under the Servicing Agreement, dated as of the date hereof, between the Servicer and Fannie Mae and any successor Servicer appointed by Fannie Mae. (d) Section 7 of the Regulatory Agreement is hereby amended by adding the following to the second paragraph thereof: "Notwithstanding any other provision of this Regulatory Agreement to the contrary,neither Fannie Mae nor the Servicer nor any successor in interest to Fannie Mae or the Servicer will assume or take subject to any liability for the indemnification obligations of the Developer for acts or omissions of the Developer prior to any transfer of title to Fannie Mae or the Servicer, whether by foreclosure,deed in lieu of foreclosure or comparable conversion of the Mortgage Loan; the Developer shall remain liable under this Regulatory Agreement for its acts and omissions prior to any transfer of title to Fannie Mae or the Servicer. Fannie Mae or the Servicer, as the case may be, shall indemnify the Issuer and Trustee following acquisition of the Development by Fannie Mae or the Servicer, as the case may be, by foreclosure, deed in lieu of foreclosure or comparable conversion of the Mortgage Loan, during, and only during, any ensuing period that Fannie Mae or the Servicer, as the case may be, owns and operates the Development, provided that Fannie Mae's and the Servicer's liability shall be limited to acts and omissions of Fannie Mae or the Servicer, as the case may be, occurring during the period of ownership and operation of the Development by Fannie Mae or the Servicer,as the case may be. The Developer shall remain liable under this Regulatory Agreement for its actions and omissions prior to any transfer of title to Fannie Mae or the Servicer." (e) Section 10 of the Regulatory Agreement is hereby amended by deleting in the seventh line thereof the words "and the Trustee" in each place in which such words appear, by replacing the first deletion of such words with the words "which consent shall be provided", by adding the word "reasonably" between the words "evidence" and "acceptable" in the thirteenth line thereof, and by adding the following as the second,a 44hird.and fourth paragraphs thereof: "The provisions of this Section 10 shall not apply to the transfer of the Development to Fannie Mae or the Servicer by foreclosure, deed in lieu of foreclosure or comparable conversion of the Mortgage Loan. No transfer of the Development shall operate to release the Developer from its obligations under this Regulatory Agreement unless the obligations of the Developer herein have been assumed by the transferee as set forth above, in which case the obligations 3 incurred by the transferee Developer from and after the transfer date shall not be the responsibilities of the original Developer. Any written consent to a sale or transfer of the Development obtained from the Issuer shall constitute conclusive evidence that such sale or transfer is not in violation of the terms of this Section 10. Nothing in this Section 10 shall affect any provisions of any other document or instrument between the Developer and any other party which requires the Developer to obtain the prior written consent of such other party in order to sell, transfer or otherwise dispose of the Development or of any direct or indirect interest in the Development or of any interest in the Developer." (f) Section 15 of the Regulatory Agreement is hereby amended and restated in its entirety to read as follows: "Section 15.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 60 days after notice thereof shall have been given by the Issuer or the Trustee to the Developer (provided, however, that the Issuer may at its sole option extend such period if the Developer provides the Issuer with an opinion of Bond Counsel to the effect that such extension will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds), then the Trustee, subject to the provisions of Section 9 hereof and the Assignment and to the extent directed by and acting on behalf of the Issuer, shall declare an "Event of Default" to have occurred hereunder, and, subject to the provisions of the Indenture,may take any one or more of the following steps: 0) 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 or the Trustee hereunder; (ii) have access to and inspect, examine and make copies of all of the books and records of the Developer pertaining to the Development;or (iii)take such other action at law or in equity as may appear necessary or desirable to enforce the obligations, covenants and agreements of the Developer hereunder, provided that such enforcement shall not include seeking a judgment en against the Development for monetary damage . The Trustee shall have the right, in accordance with this Section 15 and the provisions of the Indenture,without the consent or approval of the Issuer, to exercise any or all of the rights or remedies of the Issuer hereunder; provided that prior to taking any such act the Trustee shall give the Issuer written notice of its intended action. All reasonable fees, costs and expenses of the Trustee incurred in taking any action pursuant to this Section 15 shall be the sole responsibility of the Developer. After the Indenture has been discharged, or if the Trustee fails to act under this Section 15, the Issuer may act on its own behalf to declare an "Event 4 of Default" to have occurred and to take any one or more of the steps specified hereinabove to the same extent and with the same effect as if taken by the Trustee. Notwithstanding anything herein or in the Indenture to the contrary, (i) the liability of the Developer hereunder shall be limited as provided in the Agreement and (ii) the occurrence of an event of default under this Regulatory Agreement in respect of any party other than the Developer shall not be deemed, under any circumstances whatsoever, to be a default under the Developer Loan Documents. The parties hereto agree that the maturity date of the Mortgage Note may be accelerated solely by upon the occurrence of a default on the part of the Developer under the Developer Loan Documents that is not cured during any applicable grace period in accordance with their respective terms and for no other reason." (g) Sections 19 and 20 of the Regulatory Agreement are hereby amended and restated in their entirety to read as follows: "Section 19. Amendments. Except as provided in Section 6(a) hereof, this Regulatory Agreement shall be amended only by a written instrument executed by the parties hereto or their successors in title, and duly recorded in the real property records of the County. The parties hereto acknowledge that for so long as the Bonds are outstanding the Bank and the owners of the Bonds are third party beneficiaries to this Regulatory Agreement, and that, except as provided in Section 6(a) hereof, no amendment may occur without the prior written consent of Fannie Mae. Section 20. Notice. All notices,certificates or other communications shall be sufficiently given and (except for notices to the Trustee, which shall be deemed given only when actually received by the Trustee) shall be deemed given on the date personally delivered or on the second day following the date on which the same have been mailed by first class mail, postage prepaid, addressed as follows: Issuer: City of Huntington Beach 2000 Main Street Huntington Beach, California 92648 Attn: Department of Economic Development Trustee: Dai-Ichi Kangyo Bank of California 797`"'' I-- u-"a-, 9!*,-F1-555 West 5" Street 3`d Fl. Los Angeles, California -9004 90013-3033 Attention: Trust Division Developer: Five Points Seniors,L.P. c/o .Norman Ward Wardfam Corv. iryi., Gahf.,...i 927 5 Whitecliff At4entien- David R. Mieh 4s „Laguna Niguel, Cal ornia 92671 5 With a copy to: Bret H. Reed,Jr.,A Law Corporation 4390 rameye c,..eet S ffR. ''^^200 Garnet Avenue Balboa Island, California 92662 (which copy shall not constitute notice to the DeveleperBorrower) Fannie Mae: If by mail or overnight courier: Fannie Mae 3900 Wisconsin Avenue, N.W. Drawer AM Washington, D.C. 20016 Attention: Director,Multifamily Operations Asset Management Telecopy: (202) 752-3542 Re: $9,500,000 City of Huntington Beach Variable Rate Demand Multifamily Rental Housing Revenue Bonds (Five Points Seniors Project) Series A of 1991; Banc One Capital Funding Corporation If by messenger. Fannie Mae 4000 Wisconsin Avenue, N.W. Washington, D.C. 20016 Attention: Director,Multifamily Operations Asset Management Telecopy: (202) 752-3542 Re: $9,500,000 City of Huntington Beach Variable Rate Demand Multifamily Rental Housing Revenue Bonds (Five Points Seniors Project)Series A of 1991; Banc One Capital Funding Corporation With a copy to: If by mail or overnight courier: Fannie Mae 3900 Wisconsin Avenue, N.W. Washington, D.C. 20016 Attention:Vice President,Multifamily Asset Management Telecopy: (202) 752-5016 Re: $9,500,000 City of Huntington Beach Variable Rate Demand Multifamily Rental Housing Revenue Bonds (Five Points Senior Project)Series A of 1991; Banc One Capital Funding Corporation 6 If by messenger: Fannie Mae 3939 Wisconsin Avenue, N.W. Washington, D.C. 20016 Attention:Vice President,Multifamily Asset Management Telecopy: (202) 752-5016 Re: $9,500,000 City of Huntington Beach Variable Rate Demand Multifamily Rental Housing Revenue Bonds (Five Points Seniors Project) Series A of 1991; Banc One Capital Funding Corporation" (h) The Regulatory Agreement is hereby amended by adding the following as Sections 24, 25 and 26 thereof: "Section 24. No Interference or Impairment of Mortgage Loan. Notwithstanding anything herein to the contrary, as long as the Collateral Agreement or any other credit enhancement facility provided by Fannie Mae remains outstanding and Fannie Mae is not in default of its obligations under the Collateral Agreement or any such other credit enhancement facility, (i) the occurrence of an event of default under the Regulatory Agreement shall not, under any circumstances whatsoever, be deemed or constitute a default under the Developer Loan Documents, except as may be otherwise specified in the Developer Loan Documents, and shall not impair, defeat or render invalid the lien of the Deed of Trust and (ii)none of the Issuer,the Servicer,the Trustee nor any other person shall: (a)initiate or take any action which may have the effect, directly or indirectly, of impairing the ability of the Developer to timely pay the principal of, interest on, or other amounts due and payable under, the Developer Loan; (b)interfere with or attempt to interfere with or influence the exercise by Fannie Mae or the Servicer of any of their rights under the Developer Loan, including, without limitation, Fannie Mae's or the Servicer remedial rights under the Developer Loan Documents upon the occurrence of an event of default by the Developer under the Developer Loan; or (c) upon the occurrence of an event of default under the Developer Loan, take any action to accelerate or otherwise enforce payment or seek other remedies with respect to the Developer Loan, it being understood and agreed that neither the Issuer nor the Trustee may, without the prior written consent of Fannie Mae, on account of any default under this Regulatory Agreement,seek,in any manner, to cause the Developer Loan to become due and payable,to enforce the Developer Note or to foreclose on the Deed of Trust or cause the Trustee to redeem the Bonds or to declare the principal of the Bonds and the interest accrued on the Bonds to be immediately due and payable, or cause the trustee to foreclose or take any other action under the Agreement or the Indenture,the Developer Loan Documents or any other documents which would or could have the effect of achieving any one or more of the foregoing actions, events or results. 7 No person other than Fannie Mae shall have the right to declare the principal balance of the Developer Note to be immediately due and payable or to initiate foreclosure or other like action. The foregoing .prohibitions and limitations shall not limit the rights of the Issuer or the Trustee to specifically enforce this Regulatory Agreement or to seek injunctive relief in order to provide for the operation of the Development in accordance with the requirements of the Code and the Act, and shall not be construed to limit the rights of the Issuer to enforce its rights against the Developer under the indemnification provisions of this Regulatory Agreement provided that the prosecution of a claim for indemnification shall not cause the Developer to file a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Developer under any applicable liquidation, insolvency, bankruptcy, rehabilitation, composition, reorganization, conservation or other similar law in effect now or in the future. Notwithstanding anything in this Regulatory Agreement to the contrary, any right of the Issuer or the Trustee to take any action at law or in equity to enforce the obligations, covenants and agreements of the Developer under this Regulatory Agreement which includes any claim for indemnification, damages or any other monetary obligation sought to be enforced shall, as provided in Section 25 of this Regulatory Agreement, be subject and subordinate in priority and right to payment and in all other respects to the obligations. liens, rights (including, without limitation,the right to repayment in full of all amounts due to Fannie Mae under the Developer Loan Documents)and interests arising or generated under the Developer Loan Documents. All obligations of the Developer under this Regulatory Agreement for the payment of money, including claims for indemnification and damages shall not be secured by or in any manner constitute alien on the Development, and neither the Issuer nor the Trustee or any other person shall have the right to enforce such obligations other than directly against the Developer pursuant to Section 15 of this Regulatory Agreement. and no such person shall have recourse to the Development in respect thereof. No subsequent Developer of the Development shall be liable or obligated for the breach or default of any obligation of any prior Developer unless specifically assumed in writing by a subsequent Developer, including, but not limited to, any payment or indemnification obligation. Such obligations shall be personal to the person who was the Developer at the time the default or breach was alleged to have occurred and such person shall remain liable for any and all damages occasioned by the default or breach even after such person ceases to be the Developer of the Development. Promptly upon determining that a violation of this Regulatory Agreement has occurred, the Issuer or the Trustee shall, by notice in writing to the Servicer and Fannie Mae, inform the Servicer and Fannie Mae that such violation has occurred, the nature of the violation and that the violation has been cured or has not been cured, but is curable within a reasonable period of time, or is incurable; notwithstanding the occurrence of such violation, neither the Issuer nor the Trustee shall have, and each of them acknowledge that they shall not have, any right to 8 cause or direct acceleration of the Developer Loan,to enforce the Developer Note or to foreclose on the Deed of Trust. Section 25. Subordination. The terms, covenants and restrictions of this Agreement( other than those set forth in Sections 3 and 4) are and shall at all times hereafter remain subject and subordinate, in all respects, to the liens, rights and interests created under the Developer Loan Documents. Upon a conveyance or other transfer of title to the Development by foreclosure (judicial or under power of sale), deed in lieu of foreclosure or comparable conversion of the Developer Loan, the party who acquires title to the Development pursuant to such foreclosure or deed in lieu of foreclosure or comparable conversion (unless such party is the Developer or a person related to the Developer within the meaning of the Code, in which event this Agreement shall remain in full force and effect) shall acquire such title free and clear of the terms, covenants and restrictions of this Agreement, other than those set forth in Sections 3 and 4,and, from and after the date on which such party acquires title to the Development,the terms,covenants and restrictions of this Agreement, other than those set forth in Section 3 and 4, shall automatically terminate and be of no force and effect; provided that Sections 3 and 4, shall also terminate and be of no force or effect under the circumstances set forth in the second paragraph of Section 11. Section 26.Third-Party Beneficiary The parties to the Regulatory Agreement recognize and agree that the terms of the Regulatory Agreement and the enforcement of those terms are essential to the security of Fannie Mae and are entered into for the benefit of various parties,including Fannie Mae. Fannie Mae shall accordingly have contractual rights in this Regulatory Agreement and shall be entitled (but not obligated) to enforce,separately or jointly with the Issuer and/or the Trustee, or to cause the Issuer or the Trustee to enforce,the terms of the Regulatory Agreement. In addition, Fannie Mae is intended to be and shall be a third-party beneficiary of this Regulatory Agreement." (i) The Regulatory Agreement is hereby amended by deleting therefrom all references to the "Ba- the "Letter of Credit," and the "Intercreditor Agreement." The Regulatory Agreement is hereby amended by substituting the word "Fannie Mae wherever the term'Bank" appears in the Regulatory Agreement. Section 3. Execution in Several Counterparts. This First Amendment may be executed in any number of counterparts,and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. Section 4. No Other Modifications. Except as expressly set forth herein, the Regulatory Agreement shall remain in full force and effect in accordance with its respective terms. Section 5. Governing Law. This First Amendment shall be governed by and construed in accordance with the laws of the State of California. Section 6. Incorporation By Reference. The Issuer, the Developer and the Trustee hereby agree that the amendments and supplements contained in this First Amendment shall be incorporated by this reference into the Regulatory Agreement to produce a conformed amended and restated Regulatory Agreement which collectively shall serve as the sole operative 9 ` Regulatory Agreement in connection with the Development and the Bonds. The amendments contained herein shall be effective as of the date of this First Amendment. Section 7. Interpretation. In the event of any conflict between the provisions of the Regulatory Agreement and the provisions of this First Amendment, the provisions of this First Amendment shall control. Section 8. Severability. If any provision of this First Amendment shall be held or deemed to be or shall,in fact, be illegal, inoperative or unenforceable, the same shall not affect any other provision or provisions herein contained or render the same invalid, inoperative or unenforceable to any extent whatever. 10 IN WITNESS WHEREOF, the Issuer, the Trustee and the Developer have executed this First Amendment to Regulatory Agreement and Declaration of Restrictive Covenants by duly authorized representatives, all as of the date first written above. CITY OF HUNTINGTON BEACH Mayor ATTEST: City Clerk APPROVED AS TO FORM: APPROVED AS TO FORM: Jones Hall, A Professional Law Corporation, City Attorney's Office Bond Counsel REVIEWED AND APPROVED: INITIATED AND APPROVED: City Administrator Director of Administrative Services 11 DAI-ICHI KANGYO BANK OF CALIFORNIA,as Trustee By: Authorized Officer FIVE POINTS SENIORS, L.P. By:Norman D. Ward,Trustee of The Ward Family Trust,under the Restated and Amended Declaration of Trust dated as of 3/6/90, as amended Its: General Partner ACKNOWLEDGED AND CONSENTED TO: WELLS FARGO BANK, N.A. By: Its: 12 JONES HALL • A PROFESSIONAL LAW CORPORATION ATTORNEYS AT LAW CHARLES F.ADAMS 650 GALIFORNIA STREET STEPHEN R.GASALEGGIO EIGHTEENTH FLOOR THOMAS A.DOWNEY SAN FRANCISCO,CA 94108 ANDREW G.HALL,JR. GOURTNEY L.JONES TELEPHONE WILLIAM J.KADI (415)391-5780 CHRISTOPHER K.LYNCH FACSIMILE WILLIAM H.MADISON (415)391-5784 DAVID J.OSTER March 25, 1999 DAVID A.WALTON HOMEPAGE:http://www.jhhw.com KENNETH I.JONES,of couNsEL City Council City of Huntington Beach 2000 Main Street Huntington Beach,CA 92648 OPINION: $4,895,000 City of Huntington Beach Multifamily Housing Revenue Bonds (Village Partnership Project) 1986 Series A--1999 Reissuance Transaction Members of the City Council: • We have acted as bond counsel in connection with the reissuance by the City of Huntington Beach, California (the "City"), of $4,895,000 aggregate principal amount of City of Huntington Beach Multifamily Housing Revenue Bonds (Village Partnership Project), 1986 Series A, originally dated November 7, 1986, subsequently reissued June 21, 1989 and April 9, 1997,and reissued on the date hereof(the "Bonds"),pursuant to Chapter 7 of Part 5 of Division 31 of the Health and Safety Code of the State of California, as amended (the "Law"), and an Indenture of Trust, dated as of November 1, 1986, as amended by that certain First Supplemental Indenture of Trust, dated as of June 1, 1989, that certain Second Supplemental Indenture of Trust, dated as of March 1, 1997 and that certain Third Supplemental Indenture of Trust, dated as of March 1, 1999 (as amended, the "Indenture"), by and between the City and U.S. Bank Trust National Association, as successor trustee to First Trust Washington, the successor in interest to Seattle-First National Bank (the "Trustee"). We have examined the law and such certified proceedings and other papers as we deem necessary to render this opinion. As to questions of fact material to our opinion, we have relied upon representations of the City contained in the Indenture, representations of Village Partnership, a California General Partnership (the "Owner") contained in that certain Loan Origination and Servicing Agreement, dated as of November 1, 1986, as amended by that certain First Amendment to Loan Origination and Servicing Agreement,dated as of June 1, 1989, that certain Second Amendment to Loan Origination and Servicing Agreement, dated as of March 1, 1997, each by and among the City,the Trustee, the Owner and the Federal Deposit Insurance Corporation,as Receiver for Mercury Federal Savings and Loan Association (the "FDIC"), and that certain Third Amendment to Loan Origination and Servicing Agreement,by and among the City, the Trustee and the Owner, and in the certified proceedings and certifications of public officials, representatives of the Owner and others furnished to us without undertaking to verify the same by independent investigation. • City of Huntington Beach March 25, 1999 Page 2 Based upon the foregoing,we are of the opinion,under existing law,as follows: 1. The City is duly created and validly existing as a municipal corporation and chartered city with the power to enter into the Indenture, perform the agreements on its part contained therein and issue the Bonds. 2. The Indenture has been duly approved by the City and constitutes a valid and binding obligation of the City enforceable upon the City. 3. Pursuant to the Law, the Indenture creates a valid lien on the funds pledged by the Indenture for the security of the Bonds on a parity with other bonds (if any) issued or to be issued under the Indenture,subject to no prior lien granted under the Law. 4. The Bonds have been duly authorized, executed and delivered by the City and are valid and binding special obligations of the City, payable solely from the sources provided therefor in the Indenture. 5. For the period beginning on the date hereof and continuing through April 30,2001, the interest on the Bonds is excluded from gross income for federal income tax purposes,except during any period while a Bond is held by a "substantial user" of the facilities financed by the Bonds or a "related person" within the meaning of section 147(a) of the Internal Revenue Code • of 1986 (the "Code"). It should be noted,however,that such interest is an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations. The opinions set forth in the preceding sentence are subject to the condition that the City and the Owner comply with all requirements of the Code that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be, or continue to be, excluded from gross income for federal income tax purposes. The City and the Owner have covenanted to comply with each such requirement. Failure to comply with certain of such requirements may cause the inclusion of interest on the Bonds in gross income for federal income tax purposes to be retroactive to the date of issuance of the Bonds. We express no opinion regarding other federal tax consequences arising with respect to the Bonds. 6. The interest on the Bonds is exempt from personal income taxation imposed by the State of California. The rights of the owners of the Bonds and the enforceability of the Bonds and the Indenture may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights heretofore or hereafter enacted and may also be subject to the exercise of judicial discretion in appropriate cases. Respectfully submitted, A Professional Law Corporation NONE S HALL A PROFESSIONAL LAW CORPORATION ATTORNEYS AT LAW CHARLES F.ADAMS -350 CALIFORNIA STREET STEPHEN R.CASALEGGIO EIGHTEENTH FLOOR THOMAS A.DOWNEY SAN FRANCISCO,CA 94108 ANDREW G.HALL,JR. GOURTNEY L.JONES TELEPHONE WILLIAM J.KADI (415)391-5780 CHRISTOPHER K.LYNCH FACSIMILE WILLIAM H.MADISON (415)091-5784 DAVID J.OSTER DAVID A.WALTON March 25, 1999 HOMEPAGE:http://www.ihhw.com KENNETH I.JONES,OF WUNSE City of Huntington Beach 2000 Main Street Huntington Beach,California 92648 U.S. Bank Trust National Association 601 Union Street,Suite 2120 Seattle,Washington 98101 SUPPLEMENTAL OPINION: $4,895,000 City of Huntington Beach, California Multifamily Housing Revenue Bonds, 1986 Series A -- 1999 Reissuance Transaction Ladies and Gentlemen: We are acting as bond counsel in connection with the March 23, 1999 reissuance by the City of Huntington Beach (the "City") of its Multifamily Housing Revenue Bonds, 1986 Series A (the 'Bonds") in the aggregate principal amount of $4,895,000, pursuant to an Indenture of Trust, dated as of November 1, 1986, as amended by that certain First Supplemental Indenture of Trust, dated as of June 1, 1989, and that certain Second Supplemental Indenture of Trust, dated as of March 1, 1997 (as amended, the "Indenture"), both between the City and U.S. Bank Trust National Association, as successor trustee to First Trust Washington, the successor in interest to Seattle-First National Bank (the "Trustee"). The proceeds of the Bonds, as originally issued in the aggregate principal amount of $7,700,000, were loaned to Village Partnership, a California General Partnership (the "Developer"), pursuant to the provisions of a Loan Origination and Servicing Agreement, dated as of November 1, 1986, as amended by that certain First Amendment to Loan Origination and Servicing Agreement, dated as of June 1, 1989, and that certain Second Amendment to Loan Origination and Servicing Agreement,dated as of March 1, 1999, both by and among the City, the Trustee, The Federal Deposit Insurance Corporation, as Receiver for Mercury Federal Savings and Loan Association (the "FDIC") and the Developer(as amended,the"Loan Agreement"). In connection with the reissuance of the Bonds, the City and the Trustee are executing and delivering on the date hereof that certain Third Supplemental Indenture of Trust, dated as of March 1, 1999 (the "Third Supplemental Indenture"), and the City, the Trustee and the Developer are executing and delivering that certain Third Amendment to Loan Origination and Servicing Agreement,dated as of March 1, 1999 (the"Second Amendment to Loan Agreement"). The owner of 100 percent of the aggregate outstanding principal amount of the Bonds is consenting to the Third Supplemental Indenture and the Third Amendment to Loan Agreement. City of Huntington Beach U.S. Bank Trust National Association March 25, 1999 Page 2 In connection with execution and delivery of the Third Supplemental Indenture and the Third Amendment to Loan Agreement, we have examined the law, the Indenture, the Loan Agreement and such certified proceedings and other papers as we deem necessary to render this opinion. As the result of such examination, it is our opinion that the Third Supplemental Indenture and the Third Amendment to Loan Agreement (A) are authorized and permitted pursuant to the provisions of the Indenture and the Loan Agreement, (B) comply with the provisions of the Indenture and the Loan Agreement, including specifically the provisions of Article X and Article XII thereof, and (C) will, upon execution and delivery thereof by the parties thereto, be valid and binding upon the City in accordance with their terms. We are further of the opinion that execution and delivery of the Third Supplemental Indenture and the Third Amendment to Loan Agreement will not, in and of themselves, adversely affect either any exclusion from gross income for federal income tax purposes or exemption from personal income taxation imposed by the State of California of interest on the Bonds in effect on the date hereof. We express no opinion herein as to any matter governed by laws other than the laws of the State of California and the laws of the United States of America. This opinion is being rendered to you solely for your benefit in connection with the execution and delivery of the Third Supplemental Indenture and the Second Amendment to Loan Agreement and is not to be relied on, used, circulated, quoted or otherwise referred to by anyone else for any other purpose. Respectfully submitted, j A Professional Law Corporation JONES HALL A PROFESSIONAL LAW CORPORATION ATTORNEYS AT LAW CHARLES F.ADAMS 4350 CALIFORNIA STREET STEPHEN R.GASALEGGIO EIGHTEENTH FLOOR THOMAS A.DOWNEY SAN FRANCISCO.CA 94108 ANDREW C.HALL,JR. COURTNEY L.JONES TELEPHONE WILLIAM J.KADI (415)091-b780 CHRISTOPHER K.LYNCH FACSIMILE WILLIAM H.MADISON (415)391-5784 DAVID J.OSTER DAVID A.WALTON HOMEPAGE:http://www.jhhw.com KENNETH L JONES.or,❑ouxsEL March 25, 1999 U.S. Bank Trust National Association 601 Union Street, Suite 2120 Seattle, Washington 9810 RELIANCE LETTER Regarding Final Approving Legal Opinion: City of Huntington Beach, Multifamily Housing Revenue Bonds (Village Partnership Project), 1986 Series A -- 1999 Reissuance Transaction ($4,895,000 principal amount) Ladies and Gentlemen: We have this day released to the City of Huntington Beach our final approving legal opinion with respect to the captioned financing. The foregoing opinion may be relied upon by U.S. Bank Trust National Association, as trustee with respect to the above-captioned bonds, to the same extent as if such opinion were addressed to it. Respectfully submitted, f ' A-Professional Law Corporation 40 $4,895,000 CITY OF HUNTINGTON BEACH Multifamily Housing Revenue Bonds (Village Partnership Project), 1986 Series A 1999 Reissuance Transaction ($4,895,000) Financial Analyst Report Project Attorney : Christopher K. Lynch,Esq. Tax Attorney : David A.Walton,Esq. Financial Analyst: Carl J. D'Agostini Project Coordinator: Phyllis C.Henry Client Matter Number: 18019-49 Calculations: Weighted Average Maturity 17.60000 Years Remaining Weighted Average Maturity 17.60000 Years Assumptions: 1. The Dated Date of the Issue is March 25, 1999. 2. The Closing Date of the Issue is March 25, 1999. Attachments: Weighted Average Maturity Calculation Remaining Weighted Average Maturity Calculation Jones Hall, 3/26/99 9:51 AM Page 1 A Professional Law Corporation $4,895,000 CITY OF HUNTINGTON BEACH Multifamily Housing Revenue Bonds (Village Partnership Project), 1986 Series A 1999 Reissuance Transaction ($4,895,000) Weighted Average Maturity: 17.60000 Years Principal Maturity Reoffering Adjusted Years To AP Multiplied Amount Date Price Principal(AP) Maturity (YTM) By YTM $4,895,000.00 11/01/16 100.00000 4.8950 17.6000 86.1520 $4,895,000.00 4.8950 17.6000 86.1520 Weighted Average Maturity: 17.6000 = 86.1520 /4.8950 Weighted Average Maturity Date : October 31,2016 3/26/99 Page 2 $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 1997 Reissuance Transaction ($4,895,000) Remaining Weighted Average Maturity: 17.60000 Years Principal Maturity Adjusted Years To AP Multiplied Amount Date Price Principal(AP) Maturity(YTM) By YTM $4,895,000.00 11/01/16 100.000 4.8950 17.6000 86.1520 $4,895,000.00 4.8950 86.1520 Remaining Weighted Average Maturity: 17.6000 =86.1520 /4.8950 Weighted Average Maturity Date: October 31,2016 3/26/99 Page 3 U.S. BANK TRUST NATIONAL ASSOCIATION BYLAWS ARTICLE I • - - Meetings of Shareholders Section 1.1 Annual Meeting. The annual meeting of the shareholders, for the election of directors and the transaction of other business,shall be held at a time and place as the Chairman or President may designate. Notice of such meeting shall be given at least ten days prior to.the date thereof,to each shareholder of the Association. If, for any reason, an election of directors is not made on the designated day,the election shall be held on some subsequent day, as soon thereafter as practicable,with prior notice thereof. Section 1.2 Special Meetings. Except as otherwise specifically.provided by law, special meetings of shareholders may be called for any purpose, at any time by a majority of the board of directors,or by any shareholder or group of shareholders owning at least ten percent of the outstanding stock. Every such special meeting,unless otherwise provided by law,shall be called upon not less than ten days prior notice stating the purpose of the meeting. Section 1.3 Nominations for Directors. Nominations for election io the board of directors may be made by the board of directors or by any shareholder. Section 1.4 Proxies. Shareholders may vote at any meeting of the shareholders by proxies duly authorized in writing. Proxies shall be valid only for one meeting and any adjournments of such meeting and shall be filed with the records of the meeting. Section 1.5 Quorum. A majority of the outstanding capital stock,represented in. ptison or by proxy,shall constitute a quorum at any meeting Of shareholders;unless otherwise provided by law. A majority of the votes cast shall decide every Question or matter submitted to the shareholders at any meeting,unless otherwise provided by law or by the Articles of Association. ARTICLE II Directors Section 2.1 Board of Directors. The Board of Directors(hereinafter referred to as the"board),shall have power to manage and administer the business and affairs of the Association. All authorized corporate powers of the Association shall be vested in and may be exercised by the board. March 30, 1998 1 Section 2.2 Powers. In addition to the foregoing,the board of directors shall . have and may exercise all of the powers granted to or conferred upon it by the Articles of Association,the Bylaws and by law. Section 2.3 Number. The Board shall consist of a number of members to be fixed and determined from time to time by resolution of the board or the shareholders at any meeting thereof in accordance with the Articles of Association. Section 2.4 Organization Meeting. The newly elected board shall meet for the purpose of organizing the new board and electing and appointing such officers of the Association as may be appropriate. Such meeting shall be held on the day of the election even within thirty days thereafter. If, at or as soon thereafter as practicable, and,in any � resent the time fixed for such meeting,there shall not be a quorum present,the directors.p may adjourn the meeting until a quorum-is obtained. Section 2.5 Regular Meetings. The regular meetings of the board shall be held, without notice, as the Chairman or President may designate and deem suitable. Section 2.6 Special Meetings. Special meetings of the board may be called by the Chairman or the President of the Association,or at the request of two or more directors. Each member of the board shall be given notice stating the tune and place of each such meeting. Section 2.7Quorum. A majority of the directors shall constitute a quorum at any by law;but fewer may adjourn any meeting. meeting,except when otherwise provided Unless otherwise provided,once a quorum is established,any act by a majority of those constituting the quorum shall be the act of the board Section 2.8 Vacancies. When any vacancy occurs among the directory,the remaining members of the board may appoint a director to fill such vacancy at any i!V r meeting of the board,or at a special meeting called for that purpose.. ARTICLE III Committees y al Section 3.1 Advisory Board of Directors. The board may appoint persons,who need not be directors,to`serve as advisory directors on an advisory board of directors established with respect to the business affairs of either this Association alone or the business affairs of a group of affiliated organizations of which this Association is one. Advisory directors shall have'such powers and duties as may be determined by the board, provided that the board's responsibility for the business and affairs of this Association shall in no respect be delegated or diminished March 30, 1998 2 Section 3.2 Audit Committee. The board shall appoint an Audit Committee which shall consist of at least two Directors of the Association or of an affiliate of the Association. If legally permissible,the board may determine to name itself as the Audit Committee. The Audit Committee shall direct and review audits of the Association's fiduciary activities. "The members of the Audit Committee shall be appointed each year and shall continue to act until their successors are named. The Audit Committee shall have power to adopt its own rules and procedures and to do those things which in the judgment of such Committee are necessary or helpful with respect to the exercise of its functions or the satisfaction of its responsibilities. Section 3.3 Executive Committee. The board may appoint an Executive Committee,which shall consist of at least three directors and which shall have, and may exercise, all the powers of the board between meetings of the board or otherwise when the board is not meeting. Section 3.4 Other Committees. The board may appoint, from time to time, committees of one or more persons who need not be directors,for such purposes and with such powers as the board may determine. In addition,either the Chairman or the. President may appoint,from time to time,committees of one or more officers, employees,agents or other persons,for such purposes and with such powers as either the Chairman or the President deems appropriate and proper. Whether appointed by the board,the Chairman,or the President,any such Committee shall at all times be subject to the direction and control of the board. - Section3.5 Meetings.Minutes and Rules. An advisory board of directors and/or committee shall meet as necessary in consideration of the purpose of the advi fsory board. of directors or committee,and shall maintain minutes in sufficient detail to indicate actions taken or recommendations made;unless required by the members,discussions,. votes,or other specific details need not be reported. An advisory board of directors or a. . committee may,in consideration of its purpose,adopt its own rules for the exercise of any of its functions or authority. ARTICLE IV Officers and Employees Section 4.1 Chairman of the Board. The board may appoint one of its members to be Chairman of the board to serve at the pleasure of the board. The Chairman`shall supervise the carrying out of the policies adopted or approved by the board; shall have general executive powers, as well as the specific powers conferred by these Bylaws; shall also have and may exercise such powers and duties as from time to time may be conferred upon or assigned by the board. March 30, 1998 3 Section 4.2 President The board may appoint one of its members to be President of the Association. In the absence of the Chairman,the President shall preside at any meeting of the board. The President shall have general executive powers, and shall have and may exercise any and all other powers and duties pertaining by law,regulation or practice,to the Office of President,or imposed by these Bylaws. The President shall also have and may exercise such powers and duties as from tine to time may be conferred or assigned by the board. Section 4.3 Vice President. The board may appoint one or more Vice Presidents who shall have such powers and duties as may be assigned by the board and to perform the duties of the President on those occasions when the President is absent, including presiding at any meeting of the board in the absence of both the Chairman and President. Section 4.4 aggLetM. The board shall appoint a Secretary,or other designated officer who shall be Secretary of the board and of the Association, and shall keep accurate minutes of all.meetings. The Secretary shall attend to the giving of all notices required by these Bylaws to be given; shall be custodian of the corporate seal, records, documents and papers of the Association; shall provide for the keeping of proper records of all transactions of the Association;shall have and may exercise any and all other powers and duties pertaining by law,regulation or practice,to the Secretary,or imposed by these Bylaws;-and shall also perform such other duties as may be assigned from time to time,by the board. Section 4.5 Other Officers. The board may appoint,and may authorize the Chairman or the President to appoint,any officer as from time to time may appear to the board,the Chairman or the President to be required or desirable to transact the business of the Association. Such officers shall exercise such powers and perform such duties as pertain to their several offices,or as may be conferred upon or assigned to them by the Bylaws,the board,the Chairman or the President. Section 4.6 Tenure of Office. The Chairman or the President and all other officers shall hold office for the current year for which the board was elected,-unless they shall resign,become disqualified,or be removed. Any vacancy occurring in the Office of Chairman or President shall be filled promptly by the board. 1 Any officer elected by the board or appointed by the Chainuan or the President may be removed at any time,with or without cause,by the affirmative vote of a majority of the board or,if such officer was appointed by the Chairman or the President,by the Chairman or the President,respectively. March 30,4998 4 . I ARTICLE V Stock f the Section 5.1. Shares of stock shall �fifers of stock shall rable on the booksr recorded.•and a Transfer book shall be kept in which proportion to such person's person becoming a shareholder by such transfer shall,in pro p shares,succeed to all rights of the prior holder of such shares. Each certificate of stock shall recite on its face that the stock represented thereby is transferable only upon the books and records of the Association properly endorsed. ARTICLE VI Corporate Seal Section 6.1. The Association shall have no corporate seal;provided,however, that if the use of a seal is required by,or is otherwise convenient or advisable pursuant to, the laws or regulations of any jurisdiction,the following seal may be used;and the Chairman,the President,the Secretary and any Assistant Secretary shall have authority to affix such seal: ARTICLE VII Miscellaneous Provisions Section 7.1 Execution of Instruments. All agreements,checks,drafts,orders' indentures,notes,mortgages,deeds,conveyances,transfers,endorsements,assignments, certificates,declarations,receipts,discharges,releases,satisfaction%'settlements, petitions,schedules,accounts,affidavits,bonds,undertakings,gum proxies and other instruments or documents may be signed,countersigned,executed,acknowledged, endorsed,verified,delivered or accepted on behalf of the Association,whether in a fiduciary capacity or otherwise,by an officer of the Association,or such employee or agent as may be designated from time to time by the board by resolution,or by the Chairman or the President by written instrument,which resolution or instrument shall be. certified as in effect by the Secretary or an Assistant Secretary of the Association. The provisions of this section are supplementary to any other provision of the Articles of Association or Bylaws. March 30, 1998 5 ' t Section 7.2 Records .. The Articles of Association,the Bylaws,and the proceedings of all meetings of the shareholders,the board, and standing committees of the board, shall be recorded in appropriate minute books provided for the purpose. The minutes of each meeting shall be signed by the Secretary,or other officer appointed to act ag Secretary of the meeting. Section 7.3 Trust Files. There shall be maintained in the Association files all fiduciary records necessary to assure that its fiduciary responsibilities have been properly undertaken and discharged. Section 7.4 Trust Investments. Funds held in a fiduciary capacity shall be invested according to the instrument establishing the fiduciary relationship and according to law. Where such instrument does not specify the character and class of investments to be made and does not vest in the Association a discretion in the matter,funds held. pursuant to such instrument shall be invested in investments in which corporate fiduciaries may invest under law. Section 7.5 Notice. Whenever notice is required by the Articles of Association, the Bylaws or law, such notice shall be by mail,postage prepaid,telegram,in person,or by any other means by which such notice can reasonably be expected to be received, using the address of the person to receive such notice,or such other personal data,as may appear on the records of the Association. Prior notice shall be proper if given not more than 30 days nor less than 10 days prior to the event for which notice is given. ARTICLE VIII Indemnification Section 8.1. The Association shall indemnify to the full extent permitted by,and in the manner permissible under,the Articles of Association and the laws of the United States of America,as applicable and as amended from time to time,any person made,or threatened to be made,a party to any action,suit or proceeding,whether criminal,civil, j administrative or investigative,by reason of the fact that such person is or was a director, advisory director,officer or employee of the Association,or any predecessor of the Association,or served any other enterprise as a director or officer at the request of the Association or any predecessor of the Association. Section 8.2 The board in its direction may,on behalf of the Association,`- indemnify any person,other than a director,advisory director,officer or employee,made a party to any action,suit or proceeding by reason of the fact that such person is or was an agent of the Association or any predecessor of the Association serving in such capacity at the request of the Association or any predecessor of the Association. March 30, 1998 6 ARTICLE IX Bylaws: Interpretation and Amendment Section 9.1. These Bylaws shall be interpreted in accordance with and subject to appropriate provisions of law,and may be amended,altered or repealed, at any regular or special meeting of the board. Section 9.2. A copy of the Bylaws,with all amendments,shall at all times be kept in a convenient place at the main office of the.Association,and shall be open for inspection to all shareholders during Association hours. rj March 30, 1998 7 ASSOCIATION.OFFICERS RESOLUTION 4[wOLVED,That the Board hereby appoints and ratifies the prior appointment of: rence J.Bell,Vice President Mary A.Isgrig,Trust Officer Carole M.Clarkson,Trust Officer Carol Nelson,Asst.Vice President Corazon C.Gruenberg,Assistant Vice President David A.Pringle,Vice President Linda A.McConkey,Assistant Vice President Colleen Rideout,Trust Officer Cheryl K.Nelson,Assistant Vice President Greg Skutnik,Trust Officer Helen J.VVeidemann,Trust Officer Nancy D.Stahl,Vice President Rachel Akau,Trust Officer Jack P.VanLeuven,Vice President Dawnita Brown,Asst-Vice President Carolyn Whalen,Asst.Vice President Charles Bums III,Trust Officer Diana Wilson,Vice President R.Bruce Colwell,Jr.,Vice President Diana Woodard,Vice President Dennis M.Egan,Senior Vice President Diana Young,Trust Officer Kathleen Gylland,Asst.Vice President Shirley Young,Asst.Vice President Kenneth D.Hoffman,Vice President Glendy Yuen,Trust Officer Linda E.Houston,Trust Officer Thomas Zrust,Asst.Vice President Dyan Huhta,Vice President FURTHER RESOLVED,The titles of such officers at the Association shall be as listed above, and each such officer shall also hold the position of Assistant Secretary of the Association and Kenneth D.Hoffman will also hold the title of Secretary of the Association. Revised: Sept 1998 AFFILIATES OFFICERS RESOLUTION RESOLVED,That the Board hereby appoints the below-listed individuals,each an officer of an affiliated U.S.Bancorp (fka First Bank System,Inc.)trust entity,as officers of the Association for the following limited purposes in connection with proposed or existing corporate trusteeship accounts or other corporate trust accounts,including,but not limited to,trusteeships for municipal,public and corporate financing,escrow accounts and mortgage custody accounts: execution of indentures,agreements and all d6cu3Aents required for account closings or otherwise executed in the administration of such accounts;authentication of certificates;execution of real property deeds,conveyances,transfers and security interest filings;execution of extensions with regard to letters of credit,execution of draws on letters of credit and taking all other action and performing all other duties in connection with letters of credit;execution of investment purchase and sale transactions;and execution of all other instruments or documents in the administration of such accounts. The titles of such officers at the Association shall be as listed below,and each sKch officer shall.also hold the position of Assistant Secretary of the Association. f ARIZONA Brenda Blatt,Asst.Vice President Brad Stevenson,Vied President Mary Ambriz-Reyes,Asst.Vice President Betty Ueke,Trust Officer._ Joyce Gott,Asst.Vice President Robert Von Hess,Asst.Vice President CALIFORNIA Ashraf Z.Almurdaah,Asst.Vice President Julie B.Good,Vice President Carol Andreacchi,Trust Officer Lorraine Goodson,Asst�Vice President John Axt,Asst.Vice President Fonda Hall,Asst.Vice President Sheri B.Ball,Vice President Loyce G.Harrison,Vice President Mary Bator,Asst.Vice President Jennifer Y.Holder,Vice President June D.Borjon,Trust Officer Julie Hommel,Trust Officer Denise E.Bums,Vice President Robert C.Hyman,Asst.Vice President Malinda Cleveland,Asst.Vice President Kerri S.Jones,Asst.Vice President Celia Crom,Trust Officer James L.Keldsen,Vice President Betty Deichler,Vice President Norma M.Laguerta,Trust Officer Thomas M.Demchuk,Asst.Vice President Michael LaPierre,Trust Officer Alicia Estrada,Trust Officer Richard Leung,Trust Officer Andrea Freeman,Trust Officer Judy P.Manansala,Trust Officer Mary Lou Fuette,Trust Officer Bertha Mares,Asst.Vice President Ann Gadsby,Vice President Keith R.Marshall,Vice President Adriana Gonzalez,Asst.Vice President Tamara M.Mawn,Vice President John P.McIntire,Trust Officer Leticia E.Sabiniano,Trust Officer Terry L.McRoberts,Senior Vice President Bradley Scarbrough,Asst-Vice President dia Medrano,Asst.Vice President Robert W.Schneider,Asst.Vice President Ally ul Mehta,Trust Officer Sheila K.Soares,Asst-Vice President martin Meza,Trust Officer Annette C.Soderholm,Vice President Ingrid Soderholm,Trust Officer Stephen A.Mundy,Vice President Sandra Spivey,Asst.Vice President Cora Murphy,Trust Officer Melinda G.Murrell,Asst.Vice President Scott S.Thompson,Asst.Vice President James V.Myers,Vice President Gonzalo Urey,Trust Officer Nancy R.Perez,Trust Officer Susan Vargas,Vice President Samuel A Pratcher,Asst.Vice President Linda D.Verstuyft,Vice President M Teresa Wall-Caspary,Vice President Myrna Presto-Choroski,Trust Officer Barbara L.Wise,Vice President Leticia Ramos,Trust Officer Grace H.Yang,Asst.Vice President Francine Rockett,Asst.Vice President COLORADO Collen Carwin,Trust Officer Gretchen L.Middents,Asst.Vice President - Patricia M.Peters,Asst.Vice President Adam Dalmy,Vice President Sandra J.Shupe,Trust Officer Barbara J.Quall,Vice President William W.MacMillan,Vice President IDAHO Carol E.Smith,Asst.Vice President Roger Wright,Vice President ILLINOIS Lawrence Kusch,Asst.Vice President Nancie Arvin,Vice President Frank Layo,Asst.Vice President Margaret Bakaysa,Asst.Vice President Philip Bazile,Asst.Vice President Bud Lord,Asst.Vice President Pamela Burrows,Trust Officer Marie Martin,Vice President Steven Charles,Vice President Melissa Rosal,Vice President trica Child,Vice President Martha Sanders,Vice President Oetadra.'DlLaney, ct' Coeman,Trust Officer Frank Sgaraglino,Vice President Vice President Patricia Trlak,Vice President Michael Goodwin,Asst.Vice President David Vick,Vice President Joyce Wallington-Jones,Trust Officer Harry Hall,Vice President Mark D.Hartzell,Senior Vice President MICHIGAN James Kowalski,Trust Officer Lars P.Anderson,Vice President Patricia J.Collins,Asst.Vice President William R.Neumann,Asst Vice President Lorraine K_Grill,Vice President Susan T.-Payne.Vice President , L.J.Guillory,Vice President Teresa Walter,Trust Officer Marilyn Aram,Vice President Lynn A.Wilson,Vice President James Khami,Vice President - MINNESOTA Jacqueline Alliegro,Vice President Christina M.Hatfield,Vice President David H.Blumm,Vice President Virginia K.Hinzman, rust Officer Laurie A Howard,Vice�President David S.Blume,Asst._Vice President Diane M.Chalupsky,Asst.Vice President Helena E.Jackson,Vice President Sheryl A Christopherson,Vice President Dorie T.Kandler,Asst.Vice President Theresa L.Cramer,Trust Officer Eve D:Kaplan,Vice President James A.Ehrenberg,Senior Vice President Karen K.Kelly,Trust Officer Gloriann S.Kessler,Asst.Vice President Jeffrey Emerson,Trust Officer M.Kruse,Trust Officer Joanne Fischer,Asst.Vice President Linda Steve Fouts,Trust Officer Matt Lehmann,Trust Officer Renee J.Fritz,Asst.Vice President Kelly A.Liddle,Trust Officer Julaine A.Fuith,Asst.Vice President Sheryl L.McMahon,Trust Officer Darlene A.Garsteig,Trust Officer Beth A Mewaldt,Vice President Joel J.Geist,Asst.Vice President Donna L.Nordstrom,Assistant Vice President Jason M.Giel,Trust Officer Denise Opdahl,Trust Officer Thomas M.Gronlund,Vice President Goldie A.Pahl,Asst.Vice President Mary M.Grotenhuis,Trust Officer Jaymes M.Paulson,Trust Officer Carolyn A.Pekas,Trust Officer Brenda K.Schwintek,Trust Officer Aftkrmando C.Perez,Senior Vice President Judy M.Spahn,Asst,Vice President IW'chard H.Prokosch,Asst.Vice President Mark W.Sprenger,Senior Vice President Christine M.Robinette,Asst-Vice President. Lynn M.Steiner,Vice President Cynthia Rose,Vice President Scott T.StrodthofE,Senior Vice President Barbara J.Rush,Trust Officer Diane L.Thormodsgard, Senior Vice President Timothy J.Sandell,Vice President Sandra J.Thorson,Vice President JoAnn M.Schalk,Vice President Mary J.Waloch,Trust Officer Tamara Schultz Fugh,Assistant Vice President Judith M.Zuzek,Trust Officer MONTANA Deborah Kuykendall,Vice President Sherrie Pantle,Vice President NEBRASKA Debra A.DeGarmo,Vice President NEW YORK Glenn W.Andersen,Vice President Beverly A.Freeney,Trust Officer William Baldasare,Trust Officer Frank J.Gillhaus,Vice President Thomas R.Bowen,Vice President Teresita Glasgow,Asst.Vice President John D.Bowman,Vice President Steven E.Haas,Trust Officer Cynthia W.Brown,Trust Officer Merilyn Hess,Asst.Vice President Richard L-Buckwalter,Assistant Vice President Anne M.Horan,Vice President Dennis J.Calabrese, Senior Vice President Joanne E.Ilse,Trust Officer . Helen G.Chin,Vice President Edward A.Kachinski,Vice President John W.Cole,Vice President Carlos R.Luciano,Trust Officer Patrick J.Crowley,Vice President William Martinez,Trust Officer Catherine F.Donohue,Vice President Kenneth Racioppo,Asst.Vice President Catherine M.Donohue,Trust Officer Martin Reed,Assistant Vice President 0Carmela Ehret,Vice President Ward A.Spooner,Vice President Marlene J.Fahey,Vice President Angelina Velez,Trust Officer SOUTH DAKOTA Tim Hamel,Vice President Thomas Steele,Trust Officer UTAH Kim Galbraith,Vice President Vash Brumitt,Vice President FURTHER RESOLVED,That such persons shall each hold the respective title listed above and the position of Assistant Secretary of the Association as long as such persons continue to be employees of U.S.Bancorp-affiliates,and that any such Assistant Secretary is hereby authorized to certify a copy of these resolutions and to certify to the officership-of such affiliate officers. -- Revised. Sept 1998 r: s �VITNFSS WHEREOF,the undersigned Directors of U.S.Bank Trust National Association hereby execute this resolution as of the 30th day of March, 1998. Peter E.Raskind,Director Terry L.McRoberts,Director Lawrence J.Bell,Director Dennis M.Egan,Director: Dyan M.Huhta,Director Nancy D.Stahl,Director Diana Woodard,Director R.Bruce Colwell,7r.,Director SECRETARY'S CERTIFICATE . I hereby certify that I am Ste'of U.S.Bank Trust National Association,located in and that I have been duly appointed and am preseudy the City of Seattle,State of Washington, of U.S.Bank Trust National Association. - serving in the capacity,in��cewith the bylaws :I further certify that the foregoing Written Action of the Board of Directors of U.S.,PankTrust executed and delivered,is part of the corporate minutes of National Association has been duly Bank Tmst National Associatian,and not been rescinded or revolted as of the date. . hereof IN`�VTTNESg WF,I have hereunto set my hand as of this 30th day of March, 1998. (No Corporate Seal) � �- Kenneth D.Hoffman Secretary IN WITNESS WHEREOF,the undersigned Directors of U.S.Bank Trust National Association hereby execute this resolution as of the 30th day of March, 1998. Peter E.Raski id,Director Terry L.McRoberts,Director ,� Dennis M.Egan,Directorawrence J.Bell,'Director Dyan M.Huhta,Director Nancy D. Stahl,Director Diana Woodard,Director R.Bruce Colwell,Jr.,Director SECRETARY'S CERTIFICATE I hereby certify that I am Secretary of U.S.Bank Trust National Association,located in the City of Seattle,State of Washington,and that I have been duly appointed and am presently serving in the capacity in accordance with the bylaws of U.S.Bank Trust National Association. I further certify that the foregoing Written Action of the Board of Directors of U.S:?3ank Trust- -----_-. National Association has been duly executed and delivered,is part of the corporate minutes of _ U.S.Bank TrustNational Association,and has.not been rescinded or revoked as of the date herMf. IN WITNESS WHEREOF,I have hereunto set my hand as of this 34th day of March, 1998. (No Corporate Seal) /� ��'� �• - Kenneth D.Hoffman Secretary IN WITNESS WHEREOF,the undersigned Directors of U.S.Bank Trust National Association hereby execute this resolution as of the 30th day of March, 1998. P. r E. kind,Director Terry L.McRoberts,Director Dennis M.Egan,Director Lawrence J.Bell,Director Dyan M.Huhta,Director Nancy D. Stahl,Director Diana Woodard,Director R.Bruce Colwell,Jr.,Director SECRETARY'S CERTIFICATE I hereby certify that I am Secretary of U.S.Bank Trust National Association,located in the City of Scathe,State of Washington,and that I have been duly appointed and am presently_ serving in the capacity in amordanee with. the bylaws of U.S.Bank TiustNadmal Assoaatio_m _ I further certify that tie f m gft Wriftm A,rd of the Board of D of U S.Bank Trost National Assodatim has bees duly executed and delivered,is Part of the corporate mimrtes of U.S. Banc Trust National Assodafkx,and has not beau r wfixied or molmd as of the date hereoE .. IN WITNESS REOF,I have hereunto set my hand as of this 30di day of March, 1998. - (No Corporate Seal) Kcnneth D.Hoffman_ Secretary IN WITNESS WHEREOF,the undersigned Directors of U.S.Bank Trust National Association hereby execute this resolution as of the 30th day of March, 1998. Peter E.Raskind,Director Terry L.NLcRoberts,Director Dennis M.Egan,Director Lawrence J.Bell,Director Dyan M.Huhta,Director Nancy D.Stahl,Director Diana Woodard,Director R.Bruce Colwell,Jr.,Director SECRETARY'S CERTIFICATE I hereby certify that I am Secretary of U.S.Bank Trust National Association,Iocated in the City of Seattle,State of Washington,and that I have been duly appointed and am presently serving in the capacity in accordance with the bylaws of U.S.Bank Tmst National Association. --_-..-- I further certify that the foregoing Written Action of the Board of Directors of U.S.liank Trost National Association has been duly executed and delivered,is part of the corporate minutes of U.S.Bank Trust National Association,and has not been rescinded or revoked as of the daze hereof IN WITNESS WHEREOF,I have hereunto set my hand as of this 30th day of March, 1998. �1. (No Corporate Seal) Kenneth D.Hoffman/ Secretary SECRETARY'S CERTIFICATE I hereby certify that I am the Secretary of U.S. Bank Trust National Association ("USB'r), located in the City of Seattle, County of King and State of Washington, and that I have been duly appointed and am presently serving in that capacity in accordance with the bylaws of USBT. I further certify that the attached"Association Officers Resolution"and "Affiliates Officers Resolution"are true and correct copies of the original duly adopted by the Board of Directors of USBT on September 17, 1998,and that said action has not been rescinded or revoked and remains in full force and effect. IN WITNESS WHEREOF,I have hereunto set my hand this 17th day of September, 1998. rH Kenneth D.Hoffman Title: Secretary AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF FIRST TRUST NATIONAL ASSOCIATION WHEREAS,on August 1, 1997,First Bank System,Inc. C FBS")acquired U.S. Bancorp, Portland,(?regon,and in connection with this transaction,FBS has changed its corporate title to U.S. Bancorp and First Bank National Association has changed its corporate title to U.S.Bank National Association; and WHEREAS,Fast Trust National Association("First Trust") now proposes to change its corporate title to"U.S. Bank Trust National Association;"and WHEREAS, the Board of Directors considers the proposed change of corporate title to be advantageous,desirable, and in the best interests of First Trust. NOW,THEREFORE,BE IT RESOLVED,that,effective as of the opening of business, March 30, 1998,and subject to prior shareholder approval,Article First of First Trust's Articles of Association shall be amended to read in its entirety as follows: FIRST. The title of the Association shall be"U.S.Bank Trust National Association." FURTHER RESOLVED,that,effective as of the opening of business,March 30, 1998, bject to prior shareholder approval,the fast paragraph of Article Third of Fast Trust's Articles of IfflViation shall be amended to read as follows: THIIM.The board of directors of the Association shall consist of not less than five nor more than 25 persons,the exact number to be fixed and determined from time to time by resolution of a majority of the fullboard ofdirectors or by resolution of a majority of the shareholders at any annual or special meeting thereof. Each director shall own common or -_ preferred stock of this Association with an aggregate par,fair market,or equity value of not less than$1.,AQ0.00,as of either(i)the date of purchase,(u)the date the person became a director; whichever is more recent. Any combination of common or preferred stock of this Association or U.S.Bancorp may be used. FURTHER RESOLVED,that the Secretary and each Assistant Secretary of First Trust, or any one of them,be,and each hereby is,authorized and instructed to seek the approval of U.S.Bank National Association,the sole shareholder of First Trust,for the foregoing amendments to First Trust's Articles of Association,as required by Section 21 a of Title 12 of the United States Code and the regulations of the Office of the Comptroller of the Currency("OCC"); and FURTHER RESOLVED,that,upon approval by the shareholder of First Trust,the Secretary and each Assistant Secretary of First Trust,or anyone of them,be,and each hereby is, a orized and instructed to file the amendments to First Trust's Articles of Association with the OCC_ .doc SECRETARY'S CERTIFICATE I hereby certify that I am the Secretary of U.S.Bank Trust National Association "USBT"),located in the City of Seattle,County of King and State of Washington,and that I ( capacity in accordance with the have been duly appointed and am presently serving in that cap ty bylaws of USBT. I further certify that the attached Written Action of the Board of Directors is a true and correct copy of the original duly adopted by the Board of Directors of USBT on March 30, 1998, and that said Written Action has not been rescinded or revoked and remains m full force and effect. _ IN WITNESS WHEREOFJ have hereunto set my hand this 30th day of March, 1998. F Kenneth D.Hoffman Title: Secretary WRITTEN ACTION OF THE BOARD OF DIRECTORS OF U.S.BANK TRUST NATIONAL ASSOCIATION � WHEREAS,on August 1, 1997,First Bank System,Inc.( FBS )acquired U.S. Bancorp,Portland,Oregon,and in connection with this transaction,FBS has changed its corporate title to U.S.Bancorp,First Bank National Association has changed its corporate title to U.S.Bank National Association,-and the Association changed its corporate title to U.S.Bank Trust National Association by amendment of its Articles of Association and'shareholder approval thereof NOW,THEREFORE,the undersigned,being all of the directors of the Association, hereby{i)consent to this written action in lieu of holding a meeting of the Board of Directors,(ii) adopt and approve the following resolutions and Cii)instruct the Secretary to file this written action with the minutes of the Association: RESOLVED,that,effective as of March 30, 1998,and subject to prior shareholder approval,the Amended and Restated Articles of Association,a copy of which is attached as Exhibit A hereto,are hereby approved in all respects;and FURTHER RESOLVED,that the Secretary.and each Assistant Secretary of the Association,or any one of them,be,and each hereby is,authorized and instructed to seek the approval of U.S.Bank National Association,the sole shareholder of the Association,of the Amended and Restated Articles of Association;and FURTHER RESOLVED,that,upon approval by the shareholder of the Association, the Secretary and each Assrstant Secretary of the Association,or any one of them,bey and each hereby is,authorized and instructed to file the Association's Amended and Restated Articles of Association with the Office of the Comptroller of the Currency. FURTHER RESOLVED,tiiatthis resolution maybe executed in separate coin by the members of the Board of Directors which when fully executed and tielivered shall together. constitute one and the same instrument ed Directors of the Association hereby IN��VTT3�TF:SS�yHERFOF,the undersign . execute these resolutions as of the 30th day of March,1998. wrence J.Bell R.Bruce Colwell,Jr. Dennis M.Egan Dyan M.Huhta, Terry L.McRoberts Peter E.Raskind Nancy D. Stahl Diana Woodardrcst...aoc WRI-I'TEN ACTION OF THE BOARD OF DIRE(.,'TORS OF U.S.BANK TRUST NATIONAL ASSOCIATION WHEREAS,on August 1, 1997,First Bank System,Inc.("FBS")acquired U.S.Bancorp, Portland,Oregon,and in connection with this transaction,FBS has changed its corporate title to U.S. Bancorp,First Bank National Association has changed its corporate title to U.S.Bank National Association,and the Association changed its corporate title to U.S.Bank Trust National Association by amendment of its Articles of Association and shareholder approval thereof. NOW,THEREFORE,the undersigned,being all of the directors of the Association, hereby(1)consent to this written action in lieu of holding a meeting of the Board of Directors,(ii)adopt and approve the following resolutions and(iii)instruct the Secretary to file this.written action with the minutes of the Association: RESOLVED,that,effective as of March 30, 1998,and subject to prior shareholder approval,the Amended and Restated Articles of Association,a copy of which is attached as Exhibit A hereto,are hereby approved in all respects;and FURTHER RESOLVED,that the Secretary and each Assistant Secretary of the Association,or any one of them,be,and each hereby is,authorized and instructed to seek the approval of U.S.Bank National Association,the sole shareholder of the Association,of the Amended and Restated Articles of Association;and FURTHER RESOLVED,that,upon approval by the shareholder of the Association,the *Secretary and each Assistant Secretory of the Association,or any one of them,be,and each hereby is, authorized and instructed to file the Association's Amended and Restated Articles of Association with the Office of the Comptroller of the Cua=cy. FURTHER RESOLVED,that this resolution may be executed in separate counterparts by the members of the Board of Directors which when fully executed and delivered shall together constitute one and the same instrument. Ilv M VaMREOF,the undersigned Diredors of the Association hereby execute these resolutions as of the 30th day of March,1998. Lawrence J.Bell R.Bruce Colwell,Jr. a s Inmnu-is M.Egan Dyan M v Terry L.McRoberts Peter E.Raskind Nancy D.Stahl Diana Woodard arucstw-doc WRITTEN ACTION OF THE BOARD OF DIRECTORS OF U.S.BANK TRUST NATIONAL ASSOCIATION WHEREAS,on August 1, 1997,First Bank System,Inc. C FBS") acquired U.S. Bancorp,Portland, Oregon, and in connection with this transaction,FBS has changed its corporate title to U.S.Bancorp,First Bank National Association has changed its corporate title to U.S.Bank National Association,-and the Association changed its corporate title to U.S.Bank Trust National Association by amendment of its Articles of Association and shareholder approval thereof. NOW,THEREFORE,the undersigned,being all of the directors of the Association, hereby(i)consent to this written action in lieu of holding a meeting of the Board of Directors, (ii) adopt and approve the following resolutions and(iii)instruct.the Secretary to file this written action with the minutes of the Association: RESOLVED,that,effective as of March 30, 1998,and subject to prior shareholder approval,the Amended and Restated Articles of Association,a copy of which is attached as Exhibit A hereto,are hereby approved in all respects; and FURTHER RESOLVED,that the Secretary-and each Assistant Secretary of the Association,or any one of them,be,and each hereby is,authorized and instructed to seek the approval of U.S.Bank National Association,the sole shareholder of the Association,of the Amended and Restated Articles of Association;and FURTHER RESOLVED,that,upon approval by the shareholder of the Association, the Semrtary and each Assistant Secxetaiy.of the Association,or any one of them,be,and each hereby is,authorized and instructed to file the Association's Amended and Restated Articles of Association with the Office of the Comptroller of the Currency. FURTHER RESOLVED,that this resolution may be executed in separate counteapaazts by the members of the Board of Directors which when fully executed and delivered shall together constitute one and the same instrument IN V4TNESS WHLI WF,thetmd edDirectors of the Association hereby execute these resolutions as of the 30th day of March, 1998. Lawrence L Bell R.Bruce Colwell,Jr. Dennis M.Egan Dyan M. Huhta - Terry L.M Roberts Peter E.Raskind Nancv D. Stabl Diana Woodard anrestw.doc AMENDED AND RESTATED ARTICLES OF ASSOCIATION U.S. BANK TRUST NATIONAL ASSOCIATION FIRST_ The title of this Association shall be "U.S. Bank Trust National Association"_ SECOND. The main office of this Association shall be in the City of Seattle, County of King, State of Washington. The business of this Association will be limited to that of a national trust bank,and to support activities incidental thereto. This-Association will not amend these Articles of Association to expand the scope of or alter its business beyond that stated in the Article Second without the prior approval of the Comptroller of the Currency. Prior to the transfer of any stock of the Association, the Association will seek the prior approval-of the appropriate federal depository institution regulatory agency. THIRD. The board of directors of the Association shall consist of not less than five nor more than twenty-five members,the exact number to be fixed and determined from time to time by resolution of a majority of the full board of directors or by resolution of a majority of the shareholders at any annual or special meeting thereof. Each director shall own common or preferred stock of this Association with an aggregate par, fair market, or-equity value of not less than$1,000.00, as of either (i) the date of purchase, or (ii) the date the person became a director, whichever is more recent. Any combination of common or preferred stock of this Association or U.S.Bancorp may.be.used. ..Any vacancy in the board of directors may be filled by action of fa majosty of the remaining directors between meetings of shareholders. Tlie board of directors may not increase the number :of directors between meetings of, siTma olders to a number that (1) exceeds by more than two the number of directors last elected.by shareholders where the number was fifteen or less;and (2) exceeds-by more than four the number of directors last elected by shareholders where the number was sixteen or more, but in no event shall the number of directors exceed twenty five. �1 Terms of directors, including directors selected to fill vacancies, shall expire at the next regular meeting of shareholders at which directors are elected, unless the directors resign or are removed from office. Despite the expiration of directors term the director shall continue to. serveuntil his or her successor is elected and qualifies or until there is a decrease in the number of directors and his or her position is eliminated. Pagc 1 of 8 Honorary or advisory members of the board of directors, without voting power or power of final decision in matters concerning the business of this Association, may be appointed by resolution of a majority of the full board of directors, or by resolution of shareholders at any annual or special meeting. Honorary or advisory directors shall not be counted for purposes of determining the number of directors of this Association or the- presence of a quorum in connection with any board action, and shall not be required to own qualifying shares. FOURTH. There shall be an annual meeting of the shareholders to elect directors and transact whatever other business may be brought before the meeting. It shall be held at the main office or any other convenient place the board of directors may designate, on the day of each year specified therefor in the bylaws, or if that day falls on a legal holiday. in the State in which this Association is located, on the next following banking day. If no election is held on the day fixed, or in event of a legal holiday, an election may be held on any subsequent day within sixty days of the day fixed,to be designated by the board of directors, or, if the directors fail to fix the day, by shareholders representing two-thirds of the shares issued and outstanding. In all cases at least ten-days advance notice of the meeting shall be given to the shareholders by first crass mail. y -time b delivering - A director may resign at any g written or oral notice to the board of directors, its chairperson, or to this Association, which resignation shall be effective when the notice is delivered unless the notice specifies a later effective date. A director may be removed by shareholders at a meeting called to remove him or her, when notice of the meeting stating that the purpose or one of-the purposes is to remove him or her is provided,if there is a failure to fiilfiIl one of the affirmative requirements for qualification, or for cause; provided, however, that a director*may not be removed if the number of votes sufficient to elect him or her under cumulative voting is voted against his or her removal 14 FIFTH. The authorized amount of capital stock of this Association shall be 10,000 shares of common stock of the par value of one-hundred dollars ($100.00) each; but said capital stock may be increased or decreased from time to time, according to the provisions of the laws of the United States. No holder of shares of the capital stock of any class of this Association shall have any preemptive or preferential right of subscription to any-shares of any class of stock of this Association, whether now or hereafter authorized, or to Page 2of8 any obligations convertible into stock of this Association,issued, or sold,nor any right of subscription to any thereof other than such, if any, as the board of directors, in its discretion may from time to time determine and at such price as the board of directors may from time to time fix. Unless otherwise specified in these Articles of Association or required by law, (1) all matters requiring shareholder action, including amendments to the Articles of Association must be approved by shareholders owning a majority voting interest in the outstanding voting stock,and (2) each shareholder shall be entitled to one vote per share. Unless otherwise provided in the bylaws, the record date for determining shareholders entitled to notice of and to vote at any meeting.is the close of business on the day before the first notice is mailed or otherwise sent to the shareholders, provided that in no event may a record date be more that seventy days before the meeting. SDCTH. The board of directors shall appoint one of its members president of this Association and one of its members chairperson of the board. The board of directors shall also have-the power to appoint one or more vice presidents, a secretary who shall keep minutes of the directors' and shareholders' meetings and be responsible for authenticating the records of this Association, and such other officers and employees as may be required to transact the business of this Association. A duly appointed officer may appoint one or more officers or assistant officers if authorized by the board of directors in accordance with the bylaws. The board of directors shall have the power to: (1) Define the duties of the officers,employees,and agents of this _ Association. (2) Delegate-the performance of its duties,but not the responsibility for its duties,to the officers,employees,and agents of this Association. (3) Fix the compensation and enter into employment contracts with its officers and employees upon reasonable terms and conditions, consistent with applicable law. (4) Dismiss officers and employees. (5) Require bonds from officers and employees and to fix the penalty thereof. Page 3 of 8 ' Y (6) Ratify written policies authorized by this Association's management or committees of the board. (7 Regulate the manner in which any increase or decrease of the capital of this Association shall be made;provided,however,that nothing herein shall restrict the power of shareholders to increase or decrease the capital of this Association in accordance with law, and nothing shall raise or lower from two-thirds the percentage required for shareholder approval to increase or reduce the capital. (8) Manage and administer the business and affairs of this Association. (9) Adopt bylaws,not inconsistent with law or these Articles of Association,for managing-the business and regulating the affairs of this Association. (10) Amend or repeal bylaws,except to the extent that the Articles of Association reserve this power in whole or in part to shareholders. (11) Make contracts. (12) Generally to perform all acts that are legal for a board of directors to perform. SEVENTH. The board of directors shall have the power to change the location of the main office to any other place within the limits of the City of Seattle without the approval of the shareholders, and shall have th%power to establish or change the location of any branch or branches of this Association to any other location permitted under applicable law,without the.approval of the sharnholders,subject to approval by the Comptroller of the Currency. EIGHTH. The corporate existence of this Association shall continue until terminated according to the laws of the United States. 4-d. NUML The board of directors of this Association, or any three (3) or more shareholders owning, in the aggregate, not less than twenty-five percent (25%) of the stock of this Association,may call a special meeting of shareholders at any time. Unless otherwise provided by the bylaws or the laws of the United States, or waived by shareholders, a notice of the time, place, and purpose of every annual and special meeting of the shareholders shall be given by first-class. mail, postage prepaid, mailed at least ten, and no more than sixty, days prior to the date of the meeting to each shareholder of record at his/her addresses as Page 4of8 shown upon the books of this Association. Unless otherwise provided by these Articles of Association or the bylaws, any action requiring approval of shareholders must be effected at a duly called annual or special meeting. TENTH. Any action required to be taken at a meeting of the shareholders or directors or any action that may be taken at a meeting of shareholders or directors may be taken without a meeting if consent in writing, setting forth the action as taken shall be signed by all the shareholders or directors entitled to vote with respect to the matter thereof. Such action shall be effective on the date on which the last signature is placed on the writing, or such earlier date as is set forth therein. ELEVENTH. Meetings of the board of directors or shareholders, regular or special, may be held by means of conference telephone or similar communication equipment by means of which all persons participating in the meeting can simultaneously hear each other, and participation in such meeting by such aforementioned means shall constitute presence in person at such meeting. TWELFTH. (a) Any person who was or is a party or is threatened to be made a party to any threatened,pending or completed action,suit or proceeding, whether civil, criminal, administrative or investigative (other than any action by or in the right of the Association)by reason of the fact that he is or was a director, officer,employee or agent of the Association,or is or was serving at the request of the Association as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall be indemnified by the Association, unless similar indemnification is provided by such other corporation, partnership,joint venture,trust or other enterprise (any _ funds received by any person as a result of the provisions of this Article being deemed an advance against his receipt of any such other indemnification from any such other corporation,partnership,joint venture,trust or other enterprise), against a Tenses (including attorneys' fees),judgments,fines and-amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if'such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interest of the Association, and,. with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of anv action, suit or proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person seeking indemnification did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interest of the Association, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. Paoe 5 of (b) Any person who was or is a party.or is threatened to be made a party to any threatened,pending or completed action or suit by or in the right of the Association to procure a judgment in its favor by reason of the fact that such person is or was a director,officer,employee or agent of the Association, or is or was serving at the request of the Association as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other corporation, partnership, joint venture, trust or other enterprise shall be indemnified by the Association, unless similar indemnification is provided by such other corporation, partnership,joint venture, trust or other enterprise (any funds received by any person as a result of the-provisions of this Article being deemed an advance against his receipt of any such other indemnification from any such other corporation, partnership,joint venture, trust or other enterprise), against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in.a manner he reasonably believed to be in or not opposed to the best interests of the Association and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Association unless and only to the extent that the Court of Chancery of the State of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all of the circumstances of the case, such person is fairly and reasonably entitled to indemnify for such expenses which the Court of Chancery or such other court shall deem proper. -M 1 (c) To the extent that a director, officer, employee or agent of the Association has been successful on the merits or otherwise in defense of any action,, suit or proceeding referred to,in paragraphs (a) and (b), or in defense of. any claw, issue or matter therein, such person shall be indemnified by the Association against expenses (including attorneys' fees) actually and reasonably. incased by such person in connection therewith. (d) Except as set forth in paragraph (c) of this Article, any indemnification under paragraphs (a) and (b) of this Article (unless ordered by the court), shall be made by the Association only as authorized in the specific case upon a determination that indemnification of the director,officer,employee or agent is proper in the circumstances because such person has met the applicable standard of-conduct set forth in paragraphs (a) and (b) of this Article. Such determination shall be made (1) by a majority vote of the directors who are not parties to such action,suit or proceeding,even though less than a quorum,or (2) if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion,or(3) by the stockholders. - Page 6 of 8 (e) Expenses (including attorneys' fees) incurred by an officer or director in defending any civil, criminal, administrative or investigative action, suit or proceeding may be paid by the Association in advance of the final disposition of such action,suit or proceeding upon receipt of any undertaking b or on behalf of such director or officer to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Association. Such expenses (including attorneys' fees) incurred by other employees and agents may be so paid upon such terns and conditions,if any,as the Board of Directors deems appropriate. (� The indemnification and advancement of expenses provided b this Article shall not be deemed exclusive of any other rights to which those see�g indemnification or seeking advancement of expenses may be entitled under any by-law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in an official capacity and as to action in another capacity while holding such office. (g) By action of the Board of Directors,notwithstanding any interest of the directors in the action,the Association may purchase and maintain insurance, in such amounts as the Board of Directors deems appropriate, on behalf of any person who is or was a director,officer,employee or agent of the Association,, or is or was serving at the request of the Association as a director, officer,employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred trust him in any such capacity,or arising out of his status as such whether or not-the Association shall have the power to ' indemnify hum against such liability under the Provisions of this Article. (h) For purpose of this. Article, references to "the Association' shall -_ include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger whicly if its separate existence had continued, would have had power and authority to indemnify its directors, officers, employees or agents, so that any person who is or was a director, officer, employee or agent of such ' constituent corporation, or is-or was corporation as a director, officer, e serving at the request of such constituent mployee or agent of another corporation, Partnership, joint venture, trust or other enterprise, shall stand in the same position under this Article with respect to the resulting or surviving corporation as he would have with respect to such constituent corporation if its separate existence had continued. (i) For purposes of this Article, references to "other enterprises" shall include employee benefit plans;reference to fines shall include any excise taxes Paac 7 offs assessed on a person with respect to an employee benefit.plan; and references to "serving at the request of the Association' shall include any service as a director, officer, employee or agent of the Association which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee*benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner he reasonably believed to be in the interest of the Participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner "not opposed to the best interests of the Association' as referred to in this Article. (j) The indemnification and advancement of expenses hereby provided shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such person. THIRTEENTH. These Articles of Association may be amended at any regular or special meeting of the shareholders by the affirmative vote of the holders of a majority of the stock of this Association, unless the vote of the holders of a greater amount of stock is required by law, and in that case by the vote of the holders of such greater amount. This Association's board of directors may propose one or more amendments to these Articles of Association for submission to the shareholders. Page 8 of 8 18019-49 JH:CKL:PCH 3/12/99 CITY OF HUNTINGTON BEACH Multifamily Housing Revenue Bonds (Village Partnership Project) 1986 Series A 1999 Reissuance Transaction ($4,895,000 principal amount) CERTIFICATE OF THE TRUSTEE The undersigned hereby states and certifies: (i) that the undersigned is a duly authorized officer of U.S. Bank Trust National Association, acting as trustee (the "Trustee")under that certain Indenture of Trust, dated as of November 1, 1986,by and between the City of Huntington Beach (the "City") and the Trustee, as supplemented by that certain First Supplemental Indenture of Trust, dated as of June 1, 1989, by and between the City and the Trustee, as supplemented by that certain Second Supplemental Indenture of Trust, dated as of March 1, 1997, by and between the City and the Trustee (collectively the "Indenture"),and as such, is familiar with the facts herein certified and is authorized and qualified to certify the same on behalf of the Trustee; (ii) that the Trustee is a national banking association duly organized and existing under the laws of the United States of America, having the full power and authority to enter into and perform its duties under the Indenture;and (iii) that the Third Supplemental Indenture of Trust, dated as of March 1, 1999, by and between the City and the Trustee, and that certain Third Amendment to Loan Agreement, dated as of March 1, 1999, by and among the City, the Trustee, and Village Partnership, a California General Partnership,have been duly executed and delivered by the Trustee. MAR 2 5 1999 Dated: NINIF11 mmppw U.S. BANK TRUST NATIONAL ASSOCIATION,as Trustee O By Authorized Officer 18019-49 JH:CKL:PCH 3/12/99 CITY OF HUNTINGTON BEACH Multifamily Housing Revenue Bonds (Village Partnership Project) 1986 Series A 1999 Reissuance Transaction ($4,895,000 principal amount) CONSENT OF THE REMARKETING AGENT The undersigned duly authorized officer of PaineWebber Incorporated (the "Remarketing Agent") hereby consents to the execution and delivery of that certain Third Supplemental Indenture of Trust,dated as of March 1, 1999 (the"Third Supplemental Indenture of Trust"), by and between the City of Huntington Beach (the "Issuer") and U.S. Bank Trust National Association, as successor trustee to First Trust National Association, as successor trustee to First Trust Washington, the successor in interest to Seattle-First National Bank (the "Trustee"), and accepts the same as an integral part of that Indenture of Trust, dated as of November 1, 1986, by and between the City of Huntington Beach (the "City") and the Trustee, as supplemented by that certain First Supplemental Indenture of Trust, dated as of June 1, 1989, by and between the City and the Trustee,as supplemented by that certain Second Supplemental Indenture of Trust, dated as of March 1, 1997, by and between the City and the Trustee (the "Original Indenture"), both by and between the Issuer and the Trustee. The undersigned Remarketing Agent hereby waives notice of the execution and delivery of. the Third Supplemental Indenture of Trust as provided by Article X of the Original Indenture. MAR 2 5 1999 Dated: PAINEWEBBER INCORPORATED By: ark J. Adler, Managing Director embank. Corporate Trust Services Two Union Square 601 Union Street Suite 2120 Seattle,WA 98101 AUTHORIZED SIGNATURES I hereby certify that the following is a true and exact extract from Article VII of the Bylaws presently in effect for U.S. Bank Trust National Association, a national banking association organized and existing under the laws of the United States: Section 7.1 EXECUTION OF INSTRUMENTS All agreements, checks, drafts, orders, indentures, notes, mortgages, deeds, conveyances,transfers, endorsements, assignments, certificates, declarations, receipts, discharges,releases, satisfactions, settlements, petitions, schedules, accounts, affidavits, bonds, undertakings, guarantees, proxies and other instruments or documents may be signed, countersigned, executed, acknowledged, endorsed, verified, delivered or accepted on behalf of the Association, whether in a fiduciary capacity or otherwise, by an officer of the Association, or such employee or agent as may be designated from time to time by the board by resolution, or by the Chairman or the President by written instrument, which resolution or instrument shall be certified as in effect by the Secretary or an Assistant Secretary of the Association. The provisions of this section are supplementary to any other provision of the Articles of Association or Bylaws. I further certify that the following officers of U.S. Bank Trust National Association have been duly elected and qualified and now hold their respective offices, and that the signatures of such officers are authentic: R. Bruce Colwell, Jr. Kathleen Gylland Vice President /j' GfG� Asst. Vice President Jack VanLeuven - Carolyn Whalen 1 Y Vice President �� Asst. Vice Presidentcluy� Dawnita Brown Asst. Vice President IN WITNESS WHEREOF, I have hereunto set my hand this A3 day of u't 1999. U.S. =STIONAL ASSOCIATION By: Gl.r,- Assistant Secretary PRINCIPAL COMMERCIAL ACCEPTANCE, LLC March 24, 1999 Mr. Stephen Kohler Project Manager City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Re: $4,895,000 City of Huntington Beach Multifamily Housing Revenue Bonds, 1986 Series A (1999 Reissuance Transaction) Dear Mr. Kohler, I have been asked by the City of Huntington Beach and its bond counsel, Jones Hall, to give my opinion as to whether the Huntington Village Apartments (the "Project") could reasonably pay, over the economic life of the Project,the principal and interest due on the above-referenced bonds (the"Bonds"). • The attached analysis shows that the Project could pay at least the $4,895,000 principal amount of the Bonds, including interest thereon. The analysis makes the following assumptions (please see the attached discounted cash flow table): The first year net operating income (NOI) is $584,611. The NOI increases at 3%per year. In my opinion,this method of valuation gives a fair and reasonable estimate of the ability of the Project to pay the Bonds over the economic life of the Project. Sincerely, Chip R. Stephens Managing Director 11050 Roe Avenue, Suite 200 ■ Overland Park, KS 66211-1216 Phone: (913) 339-6687 ■ FAX: (913) 339-6341 Financial Group o O rn o 4 N vni io .O�r4N mio r o mNrn�r�c °D �g N�a O m N H�O H O oNO O< m m m o v N o M N r N o Rio Ornmem�NN - w H N N m < O .-1. Om i0$vnv _ n m R tOtpp w w w w 0 0 0 0 o r N m m o m 11 a a v rn o N N 4 n m ' H wNp (Hpp H vi m M Oi tU l7 m 0 4 a mran�Nuc'i e� o a m w w w w w v.-a mmnmm4mN 4 4 0 cam oo nm vcl rn _ O 16 N 4 N O N m N m O m r 4 r N N O `-' N O 4 ip w w N N w Q 04 O N N O�mli cli C m r M S t'1.O m O�4p O m 0 0 0 fp m fp O N N N M m Iv,W N O m f0 04 w H H p p Q room 01 t"I w M n r �` mN comma mo.Nr r y a v ma.o cmi mrmr>oc000coo ` of vi vi a w w w w w o'ov ^o am4�4�N4 a m � m�4 M�iomm 4 �i a a w w cs w w w w p w w w w p _. 0 0 OI o T � o =N a vi j r 2 tD � m A m N h b y m �.Ex z LL N a 4 LL o o • 0 o a$> a LL m c c o w j ¢ O m� O¢ y 3 ° 2 - n m m ' a s 'm x'x' w 0 z w .z a:mz zz o 18019-46 JH:CKL:PCH 3/12/99 CITY OF HUNTINGTON BEACH Multifamily Housing Revenue Bonds (Village Partnership Project) 1986 Series A 1999 Reissuance Transaction($4,895,000 principal amount) CERTIFICATE OF THE DEVELOPER The undersigned hereby states and certifies: (i) that he is a general partner of Village Partnership, A California General Partnership (the "Developer") and is a duly designated "Developer Representative" as such term is defined in Section 1.1 of that certain Loan Origination and Servicing Agreement, dated as of November 1, 1986, as amended by that certain First Amendment to Loan Origination and Servicing Agreement,dated as of June 1, 1989, each by and among the City of Huntington Beach (the "City"), The Federal Deposit Insurance Corporation, as Receiver for Mercury Federal Savings and Loan Association (the "FDIC"), First Trust National Association, as successor trustee to First Trust Washington, the successor in interest to Seattle-First National Bank (the "Trustee"), and the Developer,as amended by the Second Amendment to Loan Origination and Servicing Agreement,dated as of March 1, 1997, by and among the City, FDIC, the Developer and the Trustee (collectively,the "Loan Agreement"); GO that the Developer is familiar with the facts herein certified and is authorized and qualified to certify the same; (iii) that attached hereto is a true and correct copy of the partnership agreement of the Developer,including any and all amendments thereto (the "Partnership Agreement"), which Partnership Agreement has not been further amended, modified, supplemented, rescinded or repealed in any way other than as evidenced by the attached and is in full force and effect as of the date hereof; and (iv) that the City issued bonds designated "City of Huntington Beach Variable Rate Demand Multifamily Housing Revenue Bonds (Mercury Savings and Loan Association/Village Partnership Project) 1986 Series A"; in the aggregate principal amount of $7,700,000 (the "Bonds"), pursuant to that certain Indenture of Trust, dated as of November 1, 1986, by and between the City and Seattle-First National Bank, as trustee (the "Trustee") as amended and supplemented by that certain First Supplemental Indenture of Trust, dated as of June 1, 1989, by and between the City and the Trustee, as amended and supplemented by that certain Second Supplemental Indenture of Trust, dated as of March 1, 1997, by and between the City and the First Trust National Association,as successor trustee (collectively, the "Indenture"); MAR 2 5 19 (v) that on , the City will reissue the Bonds and designate them the "City of Huntington Beach Multifamily Housing Revenue Bonds (Village Partnership Project) 1986 Series A", in the aggregate principal amount of$4,895,000 (the "Reissued Bonds"); (vi) that the Developer has full legal right, power and authority to execute, deliver and carry out the transactions contemplated by that certain Third Amendment to Loan Origination and Servicing Agreement, dated as of March 1, 1999, by and among the City, U.S. Bank Trust National Association, as successor trustee to First Trust National Association, (the "Trustee"), and the Developer(the "Third Amendment to Loan Agreement"); (vii) that, by all necessary action, the Developer has duly authorized and approved the execution and delivery of, and the performance by the Developer of the obligations on its part contained in, the Third Amendment to Loan Agreement; (viii) that the Developer has duly executed and delivered the Third Amendment to Loan Agreement and hereby acknowledges and consents to the execution and delivery of that certain Third Supplemental Indenture of Trust,dated as of March 1, 1999, by and between the City and the Trustee; (ix) that no litigation is, to the best of my knowledge, pending or threatened against the Developer which if adversely determined would restrain or enjoin the execution or delivery of the Reissued Bonds, the Third Supplemental Indenture of Trust or the Third Amendment to Loan Agreement or the collection of the Revenues pledged under and as defined in the Indenture;and (x) that no event has occurred and is continuing that would constitute an Event of Default as defined in the Loan Agreement, as amended by the Third Amendment to Loan Agreement, or that certain Regulatory Agreement and Declaration of Restrictive Covenants, dated as of November 1, 1986, by and among the City, the Truste , ercury Federal Savings and Loan Association, and the Developer. Capitalized terms used herein and not otherwise define sha 1 have the meanings ascribed thereto in the Indenture. Dated: M VILLAGE PARTN H , A CALIFORNIA ENER ARTNERSHIP KAR 2 By: o r, General Partner -2- 18019-49 JH:CKL:PCH 3/12/99 CITY OF HUNTINGTON BEACH Multifamily Housing Revenue Bonds (Village Partnership Project) 1986 Series A 1999 Reissuance Transaction ($4,895,000 principal amount) CERTIFICATE REGARDING USE OF PROCEEDS The undersigned hereby states and certifies as follows: (i) that the undersigned is a general partner of Village Partnership, A California General Partnership (the "Developer"); (ii) that the City of Huntington Beach (the "City") previously issued bonds designated "City of Huntington Beach Variable Rate Demand Multifamily Housing Revenue Bonds (Mercury Savings and Loan Association/Village Partnership Project) 1986 Series A", in the aggregate principal amount of $7,700,000 (the "Original Bonds"), pursuant to that certain Indenture of Trust, dated as of November 1, 1986,by and between the City and the Trustee, as amended and supplemented by that certain First Supplemental Indenture of Trust, dated as of June 1, 1989,by and between the City and the Trustee, as amended and supplemented by that certain Second Supplemental Indenture of Trust, dated March 1, 1997, by and between the City and the Trustee (collectively, the "Indenture"); (iii) that the City is reissuing on this date bonds designated "City of Huntington Beach Multifamily Housing Revenue Bonds (Village Partnership Project) 1986 Series A" (the 'Bonds"), in the aggregate principal amount of$4,895,000; (iv) that pursuant to that certain Loan Origination and Servicing Agreement, dated as of November 1, 1986, as amended by that certain First Amendment to Loan Origination and Servicing Agreement,dated as of June 1, 1989,each by and among the City of Huntington Beach (the "City"), The Federal Deposit Insurance Corporation, as Receiver for Mercury Federal Savings and Loan Association (the "FDIC"), First Trust National Association, as successor trustee to First Trust Washington, the successor in interest to Seattle-First National Bank (the "Trustee"), and the Developer,as amended by the Second Amendment to Loan Origination and Servicing Agreement, dated March 1, 1997, by and among the City, FDIC, the Developer and the Trustee (collectively, the "Loan Agreement"), the City loaned the proceeds of the Bonds (the "Project Loan") to the Developer in the principal amount of $7,700,000 for the financing of the project more particularly described on Exhibit A hereto (the "Project."); and (v) that the initial Principal User of the Project is the Developer, whose Employer Identification Number is 95-4040909; (vi) that based solely upon statements and certifications of the Developer set forth in (A) that certain Certificate Regarding Use of Proceeds, dated November 7, 1986 relating to the Original Bonds, (B) that certain Certificate Regarding Use of Proceeds,dated June 21, 1989, and (C) that certain Certificate Regarding Use of Proceeds, dated April 9, 1997, relating to the Original Bonds as reissued (collectively, the "Prior Certificates"), that official action was taken by the City on May 19, 1986 (the "Official Action Date"), which action induced the Developer • to locate the Project within the City, and that physical construction of the Project did not commence prior to the Official Action Date nor was the Project placed in service prior to such • date; (vii) that based solely upon information set forth in the Prior Certificates, that the Project was placed in service on April 1, 1988; (viii) that based solely upon information set forth in the Prior Certificates, that the costs and expenses of the Project which were financed from the proceeds of the Project Loan (including land costs, issuance costs and other fees and expenses) are set forth on Exhibit B attached hereto and by this reference herein incorporated and such costs and expenses are, giving due consideration to all relevant circumstances, the most recently available accurate estimates thereof; (ix) that based solely upon information set forth in the Prior Certificates, that all of the costs and expenses (other than issuance costs, underwriter's discount and reserve for debt service on the Bonds)set forth on Exhibit B (A) were paid or incurred after the Official Action Date and (B) are chargeable to the capital account for the Project or would be so chargeable either with a proper election by the Developer or but for a proper election by the Developer to deduct such amounts,except for those costs and expenses listed on Exhibit B and marked with an asterisk; (x) that based solely upon information set forth in the Prior Certificates, that Exhibit C attached hereto and by this reference incorporated herein identifies the portion of the Project financed with the proceeds of the Project Loan (other than land, issuance costs and reserve funds) (A)by Revenue Procedure 62-21 in the case of buildings and (B) by Asset Depreciation Range ("ADR") classification and midpoint life, in the case of (i) land improvements and (ii) . personal property; (xi) that the undersigned, as general partner of the Developer, has no reason to believe that any of the statements or certifications of the Developer in the Prior Certificates are not true and correct as of the date hereof;and (xii) that the Developer acknowledges that it is intended that interest on the Bonds be excluded from gross income for federal tax purposes in the hands of the owners thereof, that the firm of Jones Hall, A Professional Law Corporation, is rendering an opinio on the date hereof to said effect,and that,in rendering said opinion, said firm is relying upo ong other things, the statements made herein and in Exhibits A, B and C attached hereto. MIAR 2 5 1999 Dated: I VILLAGE PARTNERSHIP, C fornia General Partnership By: � 1 Tod Sil er, General Partner • -2- EXHIBIT A PROJECT DESCRIPTION The Project is located on approximately 3.09 acres of land in the northern part of the City of Huntington Beach. The Project consists of two buildings of approximately equal size, 3 stories each, with a total square footage of approximately 109,000. There is approximately 69,000 net rentable square feet in 113 units and an additional unit for the manager. There are elevators servicing each floor; and laundry facilities on each floor. There is a 2,800 square foot recreation room and outdoor recreational amenities including a lap pool, jacuzzi and tables. There is on-site personnel. There is adequate parking to accommodate one car for each unit. i Exhibit A-1 EXHIBIT B USE OF PROCEEDS OF PROJECT LOAN I. Sources-Bond Proceeds Principal Amount of Bonds $7,700,000.00 Investment Earnings $ 0.00* Redemption Amount ($1,120,000.00) Amortized Portion of Upfront Credit Enhancement Fee(Prior to Placed-in-Service Date) ($ 26,900.00)** Total Sources: $6,553,100.00 II. Uses-Bond Proceeds A. Qualified Projects Costs Land $1,644,000.00 Hard Construction Costs $3,787,069.00 Soft Construction Costs 1 797,025.00 Total Qualified Project Costs: $6,228,094.00 B. Not Qualified Project Costs Origination Fee $ 131,600.00 Other Portions of Credit Enhancement Upfront Fee $ 193,406.00 Total Not Qualified Project Costs: $ 325,006.00 Total Uses: $6,553,100.00 III. 95% of Total Sources listed in I.Above $6,225,445.00 IV. Total of Qualified Project Costs $6,228,094.00 * Based solely upon rebate calculation reports prepared by Ernst & Young, Certified Public Accountants, all investment earnings earned prior to the placed-in-service date for the Project were utilized to pay for capitalized interest and level schedule credit enhancement fees. ** Based solely upon the Prior Certificates, the Project was placed in service no earlier than one year from the Bond issuance date. Exhibit B-1 EXHIBIT C ECONOMIC LIFE INFORMATION REVENUE PROCEDURE 62-21 Type of Buildings Economic Life Estimated Financed with Prior Loan (From Completion) Proceeds* Apartments 40 Years $4,144,094 Includes allocable construction period interest; excludes land, land improvements, personal property,issuance costs and debt service reserves. [NOTE: Revenue Procedure 62-21 provides the following economic lives for the following types of buildings: Apartments:40 Years; Banks:50 Years; Dwellings:45 Years;Factories:45 Years; Garages: 45 Years; Grain Elevators: 60 Years; Hotels: 40 Years; Loft Buildings: 50 Years; Machine Shops: 45 Years; Office Buildings:45 Years;Stores:50 Years; Theaters:40 Years; Warehouses: 60 Years] ADR Project Component ADR Midpoint Life Estimated Financed with Prior Loan Class (From Completion) Proceeds* Site Improvements 00.3 20 Years $400,000 Personal Property (general list) 5 Years $40,000 Other Years $0.00 Includes allocable construction period interest; excludes land, buildings, issuance costs and debt service reserves. Exhibit C-1 18019-49 JH:CKL:PCH 3/12/99 INVESTMENT LETTLER CITY OF HUNTINGTON BEACH Multifamily Housing Revenue Bonds (Village Partnership Project) 1986 Series A 1999 Reissuance Transaction ($4,895,000 principal amount) The undersigned, on behalf of Principal Commercial Acceptance,LLC (the "Purchaser"), represents and warrants to and covenants with the City of Huntington Beach (the "Issuer") that the Purchaser is purchasing the above-captioned Bonds in the principal amount of $4,895,000 (the "Bonds") for its own account for investment and with no present intention of distributing or selling the Bonds or any part thereof or any interest therein, either currently or after the passage of a fixed period of time, or upon the occurrence or non-occurrence of any predetermined event or circumstances, provided, however that at all times the disposition of such Bonds is and shall remain totally within the control of the Purchaser. THE PURCHASER RECOGNIZES THAT THE BONDS MAY NOT BE TRANSFERRED WITHOUT THE PRIOR WRITTEN CONSENT OF THE ISSUER. The Purchaser understands that the Bonds have not been registered under the Securities Act of 1933, as amended. The Purchaser acknowledges that in purchasing the Bonds it is not relying on any representations of the Issuer, U.S. Bank Trust National Association, as successor trustee to First Trust Washington, the successor in interest to Seattle-First National Bank (the "Trustee"), or any of their employees or agents with respect to the financial quality of the Bonds. The Purchaser is relying solely on statements and representations of Village Partnership, A California General Partnership (the "Owner") and on its own knowledge and investigation of the facts and circumstances relating to the purchase of the Bonds. The Purchaser acknowledges that it is an institutional investor. In connection with its business, the Purchaser holds extensive portfolios of investments. The Purchaser has knowledge and experience in financial and business matters and is capable of evaluating the merits and risks of purchasing the Bonds. In the opinion of the Purchaser, and based upon its independent investigation of the multifamily housing project (the "Project") previously financed from the proceeds of the Bonds, the Purchaser is satisfied that the Project is sufficiently economically feasible to warrant the Purchaser's purchase of the Bonds. The Purchaser covenants that it is familiar with the businesses and properties of the Owner and that it has access to the same kind of information that is specified in Schedule A of the Securities Act of 1933, as amended, relative to the businesses of the Owner to the extent that the Owner possesses such information or can acquire it without unreasonable effort or expense. The Issuer and the Owner have made available to the Purchaser the opportunity to ask questions and receive answers from such parties concerning the terms and conditions on which the Bonds have been offered for sale to the Purchaser and to obtain such additional information relative to the financial data and business of such parties and such property to be conveyed in trust or otherwise used as security, to the extent that such parties possess such information or can acquire it without unreasonable effort or expense, as the Purchaser has deemed necessary and appropriate in the circumstances. sThe undersigned acknowledges receipt of all such information as the undersigned deems necessary and appropriate to enable the undersigned to evaluate the financial risk inherent in acquiring the Bonds and acknowledges receipt of satisfactory and complete information covering the business and financial condition of the Owner and the Project, including the opportunity to obtain information regarding the Owner's and the Project's financial status,in response to all inquiries in respect thereof. The Purchaser reserves the right to dispose of the Bonds in accordance with the terms of that certain Indenture of Trust, dated as of November 1, 1986, by and between the Issuer and the Trustee, as amended by that First Supplemental Indenture of Trust, dated as of June 1, 1989, as amended by that certain Second Supplemental Indenture of Trust, dated as of March 1, 1997, and as further amended by that certain Third Supplemental Indenture of Trust, dated as of March 1, 1999 (collectively, the "Indenture") if, in its judgment, its disposition would be compelled by prudence or required by law; provided, however, that no public offering of all or a portion of the Bonds shall be made. The Purchaser understands that it may sell the Bonds to any qualified institutional investor provided that any such transfer shall be made in accordance with all federal and related state securities laws and with the requirements of the Indenture. In the event that it does so sell the Bonds in the future, it shall assume the responsibility for disclosure of all material information that may be necessary to comply with all federal and related state securities laws. LIAR 2 5 Dated: PRINCIPAL COMMERCIAL ACCEPTANCE, LLC By: Q. Its: -2- • $4,895,000 CITY OF HUNTINGTON BEACH, CALIFORNIA MULTIFAMILY HOUSING REVENUE BONDS 1986 Series A 1999 Reissuance Transaction CERTIFICATE AS TO ARBITRAGE I, Ray Silver, the City Administrator of the City of Huntington Beach (the "City"), being one of the officers of the City duly charged (by resolution of the City), with others, with the responsibility of amending the City's $7,700,000 Variable Rate Demand Multifamily Housing Revenue Bonds (Mercury Savings and Loan Association/Village Partnership Project), 1986 Series A (the "Bonds") reissued and refunded on a current basis on June 21, 1989, (the "1989 Bonds"), reissued and refunded on a current basis on April 9, 1997, (the "1997 Bonds") and currently outstanding in the par amount of$4,895,000,hereby certify as follows: (1) Purpose of Amended Bonds. On the date hereof, certain material terms of the Indenture of Trust, dated as of November 1, 1986, as amended by that certain First Supplemental Trust Indenture, dated as of June 1, 1989, and that certain Second Supplemental Trust Indenture, dated as of March 1, 1997 (the "Indenture"), between the City and U.S. Bank • Trust National Association, the successor in interest as trustee to First Trust Washington, the successor in interest to Seattle-First National Bank (the "Trustee"), and of the Loan Origination and Servicing Agreement, dated as of November 1, 1986, as amended by that certain First Amendment to Loan Origination and Servicing Agreement, dated as of June 1, 1989, and that certain Second Amendment to Loan Origination and Servicing Agreement,dated as of March 1, 1997 (the "Loan Agreement"), among the City, the Trustee, Village Partnership, a California general partnership (the "Owner"), and the Federal Deposit Insurance Corporation ("FDIC") as Receiver of Mercury Federal Savings and Loan Association, successor to Mercury Savings and Loan Association, are being amended to provide (collectively, the "Amendment") for different redemption provisions, a change in the interest rate on the Bonds, a change in the name of the Bonds (to the captioned name set forth above) and other material changes to the terms of the Bonds (the "Amended Bonds"). Such Amendment is being made pursuant to a Third Supplemental Indenture of Trust, dated as of March 1, 1999, by and between the City and the Trustee, pursuant to the consent of the owners of 100 percent of the aggregate outstanding principal amount of the Bonds,and results in the refunding on a current basis of the Bonds. The proceeds of the Bonds were used to make a loan to the Owner (the "Loan") who applied such proceeds to the payment of costs of acquisition and construction of residential rental facilities and related improvements (the "Prior Project") and more particularly described in the Certificate Regarding Use of Proceeds, dated the date hereof and included elsewhere in the transcript for the Amended Bonds and who will make loan payments (the "Loan Payments") to the City. (2) Statement of Expectations. On the basis of the facts and estimates in existence on the date hereof, I reasonably expect the following with respect to the amount and use of gross • proceeds of the Amended Bonds: (a) No Amounts Received As a Result of Amendment; No Aggregated Issues. There are no amounts being received by the City or the Owner as a result of the Amendment of the Bonds and the Amended Bonds are not being remarketed at this time. The current owner of the Bonds will sell the Bonds (which will become the Amended Bonds) to Principal Commercial Acceptance, LLC (the "Purchaser"), and all proceeds of this sale will be retained by the current owner of the Bonds. No tax-exempt debt has been sold within fifteen (15) days before or after the date of the Amendment that will be paid from substantially the same source of funds as the Amended Bonds (excluding guarantees from unrelated parties). (b) Costs of Issuance of the Amended Bonds. Legal fees, printing costs and other costs of amending the Bonds will be paid by the Owner. (c) Pledge of Revenues; Debt Service Funds. The Debt Service Fund, the Interest Account, the Principal Account and the Seasoned Funds Account in the Debt Service Fund and the Investment Earnings Account (collectively, the "Debt Service Funds") have been established primarily to achieve a proper matching of revenues consisting primarily of the amounts paid under the Loan Agreement ("Loan Payments") and debt service due on the Bonds during each year that the Bonds are outstanding. Amounts deposited in the Debt Service Funds will be spent within thirteen (13) months of the date of deposit and such Funds will be depleted at least once a year except for a reasonable carryover amount not in excess of the greater of earnings on the Debt Service Funds during the preceding bond year for the Amended Bonds (see subparagraph (k) below) or one-twelfth (1/12th) of debt service on the Amended Bonds during the preceding bond year for the Amended Bonds. Amounts in the Debt Service Funds will be invested without yield restrictions. Interest earnings and gains resulting from such investment will be deposited in the Interest Account and used for payment of debt service on the Amended Bonds. Such earnings are not expected to exceed $100,000 in any year. (d) Tender Payments Fund and General Fund. Amounts deposited in the Tender Payments Fund and the General Fund are not reasonably expected to be used for the payment of debt service on the Bonds or on the Loan and, if invested, will be invested without yield restrictions. (e) Reserve Fund. A reserve fund has not been established for the Bonds. (f) No Other Pledged Amounts or Investment-Type Property. Except as described herein, no amounts have been pledged to, or are reasonably expected to be used directly or indirectly by or on behalf of a substantial beneficiary of the Amended Bonds,to pay principal of or interest on the Amended Bonds, nor are there any amounts that have been reserved or otherwise set aside such that there is a reasonable assurance that such amounts will be available to pay principal of or interest on the Amended Bonds. In addition, the City has not entered into, and does not reasonably expect to enter into, a hedge contract primarily for the purpose of reducing the City's risk of interest rate changes with respect to the Amended Bonds. (g) No Negative Pledges. There are no amounts held by or on behalf of any substantial beneficiaries of the Amended Bonds under any agreement requiring the maintenance of amounts at a particular level for the direct or indirect benefit of the • owners of the Amended Bonds excluding for this purpose amounts in which the City may grant rights that are superior to the rights of the owners of the Amended Bonds and 2 amounts that do not exceed reasonable needs for which they are maintained and as to which the required level is tested less often than every six (6) months and that may be spent without any substantial restriction other than a requirement to replenish the amount by the next testing date. (h) No Replacement Proceeds. There are no amounts that have a sufficiently direct nexus to the Amended Bonds, the Loan Agreement or the refunding program to conclude that the amounts would have been used for debt service on the Amended Bonds, for Loan Payments or for the refunding program if the proceeds of the Amended Bonds were not being used for those purposes. The term of the Amended Bonds is not longer than reasonably necessary for refunding of the 1997 Bonds in that the weighted average maturity of the Amended Bonds does not exceed the remaining weighted average maturity of the 1989 Bonds and the 1997 Bonds did not have a weighted average maturity in excess of one hundred twenty percent (120%) of the reasonably expected remaining economic life of the Prior Project. (i) No Improper Financial Advantage. The transaction contemplated herein does not represent an exploitation of the difference between tax-exempt and taxable interest rates to obtain a material financial advantage and does not overburden the tax- exempt bond market in that the City is not issuing more bonds, issuing bonds earlier, or allowing bonds to remain outstanding longer than is otherwise reasonably necessary to accomplish the governmental purposes of the bonds. (j) Bond Year for the Amended Bonds. The City hereby selects each period from March 2 through March 1 of the following calendar year as the bond year for the Amended Bonds, except that the first bond year will commence on the date hereof and the last bond year will end on the date of payment of the Amended Bonds in full. (k) Rebate Requirement for the Amended Bonds. Because there are no proceeds of the Amended Bonds it is not expected that the City will rebate excess investment earnings,if any, to the federal government. (1) Rebate Requirement for the 1989 Bonds. The 1989 Bonds are subject to requirements for rebate of excess investment earnings to the federal government and the City is in compliance with those requirements. (m) Yield of the Amended Bonds. The yield of the Amended Bonds will be determined on the basis of regularly scheduled principal and interest payments on the Amended Bonds, discounted to the issue price of the Amended Bonds of $4,895,000 (being the face amount of the Bonds). The Purchaser has represented that it is purchasing the Amended Bonds for its own account, it does not intend to resell the Amended Bonds,and that it paid the price of par for the Amended Bonds. (n) Variable Interest Rate and Tender Features. The Amended Bond terms provide for an initial fixed rate period with stepped coupons with a remarketing on March 31, 2001, at a rate of interest (to be determined on the remarketing date) through the maturity date of the Amended Bonds. All changes in interest rates after such remarketing will be made pursuant to the terms of the Amended Bonds by a remarketing agent and will be set at a rate which will enable the Amended Bonds to be remarketed at par. • 3 (o) Yield of the Loan Payments. The Owner will pay principal and interest payments under the Loan Agreement, as amended by the Amendment (the "Amended Loan Agreement"), in amounts needed to principal and interest payments due on the Amended Bonds. The total principal and interest paid by the Owner in any bond year will not exceed the total principal and interest payable on the Amended Bonds in such year. The yield of the Loan Payments will not exceed the yield of the Amended Bonds by more than one and one-half percent (1.5%), computed by (i) excluding costs paid by the City, directly or indirectly, to purchase, carry, sell, or retire the Amended Loan Agreement, and (ii) using the same redemption assumptions used to compute the yield of the Amended Bonds. The Loan Agreement is part of a governmental program (the "Program") of the City that involves the acquisition of investments to carry out the governmental purposes of the Program, in which (i) at least ninety-five percent (95%) of the cost of the purpose investments represent one or more loans to persons who provide housing and related facilities; (ii) at least ninety-five percent (95%) of the receipts of the purpose investments are used to pay debt service on issues that finance the Program, to pay or reimburse administrative costs of those issues or of the Program, to pay or reimburse anticipated future losses directly related to the Program, to finance additional investments for the same general governmental purposes of the Program or to redeem and retire governmental obligations at the next earliest possible date of redemption; (iii) the Program documents prohibit the Owner or related parties to the Owner from purchasing Amended Bonds in an amount related to the amount of the Amended Loan Agreement or any other obligation acquired by the City in furtherance of the governmental purposes of the Program; and (iv) the City has not waived the right to . treat the Loan Agreement as a Program investment. (p) No Remaining Amounts. After the reissuance of the 1997 Bonds and the issuance of the Amended Bonds, no funds remain in any account or fund established for payment of debt service on the 1997 Bonds or established from the proceeds of the 1997 Bonds. (q) Hedge Bonds. The Amended Bonds do not constitute "hedge bonds" because the 1997 Bonds were not hedge bonds. The 1997 Bonds were not hedge bonds because the 1989 Bonds were not hedge bonds. The 1989 Bonds were not hedge bonds because the Bonds were not hedge bonds. The Bonds were not hedge bonds because, on the date of issuance of the Bonds, the City reasonably expected that not less than eighty- five percent (85%) of the proceeds of the Bonds would be expended within three (3) years of the date of issuance and not more than fifty percent (50%), if any, of the proceeds of the Bonds was invested in investments having a substantially guaranteed yield for four (4) or more years. (3) Allocation and Accounting Procedures. The City and the Owner will use a consistently applied accounting method to account for investments and expenditures of proceeds of the Amended Bonds. Allocations of Amended Bond proceeds to expenditures will be made only with respect to a current outlay of cash for the expenditures. The City and the Owner will not invest proceeds of the Amended Bonds in a commingled fund in which the City or the Owner owns more than 10 percent of the beneficial interest thereof. The City or the Owner will maintain books and records until six years after the date of retirement or • redemption of the Amended Bonds sufficient to (i) establish the accounting method used, (ii) account for all investments of proceeds of the Amended Bonds, and (iii) substantiate the allocation of proceeds of the Amended Bonds to expenditures. In the event such allocations of Bond proceeds to expenditures are not made within 60 days after the date five years after the date hereof, the City will use a specific tracing accounting method to account for investment and expenditures of proceeds of the Bonds. On the basis of the foregoing, it is not expected that the proceeds of the Amended Bonds will be used in a manner that would cause the Amended Bonds to be arbitrage bonds within the meaning of section 148 of the Code and applicable regulations. To the best of my knowledge, information and belief, the expectations herein expressed are reasonable and there are no facts or estimates, other than those expressed herein, that would materially affect the expectations herein expressed. IJAR 2 r) '19 IN WITNESS WHEREOF, I have hereunto set my hand this '1999. Ray Silver City Administrator 5 I,Todd Silver, a general partner of Village Partnership,a California general partnership, do hereby certify that I have read the foregoing Certificate as to Arbitrage and to the best of my knowledge,information and belief, the expectations therein expressed are reasonable,and there are no other facts, estimates or circumstances, other than those expressed therein, that would materially change the expectations therein expressed. MAR 5 IN WITNESS WHEREOF, I have hereunto set my hand this VILLAGE PARTNERSHIP, CALIFORNIA GENERAL PARTNERSHIP Todd S1 ver General Partner 6 18019-49 JH:CKL:PCH 3/15/99 i CITY OF HUNTINGTON BEACH Multifamily Housing Revenue Bonds (Village Partnership Project) 1986 Series A 1999 Reissuance Transaction ($4,895,000 principal amount) CERTIFICATE OF MAILING FORM 8038 I, Phyllis Clark Henry, hereby certify that for and on behalf of the City of Huntington Beach, on the date hereof, I caused to be mailed an Information Return for Tax-Exempt Private Activity Bond Issues, Form 8038, relating to the captioned financing, by certified first class mail, postage prepaid, return-receipt requested, to the Internal Revenue Service Center, Philadelphia, Pennsylvania 19255, a true copy of which Form 8038 is hereto attached. Dated: March 25, 1999 Phyllis Clark Henry, Jones Hall, • A Professional Law Corporation Forth 8038 Information Return for Tax-Exempt fW.March 1995) Private Activity Bond Issues OMe No.1545-0720 oeprernr„or the Treasury sender Internal Revenue Code section 140(s)) Oftnsl Revenue Service ► See separate instructions. Reporting Authority If Amended Return,check here ►❑ 1 ksuees name 4 Nauses employer idsntlflestlon number Cit . of Huntington Beach 95 i 6000723 3 Number and street(or P.O.box M mail is not delivered to street address) Boon✓sake 4 RepoR number 2000 Main Street PA19 99 - 2 5 City,town,or post office,state,and ZIP code 6 Deft of issue Huntington Beach, California 92648 March 2�5, 1999 7 Name of issue City of Huntington. Beach Multifamily Housing 6 curAP number Revenue Bonds (Village Partnership Project) 1986 Series A 446196 AN7 Type of Issue (check applicable box(es) and enter the issue price for each) Issue Price 9 Exempt facility bond: a ❑ Airport (sections 142(a)(1)and 142(c)) . . . . . . . . . . . . . . . . . . . 9a b ❑ Docks and wharves(sections 142(a)(2) and 142(c)) . . . . . . . . . . . . . . . 9b c ❑ Mass commuting facilities(sections 142(a)(3)and 142(c)). . . . . . . . . . . . . 9C d ❑ Water furnishing facilities (sections 142(a)(4)and 142(e)) . . . . . . . . . . . . . 9d e ❑ Sewage facilities (section 142(a)(5)) . . . . . . . . . . . . .. . . . . . . 9e f ❑ Solid waste disposal facilities(section 142(a)(6)). . . . . . . . . . . . . 9f g El Qualified residential rental projects(sections 142(a)(7)and 142(d)), as follows:. . . . . . 4 895 000 Meeting 20-50 test(section 142(d)(1xA)) . . . . . . . . . . . E3 Meeting 40-60 test (section 142(d)(1)(13)) . . . . . . . . . . . ❑ Meeting 25-60 test(NYC only) (section 142(d)(6)) . . . . . . . . ❑ Has an election been made for deep rent skewing(section 142(d)(4)(B))? ❑Yes ❑No h ❑ Facilities for the local furnishing of electric energy or gas (sections 142(a)(8) and 142(f)) 10i ❑ Local district heating or cooling facilities (sections 142(a)(9)and 142(g)). . . . . . . Gil J ❑ Qualified hazardous waste facilities (sections 142(a)(10) and 142(h)) . . . . . . . . 9J k ❑ High-speed intercity rail facilities (sections 142(6)(11), 142(c),and 14201). . . . . . 9k cti Check box If the owner elected not to claim depreciation or any tax credit(see instruons) III- ❑ I ❑ Environmental enhancements of hydroelectric generating facilities (sections 142(a)(12) and 1 420)) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91 m ❑ Facilities allowed under a transitional rule of the Tax Reform Act of 1986 (see instructions) . 9m Facilitytype...................................................................................•.......... 1986 Act section........................................................................................ n. ❑ Qualified enterprise zone facility bonds (section 1394). . . . . . . . . . . . . . Sn 10 ❑ Qualified mortgage bond (section 143(a)) . . . . . . . . . . . . . . 10 11 ❑ Qualified veterans' mortgage bond (section 143(b)). . . . . . . . . . . . . . ► 11 If you elect to rebate arbitrage profits to the United States, check box . . . . . , ❑ 12 ❑ Qualified small issue bond (section 144(a)) (see instructions). . . . . . . . . . . ► 12 For$10 million small Issue exemption, check box . . . . . . . . . . . . . ❑ 13 ❑ Qualified student loan bond (section 144(b)) . . . . . . . . . . . . . . . . . 13 14 ❑ Qualified redevelopment bond (section 144(c)) . . . . . . . . . . . . . . . . 14 15 ❑ Qualified hospital bond (section 145(c)) (attach schedule se instructions) . 15 16 ❑ Qualified 501(c)(3)bond other than a qualified hospital bond(attach schedule-see instructions) 16 17 ❑ Nongovernmental output.property bond (treated as private activity bond)(section 141(d)). 17 18 ❑ Other.Describe see instructions ► 1 18 Description of Bonds (a) Id) k) Id) N) (Q (9) Meturky date trrterest rate kaue price stated reder.vfion WoV tad averape Yield Net prios at nmt<ulty matuf ty Inkiest cost • 19 Final maturity. 11/1/16 VR % $ 4,895,000 $ 4 895,000 20 Entire issue $ 4 895 000 $ 4' 895 000 7.5972 VR % VR % For Paperwork Reduction Act Notice,see page 1 of the Instruction. Cat No.49973K Form t3M (Rev.34*1 Form W38(Rev.3-95) Pape 2 17M Uses of Proceeds of Issue (including underwriters' discount) Amount 21 Proceeds used for accrued interest . . . . . . . . . . . . . . . . . . . . 21 -0- 22 Issue price of entire issue(enter amount from line 20, column(c)) . . . . . . . . 22 4,895 000 23 Proceeds used for bond issuance costs(including underwriters'd 23 -0- 24 Proceeds used for credit enhancement . . iscount). . . . . 24 - - 25 Proceeds allocated to reasonably required reserve or replacement fund . 25 -0- 26 Proceeds used to refund prior issues(complete Part Vn . . . . . . . 28 4 895 000 27 Total (add lines 23 through 26) . . nd mou 27 4,895,000 28 Nonrefundin proceeds of the issue subtract line 27 from line 22 a enter ant here . 28 -0- MMM Description of Property Financed by Nonrefunding Proceeds (Do not complete for qualified student ban bonds,qualified mortgage bonds,or qualified veterans'mortgage bonds.) 29 Type of Property Financed by Nor.refunding Proceeds: Amount aLand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 298 b Buildings and structures . . . . . . . . . . . . . . . . . . . . . . 29b c Equipment with recovery period of more than 5 years . . . . . . . . . . . . . 29c d Equipment with recovery period of 5 years or less . . . . . . . .. . . . . . . . 29d e Other describe). . 29e 30 Standard industrial classification IC of the projects financedby nonrefunding S. SIC Code Amount of nonrefunding proceeds SIC Code Amount of nonrefunding proceeds a $ c b d 111TIM Description of Refunded Bonds (Complete this part only for refunding bonds.) 31 Enter the remaining weighted average maturity of the bonds to be refunded . . . . . . . . ► 17 Years 32 Enter the last date on which the refunded bonds will be called . . . . . . . . . . . . . ► 3/2 3/99 33 Enter the date(s)the refunded bonds were issued► 4/9/9 7 Miscellaneous • 34 Name of governmental unit(s)approving Issue(see instructions) ►.....City of Huntington Beach .................................................••••• .Resolution adopted.3/15/99 ..••• ................................................................................................ 35 Enter the amount of the bonds designated by the Issuer under section.265(b)(3)(B)(i)(I11). . . . ► . 36 Check box if you have elected to pay a penalty in lieu of rebate . . . . . . . . . . . . ► ❑ 37 Check box if you have identified a hedge see instructions . . ► ❑ Volume Cap Amount 38 Amount of volume cap allocated to the issuer.Attach copy of state certification. . . . . 38 39 Amount of issue subject to the unified state volume cap . . . ' . . 39 40 Amount of issue not subject to the unified state volume cap or other volume limitations: a Of bonds for governmentally owned solid waste facilities,airports,docks,wharves,environmental enhancements of hydroelectric generating facilities,or high-speed intercity rail facilities. . . . 40a b Under a carryforward election.Attach a copy of Form 8328 to this return . . . . . . 40b c Under transitional rules of the Tax Reform Act of 1986. . . . . . . . . . . . . . . 40c Enter the Act section of the applicable transitional rule. . . . . . . ►...................... d Under the exception for current refunding (section 146@ and section 1313(a) of the Tax Reform Act of 1986) . . . . . . . . . . . . . . . . . . . . . . . . . 40d $4,8 9 5,0 0 0 41 Amount.of issue of qualified 501(c)(3) bonds: a Qualified hospital bonds . . . . . . . . . . . . . . . . . . . . . 41a b Qualified nonhospftal bonds. . . . . . . . . . . . . . . . . . . . . . . 41b c Outstanding tax-exempt nonhospital bonds . . . . . . . . . . . . . . . . . . 41C 42a Amount of issue of qualified veterans'mortgage bonds . . . . . . . 42a b Enter the state limit on qualified veterans' mortgage bonds 42b Under penattiss or paj ry,I dwiers that I have examined thk reihM and s000mperift acrrdulee and statww ts,and to the best of my knowledge and belief,they are true,Co. and Complete. Please / _ Sign 3/25/99 r Here Ray Silver City Administrator Name of above officer(type or pr" Tide d orflow(typo or print) ® errs on r•roo eo.va• 'us.oowm«n PrirQkg once: 105—397-OOVAM 18019-49 JH:CKL:PCH 3/15/99 CITY OF HUNTINGTON BEACH Multifamily Housing Revenue Bonds (Village Partnership Project) 1986 Series A 1999 Reissuance Transaction ($46,895,000 principal amount) CERTIFICATE OF THE CITY The undersigned hereby states and certifies: (i) that the undersigned is the duly appointed, qualified and acting City Administrator of the City of Huntington Beach, a chartered city and municipal corporation, duly organized and validly existing under the Constitution and the laws of the State of California (the "City'), and as such, is familiar with the facts herein certified and s authorized and qualified to certify the same on behalf of the City; (ii) that the following are now, and have continuously been since the dates of beginning of their respective current terms of office shown below,the duly elected or appointed, qualified and acting members of the City, and the dates of the beginning and ending of their respective current terms of office are hereunder correctly designated opposite their names: Beginning Date Ending Date Member of Current Term of Current Term Peter Green December, 1998 December, 2002 David Garofalo December, 1998 December, 2002 Ralph Bauer December, 1998 December, 2002 Shirley Detloff December, 1998 December, 2002 Tom Harman December, 1996 December, 2000 Pam Julien December, 1996 December, 2000 Dave Sullivan December, 1996 December, 2000 (iii) that the signatures set forth opposite the names and titles of the following persons are the true and correct specimens of, or are the genuine signatures of, such persons, each of whom holds the office designated below: Name/Title Signature Ray Silver, City Administrator Connie Brockway,City Clerk (iv) that Resolution No. 99-20, entitled "A Resolution of the City Council of the City of Huntington Beach Approving a Third Supplemental Indenture of Trust and a Third Amendment to Loan Origination and Servicing Agreement, and Authorizing the Execution and Delivery Thereof and of Other Documents and Actions to be Taken in Connection Therewith', adopted by the City Council of the City on March 15, 1999 (the "Resolution"), has not been amended, modified, supplemented or rescinded and remains in full force and effect as of the date hereof; (v) that the above-referenced City Administrator and City Clerk are authorized by the Resolution to execute (and attest, as applicable) and deliver that certain Third Supplemental Indenture of Trust, dated as of March 1, 1999 (the "Third Supplemental Indenture"),by and between the City and U.S. Bank Trust National Association, as trustee (the "Trustee"), and that certain Third Amendment to Loan Origination and Servicing Agreement, dated as of March 1, 1999 (the "Third Amendment to Loan Agreement"), by and among the City, the Trustee, and Village Partnership, a California general partnership (the "Developer"), and any such other documents as they deem necessary in connection therewith; NO that the bonds to be reissued by the City, designated "City of Huntington Beach Multifamily Housing Revenue Bonds (Village Partnership Project), 1986 Series A" (the "Bonds"), in the aggregate principal amount of $4,895,000, will be executed by the facsimile signature of the City Administrator named herein, will be countersigned by the facsimile signature of the City Clerk named herein, and the seal of the City is impressed hereon and will be reproduced on the Bonds in facsimile; (vii) that the City has not received notice of any pending, nor to the City's knowledge is there any threatened,action,suit,proceeding,inquiry or investigation against the City, at law or in equity,by or before any court, public board or body, nor to the City's knowledge is there any basis therefor, affecting the existence of the City or the titles of its officials to their respective offices, or seeking to prohibit, restrain or enjoin the reissuance of the Bonds or the pledge of revenues or assets of the City pledged or to be pledged to pay principal of and interest on the Bonds, or in any way adversely affecting or questioning the validity or enforceability of the Bonds, any proceedings of the City taken with respect to the Bonds, the exclusion of interest on the Bonds from gross income for purposes of Federal income taxation, the execution and delivery of the Bonds, or the power of the City to carry out the transactions contemplated by the Bonds, the Third Supplemental Indenture or the Third Amendment to Loan Agreement; (viii) that, by all necessary action, the City has duly authorized and approved the execution and delivery of, and the performance by the City of the obligations on its part contained in the Bonds, the Third Supplemental Indenture and the Third Amendment to Loan Agreement; (ix) that the City's employer identification number, for federal tax purposes, is 95- 6000723; and (x) that for the calendar year 1999, and including the Information Return for Tax- Exempt Private Activity Bonds, Form 8038, filed with the Internal Revenue Service Center for the Bonds, the City has filed two (2) Information Return, Form 8038, with the Internal Revenue Service Center, Philadelphia, Pennsylvania 19255. Dated: CITY OF HUNTINGTON BEACH MAR 2 5 1999 By (2'..s Ci Administrator [SEAL] -2- This document was electronically recorded by RECORDED AT THE REODUT OF CHICAGO TITLE COMPANY CHICAGO TITLE COMPANY AND WHEN RECORDED RETURN TO: AND Recorded in the County of Orange, California Paul F. Fibler, Esquire ��(��E��I II�� (��I�`��Clerk/Recorder Berber, Kahn, Shafton, Moss, 30.00 Figler, Simon & Gladstone 19990222146 2:55pm 03/25/99 4215 Glencoe Avenue, 2nd Floor 005 28017596 28 08 Marina del Rey, California 90292 A17 9 6.00 24.00 0.00 0.00 0.00 0.00 (Above Space For Recorder's Use Only) SECOND AIVIENDI\1ENT TO DEED OF TRUST N'�'ITH ASSIGNI\1ENT OF RENTS AND SECURITY AGREEMENT IVITH FIXTURE FILING This Second Amendment is made this 1 st day of March, 1999, by and bet"veen and U.S. Bank Trust National Association as Beneficiary, and Village Partnership, a California general partnership, as TI-llslol-. **Principal Commercial Acceptance, LLC `VITNESSETH Whereas, on November 1, 1986, Maker executed a Promissory Note Secured By Deed of Trust in the amount of Seven Million. Seven Hundred Thousand and No/100 Dollars (S7,700,000.00) Note payable to Seattle First National Bank, not individually. but as Trustee under a certain indenture of trust dated as of November 1 . 1986 C'01.1 Tinal Trustee"); Whereas, the proceeds of the loan ,sere derived from the sale of certain Variable Rate Demand, Multifamily Housing Revenue Bonds. the payment of which %gas secured. in part, by a Letter of Credit dated November 1, 1986 in the amount of Seven Million. Seven Hundred Thousand and No/100 Dollars (S7,700,000.00) issued by NICI-Cory Savinas and Loan Association ("Mercury"); Whereas, the aforesaid Note was secured, in part, by a Deed of Trust dated November 1, 1986 recorded November 7, 1986 as Instrument No. 86-536373. Official Records, Orange County Recorder, State of California; Whereas, Beneficiary has succeeded to the interest of Original Trustee and the Federal Deposit Insurance Corporation (`'FDIC") has succeeded to the interest of' Mercury- Whereas, Trustor has negotiated a settlement with the FDIC \which has an interest in certain instruments which secured payment of the Note; PFF:51264 2nd Amend.to Deed.V3 I The provisions of this Second Amendment shall be binding upon and inure to the benefit of the successors and permitted assigns of the parties hereto. This Second Amendment may be executed in counterpart. IN WITNESS WHEREOF this Second Amendment has been executed as of the day and year first above written. VILLAGE PARTNERSHIP, a California General Partnership By: Todd Silver General Partner U.S. BANK TRUST NATIONAL ASSOCIATION As Trustee B y: ��-� e t� �- Its: 1 PFF:5I264 "'nd Amend.to Deed.V3 3 STATE OF KAt-cS FPS ss. COUNTY OF r1S a N ) On fA4rch 2y , lg99 , before me, (Notary Public) personally appeared MACz�- (Name of Signer(s)) personally known to me or proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to cne that he/she/they e: �=ted the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. (SEAL) R. ADDLE HILLNER Signature of Notary NOTARY PUBLIC STATE OF KrSAS / STATE OF K A,WS A S ) COUNTY OF 3o k ►tti So a j ss. On March 2-'�) kc l" , before me, T• Y Public) personally appeared C NARLES (Z. (Name of Signer(s)) personally known to me or proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that helshe/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. (SEAL) Signature of Notary R ADELE HILLNER NOTARY PUBLIC STATE OF rS STATE OF �q )ZI, Ci' ) ) ss. COUNTY OF ) On /Qqb e me, if P (Notary Public) personall - appearcd 'ODD (Name of Sinner(s)) personally known to me or roved IQ me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed tot e within instrument and acknowledged to me that he/:,he/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their sianature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. (SEAL) ---- ----------------------- Si�zn of Notary 11 EUGENE TRAKH T ENSERG 0 . COMM.#1199733 Q NOTARY PUBLIC-CALIFORNIA +n LOS ANGELES COUNTY n .� COMM. EXP, OCT, 254 2002� PFF:51264Assi«n of DFr State of Washington King, County of Kin I certify that I know or have satisfactory evidence that R. Bruce Colwell, Jr. is the person who appeared before me, and said person acknowledged that she signed this instrument, on oath stated that he was authorized to execute the instrument and acknowledged it as the Vice President of U.S. Bank Trust National Association to be the free and voluntary act of such party for the uses and purposes mentioned in the instrument. Dated:March 19, 1999 (Signature) (Seal or stamp) Title: Trust Officer at My appointment expires: February 28,2003 tl list 18019-49 JH:CKL:PCH 3/26/99 CITY OF HUNTINGTON BEACH Multifamily Housing Revenue Bonds (Village Partnership Project) 1986 Series A 1999 Reissuance Transaction($4,895,000 principal amount) CERTIFICATE PERTAINING TO CLOSING DATE The undersigned hereby state,represent and agree,as follows: (i) that in connection with the closing of the captioned financing, the undersigned have individually and collectively signed various certificates and other documents dated March 23, 1999, which was the anticipated closing date, for said financing (the "Closing Documents"); (ii) that capitalized terms used herein and not otherwise defined shall have the same meanings as assigned to them in that certain Indenture of Trust, dated as of November 1, 1986, by and between the City and Seattle-First National Bank, as trustee (the "Trustee") as amended and supplemented by that certain First Supplemental Indenture of Trust, dated as of June 1, 1989,by and between the City and the Trustee, as amended and supplemented by that certain Second Supplemental Indenture of Trust,dated as of March 1, 1997,by and between the City and the First Trust National Association,as successor trustee, and as further amended by the Third Supplemental Indenture of Trust,dated as of March 1, 1999,by and between the City and U.S. Bank Trust National Association, as successor trustee (collectively, the "Indenture") (iii) that the law firm of Jones Hall, A Professional Law Corporation, is hereby authorized and directed to change (whether manually, by interlineation, or by the replacement of existing pages or by other similar alteration) the date of the Closing Documents from March 23, 1999 to the actual closing date of March 25, 1999; provided, however, that failure to change the date of any certificate to March 25, 1999, by inadvertance or otherwise, shall not be deemed to imply any change other than from March 23, 1999 to March 25, 1999 or to negate the effect of this certificate; (iv) that the information, representations, warranties, agreements, certifications, opinions and other matters contained in the Closing Documents are true, correct and complete as of March 25, 1999, the date the closing is effected; provided, however, that no individual executing this Certificate makes any representation or warranty whatsoever concerning any Closing Document to which such individual is not a signatory;and (v) that this certificate may be executed in any number of counterparts, each of which shall for all purposes be deemed to be an original and all of which shall together constitute but one and the same instrument. Dated: March 25, 1999 CITY OF HUNTINGTON BEACH By: G', Ray Silver, City Administrator By: - 1, Connie Brockway, City Clerk U.S. BANK TRUST NATIONAL ASSOCIATION,as Trustee By /Y R.B. Colwell,Jr. VILLAGE PARTNERSHIIP, A CALIFORNIA GENERAL PARTNERSHIP By: Todd Silver, General Partner PRINCIPAL COMMERCIAL ACCEPTANCE, LLC By: By: Its: Managing Directors PAINEWEBBER INCORPORATED By: Mark J. Adler, Managing Director -2- U.S. BANK TRUST NATIONAL ASSOCIATION,as Trustee By R.B. Col eh,Jr. VILLAGE PARTNERSHII CALIFORNIA GENERAL PA TNERSHIP By: Todd Silver, General Partner PRINCIPAL COMMERCIAL ACCEPTANCE, LLC By: By: Its: Managing Directors PAINEWEBBER INCORPORATED By: Mark J. Adler, Managing Director -2- U.S. BANK TRUST NATIONAL ASSOCIATION,as Trustee By R.B. Colwell,Jr. VILLAGE PARTNERSHIIP, A CALIFORNIA GENERAL PARTNERSHIP By: Todd Silver, General Partner PRINCIPAL COMMERCIAL ACCEPTANCE, LLC By: By: Its: Mana ectors PAINEWEBBER INCORPORATED By: Mark J. Adler, Managing Director -2- U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee By R.B.Colwell,Jr. VILLAGE PARTNERSHIIP, A CALIFORNIA GENERAL PARTNERSHIP By: Todd Silver, General Partner PRINCIPAL COMMERCIAL ACCEPTANCE, LLC By: By: Its: Managing Directors • PAINEWEBBER INCORPORATED By: Ma -J. Adler, Managing Director -2- 5 This document was electronically recorded by RECORDED AT THE REQUEST OF CHICAGO TITLE COMPANY CHICAGO TITLE COMPANY D Recorded in tie County of Orange, California WHEN RECORDED RETURN TO: II L. Granvilile, Clerk/Recorder Paul F. FiQler. Es uire 'ND 1111111 II11I 1111,1111,1111I 1111,1111,11, 12.00 b q Berger, Kahn, Shafton, Moss, 19990223256 04:30PM 03/25/99 Fi ler, Simon & Gladstone 005 2016031 02 49 g 4215 Glencoe Avenue, 2nd Floor A34 3 6.00 6.00 0.00 0.00 0.00 0.00 Marina del Rey, California 90292 (Above Space For Recorder's Use Only) ASSIGNMENT OF DEED OF TRUST FOR VALUE RECEIVED, the undersigned, Principal Commercial Advisors, Inc., an Iowa corporation, hereby sets over, tra.isfers and assigns to Principal Commercial Acceptance, LLC, a Delaware limited liability company, all of its right, title and interest in and to that certain Deed of Trust, Absolute Assignment of Rent, Security Agreement and Fixture Filing recorded August 28, 1998 as Instrument No. 98-0572951, Official Records of Orange County, California,. village Partnership, a General partnership, as original Trustor. Dated: March 1, 1999 PRINCIPAL COMMERCIAL ADVISORS, INC., an Iowa corporation By: ek-,v,&, P. --, Its: ni a tNA r By: Its: PFF:51264Assign of D/r s - STATE OF ss. COUNTY OF 5 0 cJ S 0 rs ) On Mac-c" t 2- > >qqq , before me, - (y1 er' (Notary Public) personally appeared C N LLS S R . S'T C PHEt4S (Name of Signer(s)) personally known to me or proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. (SEAL) -- -- -------- — --------- Signature of Notary R ADEL.E HULL.NER NOTARY PUBLIC STATE OF KANMS IAY Apgt &0' 7 z o 0 i i PFF:51264Assign of D/T STATE OF K R S R 3 ) ss. COUNTY OF U N rJ S o r� ) On m a rC n 1119 , before me"AUIC-le- Y41r1111�41` (Notary Public) personally appeared M A (ZY- E . 'QP-T.TTEyA N p.M (Name of Signer(s)) personally known to me or proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. (SEAL) — — ---- Signature of Notary R. ADELE HILLMER NOTARY PUBLIC STATE OF KANSAS This document was electronically recorded by CHICAGO TITLE COMPANY RECORDED AT THE REQUEST OF CHICAGO TITLE COMPANY R£e6Rd)Pi6-MUESTED-BY AND Recorded in the County of Orange, California ,WHEN RECORDED RETURN TO: ANDII Ga L. Granville, Clerk/Recorder O: 12.00 Paul F. Figler, Esquire 19990223255 04:30PM 03/25/99 Berger, Kahn, Shafton, Moss, 005 2016031 02 49 Figler, Simon & Gladstone A34 3 6.00 6.00 0.00 0.00 0.00 0.00 4215 Glencoe Avenue, 2nd Floor 2 Marina del Rey, California 90292 (Above Space For Recorder's Use Only) ASSIGNMENT OF LEASES FOR VALUE RECEIVED, the undersigned, Principal Commercial Advisors, Inc.. an Iowa corporation, hereby sets over, transfers and assigns to Principal Commercial Acceptance, LLC, a Delaware limited liability company, all of its right, title and interest in and to that certain Absolute Assignment of Leases and Rents recorded August 28. 1998. as Instrument No. 98-0572952, Official Records of Orange County, California; With Village Partnership, a General partnership, as original assignor Dated: March 1, 1999 Principal Commercial Advisors, Inc., an Iowa corporation B y: 2. k4-7 Its: emu.: «� By: / Its: PFF:51264Assign of Leases STATE OF K A N s 5 ) ss. COUNTY OF --Tb A,4 $o ) On March 1--� , laaq , before me, 9 • Nall e N 11 ner (Notary Public) personally appeared !Y\A F,K C . 1g tR 2i-r EW NA m (Name of Signer(s)) personally known to me or proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. (SEAL) R. ADELE IjI A _ NOTARY PUBLIC Signature of Notary STATE OF KANSAS STATE OF S�S ss. COUNTY OF TO�A N S p tJ ) On A%0.f-.L.. 1 i) � q I q , before me, R • AM Z 0 1 0 n e-r (Notary Public) personally appeared C1 NA(Z1.E5 (Z . (Name of Signer(s)) personally known to me or proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. (SEAL) _ R. ADFLE FfILL.NER Signature o Notary NOTARY PUBLIC STATE OnFNS'ASMY NppL E)q�, 10JJ This STATEMENT is presented for filing pursuant to the California Uniform Commercial Code t F.I.t-AjJ6 53637�ANGIN4 eTA T[M[NTI IA. DATE OF FILING O�R�.•,NANCI•I L: tB• DATCOFORIG II/1/86N0 lTATEMENT tC. :LACE ACE OF FILING ORIL.I INA LACING STATEMENT 11 7 86 - 6TATCM ENT Oranae County,, CA AWTOR I LAST NnME FIRST) I 2A. :OCIA.SECURITY NO..FEDCRAL TAX NO. Village Partnership, a California general partnership 2B. MAILING ADDRESS 2C.CITY,STATE 2D.ZIP CODE 9601 Wilshire Blvd. , Suite 1110 I Beverly Hills, CA 90210 3.ADDITIONAL DEBTOR I IF ANY) 1 LAST NAME FIRST) I 3A. SOCIAL SECURITY OR FCDERAL TAX NO. 3B. MAILING ADDRESS I 3C.CITY,STATE I 3D.ZIP CODE — 4.SECURED PARTY 11 4A. 80C 1ALe[cuRITYNO..FEDu+ALTAXNO. OR SANK TRANSIT AND A.S.A.NO. NAME Principal Commercial Advisors, Inc. MAILING ADDRESS 11050 Roe Avenue, Shiite 200 CITY Overland Park STATIE Kansas ZIP CODE 66211 5.ASSIGNEE OF SECURED PARTY (IF ANY) 5A. SOCIALSECURITYNO..FCO[n ALTAXNO. OR SANI(TRANSIT AND A.S.A.NO. NAME Principal C miercial Acceptance, LLC MAILING ADDRESS 11050 Roe Avenue, Suite 200 ('ITY Overly A Park STATE Kansas ZIP CODE 66211 6. ❑CONTINUATION—the original Financing Statement between the foregoing Debtor and Secured Party bearing the file num- A ber and dote shown above is continued. If collateral is crops or timber, check here ❑ and insert description of real prop- erty on which growing or to be grown in Item 7 below. B ❑RELEASE—From the collateral described in the Financing Statement bearing the file number shown above, the Secured Party releases the collateral described in Item 7 below. c ❑ASSIGNMENT—The Secured Party certifies that the Secured Party has assigned to the Assignee above named, all the Secured X Party's rights under the Financing Statement bearing the file numF shown above in the collateral described in Item 7 below. D [:]TERMINATION—The Securec Party certifies that the Secured Pa: no longer claims a security interest under the Financing Statemer. bearing the file number shown above. OC-IAMENDMENT—The Financing Statement bearing the file number :..Town above is amended as set forth in Item 7 below. (Signatur-e--of Debtor required on all amendments.) F ❑OTHER 7. See Exhibit "A" attached hereto and made a part hereof. 6. 0 9, This Space for Usc of Filing Officer Tiarch 25 )9 99 p (Date,Time,Filing Office) (Date) E See Exhibit "B" attached hereto and made a part hereof. 1 -- - 2 By: 3SIGNATUREIS) OF DEBTOR(S) (TITLE) 4 By:_ — 5 SIGNATURE(5) OF SECURED PARTYIIES) ITITLE) 6 t C. Return Copy to � Berger Kahn Shafton 1Ioss Figler Simon S 8 A3SrtESS Gladst,.ne CITY AND STATE 4215 Glencoe Ave, 2n6 Floor 9 ' Piarina Del Fey, CA 90292-5634 Attn: Paul F. Figler UYIf oltM CoNINI[NCIAL Co Cr— FOAM UCC-2 (1) FILING OFFICER COPY Approved by the Secretory of Stote EXHIBIT "A" TO UCC-1 FINANCING STATEMENT COLLATERAL DESCRIPTIONS FOR UCC-1 STATEMENTS AND SECURITY AGREEMENT All of the Debtor's right, title and interest in: All equipment, machinery, E. cures, goods, accounts, general intangibles, documents, instruments and chattel paper, and all other personal property of every kind and description, whether now existing or hereafter acquired, now or at any time hereafter attached to, erected upon, situated in or upon, forming a part of, appurtenant to, used or useful in the construction or operation of or in connection with, or arising from the use or enjoyment of all or any portion of, or from any lease or agreement pertaining to, the real property or interests therein located in the County of Orange, State of California, as more particularly described in Schedule I attached hereto and made a part hereof (the "Real Property"), including without limitation: (a) All income, rents, royalties, revenue, issues, profits, proceeds and other benefits from any and all of the Real Property; (b) All deposits made with or other security given to utility companies by Debtor with respect to the Real Property and the Improvements thereon and all advance payments of insurance premiums made by Debtor with respect thereto and all claims or demands relating to such deposits, other security and/or such insurance; (c) All fixtures now or hereafter affixed to the Real Property, including all buildings, structu:es and improvements of every kind and description now or hereafter erected or placed thereon and any and all machinery, motors, elevators, boilers, equipment (including, without limitation, all equipment for the generation or distribution of air, water, heat, electricity, light, fuel or refrigeration or for ventilating or air conditioning purposes or for sanitary or drainage purposes or for the removal of dust, refuse or garbage), partitions, appliances, furniture, furnishings, building service equipment, building materials, supplies, ranges, refrigerators, cabinets, laundry equipment, hotel, kitchen and restaurant equipment, copiers and software, radios, televisions, security systems, awnings, window shades, venetian blinds, drapes and drapery rods and brackets, screens, carpeting and other floor coverings, lobby furnishings, games and recreational and swimming pool equipment, incinerators and other property of every kind and description now or hereafter placed, attached, affixed or installed in such buildings, structures, or improvements (all of such fixtures being referred to hereinafter as the "Improvements"); (d) All damages, royalties and revenues of every kind, nature and PFF:EXH.A/UCC EXHIBIT description whatsoever that Debtor may be entitled to receive, either before or after any default hereunder, from any person or entity owning or haNzng or hereafter acquiring a right to the oil, gas or mineral rights and reservations of the Real Property; (e) All proceeds and claims arising on account of any damage to or taking of the Real Property or the Improvements thereon or any part thereof, and all causes of action and recoveries for any loss or diminution in the value of the Real Property or the Improvements; (f) All licenses (including, but not limited to, any operating licenses or similar licenses), contracts, management contracts or agreements, franchise agreements, permits, authorities or certificates required or used in connection with the ownership of, or the operation or maintenance of the Improvements; (g) All governmental permits relating to construction, all names under or by which such Real Property or the Improvements may at any time be operated or known, and all rights to carry on business under any such names or any variant thereof, and all trademarks, tradenames, patents pending and good will; (h) All capital contributions required by any partnership agreement, the articles of incorporation or corporate resolutions which relate to the business organization which owns the Real Property and Improvements; M All water rights appurtenant to such Real Property together with all pumping plants, pipes, flumes and ditches, all rights to the use of water as well as all rights in ditches for irrigation of the Real Property, all eater stock relating to the Real Property, shares of stock or other e-,-idence of ownership of any par` of the Real Property that is owned by Debtor either by itself or in common with others, and all documents of membership in any owners' or members' association or similar group having responsibility for managing or operating any part of the Real Property; .(j) All plans and specifications prepared for construction of the Improvements and all studies, data and drawings related thereto; and also all contracts and agreements of Debtor relating to the aforesaid plans and specifications or to the aforesaid studies, data and drawings, or to the construction of the Improvements; (k) All sales agreements, deposit receipts, escrow agreements and other ancillary documents and agreements entered into with respect to the sale to any purchasers of any part of the Real Property, together with all deposits and other proceeds of the sale thereof; (1) All replacements, repairs and substitutions of, and accessions PFF:EXH. A/UCC EXHIBIT and additions to, any of the foregoing; and (m) All proceeds of any of the foregoing, including, without limitation, proceeds of any voluntary or involuntary disposition or claim respecting any thereof (pursuant to judgment, condemnation award or otherwise) and all goods, documents, general intangibles, chattel paper and accounts, wherever located, acquired with cash proceeds of any of the foregoing or proceeds thereof. The Real Property and Improvements are commonly known as 16171 Springdale Street, Huntington Beach, California. PFF:EXH. A/UCC EXHIBIT EXHIBIT "B" TO UCC-1 FINANCING STATEMENT SIGNATURE PROVISION PRINCIPAL COMMERCIAL ADVISORS, INC., an Iowa corporation By: C�ti� �Z. Y4 iI,54` Its: /h � r By: Its: ��ri: .�i7z� PFF:51264 ry This document was electronically recorded by i CEW;UED AI i l 1E PE-G EST OF CHICAGO TITLE COMPANY CHICIAGO TITLE COMPANY .T REQUESTED—I AND WHEN RECORDED RETURN TO: Recorded in the County of Orange, California ID Gal L. Granville, Clerk/Recorder Paul F. Figler, Esquire ! 12. Berner, Kahn, Shafton, Moss, 00 Figler, Simon & Gladstone 19990222145 2:55pm 03/25/99 4215 Glencoe Avenue, 2nd Floor 005 28017596 28 08 Marina del Rey, California 90292 A30 3 6.00 6.00 0.00 0.00 0.00 0.00 (Above Space For Recorder's Use Only) ASSIGNMENT OF ASSIGNMENT OF LESSOR'S INTEREST IN LEASES The undersigned, Principal Commercial Advisors, Inc.. an Iowa corporation. hereby sets over, transfers and assigns to Principal Commercial Acceptance. LLC. a Delaware limited liability company, all of its right. title and interest in and to that certain Assignment of Lessor's Interest in Lease dated November 1. 19S6. executed by \'illage Partnership, a California general partnership. as Assignor and ?Mercury Savings & Loan Association, a California savings and loan association. and Seattle First National Bank. a national banking association. as Assignee, recorded on November 7. 1956. as llltitllIMC11t No. 56-536374, Official Records of the County Recorder ol' Orange County. Caliiorllia. Dated: ?March 1. 1999 PRINCIPAL COMMERCIAL :�D�'ISORS, INC.. an lo,xa corpora1ttio�"n L Its: 1-i1Aytacq Ir- Direc4r-r- By: -1ts: � 6z- PFF:51264Assign of Assignment STATE OF K a tJ S P S ) ss. COUNTY OF r4 ) On fy arc.% I? IIgq , before me, to- (yiC,— (Notary Public) personally appeared cNAV-LE (Name of Signer(s)) personally known to me or proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. (SEAL) — ---- ----- -- ----------- R, AD ,LE HILLNER Signature of Notary NOTARY PUBLIC STATE OF KANSAS PFF:51264Assign of Assi€nmcni STATE OF K S A S ) ss. COUNTY OF On rA o.fc1' 12- , t 9gq , before me, (Notary Public) personally appeared M At;K E • 13 1�s TT EN t1 f�M (Name of Signer(s)) personally known to me or proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. `Fitness my hand and official seal. (SEAL) —_-- Signature of Notary R. ADELE HILLIER NOTARY PUBLIC STATE OF KANSAS ICY 1DAt. Er /(L i.aa This document was electronically recorded by RECORDED H i 1 rE ii-LULI S I OF CHICAGO TITLE COMPANY CHICAGO TITLE WMPANY RE-eBRIIINVa-REQUES`pEDJ-BY AND WHEN RECORDED RETURN TO: ND Recorded in the County of Orange, California Paul F. Figler, Esquire GaII L. Granville, Clerk/Recorder Berger, Kahn, Shafton, Moss, ��11111111111111 �� I��I�� 1 8.0 0 Figler, Simon & Gladstone 4215 Glencoe Avenue, 2nd Floor 19990222144 2:55pm 03/25/99 Marina del Rey, California 90292 005 28017596 28 08 A32 5 6.00 12.00 0.00 0.00 0.00 0.00 (Above Space For Recorder's Use Only) ASSIGNMENT OF CO-BENEFICLAL INTEREST 1 UNDER DEED OF TRUST FOR VALUE RECEIVED, Principal Commercial Advisors, Inc., an Iowa corporation, Assignor and co-beneficiary under that certain Deed of Trust with Assignment of Rents and Security Agreement with Fixture Filing dated November 1. 1986. executed by Village Partnership, a California general partnership. as trustor in favor of Mercury Savings and Loan Association and Seattle-First National Bank: as co- beneficiaries, and recorded November 7, 1986, as Instrument No. 86-536373 in the Official Records of the County Recorder of Orange County, California. as amended by First Amendment of Deed of Trust with Assignment of Rents and Security Agreement with Fixture Filing r corded April 9, 1997, as Instrument No. 97-0164241 . Official Records, Orange County, California, and by Second Amendment of Deed of Trust with Assignment of Rents and Security Agreement with Fixture Filing recorded concurrently herewith (the "Deed of Trust"), describing the property therein as set forth in Exhibit A attached hereto, does hereby ✓rant, convey, assign and transfer to Principal Commercial Acceptance, LLC, a Delaware limited liability company ("Assignee''). whose address is 11050 Roe Avenue, Suite 200, Overland Park. Kansas 66211-1216, all of Assignor's co- beneficial interest under the Deed of Trust. Dated this 1 st day of March, 1999. PRINCIPAL COMMERCIAL ADVISORS, INC., an Iowa corporation � By: C/f 4✓v=�l - Its: Marnc^ginq ;rec-f-v-f- By: PFF:5I264Assign of Co-Beneficial STATE OF K N S S ) ss. COUNTY OF On M0rc1A 12 lq`1q , before me,"4�- Awe- W v� (Notary Public) personally appeared CHARI.ES R. STF-21kC14S (Name of SiRner(s)) personally known to me or proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. V( (SEAL) ---- ------------------------- ti�_Lc HILLNER Signature of Notary NOTARY PUBLIC STATE OF KANSAS MY AD➢ti EYA• y 1 ZD�\ PFF:51264Assign of Co-Beneficial STATE OF 14 0 SPRS ) ss. COUNTY OF 1-01A rJ S 0 rJ ) On Mfrc11% 11, 1919 before me, ':�• Ac e(o- 14i ( lie,— (Notary Public) personally appeared MAi-K S. 'GRzTtEo N An1 (Name of Signer(s)) personally known to me or proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. (SEAL) — ----- R. ADtLE HILLNER Signature of Notary NOTARY PUBLIC STATE OF KANSAS ` My Appt. EXP. �/(Z 2- I EXHIBIT "A" TO ASSIGNMENT OF CO-BENEFICIAL INTEREST UNDER DEED OF TRUST (see attached) PFF:51264Assign of Co-Beneficial EXHIBIT A DES RIPTI NI O PROJECT F CT SITE C O� O - The land situated in the County of Orange. State of California, described as follows: The East 4.00 acres of the South Half of the Northeast Quarter of the Northeast Quarter of Section 21, Township 5 South, Ranch 11 West, in the Rancho La Bolsa- Chica, in the City of Huntington Beach, 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 California. No. R-1 ***$4,895,000*** UNITED STATES OF AMERICA STATE OF CALIFORNIA CITY OF HUNTINGTON BEACH,CALIFORNIA MULTIFAMILY HOUSING REVENUE BOND (VILLAGE PARTNERSHIP PROJECT) 1986 SERIES A THIS BOND . IS SUBJECT TO MANDATORY TENDER UNDER THE CIRCUMSTANCES HEREINAFTER DESCRIBED, AND IT MUST BE SO TENDERED OR IT WILL BE DEEMED 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). Interest Rate Maturity Date Reissuance Date CUSIP No. Variable November 1,20 6 March 25, 1999 446196 AN7 REGISTERED OWNER: Principal Co e 194cEepthrice, LLC PRINCIPAL AMOUNT: ***Four Million Eight Hundred Ninety Five Thousand Dollars*** The City of Huntington Beach, California (the "Issuer"), being a municipal corporation and charter city organized and existing under the laws of the State of California, for value received, hereby promises to pay in lawful money of the United States of America (but only out of the sources hereinafter provided) to the Registered Owner named above, or 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 time 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 referred to hereinafter) to which interest has been paid or made available for payment in accordance with the terms of the Indenture (as hereinafter defined) at the rate per annum set forth herein. The Bonds (as defined below) have been issued pursuant to that certain Indenture of Trust, dated as of November 1, 1986 (the "Original Indenture"), between the Issuer and U.S. Bank Trust National Association, as successor trustee to First Trust Washington, the successor in interest to Seattle-First National Bank (the "Trustee"), having a principal office in Seattle, Washington (said principal office being herein referred to as the "Principal Office of the Trustee"), as amended by that certain First Supplemental Indenture of Trust, dated as of June 1, 1989 (the "First Supplemental Indenture"), that certain Second Supplemental Indenture of Trust, dated as of March 1, 1997 (the "Second Supplemental Indenture") and that certain Third Supplemental Indenture of Trust, dated as of March 1, 1999 (the "Third Supplemental Indenture"), each between the Issuer and the Trustee (the "Original Indenture, the First Supplemental Indenture, the Second Supplemental Indenture and the Third Supplemental Indenture are collectively referred to herein as the "Indenture"). This Bond is part of an authorized issue of bonds limited in aggregate principal amount to $4,895,000 (the 'Bonds") issued pursuant to a resolution duly adopted by the City Council of the City of Huntington Beach, California on August 18, 1986, and the Indenture. The Bonds are issued in accordance with the Constitution and laws of the State of California, under the CITY OF HUNTINGTON BEACH (California) MULTIFAMILY HOUSING REVENUE BONDS Page 1 of 9 provisions of Chapter 7 of Part 5 of Division 31 of the Health and Safety Code of the State of California, as amended (the "Act") and are secured by and entitled to the protection of the Indenture. The Bonds are issued for the purpose of (1) obtaining funds to make a loan (the "Developer Loan") to Village Partnership,a California general partnership (the "Developer"), to provide permanent financing for the multifamily rental residential development (the "Project") constructed by the Developer in the City of Huntington Beach, to be occupied partially (at least 20%) by persons of low or moderate income within the meaning of Section 142(d)(1)(A) of the Internal Revenue Code of 1986; 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, as amended by that certain First Amendment to Loan Origination and Servicing Agreement, dated as of June 1, 1989, that certain Second Amendment to Loan Origination and Servicing Agreement, dated as of March 1, 1997 and that certain Third Amendment to Loan Origination and Servicing Agreement, dated as of March 1, 1999 (as amended, the "Loan Agreement") the payments on which are secured by a deed of trust on the Project from the Developer to the Trustee (the "Developer Mortgage") (collectively the Loan Agreement and the Developer Mortgage, together with the Regulatory Agreement mentioned below, are hereinafter referred to as the "Developer Loan Documents"). The Developer has executed and delivered a Regulatory Agreement and Declaration of Restrictive Covenants (the "Regulatory Agreement") with the Issuer, Mercury Savings and Loan Association, the issuer of a Letter of Credit (as discussed more completely below) with respect to the Bonds (the "Association"), and the Trustee settin h certain provisions relating to the acquisition, construction and operation of the Project. �r In connection with the original issuer Bonds, the Developer, to secure its obligation to make payments on the Developer Loan in accordance with its terms, 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. In connection with execution of the Second Supplemental Indenture and the Second Amendment to Loan Origination and Servicing Agreement, the Letter of Credit and the Collateral Pledge Agreement were released. For the period from the date hereof to March 31,2001 only,the Bonds may remain outstanding pursuant to the Indenture urithout a Letter of Credit. All capitalized terms used in this Bond which 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. 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, 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 which the Registered Owner of this Bond assents by the acceptance of this Bond. While the Bonds are not secured by the Letter of Credit or an Alternate Credit Facility, interest on the Bonds shall accrue on the basis of a 360-day year at the rates and for the time periods set forth below and shall be payable on the tenth day of each and every calendar month commencing April 10,1999: (i) Effective Date through March 31, 1999. Interest on the outstanding principal amount of the Bonds shall accrue from the effective date hereof through March 31, 1999 at the interest rate of eight and one-half percent(8.50%) per annum. CITY OF HUNTINGTON BEACH (California) MULTIFAMILY HOUSING REVENUE BONDS Page 2 of 9 (ii) April 1, 1999 through March 31, 2000. Interest on the outstanding principal amount of the Bonds shall accrue from April 1, 1999 through March 31, 2000 at the interest rate of six and three-quarter percent(6.75%)per annum. (iii) April 1, 2000 through September 30, 2000. Interest on the outstanding principal amount of the Bonds shall accrue from April 1, 2000 through September, 2000 at the interest rate of seven and one-quarter percent (7.25%) per annum. (iv) October 1, 2000 through March 31, 2001. Interest on the outstanding principal amount of the Bonds shall accrue from October 1, 2000 through March 31, 2001 at the interest rate of seven and three-quarter percent (7.75%) per annum. (v) Additional accrued interest. In addition to the foregoing, an additional one- half of one percent (0.5%) interest of the outstanding principal amount of the Bonds shall be earned on April 1, 2000 (but only to the extent the Bonds are outstanding and owned by a single Bondholder under the terms of this Third Supplemental Indenture) but accrued and the payment thereof deferred for the period commencing April 1, 2000 and ending September 30, 2000; thereafter, an additional one-half of one percent (0.50%) of the outstanding principal amount of the Bonds shall be earned on October 1, 2000 (but only to the extent the Bonds are outstanding and owned by a single Bondholder under the terms of this Third Supplemental Indenture) but accrued ap�d the payment thereof deferred for the period commencing October 1, 2000 aid'ending March 31, 2001. The additional accrued and deferred interest set forth above" shall�e paid upon redemption or maturity of the Bonds,whichever first occurs ; ' Pursuant to Section 3(b) of the Third Supplemental Indenture,the Bonds shall be subject to mandatory tender for purchase on March 31,2001. Prior to February 28,2001, the Developer shall notify the Issuer, the Bondholder, the Trustee and the Remarketing Agent (as defined in the Indenture) of its intent to either redeem the Bonds in whole on March 31, 2001 or to remarket the Bonds as set forth in Section 211 of the Indenture. In order to initiate remarketing of the Bonds as set forth in the previous sentence, the Developer must obtain and deliver to the Trustee on or before February 28, 2001 (i) the written consent of the Trustee, the Issuer and the Remarketing Agent to such remarketing, (ii) a written notice specifying the proposed Interest Rate Calculation Date, (iii) an opinion of Bond Counsel to the effect that the remarketing will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds, (iv) a commitment of a bank or other entity to issue a Letter of Credit or Alternate Credit Facility complying with Section 5.8 of the Loan Agreement, along with the documentation required by Section 5.8 of the Loan Agreement, (v) a form of Bond to be in effect following such remarketing, and (vi) evidence, except with the prior written approval of the Issuer, that the rating on the Bonds on April 1, 2001 will not be lower than "A" (or its equivalent). If the Developer has not delivered a Letter of Credit or Alternate Credit Facility to the Trustee prior to March 15, 2001, then the Bonds shall be subject to mandatory tender for purchase on March 31,2001. For the period while the Bonds are owned by a single Bondowner and there is no Letter of Credit outstanding with respect to the Bonds, the Bonds shall be subject to redemption as follows: (a) The Bonds shall be subject to redemption in whole, at the direction of the then-registered owner of the Bonds, in the event of a default under the Developer Loan or the Loan Agreement (as provided in the Loan Agreement and the Indenture), and payment of the redemption price shall be deemed made by the Trustee's absolute CITY OF HUNTINGT'ON BEACH (California) MULTIFAMILY HOUSING REVENUE BONDS Page 3 of 9 assignment to the owner of the Bonds of all right, title and interest of the Trustee in the Trust Estate(except for its rights to its fees and expenses and its indemnification rights). (b) For the period ending on March 31, 2001, and so long as the Bonds are owned by a single Bondholder, (i) the provisions of Section 603 of the Original Indenture shall be inapplicable, and (ii) the Bonds shall be subject to redemption in whole on any date, at the option of the Developer, upon 30 days' written notice by the Developer to the Trustee and 15 days' written notice by the Trustee to the Bondholder. The Bonds are limited obligations of the Issuer payable solely from the revenues,funds and assets pledged under the Indenture and not from any other revenues, funds or assets. 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 from, and a valid claim of the Registered Owner 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 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, 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. 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 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 is heretb ;expressly waived and.released as a condition of,and in consideration for,the execution of the Iiiae t re and the issuance of any of the Bonds. This Bond is transferable only as set forth in``"S.ection 2(e) of the Second Supplemental Indenture and Section 4 of the Third Supplemental Indenture. . f 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 take any action with respect to any event of default under the Indenture, or to institute,appear in or defend any suit or other proceedings with respect thereto, except as provided in the Indenture. If an Event of Default as defined in the Indenture occurs, the principal of all Bonds then outstanding issued 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 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 receiving 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 agent 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 Indenture prescribes the manner in which it may be discharged, including a provision that the Bonds shall be deemed to be paid if Seasoned Funds and/or Government Obligations (as defined in the Indenture) maturing as to principal and interest in such amounts and at such times not later than 30 days after the date of investment as will be such to insure the availability 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 CITY OF HUNTINGPON BEACH (California) MULTIFAMILY HOUSING REVENUE BONDS Page 4 of 9 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 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 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. 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 City Administrator and attested by the facsimile signature of the City Clerk and the facsimile of its seal to be imprinted herein,all as of the Reissuance Date as set forth above. CITY OF HUNTINGTON BEACH, CALIFORNIA By: _� r '. 1-0 0 City A,_dministrator ATTEST: s City Clerk ��,MGTOM� f y=J o f*%A f# Ir a • CITY OF HUNTINGTON BEACH (California) MULTIFAMILY HOUSING REVENUE BONDS Page 5 of 9 CERTIFICATE OF AUTHENTICATION . This Bond is one of the Bonds described in the within-mentioned Indenture of Trust. Date of registration and authentication: March 23,1999 U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee � fP By. AuthoriiO bffic r 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 MIN ACT- Custodian (Cult) (Minor) under Uniform Gifts to Minors Act (State) Additional abbreviations may also be used though not in the above list CITY OF HUNTINGTON BEACH (California) MULTIFAMILY HOUSING REVENUE BONDS Page 6 of 9 ASSIGNMENT For value received,the undersigned do(es)hereby sell,assign and transfer unto (Name,Address and Tax Identification or Social Security Number of Assignee) the within Bond and do(es)hereby irrevocably constitute and appoint attorney, to transfer the same on the registration books of the Trustee, with full power of substitution in the premises. Dated: Signature Guaranteed: NOTICE: Signature(s) must be guaranteed by an NOTICE: The signature on this assignment must eligible guarantor institution. correspond with the name(s) as written on the face of the within Bond in every particular without alteration or enlargement or any change whatsoever. CITY OF HUNTINGTON BEACH (California) MULTIFAMILY HOUSING REVENUE BONDS Page 7 of 9 LEGAL OPINION JONES HALL is A PROFESSIONAL LAW CORPORATION ATTORNEYS AT LAW 650 CALIFORNIA STREET EIGHTEENTH FLOOR SAN FRANCISCO,CALIFORNIA 94108 March 25, 1999 City Council City of Huntington Beach 2000 Main Street `F Huntington Beach,CA 92648 ' OPINION: $4,895,000 City of Huntington Beach Multifamily Housing Revenue Bonds (Village Partnership Project),1986 Series A--1999 Reissuance Transaction Members of the City Council: We have acted as bond counsel in connection with the reissuance by the City of Huntington Beach, California (the "City"), of $4,895,000 aggregate principal amount of City of Huntington Beach Multifamily Housing Revenue Bonds (Village Partnership Project), 1986 Series A, originally dated November 7, 1986, subsequently reissued June 21, 1989 and April 9, 1997, and reissued on the date hereof(the `Bonds"), pursuant to Chapter 7 of Part 5 of Division 31 of the Health and Safety Code of the State of California, as amended (the "Law"), and an Indenture of Trust, dated as of November 1, 1986, as amended by that certain First Supplemental Indenture of Trust, dated as of June 1, 1989, that certain Second Supplemental Indenture of Trust, dated as of March 1, 1997 and that certain Third Supplemental Indenture of Trust, dated as of March 1, 1999 (as amended, the "Indenture"), by and between the City and U.S. Bank Trust National Association, as successor trustee to First Trust Washington, the successor in interest to Seattle-First National Bank (the "Trustee"). We have examined the law and such certified proceedings and other papers as we deem necessary to render this opinion. As to questions of fact material to our opinion, we have relied upon representations of the City contained in the Indenture, representations of Village Partnership, a California General Partnership (the "Owner") contained in that certain Loan Origination and Servicing Agreement, dated as of November 1, 1986, as amended by that certain First Amendment to Loan Origination and Servicing Agreement, dated as of June 1, 1989, that certain Second Amendment to Loan Origination and Servicing Agreement, dated as of March 1, 1997, each by and among the City, the Trustee, the Owner and the Federal Deposit Insurance Corporation, as Receiver for Mercury Federal Savings and Loan Association (the "FDIC"), and that certain Third Amendment to Loan Origination and Servicing Agreement,by and among the City, the Trustee and the Owner, and in the certified proceedings and certifications of public officials, CITY OF HUNTINGTON BEACH (California) MULTIFAMILY HOUSING REVENUE BONDS Page 8 of 9 representatives of the Owner and others furnished to us without undertaking to verify the same by independent investigation. Based upon the foregoing,we are of the opinion,under existing law,as follows: 1. The City is duly created and validly existing as a municipal corporation and chartered city with the power to enter into the Indenture, perform the agreements on its part contained therein and issue the Bonds. 2. The Indenture has been duly approved by the City and constitutes a valid and binding obligation of the City enforceable upon the City. 3. Pursuant to the Law,the Indenture creates a valid lien on the funds pledged by the Indenture for the security of the Bonds on a parity with other bonds (if any) issued or to be issued under the Indenture,subject to no prior lien granted under the Law. 4. The Bonds have been duly authorized, executed and delivered by the City and are valid and binding special obligations of the City, payable solely from the sources provided therefor in the Indenture. 5. For the period beginning on the date hereof and continuing through April 30,2001, the interest on the Bonds is excluded from gross income for federal income tax purposes, except during any period while a Bond is held by a "substantial user" of the facilities financed by the Bonds or a "related person" within the meaning of section 147(a) of the Internal Revenue Code of 1986 (the "Code"). It should be noted,however, that such interest is an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations. The opinions set forth in the preceding sentence are subject to the condition that the City and the Owner comply with all requirements of the Code that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be, or continue to be, excluded from gross income for federal income tax purposes. The City and the Owner have covenanted to comply with each such requirement. Failure to comply with certain of such requirements may cause the inclusion of interest on the Bonds in gross income for federal income tax purposes to be retroactive to the date of issuance of the Bonds. We express no opinion regarding other federal tax consequences arising with respect to the Bonds. 6. The interest on the Bonds is exempt from personal income taxation imposed by the State of California. The rights of the owners of the Bonds and the enforceability of the Bonds and the Indenture may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights heretofore or hereafter enacted and may also be subject to the exercise of judicial discretion in appropriate cases. Reso-Pyy submitted, Q <R "'J A Professional Law Corporation CITY OF HUNTINGT ON BEACH (California) MULTIFAMILY HOUSING REVENUE BONDS Page 9 of 9 18019-49 JH:CKL:PCH 4/9/97 CITY OF HUNTINGTON BEACH Multifamily Housing Revenue Bonds (Village Partnership Project) 1986 Series A 1999 Reissuance Transaction($4,895,000 principal amount) SCHEDULE OF TRANSCRIPT DOCUMENTS A. BASE LEGAL DOCUMENTS 1. List of Financing Participants. 2. City of Huntington Beach (the "City") Resolution No. 99-20, entitled "A Resolution of the City Council of the City of Huntington Beach Approving a Third Supplemental Indenture of Trust and a Third Amendment to Loan Origination and Servicing Agreement, and Authorizing the Execution and Delivery Thereof and of Other Documents and Actions to be Taken in Connection Therewith", adopted by the City Council of the City on March 15, 1999. 3. Third Supplemental Indenture of Trust, dated as of March 1, 1999, by and between the City and U.S. Bank Trust National Association, as trustee (the "Trustee"), as acknowledged by and consented to by Principal Commercial Advisors, Inc. (the "Existing Bondowner"), Village Partnership, a California general partnership (the "Developer") and PaineWebber Incorporated, as remarketing agent (the "Remarketing Agent"). 4. Third Amendment to Loan Origination and Servicing Agreement, dated as of March 1, 1999 by and among the City, the Trustee, and the Developer, as acknowledged by and consented to by the Existing Bondowner. 5. Specimen Bond. 6. Assignment of Co-Beneficial Interest Under Deed of Trust, dated March 1, 1999, by the Existing Bondowner for the benefit of Principal Commercial Acceptance, LLC (the "New Bondowner"). 7. Assignment of Assignment of Lessor's Interest in Leases by the Existing Bondowner for the benefit of the New Bondowner, dated March 1, 1999. (recorded with the Orange County Recorder) 8. Assignment of Leases for the benefit of the New Bondowner, dated March 1, 1999. (recorded with the Orange County Recorder 9. UCC-2 by the Existing Bondowner for the benefit of the New Bondowner. (filed with the California Secretary of State) 10. Assignment of Deed of Trust for the Benefit of the New Bondowner, dated March 1, 1999. (recorded with the Orange County Recorder 11. Second Amendment to and Restatement of the First Amendment to Promissory Note Secured by Deed of Trust with Assignment of Rents and Security Agreement with Fixture Filing, dated March 1, 1999, between the Trustee, as Payee,and the Developer, as Maker. 12. Second Amendment to Deed of Trust with Assignment of Rents and Security Agreement with Fixture Filing, dated March 1, 1999, between the Trustee, as Payee, and the Developer, as Maker. (recorded with the Orange County Recorder) 13. Certificate Pertaining to Closing Date. B. CITY DOCUMENTS 1. Certificate of the City. 2. Certificate as to Arbitrage, as certified and accepted by the Developer. 3. Certificate of Mailing Information Return for Tax-Exempt Private Activity Bond Issues, Form 8038, to the Internal Revenue Service Center, together with Form 8038. C. DEVELOPER DOCUMENTS 1. Certificate of the Developer. 2. Certificate Regarding Use of Proceeds. 3. Confirmation,dated March 1, 1999,by the Developer. D. BONDOWNER DOCUMENTS 1. Investment Letter, dated March 25, 1999, executed by the New Bondowner. 2. Letter of the New Bondowner Regarding Value of Project. 3. CLTA 110.5 Endorsement to Title Policy No. 66617A-3, issued by Chicago Title Company. E. TRUSTEE AND REMARKETING AGENT DOCUMENTS 1. Authorized Signatures Certificate, together with Amended Bylaws, Articles of Association and Written Action of the Board of Directors. 2. Certificate of the Trustee. 3. Consent of the Remarketing Agent. -2- F. BOND COUNSEL DOCUMENTS 1. Final Approving Legal Opinion of Jones Hall,A Professional Law Corporation. 2. Supplemental Opinion to the City and the Trustee of Jones Hall, A Professional Law Corporation. 3. Reliance Letter to the New Bondowner Regarding Final Approving Legal Opinion and Supplemental Opinion of Jones Hall, A Professional Law Corporation. 4. Reliance Letter to Trustee, Regarding Final Approving Legal Opinion of Jones Hall, A Professional Law Corporation. 5. Financial Analyst Report prepared by Jones Hall, A Professional Law Corporation. -3- 18019-49 JH:CKL:PCH 3/15/99 CITY OF HUNTINGTON BEACH Multifamily Housing Revenue Bonds ff (Village Partnership Project), 1986 Series A 1999 Reissuance Transaction ($4,895,000 principal amount) Financing Participants ISSUER BONDHOLDER CITY OF HUNTINGTON BEACH PRINCIPAL COMMERCIAL ADVISORS,INC. -Mr. Stephen Kohler (•,t) •Mr. Chip Stephens (•) Project Manager 11050 Roe Avenue,Suite 200 *Mr. Greg Brown Overland Park,Kansas 66211-1216 -Ms. Luann Brunson (913)339-6687 •Scott Field, Esq. (913)339-6341 (FAX) Deputy City Attorney 2000 Main Street BONDHOLDER'S COUNSEL Huntington Beach,California 92648 GILMORE&BELL (714)536-5457 •Gary Anderson, Esq. (714)536-5529(Brunson) 700 West 47th Street (714)960-8831 (Brown) Kansas City,Missouri 64112 (714)375-5087(FAX) (816)931-7500 (714)536-5662(Field) (816)931-7599(FAX) (714)374-1590(FAX) BERGER,KAHN,SHAFTON,MOSS,FIGLER, BOND COUNSEL SIMON&GLADSTONE JONES HALL, -Paul Figler, Esq. (t) A PROFESSIONAL LAW CORPORATION 4215 Glencoe Avenue,2nd Floor •Christopher K. Lynch, Esq. (•) Marina del Rey,California 90202 -David A. Walton, Esq. (Tax) (310)821-9000 •Ms. Phyllis C. Henry (310)578-6178 (FAX) Senior Project Coordinator 650 California Street,18th Floor TRUSTEE San Francisco,California 94108 U.S.BANK TRUST NATIONAL ASSOCIATION (415)391-5780 •Mr. R. Bruce Colwell (•) (415)391-5784(FAX) 601 Union Street,Suite 2120 clynchOjhhw.com Seattle,Washington 98101 dwalton0jhhw.com (206)461-4129 (206)461-4175(FAX) PROJECT OWNER VILLAGE PARTNERSHIP TRUSTEE'S COUNSEL Silver Investments DORSEY&WHITNEY LLP -Mr. Todd Silver (•,t) -Jan Hadley, Esq. 216 North Foothill Road 1191 Second Avenue#1440 Beverly Hills,California 90210 Seattle,Washington 98101 (310)858-8900 (206)654-5421 (310)858-8901 (FAX) (206)654-5500(FAX) Hadley.jan@dorseylaw.com PROJECT OWNER'S COUNSEL STRADLING,YOCCA, CARLSON&RAUTH REMARKETING AGENT •Karen A. Ellis, Esq. (t) PAINEWEBBER INCORPORATED 600 Newport Center Drive,Suite 1600 -Mr. Mark Adler (t) Newport Beach,California 92660 Managing Director (949) 725-4131 725 South Figueroa Street,41 st Floor (949) 725-4100(FAX) Los Angeles,California 90017 (213)253-5403 is (213)253-5401 (FAX) • Original Transcript Binder t Copy Transcript Binder RESOLUTION NO. 99-20 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH APPROVING A THIRD SUPPLEMENTAL INDENTURE OF TRUST AND A THIRD AMENDMENT TO LOAN ORIGINATION AND SERVICING AGREEMENT, AND AUTHORIZING AND DIRECTING THE EXECUTION AND DELIVERY THEREOF AND OF OTHER DOCUMENTS AND ACTIONS TO BE TAKEN IN CONNECTION THEREWITH WHEREAS, the City of Huntington Beach (the "Issuer") has issued. its Variable Rate Demand Multifamily Housing Revenue Bonds (Mercury Savings and Loan Association/Village Partnership Project) 1986 Series A in the initial principal amount of $7,700,000 (the 'Bonds") pursuant to an Indenture of Trust, dated as of November 1, 1986, as amended by that certain First Supplemental Trust Indenture, dated as of June 1, 1989 and that certain Second Supplemental Trust Indenture, dated as of March 1, 1997 (collectively, the "Original Indenture"), each by and between the Issuer and U.S. Bank Trust National Association, as successor trustee to First Trust Washington, the successor in interest to Seattle-First National Bank (the "Trustee"); and The Issuer entered into a Loan Origination and Servicing Agreement, dated as of November 1, 1986, as amended by that certain First Amendment to Loan Origination and Servicing Agreement dated as of June 1, 1989 and that certain Second Amendment to Loan Origination and Servicing Agreement dated as of March 1, 1997 (collectively, the "Original Loan Agreement"), pursuant to which the Issuer agreed to use the proceeds of the Bonds to make a loan (the "Developer Loan") to Village Partnership, a California general partnership (the "Developer"), to finance the cost of acquiring, constructing and improving a multifamily residential project located within the City of Huntington Beach, commonly known as Huntington Village Apartments (the "Project"); and Pursuant to the Second Supplemental Trust Indenture and the Second Amendment to Loan Origination and Servicing Agreement (collectively, the "1997 Amendments"), (i) there is a single Bond currently outstanding in the principal amount of $4,895,000, which is currently owned by a single Bondowner, Principal Commercial Advisors, Inc. (the "Existing Bondowner"), (ii) the Bonds are currently outstanding with no,credit enhancement, and (iii) the Bonds bear interest at the rate specified in Section 5 of the Second Supplemental Trust Indenture through April 30, 1999; and Pursuant to the 1997 Amendments, the Bonds are subject to mandatory tender for purchase on April 30, 1999 unless, prior to March 31, 1999, the Developer notifies the City, the Bondholder, the Trustee and the Remarketing Agent (as defined in the Original Indenture) of its intent to either redeem the Bonds in whole on April 30, 1999 or to remarket the Bonds with credit enhancement as set forth in Section 211 of the Original Indenture; and The Developer has asked the City for another two-year period during which the Bonds would be owned by a single Bondholder, Principal Commercial Acceptance, LLC (the "New Bondholder"), there would be no credit enhancement of the Bonds, and the Bonds would bear 1 Y interest at a rate specified in a Third Supplemental Trust Indenture, dated as of March 1, 1999 (the"Third Supplemental Trust Indenture"); and Concurrently with execution and delivery of the Third Supplemental Trust Indenture, and for the purpose of remaining consistent with the Third Supplemental Trust Indenture, the Original Loan Agreement would be amended by that certain Third Amendment to Loan Origination and Servicing Agreement, dated as of March 1, 1999 (the "Third Amendment to Loan Agreement"); and All things necessary to make the Third Supplemental Indenture of Trust and the Third Amendment to Loan Agreement valid, binding and effective have, in all respects, occurred; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH AS FOLLOWS: SECTION 1. Third Supplemental Indenture. The Third Supplemental Indenture between the Issuer and the Trustee, in the form presented to this meeting, is hereby approved. The City Administrator or the Director of Administrative Services of the Issuer (the "Designated Officers") are, and each of them acting alone is, hereby authorized and directed, for and in the name and on behalf of the Issuer, to execute and deliver the Third Supplemental Indenture, and the City Clerk is hereby authorized and directed, for and in the name of and on behalf of the Issuer, to attest the Designated Officer's signature on the Third Supplemental Indenture, in substantially said form, with such additions thereto or changes therein as are recommended or approved by such officers upon consultation with bond counsel to the Issuer, including such additions or changes as are necessary or advisable in accordance with Section 5 hereof, the approval of such additions or changes to be conclusively evidence by the execution and delivery by the Issuer of the Third Supplemental Indenture. SECTION 2. Third Amendment to Loan Agreement. The Third Amendment to Loan Agreement, among the Issuer, the Developer and the Trustee, in the form presented to this meeting, is hereby approved. The Designated Officers are, and each of them acting alone is, hereby authorized and directed, for and in the name and on behalf of the Issuer, to execute and deliver the Third Amendment to Loan Agreement, and the City Clerk is hereby authorized and directed, for and in the name of and on behalf of the Issuer, to attest the Designated Officer's signature on the Third Amendment to Loan Agreement, in substantially said form, with such additions thereto or changes therein as are recommended or approved by such officers upon consultation with bond counsel to the Issuer, including such additions or changes as are necessary or advisable in accordance with Section 5 hereof, the approval of such additions or changes to be conclusively evidence by the execution and delivery by the Issuer of the Third Amendment to Loan Agreement. SECTION 3. Approval of Bondholder. Principal Commercial Advisors, Inc., the current sole owner of the Bonds, has requested the City's consent to the ownership of the Bonds by Principal Commercial Acceptance, LLC. The City hereby consents to the ownership of the Bonds from the effective date of the Third Supplemental Indenture and the Third Amendment to Loan Agreement by Principal Commercial Acceptance, LLC. 2 S F-99Resol ution:99-154 03/04/99 41 SECTION 4. Direction to Change Name of Bonds. The City hereby directs that the name of the Bonds be changed to "City of Huntington Beach Multifamily Housing Revenue Bonds (Village Partnership Project), 1986 A" to eliminate any reference to Mercury Savings and Loan Association, which originally provided credit enhancement for the Bonds but is no longer in existence. SECTION 5. Official Action. The Designated Officers, any and all other officials of the Issuer or such other person designated by the Issuer are hereby directed, for and on behalf of the Issuer, to do any and all things and take any and all actions, including, without limitation, the execution and delivery of any and all amendments or supplements to the documents executed and delivered by the Issuer in connection with the issuance of the Bonds, including but not limited to, any supplements or amendments to the Original Indenture and the Original Loan Agreement, any and all assignments, certificates, agreements, notices, consents, instruments of conveyance and other documents, which they, or any of them, on the advice of bond counsel to the Issuer, may deem necessary or advisable in order to effect the supplement to the Original Indenture and the Original Loan Agreement, as provided herein, and any and all assignments, certificates, agreements, notices, consents, instruments of conveyance and other documents which may be required in connection with the purchase of all, or a portion, of the Bonds, at the time of execution and delivery of the above-referenced amendments or at such later date in lieu of redemption, which they, or any of them, on the advice of bond counsel to the Issuer, may deem necessary or advisable in connection with the amendments of the Original Indenture and the Original Loan Agreement, as provided herein. PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a regular meeting thereof on the 15th day of Marc , 1999. Mayor ATTEST: APPROVED AS TO FORM: L.�g�,rcG zz X! ,� City Clerk Grey REVIEWED AND APPROVED: INITIATED AND APPROVED: City ATministrator Dir ctor of Administrative Services 3 S F-99 Resol ut i on:99-154 03/04/99-#1 Res. No. 99-20 STATE OF CALIFORNIA ) COUNTY OF ORANGE ) ss: CITY OF HUNTINGTON BEACH ) I, CONNIE BROCKWAY, 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 members 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 at least a majority of all the members of said City Council at a regular meeting thereof held on the 15th day of March, 1999 by the following vote: AYES: Bauer, Garofalo, Green, Dettloff, Harman, Sullivan NOES: None ABSENT: Julien ABSTAIN: None City Clerk and ex-officio C erk of the City Council of the City of Huntington The foregoing instrument is a correct copy of the original on file in this office. Beach, California Attest b. ,_ . lz z 19QQ CONNIE BROCKWAIf it Clerk and Ex-officio Clerk of the City Council of the City of Huntington Beach, .California. B Deputy 18019-48 JH:CKL 03/17/99 THIRD SUPPLEMENTAL INDENTURE OF TRUST dated as of March 1, 1999 by and between CITY OF HUNTINGTON BEACH, CALIFORNIA and U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee Amending that certain Indenture of Trust, dated as of November 1, 1986, as amended by that certain First Supplemental Trust Indenture, dated as of June 1, 1989, and that certain Second Supplemental Trust Indenture, dated as of March 1, 1997, securing City of Huntington Beach, California Multifamily Housing Revenue Bonds (Village Partnership Project), 1986 Series A THIRD SUPPLEMENTAL INDENTURE OF TRUST THIS THIRD SUPPLEMENTAL INDENTURE OF TRUST is made and entered into as of 1st day of March, 1999, by and between the CITY OF HUNTINGTON BEACH, a municipal corporation and chartered city, duly organized and existing under and by virtue of the Constitution and the laws of the State of California (the "Issuer") and U.S. BANK TRUST NATIONAL ASSOCIATION,a national banking association,duly organized and existing under the laws of the United States of America, as successor trustee to First Trust Washington, the successor in interest to Seattle-First National Bank, as trustee (the "Trustee") and amends that certain Indenture of Trust, dated as of November 1, 1986, as amended by that certain First Supplemental Trust Indenture, dated as of June 1, 1989,between the Issuer and the Trustee and that certain Second Supplemental Indenture of Trust, dated as of March 1, 1997,between the Issuer and the Trustee (as amended, the "Original Indenture" and, together with this Third Supplemental Indenture of Trust and all other indentures supplementary and amendatory thereof,the "Indenture"). WITNESSETH: WHEREAS,Chapter 7 of Part 5 of Division 31 of the Health and Safety Code of the State of California (the "Act"),authorizes the Issuer to issue revenue bonds to finance the construction or development of multifamily rental housing projects and to make a loan to the owner of any such project for the purpose of financing the acquisition and construction of such project;and WHEREAS, pursuant to the Act, the Issuer has heretofore issued its Variable Rate Demand Multifamily Housing Revenue Bonds (Mercury Savings and Loan Association/Village Partnership Project) 1986 Series A in the initial principal amount of $7,700,000 (the "Bonds") pursuant to the terms of the Original Indenture;and WHEREAS,the proceeds of the Bonds were used to make a loan (the "Developer Loan') to Village Partnership, a California general partnership (the "Developer"), pursuant to that certain Loan Origination and Servicing Agreement, dated as of November 1, 1986, as amended by that certain First Amendment to Loan Origination and Servicing Agreement, dated as of June 1, 1989, and that certain Second Amendment to Loan Origination and Servicing Agreement, dated as of March 1,1997 (as amended, the "Original Loan Agreement"),to finance the cost of acquiring, constructing and improving a multifamily residential project located within the City of Huntington Beach,commonly known as Huntington Village Apartments (the "Project");and WHEREAS, pursuant to the Second Supplemental Trust Indenture and the Second Amendment to Loan Origination and Servicing Agreement (collectively, the "1997 Amendments"), (i) there is a single Bond currently outstanding in the principal amount of $4,895,000, which is currently owned by a single Bondowner, Principal Commercial Advisors, Inc. (the "Existing Bondowner"), (ii) the Bonds are currently outstanding with no credit enhancement, and (iii) the Bonds bear interest at the rate specified in Section 5 of the Second Supplemental Trust Indenture through April 30,1999;and WHEREAS, pursuant to the 1997 Amendments, the Bonds are subject to mandatory tender for purchase on April 30, 1999 unless,prior to March 31, 1999, the Developer notifies the Issuer, the Bondholder, the Trustee and the Remarketing Agent (as defined in the Original Indenture) of its intent to either redeem the Bonds in whole on April 30, 1999 or to remarket the Bonds with credit enhancement as set forth in Section 211 of the Original Indenture;and 1 WHEREAS, as set forth in this Third Supplemental Indenture of Trust, the Developer has asked the Issuer for, and the Issuer and the Existing Bondholder have consented to,another two-year period during which the Bonds would be owned by a single Bondholder, Principal Commercial Acceptance, LLC (the "New Bondholder"), there would be no credit enhancement of the Bonds, and the Bonds would bear interest at a rate specified in this Third Supplemental Indenture;and WHEREAS, concurrently herewith, the Issuer, the Developer and the Trustee are amending the Original Loan Agreement pursuant to that certain Third Amendment to Loan Origination and Servicing Agreement(the "Third Amendment to Loan Agreement");and WHEREAS, all things necessary to make the Third Supplemental Indenture of Trust valid,binding and effective have,in all respects,occurred; NOW, THEREFORE, THIS THIRD SUPPLEMENTAL INDENTURE OF TRUST WITNESSETH: Section 1. Recitals. The Issuer acknowledges that each of the above recitals is true and correct. All capitalized terms not otherwise defined herein shall have the meaning set forth in the Original Indenture. Section 2. Redemption of Bonds. Section 4 of the Second Supplemental Indenture provided for certain redemption provisions to be in effect so long as the Bonds are owned by a single Bondowner and there is no Letter of Credit outstanding with respect to the Bonds. Section 4(d) of the Second Supplemental Indenture is amended and restated in its entirety to read as follows (d) From and after the effective date hereof and for the period ending on March 31, 2001, and so long as the Bonds are owned by a single Bondholder, (i) the provisions of Section 603 of the Original Indenture shall be inapplicable, and (ii) the Bonds shall be subject to redemption in whole on any date, at the option of the Developer, upon 30 days' written notice by the Developer to the Trustee and 15 days'written notice by the Trustee to the Bondholder. Section 3. Interest Rate. (a) Notwithstanding any provisions contained in the Original Indenture to the contrary, including the provisions of the Second Supplemental Indenture, while the Bonds are not secured by the Letter of Credit or an Alternate Credit Facility, interest on the Bonds shall accrue on the basis of a 360-day year at the rates and for the time periods set forth below and shall be payable on the tenth day of each and every calendar month commencing April 10, 1999: (i) Effective Date through March 31, 1999. Interest on the outstanding principal amount of the Bonds shall accrue from the effective date hereof through March 31,1999 at the interest rate of eight and one-half percent(8.50%)per annum. (ii) April 1, 1999 through March 31, 2000. Interest on the outstanding principal amount of the Bonds shall accrue from April 1, 1999 through March 31, 2000 at the interest rate of six and three-quarter percent(6.75%)per annum. (iii) April 1, 2000 through September 30, 2000. Interest on the outstanding principal amount of the Bonds shall accrue from April 1, 2000 through September,2000 at the interest rate of seven and one-quarter percent (7.25%) per annum 2 (iv) October 1, 2000 through March 31, 2001. Interest on the outstanding principal amount of the Bonds shall accrue from October 1, 2000 through March 31, 2001 at the interest rate of seven and three-quarter percent (7.75%) per annum. (v) Additional accrued interest. In addition to the foregoing, an additional one- half of one percent (0.5%) interest of the outstanding principal amount of the Bonds shall be earned on April 1, 2000 (but only to the extent the Bonds are outstanding and owned by a single Bondholder under the terms of this Third Supplemental Indenture) but accrued and the payment thereof deferred for the period commencing April 1, 2000 and ending September 30, 2000; thereafter, an additional one-half of one percent (0.50%) of the outstanding principal amount of the Bonds shall be earned on October 1, 2000 (but only to the extent the Bonds are outstanding and owned by a single Bondholder under the terms of this Third Supplemental Indenture) but accrued and the payment thereof deferred for the period commencing October 1, 2000 and ending March 31, 2001. The additional accrued and deferred interest set forth above shall be paid upon redemption or maturity of the Bonds,whichever first occurs. (b) The Bonds shall be subject to mandatory tender for purchase on March 31,2001. Prior to February 28,2001, the Developer shall notify the City, the Bondholder, the Trustee and the Remarketing Agent of its intent to either redeem the Bonds in whole on March 31,2001 or to remarket the Bonds as set forth'in Section 211 of the Original Indenture. In order to initiate remarketing of the Bonds as set forth in the previous sentence, the Developer must obtain and deliver to the Trustee on or before February 28, 2001 (i) the written consent of the Trustee, the City and the Remarketing Agent to such remarketing, (ii) a written notice specifying the proposed Interest Rate Calculation Date, (iii) an opinion of Bond Counsel to the effect that the remarketing will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds, (iv) a commitment of a bank or other entity to issue a Letter of Credit or Alternate Credit Facility complying with Section 5.8 of the Loan Agreement, along with the documentation required by Section 5.8 of the Loan Agreement, (v)a form of Bond to be in effect following such remarketing, and (vi) evidence, except with the prior written approval of the City, that the rating on the Bonds on April 1, 2001 will not be lower than "A" (or its equivalent). If the Developer has not delivered a Letter of Credit or Alternate Credit Facility to the Trustee prior to March 15, 2001, then the Bonds shall be subject to mandatory tender for purchase on March 31,2001. Section 4. Bondowner. From and after the effective date hereof, except as consented to by the Issuer (following receipt by the Trustee of an investment letter in the form attached hereto as Exhibit A),the owner of the Bonds shall be Principal Commercial Acceptance,LLC. Section 5. Name of Bonds. From and after the effective date hereof, the name of the Bonds shall be as follows: "City of Huntington Beach Multifamily Housing Revenue Bonds (Village Partnership Project), 1986 Series A." Section 6. Counterparts. This Third Supplemental Indenture of Trust may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. Section 7. Effective Date; Applicability of the Original Indenture. The provisions of this Third Supplemental Indenture of Trust shall, as applicable,become effective immediately upon the execution and delivery hereby by the parties hereto, and upon the execution and delivery of the written consents to this Third Supplemental Indenture of Trust by the Developer,the Remarketing Agent and the Existing Bondholder. Except as otherwise provided 3 herein, the provisions of the Original Indenture are hereby ratified, approved and confirmed and shall be applicable to the authorization, execution, authentication, issuance, redemption, payment and delivery of the Bonds, the custody and the distribution of the proceeds of the Bonds and the security,payment,redemption and enforcement of the payment thereof. 4 IN WITNESS WHEREOF, the City of Huntington Beach has caused this Third Supplemental Indenture of Trust to be executed on its behalf by a duly authorized officer and attested by its City Clerk, and the Trustee, to evidence its acceptance of the Trusts hereby created, has caused this Third Supplemental Indenture of Trust to be executed in its name and on its behalf by its duly authorized officer,all as of the date first written. CITY OF HUNTINGTON BEACH By: Q ' C' Administrator (SEAL) ATTEST: City Clerk U.S. BANK TRUST NATIONAL ASSOCIATION,as Trustee By: Title: 5 1 IN WITNESS WHEREOF, the City of Huntington Beach has caused this Third Supplemental Indenture of Trust to be executed on its behalf by a duly authorized officer and attested by its City Clerk, and the Trustee, to evidence its acceptance of the Trusts hereby created, has caused this Third Supplemental Indenture of Trust to be executed in its name and on its behalf by its duly authorized officer,all as of the date first written. CITY OF HUNTINGTON BEACH By: City Administrator (SEAL) ATTEST: City Clerk U.S. BANK TRUST NATIONAL ASSOCIATION,as Trustee By: Title: 5 ACKNOWLEDGED BY AND CONSENTED TO: Principal Commercial Adviso ,as Bondholder VILLAGE PARTNERSHIP,A CALIFORNIA GENERAL PARTNERSHIP, as Developer By. Todd Silver,General Partner PaineWebber Incorporated,as Remarketing Agent 6 ACKNOWLEDGED BY AND CONSENTED TO: Principal Commercial Advisors,Inc.,as I Bondholder VILLAGE PARTNERSHIP,A CALIFORNIA GENEFAL PAR ERSHIP, as Develope By: R I - Todd Silver, eneral Pa-rtYier PaineWebber Incorporated,as Remarketing Agent 6 ACKNOWLEDGED BY AND CONSENTED TO: Principal Commercial Advisors, Inc.,as Bondholder VILLAGE PARTNERSHIP,A CALIFORNIA GENERAL PARTNERSHIP, as Developer By: Todd Silver,General Partner PaineWeb6er Incorporated,as Remarketing Agent 6 EXHIBIT A FORM OF INVESTOR LETTER CITY OF HUNTINGTON BEACH MULTIFAMILY HOUSING REVENUE BONDS (VILLAGE PARTNERSHIP PROJECT),1986 SERIES A The undersigned,on behalf of Principal Commercial Acceptance, LLC (the "Purchaser"), represents and warrants to and covenants with the City of Huntington Beach (the "Issuer") that the Purchaser is purchasing the above-captioned Bonds in the principal amount of $4,895,000 (the 'Bonds") for its own account for investment and with no present intention of distributing or selling the Bonds or any part thereof or any interest therein, either currently or after the passage of a fixed period of time, or upon the occurrence or non-occurrence of any predetermined event or circumstances, provided, however that at all times the disposition of such Bonds is and shall remain totally within the control of the Purchaser. THE PURCHASER RECOGNIZES THAT THE BONDS MAY NOT BE TRANSFERRED WITHOUT THE PRIOR WRITTEN CONSENT OF THE ISSUER The Purchaser understands that the Bonds have not been registered under the Securities Act of 1933, as amended. The Purchaser acknowledges that in purchasing the Bonds it is not relying on any representations of the Issuer,U.S. Bank Trust National Association, as successor trustee to First Trust Washington, the successor in interest to Seattle-First National Bank (the "Trustee"), or any of their employees or agents with respect to the financial quality of the Bonds. The Purchaser is relying solely on statements and representations of Principal Commercial Advisors, Inc. (the "Seller") and Village Partnership, A California General Partnership (the "Owner") and on its own knowledge and investigation of the facts and circumstances relating to the purchase of the Bonds. The Purchaser acknowledges that it is an institutional investor. In connection with its business, the Purchaser holds extensive portfolios of investments. The Purchaser has knowledge and experience in financial and business matters and is capable of evaluating the merits and risks of purchasing the Bonds. In the opinion of the Purchaser, and based upon its independent investigation of the multifamily housing project (the 'Project")previously financed from the proceeds of the Bonds, the Purchaser is satisfied that the Project is sufficiently economically feasible to warrant the Purchaser's purchase of the Bonds. The Purchaser covenants that it is familiar with the businesses and properties of the Owner and that it has access to the same kind of information that is specified in Schedule A of the Securities Act of 1933,as amended,relative to the businesses of the Owner to the extent that the Owner possesses such information or can acquire it without unreasonable effort or expense. The Issuer, the Seller and the Owner have made available to the Purchaser the opportunity to ask questions and receive answers from such parties concerning the terms and conditions on which the Bonds have been offered for sale to the Purchaser and to obtain such additional information relative to the financial data and business of such parties and such property to be conveyed in trust or otherwise used as security, to the extent that such parties possess such information or can acquire it without unreasonable effort or expense, as the Purchaser has deemed necessary and appropriate in the circumstances. A-1 The undersigned acknowledges receipt of all such information as the undersigned deems necessary and appropriate to enable the undersigned to evaluate the financial risk inherent in acquiring the Bonds and acknowledges receipt of satisfactory and complete information covering the business and financial condition of the Owner and the Project, including the opportunity to obtain information regarding the Owner's and the Project's financial status,in response to all inquiries in respect thereof. The Purchaser reserves the right to dispose of the Bonds in accordance with the terms of that certain Indenture of Trust, dated as of November 1, 1986,by and between the Issuer and the Trustee,as amended by that First Supplemental Indenture of Trust, dated as of June 1, 1989, that certain Second Supplemental Indenture of Trust, dated as of March 1, 1997 and that certain Third Supplemental Indenture of Trust, dated as of March 1, 1999 (collectively, the "Indenture") if, in its judgment, its disposition would be compelled by prudence or required by law; provided,however, that no public offering of all or a portion of the Bonds shall be made. The Purchaser understands that it may sell the Bonds to any qualified institutional investor provided that any such transfer shall be made in accordance with all federal and related state securities laws and with the requirements of the Indenture. In the event that it does so sell the Bonds in the future, it shall assume the responsibility for disclosure of all material information that may be necessary to comply with all federal and related state securities laws. Dated: PRINCIPAL COMMERCIAL ACCEPTANCE,LLC By: Its: A-2 EXHIBIT B FORM OF BOND No. R-1 ***$4,895,000*** UNITED STATES OF AMERICA STATE OF CALIFORNIA CITY OF HUNTINGTON BEACH,CALIFORNIA MULTIFAMILY HOUSING REVENUE BOND (VILLAGE PARTNERSHIP PROJECT) 1986 SERIES A THIS BOND IS SUBJECT TO MANDATORY TENDER UNDER THE CIRCUMSTANCES HEREINAFTER DESCRIBED, AND IT MUST BE SO TENDERED OR IT WILL BE DEEMED 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). Interest Rate Maturity Date Reissuance Date CUSIP No. Variable November 1,2016 March 25, 1999 446196 AN7 REGISTERED OWNER: Principal Commercial Acceptance, LLC PRINCIPAL AMOUNT: ***Four Million Eight Hundred Ninety-Five Thousand*** DOLLARS The City of Huntington Beach, California (the "Issuer"), being a municipal corporation and charter city organized and existing under the laws of the State of California, for value received,hereby promises to pay in lawful money of the United States of America (but only out of the sources hereinafter provided) to the Registered Owner named above, or 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 time 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 referred to hereinafter) to which interest has been paid or made available for payment in accordance with the terms of the Indenture (as hereinafter defined) at the rate per annum set forth herein. The Bonds (as defined below) have been issued pursuant to that certain Indenture of Trust, dated as of November 1, 1986 (the "Original Indenture"), between the Issuer and U.S. Bank Trust National Association, as successor trustee to First Trust Washington, the successor in interest to Seattle-First National Bank (the"Trustee'), having a principal office in Seattle,Washington (said principal office being herein referred to as the "Principal Office of the Trustee'), as amended by that certain First Supplemental Indenture of Trust, dated as of June 1, 1989 (the "First Supplemental Indenture'), that certain Second Supplemental Indenture of Trust, dated as of March 1, 1997 (the "Second Supplemental Indenture") and that certain Third Supplemental Indenture of Trust, dated as of March 1, 1999 ***Page 1 of 8 *** (the "Third Supplemental Indenture"), each between the Issuer and the Trustee (the "Original Indenture, the First Supplemental Indenture, the Second Supplemental Indenture and the Third Supplemental Indenture are collectively referred to herein as the "Indenture"). This Bond is part of an authorized issue of bonds limited in aggregate principal amount to $4,895,000 (the "Bonds") issued pursuant to a resolution duly adopted by the City Council of the City of Huntington Beach,California on August 18, 1986,and the Indenture. The Bonds are issued in accordance with the 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, as amended (the "Act") and are secured by and entitled to the protection of the Indenture. The Bonds are issued for the purpose of (1) obtaining funds to make a loan (the "Developer Loan") to Village Partnership, a California general partnership (the "Developer"), to provide permanent financing for the multifamily rental residential development (the "Project") constructed by the Developer in the City of Huntington Beach, to be occupied partially (at least 20%) by persons of low or moderate income within the meaning of Section 142(d)(1)(A) of the Internal Revenue Code of 1986; 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, as amended by that certain First Amendment to Loan Origination and Servicing Agreement, dated as of June 1, 1989, that certain Second Amendment to Loan Origination and Servicing Agreement, dated as of March 1, 1997 and that certain Third Amendment to Loan Origination and Servicing Agreement, dated as of March 1, 1999 (as amended, the "Loan Agreement") the payments on which are secured by a deed of trust on the Project from the Developer to the Trustee (the "Developer Mortgage") (collectively the Loan Agreement and the Developer Mortgage, together with the Regulatory Agreement mentioned below, are hereinafter referred to as the "Developer Loan Documents"). The Developer has executed and delivered a Regulatory Agreement and Declaration of Restrictive Covenants (the "Regulatory Agreement")with the Issuer,Mercury Savings and Loan Association,the issuer of a Letter of Credit (as discussed more completely below) with respect to the Bonds (the "Association"), and the Trustee setting forth certain provisions relating to the acquisition, construction and operation of the Project. In connection with the original issuance of the Bonds, the Developer, to secure its obligation to make payments on the Developer Loan in accordance with its terms, 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. In connection with execution of the Second Supplemental Indenture and the Second Amendment to Loan Origination and Servicing Agreement, the Letter of Credit and the Collateral Pledge Agreement were released. For the period from the date hereof to March 31,2001 only, the Bonds may remain outstanding pursuant to the Indenture without a Letter of Credit. All capitalized terms used in this Bond which 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. 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, 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 which the Registered Owner of this Bond assents by the acceptance of this Bond. ***Page 2 of 8 *** While the Bonds are not secured by the Letter of Credit or an Alternate Credit Facility, interest on the Bonds shall accrue on the basis of a 360-day year at the rates and for the time periods set forth below and shall be payable on the tenth day of each and every calendar month commencing April 10,1999 : (i) Effective Date through March 31, 1999. Interest on the outstanding principal amount of the Bonds shall accrue from the effective date hereof through March 31, 1999 at the interest rate of eight and one-half percent(8.50%)per annum. (ii) April 1, 1999 through March 31, 2000. Interest on the outstanding principal amount of the Bonds shall accrue from April 1, 1999 through March 31, 2000 at the interest rate of six and three-quarter percent(6.75%)per annum. (iii) April 1, 2000 through September 30, 2000. Interest on the outstanding principal amount of the Bonds shall accrue from April 1, 2000 through September,2000 at the interest rate of seven and one-quarter percent (7.25%) per annum. (iv) October 1, 2000 through March 31, 2001. Interest on the outstanding principal amount of the Bonds shall accrue from October 1, 2000 through March 31, 2001 at the interest rate of seven and three-quarter percent (7.75%) per annum. (v) Additional accrued interest. In addition to the foregoing, an additional one- half of one percent (0.5%) interest of the outstanding principal amount of the Bonds shall be earned on April 1, 2000 (but only to the extent the Bonds are outstanding and owned by a single Bondholder under the terms of this Third Supplemental Indenture) but accrued and the payment thereof deferred for the period commencing April 1, 2000 and ending September 30, 2000; thereafter, an additional one-half of one percent (0.50%) of the outstanding principal amount of the Bonds shall be earned on October 1, 2000 (but only to the extent the Bonds are outstanding and owned by a single Bondholder under the terms of this Third Supplemental Indenture) but accrued and the payment thereof deferred for the period commencing October 1, 2000 and ending March 31, 2001. The additional accrued and deferred interest set forth above shall be paid upon redemption or maturity of the Bonds,whichever first occurs. Pursuant to Section 3(b) of the Third Supplemental Indenture, the Bonds shall be subject to mandatory tender for purchase on March 31, 2001. Prior to February 28,2001, the Developer shall notify the Issuer, the Bondholder, the Trustee and the Remarketing Agent (as defined in the Indenture) of its intent to either redeem the Bonds in whole on March 31, 2001 or to remarket the Bonds as set forth in Section 211 of the Indenture. In order to initiate remarketing of the Bonds as set forth in the previous sentence, the Developer must obtain and deliver to the Trustee on or before February 28, 2001 (i) the written consent of the Trustee, the Issuer and the Remarketing Agent to such remarketing, (H) a written notice specifying the proposed Interest Rate Calculation Date, (iii) an opinion of Bond Counsel to the effect that the remarketing will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds, (iv)a commitment of a bank or other entity to issue a Letter of Credit or Alternate Credit Facility complying with Section 5.8 of the Loan Agreement, along with the documentation required by Section 5.8 of the Loan Agreement, (v)a form of Bond to be in effect following such remarketing, and (vi) evidence, except with the prior written approval of the Issuer, that the rating on the Bonds on April 1, 2001 will not be lower than "A" (or its equivalent). If the Developer has not delivered a Letter of Credit or Alternate Credit Facility to ***Page 3 of 8 *** the Trustee prior to March 15, 2001, then the Bonds shall be subject to mandatory tender for purchase on March 31,2001. For the period while the Bonds are owned by a single Bondowner and there is no Letter of Credit outstanding with respect to the Bonds, the Bonds shall be subject to redemption as follows: (a) The Bonds shall be subject to redemption in whole, at the direction of the then-registered owner of the Bonds, in the event of a default under the Developer Loan or the Loan Agreement (as provided in the Loan Agreement and the Indenture), and payment of the redemption price shall be deemed made by the Trustee's absolute assignment to the owner of the Bonds of all right, title and interest of the Trustee in the Trust Estate(except for its rights to its fees and expenses and its indemnification rights). (b) For the period ending on March 31, 2001, and so long as the Bonds are owned by a single Bondholder, (i) the provisions of Section 603 of the Original Indenture shall be inapplicable, and (ii) the Bonds shall be subject to redemption in whole on any date, at the option of the Developer, upon 30 days' written notice by the Developer to the Trustee and 15 days'written notice by the Trustee to the Bondholder. The Bonds are limited obligations of the Issuer payable solely from the revenues,funds and assets pledged under the Indenture and not from any other revenues, funds or assets. 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 from, and a valid claim of the Registered Owner 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 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, 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. 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 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 is hereby expressly waived and released as a condition of,and in consideration for,the execution of the Indenture and the issuance of any of the Bonds. This Bond is transferable only as set forth in Section 2(e) of the Second Supplemental Indenture and Section 4 of the Third Supplemental Indenture. 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 take any action with respect to any event of default under the Indenture, or to institute,appear in or defend any suit or other proceedings with respect thereto, except as provided in the Indenture. If an Event of Default as defined in the Indenture occurs, the principal of all Bonds then outstanding issued 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 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 receiving payment as herein provided and for all other purposes,whether or not this Bond shall ***Page 4 of 8*** be overdue, and neither 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, may 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 if Seasoned Funds and/or Government Obligations (as defined in the Indenture)maturing as to principal and interest in such amounts and at such times not later than 30 days after the date of investment as will be such to insure the availability 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 payment 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 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. ***Page 5 of 8*** 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 Assistant City Administrator and attested by the facsimile signature of the City Clerk and the facsimile of its seal to be imprinted herein,all as of the Reissuance Date as set forth above. CITY OF HUNTINGTON BEACH, CALIFORNIA By: Assistant City Administrator ATTEST: City Clerk [SEAL] ***Page 6 of 8*** TRUSTEE'S CERTIFICATE OF AUTHENTICATION This Bond is one of the Bonds described in the within-mentioned Indenture of Trust. Date of registration and authentication: 119 U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee 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 MIN ACT- Custodian (Cust) (Minor) under Uniform Gifts to Minors Act (State) Additional abbreviations may also be used though not in the above list ***Page 7 of 8 " * FORM OF ASSIGNMENT For value received,the undersigned do(es)hereby sell,assign and transfer unto (Name,Address and Tax Identification or Social Security Number of Assignee) the within Bond and do(es)hereby irrevocably constitute and appoint attorney, to transfer the same on the registration books of the Trustee,with full power of substitution in the premises. Dated: Signature Guaranteed: NOTICE: Signature(s) must be guaranteed by an NOTICE: The signature on this assignment must eligible guarantor institution. correspond with the name(s) as written on the face of the within Bond in every particular without alteration or enlargement or any change whatsoever. ***Page 8 of 8*** 18019-48 JH:CKL 03/17/99 THIRD AMENDMENT TO LOAN ORIGINATION AND SERVICING AGREEMENT dated as of March 1,1999 among CITY OF HUNTINGTON BEACH,CALIFORNIA, VILLAGE PARTNERSHIP, and U.S.BANK TRUST NATIONAL ASSOCIATION,as Trustee Amending that certain Loan Origination and Servicing Agreement, dated as of November 1, 1986, as amended by that certain First Amendment to Loan Origination and Servicing Agreement, dated as of June 1, 1989 and that certain Second Amendment to Loan Origination and Servicing Agreement, dated as of March 1, 1997 i THIS THIRD AMENDMENT TO LOAN ORIGINATION AND SERVICING AGREEMENT (this 'Third Amendment"), dated as of March 1, 1999, is among the CITY OF HUNTINGTON BEACH,a municipal corporation and chartered city duly organized and existing under the laws of the State of California (the "Issuer"), VILLAGE PARTNERSHIP, a California general partnership (the "Developer") and U.S. BANK TRUST NATIONAL ASSOCIATION, a national banking association, duly organized and existing under the laws of the United States of America, as successor trustee to First Trust Washington,the successor in interest to Seattle-First National Bank, as trustee (the "Trustee"), and amends that certain Loan Origination and Servicing Agreement, dated as of November 1, 1986, as amended by that certain First Amendment to Loan Origination and Servicing Agreement, dated as of June 1, 1989, and that certain Second Amendment to Loan Origination and Servicing Agreement, dated as of March 1, 1997 (as amended, the "Original Loan Agreement"). WHEREAS, the Issuer has issued its Variable Rate Demand Multifamily Housing Revenue Bonds (Mercury Savings and Loan Association/Village Partnership Project) 1986 Series A in the aggregate principal amount of$7,700,000 (the "Bonds") pursuant to an Indenture of Trust, dated as of November 1, 1986, as amended by that certain First Supplemental Trust Indenture, dated as of June 1, 1989 and that certain Second Supplemental Indenture of Trust, dated as of March 1, 1997 (as amended, the"Original Indenture"),by and between the Issuer and Trustee;and WHEREAS, the proceeds of the Bonds were used to make a loan (the "Developer Loan"), pursuant to the Original Loan Agreement, to the Developer to finance the cost of acquiring, constructing and improving a multifamily residential project located within the City of Huntington Beach,and commonly known as Huntington Village Apartments (the"Project");and WHEREAS, as security for the Bonds, the Mercury Savings and Loan Association (the "Original Association") delivered a letter of credit (the "Letter of Credit"), pursuant to that certain Letter of Credit and Reimbursement Agreement, dated as of November 1, 1986 (the "Reimbursement Agreement"),against which the Trustee was entitled to draw to pay, when and as due, the principal of and interest on the Bonds, which Letter of Credit was secured by certain collateral (the "Collateral")assigned to BNY Western Trust Company, as successor collateral agent to Seattle-First National Bank (the "Collateral Agent") for the benefit of the Issuer and the Trustee pursuant to an Assignment of Collateral and Trust Agreement, dated as of November 1, 1986, as amended by that certain First Amendment to Assignment of Collateral and Trust Agreement, by and among the Original Association, the Trustee and the Collateral Agent (as amended, the "Collateral Agreement");and WHEREAS, the Office of Thrift Supervision (the "OTS"), by its Order No. 90-952, dated May 25, 1990, appointed the Resolution Trust Corporation (the "RTC") as Receiver of the Original Association; and WHEREAS, by Order No. 90-953, dated May 25, 1990, the OTS authorized the organization of Mercury Federal Savings & Loan Association (the "New Association"), and thereafter, the RTC as Receiver of the Original Association and the New Association, entered into a certain Purchase and Assumption Agreement, dated May 25, 1990, pursuant to which certain assets and liabilities of the Original Association, including the Letter of Credit and all documents contemplated therein or executed in connection therewith, were transferred to the New Association; and WHEREAS, by Order No. 90-954, dated May 25, 1990, the OTS appointed the RTC as Conservator of the New Association; and a WHEREAS, the OTS by its Order No. 90-1768, dated September 21, 1990, replaced the Conservator of the New Association with the RTC as Receiver of the New Association for the purpose of liquidation; and WHEREAS, on January 1, 1996, the FDIC, acting in its capacity as Receiver for the New Association, succeeded to the RTC in its capacity as Receiver for the New Association pursuant to 12 U.S.C. Section 1441a(m)(1); and WHEREAS, as a result, the FDIC was the secured creditor of the Developer with respect to the Note and the Deed of Trust; and WHEREAS, pursuant to the Second Supplemental Indenture of Trust and the Second Amendment to Loan Origination and Servicing Agreement (the "1997 Amendments"), the Developer and the FDIC caused the Bonds to be purchased in lieu of redemption by causing a drawing under the Letter of Credit for the full redemption price of the Bonds (less the amount of any proceeds of the Bonds held by the Trustee in the Debt Service Fund established under the Original Indenture) and,thereafter,the release of the Collateral from the Trust Estate;and WHEREAS, in addition, the 1997 Amendments provided that during the period ending April 30, 1999 (i) the Bonds, outstanding in the principal amount of $4,895,000, would be owned by a single Bondowner, Principal Commercial Advisors, Inc. (the "Existing Bondowner"), (ii) the Bonds could remain outstanding with no credit enhancement so long as they were owned by a single Bondowner, and (iii) that the Bonds would bear interest at the rate specified in Section 5 of the Second Supplemental Trust Indenture; and WHEREAS, pursuant to the 1997 Amendments, the Bonds are subject to mandatory tender for purchase on April 30, 1999 unless, prior to March 31, 1999, the Developer notifies the City, the Bondholder, the Trustee and the Remarketing Agent (as defined in the Original Indenture) of its intent to either redeem the Bonds in whole on April 30, 1999 or to remarket the Bonds with credit enhancement as set forth in Section 211 of the Original Indenture;and WHEREAS, the Trustee and the Issuer desire to further amend and supplement the Original Indenture and the Original Loan Agreement to provide for another two-year period during which the Bonds would be owned by a single Bondholder, Principal Commercial Acceptance, LLC (the"New Bondholder"), there would be no credit enhancement of the Bonds, and the Bonds would bear interest at a rate specified in that certain Third Supplemental Trust Indenture, dated as of March 1, 1999 (the "Third Supplemental Indenture"); and WHEREAS,Section 10.6 of the Original Loan Agreement provides for the amendment of the Original Loan Agreement upon the written consent of all the parties thereto;and WHEREAS, as a result of the events described in the preceding WHEREAS clauses, which resulted in the release of the Collateral and the Letter of Credit, the FDIC is no longer a party in interest to the Original Loan Agreement;and WHEREAS, pursuant to Section 1202 of the Original Indenture, the parties hereto, with the written consent of the Existing Bondowner, desire to amend and supplement the Original Loan Agreement as set forth in this Third Amendment;and WHEREAS, the Issuer, the Developer, the Existing Bondholder and the Trustee have consented to the execution and delivery of an amendment to the Original Loan Agreement pursuant to the provisions thereof; -2- NOW, THEREFORE, in consideration of the above premises and of the mutual covenants hereinafter contained and for other good and valuable consideration, the parties hereto agree as follows: Section 1. Amendment of Developer Note. The parties hereto acknowledge that the Developer Note,at the written direction of the owner(s) of 100 percent of the aggregate outstanding principal amount of the Bonds,shall be amended to reflect the change in the repayment terms of the Developer Loan mandated by Section 3(a) of the Third Supplemental Indenture. The amended Developer Note shall be in the form attached hereto as Exhibit A. The parties hereto consent to the servicing of the Developer Loan by Principal Commercial Acceptance,LLC. Section 2. Mandatory Tender of the Bonds on March 31, 2001. The Developer shall take all steps required to comply with the provisions of Section 3(b) of the Third Supplemental Indenture with respect to electing whether the Bonds, on or prior to March 31, 2001, will be redeemed on March 31,2001 or remarketed pursuant to Section 2.11 of the Original Indenture. Section 3. Name of Bonds. The parties to this Third Amendment hereby acknowledge the change in the name of the Bonds to "City of Huntington Beach Multifamily Housing Revenue Bonds (Village Partnership Project), 1986 Series A". Section 4. Execution in Counterparts. This Third Amendment may be executed in several counterparts,each of which shall be an original and all of which shall constitute but one and the same instrument. Section 5. Applicable Law. This Third Amendment shall be governed by and construed in accordance with the laws of the State of California. Section 6. Effective Date. The provisions of this Third Amendment and the amendments made hereby shall take effect from and after the execution of this Third Amendment by the parties hereto, or, to the extent applicable, at the written direction of the owner(s)of 100 percent of the aggregate outstanding principal amount of the Bonds. Except as otherwise provided herein, the provisions of the Original Loan Agreement, as amended, are hereby ratified, approved and confirmed. -3- WITNESS WHEREOF,the Issuer has caused this Third Amendment to be executed and attested in its name by its duly authorized officers and sealed with its corporate seal; the Trustee has caused this Third Amendment to be executed in its name by a duly authorized officer of the Trustee;and the Developer has caused this Third Amendment to be executed in its name by an authorized general partner of the Developer, all as of the date first hereinabove stated. CITY OF HUNTINGTON BEACH By: �«.v C-.0 l ity Administrator (S E A L) Attest: G - City Cle U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee By: VILLAGE PARTNERSHIP, A CALIFORNIA GENERAL PARTNERSHIP By: Todd Silver,General Partner ACKNOWLEDGED BY AND CONSENTED TO: PRINCIPAL COMMERCIAL ADVISORS, INC.,as Bondholder By: Its: -4- WITNESS WHEREOF,the Issuer has caused this Third Amendment to be executed and attested in its name by its duly authorized officers and sealed with its corporate seal; the Trustee has caused this Third Amendment to be executed in its name by a duly authorized officer of the Trustee;and the Developer has caused this Third Amendment to be executed in its name by an authorized general partner of the Developer, all as of the date first hereinabove stated. CITY OF HUNTINGTON BEACH By: City Administrator (S E A L) Attest: City Clerk U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee By: Al)dj�01 VILLAGE PARTNERSHIP, A CALIFORNIA GENERAL PARTNERSHIP By: Todd Silver,General Partner ACKNOWLEDGED BY AND CONSENTED TO: PRINCIPAL COMMERCIAL ADVISORS, INC.,as Bondholder By: Its: -4- WITNESS WHEREOF,the Issuer has caused this Third Amendment to be executed and attested in its name by its duly authorized officers and sealed with its corporate seal; the Trustee has caused this Third Amendment to be executed in its name by a duly authorized officer of the Trustee;and the Developer has caused this Third Amendment to be executed in its name by an authorized general partner of the Developer, all as of the date first hereinabove stated. CITY OF HUNTINGTON BEACH By: City Administrator (S E A L) Attest: City Clerk U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee is By: VILLAGE PARTNERSHIP, CALIFORNIA GENERAL PA NERSHIP By: Todd Silver,Gene rt r ACKNOWLEDGED BY AND CONSENTED TO: PRINCIPAL COMMERCIAL ADVISORS, INC.,as Bondholder By: Its: -4- WITNESS WHEREOF,the Issuer has caused this Third Amendment to be executed and attested in its name by its duly authorized officers and sealed with its corporate seal; the Trustee has caused this Third Amendment to be executed in its name by a duly authorized officer of the Trustee;and the Developer has caused this Third Amendment to be executed in its name by an authorized general partner of the Developer, all as of the date first hereinabove stated. CITY OF HUNTINGTON BEACH By: City Administrator (SEAL) Attest: City Clerk U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee By: VILLAGE PARTNERSHIP, A CALIFORNIA GENERAL PARTNERSHIP By: Todd Silver,General Partner ACKNOWLEDGED BY AND CONSENTED TO: PRINCIPAL COMMERCIAL ADVISORS, INC.,as Bondholder By: " Its: a ircc�vrs -4- EXHIBIT A is AMENDED PROMISSORY NOTE SECURED BY DEED OF TRUST A-1 NONE S HALL A PROFESSIONAL LAW CORPORATION ATTORNEYS AT LAW CHARLES F.ADAMS 650 CALIFORNIA STREET STEPHEN R.CASALEGGIO EIGHTEENTH FLOOR THOMAS A.DOWNEY SAN FRANCISC:O.CA 94108 SCOTT R.FERGUSON ANDREW C.HALL,JR. TELEPHONE COURTNEY L.JONES (415)391-5780 WILLIAM J.KADI April 30, 1999 FACSIMILE: CHRISTOPHER K.LYNCH (415)301.5784 WILLIAM H.MADISON STEPHEN G.MELIKIAN HOMEPAGE:http://www.jhhw.com DAVID J.OSTER DAVID A.WALTON KENNETH 1.JONES,of couxsm. To: Transcript Recipients CITY OF HUNTINGTON BEACH Multifamily Housing Revenue Bonds (Village Partnership Project) 1986 Series A 1999 Reissuance Transaction ($4,895,000 principal amount) Enclosed please find the transcript binder for the above-captioned. Please note the following items are either missing or incomplete. You can obtain copies of these items by contacting Paul Figler, Esq.,at Berger, Kahn, Shafton, Moss, Figler, Simon &Gladstone at (310) 821-9000. A4. Exhibit A to Third Amendment to Loan Origination and Servicing Agreement, dated as of March 1, 1999 by and among the City, the Trustee, and the Developer, as acknowledged by and consented to by the Existing Bondowner. All. Second Amendment to and Restatement of the First Amendment to Promissory Note. Secured by Deed of Trust with Assignment of Rents and Security Agreement with Fixture Filing, dated March 1, 1999, between the. Trustee, as Payee, and the Developer, as Maker. C3. Confirmation, dated March 1, 1999,by the. Developer. D3. CLTA 110.5 Endorsement to Title Policy No. 66617A-3, issued by Chicago Title Company. Very truly yours, Phyllis Cl' Henry Senior P :)ject Coordinator Closing Department Enclosure CITY OF HUNTINGTON BEACH INTER-DEPARTMENT COMMUNICATION Economic Development Department UIE To Connie Brockway, City Clerk From David C. Biggs, Director of Economic Developmen Date May 6, 1999 Subject Transcript Binders Huntington Village Senior Apartments Attached are transcript binders from the refinancing of the Huntington Village(Village Partnership) Multifamily Revenue Bonds that was approved by the City Council on March.15, 1999. These binders should be kept with your records. You will note in the cover letter from Jones Hall that four items are missing or are incomplete. You may wish to contact the party listed in the letter and request copies. Please call Greg Brown at ext. 8831 with any questions. As always, thank you for your assistance. DCB:gab Attachments xc: Greg Brown, Development Specialist 3 I 3/15/99 - Council/Agency Minutes - Page 9 Councilmember Sullivan questioned how many residents are in the low-income category. Mr. Michaelson reported on the allocation of low-income and HUD units and stated they have a 30% requirement. Councilmember Sullivan responded to Councilmember Garofalo's earlier question about affordable housing. In response to Councilmember Sullivan, Economic Development Director Biggs responded for Mr. Michaelson stating that 17 units are very low and reported on Section 8 units which he believes number 31 split between low and moderate. Councilmember Dettloff stated that she concurred with some of the comments made by Councilmember Sullivan as she had held meetings with a senior citizen group and that the Orange County Fair Housing had agreed with many of the statements made by the tenants. She stated that the Council needs to continue watching the site to ensure that this is a good place for our senior citizens as there have been problems in the past. A motion was made by Dettloff, second Harman to approve the following recommended actions: Adopt Resolution No. 99-21 — "A Resolution of the City Council of the City of Huntington Beach Approving an Amended and Restated Indenture of Trust, an Amended and Restated Loan Agreement, a First Amendment to Regulatory Agreement and Declaration of Restrictive Covenants and an Assignment and Intercreditor Agreement, and Authorizing the Execution and Delivery Thereof, and Other Agreements in Connection Therewith, and Authorizing and Directing the Execution and Delivery of Documents and Actions Taken in Connection Therewith, All With Respect to the Five Points Seniors Project"authorizing amended documents for $9,500,000 City of Huntington Beach Variable Rate Demand Multifamily Housing Revenue Bonds (Five Points Seniors Project) Series A of 1991 permitting the substitution of a Fannie Mae pledge of collateral in lieu of the Wells Fargo Bank Letter of Credit. and Adopt Redevelopment Agency Resolution No. 296 "A Resolution of the Redevelopment Agency of the City of Huntington Beach Approving a First Amendment to Affordable Housing Agreement and Authorizing the Execution and Delivery Thereof, and Authorizing and Directing the Execution and Delivery of Documents and Actions Taken in Connection Therewith, all with Respect to the Five Points Seniors Project." Approving the amended Housing Agreement between the Redevelopment Agency and Five Points Seniors, LP, which permits a reduction in the project's amenity budget. The motion carried by the following roll call vote: AYES: Bauer, Garofalo, Green, Dettloff, Harman NOES: Sullivan ABSENT: Julien Councilmember Garofalo requested that this type of financing be made part of an Economic Development future agenda. CONSENT CALENDAR— ITEMS REMOVED FOR SEPARATE DISCUSSION Sale And Transfer Of Ownership—Ocean View Estates (7051 Ellis Avenue) Mobile Home Unit No. 34— (Brooks Estate To David Hicks) — Agreement For Occupancy Between City & David & Sandra Hicks Page 8 - Council/Agency Minutes—03/15/99 (CITY COUNCIL/REDEVELOPMENT AGENCY) PUBLIC HEARING —ADOPTED CITY COUNCIL RESOLUTION NO. 99-21 —ADOPTED REDEVELOPMENT AGENCY RESOLUTION NO. 296 —APPROVAL OF DOCUMENTS FOR THE REISSUANCE OF $9,500,000 CITY OF HUNTINGTON BEACH VARIABLE RATE DEMAND MULTIFAMILY HOUSING REVENUE BONDS (FIVE POINTS SENIORS PROJECT) SERIES A OF 1991 — LOCATED AT MAIN & FLORIDA STREETS (330.30) Mayor Green announced that this was the meeting set for a public hearing to consider Borrower request to replace a Wells Fargo Bank Letter of Credit as a guarantee of payment to the bond holder with the participation of Fannie Mae. Legal notice as provided to the City Clerk's Office by staff had been published and posted. Economic Department Director Biggs presented a slide show dated March 11, 1999 titled Five Points Senior Project Reissuance of Revenue Bonds 1991, City Council Public Hearing March 15, 1999. ° 6 Mayor Green declared the hearing open. There being no persons present to speak on the matter and there being no protests filed, either written or oral, the hearing was closed by the Mayor. Economic Development Director Biggs responded to Councilmember Sullivan's inquiry as to how it could happen that the owner had not spent the required amount of money as set forth in the original documents approving the bond issuance. Councilmember Sullivan informed Council of a story relayed to him about the response of Five Points Senior Project management relative to a situation that a volunteer for Meals on Wheels had encountered when trying to assist a resident. Councilmember Sullivan stated that he did not believe that Council should agree to the action on this item until situations as these are cleared up. David Michaelson, applicant, informed Council that the management of Five Points has been a challenge. He spoke regarding a group of residents who had been creating a problem and stated that these residents are no longer living at the Five Points complex. He stated that the Fair Housing Council had attempted to form a tenants' committee, but the tenants had not formed a committee as they were satisfied. Mr. Michaelson stated that the incident to which Councilmember Sullivan had referred had happened, and the management had been rebuked. He stated that generally Five Points is running smoother as the dissidents are no longer there. He spoke regarding the request under consideration at this meeting. Mr. Michaelson reported on the background of the matter as it relates to the costs that had been incurred from the fire before the project was constructed. He spoke regarding the financial effect on their business due to the water rate increase. Mr. Michaelson stated that when the project was funded, HUD was paying $695 for rent, and now the payment had been decreased to $650 per month; that the reality is that the seniors do not suffer from loss of services. He stated that he agreed that there should be some sensitivity training for the manager, but he has been unable to find any classes. REQUEST FOR CITY COUNCIL ACTIOf H 91-53 July 29, 1991 _ Date ---_._�_. APPROVED T3V cyyi Submitted to: Honorable Mayor and City Council Members Submitted by: Michael T. Uberuaga, City Administrator Prepared by: Barbara A. Kaiser, Deputy City Administrator/Economic;,Der ----- Subject: INDUCEMENT RESOLUTION: FIVE POINTS SENIOR HOUSING PROJECT REVENUE BONDS Consistent with Council Policy? Yes [ ] New Policy or Exception Statement of Issue, Recommendation,Analysis, Funding Source,Alternative Actions,Attachments: STATEMENT OF ISSUE: Five Points Seniors, a California General Partnership, has asked the City to issue and sell revenue bonds for financing the acquisition of land, and for the construction of an 164 (proposed) unit rental housing development on the partially improved site at Main Street and Five Points Street. RECOMMENDED ACTION: Approve Resolution No. authorizing the City to issue and sell $10 million in revenue bonds to provide financing for this project, as delineated by Chapter 7 of Part 5 of Division 31 of the Health and Safety Code. ANALYSIS: A 164 unit rental housing development for seniors has been proposed for the 1.89 acre site located at 18660 Main Street. The developer, Five Points Seniors, has requested that the City issue revenue bonds in the amount of $10 million for land acquisition and development. The developer will pay all costs associated with the issuance of the bonds, including the 1% commitment fee ($100,000). These bonds do not constitute a debt or obligation of the City. The developer has been negotiating with the Redevelopment Agency for other financial assistance for this project, however, to date there has been no commitment made, other than an agreement to bring an inducement resolution to the City Council for consideration. FUNDING SOURCE: Not applicable. Any unforseen expense could be covered by housing set aside funds, if needed. ATTACHMENT: 1. Resolution No. MTU/BAK/GAB:sar 0378y P10 5/85 J t RESOLUTION NO. 6330 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH AUTHORIZING THE ISSUANCE, SALE AND DELIVERY OF MULTIFAMILY MORTGAGE REVENUE BONDS TO PROVIDE FINANCING FOR CONSTRUCTION OF FIVE POINTS SENIORS PROJECT, AUTHORIZING THE EXECUTION AND DELIVERY OF AN INDENTURE OF TRUST, LOAN AGREEMENT, REGULATORY AGREEMENT, OFFICIAL STATEMENT AND BOND PURCHASE AGREEMENT AND AUTHORIZING OTHER RELATED DOCUMENTS AND APPROVING OTHER RELATED ACTIONS WHEREAS, the City of Huntington Beach is authorized by Chapter 7 (commencing with Section 52075) of Part 5 of Division 31 of the Health and Safety Code of the State of California, as amended, to issue and sell revenue bonds for the purpose of providing financing for the development of multifamily rental housing facilities located within the City by private developers; and Five Points Springs ("Developer") , a California general partnership, has applied to the City to issue and sell revenue bonds for the purpose of providing financing for the acquisition of land and construction thereon of an approximately 164-unit multifamily rental housing development and related auxiliary facilities to be located within the City on the southwest corner of Main and Florida and more commonly known as 18660 Main Street, Huntington Beach,. California ("Project" ) ; and Notice of a public hearing with respect to the proposed issuance of the bonds has been published in accordance with the applicable requirements of federal tax law; and -1- y ' Such public hearing has been held before this City Council , and an opportunity was provided for interested parties to present arguments for and against the issuance of the bonds; and The firm of Bancroft, Garcia & Lavell has informed the City that it expects to submit a bid to purchase all of the bonds and in connection with the marketing of the bonds has caused to be prepared an Official Statement describing the bonds ; and All conditions, things and acts required to exist, to have happened and to have been performed precedent to and in the issuance of the Bonds as contemplated by this resolution and the documents referred to herein exist, have happened and have been performed in due time, form and manner as required by the laws of the State of California, including the Act : NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Huntington Beach, as follows : SECTION 1. Recitals . The City Council hereby finds and declares that the above recitals are true and correct. SECTION 2 . Authorization of Bonds . Pursuant to the Act, revenue bonds of the City, in an aggregate principal of $9, 500, 000 ("Bonds" ) , are hereby authorized to be issued for the purpose of assisting in the financing of the acquisition, c-onstruction and development of the Project . The Bonds shall be executed by the manual or facsimile signature of the Mayor, the seal or facsimile of the seal of the City shall be reproduced thereon and the Bonds shall be attested by the manual or facsimile signature of the City Clerk, in the form set forth in and otherwise in accordance with the Indenture (as hereinafter defined) . -2- 6330 SECTION 3 . Indenture. The proposed form of Indenture of Trust ("Indenture") between the City and a banking institution to be named therein as trustee ("Trustee" ) , in substantially the form on file with the City Clerk, is hereby approved. The Mayor is hereby authorized and directed, for and in the name and on behalf of the City, to execute and deliver the Indenture, and the City Clerk is hereby authorized and directed, for and in the name and on behalf of the City, to attest the Indenture, in substantially the form on file with the City Clerk together with any immaterial additions thereto or immaterial changes therein deemed necessary or advisable by the City Administrator. SECTION 4 . Loan Agreement . The proposed form of Loan Agreement (Loan Agreement) among the Trustee, - the City and the Developer, in substantially the form on file with the City Clerk, is hereby approved. The Mayor is hereby authorized and directed, for and in the name and on behalf of the City, to execute and deliver the Loan Agreement, and the City Clerk is hereby authorized and directed, for and in the name and on behalf of the City, to attest the Loan Agreement, in substantially the form on file with the City Clerk together with any immaterial additions thereto or immaterial changes therein deemed necessary or advisable by the City Administrator . SECTION 5 . Regulatory Agreement . The proposed form of Regulatory Agreement and Declaration of Restrictive Covenants ("Regulatory Agreement" ) among the City, the Trustee and the Developer, in substantially the form on file with the City Clerk, is hereby approved. The Mayor is hereby authorized and -3- 6330 e ` directed, for and in the name of and on. behalf of the City, to execute and deliver the Regulatory Agreement, and the City Clerk is hereby authorized and directed, for and in the name and on behalf of the City, to attest the Regulatory Agreement, in substantially the form on file with the City Clerk together with any immaterial additions thereto or immaterial changes therein deemed necessary or advisable by the City Administrator . SECTION 6 . Sale of Bonds . The proposed form of Bond Purchase Agreement ("Purchase Agreement") among the City, the Developer and the Underwriter, in substantially the form presented on file with the City Clerk, is hereby approved. The City Administrator is hereby authorized and directed, for and in the name and on behalf of the City, to accept the offer of the Underwriter to purchase the Bonds contained in the Purchase Agreement and to execute and deliver said Purchase Agreement in substantially the form on file with the City Clerk together with any immaterial additions thereto or immaterial changes therein deemed necessary or advisable by the City Administrator. SECTION 7 . Official Statement. The proposed form of Official Statement relating to the bonds ("Official Statement") , in substantially the form on file with the City Clerk, is hereby approved. The City Administrator is hereby authorized and directed, for and in the name and on behalf of the City, (a) to execute and deliver to the Underwriter a certificate deeming the preliminary Official Statement to be nearly final prior to the distribution thereof by the Underwriter, (b) approve any changes in or additions to cause such Official Statement to be put in -4- 6330 f ' final form, and (c) execute said final Official Statement for and in the name and on behalf of the City, Distribution by the Underwriter of said preliminary Official Statement relating to the Bonds is hereby approved and authorized. SECTION 8 . Issuance of Bonds . The Bonds, when executed, shall be delivered to the Trustee for authentication. The Trustee is hereby requested and directed to authenticate the Bonds by executing the Trustee ' s certificate of authentication and registration appearing thereon, and to deliver the Bonds, when duly executed and authenticated, to the Underwriter in accordance with written instructions executed on behalf of the City by any of its officers . Such instructions shall provide for the delivery of the Bonds to the Underwriter in accordance with the Purchase Agreement, upon payment of the purchase price therefor . SECTION 9 . Engagement of Bond Counsel . The City Council hereby authorizes and directs the engagement of Jones Hall Hill & White, a Professional Law Corporation, as bond counsel to the City in connection with the sale of the Bonds, pursuant to and in accordance with the form of agreement with said firm on file with the City Clerk. The City Council hereby authorizes and directs the Mayor to execute said agreement for and in the name and on behalf of the City. SECTION 10 . Official Action. All actions heretofore taken by the officers and agents of the City with respect to the sale and issuance of the Bonds are hereby approved, confirmed and ratified, and the officers of the City, including the Mayor, the -5- 6330 Mayor Pro Tem, the City Administrator, the Deputy City Administrator, the City Clerk, the City Treasurer and any and all other officers of the City, are hereby authorized and directed, for and in the name and on behalf of the City, to do any and all things and take any and all actions and execute and deliver any and all certificates, agreements and other documents which they, or any of them, may deem necessary or advisable in order to consummate the lawful issuance and delivery of the Bonds in accordance with this resolution, including but not limited to those certificates, agreement and other documents described in the Indenture, the Loan Agreement, the Regulatory Agreement, the Purchase Contract, and the other documents herein approved and any certificates, agreements or documents as may be necessary to further the purpose hereof. Whenever in this resolution any officer of the City is authorized to execute and deliver any document or take any action, such execution, delivery or action may be taken on behalf of such officer by any deputy thereto or by any other person designated by such officer to act on his or her behalf in the case such officer shall be absent or unavailable. -6- 6330 SECTION 11 . Effective Date. This resolution shall take effect from and after the date of its passage and adoption. PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a regular meeting thereof held on the 18th day of November 1991. ayor ATTEST: APPROVED AS TO FORM: • / City Clerk City ttorney REVIEWED AND APPROVED: INITIATED AND APPROVED: 4Z City A inistrator D' ector, Economic / Development r -� 6330 Res, No. 6330 STATE OF CALIFORNIA COUNTY OF ORANGE ss: CITY OF HUNTINGTON BEACH ) I, CONNIE BROCKWAY, 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 members 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 at least a majority of all the members of said City Council at a regular meeting thereof held on the 18th day of November 19 91 , by the following vote: AYES: Councilmembers: Mar-A11istPr. Wincht-11 , Silva C'rp-,--n, Kelly, Rohitoi11e, Moulton Pai-tPrcnn NOES: Councilmembers: None ABSENT: Councilmembers: None 1 y Clerk and ex-officio er of the City Council of the City of Huntington Beach, California APPENDIX A [FORM OF FRONT OF BOND]_ No. R- $ UNITED STATES OF AMERICA STATE OF CALIFORNIA CITY OF HUNTINGTON BEACH VARIABLE RATE DEMAND MULTIFAMILY HOUSING REVENUE BONDS (FIVE POINTS SENIORS PROJECT), SERIES A OF 1991 THIS BOND IS SUBJECT TO MANDATORY TENDER UNDER THE CIRCUMSTANCES HEREINAFTER DESCRIBED,AND IT MUST BE SO TENDERED OR IT WILL BE DEEMED 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) AS OF SUCH MANDATORY TENDER DATE. Interest Rate Maturity Date Issue Date CUSIP Adjustable REGISTERED OWNER: PRINCIPAL AMOUNT: The City of Huntington Beach (the "Issuer"), a chartered city and municipal corporation, duly organized and existing under the laws of the State of California, for value received, hereby promises to pay in lawful money of the United States of America (but only out of the sources hereinafter provided) to the registered owner named above (the 'Registered Owner"), or registered assigns, upon presentation and surrender hereof, the Principal Amount specified above on the Maturity Date specified above and to pay in such lawful money (but only out of the sources hereinafter described) interest on the balance of said Principal Amount from time to time remaining unpaid from the Interest Payment Date next preceding the date of authentication hereof to which interest has been paid or provided for(unless this Bond was authenticated prior to the first Record Date (the fifth day next preceding an Interest Payment Date), in which case interest will accrue from the Issue Date specified above) at an Adjustable Interest Rate (as determined in accordance with the provisions of the Indenture). Capitalized terms used in this Bond and not otherwise defined shall have the meanings ascribed to such terms in the Indenture (defined below). During an Adjustable Interest Rate Period, interest is payable on the first Business Day of each quarter, commencing January 2, 1992. The Issuer promises to pay interest on overdue principal, but only from sources named above, at the rate then in effect on this Bond, except as the provisions hereinafter set forth with respect to mandatory tender or redemption prior to maturity may become applicable hereto. The interest payable on any Interest Payment Date will, subject to certain exceptions provided in the Indenture, be paid to the Registered Owner as of the close of business on the Record Date for such payment. Regularly scheduled interest on this Bond is payable by check or draft mailed on the Interest Payment Date by first class mail to the address of the Registered Owner A-1 of this Bond as it appears on the registration books of Dai-Ichi Kangyo Bank of California, as trustee (the "Trustee"); provided that, upon the written request of any Registered Owner of at least $1,000,000 in principal amount of Bonds received by the Trustee not later than the Record Date for such payment,payment thereof shall be made by wire transfer in immediately available funds to an account designated by such Registered Owner. Principal of this Bond (other than for its purchase price) shall be payable only upon presentation of this Bond at the principal corporate trust office of the Trustee in Los Angeles, California, or at the principal corporate trust office of any successor trustee. This Bond is one of an authorized issue of bonds limited in aggregate principal amount to $9,500,000 (the "Bonds") issued pursuant to a resolution duly adopted by the Issuer on November 18, 1991, and an Indenture of Trust (the "Indenture") dated as of December 1, 1991, between the Issuer and the Trustee. The Bonds are issued in accordance with the 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 the Indenture. The Bonds are issued for the purpose of obtaining funds to make a loan (the "Developer Loan") to Five Points Seniors, a California general partnership (the "Developer"), to provide construction and permanent financing for a multifamily rental residential development (the "Development") to be constructed by the Developer in the City of Huntington Beach in the County of Orange. The Issuer has made the Developer Loan pursuant to a loan agreement among the _ Issuer, the Developer and the Trustee (the "Loan Agreement") and the developer note (the "Developer Note"), the payments on which will be secured, upon satisfaction of certain conditions required by the Bank (defined below), in part by a deed of trust, assignment of rents, security agreement and fixture filing, or other similar security document, from the Developer for the benefit of the Trustee and the Bank (the "Deed of Trust"). To secure its obligation to make payments on the Developer Note in accordance with its terms, the Developer has delivered to the Trustee an irrevocable direct-pay letter of credit (the "Letter of Credit") issued by Wells Fargo Bank, N.A. (the "Bank"). The Developer has also entered into a regulatory agreement and declaration of restrictive covenants (the "Regulatory Agreement") with the Issuer and the Trustee setting forth certain provisions relating to the operation and occupancy of the Development (the Loan Agreement, the Developer Note, the Deed of Trust and the Regulatory Agreement are hereinafter collectively referred to as the "Developer Loan Documents"). 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, duties and obligations of the Issuer, the Trustee, the Tender Agent, the Developer, the Bank 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 which 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 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, together with investment earnings thereon (except amounts on deposit in the Excess Investment Earnings Fund); (iii) the Issuer's rights and interest in the Developer Loan Documents, except the Issuer's rights to receive certain fees and indemnification; and (iv) any amounts drawn under the Letter of Credit; provided that said pledge and assignment are subject to certain exceptions set forth in the Indenture. The Bonds are limited obligations of the Issuer payable A-2 solely from the revenues, funds and assets pledged under the Indenture and not from any other revenues, funds or assets of the Issuer. The transfer of this Bond by the Registered Owner hereof in person or by his attorney duly authorized in writing is registrable at the principal corporate trust office of the Trustee in Seattle, Washington, but only in the manner, subject to the limitations and upon payment of the charges provided in the Indenture, and upon surrender and cancellation of this Bond. The Trustee shall not be required to register the transfer or exchange of any Bond after the mailing of notice calling such Bond for redemption has been given as provided in the Indenture, nor during the period of fifteen (15) days next preceding the giving of such notice of redemption, nor during any period during which this Bond is required by the Indenture to be tendered, but has not been so tendered to the Tender Agent. Upon registration of such transfer, a new registered Bond or Bonds of authorized denomination or denominations, for the same aggregate principal amount, will be issued to the transferee in exchange therefor. During an Adjustable Interest Rate Period, the Bonds are issuable as registered Bonds without coupons in a minimum denomination of $100,000 and any integral multiple thereof, subject to certain restrictions contained in the Indenture. 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. For the period commencing on the-date of the first delivery of fully executed and authenticated Bonds to and including , 1992, the Adjustable Interest Rate shall be the rate set forth in the Indenture. Thereafter, the Adjustable Interest Rate shall be determined for the period from and including Wednesday of each week through and including the following Tuesday or such other weekly period as may be specified in accordance with the Indenture (each an "Adjustable Interest Rate Period"). The Adjustable Interest Rate shall be determined (on the basis of a 365 or 366 day year, as the case may be) by , or its successor, as remarketing agent (the 'Remarketing Agent"), on the day preceding each Adjustable Interest Rate Period, except that if such day is not a Business Day, then the Adjustable Interest Rate shall be determined by the Remarketing Agent on the next preceding Business Day. The Adjustable Interest Rate for each such Interest Period shall be the rate necessary in its best judgment to enable the Remarketing Agent, under prevailing market conditions, to sell the Bonds at a price equal to the principal amount thereof and interest accrued thereon. If the Remarketing Agent shall fail to determine the Adjustable Interest Rate as described in the preceding paragraph,then the Adjustable Interest Rate shall be in the following order of priority (i) the rate equal to the rate for 7-day variable rate tax-exempt notes as most recently published by J.J. Kenny Information Systems or by any other nationally recognized service, (ii) the rate for 60- day tax-exempt commercial paper published the afternoon of the Business Day preceding the first day of said Interest Period by Munifacts Wire System, Inc., or by any other nationally recognized service or (iii) if no such rate is then published as described in (i) or (ii) above, 80 percent of the interest rate applicable to 13-week United States Treasury bills, determined on the basis of the average per annum rate at which such bills shall have been sold on a bond-equivalent basis at the most recent Treasury auction prior to the first day of said Adjustable Interest Rate Period. Notwithstanding the foregoing, in no event shall the Adjustable Interest Rate exceed the Maximum Permitted Rate. If the Developer so elects, the interest rate on the Bonds may be reset to a Reset Rate or converted to a Fixed Rate at any time that Bonds are outstanding on any date selected by the Developer following compliance with certain provisions of the Indenture (the 'Reset Date" or "Conversion Date", as applicable). At the end of a Reset Period, at the election of the Developer, A-3 the interest rate on the Bonds may be reset to a Reset Rate, to an Adjustable Interest Rate or converted to a Fixed Rate. During an Adjustable Interest Rate Period, at the option of the Registered Owner, this Bond shall be purchased as provided in the Indenture (the "Demand Purchase Option") on any Business Day, at a purchase price equal to 100 percent of the principal amount hereof plus accrued interest to the date of purchase,with such payment to be made by wire transfer or official bank check,upon: (a) delivery to the Tender Agent not less than seven days prior to the date on which this Bond is to be purchased, of a notice of exercise of option to sell Bonds substantially in the form set forth below (said notice to be effective upon receipt); and (b) delivery to the Tender Agent of this Bond in negotiable form by 12:00 noon, New York City time, on the purchase date specified in the aforesaid notice. The Bonds shall be subject to mandatory and optional redemption at a price equal to 100% of the principal amount of the Bonds called for redemption(with accrued interest to the redemption date to be paid to the Registered Owner on the Record Date for such payment if the redemption date is an Interest Payment Date and to the Registered Owner on the redemption date in all other cases) as follows: (a) in whole_or_in-part_on_December 1, 1994 (or such later date as is established pursuant to the Loan Agreement) in the event and to the extent that the Developer Note is prepaid in accordance with the Loan Agreement,from certain undisbursed funds remaining on deposit under the Indenture on November 1, 1994; (b) in whole or in part on the first Interest Payment Date for which notice of redemption may be timely given, in the event and to the extent that the Developer Note is prepaid in accordance with the Loan Agreement upon completion of the Development; (c) in whole on the first day for which notice of redemption may be timely given after the Trustee has accelerated the amounts due with respect to the Bonds or the Developer Note, as the case may be, as a result of an event of default occurring under the Indenture, the Loan Agreement or the Regulatory Agreement; (d) in whole on the first day for which notice of redemption may be timely given if within 60 days after receipt by the Trustee of written notice of the occurrence of an Act of Bankruptcy of the Bank, or if at least 15 days (during an Adjustable Interest Rate Period) or 45 days (during a Reset Period or after Conversion) prior to the then-scheduled expiration date of the Letter of Credit, the Developer does not cause to be delivered to the Trustee a Substitute Credit Facility satisfying the criteria set forth in the Indenture, except that in no event shall such redemption occur later than five days prior to such expiration date of the Letter of Credit; (e) in whole on the first day for which notice of redemption may be timely given if the Bank fails or refuses to honor a drawing under the Letter of Credit and the Trustee has on deposit sufficient funds to effect such a redemption; (f) in whole or in part on the first Interest Payment Date for which notice of redemption may be timely given in the event of an involuntary loss or the substantial destruction of the Development as a result of unforeseen events (e.g., fire, seizure, requisition, change in a federal law or an action of a federal agency after the date of issuance of the Bonds which prevents the Issuer from enforcing the requirements of A-4 Section 1.103-8(b) of the Income Tax Regulations promulgated under the Internal Revenue Code of 1986, or condemnation), under the circumstances described in the Indenture; (g) in whole on the first day for which notice of redemption may be timely given after the Trustee has received written notice from the Bank that an event of default has occurred under the Reimbursement Agreement and requesting that the Bonds be called for redemption; (h) in whole on the first day for which notice of redemption may be timely given after receipt by the Trustee of notice from the Issuer of a Determination of Taxability; or (i) in whole or in part on any Interest Payment Date during an Adjustable Interest Rate Period with the consent of the Bank in the event and to the extent the Developer Note is voluntarily prepaid during an Adjustable Interest Rate Period. Except as otherwise provided in the Indenture with respect to redemptions described in subparagraphs (c) and (e) above, notice of redemption shall be given by sending such notice, by first class mail, postage prepaid, not less than five nor more than seven days prior to the redemption date. All notices of redemption shall be mailed to the Registered Owner of each Bond to be redeemed in whole or in part at the address shown on the registration books maintained by the Trustee. Neither the failure of the Registered Owner of this Bond to receive a notice mailed nor --_-..-.-any defect-in_any.notice so mailed shall 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 provided funds for their redemption are on deposit at the place of payment at that time. If less than all of the Bonds are to be redeemed,the Trustee shall first select for redemption any Pledged Bonds outstanding, and thereafter shall select Bonds for redemption by lot as provided in the Indenture; provided that, in any event, the principal amount of each Bond redeemed during an Adjustable Interest Rate Period shall be a minimum denomination of$100,000 and any integral multiple thereof. A Substitute Credit Facility may be provided to the Trustee under the terms and conditions set forth in the Indenture, which include the condition that such Substitute Credit Facility be rated by either Moody's Investors Service or Standard & Poor's Corporation. During an Adjustable Interest Rate Period, on a Reset Date and on the Conversion Date such substitution may cause the rating on the Bonds to be withdrawn or reduced, but in no event shall the then-existing rating be reduced to a rating lower than Aa3/VMIG-1 (short term) or Aa3 (long term), unless lower ratings are consented to by the Issuer, if, as a result of the substitution, the Bonds are rated by Moody's Investors Service, or AA-/A-l+ (short term) or AA- (long term), unless lower ratings are consented to by the Issuer, if, as a result of the substitution, the Bonds are rated by Standard & Poor's Corporation. The Bonds are subject to mandatory tender in the event a Substitute Credit Facility is delivered to the Trustee resulting in a reduction or withdrawal of the then-existing rating on the Bonds as described below. Upon receipt of a notice from the Trustee that the Developer has elected to reset the interest rate on the Bonds to a Reset Rate or convert the interest rate on the Bonds to a Fixed Rate and/or that the Developer has elected to provide a Substitute Credit Facility causing a reduction in or withdrawal of the existing rating on the Bonds, each Registered Owner of Bonds is required, and the Registered Owner hereof specifically agrees, to tender his Bonds to the Tender Agent for purchase at a price of 100 percent of the principal amount thereof plus accrued interest thereon in accordance with the Indenture. Any Bond which is not so tendered shall nonetheless be deemed to have been purchased from the Registered Owner thereof on the Reset Date, the Conversion Date or the date of substitution of the Substitute Credit Facility at said price plus accrued interest thereon to A-5 such date. Such Bond shall thereafter cease to bear interest and may be cancelled by the Trustee, and the Trustee or the Tender Agent may authenticate and deliver a revised form of Bond in substitution thereof. 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 take any action with respect to any Event of Default under the Indenture, or to institute, appear in or defend any suit or other proceedings with respect thereto, except as provided in the Indenture. If an Event of Default occurs, the principal of all Bonds then Outstanding 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, the Tender Agent, 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 Registered Owner hereof(except as to Pledged Bonds) for the purpose of receiving payment as herein provided and for all other purposes, whether or not this Bond be overdue, and neither the Issuer, the Trustee, the Tender Agent,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, may be made only to the extent and in the circumstances permitted by the Indenture. This Bond and the issue of which it forms a part is a limited obligation of the Issuer,giving --------__-.-----rise to no pecuniary liability of the Issuer, the State_of..California-or. any-political subdivision thereof, nor any charge against its general credit, is payable solely from, and a valid claim of the Registered Owner hereof only against the Trust Estate. This Bond does not constitute an indebtedness or a loan of the credit of the Issuer or the State of California or any political subdivision thereof within the meaning of any constitutional or statutory provisions. Neither the faith and credit nor the taxing power of the Issuer or the State of California or any political subdivision thereof is pledged to the payment of principal of or interest on this Bond. 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 issue 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 or the Tender Agent. A-6 v � IN WITNESS WHEREOF, the City of Huntington Beach has caused this Bond to be executed in its name by the facsimile signature of its and attested by the facsimile signature of its and the facsimile of its seal to be impressed or imprinted hereon, all as of the first day of December, 1991. CITY OF HUNTINGTON BEACH By: (SEAL) ATTEST: A-7 r _ FORM OF CERTIFICATE OF AUTHENTICATION This Bond is one of the Bonds described in the within mentioned Indenture. Date of authentication: Dai-Ichi Kangyo Bank of California, as Trustee By: Authorized Officer or ----------- -------- as Tender Agent By Authorized Officer FORM OF NOTICE OF DEMAND PURCHASE OPTION The undersigned is the Registered Owner of Bond(s) R-_ constituting a portion of the City of Huntington Beach, Variable Rate Demand Multifamily Housing Revenue Bonds (Five Points Seniors Project), Series A of 1991. In accordance with the Demand Purchase Option contained in the Indenture, the undersigned hereby irrevocably demands that: 1. $ in aggregate principal amount of its Bond(s) R-_be purchased in accordance with the Indenture. 2. Such Bonds are to be purchased on the date which is the next Business Day not less than seven days after the date of receipt of this notice by the Tender Agent (which date shall not be later than a Reset Date or the Conversion Date). Print Name of Registered Owner: Dated: Signature: A-8 Selected means of payment: Wire transfer to By official bank check account below: made payable to: Bank addressee! Account No. Note: The signature to the notice of exercise of option must correspond with the name of the Registered Owner as it appears on the face of the within Bond in every particular, without 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. FORM OF ASSIGNMENT FOR VALUE RECEIVED, the undersigned sells, assigns and transfers unto (Name,Address and Tax Identification or Social Security Number of Assignee) the within Bond of the CITY OF HUNTINGTON BEACH and does hereby irrevocably constitute and appoint to transfer the said Bond on the books kept for registration thereof with full power of substitution in the premises. Dated: Signature guaranteed by Note: The signature to the assignment must correspond with the name of the Registered Owner as it appears on the face of the within Bond in every particular, without 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. END OF BOND FORM A-9 JONES HALL HILL & WHITE, A PROFESSIONAL LAW CORPORATION ATTORNEYS AT LAW CHARLES F.ADAMS FOUR EMBARCADERO CENTER STEPHEN R.CASALEGGIO NINETEENTH FLOOR MICHAEL D.CASTELLI SAN FRANCISCO, CA 94111 THOMAS A.DOWNEY (415) 391-5780 ANDREW C.HALL,JR. GREG HARRINGTON FACSIMILE KENNETH I.JONES WILLIAM H.MADZSON August 28, 1992 (415)391-5784 R.WADE NORRIS* (415)301-5785 DAVID J.OSTER (415)956-6308 BRIAN D.QUINT PAUL J.THIMMIG DAVID A.WALTON SHARON STANTON WHITE ROBERT J.HILL(1922-1988) ADMITTED TO GEORGIA BAR ONLY To: All Transcript Recipients Re: $9,500,000 City of Huntington Beach Variable Rate Demand Multifamily Housing Revenue Bonds (Five Points Seniors Project), Series A of 1991 Enclosed are the following documents which are to be inserted into the Transcript of the captioned financing as outlined below: (a) two copies of the Schedule of Transcript Documents, to replace the existing Schedule of Transcript Documents, a copy of which is located in the front of each volume of the Transcript; (b) index tab number 39, together with a copy of the Construction Deed of Trust with Assignment of Rents, made by Five Points Seniors, L.P. (the "Developer"), as trustor, to First American Title Insurance Company, as Deed of Trust trustee, for the benefit of the Redevelopment Agency of the City of Huntington Beach (the "Agency"), to be inserted as item number 39 under index tab "A"; (c) index tab number 40, together with a copy of the Guarantee, made by David Michelson and Kathleen M. Michelson, for the benefit of the Agency, to be inserted as item number 40 under index tab "A"; and (d) index tab number 41, together with a copy of the Guarantee, made by Norman D. Ward and Bunnie L. Ward, for the benefit of the Agency, to be inserted as item number 41 under index tab "A". Should you have any questions concerning the enclosed, please do not hesitate to contact the undersigned. Very truly yours, Glenda F. Bell �J Senior Project Coordinator Enclosure 1 18019-34 JHHW:TAD:GFB 8/28/92 �f $9,500,000 CITY OF HUNTINGTON BEACH VARIABLE RATE DEMAND MULTIFAMILY HOUSING REVENUE BONDS (FIVE POINTS SENIORS PROJECT) SERIES A OF 1991 SCHEDULE OF TRANSCRIPT DOCUMENTS A. BASE LEGAL DOCUMENTS 1. List of Financing Participants. 2. Acknowledgment of Receipt of Report of Proposed Debt Issuance by the California Debt Advisory Commission ("CDAC"), together with Report. CDAC No. 91-1433. 3. Certification of the California State Treasurer as to compliance with Section 8855.5 of the California Government Code. 4. City of Huntington Beach (the "City") Resolution No. 6309 entitled "A Resolution of the City Council of the City of Huntington Beach Authorizing the Issuance of Revenue Bonds for the Purpose of Providing Financing for a Multifamily Rental Housing Development", adopted July 29, 1991, certified pursuant to Section 210(1) of the Indenture (the "Inducement Resolution"). 5. California Debt Limit Allocation Committee ("CDLAC") Resolution No. 91-49 entitled "Resolution Transferring a Portion of the 1991 State Ceiling for Private Activity Bonds", adopted October 16, 1991. 6. Proof of Publication of Notice of Public Hearing in the Orange Coast Daily Pilot to be held by the City Council of the City on November 18, 1991. 7. City Resolution No. 6330 entitled "A Resolution of the City Council of the City of Huntington Beach Authorizing the Issuance, Sale and Delivery of Multifamily Mortgage Revenue bonds to Provide Financing for Construction of Five Points Seniors Project, Authorizing the Execution and Delivery of an Indenture of Trust, Loan Agreement, Regulatory Agreement, Official Statement and Bond Purchase Agreement and Authorizing Other Related Documents and Approving Other Related Actions", adopted November 18, 1991, certified pursuant to Section 210(1) of the Indenture (the"Authorizing Resolution"). 8. Statement of the Action of the City Council at its meeting held November 18, 1991, evidencing public hearing. 9. Bond Purchase Agreement, dated December 9, 1991 (the "Bond Purchase Agreement"), among the City, Bancroft, Garcia & Lavell, Inc. and Prudential Securities Inc., as underwriters (the "Underwriters"), and Five Points Seniors, L.P. (the "Developer"). 10. Indenture of Trust, dated as of December 1, 1991 (the "Indenture"), between the City and Dai-Ichi Kangyo Bank of California, as trustee (the "Trustee"). 11. Loan Agreement, dated as of December 1, 1991 (the "Loan Agreement"), among the City, the Developer and the Trustee. 12. Regulatory Agreement and Declaration of Restrictive Covenants, dated as of December 1, 1991 (the "Regulatory Agreement"), by and among the City, the Trustee and the Developer. (recorded with the Orange County Recorder). 13. Reimbursement Agreement, dated as of December 1, 1991, between the Developer and Wells Fargo Bank, N.A. (the "Bank"). 14. Remarketing Agent Agreement, dated as of December 1, 1991 (the "Remarketing Agreement"), by and between the Developer and Prudential Securities Inc., as remarketing agent, as consented to by the Bank and accepted by Bancroft, Garcia & Lavell, Inc. 15. Affordable Housing Agreement (Five Points Seniors Project), by and between the Redevelopment Agency of the City of Huntington Beach (the "Agency") and the Developer. 16. Construction Deed of Trust, Assignment of Rents and Fixture Filing, dated as of December 1, 1991 (the "Deed of Trust"), executed by the Developer, as trustor, in favor of American Securities Company, as deed of trust trustee, for the benefit of the Bank and the Trustee. (recorded with the Orange County Recorder) 17. Assignment of Leases, dated as of December 1, 1991, made by the Developer, in favor of the Bank and the Trustee. (recorded with the Orange County Recorder) 18. UCC-1 Financing Statement [Developer, debtor; Bank and Trustee, secured parties] filed with the California Secretary of State. 19. Security Agreement, dated as of December 1, 1991, executed by the Developer, in favor of the Bank and the Trustee. 20. Account Pledge Agreement, dated as of December 1, 1991, between the Developer and the Bank. 21. Pledge and Security Agreement, dated as of December 1, 1991, among the Developer, the Bank and the Trustee. 22. Securities Pledge Agreement, dated as of December 1, 1991, between the Developer and the Bank. 23. Intercreditor Agreement, dated as of December 1, 1991, by and among the Bank,the City and the Trustee, together with Consent of the Developer. 24. Pledged Collateral Account Agreement, dated as of December 1, 1991, by and between the Developer and the Bank, as acknowledged by Merrill Lynch, Pierce, Fenner&Smith, Incorporated. 25. Pledge of Loan and Grant Proceeds, dated as of December 1, 1991, executed by the Developer, as pledgor. 26. (Form of) Consent of the Agency to Assignment and Pledge of Loan and Grant Proceeds. 27. Interest Rate Agreement. -2- 28. Construction Deed of Trust, Assignment of Rents and Fixture Filing (Interest Rate Agreement), made by the Developer, as trustor, in favor of First American Title Insurance Company, as deed of trust trustee, in favor of the Bank. (recorded with the Orange County Recorder). 29. Hazardous Materials Agreement, dated as of December 1, 1991, executed by the Developer. 30. Repayment Guaranty, dated as of December 1, 1991, made by Norman D. Ward, Bunnie Ward, David Michelson and Kathleen Michelson, for the benefit of the Bank. 31. Completion Guaranty, dated as of December 1, 1991,'made by Norman D. Ward, Bunnie Ward, David Michelson and Kathleen Michelson, for the benefit of the Bank. 32. Final Official Statement, executed by the City pursuant to Section 7(c) of the Authorizing Resolution. 33. Certificate of Mailing Report of Final Sale to CDAC,together with Report. 34. Certificate of Mailing Report of Action Taken With Respect to the Issuance of Private Activity Bonds to CDLAC, together with Report. 35. Certificate of Mailing Initial Housing Bond Issuance Report to CDAC, together with Report. 36. Investment Agreement, dated December 10, 1991, between Mercadian Funding L.P., a Delaware limited partnership, and the Trustee. • 37. Guaranty of New England Mutual Life Insurance Company, in favor of the Trustee, delivered with respect to the Investment Agreement. 38. Opinion of Counsel to New England Mutual Life Insurance Company pertaining to the enforceability of the Guaranty. 39. Construction Deed of Trust with Assignment of Rents, made by the Developer, as trustor, to First American Title Insurance Company, as Deed of Trust trustee, for the benefit of the Agency. 40. Guarantee, made by David Michelson and Kathleen M. Michelson, for the benefit of the Agency. 41. Guarantee, made by Norman D. Ward and Bunnie.L. Ward, for the benefit of the Agency. B. CITY DOCUMENTS 1. Incumbency and Signature Certificate of the City. 2. Certificate as to Arbitrage, pursuant to Section 210(6) of the Indenture and Section 7(r) of the Bond Purchase Agreement. 3. Officer's Certificate, pursuant to Sections 7(a), 7(f) and 7(i) of the Bond Purchase Agreement. 4. Written Request to Trustee (a) to authenticate and deliver Bonds, pursuant to Sections 202 and 210(5) of the Indenture and Section 8 of the City's Authorizing -3- Resolution, and (b) to make the necessary deposits to the funds and accounts pursuant to Section 210(4) of the Indenture. 5. Written Request for Disbursement from Cost of Issuance Fund, pursuant to Section 305 of the Indenture. 6. Certificate of Mailing Information Return for Tax-Exempt Private Activity Bond Issues Form 8038 to Internal Revenue Service Center, together with Form 8038. 7. Opinion of Gail Hutton, Esq., City Attorney, pursuant to Section 7(c) of the Bond Purchase Agreement and attached as Exhibit G thereto. C. DEVELOPER, GUARANTORS and DEVELOPER TRUSTEE DOCUMENTS 1. Certificate Regarding Effectiveness of Partnership Agreement of the Developer together with Partnership Agreement of Developer, pursuant to Section 6.1(c) of the Reimbursement Agreement. 2. Certificate of Partnership Authorization to Borrow, together with Certificate of Limited Partnership (Form LP-1), including any and all amendments thereto, as filed with and certified by the California Secretary of State, pursuant to Section 6.1(c) of the Reimbursement Agreement. 3. Developer's Closing Certificate, pursuant to Sections 7(a), 7(f) and 7(I) of the Bond Purchase Agreement and Section 3.2(c) of the Loan Agreement. 4. Certificate Regarding Use of Proceeds, together with accountant's letter required pursuant thereto. 5. Certificate Regarding Capital Expenditures. 6. Certificate Regarding $40,000,000 Limitation. 7. Developer Note, executed by the Developer, as endorsed by the City, pursuant to Sections 3.2(a) and 3.3 of the Loan Agreement and attached as Exhibit E thereto. 8. ALTA Title Insurance Policy, required under Section 6.1.4 of the Reimbursement Agreement and Section 6.11 of the Loan Agreement. 9. Funding Requisition executed by the Developer Representative, as approved by the Bank, pursuant to Section 4.2(ii) of the Loan Agreement and attached as Exhibit B thereto. 10. Opinion of Bret H. Reed, Jr., A Law Corporation, Counsel to the Developer, pursuant to Section 70) of the Bond Purchase Agreement and Section 3.2(b) of the Loan Agreement. 11. Opinion of Bret H. Reed, Jr., A Law Corporation, Counsel to the Developer, pursuant to the requirements of the Credit Agreement. 12. Written Direction to Trustee Regarding Investments, pursuant to Section 501 of the Indenture, as approved by the Bank and acknowledged by the Trustee. -4- D. BANK DOCUMENTS 1. Certificate Designating "Authorized Representative of the Bank", including specimen signatures, pursuant to the requirements of the definitions of the Loan Agreement. 2. Specimen Irrevocable Letter of Credit No. NAS163050 issued by the Bank for the account of the Developer in favor of the Trustee, in the initial Stated Amount of $9,890,411, pursuant to Section 3 of the Reimbursement Agreement, Section 210(2) of the Indenture and Section 3.2(a) of the Loan Agreement. 3. Certificate of the Bank, pursuant to Sections 7(a) and 7(f) of the Bond Purchase Agreement. 4. Letter of Bank, pursuant to Section 7(p) of the Bond Purchase Agreement and attached as Exhibit F thereto. 5. Certificate Regarding Letter of Credit Fees required under Article 4 of the Reimbursement Agreement. 6. Opinion of Counsel to the Bank, pursuant to Section 3.2(b) of the Loan Agreement and Section 7(q) of the Bond Purchase Agreement and attached as Exhibit E thereto. 7. Recordation Instructions to First American Title Insurance Company. E . TRUSTEE DOCUMENTS 1. Certificate of Authentication and Incumbency of the Trustee,together with articles of association, bylaws or general signing resolution. 2. Certificate of Trustee, pursuant to Sections 7(a) and 7(n) of the Bond Purchase Agreement. 3. Trustee's Receipt of Proceeds and Developer's Contribution. 4. Opinion of Jensen Law Offices, Counsel to the Trustee, pursuant to Section 7(m) of the Bond Purchase Agreement and attached as Exhibit D thereto. 5. Tender Agent's Acceptance of Duties. F. UNDERWRITERS and REMARKETING AGENT DOCUMENTS 1. Rating Letter of Moody's Investors Service evidencing "Aa3/VMIG-1" rating, pursuant to Section 7(k) of the Bond Purchase Agreement. 2. Representation Letter of Underwriter regarding (a) present value of Letter of Credit fees and (b) reoffering price of the Bonds to the public. 3. Receipt for Bonds. 4. Specimen Temporary Bond. 5. Opinion of Kutak, Rock & Campbell, Counsel to the Underwriter, pursuant to Section 7(t) of the Bond Purchase Agreement and attached as Exhibit H thereto. -5- 6. Preliminary, Supplemental and Final Supplemental Blue Sky Memoranda. 7. Specimen Definitive Bonds. G. BOND COUNSEL DOCUMENTS 1. Final Approving Legal Opinion of Jones Hall Hill & White, A Professional Law Corporation, pursuant to Section 210(3) of the Indenture and Section 7(c) of the Bond Purchase Agreement. 2. Supplemental Opinion to the Underwriter of Jones Hall Hill & White, A Professional Law Corporation, pursuant to Section 7(c) of the Bond Purchase Agreement and attached as Exhibit B thereto. 3. Reliance Letter to the Underwriters Regarding Final Approving Legal Opinion of Jones Hall Hill &White, A Professional Law Corporation, pursuant to Section 7(c) of the Bond Purchase Agreement. 4. Reliance Letter to the Trustee Regarding Final Approving Legal Opinion and Supplemental Opinion of Jones Hall Hill & White, A Professional Law Corporation. 5. Reliance Letter to the Bank Regarding Final Approving Legal Opinion and Supplemental Opinion of Jones Hall Hill & White, A Professional Law Corporation. 6. Financial Analyst Report prepared by Jones Hall Hill & White, A Professional Law Corporation. 7. Notification to CDLAC of amount of Bonds issued, pursuant to Section 3 of CDLAC Resolution No. 91-149. -6- 18019-34 JHHW:TAD:GFB 828/92 $9,500,000 CITY OF HUNTINGTON BEACH VARIABLE RATE DEMAND MULTIFAMILY HOUSING REVENUE BONDS (FIVE POINTS SENIORS PROJECT) SERIES A OF 1991 SCHEDULE OF TRANSCRIPT DOCUMENTS A. BASE LEGAL DOCUMENTS 1. List of Financing Participants. 2. Acknowledgment of Receipt of Report of Proposed Debt Issuance by the California Debt Advisory Commission ("CDAC"), together with Report. CDAC No. 91-1433. 3. Certification of the California State Treasurer as to compliance with Section 8855.5 of the California Government Code. 4. City of Huntington Beach (the "City") Resolution No. 6309 entitled "A Resolution of the City Council of the City of Huntington Beach Authorizing the Issuance of Revenue Bonds for the Purpose of Providing Financing for a Multifamily Rental Housing Development", adopted July 29, 1991, certified pursuant to Section 210(1) of the Indenture (the "Inducement Resolution"). 5. California Debt Limit Allocation Committee ("CDLAC") Resolution No. 91-49 entitled "Resolution Transferring a Portion of the 1991 State Ceiling for Private Activity Bonds", adopted October 16, 1991. 6. Proof of Publication of Notice of Public Hearing in the Orange Coast Daily Pilotto be held by the City Council of the City on November 18, 1991. 7. City Resolution No. 6330 entitled "A Resolution of the City Council of the City of Huntington Beach Authorizing the Issuance, Sale and Delivery of Multifamily Mortgage Revenue bonds to Provide Financing for Construction of Five Points Seniors Project, Authorizing the Execution and Delivery of an Indenture of Trust, Loan Agreement, Regulatory Agreement, Official Statement and Bond Purchase Agreement and Authorizing Other Related Documents and Approving Other Related Actions", adopted November 18, 1991, certified pursuant to Section 210(1) of the Indenture (the"Authorizing Resolution"). 8. Statement of the Action of the City Council at its meeting held November 18, 1991, evidencing public hearing. 9. Bond Purchase Agreement, dated December 9, 1991 (the "Bond Purchase Agreement"), among the City, Bancroft, Garcia & Lavell, Inc. and Prudential Securities Inc., as underwriters (the "Underwriters"), and Five Points Seniors, L.P. (the "Developer"). 10. Indenture of Trust, dated as of December 1, 1991 (the "Indenture"), between the City and Dai-Ichi Kangyo Bank of California, as trustee (the "Trustee"). 11. Loan Agreement, dated as of December 1, 1991 (the "Loan Agreement"), among the City, the Developer and the Trustee. 12. Regulatory Agreement and Declaration of Restrictive Covenants, dated as of December 1, 1991 (the "Regulatory Agreement"), by and among the City, the Trustee and the Developer. (recorded with the Orange County Recorder). 13. Reimbursement Agreement, dated as of December 1, 1991, between the Developer and Wells Fargo Bank, N.A. (the "Bank"). 14. Remarketing Agent Agreement, dated as of December 1, 1991 (the "Remarketing Agreement"), by and between the Developer and Prudential Securities Inc., as remarketing agent, as consented to by the Bank and accepted by Bancroft, Garcia & Lavell, Inc. 15. Affordable Housing Agreement (Five Points Seniors Project), by and between the Redevelopment Agency of the City of Huntington Beach (the "Agency") and the Developer. 16. Construction Deed of Trust, Assignment of Rents and Fixture Filing, dated as of December 1, 1991 (the "Deed of Trust"), executed by the Developer, as trustor, in favor of American Securities Company, as deed of trust trustee, for the benefit of the Bank and the Trustee. (recorded with the Orange County Recorder) 17. Assignment of Leases, dated as of December 1, 1991, made by the Developer, in favor of the Bank and the Trustee. (recorded with the Orange County Recorder) 18. UCC-1 Financing Statement [Developer, debtor; Bank and Trustee, secured parties] filed with the California Secretary of State. 19. Security Agreement, dated as of December 1, 1991, executed by the Developer, in favor of the Bank and the Trustee. 20. Account Pledge Agreement, dated as of December 1, 1991, between the Developer and the Bank. 21. Pledge and Security Agreement, dated as of December 1, 1991, among the Developer, the Bank and the Trustee. 22. Securities Pledge Agreement, dated as of December 1, 1991, between the Developer and the Bank. 23. Intercreditor Agreement, dated as of December 1, 1991, by and among the Bank, the City and the Trustee, together with Consent of the Developer. 24. Pledged Collateral Account Agreement, dated as of December 1, 1991, by and between the Developer and the Bank, as acknowledged by Merrill Lynch, Pierce, Fenner&Smith, Incorporated. 25. Pledge of Loan and Grant Proceeds, dated as of December 1, 1991, executed by the Developer, as pledgor. 26. (Form of) Consent of the Agency to Assignment and Pledge of Loan and Grant Proceeds. 27. Interest Rate Agreement. -2- 28. Construction Deed of Trust, Assignment of Rents and Fixture Filing (Interest Rate Agreement), made by the Developer, as trustor, in favor of First American Title Insurance Company, as deed of trust trustee, in favor of the Bank. (recorded with the Orange County Recorder). 29. Hazardous Materials Agreement, dated as of December 1, 1991, executed by the Developer. 30. Repayment Guaranty, dated as of December 1, 1991, made by Norman D. Ward, Bunnie Ward, David Michelson and Kathleen Michelson, for the benefit of the Bank. 31. Completion Guaranty, dated as of December 1, 1991, made by Norman D. Ward, Bunnie Ward, David Michelson and Kathleen Michelson, for the benefit of the Bank. 32. Final Official Statement, executed by the City pursuant to Section 7(c) of the Authorizing Resolution. 33. Certificate of Mailing Report of Final Sale to CDAC, together with Report. 34. Certificate of Mailing Report of Action Taken With Respect to the Issuance of Private Activity Bonds to CDLAC, together with Report. 35. Certificate of Mailing Initial Housing Bond Issuance Report to CDAC, together with Report. 36. Investment Agreement, dated December 10, 1991, between Mercadian Funding L.P., a Delaware limited partnership, and the Trustee. 37. Guaranty of New England Mutual Life Insurance Company, in favor of the Trustee, delivered with respect to the Investment Agreement. 38. Opinion of Counsel to New England Mutual Life Insurance Company pertaining to the enforceability of the Guaranty. 39. Construction Deed of Trust with Assignment of Rents, made by the Developer, as trustor, to First American Title Insurance Company, as Deed of Trust trustee, for the benefit of the Agency. 40. Guarantee, made by David Michelson and Kathleen M. Michelson, for the benefit of the agency. 41. Guarantee, made by Norman D. Ward and Bunnie L. Ward, for the benefit of the agency. B. CITY DOCUMENTS 1. Incumbency and Signature Certificate of the City. 2. Certificate as to Arbitrage, pursuant to Section 210(6) of the Indenture and Section 7(r) of the Bond Purchase Agreement. 3. Officer's Certificate, pursuant to Sections 7(a), 7(f) and 7(i) of the Bond Purchase Agreement. 4. Written Request to Trustee (a) to authenticate and deliver Bonds, pursuant to Sections 202 and 210(5) of the Indenture and Section 8 of the City's Authorizing -3- Resolution, and (b) to make the necessary deposits to the funds and accounts pursuant to Section 210(4) of the Indenture. 5. Written Request for Disbursement from Cost of Issuance Fund, pursuant to Section 305 of the Indenture. 6. Certificate of Mailing Information Return for Tax-Exempt Private Activity Bond Issues Form 8038 to Internal Revenue Service Center, together with Form 8038. 7. Opinion of Gail Hutton, Esq., City Attorney, pursuant to Section 7(c) of the Bond Purchase Agreement and attached as Exhibit G thereto. C. DEVELOPER, GUARANTORS and DEVELOPER TRUSTEE DOCUMENTS 1. Certificate Regarding Effectiveness of Partnership Agreement of the Developer together with Partnership Agreement of Developer, pursuant to Section 6.1(c) of the Reimbursement Agreement. 2. Certificate of Partnership Authorization to Borrow, together with Certificate of Limited Partnership (Form LP-1), including any and all amendments thereto, as filed with and certified by the California Secretary of State, pursuant to Section 6.1(c) of the Reimbursement Agreement. 3. Developer's Closing Certificate, pursuant to Sections 7(a), 7(f) and 7(I) of the Bond Purchase Agreement and Section 3.2(c) of the Loan Agreement. 4. Certificate Regarding Use of Proceeds, together with accountant's letter required pursuant thereto. 5. Certificate Regarding Capital Expenditures. 6. Certificate Regarding $40,000,000 Limitation. 7. Developer Note, executed by the Developer, as endorsed by the City, pursuant to Sections 3.2(a) and 3.3 of the Loan Agreement and attached as Exhibit E thereto. 8. ALTA Title Insurance Policy, required under Section 6.1.4 of the Reimbursement Agreement and Section 6.11 of the Loan Agreement. 9. Funding Requisition executed by the Developer Representative, as approved by the Bank, pursuant to Section 4.2(ii) of the Loan Agreement and attached as Exhibit B thereto. 10. Opinion of Bret H. Reed, Jr., A Law Corporation, Counsel to the Developer, pursuant to Section 70) of the Bond Purchase Agreement and Section 3.2(b) of the Loan Agreement. 11. Opinion of Bret H. Reed, Jr., A Law Corporation, Counsel to the Developer, pursuant to the requirements of the Credit Agreement. 12. Written Direction to Trustee Regarding Investments, pursuant to Section 501 of the Indenture, as approved by the Bank and acknowledged by the Trustee. -4- D. BANK DOCUMENTS 1. Certificate Designating "Authorized Representative of the Bank", including specimen signatures, pursuant to the requirements of the definitions of the Loan Agreement. 2. Specimen Irrevocable Letter of Credit No. NAS163050 issued by the Bank for the account of the Developer in favor of the Trustee, in the initial Stated Amount of $9,890,411, pursuant to Section 3 of the Reimbursement Agreement, Section 210(2) of the Indenture and Section 3.2(a) of the Loan Agreement. 3. Certificate of the Bank, pursuant to Sections 7(a) and 7(f) of the Bond Purchase Agreement. 4. Letter of Bank, pursuant to Section 7(p) of the Bond Purchase Agreement and attached as Exhibit F thereto. 5. Certificate Regarding Letter of Credit Fees required under Article 4 of the Reimbursement Agreement. 6. Opinion of Counsel to the Bank, pursuant to Section 3.2(b) of the Loan Agreement and Section 7(q) of the Bond Purchase Agreement and attached as Exhibit E thereto. 7. Recordation Instructions to First American Title Insurance Company. E . TRUSTEE DOCUMENTS 1. Certificate of Authentication and Incumbency of the Trustee, together with articles of association, bylaws or general signing resolution. 2. Certificate of Trustee, pursuant to Sections 7(a) and 7(n) of the Bond Purchase Agreement. 3. Trustee's Receipt of Proceeds and Developer's Contribution. 4. Opinion of Jensen Law Offices, Counsel to the Trustee, pursuant to Section 7(m) of the Bond Purchase Agreement and attached as Exhibit D thereto. 5. Tender Agent's Acceptance of Duties. F. UNDERWRITERS and REMARKETING AGENT DOCUMENTS 1. Rating Letter of Moody's Investors Service evidencing "Aa3/VMIG-1" rating, pursuant to Section 7(k) of the Bond Purchase Agreement. 2. Representation Letter of Underwriter regarding (a) present value of Letter of Credit fees and (b) reoffering price of the Bonds to the public. 3. Receipt for Bonds. 4. Specimen Temporary Bond. 5. Opinion of Kutak, Rock & Campbell, Counsel to the Underwriter, pursuant to Section 7(t) of the Bond Purchase Agreement and attached as Exhibit H thereto. -5- 6. Preliminary, Supplemental and Final Supplemental Blue Sky Memoranda. 7. Specimen Definitive Bonds. G. BOND COUNSEL DOCUMENTS 1. Final Approving Legal Opinion of Jones Hall Hill & White, A Professional Law Corporation, pursuant to Section 210(3) of the Indenture and Section 7(c) of the Bond Purchase Agreement. 2. Supplemental Opinion to the Underwriter of Jones Hall Hill & White, A Professional Law Corporation, pursuant to Section 7(c) of the Bond Purchase Agreement and attached as Exhibit B thereto. 3. Reliance Letter to the Underwriters Regarding Final Approving Legal Opinion of Jones Hall Hill &White, A Professional Law Corporation, pursuant to Section 7(c) of the Bond Purchase Agreement. 4. Reliance Letter to the Trustee Regarding Final Approving Legal Opinion and Supplemental Opinion of Jones Hall Hill &White, A Professional Law Corporation. 5. Reliance Letter to the Bank Regarding Final Approving Legal Opinion and Supplemental Opinion of Jones Hall Hill &White, A Professional Law Corporation. 6. Financial Analyst Report prepared by Jones Hall Hill & White, A Professional Law Corporation. 7. Notification to CDLAC of amount of Bonds issued, pursuant to Section 3 of CDLAC Resolution No._91-149. -6- 28. Construction Deed of Trust, Assignment of Rents and Fixture Filing (Interest Rate Agreement), made by the Developer, as trustor, in favor of First American Title Insurance Company, as deed of trust trustee, in favor of the Bank. (recorded with the Orange County Recorder). 29. Hazardous Materials Agreement, dated as of December 1, 1991, executed by the Developer. 30. Repayment Guaranty, dated as of December 1, 1991, made by Norman D. Ward, Bunnie Ward, David Michelson and Kathleen Michelson, for the benefit of the Bank. 31. Completion Guaranty, dated as of December 1, 1991, made by Norman D. Ward, Bunnie Ward, David Michelson and Kathleen Michelson, for the benefit of the Bank. 32. Final Official Statement, executed by the City pursuant to Section 7(c) of the Authorizing Resolution. 33. Certificate of Mailing Report of Final Sale to CDAC, together with Report. 34. Certificate of Mailing Report of Action Taken With Respect to the Issuance of Private Activity Bonds to CDLAC, together with Report. 35. Certificate of Mailing Initial Housing Bond Issuance Report to CDAC, together with Report. 36. Investment Agreement, dated December 10, 1991, between Mercadian Funding L.P., a Delaware limited partnership, and the Trustee. . 37. Guaranty of New England Mutual Life Insurance Company, in favor of the Trustee, delivered with respect to the Investment Agreement. 38. Opinion of Counsel to New England Mutual Life Insurance Company pertaining to the enforceability of the Guaranty. 39. Construction Deed of Trust with Assignment of Rents, made by the Developer, as trustor, to First American Title Insurance Company, as Deed of Trust trustee, for the benefit of the Agency. 40. Guarantee, made by David Michelson and Kathleen M. Michelson, for the benefit of the Agency. 41. Guarantee, made by Norman D. Ward and Bunnie L. Ward, for the benefit of the Agency. B. CITY DOCUMENTS 1. Incumbency and Signature Certificate of the City. 2. Certificate as to Arbitrage, pursuant to Section 210(6) of the Indenture and Section 7(r) of the Bond Purchase Agreement. 3. Officer's Certificate, pursuant to Sections 7(a), 7(f) and 7(i) of the Bond Purchase Agreement. 4. Written Request to Trustee (a) to authenticate and deliver Bonds, pursuant to Sections 202 and 210(5) of the Indenture and Section 8 of the City's Authorizing -3- RECORDING REQUESTED BY AND ) WHEN RECORDED RETURN TO: ) Redevelopment Agency of the City ) of Huntington Beach ) 2000 Main Street ) Huntington Beach, California 92648 ) Attn: Executive Director ) (Space Above this Line For Recorder ' s Use) CONSTRUCTION DEED OF TRUST WITH ASSIGNMENT OF RENTS THIS DEED OF TRUST is made this day of December , 1991, by and between FIVE POINTS SENIORS, L.P. , a California limited partnership (the "TRUSTOR" ) , whose address is : 19800 MacArthur Boulevard, Suite 680, Irvine, California 92715 and FIRST AMERICAN TITLE INSURANCE COMPANY (the "TRUSTEE" ) , whose address is 114 East Fifth Street, Santa Ana, California 92701, and THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body corporate and politic (the "BENEFICIARY" ) . WITNESSETH: That Trustor Irrevocably, Grants Transfers and Assigns, to Trustee, in Trust, with Power of Sale, that property in the City of Huntington Beach, County of Orange, State of California, described legally in the Legal Description attached hereto as Exhibit "A" and incorporated herein. TOGETHER WITH: (a) all buildings, improvements and fixtures , now or hereafter placed thereon, it being understood and agreed that all classes of property attached or unattached used in connection herewith shall be deemed fixtures, ' (b) rents, issues and profits thereof , (c) any water rights and/or stock are appurtenant or pertain to said land, and (d) all sums of money payable on the purchase price of said property secured by a lien thereon or payable under any agreement for the sale thereof, SUBJECT, HOWEVER, to the right , power and authority hereinafter given to and conferred upon Beneficiary to collect and apply such rents, issues and profits, and all sums of money payable on the purchase price of said property secured by a lien thereon or payable under any agreement . FOR THE PURPOSE OF SECURING: 1. Payment of the sum of Two Hundred Fifty Thousand Dollars ($250, 000) with interest thereon according to the terms of a Promissory Note of even date herewith, made by Trustor, payable to the order of the Beneficiary and extensions or renewals thereof . 12/04/91 8557u/2460/050 2 . Payment of such additional sums with interest thereon as : (a) may be hereafter borrowed from the Beneficiary by the then record owner or owners of said property when evidenced by another Promissory Note or Notes, or (b) as may be added to the indebtedness secured hereby in accordance with the provision of this Deed of Trust . 3 . Performance of each and every obligation, covenant, promise or agreement of Trustor contained herein and in that certain Affordable Housing Agreement entered by and between Trustor and Beneficiary on November 18 , 1991, (hereinafter the "Agreement" ) , including without limitation, the payment of liquidated damages pursuant to Section 608 of the Agreement.. 4 . Payment, with interest thereon, of any other present or future indebtedness or obligation of the Trustor (or of any successor-in-interest of the Trustor to said property) to the Beneficiary, whether created directly or acquired by assignment, whether absolute or contingent, whether due or not, whether otherwise secured or not, or whether existing at the time of the execution of the Deed of Trust, or arising thereafter . TO PROTECT THE SECURITY OF THIS DEED OF TRUST, TRUSTOR AGREES: 1 . To keep said property in good condition and repair; to allow Beneficiary or its representatives to enter and inspect the premises at all reasonable times and access thereto, shall be permitted for that purpose; not to remove or demolish any building thereon; not to make alterations thereto without the consent of the Beneficiary; to suffer or permit no change in the general nature of the occupancy of the premises without Beneficiary' s written consent; to complete or restore promptly and in good workmanlike manner any building which may ' be constructed, damaged or destroyed thereon, including, without restricting the generality of the foregoing, damage from termites and dry-rot; to pay when due all claims for labor performed and materials furnished in connection with such property and not to permit any mechanic ' s lien against such property; to comply with all laws affecting such property or requiring any alterations or improvements to be made thereon; not to initiate or acquiesce in any zoning reclassification without Beneficiary' s written consent; not to commit or permit waste thereon; not to commit, suffer or permit any act upon such property in violation of the law; and to paint, cultivate, irrigate, fertilize, fumigate, prune, and do all other acts that from the character or use of said property may be reasonably necessary; to promptly pay all amounts due others upon agreements of lease or conditional sale of all fixtures , furnishings and equipment located thereon. 12/04/91 8557u/2460/050 If the loan secured hereby or any part thereof is being obtained or should any additional loan be made hereafter for the purpose of financing rehabilitation improvements on said property, Trustor further agrees , anything in this Deed of Trust to the contrary notwithstanding; (a) to complete the same in accordance with City approved plans and specifications satisfactory to Beneficiary; (b) to allow Beneficiary to inspect such property at all times during rehabilitation; (c) to replace any work or materials unsatisfactory to Beneficiary within fifteen (15) calendar days after written notice from Beneficiary of such fact, which notice may be given to Trustor by registered or certified mail , sent to his last known address, or by personal service of the same; (d) that work shall not cease on the rehabilitation of such improvements for any reason whatsoever for a period of fifteen ( 15) calendar days, whether consecutive or not, without the written permission of the Beneficiary; (e) to pay when due all claims for labor and materials furnished in connection with the said rehabilitation and not to permit any claims of lien for said work or material to be filed of record against the said property; (f) not to permit any stop notice claims to be presented to Beneficiary. If the said property is part of a larger tract upon which improvements will be constructed, Trustor shall make separate contracts and subcontracts for said construction which shall pertain to the said property only and shall keep separate, full and complete records of all work and materials furnished to the said property. Trustee upon presentation to it of an affidavit signed by the Beneficiary setting forth facts showing a default by Trustor under this paragraph, is authorized to accept as true and conclusive all facts and statements therein, and to act thereon hereunder . 2 . To provide, and maintain in force at all time with respect to said property, fire and other types of insurance as may be required by Beneficiary. All of such insurance shall have a loss payable endorsement in favor of Beneficiary, shall be for a term and in form, content, amount and in such companies as may be satisfactory to Beneficiary, and the policies therefor shall be delivered to and remain in possession of Beneficiary as further security for the faithful performance of these trusts . At least thirty (30) days prior to the expiration of any insurance policy, a policy or policies renewing or extending such expiring insurance shall be delivered to Beneficiary together with written evidence showing payment of the premium therefor and, in the event any such insurance policy and evidence of the payment of the premium therefor are not so delivered by Trustor to Beneficiary, Trustor by executing this Deed of Trust specifically requests Beneficiary to obtain such insurance and Beneficiary, without obligation to do so, without notice to or demand upon Trustor and without releasing Trustor from any obligation hereof, may obtain such insurance through or from any insurance agency or 12/04/91 8557u/2460/050 company acceptable to it, pay the premium thereof, and may add the amount thereof to the indebtedness secured hereby, which amount shall bear a like rate of interest . Beneficiary may furnish to any insurance agency or company, or any other person, any information contained in or extracted from any insurance policy theretofore delivered to Beneficiary pursuant hereto and any information concerning the loan secured hereby. Neither Trustee nor Beneficiary shall be responsible for such insurance or for the collection of any insurance monies , or for any insolvency of any insurer or insurance underwriter . In case of insurance loss, Beneficiary is hereby authorized either (a) to settle and adjust any claim under the insurance policies provided for in this document without the consent of the Trustor, or (b) to allow Trustor to agree with the insurance company or companies on the amount to be paid upon the loss . In either case, the Beneficiary is authorized to collect and make receipt of any such insurance money. If Trustor is obligated to restore or replace the damaged or destroyed buildings or improvements under the terms of any lease or leases which are or may be prior to the lien of this Deed of Trust and such damage or destruction does not result in cancellation or termination of such lease, such proceeds , after deducting therefrom any expenses incurred in the collection thereof , shall be used to reimburse the Trustor for the cost of rebuilding or restoring the buildings or improvements on said premises . In all other cases, such insurance proceeds, at the option of the Beneficiary, shall either be applied in reduction 0 of the indebtedness secured hereby whether due or not, or in such order as Beneficiary may determine, or be held by the Beneficiary and used to reimburse the Trustor for the cost of the rebuilding or restoring the buildings or improvements on said premises . Such buildings and improvements shall be so restored or rebuilt as to be of at least equal value and substantially the same character as prior to the damage or _destruction, and shall be in a condition satisfactory to Beneficiary. Such application or release shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice. Any and all unexpired. insurance shall inure to the benefit of , and pass to the purchaser of, the property conveyed at any Trustee sale held hereunder . 3 . To pay: (a) at least ten (10) days before delinquency, all general and special City and County taxes, and all assessments on appurtenant water stock, affecting such property, (b) when done, all special assessments for public improvements, without permitting any improvement bond to issue for any special assessment (c) when done, all encumbrances, charges and liens, with interest , on said property, or any part thereof , which are or appears to be prior to superior hereto, (d) if the security of this Deed of Trust is leasehold estate, to make any payment or do any act required of the Lessee or its 12/04/91 8557u/2460/050 successor in interest under the terms of the instrument or instruments creating said leasehold, (e) all costs , fees and expenses of this trust , (f) for any statement regarding the obligation secured hereby any amount demanded by Beneficiary not to exceed the maximum allowed by law thereof at the time when such request is made, (g) such other charges for services , rendered by Beneficiary and furnished at Trustor ' s request or that of any successor in interest to Trustor as the Beneficiary may deem reasonable. If , by the laws of the United States of America, or of any state having jurisdiction over the Trustor, any tax is due or becomes due in respect to the issuance of the Note hereby secured, the Trustor covenants and agrees to pay such tax in the manner required by such law. Should Trustor fail to make any such payment, Beneficiary may elect to make such payment, Beneficiary may elect to make such payment and any amount so paid may be added by Beneficiary to the indebtedness secured hereby and shall bear a like rate of interest . 4 . That, should Trustor fail to make any payment or do any act as provided in this Deed of Trust , then Beneficiary or Trustee, but without obligation to do so and without notice to or demand upon Trustor and without releasing Trustor from any obligation hereof , may (a) make or do the same in such manner and to such extent as either may deem necessary to protect the security hereof , Beneficiary or Trustee being authorized to enter upon said property for such purposes, (b) commence, appear in, or defend any action or proceeding purporting to affect the security hereof or the property covered by this Deed of Trust, or the rights or powers of Beneficiary or Trustee, (c) pay, purchase, contest or compromise any encumbrance, charge or lien, which in the judgment of either is or appears to be prior .or superior hereto, and (d) in exercising any such powers , pay necessary T -expenses, employ counsel and pay his reasonable fees . Trustor agrees to repay any amount so expended on demand of Beneficiary, and any amount so expended may be added by Beneficiary to the indebtedness secured hereby and shall bear a like rate of interest . 5 . To appear in and defend any action or proceeding purporting to affect the security hereof or the property which is covered by this Deed of Trust, or the rights or powers of Beneficiary or Trustee, and whether or not Trustor so appears or defends, to pay all costs and expenses, including cost of evidence of title and attorneys ' fees in a reasonable sum, in any such action or proceeding in which Beneficiary or Trustee may appear by virtue of being made a party defendant or otherwise irrespective of whether the interest of Beneficiary or Trustee in such property is directly questioned by such action, including any action for the condemnation or partition 12/04/91 8557u/2460/050 of said premises, and in any suit brought by Beneficiary to foreclose this Deed of Trust . 6 . To pay immediately and without demand, all sums expended under the terms of this Deed of Trust by Beneficiary or Trustee, with interest from the date of expenditure at the rate which the principal obligation secured hereby bears at the time such payment is made, and the repayment of such sums shall be secured hereby. 7 . That , should the Trustor or any successor in interest to Trustor in such property drill or extract, or enter into a lease for drilling or extraction of oil , gas or other hydrocarbon substances or any mineral of any kind or character, or sell , convey, further encumber, or alienate said property, or any party thereof, or any interest therein, or be divested of his title or any interest therein in any manner or way, whether voluntarily or involuntarily, Beneficiary shall have the right , at its option, to declare any indebtedness or obligations secured hereby irrespective of the maturity date specified in any Note evidencing the same, immediately due and payable, and no waiver of this right shall be effective unless in writing . 8 . That any award, settlement or damages for injury or damages to such property, or in construction with the transaction financed by such loan, and any award of damages in connection with any condemnation for public use of or injury to said property, or any part thereof , is hereby assigned and shall be paid to Beneficiary, who may apply or release such monies received by it in such manner and with the same effect as above provided for the disposition of proceeds of fire or other insurance. 9 . That , by accepting payment of any sums secured ' hereby after its due date, or by making any payment, performing any act on behalf of Trustor, that Trustor was obligated hereunder, but failed, to make, or perform, or by adding any payment so made by Beneficiary to the indebtedness secured hereby, Beneficiary does not waive its right either to require prompt payment when due of all sums so secured or to declare a default for failure so to pay. 10 . That at any time, or from time to time, without liability of the Beneficiary or Trustee thereof, and without notice, upon written request of Beneficiary and presentation of this Deed of Trust and any Note secured hereby for endorsement , and without affecting the personal liability of any person for payment of the indebtedness secured hereby, or the lien of the Deed of Trust upon the remainder of said property for the full amount of the indebtedness then or thereafter secured hereby, or the rights or powers of Beneficiary or the Trustee with 12/04/91 8557u/2460/050 respect to the remainder of said property, Trustee may: (a) reconvey any part of said property, (b) consent to the making of any map or plat thereof, (c) join in granting any easement thereon, (d) join in any agreement subordinating the lien or charge hereof . 11. That the lien hereof shall remain in full force and effect during any postponement or extension of time of payment of the indebtedness secured hereby, or any part thereof . 12 . That , upon written request of Beneficiary stating that all sums secured hereby have been paid, and upon surrender of this Deed of Trust and said Note or Notes to Trustee for cancellation and retention, and upon payment of its fees , Trustee shall reconvey, without warranty, the property then held hereunder . The recitals in such reconveyance of any matters of fact shall be conclusive payoff of the truthfulness thereof . The grantee in such reconveyance may be described as "the person or persons legally entitled thereto. " Such request and reconveyance shall operate as a re-assignment of the rents, issues , royalties and profits hereinafter assigned to Beneficiary. Five (5) years after issuance of such full reconveyance, Trustee may destroy said Note and this Deed of Trust (unless directed in such request to retain them) . 13 . That as additional security, Trustor irrevocably assigns to Agency the rents, issues , and profits of the property affected by this Trust Deed for the purposes and upon the terms and conditions set forth below. This assignment shall not impose upon Agency any duty to produce rents from the property affected by this Trust Deed, or cause Agency to be (a) "mortgages in possession" for any purpose; (b) responsible for performing any of the obligations of the lessor under any lease; or (c) responsible for any waste committed by lessees or any other parties, for any dangerous or defective condition of the property affected by this Trust Deed, or for any negligence ... in the management , upkeep, repaid, or control of such property. This is an absolute assignment, not an assignment for security only, and Beneficiary' s right to rents, issues and profits is not contingent upon, and may be exercised without possession of , the property affected by this Trust Deed. Agency confers upon Trustor a license ( "License" ) to collect and retain the rents, issues and profits of the property affected by this Trust Deed as they become due and payable, until the occurrence of a default hereunder . Upon such default, the License shall be automatically revoked and Agency may collect and retain the rents , issues and profits without notice and without taking possessions of the property affected by this Trust Deed. This right to collect rents , issues and profits shall not grant to Agency or Trustee the right to possession, except as otherwise provided herein; and 12/04/91 8557u/2460/050 J neither said right , nor termination of the License, shall impose upon Agency or Trustee the duty to produce rents , issues or profits or maintain all or any part of the property affected by this Trust Deed. If Trustor shall default as aforesaid, Trustor ' s right to collect any such money shall cease and Beneficiary shall have the right, with or without taking possession of the property affected hereby, to collect all rents , issues , royalties and profits and shall be authorized to, and may, without notice and irrespective of whether declaration of default has been delivered to Trustee and without regard to declaration of default has been delivered to Trustee and without regard to the adequacy of the security for the indebtedness secured hereby, either personally or by attorney or agent without bringing any action or proceeding , or by receiver to be appointed by the Court , enter into possession and hold, occupy, possess and enjoy the said property, make cancel , enforce and modify leases, obtain and eject tenants, and set and modify rents and terms of rents, and to sue, and to take, receive and collect all or any part of the said rents , issues, and profits of the property affected hereby, and after paying such costs of maintenance, operation of said property, and of collection including reasonable attorneys ' fees, as in its judgment it may deem proper, to apply the balance upon any indebtedness then secured hereby, the rents, issues, royalties and profits of said property being hereby assigned to Beneficiary for said purposes . The acceptance of such rents, issues , royalties and profits shall not constitute a waiver of any other right which Trustee or Beneficiary may enjoy under this Deed of Trust or under the laws of California . Failure of or discontinuance by Beneficiary at any time, or from time to time, to collect any such rents, issues, royalties or profits shall not in any manner affect the subsequent enforcement by Beneficiary of the right , power and authority to collect the same. The receipt and application by said Beneficiary of all such rents, issues , royalties and profits pursuant hereto, after execution and delivery of declaration of default and ' demand for sale as hereinafter provided, or during the pendency of Trustee ' s sale proceedings hereunder, shall not cure such breach or default not affect said sale proceedings, or any sale made pursuant thereto, but such rents , issues, royalties and profits , less all costs of operation, maintenance, collection and reasonable attorneys ' fees, when received by Beneficiary, shall be applied in reduction of the indebtedness secured hereby, from time to time, in such order as Beneficiary may determine. Nothing contained herein, nor the exercise of the right by Beneficiary to collect, shall be, or be construed to be an affirmation by Beneficiary of any tenancy, lease or option, nor an assumption of liability under, . nor a subordination of the lien or charge of this Deed of Trust to, any such tenancy, lease or option. 12/04/91 8557u/2460/050 14 . That if the security of this Deed of Trust is a leasehold estate, the Trustor agrees that : (a) the term "Lease" as used herein shall mean the lease creating the " leasehold estate" ; (b) Trustor shall not amend, change or modify his leasehold interest, or the Lease, or agree to do so, without the written consent of the Beneficiary; (c) Trustor will promptly advise Beneficiary regarding any notice, request or demand received by him from the lessor under the Lease and promptly furnish Beneficiary with a copy of any such notice, request or demand; (d) as long as any of the indebtedness secured hereby shall remain unpaid, unless the Beneficiary shall otherwise consent thereto in writing, the leasehold estate shall not merge with the fee title but shall always be kept separate and distinct, notwithstanding the union of said estates in any party; (e) Trustor agrees that it will promptly, strictly, and faithfully perform, fulfill, and comply with all covenants , agreements, terms , conditions and provisions under any lease affecting the premises and to neither do anything, nor to permit anything to be done which may cause modification or termination of any such lease or of the obligations of any lessee or person claiming through such lease or the rents provided for therein or the interest of the lessor or the Beneficiary therein or thereunder . Trustor further agrees he will not execute a Deed of Trust or mortgage which may be or become superior to any leasehold estate that is security for this Deed of Trust . In the event of a violation of any of the covenants set forth in this paragraph, Beneficiary shall have the right, at its option, to declare all sums secured hereby immediately due and payable. Consent to or waiver of one of said violations shall not be deemed to be a consent to or waiver of any other violation. If the security for this Deed of Trust is a leasehold estate, the term "said property" as used in this Deed of Trust shall be deemed to mean the leasehold estate whenever the context so requires for the protection of the Beneficiary. 15 . That upon default by Trustor in payment of any indebtedness secured hereby or in performance of any agreement, and the Promissory Note, if applicable, hereunder, and upon . default by Trustor under the terms of any encumbrance, charge or lien which is or appears to be prior or superior hereto, Beneficiary may declare all sums secured hereby immediately due and payable by delivery to Trustee of written declaration of default and demand for sale of written notice of default and of election to cause to be sold said property, which notice Trustee shall cause to be filed for record. Beneficiary shall also deposit with Trustee this Deed of Trust and any Notes and all documents evidencing expenditures, secured hereby. After the lapse of such time as then may be required by law following recordation of such notice of default , and notice of sale having been given as then required by law, Trustee, without demand on Trustor, shall sell said property at the time and 12/04/91 8557u/2460/050 place fixed by it in such notice of sale, whether as a whole or in separate parcels , and in such order as it may determine, at public auction to the highest bidder for case in lawful money of the United States , payable at time of sale. Trustee may postpone sale of all or any portion of said property by public announcement at such time and place of sale, and from time to time thereafter may postpone such sale by public announcement at the time fixed by the preceding postponement . Trustee shall deliver to such purchaser its Deed conveying the property so sold, but without any covenant or warranty, express or implied. The recital in such Deed of any matters of fact shall be conclusive payoff of the truthfulness thereof . Any person, including Trustor , Trustee, or Beneficiary as hereinafter defined, may purchase at such sale. Trustee may also sell at any such sale and as part thereof any shares of corporate stock securing the obligations secured hereby, and Trustor waives demand and notice of such sale. (Beneficiary at its option may also foreclose on such shares by independent pledge sale, and Trustor waives demand and notice of such sale) . After deducting all costs, fees and expense of Trustee, and of this Trust , including cost of evidence of title in connection with this sale, Trustee shall apply the proceeds of sale to payment , first ; all sums expended under the terms hereof, not then repaid, with accrued interest at the rate then payable under the Note or Notes secured hereby, and then of all other sums secured hereby, and, if there are any proceeds remaining, shall distribute them to the person or persons legally entitled thereto. 16 . To waive, to the fullest extent permissible by law, the right to plead any statute of limitations as a defense to any demand secured hereby. 17. That Beneficiary may, from time to time, by instrument in writing, substitute a successor or successors to -any Trustee named herein or acting hereunder, which instrument , executed and acknowledged by Beneficiary and recorded in the office of the recorder of the county or counties where such property is situated, shall be conclusive proof of property substitution of such successor Trustee or Trustees , who shall, without conveyances from the Trustee predecessor, succeed to all its title, estate, rights, powers and duties, including but not limited to the power to reconvey the whole or any part of the property covered by this Deed of Trust . Such instrument must contain the name of the original Trustor, Trustee and Beneficiary hereunder, the book and page where this Deed of Trust is recorded. If notice of default shall have been recorded, this power of substitution cannot be exercised until after the costs, fees and expenses of the then acting Trustee Shall have been paid to such Trustee, who shall endorse receipt thereof upon such instrument . The procedures herein provided for substitution of Trustee shall not be exclusive of other provisions for substitution provided by law. 12/04/91 8557u/2460/050 18 . That this Deed of Trust applies to, inures to the benefit of , and binds all parties hereto, their heirs , legatees, devisees, administrators, executors, successors and assigns . The term "Beneficiary" shall mean the owner and holder, including pledgee, of the Note secured hereby, whether or not named as Beneficiary herein. In this Deed of Trust , whenever the context so requires , the masculine gender includes the feminine and/or neuter, and the singular number includes the plural . 19 . That in the event the property secured by this Deed of Trust is income producing property consisting of four units or more, Trustor agrees to file with Beneficiary, at Beneficiary' s request, monthly, on or before the 15th day of each month, a written operational report. Such operational report shall contain a brief but complete statement of the month' s income and expenses of such property, a list of all vacancies, and a statement of any material change in the property or business carried on therein for such period. 20 . That in the event of a demand for, and the preparation and delivery of a written statement regarding the obligations secured by this Deed of Trust pursuant to Sections 2943 and 2954 of the Civil Code of California , Beneficiary shall be entitled to make a reasonable change, not exceeding the maximum amount which is permitted by law at the time the statement is furnished. Beneficiary may also charge Trustor a reasonable fee for any other services rendered to Trustor or rendered in Trustor ' s behalf in connection with said property of this Deed of Trust , including changing Beneficiary' s records pertaining to this Deed of Trust and the loan secured hereby in connection with the transfer of said property, or releasing an existing policy of fire insurance or other casualty insurance held by Beneficiary and replacing the same with another such policy. 21 . That Trustee accepts this Trust when this Deed of Trust, duly executed and acknowledged, is made a public record as provided by law. Trustee is not obligated to notify any party hereto of pending sale under any other Deed of Trust or of any action or proceeding in which Trustor , Beneficiary, or Trustee shall be a party unless brought by Trustee. 22 . That should this Deed of Trust or any Note secured hereby provide any fee for prepayment of any indebtedness secured hereby, Trustor agrees to pay said fee, if any, of said indebtedness shall be paid prior to the due date thereof stated in said Note or this Deed of Trust even if and notwithstanding Trustor shall have defaulted in payment thereof, or in performance of any agreement hereunder , and Beneficiary, by reason thereof, shall have declared all sums secured hereby immediately due and payable. 12/04/91 8557u/2460/050 23 . That Trustor has made certain representations and disclosures in order to induce Beneficiary to make the loan evidenced by the Promissory Note or Notes which this Deed of Trust secures , and in the event that Trustor has made any material misrepresentation or failed to disclose any material fact, Beneficiary at its option and without notice, shall have the right to declare the indebtedness secured hereby, irrespective of the maturity date specified in such Note or Notes , immediately due and payable, and on failure to so pay Beneficiary may make a written declaration of default and demand for sale as in paragraph No. 15 herein set forth . Trustee, upon presentation to it of an affidavit signed by Beneficiary setting forth facts showing a default by Trustor under this paragraph, is authorized to accept as true and conclusive all facts and statements therein, and to act thereon hereunder . 24 . This Deed of Trust is subordinate to the Indenture of Trust , dated as of December 1, 1991, between the City and Dai-Ichi Icangyo Bank of California , as trustee, and the Construction Deed of Trust , Assignment of Rents and Fixture Filing , dated as of December 1, 1991 executed by Trustor in favor of American Securities Company. Any notice which any party hereto may desire or be required to give to the other party shall be in writing . The mailing thereof must be certified mail addressed to the Trustor at his address hereinabove set forth or to the Beneficiary at his office or at such other place as such parties hereto may designate in writing . THE UNDERSIGNED TRUSTOR REQUESTS that a copy of any notice of default and of any notice of sale hereunder be mailed to him at his address hereinbefore set forth. FIVE POINTS SENIORS, L.P. , a California limited partnership By: Michelson Family Trust, dated December 12 , 1984 , as amended March 1, 1985 , its gene al partner By: David Michelson, Trustee 12/06/91 8557u/2460/050 STATE OF CALIFORNIA ) ss. COUNTY OF SAN FRANCISCO ) On this 9th day of December, 1991, before me, the undersigned, a Notary Public in and for said State, personally appeared David R. Michelson, Trustee of the Michelson Family Trust, u/d/t dated December 12, 1984, as amended March 1, 1985, a general partner of Five Points Seniors, L.P. , a California limited partnership, personally known to me or proved to me on the basis of satisfactory evidence to be the person who executed the within instrument as general partner and on behalf of the partnership that executed the within instrument, and acknowledged to me that said partnership executed the same. WITNESS my hand and official seal. ryMr�lq; NOTARY SEAL .FIJA E PIKE Notary Publ is Nary pudic—California SAN FRANCISCO COUNTY My Comm Expires MAY05,1995 OFFICIAL NOTARY SEAL cyam,_ • CELIA E.PIKE - • Notary Public—California SAN FRANCISCO COUNTY My Comm Expires MAY o5.1995 2\K\Z055015V.LR5 120891 EXHIBIT "A" LEGAL DESCRIPTION OF THE LAND All that certain real property, together with all appurtenances thereto and all improvements now or hereafter located thereon, situated in the County of Orange, City of Huntington Beach, State of California, and described as follows: PORTIONS OF LOTS 3 AND 4 IN BLACK G OF TRACT NO. 7, AS SHOWN ON A MAP RECORDED IN BOOK 9, PAGE 8 OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA, DESCRIBED AS FOLLOWS: PARCELS 1 AND 2 AS SHOWN ON A MAP FILED IN BOOK 134, PAGE 22 OF PARCEL MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA. EXCEPTING FROM THAT PORTION (HEREINAFTER CALLED THE "SUB-500 PORTION") OF SAID REAL PROPERTY LYING BELOW A DEPTH OF 500 FEET BENEATH THE SURFACE THEREOF, ALL. OIL, GAS, ASPHALTUM AND OTHER HYDROCARBONS AND ALL OTHER MINERALS, WHETHER SIMILAR OR DISSIMILAR TO THOSE HEREIN SPECIFIED, AND INCLUDING ALL FISSIONABLE MATERIALS WITHIN OR THAT MAY BE PRODUCED FROM OR EXTRACTED OR TAKEN FROM THE SUB-500 PORTION OF THE SAID REAL PROPERTY, WHICH SAID OIL, GAS, ASPHALTUM, HYDROCARBONS AND MINERALS SHALL BE HEREINAFTER COLLECTIVELY CALLED THE "SUB-500 MINERALS", AS RESERVED IN DEED FROM HUNTINGTON BEACH COMPANY, A CORPORATION, RECORDED JUNE 21, 1979 IN BOOK 13195, PAGE 1898 OF OFFICIAL RECORDS. ALSO EXCEPTING FROM THAT PORTION (HEREINAFTER CALLED THE "SUB-200 PORTION") OF SAID REAL PROPERTY LYING BELOW A DEPTH OF 200 FEET BENEATH THE SURFACE THEREOF, THE FOLLOWING: (A) THE SOLE AND EXCLUSIVE RIGHT, FROM TIME TO TIME, TO LOCATE AND TO MAINTAIN SUBSURFACE PORTIONS OF OIL AND GAS WELLS IN THE SUB-200 PORTION OF SAID REAL PROPERTY, AND THE RIGHT TO DRILL FOR, PRODUCE, EXTRACT AND TAKE THE SUB-500 MINERALS FROM THE SUB-500 PORTION OF SAID REAL PROPERTY, AND THE RIGHT TO EXERCISE ALL OF THE RIGHTS AND PRIVILEGES NECESSARY FOR SUCH DRILLING, PRODUCING, EXTRACTING AND TAKING; AND, (B) THE SOLE AND EXCLUSIVE RIGHT TO USE THE SUB-200 PORTION OF SAID REAL PROPERTY TO CONDUCT OPERATIONS, FROM TIME TO TIME, BY METHODS NOW KNOWN OR UNKNOWN, WHICH, IN THE OPINION OF THE HUNTINGTON BEACH COMPANY, ARE REASONABLY DESIGNED TO BENEFIT OR FACILITATE THE DRILLING FOR, OR PRODUCTION, EXTRACTION OR TAKING OF THE SUB-500 MINERALS FROM THE SUB-500 PORTION OF SAID REAL PROPERTY, OR ANY MINERALS FROM OTHER LANDS OTHER THAN SAID REAL PROPERTY (HEREIN CALLED THE "OTHER LANDS") , TOGETHER WITH THE RIGHT TO DRILL A WELL OR WELLS OR USE ANY EXISTING WELLS IN, INTO OR THROUGH THE SUB-200 PORTION OF SAID REAL PROPERTY, FOR THE PURPOSE OF INJECTING INTO THE SUB-500 PORTION OF SAID REAL PROPERTY OR INTO OTHER LANDS, OIL, Page 1 of 2 GAS, AIR, WATER OR OTHER LIQUID OR GASEOUS SUBSTANCES, INCLUDING THE RIGHT, FROM TIME TO TIME, TO IGNITE OR OTHERWISE ACTIVATE ANY OR ALL OF SUCH SUBSTANCES SO INJECTED, OR ANY OR ALL OF THE SUB-500 MINERALS WITHIN THE SUB-500 PORTION OF SAID REAL PROPERTY, OR ANY MINERALS FROM OTHER LANDS; AND, (C) THE SOLE AND EXCLUSIVE RIGHT, FROM TIME TO TIME, TO DRILL INTO AND THROUGH THE SUB-200 PORTION OF SAID REAL PROPERTY FROM OTHER LANDS, BY MEANS OF A WELL OR WELLS DRILLED FROM THE SURFACE OF OTHER LANDS, TOGETHER WITH THE SOLE AND EXCLUSIVE RIGHT TO REPAIR, REDRILL, DEEPEN, MAINTAIN, REWORK AND OPERATE SUCH WELLS AND PRODUCE ANY MINERALS FROM OTHER LANDS BY MEANS OF SUCH WELLS, OR PRODUCE ANY MINERALS FROM OTHER LANDS BY MEANS OF SUCH WELL OR WELLS, THROUGH THE SUB-200 PORTION OF SAID REAL PROPERTY; AND, (D) THE SOLE AND EXCLUSIVE RIGHT, FROM TIME TO TIME, TO LOCATE, OPERATE AND MAINTAIN SUBSURFACE PORTIONS OF WELLS IN, INTO OR THROUGH THE SUB-200 PORTION OF SAID REAL PROPERTY, AND THE RIGHT, FROM TIME TO TIME, TO INJECT, STORE, PRESSURIZE AND REMOVE THE SUB-500 MINERALS OR ANY MINERALS FROM OTHER LANDS FOR THE PURPOSE OF STORING THE SAME IN THE SUB-500 PORTION OF SAID REAL PROPERTY, OR IN OTHER LAND. NOTHING HEREINABOVE SET FORTH SHALL BE DEEMED TO RESERVE ANY INTEREST IN THE SURFACE OR IN ANY PORTION OF SAID REAL PROPERTY LYING WITHIN 200 FEET MEASURED VERTICALLY DOWNWARD FROM THE SURFACE OF SAID REAL PROPERTY, ALL AS RESERVED IN DEED FROM HUNTINGTON BEACH COMPANY, A CORPORATION, RECORDED JUNE 21, 1979 IN BOOK 13195, PAGE 1898 OF OFFICIAL RECORDS. ALSO EXCEPTING THEREFROM, ALL WATER RIGHTS OF, OR RELATED TO, OR APPURTENANT TO SAID REAL PROPERTY, INCLUDING, BUT NOT LIMITED TO, ALL RIGHT TO PERCOLATING WATER, ARTESIAN WATERS AND UNDERGROUND STREAMS, BUT EXCLUDING THE RIGHT OF SURFACE ENTRY, AS RESERVED IN DEED FROM HUNTINGTON BEACH COMPANY, A CORPORATION, RECORDED JUNE 21, 1979 IN BOOK 13195, PAGE 1898 OF OFFICIAL RECORDS. Page 2 of 2 i GUARANTY THIS GUARANTY (the "Guaranty" ) is hereby entered into in favor of THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body corporate and politic (the "Agency" ) , by DAVID MICHELSON and KATHLEEN M. MICHELSON (collectively, the "Guarantors" ) , as of the date set forth herein. R E C I T A L S A. The Agency and FIVE POINTS SENIORS, L.P. , a California limited partnership (the "Developer" ) have entered into or will enter into a certain Affordable Housing Agreement (the "Agreement" ) which provides in part that Guarantors shall provide a guaranty to the Agency. B . The Guarantors , who are beneficiaries of the trust which is a general partner of the Developer, will significantly benefit by the execution by the Agency of the Agreement . C. The execution by the Guarantors of this Guaranty is a condition but for which the Agency would not execute the Agreement . D. Guarantors have reviewed and hereby approve the form and content of the Agreement . NOW, THEREFORE, in consideration of the execution of the Agreement, and of other valuable consideration, receipt of which is hereby acknowledged: 1 . Guarantors guarantee to the Agency the full and timely performance of each and every obligation of the Developer pursuant to the Agreement . 2 . This Guaranty is unconditional and may be enforced directly against the undersigned. No extensions, modifications or changes to the Agreement as Amended shall release the undersigned or affect this Guaranty in any way, and the undersigned waives notification thereof . 3 . The undersigned hereby waive all of the suretyship provisions of the California Civil Code Sections 2788 through 2855 . 4 . Guarantors hereby waive and agree not to assert or take advantage of (a) any right to require the Agency to proceed against the Developer or to pursue any other remedy in the Agency' s power before proceeding against the Guarantors , (b) demand, protest, and notice which the Agency may be required to provide to Developer under the Agreement, and (c) any duty on the part of Agency to disclose to Guarantors any facts Agency now or hereafter knows about the "Site" (as defined in the Agreement) , the Agreement, or the Developer, regardless of whether Agency has reason to believe that any such facts materially increase the risks beyond that which Guarantors intend to assume or has reason to believe that such facts are unknown to Guarantors or has a reasonable opportunity to communicate such facts to Guarantors, it being understood and agreed that Guarantors are fully responsible for being and keeping informed of all circumstances regarding the Site, the Agreement , the obligations of the Developer, the financial condition of the Developer, and of all circumstances bearing on the risk of any obligation by Developer hereby guaranteed. 5 . Guarantors shall have no right of subrogation and waive any right to enforce any remedy the Agency now has or may hereafter have against the Developer, and any benefit of, and any right to participate in any security now or hereafter held by Agency. 6 . The obligations of Guarantors hereunder are independent of the obligations of Developer and, in the event of default hereunder, a separate action or actions may be brought and prosecuted against Guarantors (or any other guarantor) whether or not Developer is joined therein or a separate action or actions are brought against Developer. 7 . In the event of any litigation between Agency and one or both Guarantors arising out of this Guaranty, the prevailing party shall be entitled to recover its reasonable costs and attorney' s fees . 8 . No provisions of this Guaranty can be waived nor can Guarantors be released from the obligations hereunder except by a writing duly executed by the Agency. 9 . Guarantors agree to pay all reasonable attorney' s fees and all other costs and expenses which may be incurred by Agency in enforcing or attempting to enforce this Guaranty, whether the same shall be enforced by suit or otherwise. 10 . Guarantors hereby waive notice of any demand by the Agency, as well as notice of any default by the Developer . 11 . The Agency may assign this Guaranty. When so assigned, Guarantors shall be bound as above to the assignees without in any manner affecting Guarantors ' liability hereunder . 12/04/91 8557u/2460/050 12 . This Guaranty shall remain in effect notwithstanding any bankruptcy, reorganization or insolvency of the Developer is or any successor or assignee thereof or any disaffirmance by a trustee of the Developer . 13 . This Guaranty shall inure to the benefit of and bind the successors and assigns of Agency and Guarantors . 14 . Guarantors agree that jurisdiction and venue with respect to any matter pertaining to the Guaranty or acts or omissions hereunder shall lie exclusively with the Superior Court of the County of Orange, State of California, in an appropriate municipal court of that county, or in the Federal District Court in the Central District of California . Guarantors irrevocably waives any and all defenses based upon revenue or forum non conveniens . 15 . The laws of the State of California shall govern the interpretation and enforcement of this Guaranty. IN WITNESS WHEREOF, the undersigned have executed this Guaranty this day of 1991 . David Michelson Kathleen M. Michelson 12/04/91 8557u/2460/050 GUARANTY THIS GUARANTY (the "Guaranty" ) is hereby entered into in favor of THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body corporate and politic (the "Agency" ) , by NORMAN D. WARD, and BUNNIE L. WARD (collectively, the "Guarantors" ) , as of the date set forth herein. R E C I T A L S A. The Agency and FIVE POINTS SENIORS, L.P. , a California limited partnership (the "Developer" ) have entered into or will enter into a certain Affordable Housing Agreement (the "Agreement" ) which provides in part that Guarantors shall provide a guaranty to the Agency. B. The Guarantors , who are beneficiaries of the trust which is a limited partner of the Developer, will significantly benefit by the execution by the Agency of the Agreement . C. The execution by the Guarantors of this Guaranty is a condition but for which the Agency would not execute the Agreement . D. Guarantors have reviewed and hereby approve the form and content of the Agreement . NOW, THEREFORE, in consideration of the execution of the Agreement , and of other valuable consideration, receipt of which is hereby acknowledged: 1 . Guarantors guarantee to the Agency the full and timely performance of each and every obligation of the Developer pursuant to the Agreement . 2 . This Guaranty is unconditional and may be enforced directly against the undersigned. No extensions, modifications or changes to the Agreement as Amended shall release the undersigned or affect this Guaranty in any way, and the undersigned waives notification thereof . 3 . The undersigned hereby waive all of the suretyship provisions of the California Civil Code Sections 2788 through 2855 . 4 . Guarantors hereby waive and agree not to assert or take advantage of (a) any right to require the Agency to proceed against the Developer or to pursue any other remedy in 12/04/91 8557u/2460/050 , the Agency' s power before proceeding against the Guarantors , (b) demand, protest , and notice which the Agency may be required to provide to Developer under the Agreement , and (c) any duty on the part of Agency to disclose to Guarantors any facts Agency now or hereafter knows about the "Site" (as defined in the Agreement) , the Agreement, or the Developer , regardless of whether Agency has reason to believe that any such facts materially increase the risks beyond that which Guarantors intend to assume or has reason to believe that such facts are unknown to Guarantors or has a reasonable opportunity to communicate such facts to Guarantors , it being understood and agreed that Guarantors are fully responsible for being and keeping informed of all circumstances regarding the Site, the Agreement , the obligations of the Developer, the financial condition of the Developer, and of all circumstances bearing on the risk of any obligation by Developer hereby guaranteed. 5 . Guarantors shall have no right of subrogation and waive any right to enforce any remedy the Agency now has or may hereafter have against the Developer , and any benefit of , and any right to participate in any security now or hereafter held by Agency. 6 . The obligations of Guarantors hereunder are independent of the obligations of Developer and, in the event of default hereunder , a separate action or actions may be brought and prosecuted against Guarantors (or any other guarantor) whether or not Developer is joined therein or a separate action or actions are brought against Developer . 7 . In the event of any litigation between Agency and one or both Guarantors arising out of this Guaranty, the prevailing party shall be entitled to recover its reasonable costs and attorney' s fees . 8 . No provisions of this Guaranty can be waived nor can Guarantors be released from the obligations hereunder except by a writing duly executed by the Agency. 9 . Guarantors agree to pay all reasonable attorney' s fees and all other costs and expenses which may be incurred by Agency in enforcing or attempting to enforce this Guaranty, whether the same shall be enforced by suit or otherwise. 10 . Guarantors hereby waive notice of any demand by the Agency, as well as notice of any default by the Developer . 11 . The Agency may assign this Guaranty. When so assigned, Guarantors shall be bound as above to the assignees without in any manner affecting Guarantors ' liability hereunder . OP 12/04/91 8557u/2460/050 I 12 . This Guaranty shall remain in effect notwithstanding any bankruptcy, reorganization or insolvency of the Developer or any successor or assignee thereof or any disaffirmance by a trustee of the Developer . 13 . This Guaranty shall inure to the benefit of and bind the successors and assigns of Agency and Guarantors . 14 . Guarantors agree that jurisdiction and venue with respect to any matter pertaining to the Guaranty or acts or omissions hereunder shall lie exclusively with the Superior Court of the County of Orange, State of California , in an appropriate municipal court of that county, or in the Federal District Court in the Central District of California . Guarantors irrevocably waives any and all defenses based upon revenue or forum non conveniens . 15 . The laws of the State of California shall govern the interpretation and enforcement of this Guaranty. 16 . This Guaranty shall terminate and be of no force and effect as of the date which is seven years from the date of execution of this Guaranty. IN WITNESS WHEREOF, the undersigned have executed this Guaranty this day of 1991 . Norman D. Ward x, Bunnie L. Ward "GUARANTORS" 12/04/91 8557u/2460/050 18019-34 JMW:TAD:cep 09/24/91 10/23/91 i. 11/07/91 fi LOAN AGREEMENT AMONG CITY OF HUNTINGTON BEACH AND FIVE POINTS SENIORS, L.P. AND Dai-Ichi Kangyo Bank of California, as Trustee Dated as of December 1, 1991 The interest of the City of Huntington Beach in this Loan Agreement(except the interest of the City of Huntington Beach under Sections 5.1(d) , 6.8 and 7.4 hereof) has been assigned to Dai-Ichi Kangyo Bank of California, as Trustee under the Indenture of Trust dated as of the date hereof from the City of Huntington Beach. R TABLE OF CONTENTS ARTICLE I DEFINITIONS AND INTERPRETATION Section1.1. Definitions...............................................................................................................I Section1.2. Interpretation............................................................................................................7 Section 1.3. Recitals,Titles and Headings.......................................................................................7 ARTICLE II REPRESENTATIONS AND WARRANTIES Section 2.1. Representations and Warranties of the Issuer...................................................................8 Section 2.2. Representations,Warranties and Covenants of the Developer.............................................9 ARTICLE III Section 3.1. Agreement to Issue Bonds...........................................................................................I I Section 3.2. Delivery of the Bonds and Closing of the Developer Loan.................................................11 Section 3.3. Commitment to Execute the Developer Note..................................................................11 Section3.4. Limited Liability.......................................................................................................11 Section3.5. The Trustee...................................................:..........................................................11 Section 3.6. Developer Accepts Obligations....................................................................................12 ARTICLE IV THE DEVELOPER LOAN Section 4.1. Amount and Source of Loan........................................................................................13 Section 4.2. Disbursement of Loan Proceeds....................................................................................13 .ARTICLE V REPAYMENT OF THE DEVELOPER LOAN Section 5.1. Developer Loan Repayment.........................................................................................14 Section 5.2. Nature of the Developer's Obligations...........................................................................16 Section 5.3. Mandatory Prepayment of Developer Note......................................................................16 Section 5.4. Optional Prepayment of Developer Note........................................................................18 Section 5.5. Past Due Payments............................................................................................_........19 Section 5.6. Reset to Reset Rate or Conversion to Fixed Rate 19 ............................................................. ARTICLE VI FURTHER AGREEMENTS Section 6.1. Successor to the Issuer ..........20 Section 6.2. Developer Not to Dispose of Assets..............................................................................20 Section 6.3. Cooperation in Enforcement of Regulatory Agreement.....................................................20 Section6.4. Tax Status of Bonds...................................................................................................20 Section 6.5. Additional Instruments...............................................................................................21 Section 6.6. Books and Records........................................................................... Section 6.7. Notice of Certain Events.............................................................................................21 Section 6.8. Indemnification of the Issuer and the Trustee...................................................................22 Section 6.9. Consent to Assignment............ Section 6.10. Compliance with Usury Laws......................................................................................22 Section 6.11. Title to and Completion of the Development..................................................................22 Section 6.12. Design of Development..............................................................................................23 Section6.13. Payment of Taxes......................................................................................................23 Section 6.14. No Untrue Statements................................................................................................23 Section 6.15. Date of Construction..................................................................................................23 Section6.16. Useful Life...............................................................................................................24 Section 6.17. Federal Guarantee Prohibition......................................................................................24 Section 6.18. No Existing Facilities................................................................................................24 Section 6.19. Prohibited Facilities...................................................................................................24 I,t ARTICLE VII EVENTS OF DEFAULT AND REMEDIES Section7.1. Events of Default......................................................................................................25 Section7.2. Notice of Default.......................................................................................................25 Section7.3. Remedies.................................................................................................................25 Section 7.4. Attorneys'Fees and Expenses......................................................................................26 Section 7.5. No Remedy Exclusive................................................................................................26 Section 7.6. No Additional Waiver Implied by One Waiver.................................................................26 ARTICLE VIR MISCELLANEOUS Section8.1. Entire Agreement......................................................................................................27 Section8.2. Notices....................................................................................................................27 Section8.3. Assignments............................................................................................................27 Section8.4. Severability..............................................................................................................27 Section 8.5. Execution of Counterparts...........................................................................................27 Section 8.6. Amendments,Changes and Modifications......................................................................27 Section8.7. Governing Law.........................................................................................................27 Section 8.8. Term of Agreement....................................................................................................28 Section 8.9. Survival of Agreement...............................................................................................28 Section8.10. Survival of Rights.....................................................................................................28 Section8.11. Recordation..............................................................................................................28 EXHIBIT A (FORM OF OPINION OF DEVELOPER'S COUNSEL) EXHIBIT B REQUEST FOR DISBURSEMENT EXHIBIT C INCOME COMPUTATION AND CERTIFICATION EXHIBIT D CERTIFICATE OF CONTINUING PROGRAM COMPLIANCE CITY OF HUNTINGTON BEACH(FIVE POINTS SENIORS PROJECT) EXHIBIT E DEVELOPER NOTE EXHIBIT F COMPLETION CERTIFICATE,CITY OF HUNTINGTON BEACH (FIVE POINTS SENIORS PROJECT) Ut h LOAN AGREEMENT THIS LOAN AGREEMENT dated as of December 1, 1991 is among the City of Huntington Beach, a chartered city and municipal corporation, organized and existing pursuant to the law of the State of California (together with any successor to its rights, duties and obligations, the "Issuer") , Five Points Seniors, L.P. (the 'Developer") and Dai-Ichi Kangyo Bank of California, as trustee (the "Trustee") For and in consideration of the mutual agreements hereinafter contained, the parties hereto agree as follows: ARTICLE I DEFINITIONS AND INTERPRETATION Section 1.1. Definitions. The following words and terms as used in this Agreement shall have the following meanings unless the context or use otherwise requires: "Act"means Chapter 7 of Part 5 of Division 31 of the Health and Safety Code of the State of California as now in effect and as it may from time to time hereafter be amended,or supplemented. "Act of Bankruptcy" means the filing of a petition in bankruptcy (or other commencement of a bankruptcy or similar proceeding) by or against the Developer, or any general or limited partner or guarantor of the Developer, or the Issuer under any applicable bankruptcy,insolvency or similar law now or hereafter in effect. "Act of Bankruptcy of Bank" means that the Bank has become insolvent or has failed to pay its debts generally as such debts become due (including its obligations to pay draws made on the Letter of Credit) or has admitted in writing its inability to pay any of its indebtedness or has consented to or has petitioned 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) have been instituted by or against the Bank, unless the appropriate regulatory agency has confirmed in writing the effectiveness of the Letter of Credit. "Adjusted Income" means the adjusted income of all persons who intend to reside in one residential unit, calculated in the manner determined by the Secretary of the Treasury pursuant to Section 142(d) (2) (B) of the Code. "Affiliated Party"means a Person whose relationship with the Developer would result in a disallowance of losses under Section 267 or 707(b) of the Code or (2) a Person who together with the Developer are members of the same controlled group of corporations (as defined in Section 1563(a) of the Code, except that "more than 50 percent" shall be substituted for"at least 80 percent" each place it appears therein) , (3) a partnership and each of its partners (and their spouses and minor children) whose relationship with the Developer would result in a disallowance of losses under Section 267 or 707(b) of the Code, and (4) an S corporation and each of its shareholders (and their spouses and minor children) whose relationship with the Developer would result in a disallowance of losses under Section 267 or 707(b) of the Code. 1 "Agreement" means this Loan Agreement, as amended and supplemented from time to time. "Area"means the Anaheim/Santa Ana,California Primary Metropolitan Statistical Area. "Authorized Representative of the Bank" means the person or persons authorized to sign Funding Requisitions on behalf of the Bank whose specimen signatures have been furnished to the Trustee. "Bank" means Wells Fargo Bank, N.A., acting as the issuer of the Letter of Credit, or the issuer of a Substitute Credit Facility,if one has been issued as provided in the Indenture. "Bond Counsel"means an attorney or a firm of attorneys of nationally recognized standing in matters pertaining to the tax status of interest on bonds issued by states and their political subdivisions, selected by the Issuer and duly admitted to the practice of law before the highest court of any state of the United States of America or the District of Columbia. "Bond Issuance Date"means the date of delivery of the Bonds, being December_, 1991. "Bonds" means the Issuer's Variable Rate Demand Multifamily Housing Revenue Bonds (Five Points Seniors Project) , Series A of 1991, to be issued pursuant to the Indenture. "Business Day" means any day other than a Saturday, a Sunday, or a day on which banks in the city in which the principal corporate trust office of the Trustee is located or the office of the .Tender Agent is located or a day on which the Bank is closed, or a day on which the New York Stock Exchange is closed. "Certificate of Continuing Program Compliance"means the document in the form attached hereto as Exhibit D. "Code" means the Internal Revenue Code of 1986, as amended, together with the Regulations. All references herein to sections, paragraphs or other subdivisions of the Code or the Regulations shall be deemed to be references to correlative provisions of any applicable successor code or regulations promulgated thereunder. "Completion Certificate"means a certificate of completion to be provided by the Developer pursuant to the provisions of the Regulatory Agreement in the form attached hereto as Exhibit F. "Completion Date" means the date of the completion of the Development as certified pursuant to Section 2 of the Regulatory Agreement. "Conversion"means the establishment of the interest rate on the Bonds at the Fixed Rate as provided in Section 213 of the Indenture. "Conversion Date"means the date on which interest on the Bonds is converted to the Fixed Rate as provided in Section 213 of the Indenture. "Costs of Issuance"means all costs incurred in connection with the issuance of the Bonds, including, but not limited to, the Underwriter's fee or discount, attorneys' fees and expenses (including Bond Counsel, Issuer's counsel, Developer's counsel, Trustee's counsel, as well as other specialized counsel fees and expenses incurred in connection with the borrowing) , Bank's origination and first annual Letter of Credit fee, fees and expenses of counsel to the Bank,financial advisor fees and expenses, rating agency fees, accountant's fees related to the issuance of the Bonds, Trustee's initial fees and expenses, Issuer's initial fees and expenses, Tender Agent's 2 initial fees and expenses, printing costs for the Bonds and any preliminary and final offering materials, costs incurred in connection with satisfying the public approval requirement of Section 147(f) of the Code and costs of engineering and feasibility studies necessary to the issuance of the Bonds, if any. "County"means the County of Orange, California. "Deed of Trust"means the Construction Deed of Trust, Assignment of Rents and Fixture Filing executed by the Developer and granting a security interest in the Development to the deed trustee for the benefit of the Trustee and the Bank to secure the Developer's obligations under the Developer Note and the Reimbursement Agreement. "Determination of Taxability" means (1) the failure of the Bank to consent in writing within forty-five (45) days to any amendment to the Indenture, the Loan Agreement or the Regulatory Agreement which in the written opinion of Bond Counsel is necessary to preserve the exclusion from gross income of interest on the Bonds for federal income tax purposes, or (2) enactment of legislation or a final judgment or order of a court original jurisdiction, a final order of any other court of competent jurisdiction, or a final ruling or decision of the Internal Revenue Service, in any such case to the effect that the interest on any of the Bonds (other than interest on any Bond for any period during which such Bond is held by a "substantial user" of any facility financed with the proceeds of the Bonds or a "related person," as such terms are used in Section 147(a) of the Code) is not excludable for federal income tax purposes from the gross incomes of the recipients thereof subject to federal income taxes as a result of action or inaction of the Developer during an Adjustable Interest Rate Period and as a result of any action during a Reset Period or after Conversion. With respect to clause (2) above, a judgment or order of a court 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"means Five Points Seniors, L.P., and its successors and assigns. "Developer Letter of Credit"means an irrevocable letter of credit(which may be the Letter of Credit, the stated amount of which has been sufficiently increased) issued by a financial institution acceptable to, and in form and substance acceptable to, the Issuer and the Trustee in an amount equal to the amount of any premium payable on the Bonds required to be redeemed as the result of an election by the Developer to prepay the Developer Note during a Reset Period or after Conversion, which letter of credit shall be accompanied by (i) an opinion of nationally recognized bankruptcy counsel to the effect that proceeds of a drawing under the letter of credit will not be subject to recapture under Section 547 of the Federal Bankruptcy Code or recoverable under Section 550 of such Code and (ii) written confirmation from the Rating Agency to the effect that delivery of the letter of credit will not adversely affect the then rating on the Bonds or cause the withdrawal of such rating. "Developer Loan"means the mortgage loan originated by the Issuer to the Developer in an amount equal to $9,500,000 for the purpose of financing the construction and development of the Development. "Developer Loan Documents" means the Agreement, the Regulatory Agreement, the Developer Note and the Deed of Trust. "Developer Note" means the promissory note in a principal amount equal to the principal amount of the Developer Loan executed by the Developer in the form attached hereto as Exhibit E. "Developer Representative" means the person or persons at the time designated by the Developer to act on behalf of the Developer by written certificate furnished to the Issuer, the Bank 3 and Trustee containing the specimen signatures of such person or persons and signed by a general partner of the Developer. Such certificate may designate an alternate or alternates. Such person or persons must be designated in Section 7.6 of the Reimbursement Agreement as persons eligible to execute vouchers and Funding Requisitions on behalf of the Developer in accordance with the terms of the Reimbursement Agreement. "Development" means an approximately 164-unit multifamily rental housing project to be constructed, owned and operated by the Developer pursuant to the restrictions set forth in the Regulatory Agreement, all applicable County of Orange and City of Huntington Beach approvals and all zoning,environmental and other applicable laws and ordinances. 'Development Costs"means,to the extent authorized by the Code,the Regulations and the Act, any and all costs incurred by the Developer with respect to the acquisition, construction, and equipping, as the case may be, of the Development, whether paid or incurred prior to or after the Inducement Date, including, without limitation, costs for site preparation,the planning of housing and related facilities and improvements, the acquisition of property, the removal or demolition of existing structures, the construction of housing and 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 services, other expenses necessary or incident to determining the feasibility of the Development, contractors' and developers' overhead and supervisors' fees and costs directly allocable to the Development, administrative and other expenses necessary or incident to the Development and the financing thereof (including reimbursement to any municipality, county or entity for expenditures made, with the approval of the Issuer,for the Development) , interest accrued during construction and prior to the Completion Date and all other costs approved by Bond Counsel. "Event of Default" means any of the events described as an event of default in Section 7.1 hereof. "Excess Investment Earnings Fund"means the Fund by that name created in Section 504 of the Indenture. "Fixed Rate" means the interest rate borne by the Bonds after Conversion and until the maturity date of the Bonds as provided in Section 213 of the Indenture. "Funding Requisition" means the requisition form requesting disbursement of moneys from the Developer Loan Fund in the form attached hereto as Exhibit B. "General Fund"means the Fund by that name created in Section 302 of the Indenture. "Indenture"means the Indenture of Trust dated as of the date hereof between the Issuer and the Trustee pursuant to which the Bonds have been issued, as amended or supplemented from time to time. "Inducement Date" means July 29, 1991, the date of adoption of the Inducement Resolution. "Intercreditor Agreement" means the Intercreditor Agreement dated as of the date hereof among the Trustee, the Issuer and the Bank. "Interest Payment Date" means, prior to and including the Conversion Date, the first Business Day of each quarter, commencing January 2, 1992, and during a Reset Period and after the Conversion Date, January 1 and July 1 of each year. 4 "Issuer"means the City of Huntington Beach, California. "Letter of Credit" means the letter of credit issued by the Bank or any Substitute Credit Facility substituted in accordance with the provisions of Section 214 of the Indenture. "Maximum Permitted Rate" means twelve percent(12%) per year(computed on the basis of a 365 or 366 day year for the actual number of days elapsed) ; provided, however, that the Issuer shall designate a rate higher than twelve percent (12%) per year as the Maximum Permitted Rate if it receives (i) evidence satisfactory to the Trustee that the stated amount of the Letter of Credit has been increased by an amount equal to the principal amount of the Bonds Outstanding times the increase in the interest rate for the number of days of interest coverage then required to be maintained under the Letter of Credit, and (ii) an opinion of Bond Counsel to the effect that the designation of such higher Maximum Permitted Rate or the determination that no Maximum Permitted Rate shall be applicable to the Bonds will neither violate any provision of any law applicable to the Bonds or the Developer Loan nor cause the Bonds to be "arbitrage bonds" within the meaning of Section 148 of the Code and will not cause the Maximum Permitted Rate to exceed the maximum rate permitted by applicable law. "Median Income for the Area" means the median income for the Area as most recently determined by the Secretary of the Treasury pursuant to Section 142(d) (2) (B) of the Code. "Pledge Agreement"means that pledge and security agreement dated as of the date hereof between the Developer and the Bank. "Qualified Development Costs" means the Development Costs (excluding Costs of Issuance) incurred after the Inducement Date which either constitute land or property of a character subject to the allowance for depreciation under Section 167 of the Code or are chargeable to a capital account with respect to the Development for federal income tax and financial accounting purposes, or would be so chargeable either with a proper election by the Developer or but for the proper election by the Developer to deduct those amounts within the meaning of Regulation 1.103- 8(a) (1) (i) ; provided, however, that only such portion of interest accrued during construction of the Development shall constitute a Qualified Development Cost as bears the same ratio to all such interest as the Qualified Development Costs bear to all Development Costs; and provided further that interest accruing after the Completion Date shall not be a Qualified Development Cost; and provided still further that if any portion of the Development is being constructed by an Affiliated Party (whether as a general contractor or a subcontractor) , "Qualified Development Costs" shall include only (a) the actual out-of-pocket costs incurred by such Affiliated Party in constructing the Development (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 Development, 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 Development or payments received by such Affiliated Party due to early completion of the Development (or any portion thereof) . "Qualified Development Period" means the period beginning on the first day on which at least 10 percent of the dwelling units in the Development are first occupied and ending on the later of(a) the date which is 15 years after the date on which at least 50 percent of the dwelling units in the Development are first occupied; (b) the first day on which no tax-exempt bonds with respect to the Development are outstanding; or(c) the date on which any assistance provided with respect to the Development under Section 8 of the United States Housing Act of 1937 terminates. "Regulations" means the income tax regulations promulgated or proposed by the United States Department of the Treasury from time to time pursuant to the Code. 5. r "Regulatory Agreement"means the Regulatory Agreement and Declaration of Restrictive Covenants dated as of the date hereof with respect to the Development, executed by the Issuer,the Developer and the Trustee and recorded in the Official Records of the County. "Reimbursement Agreement" means the Reimbursement Agreement dated as of the date hereof between the Bank and the Developer providing for the issuance of the Letter of Credit by the Bank; or,following the issuance of any Substitute Credit Facility, the Reimbursement Agreement or similar agreement supporting the issuance of the same. "Seasoned Funds" means if and to the extent any letter of credit caused to be delivered to the Trustee by the Developer does not provide for the payment of redemption premiums on the Bonds, moneys deposited by the Developer with the Trustee in the Seasoned Funds Account to pay premiums on the Bonds and so designated by the Developer, which moneys shall have been held by the Trustee in the Seasoned Funds Account for at least one year prior to the date notice of redemption of the Bonds is given by the Trustee, provided that no Act of Bankruptcy shall have occurred during the one year period prior to or after such moneys were deposited in the Seasoned Funds Account (the Trustee shall be entitled to rely on the Developer's certificate to the effect that no Act of Bankruptcy has occurred as evidence that no such bankruptcy has occurred) . "State"means the State of California. "Substitute Credit Facility"means any credit facility which satisfies the criteria set forth in Section 214 of the Indenture. "Substitution Date"means the date on which a Substitute Credit Facility is delivered to the Trustee with the effect that the existing rating on the Bonds is withdrawn or reduced. "Tender Agent"means DKB Trust Company of New York, acting in the capacity of Tender Agent under the Indenture, or any successor tender agent appointed in accordance with the terms of the Indenture. "Trustee"means Dai-Ichi Kangyo Bank of California, or any successor trustee appointed in accordance with the terms of the Indenture. "Underwriter"means Bancroft, Garcia&Lavell, Inc. and Prudential Securities Inc. "Very Low Income Tenants"means individuals or families with an Adjusted Income which does not exceed 50 percent of the Median Income for the Area for the applicable household size. In no event, however, will the occupants of a residential unit be considered to be Very Low Income Tenants if all the occupants are students, as defined in Section 151(c) (4) of the Code, as such may be amended, no one of which is entitled to file a joint federal income tax return. Currently, Section 151(c) (4) defines a student as an individual enrolled as a full-time student during each of 5 calendar months during the calendar year in which occupancy of the unit begin at an educational organization which normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance or is an individual pursuing a full- time course of institutional on-farm training under the supervision of an accredited agent of such an educational organization or of a state or political subdivision thereof. "Very Low Income Units" means the dwelling units in the Development designated for occupancy by Very Low Income Tenants pursuant to Section 4(a) of the Regulatory Agreement. Such terms as are not defined herein shall have the meanings assigned to them in the Indenture. 6 Section 1.2. Interpretation. Unless the context clearly requires otherwise, words of masculine gender shall be construed to include correlative words 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 Agreement and all the terms and provisions hereof shall be construed to effectuate the purpose set forth herein and to sustain the validity hereof. Section 1.3. Recitals, Titles and Headings. The terms and phrases used in the recitals of this 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 Agreement shall be determined by references to Section 1.1 hereof. The titles and headings of the articles and sections of this 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 Agreement or any provision hereof or in ascertaining intent,if any question of intent should arise. 7 ARTICLE II REPRESENTATIONS AND WARRANTIES Section 2.1.Representations and Warranties of the Issuer. The Issuer makes the following representations and warranties: (a) The Issuer is a chartered city and municipal corporation, duly organized and existing under the constitution and laws of the State. (b) The Issuer has full legal right,power and authority under the laws of the State and has taken all official actions necessary (i) to enter into this Agreement,the Regulatory Agreement, the Intercreditor Agreement, the Remarketing Agreement and the Indenture, (ii) to issue,execute and deliver the Bonds, (iii) to perform its obligations hereunder and thereunder and (iv) to consummate all other transactions contemplated by this Agreement and such other documents, including,without limitation, the loaning of the proceeds of the Bonds to the Developer. (c) This Agreement has been duly executed and delivered by the Issuer and constitutes a valid and binding obligation of the Issuer, enforceable against the Issuer in accordance with its terms, except as limited by bankruptcy,insolvency, reorganization, moratorium and other similar laws affecting the rights of creditors generally. Upon the execution and delivery thereof, the Regulatory Agreement, the Intercreditor Agreement, the Remarketing Agreement, the Indenture and the Bonds will constitute valid and binding obligations of the Issuer, enforceable against the Issuer in accordance with their respective terms, except as limited by bankruptcy, insolvency, reorganization,moratorium and other similar laws affecting the rights of creditors generally. (d) The execution and delivery of this Agreement, the Regulatory Agreement, the Intercreditor Agreement, the Remarketing Agreement and the Indenture, the issuance, execution and delivery of the Bonds, the performance by the Issuer of its obligations hereunder and thereunder and the consummation of the transactions contemplated hereby and thereby, including, without limitation, the loaning of the proceeds of the Bonds to the Developer, 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 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. (e) There is no action, suit, proceeding, inquiry or investigation pending or, to the knowledge of the Issuer, threatened against the Issuer by or before any court, governmental agency or public board or body which (i) affects or questions the existence or the territorial jurisdiction of the Issuer or the title to office of any member of the Board of the Issuer; (ii) affects or seeks to prohibit,restrain or enjoin the execution and delivery of this Agreement,the Regulatory Agreement, the Intercreditor Agreement, the Remarketing Agreement or the Indenture, the issuance, execution or delivery of the Bonds or the loaning of the proceeds of the Bonds to the Developer; (iii) affects or questions the validity or enforceability of this Agreement,the Regulatory Agreement, the Intercreditor Agreement, the Remarketing Agreement, the Indenture, or the Bonds; (iv) questions the exclusion from gross income for federal income tax purposes of interest on the Bonds; or (v) questions the power or authority of the Issuer to carry out the transactions contemplated by this Agreement, the Indenture, the Regulatory Agreement, the Remarketing Agreement, the Intercreditor Agreement or the Bonds. (f)The Issuer has determined that the adoption and implementation of the Development and the issuance of the Bonds to obtain moneys to carry out the purposes of the Development will serve the public interest and will further the purposes of the Act,including, among other purposes, 8 providing an opportunity for multifamily residential rental housing for occupancy by, among other persons, families of low and moderate income. Section 2.2. Representations Warranties and Covenants of the Developer. The Developer as of the date hereof,represents, warrants and covenants that: (a) The Developer is a California limited partnership and has full legal right, power and authority under the laws of the United States and the State of California (i) to enter into this Agreement,.the Remarketing Agreement, the Reimbursement Agreement, the Deed of Trust, the Pledge Agreement and the other Developer Loan Documents, (ii) to be bound by the terms of the Indenture to the extent that they apply to the Developer Loan, (iii) to perform its obligations hereunder and thereunder and (iv) to consummate the transactions contemplated by the Remarketing Agreement, the Reimbursement Agreement, the Indenture, the Pledge Agreement, and the Developer Loan Documents. (b)This Agreement has been duly executed and delivered by the Developer and constitutes a valid and binding obligation of the Developer,enforceable in accordance with its terms,except as limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws or judicial decisions affecting the rights of creditors generally. Upon the execution and delivery thereof, each of the Developer Loan Documents, the Pledge Agreement, the Remarketing Agreement and the Reimbursement Agreement will constitute valid and binding obligations of the Developer, enforceable in accordance with their terms, except as limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws or judicial decisions affecting creditors' rights generally and by judicial discretion in the exercise of equitable remedies. (c) The execution and delivery of the Reimbursement Agreement, the Remarketing Agreement, the Pledge Agreement and the Developer Loan Documents, the performance by the Developer of its obligations hereunder and thereunder and the consummation of the transactions contemplated hereby and thereby will not violate any law, regulation, rule 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, any document, instrument or commitment to which the Developer is a party or by which the Developer or any of its property is bound. (d)The Developer has not been served with and,to the knowledge of the Developer there is no action, suit,proceeding, inquiry or investigation by or before any court, governmental agency or public board or body pending or threatened against the Developer which (i) affects or seeks to prohibit, restrain or enjoin the issuance, sale or delivery of the Bonds or the loaning of the proceeds of the Bonds to the Developer or the execution and delivery of this Agreement, the Indenture, the Letter of Credit, the Regulatory Agreement, the Reimbursement Agreement, the Pledge Agreement, the Remarketing Agreement, the Developer Note or the Deed of Trust, (ii) affects or questions the validity or enforceability of this Agreement, the Bonds, the Indenture, the Regulatory Agreement, the Reimbursement Agreement, the Letter of Credit, the Developer Note, the Pledge Agreement, the Remarketing Agreement or the Deed of Trust, (iii) questions the exclusion from gross income for federal income tax purposes of interest on the Bonds, or (iv) questions the power or authority of the Developer to carry out the transactions contemplated by, or to perform its obligations under, this Agreement, the Bonds, the Regulatory Agreement, the Reimbursement Agreement, the Indenture, the Letter of Credit, the Pledge -Agreement, the Remarketing Agreement, the Developer Note or the Deed of Trust, or the powers of the Developer to own,acquire, equip or operate the Development. (e) The Developer is not in default under any document, instrument or commitment to which the Developer is a party or to which it or any of its property is subject which default would or could affect the ability of the Developer to carry out its obligations under this Agreement, the 9 Regulatory Agreement,the Reimbursement Agreement, the Pledge Agreement, the Deed of Trust, the Remarketing Agreement or the Developer Note. (f) Any certificate signed by the Developer or a Developer Representative and delivered pursuant to this Agreement, the Regulatory Agreement, the Reimbursement Agreement or the Indenture shall be deemed a representation and warranty by the Developer as to the statements made therein. (g) Concurrently with the execution of this Agreement, the Developer will cause to be delivered to the Trustee, on behalf of the Issuer,the Letter of Credit and such Letter of Credit shall be in full force and effect and shall secure the performance of the Developer's obligations under the Developer Note (other than for the payment of any premium due thereunder upon optional prepayment of the Developer Loan) in accordance with its terms. (h) In the event the Developer Loan proceeds are not sufficient to complete the Development, it will furnish any additional moneys necessary to complete the acquisition and construction of the Development. (i) The Developer intends to hold the Development for its own account, has no current plans to sell and has not entered into any agreement to sell the Development and, until payment in full of all of the Bonds or until the date which is five years after the Bond Issuance Date, whichever is the earlier, will not sell or contract to sell the Development without having first delivered to the Trustee an opinion of Bond Counsel to the effect that such sale will not cause the interest on the Bonds to become includable in gross income for federal income tax purposes, provided that no such opinion shall be required in connection with a foreclosure sale. (j) The Indenture has been submitted to the Developer for its examination; and the Developer acknowledges, by execution of this Agreement, that it has approved the Indenture and agrees that it will be bound by the terms thereof. (k) The Developer has contacted all "related persons" thereof (within the meaning of Section 147(a) (2) of the Code) ; and neither the Developer nor any of them shall, at any time, pursuant to any arrangement, formal or informal, acquire any Bond. (1) The Development is located wholly within the City of Huntington Beach, California. (m)The aggregate amount of the proceeds of the Bonds used to pay Costs of Issuance shall not exceed two percent (2%) of the face amount of the Bonds. 10 L L° ARTICLE III ISSUANCE OF THE BONDS Section 3.1. Agreement to Issue Bonds. In order to provide funds for the purpose of making the Developer Loan, the Issuer agrees that it will use its best efforts to sell the Bonds and cause them to be delivered to the initial purchasers thereof and deposit the proceeds thereof with the Trustee for application in accordance with Section 303 of the Indenture. Section 3.2. Delivery of the Bonds and Closing of the Developer Loan. The delivery of the Bonds and the closing of the Developer Loan shall not occur until the following conditions, in addition to those set forth in Section 210 of the Indenture, are met: (a) The Trustee shall have received an original executed counterpart of this Agreement, the Developer Note,the Regulatory Agreement,together with evidence satisfactory to the Trustee of the recordation thereof in the official land records of the County, which may be telephonic notice from a title company, and the Letter of Credit and shall have executed a receipt for the proceeds of the Bonds; (b) The Trustee shall have received an opinion of counsel to the Developer substantially in the form referenced herein in Exhibit A, and an opinion of counsel to the Bank in substantially the form referenced herein in Exhibit A-l; (c)No Event of Default nor any event which with the passage of time and/or the giving of notice would constitute an Event of Default under this Agreement shall have occurred as evidenced by a certificate received from the Developer; and (d) All legal matters incident to the transactions contemplated by this Agreement shall be concluded to the reasonable satisfaction of Bond Counsel. Section 3.3. Commitment to Execute the Developer Note. The Developer agrees to execute and deliver the Developer Note simultaneously with the execution of this Agreement. Section 3.4. Limited Liability. All obligations of the Issuer incurred hereunder shall be special obligations of the Issuer, payable solely and only from the Trust Estate, as defined in the Indenture. The Bonds, and the interest thereon,do not constitute a debt, liability, general or moral obligation or pledge of the faith or loan of the credit of the Issuer,the State or any other political subdivision of the State, within the meaning of any constitutional or statutory limitation or provisions. Neither the faith and credit nor the taxing power of the Issuer or the State or any political subdivision thereof is pledged to the payment of the principal of or premium, if any, or interest on the Bonds or any other costs incident thereto. Section 3.5. The Trustee. The Trustee acts hereunder solely as Trustee for the benefit of the Registered Owners, and not in its individual capacity. The Trustee shall act as specifically provided herein and in the Indenture and may exercise such additional powers as are reasonably incidental hereto and thereto; provided, however, that the Trustee shall not do anything which is not permitted by the Indenture. The Trustee shall act as the agent of and on behalf of the Issuer and any act required to be performed by the Issuer as herein provided shall be deemed taken if such act is performed by the Trustee. Neither the Trustee nor any of its officers,directors or employees shall be liable for any action taken or omitted to be taken by it hereunder or in connection herewith except for its or their own negligence or willful misconduct. The Trustee may consult with legal counsel selected by it (the fees of which counsel shall be paid by the Developer) and any action taken or suffered by it reasonably and in good faith in accordance with the opinion of such counsel shall be full justification and protection to it. The rights of the Trustee to rely on documents, the 11 manner in which it may prove or establish a matter and the scope of its liabilities and protections shall be as set forth in Article IX of the Indenture. Section 3.6. Developer Accepts Obligations._ The Developer hereby agrees to all of the terms and.provisions of the Indenture and accepts each of his obligations expressed or implied thereunder. 12 r ARTICLE IV THE DEVELOPER LOAN Section 4.1. Amount and Source of Loan. The Issuer hereby makes to the Developer and agrees to fund, and the Developer hereby accepts from the Issuer, upon the terms and conditions set forth herein and in the Indenture, the Developer Loan and agrees to have the proceeds of the Developer Loan applied and disbursed in accordance with the provisions of this Agreement and the Indenture. The Developer Loan shall be deemed made when the Trustee acknowledges receipt of the proceeds of the Bonds and satisfaction of the conditions specified in Section 3.2 hereof and in Section 210 of the Indenture. Section 4.2. Disbursement of Loan Proceeds. The Issuer has authorized and directed the Trustee to disburse moneys from the Developer Loan Fund created pursuant to Section 302 of the Indenture to pay or to reimburse the Developer for Development Costs for the construction of the Development, but only if (i) the Regulatory Agreement and the Deed of Trust shall have been executed and signed by the Developer and filed with the Trustee and duly recorded in the office of the County Recorder of the County and (ii) the Trustee shall have received a Funding Requisition executed by a Developer Representative and approved by an Authorized Representative of the Bank with respect to each requested disbursement. Each Funding Requisition shall be signed by the Developer Representative and by an Authorized Representative of the Bank and be in the form of the Funding Requisition attached hereto as Exhibit B. In making any payment from the Developer Loan Fund the Trustee may rely on Funding Requisitions delivered to it pursuant to this Section 4.2, and the Trustee shall be relieved of all liability with respect to making such payments in accordance with such Funding Requisitions. The Developer covenants and agrees that (1) it will cause at least 95 percent of Bond proceeds (including any investment earnings on amounts on deposit in the Developer Loan Fund not constituting Excess Investment Earnings) to be disbursed for Qualified Development Costs, (2) less than 25% of Bond proceeds will be disbursed for the cost of acquiring land or any interest therein, and (3) not more than 2% of the Bond proceeds shall be applied to pay Costs of Issuance. Upon receipt of the Funding Requisition properly executed by the Developer and approved by the Bank,the Trustee shall disburse moneys from the Developer Loan Fund in accordance with such Funding Requisition. 13 1 ARTICLE V REPAYMENT OF THE DEVELOPER LOAN Section 5.1. Developer Loan Repayment. The Developer Loan shall be evidenced by the Developer Note which shall be executed by the Developer in the form attached hereto as Exhibit E. The Developer agrees to pay to the Trustee principal of, premium (if any) and interest on the Developer Loan at the times, in the manner, in the amount and at the rate of interest provided in the Developer Note and this Agreement. To secure its obligations to repay the Developer Loan and to cause funds to be available for the purchase of Bonds, the Developer has delivered to the Trustee the Letter of Credit and will grant the Trustee a security interest in the Development pursuant to the terms of the Deed of Trust. The Developer hereby agrees to the Trustee's exercising all of its rights and remedies under the Deed of Trust upon the occurrence of an Event of Default hereunder or thereunder. (a)The Developer agrees to pay, in repayment of the Developer Loan,to the Trustee for the account of the Issuer until the principal of,premium (if any) and interest on the Bonds shall have been paid or provision for payment shall have been made in accordance with the Indenture, in federal or other immediately available funds current in the city in which the principal corporate trust office of the Trustee is located, on each date upon which a payment is due on the Bonds an amount equal to (i) the interest on the Bonds which will become due on such date and (ii) the principal and purchase price of and the redemption premium, if any, on the Bonds which will become due (whether.at maturity, by prior redemption, by purchase or otherwise) on such date. Payment of any redemption premium shall be made in accordance with Section 5.4(b) hereof. In addition, the Developer agrees to repay the principal of the Developer Loan, plus interest accrued thereon until the date fixed for redemption of the Bonds to be redeemed with such repayment, in the amounts and at the times specified in Section 5.3 hereof. Each loan payment under this Section 5.1 shall at all times be sufficient to pay the total amount of interest, principal, premium, if any, and purchase price payable on the Bonds on the applicable Interest Payment Date, redemption date, Purchase Date or principal payment date established under the Indenture. If on any Interest Payment Date or any date on which the principal of the Bonds shall become due, whether at maturity or by redemption, acceleration or otherwise, the amounts held by the Trustee in the Interest Account, the Principal Account and the Redemption Account in the Debt Service Fund created pursuant to the Indenture are insufficient to make the required payments of interest,principal, and premium,if any, on the Bonds on such date as required by the terms of the Indenture,the Developer shall forthwith pay such deficiency to the Trustee for deposit in the Debt Service Fund. The Developer hereby authorizes and directs the Trustee to draw moneys under the Letter of Credit in accordance with the terms thereof and the provisions of the Indenture and this Agreement to the extent necessary to pay the interest on and principal and purchase price of the Bonds when due. It is the intention of the Issuer and the Developer that the Developer shall reimburse the Bank for payments made under the Letter of Credit in accordance with the provisions of the Reimbursement Agreement. The obligations of the Developer hereunder to pay principal of, premium (if any) and interest on the Developer Loan shall be deemed satisfied and discharged at such time and to the extent that: (i) such amounts are paid fro} proceeds of drawings under the Letter of Credit, (ii) Seasoned Funds or proceeds of the Developer Letter of Credit are applied by the Trustee to the obligation to pay redemption premiums on the Bonds pursuant to the Indenture and(iii) the Bank is reimbursed for payments made by the Bank under the Letter of Credit. The Developer hereby authorizes and directs the Trustee, and the Trustee agrees, to reimburse the Bank immediately for drawings under the Letter of Credit to purchase Bonds from remarketing proceeds, including investment earnings thereon to the extent such earnings do not 14 constitute Excess Investment Earnings, under the circumstances and to the extent provided for in the Indenture. (b) The Developer further agrees to pay all taxes and assessments, general or special, including, without limitation, all ad valorem taxes, concerning or in any way related to the Development, or any part thereof, and any other governmental charges and impositions whatsoever, foreseen or unforeseen, and all utility and other charges and assessments; provided, however, that the Developer reserves the right to contest in good faith the legality of any tax or governmental charge concerning or in any way related to the Development. (c) The Developer further agrees to pay $ on the Bond Issuance Date to the Trustee for deposit to the Developer's Contribution Account in the Cost of Issuance Fund to be applied to the payment of Costs of Issuance in excess of 2% of Bond proceeds, including the Issuer's administrative fee of % of the principal amount of the Bonds on the Bond Issuance Date, and the Underwriter's fee of$ . The Developer agrees to pay any additional Costs of Issuance in excess of the amount on deposit in the Cost of Issuance Fund which have been previously approved by the Issuer. (d)The Developer further agrees to pay, until the principal of and interest on all outstanding Bonds shall have been fully paid,to the Trustee for deposit in the General Fund established by the Indenture such amounts as the Trustee may from time to time request for Ordinary Services and Ordinary Expenses and Extraordinary Services and Extraordinary Expenses (as defined in the Indenture)., the expenses of the Issuer and the annual fee of the Issuer of % of the principal amount of the Bonds on the Bond Issuance Date, payable on October 1 of each year, commencing October 1, 1992; provided that in the event the Developer causes the Bonds to be prepaid in full or in part,the Issuer's fee shall be paid as provided in Section 17 of the Regulatory Agreement; and to pay on the demand of the Trustee fees and expenses incurred in connection with the enforcement of the Regulatory Agreement and for the payment of annual rating agency fees and all amounts as and when required to be deposited in the Excess Investment Earnings Fund under the Indenture or to be remitted to the United States pursuant to the Indenture, in each case to the extent of any deficiency therefor in the Interest Account of the Developer Loan Fund or the General Fund and to pay to the Trustee or the Issuer the cost of any attorney, accountant or consultant authorized by Section 904 of the Indenture in connection with the Issuer's and the Trustee's obligations under Sections 503 and 504 of the Indenture. The Developer agrees to pay all fees and expenses incurred in connection with reset or conversion of the interest rate on the Bonds or in connection with the delivery of a Substitute Credit Facility. (e) The Developer further agrees that, in the event moneys for the purchase of a Bond tendered for purchase pursuant to the provisions of Article XI of the Indenture are not available for such purpose through the successful remarketing.of such Bond prior to the date specified for its purchase, the Developer will cause such moneys to be made available for such purpose on said date. To satisfy the Developer's obligation under this subsection (e) , the Developer hereby authorizes and directs the Trustee to draw moneys under the Letter of Credit in accordance with the provisions of the Indenture, this Agreement and the Letter of Credit to.pay the purchase price of tendered Bonds which have not been remarketed. The Developer's obligation to repay the Developer Loan shall be deemed satisfied and discharged to the extent Bonds so purchased are cancelled as a result of the Developer's reimbursement to the Bank for any such drawing. Nothing herein shall prevent Bonds from becoming Pledged Bonds in accordance with the Indenture and the Reimbursement Agreement. (f) At its option, the Developer may deliver to the Trustee a Substitute Credit Facility, and the Trustee shall accept the Substitute Credit Facility in place of the Letter of Credit and return the latter to the Bank for cancellation if, but only if, the relevant conditions set forth in Section 214 of the Indenture have been met. ,Unless waived by the Trustee and the Issuer, the Developer shall 15 provide written notice to the Trustee and the Issuer of its intention to deliver a Substitute Credit Facility at least 20 days prior to the expected date of substitution and shall cause the rating agency then rating the Bonds to provide the Trustee at least 15 days prior to such date with a written statement as to the rating expected to be on the Bonds on and after the date of substitution of the Substitute Credit Facility. Section 5.2. Nature of the Developer's Obligations. The Developer shall repay the Developer Loan pursuant to the terms of the Developer Note and shall provide moneys for the purchase of Bonds as provided for in Section 5.1(e) hereof irrespective of any rights of set-off, recoupment or counterclaim the Developer might otherwise have against the Issuer,the Trustee,the Bank or any other person. The Developer will not suspend, discontinue or reduce any such payment or (except as expressly provided herein) terminate this Agreement for any cause, including, without limiting the generality of the foregoing, (i) any delay or interruption in the development, construction or operation of the Development; (ii) the failure to obtain any permit, order or action of any kind from any governmental agency relating to the Developer Loan or the Development; (iii) any event constituting force majeure; (iv) any acts or circumstances that may constitute commercial frustration of purpose; (v) the termination of this Agreement; (vi) any change in the laws of the United States of America,the State or any political subdivision thereof, or (vii) any failure of the Issuer to perform or observe any covenant whether expressed or implied,or to discharge any duty,liability or obligation arising out of or connected with the Developer Note; it being the intention of the parties that, as long as the Developer Note or any portion thereof remains outstanding and unpaid, the obligation of the Developer to repay the Developer Loan and provide such moneys shall continue in all events. This Section 5.2 shall not be construed to release the Issuer from any of its obligations hereunder, the Trustee from any of its obligations under the Indenture, or, except as provided in this Section 5.2, to prevent or restrict the Developer from asserting any rights which it may have against the Issuer, or the Trustee under the Developer Note, or the Indenture or under any provision of law or to prevent or restrict the Developer, at its own cost and expense, from prosecuting or defending any action or proceeding by or against the Issuer or the Trustee or taking any other action to protect or secure its rights. Notwithstanding the foregoing, neither the Developer nor any of its general partners shall be personally liable for the amounts owing under the Developer Note or the Deed of Trust; and the Issuer's and the Trustee's remedies in the event of a default under the Developer Loan shall be limited to those remedies set forth in Section 7.3 hereof and to foreclosure of the Development under the Deed of Trust and the exercise of the power of sale or other rights granted thereunder except as otherwise provided by the Intercreditor Agreement. In the event of a default hereunder, under the Deed of Trust or on the Developer Note, neither the Issuer nor the Trustee shall have the right to proceed directly against the Developer or the right to obtain a deficiency judgment after foreclosure. Nothing in this Section 5.2 shall preclude the Issuer and the Trustee from proceeding directly against the Developer in connection with the obligation of the Developer to indemnify the Issuer and the Trustee under Section 6.8 hereof or Section 7 of the Regulatory Agreement or to make any payment to the Issuer or the Trustee required to be paid by the Developer pursuant to the provisions of Sections 5.1(d) and 7.4 hereof or Section 17 of the Regulatory Agreement. Section 5.3. Mandatory Prepayment of Developer Note. The Developer Note is subject to mandatory prepayment in whole or in part, at a price equal to the 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: (a) On December 1, 1994, in an amount equal to the amount on deposit in the Developer Loan Fund which shall not have been disbursed to pay Development Costs or set aside to pay Development Costs incurred but not paid prior to November 1, 1994,provided that such date shall be extended at the request of the Developer and upon approval by the Issuer and the Bank, in their sole discretion, and receipt by the Trustee of an opinion of Bond Counsel that such extension will 16 M not adversely affect the exclusion from gross income of interest on the Bonds for federal income tax purposes, in which case such portion of the Developer Note shall be prepaid on such later date as is approved by Bond Counsel in an amount equal to the amount of the Developer Loan proceeds not disbursed to pay Development Costs prior to such date as may be specified by Bond Counsel; (b) On the first Interest Payment Date subsequent to the Completion Date of the Development for which notice of redemption of the Bonds to be redeemed may be timely given by the Trustee, in an amount equal to the amount on deposit in the Developer Loan Fund not disbursed prior to such Completion Date to pay Development Costs or set aside to pay Development Costs incurred but not paid prior to the Completion Date; (c) On the first day for which notice of redemption may be timely given after the Trustee has accelerated the amounts due with respect to the Bonds or the Developer Note,as the case may be, as.a result of an Event of Default under the Indenture, this Agreement or the Regulatory Agreement,in an amount equal to the then unpaid principal amount of the Developer Note; (d) On the first day for which notice of redemption may be timely given where the Developer has failed to deliver to the Trustee a Substitute Credit Facility satisfying the criteria set forth in Section 214 of the Indenture, within 60 days of written notice to the Trustee of the occurrence of an Act of Bankruptcy of the Bank, or at least 15 days (during an Adjustable Interest Rate Period) or 45 days (during a Reset Period or after Conversion) prior to the then-scheduled expiration date of the Letter of Credit,except that in no event shall such redemption occur later than five days prior to such expiration date of the Letter of Credit; (e) On the first day for which notice of redemption may be timely given after the Bank fails or refuses to honor a drawing under the Letter of Credit and the Trustee has on deposit sufficient funds to effect such redemption. (f) On the first Interest Payment Date for which notice of redemption can be timely given, in the event of an involuntary loss or the substantial destruction of the Development as a result of unforeseen events (e.g., fire, seizure,requisition, change in a federal law or an action of a federal agency after the date of issuance of the Bonds which prevents the Issuer from enforcing the requirements of Section 1.103-8(b) of the Regulations, or condemnation) , upon receipt of insurance or other compensation or,if there are to be no such payments, after the event giving rise to the involuntary loss or substantial destruction of the Development,'in an amount equal to the then unpaid principal amount of the Developer Note. Notwithstanding the foregoing, the Developer Note will not have to be prepaid in whole in such circumstances if(i) within 90 days of the event giving rise to the loss or destruction,the Developer notifies the Trustee and the Issuer, in writing, that the Development can be restored within 18 months to a condition permitting the conduct of normal business operations or that, if such event shall occur during the construction of the Development,completion of the Development will not be delayed for more than twelve months; (ii) within 180 days of the event giving rise to such taking, loss or destruction, the Developer commences to use such amounts to reconstruct the Development pursuant to the terms of this Agreement and the Indenture; and (iii) such amounts are disbursed for the restoration of the Development within 18 months after the date of the notice from the Developer referred to in clause (i) hereof, or; if such event shall occur during the construction of the Development, such amounts are disbursed within the period provided for in said clause (i) but,rather, the Developer Note shall be prepaid, in part, to the extent of undisbursed funds on deposit in the Insurance Proceeds Account created pursuant to the Indenture at the expiration of the period described in (iii) above unless such period is extended with the consent of the Issuer and the Bank and an opinion of Bond Counsel to the effect that such extension will not result in interest on the Bonds becoming includable in the gross income of the recipients thereof for federal income tax purposes; provided, however, that prepayment in whole shall be immediately due and payable if in the written opinion of Bond Counsel filed with the Issuer, the Developer, the Bank and the Trustee a failure to make 17 such prepayment will cause interest on the Bonds to be includable in gross income for federal income tax purposes; (g) On the day selected by the Trustee to redeem Bonds after the Trustee has received written notice from the Bank to redeem Bonds as a result of the occurrence of an event of default under the Reimbursement Agreement,in an amount equal to the then-unpaid principal amount of the Developer Note; (h) On the first day for which notice of redemption may be timely given after the Trustee has received notice from the Issuer of a Determination of Taxability, in an amount equal to the unpaid principal amount of the Developer Note; and (i) On any Reset Date,the Conversion Date or Substitution Date in the event the conditions precedent to a remarketing of the Bonds on any of such dates, as set forth in Section 1105 of the Indenture, have not been satisfied, in an amount equal to the principal amount of the Developer Note. If the required principal amount of any prepayment in part pursuant to this Section 5.3 shall not be an integral multiple of$100,000 during an Adjustable Interest Rate Period or$5,000 during a Reset Period and after Conversion, then the required principal amount of such prepayment shall be deemed to be the next greater integral multiple of$100,000 or $5,000, as applicable, and any interest due with such prepayment shall be calculated using such higher amount. The Trustee shall deposit and use prepayments of the Developer Note pursuant to this Section and Section 5.4 in accordance with the Indenture. In the event of a partial prepayment of the Developer Note, pursuant to this Section or Section 5.4,the principal amount of the Developer's obligation under the Developer Note shall be reduced by the principal amount of Bonds to be redeemed with the proceeds of such prepayment.- Section 5.4.Optional Prepayment of Developer Note. (a)The Developer, at its option, subject to the prior written consent of the Bank in the event that a drawing under the Letter of Credit will be required to effect such payment, may prepay the Developer Note, in whole or in part on any Interest Payment Date during an Adjustable Interest Rate Period, following written notice of the Developer's intention to do so as provided hereinbelow, in any integral multiple of$100,000, at the principal amount thereof, together with accrued interest to the date on which Bonds will be redeemed with such payment. (b)The Developer also, at its option,may prepay the Developer Note,in whole or in part in any integral multiple of $5,000 on any Interest Payment Date during any Reset Period or after Conversion, at the respective initial prepayment prices set forth below expressed as percentages of the principal amount of the Developer Note prepaid, such initial prepayment prices declining 1% each year until such prepayment price equals 100% of the principal amount of the Developer Note. 18 Term of Reset Period Initial or from Conversion Prepayment to Maturity No Call Period Price No Premium 15 or more years First 7 years 102.0% loth year after Reset or and there- Conversion Date after 10 or more years First 5 years 102.0% 8th year after Reset or and there- Conversion Date after 5 years or more First 3 years 102.0% 6th year (but less than 10) and there- after Reset or after Conversion Date Less than 5 years No call If and to the extent the Developer Letter of Credit does not provide for the payment of premiums on the Bonds, the amount of any prepayment premium paid by the Developer to the Trustee shall be deposited with the Trustee at least one year prior to the date that the Trustee is required to mail a notice of redemption with respect to the applicable Bonds to be redeemed,and on the date of such payment, the Developer shall give written notice to the Issuer, the Bank and the Trustee of the principal amount to be optionally prepaid on the applicable Interest Payment Date and the amount of prepayment premium. No optional prepayment shall occur if an Act of Bankruptcy occurs within such one-year period prior to the mailing of the notice of redemption. The Developer shall deliver a certificate in writing to the Trustee prior to the date that any notice of redemption is mailed as set forth above, certifying that no Act of Bankruptcy has occurred during such one-year period prior to the mailing of the notice of redemption. If an Act of Bankruptcy does occur, the Trustee shall hold such funds of the Developer until directed by a court of competent jurisdiction as to their disposition. Section 5.5. Past Due Payments. In the event the Developer shall fail to pay any amounts required to be paid under Section 5.1 hereof, any such past due amount shall bear interest at the Maximum Permitted Rate until finally paid. Section 5.6. Reset to Reset Rate or Conversion to Fixed Rate. The Developer may elect to reset the interest rate applicable to the Developer Loan to the Reset Rate or convert it to a Fixed Rate as provided for and subject to the requirements contained in Sections 212 and 213, respectively, of the Indenture. 19 1 ARTICLE VI FURTHER AGREEMENTS Section 6.1. Successor to the Issuer. The Issuer will at all times use its best efforts to maintain the powers, functions, duties and obligations now reposed in it pursuant to law or assure the assumptions of its obligations hereunder by any public trust or political subdivision succeeding to its powers. Section 6.2. Developer Not to Dispose of Assets,• Conditions Under Which Exceptions Permitted. The Developer agrees that during the term of this Agreement it will not dispose of all or substantially all of its assets nor consolidate with nor merge into any entity unless (i) it shall have first filed with the Trustee an opinion of Bond Counsel to the effect that such disposal of assets, consolidation or merger will not cause the interest on the Bonds to become includable in gross income for federal income tax purposes, provided that this requirement shall not be applicable at any time after the earlier of payment in full of all of the Bonds or the date which is five years after the Bond Issuance Date; (ii) the acquires of its assets or the entity with which it shall consolidate or into which it shall merge shall be an individual or a corporation,partnership or other legal entity organized and existing under the laws of the United States of America or one of the states of the United States of America and shall be qualified and admitted to do business in the State; and (iii) such acquiring or remaining entity shall assume in writing all of the obligations of the Developer under this Agreement, the Regulatory Agreement and the Deed of Trust; provided, however, that as long as the Letter of Credit is in effect, such disposition, consolidation or merger shall be effected only with the prior written consent of the Bank. Section 6.3.Cooperation in Enforcement of Regulatorygreement. The Developer hereby covenants and agrees as follows: (a) to comply with all provisions of the Regulatory Agreement; (b) to advise the Issuer, the Trustee and the Bank in writing promptly upon learning of any default with respect to the covenants, obligations and agreements of the Developer set forth in the Regulatory Agreement; - (c)upon written direction by the Issuer or the Trustee, to cooperate fully and promptly with the Issuer and the Trustee in enforcing the terms and provisions of the Regulatory Agreement; and (d) to file in accordance with the time limits established by the Regulatory Agreement all reports and certificates required thereunder, including the required Funding Requisitions, Income Certifications, Certificate of Continuing Program Compliance and Completion Certificate attached hereto as Exhibits B, C, D and F, respectively, and the Certification to the Secretary of the Treasury required by Section 4(f) of the Regulatory Agreement. Neither the Trustee nor the Issuer shall incur any liability in the event of any breach or. violation of the Regulatory Agreement by the Developer,and the Developer agrees to indemnify the Issuer and the Trustee from any claim or liability for such breach pursuant to Section 6.8 hereof. Section 6.4. Tax Status of Bonds. The Developer hereby covenants,represents;and agrees as follows: (a) that the Developer will not knowingly take or permit any action to be taken that would adversely affect the exemption from State income taxation or the exclusion from gross income for federal income tax purposes 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 upon having knowledge thereof; and (b) that the Developer will take such action or actions, including amending the Developer Loan and the Developer Note, as may be reasonably 20 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 United States Department of the Treasury or the Internal Revenue Service under Section 142(d) pertaining to obligations issued under Section 103 of the Code. The Developer covenants and agrees that it has 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 to become includable in gross income for federal income tax purposes, and the Trustee covenants and agrees to act in accordance with Sections 503 and 504 of the Indenture and that it will not knowingly take or permit to be taken any action which will cause the interest on the Bonds to become includable in gross income for federal income tax purposes; provided that neither the Developer, the Trustee nor the Issuer shall have violated these covenants if the interest on any of the Bonds becomes includable in the gross income of a person solely because such person is a "substantial user" of the Development or a "related person"within the meaning of Section 147(a) of the Code; and provided further that none of the covenants and agreements herein contained shall require any of the Developer,the Trustee 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 exclusion from gross income for federal income tax purposes of interest on the Bonds; and provided further that the Trustee's or the Issuer's responsibility under this paragraph shall be limited to actions within its control. The Developer covenants and agrees to provide to the Trustee information with respect to the investment of any Bond proceeds which are disbursed to the Developer or the Bank pursuant to the Indenture and are not immediately expended to pay Development Costs, such investment information to be included by the Trustee in any computations to be made pursuant to Section 504 of the Indenture. The Developer hereby warrants and covenants that the Development constitutes and,for the Qualified Development Period will constitute a "qualified residential rental project", as defined in Section 142(d) 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. The Development consists 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 of the Development therefor and not less than 20% of the units of the Development shall be rented or available for rental as provided by Section 4 of the Regulatory Agreement. Section 6.5. Additional Instruments. The Developer hereby covenants to execute and deliver such additional instruments and to perform such additional acts as may be necessary,in the opinion of the Issuer, the Bank or the Trustee,to carry out the intent of the Developer Loan and the Developer Note or to perfect or give further assurances of any of the rights granted or provided for in the Developer Loan and the Developer Note. Section 6.6. Books and Records, Annual Reports. The Developer hereby covenants to permit the Issuer and the Trustee or their duly authorized representatives access during normal business hours to the books and records of the Developer pertaining to the Developer Loan and the Development, and to make such books and records available for audit and inspection, at reasonable times and under reasonable conditions to the Issuer, the Trustee and their duly authorized representatives. Section 6.7. Notice of Certain Events. The Developer hereby covenants to advise the Issuer, the Bank and the Trustee promptly in writing of the occurrence of any Event of Default hereunder or any event which, with the passage of time or service of notice, or both, would constitute an Event of Default hereunder, specifying the nature and period of existence of such 21 r event and the actions being taken or proposed to be taken with respect thereto. In addition, the Developer hereby covenants to advise the Issuer, the Bank and the Trustee promptly in writing of the occurrence of any default under the Developer Loan or of the occurrence of an Act of Bankruptcy. Section 6.8. Indemnification of the Issuer and the Trustee. The Developer hereby covenants and agrees to indemnify, hold harmless and defend the Issuer, the Trustee and their respective officers, members, supervisors, directors, officials and employees and each of them from and against (i) 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 Development or the making of the Developer Loan; (ii) any and all claims arising from any act or omission of the Developer or any of its agents, servants, employees or licensees,in connection with the Developer Loan or the Development; (iii) all reasonable costs,counsel fees,expenses or liabilities incurred in connection with any such claim or proceeding brought thereon; and(iv) any and all losses,claims, damages, liabilities or expenses, including attorneys fees and expenses, arising out of or connected with the Trustee's acceptance or administration of the trusts created by the Indenture and its exercise of powers or duties thereunder, or under this Agreement, the Regulatory Agreement or any other agreements in connection therewith to which it is a parry, except to the extent such damages are caused by the negligence or willful misconduct of the Trustee. In the event that any action or proceeding is brought against the Issuer, the Trustee or any of their respective officers, members, supervisors, directors, officials or employees, with respect to which indemnity may be sought hereunder, the Developer,upon written notice from the indemnified party, shall assume the investigation and defense thereof, including the employment of counsel selected by the indemnified party and the payment of all expenses related thereto, 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; provided,further, that the Issuer and Trustee shall act reasonably in connection therewith. Notwithstanding any transfer of the Development to another owner in accordance with the provisions of the Regulatory Agreement, the Developer shall remain obligated to indemnify the Issuer and the Trustee pursuant to this Section 6.8 if such subsequent owner fails to indemnify any party entitled to be indemnified hereunder. Section 6.9. Consent to Assi ng ment. The Issuer has made an assignment to the Trustee under the Indenture for the benefit of the holders of the Bonds of all rights and interest of the Issuer in and to this Agreement (except its rights under Sections 6.8 and 7.4 hereof and its right under Section 5.1(d) to be paid its expenses) ,the Developer Note, and the Deed of Trust; and the Developer hereby consents to all such assignments. The Issuer shall file such financing statements and other documents as it shall deem necessary or desirable to perfect the lien of the Indenture with respect to this Agreement, the Developer Note, and the Deed of Trust and the Developer hereby consents to all such filings. Section 6.10. Compliance with Usury Laws. Notwithstanding any other provision of this Agreement, it is agreed and understood that in no event shall this Agreement, with respect to the Developer Note or other instrument of indebtedness, be construed as requiring the Developer or any other person to pay interest and other costs or considerations that constitute interest under any applicable law which are contracted for, charged or received pursuant to this Agreement in an amount in excess of the maximum amount of interest allowed under any applicable law. In the event of any acceleration of the payment of the principal amount of the Developer Note or other evidence of indebtedness, that portion of any interest payment in excess the maximum legal rate of interest, if any,provided for in this Agreement or related documents shall be cancelled automatically as of the date of such acceleration, or if theretofore paid, credited to the principal amount. 22 Y The provisions of this Section prevail over any other provision of this Agreement. Section 6.11. Title to and Completion of the Development. The Developer shall concurrently with the closing of the Developer Loan have fee title to the Development free and clear of any lien or encumbrance except for (i) liens for nondelinquent assessments and taxes not yet due or which are being contested in good faith by appropriate proceedings; (ii) the Deed of Trust and (iii) any other encumbrances approved by the Bank and the Issuer. Concurrently with the closing of the Developer Loan, the Developer shall cause to be delivered to the Trustee and the Bank one or more ALTA title policies, naming the Bank and the Trustee as the insureds, as their respective interests may appear. The Developer covenants to complete the acquisition and construction of the Development with due diligence and in any event no later than June 1; 1994, provided that this date shall be extended at the request of the Developer and upon receipt by the Trustee of an opinion of Bond Counsel to the effect that such extension will not adversely affect the exclusion of interest on the Bonds from gross income for federal income tax purposes. Upon completion of the Development, the Developer promptly will provide the Issuer and the Trustee with a Completion Certificate. In the event the Developer Loan is insufficient to complete the Development,the Developer agrees to pay from its own funds such additional amounts as are necessary to complete the Development in accordance with all Issuer approvals and applicable laws and ordinances. Section 6.12. Design of Development. To the best of the Developer's knowledge after due investigation the design, construction and operation of the Development in the manner presently contemplated and as described herein will not and do not conflict with any zoning, water or air pollution or other ordinance, order, law or regulation applicable thereto; the Developer shall cause the Development to be designed in accordance with all the applicable federal,state and local laws or ordinances (including rules and regulations) relating to zoning, building, safety, and environmental quality; and the Developer has not failed to obtain and maintain in effect any licenses,permits, franchises or other governmental authorizations necessary for the operation and conduct of the Development to date. The Developer represents that all zoning approvals required to construct the Development and all planning approvals requiring approval by the City of Huntington Beach have been obtained. Section 6.13. Payment of Taxes. The Developer has filed or caused to be filed all federal, state and local tax returns or information returns which are required to be filed with respect to the Development and of which Developer has knowledge, and has paid or caused to be paid all taxes as shown on said returns or on any assessment received by it, to the extent that such taxes have become due and payable other than those payable without penalty or interest. Section 6.14. No Untrue Statements. Neither this Agreement nor any other document, certificate or statement furnished to the Trustee, the Bank, or the Issuer by or on behalf of the Developer, contains to the best of its knowledge any untrue statement of a material fact or omits to state a material fact necessary in order to make the statement contained herein and therein not misleading or incomplete as of the date hereof and as of the Bond Issuance Date. It is specifically understood by Developer that all such statements,representations and warranties shall be deemed to have been relied upon by the Issuer as an inducement to make the Developer Loan and that if any such statements, representations and warranties were materially incorrect at the time they were made or as of the Bond Issuance Date, the Issuer may consider any such misrepresentation or breach an Event of Default. . Section 6.15. Date of Construction. Acquisition, construction, equipping, furnishing and improvement by the Developer of all portions of the Development to be financed with proceeds from the sale of the Bonds commenced after the Inducement Date, and no portion of the Development has been placed into service more than one year prior to the Bond Issuance Date. 23 The Developer will not, during the five-year period following the Bond Issuance Date, sell, convey, lease, license, or otherwise transfer the Development or any interest therein to any company, partnership, person or other entity of any kind which (i) was a "substantial user" (within the meaning of Section 147(a) of the Code and the regulations thereunder) of all or any portion of the Development (or a "related person"with respect to any such substantial user) at any time during the five-year period preceding the Inducement Date without first obtaining an opinion of Bond Counsel to the effect that such transfer will not adversely affect the tax-exempt status of the Bonds, and (ii) receives, directly or indirectly, proceeds of the Bonds in an amount equal to five percent or more of the face amount of the Bonds originally issued. Section 6.16. Useful Life. Within the meaning of Section 147(b) of the Code, the average maturity of the Bonds does not exceed 120 percent of the average reasonably expected economic life of the facilities being financed with the proceeds of the Bonds. Section 6.17. Federal Guarantee Prohibition The Developer shall take no action nor permit nor suffer any action to be taken if the result of the same would be to cause the Bonds to be "federally guaranteed"within the meaning of Section 149(b) of the Code. Section 6.18. No Existing Facilities The Developer represents and warrants that no proceeds of the Bonds shall be used for the acquisition of any tangible property or an interest therein, other than land or an interest in land, unless the first use of such property is pursuant to such acquisition. Section 6.19. Prohibited Facilities. The Developer represents and warrants that no portion of the proceeds of the Bonds shall be used to provide any airplane, skybox or other private luxury box, health club facility, facility primarily used for gambling, or store the principal business of which is the sale of alcoholic beverages for consumption off premises, and no portion of the proceeds of the Bonds shall be used for an office unless the office is located on the premises of the facilities constituting the Project and unless not more than a de minimus amount of the functions to be performed at such office is not related to the day-to-day operations of the Development. 24 ARTICLE VII EVENTS OF DEFAULT AND REMEDIES Section 7.1. Events of Default. Each of the following shall be an "Event of Default": (a) The Developer shall fail to pay when due the amounts required to be paid under this Agreement or the Developer Note when the same shall become due and payable in accordance with the terms of this Agreement or the Developer Note,including a failure to repay any amounts which have been previously paid but are recovered, attached or enjoined pursuant to any insolvency, receivership,liquidation or similar proceedings; or (b) The Developer shall fail to perform or observe any of its covenants or agreements contained in this Agreement, the Regulatory Agreement, the Developer Note or the Deed of Trust, other than as specified in paragraph (a) above, and such failure shall continue during and after the period specified in Section 7.2; or (c) Any representation or warranty of the Developer shall be determined by the Trustee or the Issuer to have been false in any material respect when made. Section 7.2. Notice of Default: Opportunity to Cure. No default under Section 7.1(b) hereof shall constitute an Event of Default until: (a) The Trustee or the Issuer, by registered or certified mail, shall give notice to the Developer and the Bank of such default specifying the same and stating that such notice is a "Notice of Default"; and (b) The Developer shall have 60 days (30 days with respect to a Regulatory Agreement default) after receipt of such notice to correct the default and shall not have corrected it; provided, however, that if the default stated in the notice is of such a nature that it cannot be corrected within 60 days (or 30 days with respect to a Regulatory Agreement default) , such default shall not constitute an Event of Default hereunder so long as (i) the Developer institutes corrective action within said 60 days (or 30 days, as applicable) and diligently pursues such action until the default is corrected, and (ii) in the opinion of Bond Counsel, the failure to cure said default within 60 days (or 30 days, as applicable) will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds. The Bank may, but shall not be required to, correct the default on behalf of the Developer. Section 7.3. Remedies. Subject to the provisions of the Intercreditor Agreement, whenever any Event of Default under Section 7.1 hereof shall have happened and be continuing, the following remedial steps shall be taken: (a) Immediately upon the occurrence of any Event of Default under Section 7.1 the Trustee shall notify the Bank and declare all amounts due under this Agreement and the Developer Note to be immediately due and payable; provided, however, that in the case of an Event of Default described in (b) or (c) of Section 7.1 hereof, the amounts due under this Agreement and the Developer Note shall not be accelerated where (i) the Trustee has received an opinion of Bond Counsel that the failure to accelerate the Developer Loan under such circumstances will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds, and (ii) the Bank has directed the Trustee not to so declare such amounts; (b) The Trustee shall, for and on behalf of the Issuer and the owners of the Bonds, draw under the Letter of Credit in an amount sufficient to pay amounts due or to become due with respect to the Bonds as provided in the Indenture; and 25 (c) Subject to the provisions of the Indenture (including Article IX thereof) and Section 5.2 hereof, the Trustee and the Issuer, at the written request or consent of the Trustee, shall take whatever action at law or in equity which may appear necessary or desirable to collect the payments required to be made by the Developer under this Agreement, or to enforce performance and observance of any obligation or agreement of the Developer under this Agreement, the Developer Note, the Deed of Trust or the Regulatory Agreement, but in no event shall the Issuer or the Trustee be obligated to take any such action which in its opinion will or might cause it to expend time or money or otherwise incur liability unless and until a satisfactory indemnity bond has been furnished to it. Any amounts collected as payments made on the Developer Note and pursuant to Article V hereof, or applicable to such payments, and any other amounts which would be applicable to payment of principal of, premium, if any, and interest on the Bonds collected pursuant to action taken under this Section shall be applied in accordance with the provisions of the Indenture or, if the outstanding Bonds have been deemed paid in accordance with the provisions of the Indenture, shall be paid as provided in Section 310 of the Indenture. Upon payment in full of all amounts owing under the Indenture, including all fees and expenses of the Trustee, the Tender Agent and the Issuer, the Issuer and the Trustee shall transfer any remaining right, title or interest that each has in the Indenture,this Agreement,the Developer Note and the Deed of Trust to the Bank except any rights to receive payment of fees and expenses and to be indemnified, as provided for herein and therein. Section 7.4. Attorneys' Fees and Expenses. If an Event of Default occurs and if the Issuer or the Trustee should employ attorneys or incur expenses for the enforcement of any obligation or agreement of the Developer contained herein,the Developer on demand will pay to the Issuer or the Trustee the reasonable fees of such attorneys and the reasonable expenses so incurred, including court appeals. Section 7.5. 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 and shall be in addition to every other remedy given under this Agreement or now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. In order to entitle the Issuer or the Trustee to exercise any remedy reserved to either of them in this Article VII, 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 hereunder shall also extend to the owners of the Bonds, and the owners of the Bonds shall be deemed third party beneficiaries of all covenants and agreements herein contained. Section 7.6. No Additional Waiver Implied by One Waiver. In the event any agreement or covenant contained in this Agreement should be breached 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 including any other breach of the same agreement or covenant. 26 ARTICLE VIII MISCELLANEOUS Section 8.1. Entire Agreement. This Agreement, the Developer Note, the Indenture, the Regulatory Agreement and the Deed of Trust constitutes the entire agreement and supersede all prior agreements and understandings, both written and oral;between the Issuer and the Developer with respect to the subject matter hereof. Section 8.2. Notices. All notices, certificates or other communications shall be in writing and shall be sufficiently given and shall be deemed given on the second day following the date on which the same have been personally delivered or mailed by certified mail,return receipt requested, postage prepaid, addressed as follows; If to the Issuer to City of Huntington Beach, 2000 Main Street, P.O. Box, 190, Huntington Beach, California 92648, Attention: Department of Economic Development; if to the Developer, to Five Points Seniors, a general law partnership, c/o Institutional Property Investors, Inc., 19800 MacArthur Boulevard, Suite 680, Irvine, California 92715,Attention: David R. Michelson with a copy to Bret H. Reed Jr., A Law Corporation, 1300 Dove Street, Suite 200, Newport Beach, California 92660 (which copy shall not constitute notice to the Developer) ; if to the Trustee, to Dai-Ichi Kangyo Bank of California, 770 Wilshire Boulevard, 5th Floor, Los Angeles, California 90017; and if to the Bank, to Wells Fargo Bank, N.A., Real Estate Industries Group Community Affairs, 333 South Grand Street, 12th Floor, Los Angeles, California 90071, Attention: Gary Steffens, Vice President; if to the Tender Agent, to DKB Trust Company of New York, One World Trade Center, Suite 5031, New York, New York 10048. A duplicate copy of each notice, certificate or other communication given hereunder shall also be given to each of the above. All other documents required to be submitted to any of the foregoing parties shall also be submitted to such party at its address set forth above. Any of the foregoing parties may, by notice given hereunder, designate any further or different addresses to which subsequent notices,certificates,documents or other communications shall be sent. Section 8.3. Assignments., This Agreement may not be assigned by any party without the prior written consent of the other, which consent shall not be unreasonably withheld; except that the Issuer shall assign to the Trustee its rights under this Agreement and may assign its rights under this Agreement as provided in Section 7.3 and except also that the Developer may assign to any transferee its rights under this Agreement as provided by Section 6.2 and the Trustee may assign its rights to a successor Trustee as provided in Section 901 of the Indenture. Section 8.4. 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, or unenforceable to any extent whatever. Section 8.5. Execution of Counterparts. This Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. Section 8.6. Amendments, Changes and Modifications. Except as otherwise provided in this Agreement or in the Indenture, subsequent to the issuance of Bonds and prior to their payment in full (or provision for payment thereof having been made in accordance with the provisions of the Indenture) , this Agreement may not be effectively amended, changed, modified, altered or terminated without the written consent of the all parties hereto and the Bank. Section 8.7. Governing. This Agreement shall be governed exclusively by and construed in accordance with the applicable laws of the State. 27 a Section 8.8. 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. Time is of the essence in this Agreement. Section 8.9. Survival of Agreement. All agreements,representations and warranties made herein shall survive the making of the Developer Loan. Section 8.10. Survival of Rights. The Trustee's rights to indemnification and to the payment of its fees and expenses shall survive its resignation or removal and final payment or defeasance of the Bonds. The Issuer's rights to indemnification and to the payment of its fees and expenses shall survive the final payment or defeasance of the Bonds. Section 8.11. Recordation. The Developer covenants that it will cause the Regulatory Agreement and any financing statement and all supplements thereto 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 Regulatory Agreement. 28 IN WITNESS WHEREOF, the parties hereto have executed this Agreement, all as of the date fir t above written. CITY OF HUNTINGTON BEACH By: Mayor SEAL ATTEST: City Clerk Approved as to form: By: City Attorney as Trustee By: Authorized Officer FIVE POINTS SENIORS, L.P. By: David R. Michelson,Trustee of the Michelson Family Trust, U.T.D. 12/12/84 as amended 3/1/85 29 EXHIBIT A (Form of Opinion of Developer's Counsel) The opinion of counsel to the Developer shall be in substantially the form set forth in the Bond Purchase Agreement dated as of December _, 1991 by and among the Issuer, the Developer and the Purchaser named therein, with such changes thereto as may be approved by Bond Counsel. A-1 EXHIBIT A-1 (Form of Opinion of Bank's Counsel) The opinion of counsel to the Bank shall be in substantially the form set forth in the Bond Purchase Agreement dated as of December_, 1991 by and among the Issuer, the Developer and the purchaser named therein, with such changes thereto as may be approved by Bond Counsel. EXHIBIT B REQUEST FOR DISBURSEMENT DATE: 19_ REQUISITION NO. _ RE: CITY OF HUNTINGTON BEACH (FIVE POINTS SENIORS PROJECT) TO: Dai-Ichi Kangyo Bank of California, as Trustee Reference is made to (i) that certain Reimbursement Agreement ("Reimbursement Agreement") dated as of December_, 1991, by and between Five Points Seniors, a general law partnership ("Borrower") , and Wells Fargo Bank, N.A., a national banking association ("Bank"), and (ii) that certain Indenture of Trust (the "Indenture") dated as of December 1, 1991, by and among Borrower, Dai-Ichi Kangyo Bank of California, ("Trustee") , and the City of Huntington Beach. Capitalized terms used herein and not otherwise defined herein shall have the meanings set forth in the Reimbursement Agreement or, if not defined in the Reimbursement Agreement,in the Indenture. Pursuant to the Indenture and the Reimbursement Agreement, Borrower hereby requests that a Disbursement in the aggregate amount of$ be made on or before , 19_. Such amount should be disbursed to , Account No. , at Bank's consent is required as a condition to the Disbursement. To induce Bank to consent to the Disbursement described above, and to induce the Trustee to make such disbursement on behalf of the Issuer,the undersigned represents, warrants and certifies to Bank and Trustee that: (a) each obligation to which the amount specified above relates has been properly incurred in connection with the Project being financed with the proceeds of the Developer Loan, is a reimbursable Development Cost properly chargeable against the Developer Loan and has not been the basis of any previous disbursement; (b) the expenditure of the amount specified above, when added to all previous disbursements from the Developer Loan Fund will result in (i) not more than $480,000* having been used to pay or reimburse the Borrower for amounts which are other than Qualified Development Costs and by the date of the final Disbursement not less than 96 percent** of all disbursements from the Developer Loan Fund having been disbursed to pay for Qualified Development Costs and not more than 2% of Bond proceeds having been disbursed to pay Costs of Issuance; (c) disbursements of less than 25% of the Developer Loan have been used to pay or reimburse the Borrower for the cost of acquiring land; (d) the Regulatory Agreement is in full force and effect and the Borrower is not in default thereunder; (e) the representations and warranties of Borrower contained in all of the Loan Documents and Bond Documents are correct on and as of the date hereof as though made on and as of the date hereof, and will be correct on and as of the date of the Disbursement as though made on and as of that date, and no Event of Default (or event which, with the giving of notice and/or the passage of B-1 • i time, could become an Event of Default) has occurred and is continuing as of the date hereof or will have occurred and be continuing as of the date of the Disbursement; (f) Borrower has received (i) valid and enforceable partial or complete lien releases or waivers, as may be appropriate, from all direct subcontractors and from all other Persons who have furnished labor, service, equipment or material to the Project, except with respect to claims being actively contested in good faith or otherwise excepted in accordance with the Reimbursement Agreement, and (ii) an invoice or receipt with respect to each payment made on account of labor, service, equipment or material furnished to the Project in sufficient detail so that the particular nature of the labor, service,equipment or material may be identified; *Such amount may be increased to 5 percent of all disbursements on the Developer Loan for the final Disbursement provided that the Trustee has received an Accountant's Certificate. **Such percentage may be reduced to 95 percent for the final Disbursement provided that the Trustee has received an Accountant's Certificate. (g) as of the date hereof, the construction of the Improvements is in all respects in conformity with the Improvement Plans and all applicable Laws and other requirements; (h) the Disbursement described above and itemized in Schedule 1 attached hereto is in conformity with the terms of the Disbursement Schedule and with the Approved Budget; and (i) the progress of construction of the Improvements is as represented in Schedule 1 attached hereto, and all information set forth therein is true, accurate and complete in all material respects. "Borrower" FIVE POINTS SENIORS, L.P. By: David R. Michelson,Trustee of the Michelson Family Trust, U.T.D. 12/12/84 as amended 3/1/85 *DISBURSEMENT AND PAYMENT THEREOF CONSENTED TO BY: WELLS FARGO BANK, N.A. By: Its *Wells Fargo Bank, N.A. makes no representations, express or implied, concerning the accuracy of the foregoing representations, warranties and certifications made by Borrower. B-2 R SCHEDULEI Itemization of Requested Disbursement EXHIBIT C INCOME COMPUTATION AND CERTIFICATION NOTE TO APARTMENT OWNER: This form is designed to assist you in computing Annual Income in accordance with the method set forth in the Department of Housing and Urban Development("HUD") Regulations (24 CFR 813). You should make certain that this form is at all times up to date with the HUD Regulations. Re:[Address of Apartment Building] I/We,the undersigned state that Uwe have read and answered fully, frankly and personally each of the following questions for all persons who are to occupy the unit being applied for in the above apartment project. Listed below are the names of all persons who intend to reside in the unit: 1 2. 3. 4. 5. Name of Members Relationship of the to Head of Social Security Place of Household Household Age Number Employment HEAD SPOUSE Income Computation 6. The total anticipated income, calculated in accordance with the provisions of this paragraph 6, of all persons over the age of 18 years listed above for the 12-month period beginning the date that I/we plan to move into a unit is $ Included in the total anticipated income listed above are: (a) all wages and salaries, overtime pay, commissions, fees, tips and bonuses and other compensation for personal services, before payroll deductions; (b) the net income from the operation of a business or profession or from the rental of real or personal property (without deducting expenditures for business expansion or amortization of capital indebtedness or any allowance for depreciation of capital assets); (c) interest and dividends (including income from assets excluded below); C-1 (d) the full amount of periodic payments received from social security, annuities, insurance policies,retirement funds,pensions, disability or death benefits and other similar types of periodic receipts, including any lump sum payment for the delayed start of a periodic payment; (e) payments in lieu of earnings, such as unemployment and disability compensation, workmen's compensation and severance pay; (f) the maximum amount of public assistance available to the above persons other than the amount of any assistance specifically designated for shelter and utilities; (g) periodic and determinable allowances, such as alimony and child support payments and regular contributions and gifts received from persons not residing in the dwelling; (h) all regular pay, special pay and allowances of a member of the Armed Forces (whether or not living in the dwelling) who is the head of the household or spouse; and (i) any earned income tax credit to the extent that it exceeds income tax liability. Excluded from such anticipated income are: (a) casual, sporadic or irregular gifts; (b) amounts which are specifically for or in reimbursement of medical expenses; (c) lump sum additions to family assets, such as inheritances, insurance payments (including payments under health and accident insurance and workmen's compensation), capital gains and settlement for personal or property losses; (d) amounts of educational scholarships paid directly to the student or the educational institution, and amounts paid by the government to a veteran for use in meeting the costs of tuition, fees, books and equipment. Any amounts of such scholarships or payments to veterans not used for the above purposes are to be included in income; (e) special pay to a household member who is away from home and exposed to hostile fire; (f) relocation payments under Title II of the Uniform Relocation Assistance and Real Property Acquisition Policies Law of 1970; (g) foster child care payments; (h) the value of coupon allotments for the purchase of food pursuant to the Food Stamp Law of 1977; (i) payments to volunteers under the Domestic Volunteer Service Law of 1973; (j) payments received under the Alaska Native Claims Settlement Law; (k) income derived from certain submarginal land of the United States that is held in trust for certain Indian tribes; C-2 (1) payments or allowances made under the Department of Health and Human Services' Low-Income Home Energy Assistance Program; (m) payments received from the Job Training Partnership Law; (n) income derived from the disposition of funds of the Grand River Band of Ottawa Indians; and (o) the first$2,000.00 of per capita shares received from judgment funds awarded by the Indian Claims Commission or the Court of Claims. 7. Do the persons whose income or contributions are included in item 6 above: (a) have savings, stocks, bonds, equity in real property or other form of capital investment(excluding the values of necessary items of personal property such as furniture and automobiles and interests in Indian trust land)Yes No ; or (b) have they disposed of any assets (other than at a foreclosure or bankruptcy sale) during the last two years at less than fair market value?Yes - No (c) If the answer to (a) or (b) above is yes, does the combined total value of all such assets owned or disposed of by all such persons total more than $5,000? Yes No (d) If the answer to (c) above is yes, state: (1) the amount of income expected to be derived from such assets in the 12- month period beginning on the date of initial occupancy in the unit that you propose to rent: $ , and (2) the amount of such income,if any, that was included in item 6 above: $ 8. (a) Are all of the individuals who propose to reside in the unit full-time students*?Yes No *A full-time student is an individual enrolled as a full-time student during each of 5 calendar months during the calendar year in which occupancy of the unit begins at an educational organization which normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance and is not an individual pursuing a full-time course of institutional or farm training under the supervision of an accredited agent of such an educational organization or of a state or political subdivision thereof. (b) If the answer to 8(a) is yes, is at least 1 of the proposed occupants of the unit a husband and wife entitled to file a joint federal income tax return?Yes No 9. Neither myself nor any other occupant of the unit I/we propose to rent is the owner of the rental housing project in which the unit is located (hereinafter the "Owner"), has any family relationship to the Owner; or owns directly or indirectly any interest in the Owner. For purposes of this paragraph, indirect ownership by C-3 • an individual shall mean ownership by a family member, ownership by a corporation,partnership, estate or trust in proportion to the ownership or beneficial interest in such corporation, partnership,estate or trustee held by the individual or a family member; and ownership, direct or indirect, by a partner of the individual. 10.This certificate is made with the knowledge that it will be relied upon by the Owner to determine maximum income for eligibility to occupy the unit; and Uwe declare that all information set forth herein is true, correct and complete and based upon information Uwe deem reliable and that the statement of total anticipated income contained in paragraph 6 is reasonable and based upon such investigation as the undersigned deemed necessary. 11. Uwe will assist the Owner in obtaining any information or documents required to verify the statements made herein, including either an income verification from my/our present employer(s) or copies of federal tax returns for the immediately preceding calendar year. 12. Uwe acknowledge that Uwe have been advised that the making of any misrepresentation or misstatement in this declaration will constitute a material breach of my/our agreement with the Owner to lease the unit and will entitle the Owner to prevent or terminate my/our occupancy of the unit by institution of an action for ejection or other appropriate proceedings. Uwe declare under penalty of perjury that the foregoing is true and correct. Executed this day of in the City of , California. Applicant Applicant [Signature of all persons over the age of 18 years listed in number 2 above required] FOR COMPLETION BY APARTMENT OWNER ONLY: 1. calculation of eligible income: a. Enter amount entered for entire household in 6 above: $ b.(1) If answer to 7(c) above is yes, enter the total amount entered in 7(d)(1), subtract from that figure the amount entered in 7(d)(2) and enter the remaining balance ($ ); (2) Multiply the amount entered in 7(c) times the current passbook savings rate to determine what the total annual earnings on the amount in 7(c) would be if invested in passbook C-4 savings ($ ), subtract from that figure the amount entered in 7(d)(2) and enter the remaining balance ($ }; (3) Enter at right the greater of the amount calculated under(1) or(2) above: $ ; c.TOTAL ELIGIBLE INCOME (Line La plus line l.b(3)): $ 2. The amount entered in l.c: Qualifies the applicant(s) as a Lower Income Tenant(s). Does not qualify the applicant(s) as a Lower Income Tenant(s). 3. Number of apartment unit assigned: Bedroom Size: Rent: $ 4. This apartment unit [was/was not] last occupied for a period of 31 consecutive days by persons whose aggregate anticipated annual income as certified in the above manner upon their initial occupancy of the apartment unit qualified them as Lower Income Tenants. 5. Method used to verify applicant(s) income: Employer income verification. Copies of tax returns. Other( ) Manager C-5 INCOME VERIFICATION (FOR EMPLOYED PERSONS) The undersigned employee has applied for a rental unit located in a project financed under the City of Huntington Beach Multifamily Housing Program for persons of low and moderate income. Every income statement of a prospective tenant must be stringently verified. Please indicate below the employee's current annual income from wages, overtime, bonuses, commissions or any other form of compensation received on a regular basis. Annual wages Overtime Bonuses Commissions Total current income I hereby certify that the statements above are true and complete to the best of my knowledge. Signature Date Title I hereby grant you permission to disclose my income to in order that they may determine my income eligibility for rental of an apartment located in their project which has been financed under the City of Huntington Beach Multifamily Housing Program. Signature Date Please send to: C-6 INCOME VERIFICATION (for self-employed persons) I hereby attach copies of my. individual federal and state income tax returns for the immediately preceding calendar year and certify that the information shown in such income tax returns is true and complete to the best of my knowledge. Signature Date C-7 EXHIBIT D Period Covered (Annual or monthly) CERTIFICATE OF CONTINUING PROGRAM COMPLIANCE CITY OF HUNTINGTON BEACH (FIVE POINTS SENIORS PROJECT) The undersigned, Five Points Seniors, a general law partnership (the "Developer") , has read and is thoroughly familiar with the provisions of the various Developer Loan Documents associated with the Developer's participation in the City of Huntington Beach's (the "Issuer") Multifamily Housing Program, such documents including: 1. The Regulatory Agreement dated as of December 1, 1991 among the Developer,the Issuer and (the Trustee) ; 2. The Loan Agreement dated as of December 1, 1991 among the Developer,the Issuer and the Trustee; and 3. The Developer Note dated as of December 1, 1991 from the Developer to the Issuer and endorsed to the Trustee representing the Developer's obligation to repay its Developer Loan. 4. As of the date of this Certificate,the following percentages of completed residential units in the Development(i) are occupied by Very Low Income Tenants (as such term is defined in the Regulatory Agreement) or (ii) are currently vacant and being held available for such occupancy and have been so held continuously since the date a Very Low Income Tenant vacated such unit; as indicated: Total Units Completed: Number of Units Occupied by Very Low Income Tenants: Percent of Total Units Occupied by Very Low Income Tenants: D-1 Type of Units Occupied by Very Low Income Tenants: Studio Apartments Unit Nos. Rent Charged One Bedroom Apartments Unit Nos. Rent Charged Two Bedroom Apartments Unit Nos. Rent Charged Held vacant for occupancy continuously since last occupied by Very Low Income Tenant percentUnit Nos. Vacant Units percentUnit Nos. 5. No Determination of Taxability (as defined in the Loan Agreement) has occurred and, to the Developer's knowledge, no event has occurred which, with the passage of time, would cause a Determination of Taxability to occur ¢or if such an event has occurred explain below the event and the steps being taken to remedy such event!. The undersigned hereby certifies that the Developer is not in default under any of the terms and provisions of the above documents. FIVE POINTS SENIORS, L.P. By: David R. Michelson,Trustee of the Michelson Family Trust, U.T.D. 12/12/84 as amended 3/l/85 D-2 • EXHIBIT E DEVELOPER NOTE $9,500,000 December_, 1991 Five Points Seniors, L.P. (the 'Developer") hereby PROMISES TO PAY TO THE ORDER OF THE CITY OF HUNTINGTON BEACH (the "Issuer") , a public body corporate and politic duly.organized and existing under the laws of the State of California, the principal sum of Nine Million Five Hundred Thousand Dollars ($9,500,000), together with interest from December _, 1991 on the unpaid principal balance owing hereunder at the Adjustable Interest Rate,the Reset Rate or the Fixed Rate, as the case may be, as provided for in Sections 211, 212 and 213, respectively, of the Indenture (defined below) . This Promissory Note is issued, executed and delivered pursuant to that certain Loan Agreement dated as of December 1, 1991 by and among the Developer, the Issuer and Dai-Ichi Kangyo Bank of California (the "Trustee") (the "Loan Agreement") . All capitalized terms used herein and not otherwise defined herein shall have the respective meanings set forth in the Loan Agreement or in the Indenture of Trust dated as of December 1, 1991 between the Issuer and the Trustee (the "Indenture") . Principal and interest shall be payable as follows: (a)Interest on the principal amount hereof shall be payable in arrears: (1) During an Adjustable Interest Rate Period, in quarterly installments on the first Business Day of each quarter, commencing January 1, 1992, in the respective amounts determined pursuant to the Loan Agreement which at all times shall be sufficient to pay the interest due on the Bonds; and (2) During a Reset Period or after Conversion, in semiannual installments on January 1 and July 1 of each year, at the Reset Rate or the Fixed Rate, as applicable,until this Promissory Note shall have been paid in full. (b) On December 1, 2021,the entire unpaid principal balance,together with all accrued but unpaid interest, shall be due and payable. All payments on this Promissory Note not made from a drawing under the Letter of Credit (or the Developer Letter of Credit with respect to prepayment premiums) shall be made in lawful money of the United States of America at the principal corporate trust office of the Trustee. All sums paid hereon shall be applied first to the satisfaction of interest due and the balance to the unpaid principal owing hereunder. This Promissory Note is subject to mandatory prepayment in the following principal amounts, plus interest accrued to the date fixed by the Trustee for redemption of the Bonds to be redeemed with such prepayment: (a) On December 1, 1994, in an amount equal to the amount on deposit in the Developer Loan Fund which shall not have been disbursed to fund the Developer Loan or set aside to pay Development Costs incurred but not paid prior to November 1, 1994,provided that such date shall be extended at the request of the Developer and upon approval by the Issuer and the Bank and E-3 receipt by the Trustee of an opinion of Bond Counsel that such extension will not adversely affect the exclusion from gross income of interest on the Bonds for federal income tax purposes, in which case this Promissory Note shall be prepaid on such later date as approved by Bond Counsel in an amount equal to the amount of the Developer Loan proceeds not disbursed to pay Development Costs prior to such extended date; (b) On the first Interest Payment Date subsequent to the Completion Date of the Development for which notice of redemption of the Bonds to be redeemed with such prepayment may be timely given by the Trustee, in an amount equal to the amount on deposit in the Developer Loan Fund not disbursed prior to such Completion Date to pay Development Costs or set aside to pay Development Costs incurred but not paid prior to the Completion Date. (c) On the day selected by the Trustee to redeem Bonds after the Trustee has accelerated the amounts due with respect to the Bonds or this Promissory Note, as the case may be, as a result of an event of default under the Indenture, the Loan Agreement or the Regulatory Agreement, in an amount equal to the then unpaid principal amount of this Promissory Note; (d) On the day selected by the Trustee to redeem Bonds where the Developer has failed to deliver to the Trustee a Substitute Credit Facility satisfying the criteria set forth in Section 214 of the Indenture, within 60 days of written notice to the Trustee of the occurrence of an Act of Bankruptcy of the Bank, or at least 15 days (during the Adjustable Interest Rate Period) or 45 days (during a Reset Period or after Conversion) prior to.the then scheduled expiration date of the Letter of Credit, but in no event shall such redemption occur later than five days prior to such expiration date of the Letter of Credit; (e) On the first day for which notice of redemption may be timely given after the Bank fails or refuses to honor a drawing under the Letter of Credit and the Trustee has on deposit sufficient funds to effect such redemption. (f) On the day selected by the Trustee to redeem Bonds, in the event of an involuntary loss or the substantial destruction of the Development as a result of unforeseen events (e.g., fire, seizure, requisition, change in a federal law or an action of a federal agency after the date of issuance of the Bonds which prevents the Issuer from enforcing the requirements of Section 1.103-8(b) of the Regulations, or condemnation) , upon receipt of insurance or other compensation or,if there are to be no such payments, after the event giving rise to the involuntary loss or substantial destruction of the Development, in an amount equal to the then unpaid principal amount of this Promissory Note. Notwithstanding the foregoing, this Promissory Note will not have to be prepaid in whole in such circumstances if(i) within 90 days of the event giving rise to the loss or destruction, theDeveloper notifies the Trustee and the Issuer, in writing, that the Development can be restored within 18 months to a condition permitting the conduct of normal business operations or that if such event shall occur during the construction of the Development, completion of the Development will not be delayed for more than twelve months; (ii) within 180 days of the event giving rise to such taking, loss or destruction, the Developer commences to use such amounts to reconstruct the Development pursuant to the terms of the Loan Agreement and the Indenture; and (iii) such amounts are disbursed for the restoration of the Development within 18 months after the date of the notice from the Developer referred to in clause (i) hereof, or, if such event shall occur during the construction of the Development, such amounts are disbursed within the period provided for in said clause (i) but, rather, the Promissory Note shall be prepaid, in part, to the extent of undisbursed funds on deposit in the Insurance Proceeds Account created pursuant to the Indenture at the expiration of the period described in (iii) above unless such period is extended with the consent of the Issuer and the Bank and an opinion of Bond Counsel to the effect that such extension will not result in interest on the Bonds becoming includable in the gross income of the recipients thereof for federal income tax purposes; provided, however, that such prepayment in E-4 • whole shall be immediately due and payable if in the written opinion of Bond Counsel filed with the Issuer, the Developer, the Bank and the Trustee a failure to make such prepayment will cause interest on the Bonds to be included in gross income for federal income tax purposes; (g) On the day selected by the Trustee to redeem Bonds after the Trustee has received written notice from the Bank to redeem Bonds as a result of the occurrence of an event of default under the Reimbursement Agreement, in an amount equal to the then unpaid principal amount of this Promissory Note; (h) On the day selected by the Trustee to redeem Bonds after the Trustee has received notice from the Issuer of a Determination of Taxability,in an amount equal to the unpaid principal amount of this Promissory Note; and (i) On the Conversion Date, any Reset Date or Substitution Date in the event the conditions precedent to a remarketing of the Bonds on any of such dates, as set forth in Section 1105 of the Indenture, have not been satisfied, in an amount equal to the principal amount of this Promissory Note. If the required principal amount of any prepayment in part pursuant to Section 5.3 and Section 5.4 of the Loan Agreement shall not be an integral multiple of $100,000 during an Adjustable Interest Rate Period or $5,000 during a Reset Period and after Conversion, then the required principal amount of such prepayment shall be deemed to be the next greater integral multiple of$100,000 or$5,000, as applicable, and any interest due with such prepayment shall be calculated using such higher amount. The Trustee shall deposit and use prepayments of this Promissory Note pursuant to Section 5.3 and Section 5.4 of the Loan Agreement in accordance with the Indenture. In the event of a partial prepayment of this Promissory Note, pursuant to Section 5.3 or Section 5.4 of the Loan Agreement, the principal amount of the Developer's obligation under this Promissory Note shall be reduced by the principal amount of Bonds to be redeemed with the ,,proceeds of such prepayment. This Promissory Note may be optionally prepaid as follows: (a)The Developer,at its option, subject to the prior written consent of the Bank in the event that a drawing under the Letter of Credit will be required to effect such payment, may prepay this Promissory Note, in whole or in part on any Interest Payment Date during an Adjustable Interest Rate Period following written notice of the Developer's intention to do so as provided below, in any integral multiple of$100,000, at the principal amount thereof,together with accrued interest to the date on which Bonds will be redeemed with such payment; E-5 • (b) The Developer, at its option, may prepay this Promissory Note, in whole or in part in any integral multiple of $5,000 on any Interest Payment Date during any Reset Period or after Conversion, at the respective initial prepayment prices set forth below expressed as percentages of the principal amount of the Developer Note prepaid, such initial prepayment prices declining 1% each year until such prepayment price equals 100% of the principal amount of the Developer Note. Term of Reset Period Initial or from Conversion Prepayment to Maturity No Call Period Price No Premium 15 or more years First 7 years 102.0% 10th year after Reset or and there- Conversion Date after 10 or more years First 5 years 102.0% 8th year after Reset or and there- Conversion Date after 5 years or more First 3 years 102.0% 6th year (but less than 10) and there- after Reset or after Conversion Date Less than 5 years No call If and to the extent the Developer Letter of Credit does not provide for the payment of premiums on this Promissory Note any prepayment premium paid by the Developer to the Trustee shall be deposited with the Trustee at least one year prior to the date that the Trustee is required to mail a notice of redemption with respect to the applicable Bonds to be redeemed,and on the date of such payment,the Developer shall give written notice to the Issuer,the Bank and the Trustee of the principal amount to be optionally prepaid on the applicable Interest Payment Date and the amount of prepayment premium. No optional prepayment shall occur if an Act of Bankruptcy occurs prior to or during the one-year period prior to the mailing of the notice of redemption. In such event,the Trustee shall hold such funds of the Developer until directed by a court of competent jurisdiction as to their disposition. If default is made in the payment of the principal of or any installment of interest on this Promissory Note and the same is placed in the hands of an attorney for collection, or if suit is filed hereon, or proceedings are had in bankruptcy, probate, receivership, reorganization, arrangement or other judicial proceedings for the establishment or collection of any amount called for hereunder, or any amount payable or to be payable hereunder is collected through any such proceedings, the Developer agrees to pay to the holder hereof all reasonable costs of collection,including attorneys fees. All past-due installments of the principal of or interest on this Promissory Note shall bear interest at the Maximum Permitted Rate from and after maturity until paid. The Developer expressly waives demand and presentment for payment, notice of nonpayment, protest, notice of protest,notice of dishonor, bringing of suit, and diligence in taking any action to collect any amounts called for hereunder and in the handling of properties, rights or collateral at any time existing in connection herewith. The Developer shall not be personally liable for amounts owing under this Promissory Note and the Issuer's or the Trustee's remedies in the event of a default hereunder shall be limited to those set forth in the Loan Agreement and the Deed of Trust. This limitation of remedies shall E-6 not apply to the Issuer's and the Trustee's rights to their fees, expenses and indemnifications as set forth in Section 5.2 of the Loan Agreement. This Promissory Note has been issued pursuant to the Loan Agreement and is entitled to the benefit and security thereof. Reference is hereby made to the Loan Agreement for provisions relating to the acceleration of the indebtedness evidenced hereby upon the occurence of certain events stated therein, and for all other relevant purposes. E-7 This Promissory Note has been issued, executed and delivered in the State of California and shall be governed by and construed in accordance with the laws of the State of California, except to the extent that the laws of the United States of America may prevail. FIVE POINTS SENIORS, L.P. By: David R. Michelson,Trustee of the Michelson Family Trust, U.T.D. 12/12/84 as amended 3/1/85 E-8 ENDORSEMENT TO PROMISSORY NOTE,dated December_, 1991, in the principal amount of$9,500,000, made by Five Points Seniors, L.P., payable to the order of the CITY OF HUNTINGTON BEACH. PAY TO THE ORDER OF Dai-Ichi Kangyo Bank of California, as Trustee. CITY OF HUNTINGTON BEACH By: E-9 i * EXHIBIT F COMPLETION CERTIFICATE CITY OF HUNTINGTON BEACH (FIVE POINTS SENIORS PROJECT) Capitalized terms used in this Certificate and not otherwise defined shall have the meanings assigned to such terms in the Indenture of Trust dated as of December 1 _, 1991, between the City of Huntington Beach (the "Issuer") and Dai-Ichi Kangyo Bank of California, as trustee (the "Trustee") or the Loan Agreement dated as of December 1, 1991s among the Issuer, the Trustee and Five Points Seniors. The undersigned hereby certifies that: (1) all portions of the Development were substantially completed and available either for occupancy or use by tenants in the Development as of (2) the aggregate amount disbursed on the Developer Loan to date is $ ; (3) all amounts disbursed on the Developer Loan have been applied to pay or reimburse the undersigned for the payment solely of Development Costs; and (4) at least 95 percent of the amounts disbursed on the Developer Loan have been applied to pay or reimburse the Developer for the payment of Qualified Development Costs (as that term is used in the Regulatory Agreement) , and less than 25% of the amounts disbursed on the Developer Loan have been applied to pay or reimburse the Developer for the cost of acquiring land or any interest therein and not more than 2% of amounts disbursed on the Developer Loan have been applied to pay Costs of Issuance. -FIVE POINTS SENIORS, L.P. By: David R. Michelson,Trustee of the Michelson Family Trust, U.T.D. 12/12/84 as amended 3/1/85 F-1 a r The undersigned hereby certifies that $ has been disbursed on the Developer Loan. DAI-ICHI KANGYO BANK OF CALIFORNIA, as Trustee By: F-2 w w CERTIFICATE OF CERTIFIED PUBLIC ACCOUNTANT the undersigned, a certified public accountant licensed to do business in the State of California, DO HEREBY CERTIFY to the City of Huntington Beach (the "Issuer") : 1.I am a representative of (or have been retained by) (the "Company") and am authorized to execute and deliver this certificate on behalf of the Company. 2.I have reviewed the Loan Agreement,the Developer's Tax and No Arbitrage Certificate, Section 142 of the Internal Revenue Code of 1986 and Treasury Regulations Section 1.103-8(a) and understand the significance of this Certificate in computing the amount of Qualified Development Costs relating to disbursements on the Developer Loan. 3.I have reviewed the Developer's books and records and the previous Requests for Disbursement paid by the Trustee, together with the proposed final Request for Disbursement. Based upon such review, I have determined that the.Developer has paid or incurred all of the Development Costs set forth in the Requests for Disbursement and that, upon payment by the Trustee of the final Request for Disbursement, not less than 95 percent of all disbursements from the Developer Loan Fund have been applied to pay or to reimburse the Developer for Qualified Development Costs and not more than 2% of all disbursements under the Developer Loan have been applied to pay or to reimburse the Developer for Costs of Issuance. EXECUTED this_day of , 19_. ACCOUNTANT By: Its: 18019-34 JHHW:TAD:cep 09/24/91 :cep 10/23/91 :brf 11/08/91 RECORDING REQUESTED BY AND WHEN RECORDED RETURN TO: JONES HALL HILL & WHITE 4 EMBARCADERO CENTER, SUITE 1950 SAN FRANCISCO, CALIFORNIA 94111 ATTENTION: THOMAS A. DOWNEY REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE COVENANTS By and Among CITY OF HUNTINGTON BEACH and DAI-ICHI KANGYO BANK OF CALIFORNIA, as Trustee and FIVE POINTS SENIORS, L.P. Dated as of December 1, 1991 Relating to $9,500,000 CITY OF HUNTINGTON BEACH VARIABLE RATE DEMAND MULTIFAMILY HOUSING REVENUE BONDS (FIVE POINTS SENIOR VILLAS PROJECT), SERIES A OF 1991 TABLE OF CONTENTS Section 1. Definitions and Interpretation...................................................................................2 Section 2. Acquisition, Construction, Equipping and Completion of the Development...............6 Section 3. Residential Rental Property.......................................................................................7 Section 4. Very Low Income Tenants........................................................................................9 Section 5. Tax Status of the Bonds............................................................................................12 Section 6. Modification of Special Tax Covenants.....................................................................12 Section7. Indemnification........................................................................................................13 Section8. Consideration...........................................................................................................13 Section9. Reliance....................................................................................................................14 Section 10. Sale or Transfer of the Development.........................................................................14 Section11. Term........................................................................................................................15 Section 12. Covenants to Run With the Land...............................................................................15 Section 13. Burden and Benefit...................................................................................................15 Section14. Uniformity...............................................................................................................16 Section15. Enforcement.............................................................................................................16 Section 16. Recording and Filing................................................................................................16 Section17. Payment of Fees...................................................................................................... Section18. Governing Law.........................................................................................................17 Section19. Amendments............................................................................................................17 Section20. Notice.......................................................................................................................17 Section21. Severability...............................................................................................................18 Section 22. Multiple Counterparts...............................................................................................18 Section 23. Trustee Acting Solely in Such Capacity....................................................................18 Section 24. Compliance by Developer.........................................................................................19 Exhibit A Legal Description of Land................................................................... REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE COVENANTS THIS REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE COVENANTS (the "Regulatory Agreement"), made and entered into as of December 1, 1991, by and among City of Huntington Beach, a chartered city and municipal corporation, organized and existing under the constitution and laws of the State of California (together with any successor to its rights, duties and obligations, the "Issuer"), Dai-Ichi Kangyo Bank of California, duly authorized to accept and execute trusts of the type contemplated by the Indenture (as hereinafter defined), with its principal corporate trust office in Los Angeles, as Trustee (the "Trustee"), and Five Points Seniors, L.P. (the "Developer"), WITNESSETH : WHEREAS,the Legislature of the State of California enacted Chapter 7,Part 5 of Division 31 of the Health and Safety Code (the "Act") to authorize housing authorities to issue bonds to finance the construction of multifamily rental housing for families and individuals of low or moderate income; and WHEREAS, the Issuer is a public body corporate and politic (within the meaning of that term in the Regulations of the Department of Treasury and the rulings of the Internal Revenue Service prescribed and promulgated pursuant to Section 103 of the Internal Revenue Code of 1986, as amended (the "Code"); and WHEREAS, on November 18, 1991 the Issuer adopted a resolution (the "Resolution") authorizing the issuance of revenue bonds in connection with the financing of the approximately 164-unit multifamily residential rental housing project of the Developer located in the City of Huntington Beach in the County of Orange (the "Development"); and WHEREAS, in furtherance of the purposes of the Act and the Resolution and as a part of the Issuer's plan of financing residential housing, the Issuer proposes to issue $9,500,000 aggregate principal amount of its revenue bonds designated "City of Huntington Beach Variable Rate Demand,Multifamily Housing Revenue Bonds (Five Points Senior Project), Series A of 1991" (the "Bonds"), the proceeds of which will be loaned to the Developer (the "Developer Loan") which, in consideration of the Developer Loan, will cause to be delivered to the Trustee a letter of credit (the "Letter of Credit") in accordance with the terms of the Indenture and use the proceeds of the Developer Loan to finance the cost of the Development for the public purpose of providing decent, safe and sanitary housing; and WHEREAS, the Issuer, the Trustee and the Developer have entered into a Loan Agreement,dated the date hereof(the "Agreement"), providing for(i) the delivery of the Letter of Credit and (ii) the terms and conditions under which the Issuer will make the Developer Loan to the Developer to finance the acquisition,construction and equipping of the Development; and WHEREAS, the Letter of Credit is to be issued to the Trustee to be held by the Trustee in trust for the benefit of the owners from time to time of the Bonds pursuant to the terms of the Indenture to pay when due the principal of and interest on the Bonds; and WHEREAS, all things necessary to make the Bonds, when issued as provided in the Indenture, the valid, binding, and limited obligations of the Issuer according to the import thereof, and to constitute the Indenture a valid assignment of the amounts 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 the Indenture and the execution and issuance of the Bonds, subject to the terms thereof, in all respects have been duly authorized; and WHEREAS, the Issuer has considered opportunities to contribute to the economic feasibility of the Development as required by the Act; and WHEREAS, the Issuer has obtained an allocation for the Development of a portion of the State of California's private activity bond volume cap, within the meaning of Section 146 of the Code, in accordance with the procedures established by the California Debt Limit Allocation Committee; and WHEREAS,the Code and the regulations and rulings promulgated with respect thereto and the Act prescribe that the use and operation of the Development be restricted in certain respects and in order to ensure that the Development will be constructed,used and operated in accordance with the Code and the Act, the Issuer,the Trustee and the Developer have determined to enter into this Regulatory Agreement in order to set forth certain terms and conditions relating to the acquisition, construction,equipping and operation of the Development; NOW,THEREFORE, in consideration of the mutual covenants and undertakings set forth herein, and other good and valuable consideration,the receipt and sufficiency of which hereby are .acknowledged,the Issuer, the Trustee and the Developer hereby agree as follows: Section 1. Definitions and Interpretation. The following terms shall have the respective meanings assigned to them in this Section 1 unless the context in which they are used clearly requires otherwise: "Act" - Chapter 7 of Part 5 of Division 31 of the Health and Safety Code of the State of California as now in.effect and as it may from time to time hereafter be amended or supplemented. "Adjusted Income" - The adjusted income of all persons who intend to reside in one residential unit, calculated in the manner determined by the Secretary of the Treasury pursuant to Section 142(d)(2)(B) of the Code. "Affiliated Party" - (1) a Person whose relationship with the Developer would result in a disallowance of losses under Section 267 or 707(b) of the Code or(2) a Person who together with the Developer are members of the same controlled group of corporations (as defined in Section 1563(a) of the Code, except that "more than 50 percent" shall be substituted for "at least 80 percent"each place it appears therein), (3) a partnership and each of its partners (and their spouses and minor children) whose relationship with the Developer would result in a disallowance of losses under Section 267 or 707(b)'of the Code and (4) an S corporation and each of its shareholders (and their spouses and minor children) whose relationship with the Developer would result in a disallowance of losses under Section 267 or 707(b) of the Code. "Agreement" - The Loan Agreement entered into by the Developer, the Trustee and the Issuer pursuant to which the Issuer will make the Developer Loan. "Area -The Anaheim-Santa Ana,California Primary Metropolitan Statistical Area. "Bank" -Wells Fargo Bank, N.A., acting as the issuer of the Letter of Credit, or the issuer of a Substitute Credit Facility,if one has been issued as provided in the Indenture. 2 "Bond Counsel" - An attorney or a firm of attorneys of nationally recognized standing in matters pertaining to the tax status of interest on bonds issued by states and their political subdivisions, who is or are reasonably acceptable to the Issuer and the Trustee and duly admitted to the practice of law before the highest court of any state of the United States of America or the . District of Columbia. "Bond Issuance Date" -The date of the delivery of the Bonds, being December_, 1991. "Bonds" - City of Huntington Beach Variable Rate Demand Multifamily Housing Revenue Bonds (Five Points Senior Project), Series A of 1991. "Certificate of Continuing Program Compliance" - The certificate with respect to the Development to be filed by the Developer with the Issuer,the Bank and the Trustee which shall be substantially in the form attached to the Agreement as Exhibit D. "City" -The City of Huntington Beach, California. "Code" - The Internal Revenue Code of 1986, as amended, together with the Regulations. All references herein to sections, paragraphs or other subdivisions of the Code or the Regulations shall be deemed to be references to correlative provisions of any applicable successor code or regulations promulgated thereunder. "Completion Certificate" -The certificate of completion of the Development required to be delivered to the Issuer, the Bank and the Trustee by the Developer pursuant to Section 2 of this Regulatory Agreement, which shall be substantially in the form attached to the Agreement as Exhibit F. "Completion Date" - The date of the completion of the acquisition, construction and equipping of the Development, as that date shall be certified as provided in Section 2 of this Regulatory Agreement. "Costs of Issuance" - All costs incurred in connection with the issuance of the Bonds, including, but not limited to, underwriter's fee or discount, attorneys' fees and expenses (including Bond Counsel, Issuer's counsel, Developer's counsel, Trustee's counsel, as well as other specialized counsel fees and expenses incurred in connection with the borrowing), Bank's origination and first annual Letter of Credit fee, fees and expenses of counsel to the Bank, Issuer's initial fees and expenses, financial advisor fees and expenses, rating agency fees, Trustee's initial fees and expenses,Tender Agent's initial fees and expenses, accountant fees related to the issuance of the Bonds, printing costs for the Bonds and any preliminary and final offering materials, costs incurred in connection with satisfying the public approval requirement of Section 147(f) of the Code and costs of engineering and feasibility studies necessary to the issuance of the Bonds, if any. "County -The County of Orange, California. "Deed of Trust" - The Construction Deed of Trust, Assignment of Rents and Fixture Filing,executed by the Developer and granting a security interest in the Development to the deed trustee for the benefit of the Trustee and the Bank to secure the Developer's obligations under the Developer Note and the Reimbursement Agreement. "Determination of Taxability" - (1) the failure of the Bank to consent in writing within forty-five (45) days to any amendment to the Indenture, the Loan Agreement or the Regulatory Agreement which in the written opinion of Bond Counsel is necessary to preserve the exclusion 3 from gross income of interest on the Bonds for federal income tax purposes, or (2) enactment of legislation or a final judgment or order of a court of original jurisdiction, a final order of any other court of competent jurisdiction, or a final ruling or decision of the Internal Revenue Service, in any such case to the effect that the interest on any of the Bonds (other than interest on any Bond for any period during which such Bond is held by a "substantial user" of any facility financed with the proceeds of the Bonds or a "related person," as such terms are used in Section 147(a) of the Code) is not excludable for federal income tax purposes from the gross incomes of the recipients thereof subject to federal income taxes as a result of action or inaction of the Developer during an Adjustable Interest Rate Period and as a result of any action during a Reset Period or after Conversion. With respect to clause (2) above, a judgment or order of a court 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" - Five Points Seniors, L.P. , and its successors and assigns. "Developer Loan" - The mortgage loan made by the Issuer to the Developer to provide financing for the Development. "Developer Note" - The promissory note executed by Developer in a principal amount equal to the principal amount of the Developer Loan. "Developer's Tax and No Arbitrage Certificate"-The certificate of the Developer, dated as of the Bond Issuance Date, with respect to certain Development Costs delivered to the Issuer by the Developer. "Development"-The Development Facilities and the Development Site. "Development Costs" - To the extent authorized by the Code,the Regulations and the Act, any and all costs incurred by the Developer with respect to the acquisition, construction, and equipping, as the case may be, of the Development, whether paid or incurred prior to or after the Inducement Date, including, without limitation, costs for site preparation,the planning of housing and related facilities and improvements, the acquisition of property, the removal or demolition of existing structures, the construction of housing and 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 services, other expenses necessary or incident to determining the feasibility of the Development, contractors' and Developer's overhead and supervisors' fees and costs directly allocable to the Development, administrative and other expenses necessary or incident to the Development and the financing thereof (including reimbursement to any municipality, county or entity for expenditures made, with the approval of the Issuer,for the Development), interest accrued during construction and prior to the Completion Date and all other costs approved by Bond Counsel. "Development Facilities" - The buildings, structures and other improvements to be constructed on the Development Site, and all fixtures and other property owned by the Developer and located on, or used in connection with, such buildings, structures and other improvements constituting the Development. "Development Site"-The parcel or parcels of real property described in Exhibit"A",which is attached hereto and by this reference incorporated herein, and all rights and appurtenances thereunto appertaining. "Funding Requisition" -A document substantially in the form attached to the Agreement as Exhibit B, which has been duly authorized,executed and delivered by the Developer and approved by the Bank. 4 "Indenture" - The Indenture of Trust, dated as of the date hereof, between the Issuer and the Trustee, pursuant to which the Bonds have been issued, as amended or supplemented from time to time. "Inducement Date" -July 29, 1991, the date of adoption of the Inducement Resolution. "Inducement Resolution" - The resolution adopted by the Issuer on July 29, 1991, indicating its intention to issue the Bonds. "Intercreditor Agreement" - The Intercreditor Agreement, dated as of the date hereof, among the Trustee,the Issuer, and the Bank. "Issuer" - City of Huntington Beach, California. "Letter of Credit"-The letter of credit issued by the Bank or any Substitute Credit Facility substituted in accordance with the provisions of Section 214 hereof. "Median Income for the Area" - The median income for the Area as most recently determined by the Secretary of Treasury pursuant to Section 142(d).(2)(B) of the Code. "Program Administrator"- A governmental agency, a financial institution, a certified public accountant, an apartment management firm, a mortgage insurance company or other business entity performing similar duties or otherwise experienced in the administration of restrictions on bond financed multifamily housing projects which shall initially be the Issuer and, at the Issuer's election, any other person or entity appointed by the Issuer who shall enter into an administration agreement in a form acceptable to the Issuer and the Program Administrator. "Qualified Development Costs" - The Development Costs (excluding Costs of Issuance) incurred after the Inducement Date which either constitute land or property of a character subject to the allowance for depreciation under Section 167 of the Code or are chargeable to a capital account with respect to the Development for federal income tax and financial accounting purposes, or would be so chargeable either with a proper election by the Developer or but for the proper election by the Developer to deduct those amounts within the meaning of Regulation 1.103-8(a)(1)(i); provided, however, that only such portion of interest accrued during construction of the Development shall constitute a Qualified Development Cost as bears the same ratio to all such interest as the Qualified Development Costs bear to all Development Costs; and provided further that interest accruing after the Completion Date shall not be a Qualified Development Cost; and provided still further that if any portion of the Development is being constructed by an Affiliated Party (whether as a general contractor or a subcontractor), "Qualified Development Costs" shall include only (a) the actual out-of-pocket costs incurred by such Affiliated Party in constructing the Development (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 Development, 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 Development or payments received by such Affiliated Party due to early completion of the Development (or any portion thereof). "Qualified Development Period" - The period beginning on the first day on which at least 10 percent of the dwelling units in the.Development are first occupied and ending on the later of(a) the date which is 15 years after the date on which at least 50 percent of the dwelling units in the Development are first occupied, (b) the first day on which no tax exempt bonds with respect to the 5 Development are Outstanding, or(c)the date on which any assistance provided with respect to the Development under Section 8 of the United States Housing Act of 1937 terminates. "Registered Owner" or "owner" - When used with respect to the Bonds, the owner of a Bond then outstanding under the Indenture as shown on the registration books maintained by the Trustee pursuant to the Indenture. "Regulations" - The income tax regulations promulgated or proposed by the United States Department of the Treasury pursuant to the Code from time to time. "Regulatory Agreement" - This Regulatory Agreement and Declaration of Restrictive Covenants, together with any amendments hereto or supplements hereof. "State" - State of California. 'Trustee" - Dai-Ichi Kangyo Bank of California, or any successor trustee appointed in accordance with the terms of the Indenture. "Very Low Income Tenants" - Individuals or families with an Adjusted Income which does not exceed 50 percent of the Median Income for the Area, adjusted for household size. In no event, however, will the occupants of a residential unit be considered to be Very Low Income Tenants if all the occupants are students, as defined in Section 151(c)(4) of the Code, as such may be amended,no one of which is entitled to file a joint federal income tax return. Currently, Section 151(c)(4) defines a student as an individual enrolled as a full-time student during each of 5 calendar months during the calendar year in which occupancy of the unit begins at an educational organization which normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance or is an individual pursuing a full-time course of institutional on-farm training under the supervision of an accredited agent of such an educational organization or of a state or political subdivision thereof. "Very Low Income Units" - The dwelling units in the Development designated for occupancy by Very Low Income Tenants pursuant to Section 4(a) of this Regulatory Agreement. Unless the context clearly requires otherwise, as used in this Regulatory Agreement, words of the masculine, feminine or neuter gender shall be construed to include each other gender when appropriate and words of the singular number shall be construed to include the plural number, and vice versa, when appropriate. This Regulatory Agreement and all the terms and provisions hereof shall be construed to effectuate the purposes set forth herein and to sustain the validity hereof. The defined terms used in the preamble and recitals of this Regulatory Agreement have been included for convenience of reference only, and the meaning, construction and interpretation of all defined terms shall be determined by reference to this Section 1 notwithstanding any contrary definition in the preamble or recitals hereof. The titles and headings of the sections of this Regulatory Agreement have been inserted for convenience of reference only, and are not to be considered a part hereof and shall not in any way modify or restrict any of the terms or provisions hereof or be considered or given any effect in construing this Regulatory Agreement or any provisions hereof or in ascertaining intent,if any question of intent shall arise. Section 2. Acquisition. Construction, Equipping and Completion of the Development. The Developer hereby represents, as of the date hereof, and covenants, warrants and agrees as follows: (a) The Developer has incurred, or will incur within six months after the Bond Issuance Date, a substantial binding obligation to commence the acquisition, construction and equipping of 6 the Development, pursuant to which the Developer is or will be obligated to expend at least the lesser of(i) 2-1/2 percent of the principal amount of the Bonds or(ii) $100,000. (b) The Developer's reasonable expectations respecting the total cost of the acquisition, construction and equipping of the Development and the disbursement of Bond proceeds are accurately set forth in the Developer's Tax and No Arbitrage Certificate which has been delivered to the Issuer. (c)The Developer will proceed with due diligence to complete the acquisition,construction and equipping of the Development and expects to expend the full amount of the proceeds of the Developer Loan for Development Costs prior to June 1, 1994. (d)The statements made in the various certificates delivered by the Developer to the Issuer or the Trustee are true and correct. (e) On the Completion Date, the Developer will submit to the Issuer, the Bank and the Trustee, a duly executed and completed Completion Certificate. (f) Except as provided in Section 304(b)(ii) of the Indenture, the Developer will submit a Funding Requisition to the Trustee on or before the date of each disbursement on the Developer Loan. (g) Money on deposit in any fund or account in connection with the Bonds, whether or not such money was derived from other sources, shall not be used by or under the direction of the Developer, in a manner which would cause the Bonds to be "arbitrage bonds" within the meaning of Section 148 of the Code, and the Developer specifically agrees that the investment of money in any such fund shall be restricted as may be necessary to prevent the Bonds from being "arbitrage bonds"under the Code. (h) The Developer(and any person related to it within the meaning of Section 147(a)(2) of the Code) will not take or omit to take, as is applicable, any action if such action or omission would in any way cause the proceeds from the sale of the Bonds to be applied in a manner contrary to the requirements of the Indenture,the Agreement or this Regulatory Agreement. Section 3. Residential Rental Property. The Developer hereby acknowledges and agrees that the Development will be owned, managed and operated as a "qualified residential rental project" (within the meaning of Section 142(d) of the Code) until the expiration of the Qualified Development Period. To that end, and for the term of this Regulatory Agreement, the Developer hereby represents, as of the date hereof, and covenants, warrants and agrees as follows: (a) The Development is being acquired, constructed and equipped for the purpose of providing multifamily residential rental property, and the Developer shall own,manage and operate the Development as a project to provide multifamily residential rental property comprised of a building or structure or several interrelated buildings or structures, together with any functionally related and subordinate facilities, and no other facilities, in accordance with applicable provisions of Section 142(d) of the Code and Section 1.103-8(b) of the Regulations, and the Act, and in accordance with such requirements as may be imposed thereby on the Development from time to time. (b) All of the dwelling units in the Development will be similarly constructed units, and,to the extent required by the Code and the Regulations, each dwelling unit in the Development will contain complete separate and distinct facilities for living, sleeping, eating, cooking and sanitation for a single person or a family, including a sleeping area, bathing and sanitation facilities and 7 cooking facilities equipped with a cooking range, refrigerator (which may be provided by the tenant) and sink. (c)None of the dwelling units in the Development will at any time be utilized on a transient basis, or will ever be used as a hotel, motel, dormitory, fraternity house, sorority house,rooming house, nursing home, hospital, sanitarium, rest home,retirement house or trailer court or park. (d) No part of the Development will at any time be owned by a cooperative housing corporation, nor shall the Developer take any steps in connection with a conversion to such ownership or uses. Other than obtaining a final subdivision map on the Development and a Final Subdivision Public Report from the California Department of Real Estate, the Developer shall not take any steps in connection with a conversion of the Development to a condominium ownership except with the prior written approving opinion of Bond Counsel that the interest on the Bonds will not become taxable thereby under Section 103 of the Code. (e) All of the dwelling units will be available for rental on a continuous basis to members of the general public and the Developer will not give preference to any particular class or group in renting the dwelling units in the Development,except to the extent that dwelling units are required to be leased or rented to Very Low Income Tenants and except that preference shall be given to residents of the City of Huntington Beach. (f) The Development Site consists of a parcel or parcels that are contiguous except for the interposition of a road, street or stream, and all of the Development Facilities will comprise a single geographically and functionally integrated project for residential rental property, as evidenced by the ownership,management, accounting and operation of the Development. (g) No dwelling unit in the Development shall be occupied by the Developer unless the Development contains five or more dwelling units,in which case one unit may be occupied by the Developer or by persons related to or affiliated with the Developer such as a resident manager or maintenance personnel. (h) Within 30 days after the commencement of the Qualified Development Period, the Developer shall deliver a written notice to the Issuer, the Bank and the Trustee specifying such date. Within 30 days after the date on which 50 percent of the dwelling units in the Development are occupied, the Developer, the Issuer and the Trustee shall execute and deliver to the Bank a certificate identifying said date. The Developer may record a copy of such certificate in the Office of the County Recorder of the County. (i) Should involuntary noncompliance with the provisions of Section 1.103-8(b) of the Regulations be caused by fire, seizure, requisition,foreclosure, transfer of title by deed in lieu of foreclosure, change in a federal law or an action of a federal agency after the Bond Issuance Date which prevents the Issuer from enforcing the requirements of the Regulations, or condemnation or similar event,the Developer covenants that, within a"reasonable period"determined in accordance with the Regulations, it will either prepay the Developer Note or apply any proceeds received as a result of any of the preceding events to reconstruct the Development to meet the requirements of Section 142(d) of the Code and the Regulations. 0) The Developer shall not discriminate on the basis of race, creed, color, sex, source of income (e.g. AFDC, SSI), physical disability, age, national origin or marital status in the rental, lease, use or occupancy of the Development or in connection with the employment or application for employment of persons for the operation and management of the Development. 8 Section 4. Very Low Income Tenants. Pursuant to the requirements of the Issuer and Section 142(d) of the Code and applicable provisions of the Act, the Developer hereby represents, as of the date hereof, and warrants, covenants and agrees as follows: (a)During the Qualified Development Period: (1) not less than twenty percent (20%) of the completed units in the Project shall be designated as Very Low Income Units and shall be continuously occupied by Very Low Income Tenants. All of the Very Low Income Units shall be generally distributed in terms of location and number of bedrooms throughout the Development: The Very Low Income Units shall be of comparable quality and offer a range of sizes and number of bedrooms comparable to those units which are available to other tenants. (2) the monthly rent paid by the persons occupying the Very Low Income Units (excluding any supplemental rental assistance from the State, the federal government, or any other public agency to those persons or on behalf of those units) shall not exceed one-twelfth of the amount obtained by multiplying 30% times 50% of the Median Income for the Area, as adjusted by the assumed household size set forth below of each such Very Low Income Unit; for the purpose of this section, the Developer shall assume the household size set forth in the following table for the corresponding size of residential unit: Residential Unit No. of Persons Size by Bedroom in Family Studio 1 1 2 2 3 3 4 For purposes of this paragraph, a one-bedroom unit plus a den shall be deemed to be a two-bedroom unit. (3) Very Low Income Units shall remain available on a priority basis for occupancy by Very Low Income Tenants. A unit occupied by a Very Low Income Tenant who at the commencement of the occupancy is a Very Low Income Tenant shall be treated as occupied by a Very Low Income Tenant until a recertification of such tenant's income in accordance with Section 4(c) below demonstrates that such tenant no longer qualifies as a Very Low Income Tenant and thereafter any residential unit of comparable or smaller size in the Development is occupied by a new resident other than a Very Low Income Tenant. Moreover, a unit previously occupied by a Very Low Income Tenant and then vacated shall be considered occupied by a Very Low Income Tenant until reoccupied, other than for a temporary period, at which time the character of the unit shall be redetermined. In no event shall such temporary period exceed thirty-one (3 1) days. ( 4) Following the expiration or termination of the Qualified Development Period,except in the event of foreclosure and redemption of the bonds, deed in lieu of the foreclosure, eminent domain, or action of a federal agency preventing enforcement,Very Low Income Units required to be reserved for occupancy pursuant to subparagraph (a) shall remain available to the Very Low Income Tenant occupying a Very Low Income Units at the date of expiration or termination of the Qualified Development Period, at a rent not greater than the amount set forth by subparagraph (a)(2),until the earliest of any of the following occur: 9 (i) The Very Low Income Tenant's income exceeds 140 percent of the maximum eligible income specified in the definition of Very Low Income Tenant. (ii)The Very Low Income Tenant voluntarily moves or is evicted for"good cause". "Good cause" for the purposes of this section, means the nonpayment of rent or allegation of facts necessary to prove major, or repeated minor,violations of material provisions of the occupancy agreement with detrimentally affect the health and safety of other persons or the structure, the fiscal integrity of the Development or the purposes or special program of the Development. (5)Thirty years after the date of commencement of the Qualified Development Period. ( 6) The Developer pays the relocation assistance and benefits to tenants as provided in subdivision (b) of Section 7264 of the Government Code of the State of California. ( 7) During the three years prior to expiration of the Qualified Development Period, the Developer shall continue to make available to Very Low Income Tenants, Very Low Income Units that have been vacated to the same extent the Very Low Income Units are made available to noneligible households. ( 8) Subparagraph(3) hereof shall not construed to require the Issuers to monitor the Developer's compliance with the provisions of subparagraph (3) hereof. (b) Immediately prior to a Very Low Income Tenant's occupancy of a Very Low Income Unit,the Developer will obtain and maintain on file an Income Computation and Certification form from each Very Low Income Tenant occupying a Very Low Income Unit, dated immediately prior to the initial occupancy of such Very Low Income Tenant in the Development. In addition, the Developer will provide such further information as may be required in the future by the State of California,the Issuer and by the Act, Section 142(d) of the Code and the Regulations, as the same may be amended from time to time, or in such other form and manner as may be required by applicable rules, rulings, policies, procedures or other official statements now or hereafter promulgated, proposed or made by the Department of the Treasury or the Internal Revenue Service with respect to obligations issued under Section 142(d) of the Code. The Developer shall verify that the income provided by an applicant is accurate by taking the following steps as a part of the verification process: (1) obtain a federal income tax return for the most recent tax year, (2) obtain a written verification of income and employment from applicant's current employer, (3) if an applicant is unemployed or did not file a tax return for the previous calendar year, obtain other verification of such applicant's income satisfactory to the Program Administrator or(4) such other information as may be requested by the Program Administrator. Copies of the most recent Income Certifications for Very Low Income Tenants commencing or,continuing occupancy of a Very Low Income Unit shall be attached to the monthly report to be filed with the Program Administrator within 10 days of the last day of each month during the Qualified Development Period. (c) Immediately prior to the first anniversary date of the occupancy of a Very Low Income Unit by one or more Very Low Income Tenants, and on each anniversary date thereafter, the Developer shall recertify the income of the occupants of such Very Low Income Unit by obtaining a completed Income Computation and Certification based upon the current income of each occupant of the unit. In the event the recertification demonstrates that such household's income exceeds 140% of the income at which such household would qualify as Very Low Income Tenants, such household will no longer qualify as a Very Low Income Tenant and the Developer will rent the next available unit of comparable or smaller size to one or more Very Low Income Tenants and will not rent any unit to tenants who are not Very Low Income Tenants until at least 10 twenty percent (20%) of the units are again occupied by Very Low Income Tenants. No tenant in the Development shall be denied continued occupancy in the Development because, after occupancy, such tenant's household income increases such that the income for such household will no longer qualify such household as Very Low Income Tenants. An "available" unit is one that is unoccupied by a tenant. (d) Upon the commencement of the Qualified Development Period, and within ten days of the last day of each quarter thereafter during the term of this Regulatory Agreement,the Developer shall advise the Issuer and the Trustee of the status of the occupancy of the Development by delivering to such parties a Certificate of Continuing Program Compliance. (e) The Developer will maintain complete and accurate records pertaining to the Very Low Income Units, and will permit any duly authorized representative of the Issuer, the Trustee, the Bank, the Department of the Treasury or the Internal Revenue Service to inspect the books and records of the Developer pertaining to the Development, including those records pertaining to the occupancy of the Very Low Income Units. (f) The Developer will prepare and submit to the Issuer and the Program Administrator, if any, within thirty days after each anniversary of the Completion Date, a Certificate of Continuing Program Compliance executed by the Developer stating (i) the percentage of the dwelling units of the Development which were occupied or deemed occupied,pursuant to subsection (a) hereof, by Very Low Income Tenants during such period, (ii) that either (A) no unremedied default has occurred under this Regulatory Agreement or (B) a default has occurred, in which event the certificate shall describe the nature of the default and set forth the measures being taken by the Developer to remedy such. default, and (iii) that, to the knowledge of the Developer, no Determination of Taxability has occurred, or if a Determination of Taxability has occurred, setting forth all material facts relating thereto. The Developer shall submit to the Secretary of the Treasury annually on the anniversary date of the start of the Qualified Development Period, or such other date as is required by the Secretary, a certification that the Development continues to meet the requirements of Section 142(d) of the Code, and shall provide a copy of such certification to the Issuer and the Program Administrator,if any. (g)The Developer shall accept as tenants on the same basis as all other prospective tenants, persons who are recipients of federal certificates or vouchers for rent subsidies pursuant to the existing program under Section 8 of the United States Housing Act of 1937, or its successor. The Developer shall not apply selection criteria to Section 8 certificate or voucher holders that are more burdensome than criteria applied to all other prospective tenants and the Developer shall not refuse to rent to any Very Low Income Tenant on the basis of household size as long as such household size does not exceed two persons for a one bedroom unit, four persons for a two bedroom unit and six persons for a three bedroom unit. The Developer shall not collect any additional fees or payments from a Very Low Income Tenant except security deposits or other deposits required of all tenants. The Developer shall not collect security deposits or other deposits from Section 8 certificate or voucher holders in excess of that allowed under the Section 8 Program. The Developer shall not discriminate against Very Low Income Tenant applicants on the basis of source of income (i.e., AFDC or SSI), and the Developer shall consider a prospective tenant's previous rent history of at least one year as evidence of the ability to pay the applicable rent (ability to pay shall be demonstrated if a Very Low Income Tenant can show that the same percentage or more of the tenant's income has been paid for rent in the past as will be required to be paid for the rent applicable to the Very Low Income Unit to be occupied provided that such Very Low Income Tenant's expenses have not materially increased). (h) Each lease pertaining to a Very Low Income Unit shall contain a provision to the effect that the Developer has relied on the income certification and supporting information supplied by the Very Low Income Tenant in determining qualification for occupancy of the Very Low Income 11 Unit, and that any material misstatement in such certification (whether or not intentional) will be cause for immediate termination of such lease. Each lease will also contain a provision that failure to cooperate with the annual recertification process reasonably instituted by the Developer pursuant to Section 4(c) above may at the option of the Developer disqualify the unit as a Very Low Income Unit or provide grounds for termination of the lease. Section 5. Tax Status of the Bonds. The Developer and the Issuer each hereby represents, as of the date hereof,and warrants, covenants and agrees that: (a) It will not knowingly take or permit, or omit to take or cause to be taken, as is appropriate, any action that would adversely affect the exclusion from gross income for federal income tax purposes or the exemption from California personal income taxation of the interest on the Bonds and, if it should take or permit, or omit to take or cause to be taken, any such action, it will take all lawful actions necessary to rescind or correct such actions or omissions promptly upon obtaining knowledge thereof; (b) It will take such action or actions as may be necessary, in the written opinion of Bond Counsel filed with the Issuer, the Bank, the Trustee and the Developer, to comply fully with the Act and all applicable rules, rulings, policies,procedures, Regulations or other official statements promulgated, proposed or made by the Department of the Treasury or the Internal Revenue Service pertaining to obligations issued under Section 142(d) of the Code to the extent necessary to maintain the exclusion from gross income for federal income tax purposes of interest on the Bonds; and (c) It will file of record such documents and take such other steps as are necessary, in the written opinion of Bond Counsel filed with the Issuer, the Bank, the Trustee and the Developer, in order to insure that the requirements and restrictions of this Regulatory Agreement will be binding upon all owners of the Development,including,but not limited to,the execution and recordation of this Regulatory Agreement in the real property records of the County. The Developer hereby covenants to include the requirements and restrictions contained in this Regulatory Agreement in any document(other than the Deed of Trust, any document granting a security interest in the Development to the Bank and in any leases to individual occupants of units in the Development) transferring any interest in the Development to another person to the end that such transferee has notice of, and is bound by, such restrictions, and to obtain the agreement from any transferee to abide by all requirements and restrictions of this Regulatory Agreement. Section 6. Modification of Special Tax Covenants. The Developer, the Trustee and the Issuer hereby agree as follows: (a) To the extent any amendments to the Act, the Regulations or the Code shall, in the written opinion of Bond Counsel filed with the Issuer, the Bank, the Trustee and the Developer, impose requirements upon the ownership or operation of the Development more restrictive than those imposed by this Regulatory Agreement which must be complied with in order to maintain the exclusion from gross income for federal income tax purposes of interest on the Bonds, this Regulatory Agreement shall be deemed to be automatically amended (subject,however, to receipt of the consent of the Bank) to impose such additional or more restrictive requirements. (b) To the extent any amendments to the Act, the Regulations or the Code shall, in the written opinion of Bond Counsel filed with the Issuer, the Trustee, the Bank and the Developer, impose requirements upon the ownership or operation of the Development less restrictive than imposed by this Regulatory Agreement, this Regulatory Agreement may be amended or modified to provide such less restrictive requirements but only by written amendment approved and signed by the Issuer, the Trustee and the Developer, approved by the Bank and approved by the written 12 opinion of Bond Counsel that such amendment will not affect the exclusion from gross income for federal income tax purposes of interest on the Bonds. (c) The Developer, the Issuer and, if applicable, the Trustee shall execute, deliver and, if applicable,file of record any and all documents and instruments, necessary to effectuate the intent of this Section 6, and each of the Developer and the Issuer hereby appoints the Trustee as its true and lawful attorney-in-fact to execute, deliver and, if applicable, file of record on behalf of the Developer or the Issuer, as is applicable, any such document or instrument (in such form as may be approved in writing by Bond Counsel) if either the Developer or the Issuer defaults in the performance of its obligations under this subsection (c); provided,however,that the Trustee shall take no action under this subsection (c) without first notifying the Developer or the Issuer, or both of them, as is applicable,unless directed in writing by the Issuer or the Developer and without first providing the Developer or the Issuer, or both, as is applicable, an opportunity to comply with the requirements of this Section 6. Section 7. Indemnification. The Developer shall indemnify, hold harmless and defend the Issuer and the Trustee and the respective officers,members, directors, officials and employees of each of them 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 settlement, and amounts paid to discharge judgments) directly or indirectly resulting from or arising out of or related to (a) the design, construction, installation, operation, use, occupancy, maintenance, or ownership of the Development (including compliance with laws, ordinances and rules and regulations of public authorities relating thereto); or (b) any written statements_or representations with respect to the Developer,the Development or the Bonds made or given to the Issuer or any underwriters or purchasers of any of the Bonds, by the Developer, or any of its partners, agents or employees, (with respect to the Trustee, indemnification shall be given as to written statements or representations of the Developer or any Developer Representative(as defined in the Loan Agreement) including, but not limited to, statements or representations of facts or financial information. The Developer also shall pay and discharge and shall indemnify and hold harmless the Issuer 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 Development. 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, including the employment of counsel selected by the indemnified party and the payment of all expenses related thereto, 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, and provided further that the Issuer and Trustee shall act reasonably in connection therewith. In addition thereto, the Developer will pay upon demand all of the fees and expenses paid or incurred by the Trustee or the Issuer in enforcing the provisions hereof. Section 8. Consideration. The Issuer has issued the Bonds to provide funds to make the Developer Loan to finance the Development, all for the purpose, among others, of inducing the Developer to acquire, construct, equip and operate the Development. In consideration of the issuance of the Bonds by the Issuer, the Developer has entered into this Regulatory Agreement and has agreed to restrict the uses to which-the Development can be put on the terms and conditions set forth herein. Section 9. Reliance. The Issuer and the Developer hereby recognize and agree that the representations, warranties, covenants and agreements set forth herein may be relied upon by all 13 persons interested in the legality and validity of the Bonds, and in the exclusion from gross income for federal income tax purposes and the exemption from California personal income taxation of the interest on the Bonds. In performing their duties and obligations hereunder, the Issuer and the Trustee may rely upon statements and certificates of the Developer and Very Low Income Tenants, and upon audits of the books and records of the Developer pertaining to the Development. In addition, the Issuer and the Trustee may consult with counsel, and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by the Issuer or the Trustee hereunder in good faith and in conformity with such opinion. In determining whether any default or lack of compliance by the Developer exists under this Regulatory Agreement, the Trustee shall not be required to conduct any investigation into or review of the operations or records of the Developer and may rely solely on any notice or certificate delivered to the Trustee by the Developer or the Issuer with respect to the occurrence or absence of a default. Section 10. Sale or Transfer of the Development; Syndication. Except in the case of a sale or transfer of partnership interests which in the aggregate do not exceed 49% of the total partnership interest, the Developer intends to hold the Development for its own account, has no current plans to sell, transfer or otherwise dispose of the Development, and hereby covenants and agrees not to sell, transfer or otherwise dispose of the Development, or any portion thereof(other than for individual tenant use as contemplated hereunder), without obtaining the prior consent of the Issuer and the Trustee and upon receipt by the Issuer and the Trustee of(i)reasonable evidence satisfactory to the Issuer that the Developer's purchaser or transferee has assumed in writing and in full, the Developer's duties and obligations under this Regulatory Agreement, acknowledgment of which shall be provided to the Developer at its request, (ii) an opinion of counsel of the transferee that the transferee has duly assumed the obligations of the Developer under this Regulatory Agreement and that such obligations and this Regulatory Agreement are binding on the transferee, (iii) the Issuer receives evidence acceptable to the Issuer that either(A) the purchaser or assignee has experience in the ownership, operation and management of rental housing developments such as the Development without any record of material violations of discrimination restrictions or other state or federal laws or regulations applicable to such developments, or (B) the purchaser or assignee agrees to retain a property management firm with the experience and record described in subparagraph (A) above or if the purchaser or assignee does not have management experience,the Issuer will or will cause the Program Administrator.to provide on-site training in program compliance if the Issuer determines such training is necessary, (iv) no event of default exists under any of the Developer Loan Documents and payment of all fees of the Issuer and the Trustee are current, and (v) an opinion of Bond Counsel to the effect that such sale will not cause interest on any Bond to become includable in the gross income of the recipients thereof for federal income tax purposes. It is hereby expressly stipulated and agreed that any sale, transfer or other disposition of the Development in violation of this Section 10 shall be null, void and without effect, shall cause a reversion of title to the Developer, and shall be ineffective to relieve the Developer of its obligations under this Regulatory Agreement. Not less than 20 days prior to,consummating any sale, transfer or disposition of any interest in the Development, the Developer shall deliver to the Issuer and the Trustee a notice in writing explaining the nature of the proposed transfer. The Developer shall not syndicate the Development without the prior written approval of the Issuer; provided, however, that the Issuer shall not withhold such approval if the Issuer determines that such syndication meets the requirements of 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 requirements of the Act or regulations adopted or documents executed pursuant to the Act, (ii) no requirements of the Issuer shall be subordinated to the syndication agreement and (iii) the syndication shall not result in the provision of fewer assisted units, or the reduction of any benefits or services, than were in existence prior to the syndication agreement. 14 Section 11. Term. Subject to the following paragraph of this Section 11, this Regulatory Agreement and all and several of the terms hereof shall become effective upon its execution and delivery and shall remain in full force and effect during the Qualified Development Period, it being expressly agreed and understood that the provisions hereof are intended to survive the retirement of the Bonds and expiration of the Indenture, the Loan Agreement and the Developer Note. Notwithstanding any other provisions of this Regulatory Agreement to the contrary, this entire Regulatory Agreement, or any of the provisions or sections hereof, may be terminated upon agreement by the Issuer, the Trustee and the Developer subject to compliance with any of the provisions contained in this Regulatory Agreement only if there shall have been received an opinion of Bond Counsel that such termination will not adversely affect the exclusion from gross income for federal income tax purposes or the exemption from State personal income taxation of the interest on the Bonds. The Developer shall provide notice of any termination of this Regulatory Agreement to the Trustee and the Bank. The terms of this Regulatory Agreement to the contrary notwithstanding, this Regulatory Agreement, and all and several of the terms hereof, shall terminate and be of no further force and effect in the event of a foreclosure or delivery of a deed in lieu of foreclosure whereby a third party shall take possession of the Development or involuntary non-compliance with the provisions of this Regulatory Agreement caused by fire, seizure,requisition,change in a federal law or an action of a federal agency after the date hereof which prevents the Issuer and the Trustee from enforcing the provisions hereof or condemnation or a similar event and the payment in full and retirement of the Bonds theretofore or within a reasonable period thereafter; provided, however, that the preceding provisions of this sentence shall cease to apply and the restrictions contained herein shall be reinstated if, at any time subsequent to the termination of such provisions as the result of the foreclosure or the delivery of a deed in lieu of foreclosure or a similar event,the Developer or any related person to it (within the meaning of Section 1.103-10(e) of the Regulations) obtains an ownership interest in the Development for Federal income tax purposes. Upon the termination of the terms of this Regulatory Agreement, the parties hereto agree to execute, deliver and record appropriate instruments of release and discharge of the terms hereof; provided, however, that the execution and delivery of such instruments shall not be necessary or a prerequisite to the termination of this Regulatory Agreement in accordance with its terms. Section 12. Covenants to Run With the Land. The Developer hereby subjects the Development(including the Development Site) to the covenants, reservations and restrictions set forth in this Regulatory Agreement. The Issuer,the Trustee and the Developer hereby declare their express intent that the covenants, reservations and restrictions set forth herein shall be deemed covenants running with the land and shall pass to and be binding upon the Developer's successors in title to the Development; provided, however, that on the termination of this Regulatory Agreement said covenants, reservations and restrictions shall expire. Each and every contract, deed or other instrument hereafter executed covering or conveying the Development or any portion thereof shall conclusively be held to have been executed, delivered and accepted subject to such covenants, reservations and restrictions, regardless of whether such covenants, reservations and restrictions are set forth in such contract, deed or other instruments. No breach of any of the provisions of this Regulatory Agreement shall defeat or render invalid the lien of a mortgage or deed of trust made in good faith and for value encumbering the Development Site. Section 13. Burden and Benefit. The Issuer,the Trustee 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 Development is rendered less valuable thereby. The Issuer,the Trustee and the Developer hereby further declare their understanding and intent that the benefit of such covenants touch and concern the land by enhancing and increasing the enjoyment and use of the Development by Very Low Income Tenants, the intended beneficiaries of such covenants,reservations and restrictions, and by furthering the public purposes for which the Bonds were issued. 15 Section 14. Uniformity: Common Plan. The covenants, reservations and restrictions hereof shall apply uniformly to the entire Development in order to establish and carry out a common plan for the use, development and improvement of the Development Site. Section 15. 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 60 days after notice thereof shall have been given by the Issuer or the Trustee to the Developer and the Bank (provided, however, that the Issuer may at its sole option extend such period if the Developer provides the Issuer with an opinion of Bond Counsel to the effect that such extension will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds), then the Trustee, subject to the provisions of Section 9 hereof and the Intercreditor Agreement and acting on its own behalf or on behalf of the Issuer, shall declare an "Event of Default" to have occurred hereunder, and, at its option, may take any one or more of the following steps: (i) 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 or the Trustee hereunder; (ii) have access to and inspect,examine and make copies of all of the books and records of the Developer pertaining to the Development, (iii) take such other action at law or in equity as may appear necessary or desirable to enforce the obligations, covenants and agreements of the Developer hereunder; or (iv) subject to the provisions of Article VII of the Agreement, require the Issuer to declare a default under the Developer Loan, to accelerate the indebtedness evidenced by the Developer Note, to proceed with foreclosure under the Deed of Trust and to proceed to redeem Bonds in accordance with the Indenture. The Trustee shall have the right, in accordance with this Section 15 and the provisions of the Indenture and subject to the provisions of the Intercreditor Agreement, without the consent or approval of the Issuer, to exercise any or all of the rights or remedies of the Issuer hereunder; provided that prior to taking any such act the Trustee shall give the Issuer written notice of its intended action. All fees, costs and expenses of the Trustee incurred in taking any action pursuant to this Section 15 shall be the sole responsibility of the Developer. After the Indenture has been discharged, or if the Trustee fails to act under this Section 16, the Issuer may act on its own behalf to declare an "Event of Default" to have occurred and to take any one or more of the steps specified hereinabove to the same extent and with the same effect as if taken by the Trustee. Notwithstanding anything herein to the contrary, the liability of the Developer hereunder shall be limited as provided in Section 5.2 of the Agreement. Section 16. Recording and Eiling. The Developer shall cause this Regulatory Agreement and all amendments and supplements hereto and thereto, to be recorded and filed, prior to the recording of the Deed of Trust and the disbursement of the Developer Loan (except for disbursements to pay the costs of issuing the Bonds and other Qualified Development Costs permitted under the Reimbursement Agreement with the approval of the Bank) in the real property 16 records of the County and in such other places as the Issuer or the Trustee may reasonably request. The Developer shall pay all fees and charges incurred in connection with any such recording. Section 17. Payment of Fees. Notwithstanding any prepayment of the Developer Loan and notwithstanding a discharge of the Indenture, throughout the term of this Regulatory Agreement, the Developer shall continue to pay to the Issuer its administrative fee described below and in the event of default, to the Issuer and to the Trustee reasonable compensation for any services rendered by either of them hereunder and reimbursement for all expenses reasonably incurred by either of them in connection therewith. The Developer shall pay to the Issuer on the Bond Issuance Date its initial administrative fee in the amount of . % of the original principal amount of the Bonds on the Bond Issuance Date. Thereafter, an annual administrative fee shall be paid in advance, commencing December 1, 1992, and on December 1 of each year thereafter as long as this Regulatory Agreement remains in effect, in an amount equal to % of the original principal amount of the Bonds on the Bond Issuance Date. The fee of the Issuer referenced in this section shall in no way limit amounts payable by the Developer under Section 7 hereof, or arising after an Event of Default in connection with the Issuer's or Trustee's enforcement of the provisions of this Regulatory Agreement. In the event that the Bonds are prepaid in part or in full prior to the end of the term of this Regulatory Agreement, the Issuer's fee for the remainder of the term of this Regulatory Agreement, at the option of the Issuer, shall be paid by the Developer at the time of the prepayment of the Bonds and shall be a lump sum amount equal to the present value (based on a discount rate equal to the prime rate as defined by the Trustee at the time of prepayment) of the Issuer's fee for the number of years remaining under the Regulatory Agreement. After the date on which no Bonds remain outstanding, as provided in the Indenture, the Trustee shall no longer have any duties or responsibilities under this Regulatory Agreement and all references to the Trustee in this Regulatory Agreement shall be deemed references to the Issuer. Section 18. Governing Law. This Regulatory Agreement shall be governed by the laws of the State of California. Except as expressly provided herein and in the Agreement, the Trustee's rights, duties and obligations hereunder are governed in their entirety by the terms and provisions of the Indenture. Section 19. Amendments. Except as provided in Section 6(a) hereof, this Regulatory Agreement shall be amended only by a written instrument executed by the parties hereto or their successors in title, and duly recorded in the real property records of the County. The parties hereto acknowledge that for so long as the Bonds are outstanding the Bank and the owners of the Bonds are third party beneficiaries to this Regulatory Agreement, and that,except as provided in Section 6(a)hereof,no amendment may occur without the prior written consent of the Bank. Section 20. Notice. All notices, certificates or other communications shall be sufficiently given and (except for notices to the Trustee, which shall be deemed given only when actually received by the Trustee) shall be deemed given on the date personally delivered or on the second day following the date on which the same have been mailed by certified mail, return receipt requested,postage prepaid, addressed as follows: Issuer: City of Huntington Beach 2000 Main Street Huntington Beach, California 92648 Attn: Deparment of Economic Development 17 Bank: Wells Fargo Bank, N.A. Real Estate Industries Group Community Affairs 333 South Grand Street, 12th Floor Los Angeles, California 90071 Attn: Gary Steffens, Vice President Trustee: Dai-Ichi Kangyo Bank of California .707 Wilshire Blvd., 5th Fl. Los Angeles, California 90017 Developer: Five Points Seniors , L.P. c/o Institutional Property Investors, Inc. 19800 MacArthur Boulevard, Suite 680 Irvine, California 92715 Attention: David R. Michelson with a copy to: Bret H. Reed, Jr., A Law Corporation 1300 Dove Street, Suite 200 Newport Beach, California 92660 (which copy shall not constitute notice to the Developer) Any of the foregoing parties may, by notice given hereunder, designate any further or different addresses to which subsequent notices,certificates, documents or other communications shall be sent. Section 21. Severability. If any provision of this Regulatory Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining portions hereof shall not in any way be affected or impaired thereby. Section 22. Multiple Counterparts. This Regulatory Agreement may be executed in multiple counterparts, all of which shall constitute one and the same instrument,and each of which shall be deemed to be an original. Section 23. Trustee Acting Solely in Such Capacity. In accepting its obligations hereunder,the Trustee acts solely as trustee for the benefit of the Registered Owners, and not in its individual capacity; and the Trustee shall be liable to any persons,including, without limitation,the Issuer and the Developer, seeking payment from the Trustee for any liability arising by reason of the transactions contemplated hereby only to the extent set forth in Article IX of the Indenture. 18 Section 24. Compliance by Developer. The Trustee shall not be responsible for monitoring or verifying compliance by the Developer with its obligations under this Regulatory Agreement. IN WITNESS WHEREOF, the Issuer, the Trustee and the Developer have executed this Regulatory Agreement by duly authorized representatives, all as of the date first written hereinabove. CITY OF HUNTINGTON BEACH By: Mayor Attest: Approved as to form: By: By: City Clerk City Attorney By: FIVE POINTS SENIORS , L.P. By: David R. Michelson,Trustee of the Michelson Family Trust U.T.D. 12/12/84 as amended 12/1/85 19 STATE OF ) ss. COUNTY OF ) On this day of ; 1991, before me, the undersigned, a Notary Public in and for said State, personally appeared , known to me or proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the foregoing instrument as the of the City of Huntington Beach, a public body corporate and politic organized and existing under the constitution and laws of the State of California that executed the foregoing instrument, and acknowledged to me that he executed the same pwsuant to a resolution of the City, for the purposes and consideration therein expressed, in the capacity therein stated, as the act and deed of the City. WITNESS my hand and official seal. Notary Public 20 STATE OF ) ss. COUNTY OF ) On this day of, 1991, before me, the undersigned, a Notary Public in and for said State, personally appeared , personally known to me or proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the foregoing instrument as the of Dai-Ichi Kangyo Bank of California, that executed the foregoing instrument, and acknowledged to me that he executed the same pursuant to a resolution of its board of directors, for the purposes and consideration therein expressed, in the capacity therein stated, and as the act and deed of said . WITNESS my hand and official seal. Notary Public 21 f STATE OF ) ss. COUNTY OF ) On this day of, 1991, before me, the undersigned, a Notary Public in and for said State, personally appeared David R. Michelson, Trustee of the Michelson Family Trust, U.T.D. 12/12/84 as amended 3/l/85, a general partner of Five Points Seniors, L.P. ,personally known to me or proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the foregoing instrument as the general partner of the Developer, that executed the foregoing instrument, and acknowledged to me that he executed the same for the purposes and consideration therein expressed, in the capacity therein stated, and as the act and deed of said partnership. WITNESS my hand and official seal. Notary Public 22 4 1 f EXHIBIT "A" LEGAL DESCRIPTION OF LAND 18019-34 JHHW:TAD:cep 09l24/91 10/23/91 11/07/91 CITY OF HUNTINGTON BEACH TO DAI-ICHI KANGYO BANK OF CALIFORNIA, as Trustee INDENTURE OF TRUST DATED AS OF DECEMBER 1, 1991 SECURING $9,500,000 VARIABLE RATE DEMAND MULTIFAMILY HOUSING REVENUE BONDS (FIVE POINTS SENIORS PROJECT), SERIES A OF 1991 TABLE OF CONTENTS ARTICLE I DEFINITIONS SECTION 101. DEFINITIONS..............................................................4 ARTICLE II THE BONDS SECTION 201. AUTHORIZED AMOUNT OF BONDS................................. 16 SECTION 202. ISSUANCE OF BONDS .................................................. 16 SECTION 203. REGISTRATION,TRANSFER AND EXCHANGE ................. 17 SECTION 204. EXECUTION............................................................... 19 SECTION 205. AUTHENTICATION...................................................... 19 SECTION 206. FORM OF BONDS.......................................................... 19 SECTION 207. MUTILATED,DESTROYED,LOST OR STOLEN BONDS ........ 19 SECTION 208. TEMPORARY BONDS....................................................20 SECTION 209. CANCELLATION AND DESTRUCTION OF SURRENDERED BONDS 20 SECTION 210. DELIVERY OF THE BONDS............................................20 SECTION 211. DETERMINATION OF ADJUSTABLE INTEREST RATE .........21 SECTION 212. RESET OF INTEREST RATE ON THE BONDS .....................22 SECTION 213. ESTABLISHMENT OF FIXED RATE..................................23 SECTION 214. SUBSTITUTE CREDIT FACILITY.....................................24 SECTION 215. VALIDITY OF THE BONDS.............................................27 SECTION 216. ADDITIONAL BONDS....................................................27 ARTICLE III REVENUES AND FUNDS SECTION 301. SOURCE OF PAYMENT OF BONDS..................................29 SECTION 302. CREATION OF FUNDS AND ACCOUNTS ..........................29 SECTION 303. INITIAL DEPOSITS.......................................................29 SECTION 304: DEVELOPER LOAN FUND..............................................29 SECTION 305. COST OF ISSUANCE FUND............................................30 SECTION 306. REVENUE FUND .........................................................30 SECTION 307. DEBT SERVICE FUND...................................................31 SECTION 308. GENERAL FUND .........................................................32 SECTION 308A. PURCHASE FUND .......................................................32 SECTION 309. DRAWINGS UNDER THE LETTER OF CREDIT...................33 SECTION 310. FINAL BALANCES.......................................................33 SECTION 311. SECURITY OF FUNDS ..................................................33 SECTION 312. NON-PRESENTMENT OF BONDS....................................34 SECTION 313. MONEYS TO BE HELD IN TRUST....................................34 ARTICLE IV REVENUES AND APPLICATION SECTION 401. REVENUES TO BE PAID OVER TO TRUSTEE .....................35 SECTION 402. PAYMENTS OF PRINCIPAL,PREMIUM AND INTEREST ......35 SECTION 403. TRUST ESTATE TO BE HELD FOR ALL REGISTERED OWNERS35 i ARTICLE V INVESTMENT OF MONEYS SECTION 501. INVESTMENT OF MONEYS............................................36 SECTION 502. EARNINGS AND LOSSES ..............................................37 SECTION 503. INVESTMENT YIELD LIMITATIONS.................................37 SECTION 504. REBATE OF EXCESS INVESTMENT EARNINGS TO THE UNITED STATES ................................................................................38 SECTION 505. INVESTMENTS............................................................40 ARTICLE VI REDEMPTION OF BONDS BEFORE MATURITY SECTION 601. LIMITATION ON REDEMPTION.......................................42 SECTION 602. REDEMPTION DATES,AMOUNTS AND PRICES .................42 SECTION 603. PARTIAL REDEMPTION 43 ................................................ SECTION 604. NOTICE OF REDEMPTION .............................................43 SECTION 605. PAYMENT UPON REDEMPTION......................................44 SECTION 606. EFFECT OF REDEMPTION .............................................44 ARTICLE VII PAYMENT; FURTHER ASSURANCES SECTION 701. PAYMENT OF PURCHASE PRICE, PRINCIPAL OR REDEMPTION PRICE OF AND INTEREST ON BONDS ...........................................45 SECTION 702. POWER TO ISSUE BONDS AND MAKE PLEDGE AND ASSIGNMENT 45 SECTION 703. FURTHER ASSURANCES ..............................................45 SECTION 704. IMMUNITIES AND LIMITATIONS OF RESPONSIBILITY OF ISSUER 45 SECTION 705. ADDITIONAL INSTRUMENTS.........................................46 SECTION 706. EXTENSION OF PAYMENT OF BONDS.............................46 SECTION 707. AGAINST ENCUMBRANCES..........................................46 SECTION 708. ACCOUNTING RECORDS AND REPORTS .........................46 SECTION 709. PAYMENT OF TAXES AND CLAIMS.................................47 SECTION 710. RIGHTS UNDER THE DEVELOPER LOAN DOCUMENTS ......47 SECTION 711. TAX COVENANTS........................................................47 SECTION 712. COMPLIANCE WITH INDENTURE,CONTRACTS;LAWS AND REGULATIONS ...........................................................48 SECTION 713. MAINTENANCE OF POWERS .........................................48 ARTICLE VIII DEFAULT PROVISIONS AND REMEDIES OF TRUSTEE AND REGISTERED OWNERS - SECTION801. DEFAULTS.................................................................49 SECTION 802. ACCELERATION OF MATURITIES...................................49 SECTION 803. APPLICATION OF MONEYS ...........................................50 ll SECTION 804. TRUSTEE TO REPRESENT REGISTERED OWNERS.............50 SECTION 805. REGISTERED.OWNERS' DIRECTION OF PROCEEDINGS......51 SECTION 806. LIMITATION ON REGISTERED OWNERS' RIGHT TO SUE....51 SECTION 807. LIMITED OBLIGATION OF ISSUER..................................51 SECTION 808. TERMINATION OF PROCEEDINGS..................................52 SECTION 809. REMEDIES NOT EXCLUSIVE..........................................52 SECTION 810. NO WAIVER OF DEFAULT.............................................52 SECTION 811. WAIVERS OF EVENTS OF DEFAULT................................52 ARTICLE IX THE TRUSTEE AND THE PAYING AGENT SECTION 901. APPOINTMENT, DUTIES, IMMUNITIES AND LIABILITIES OF TRUSTEE 53 SECTION 902. FEES, CHARGES AND EXPENSES OF TRUSTEE AND PAYING AGENT 55 SECTION 903. LIABILITY OF TRUSTEE................................................56 SECTION 904. RIGHT OF TRUSTEE TO RELY ON DOCUMENTS................56 SECTION 905. INTERVENTION BY TRUSTEE........................................57 SECTION 906. DESIGNATION OF AND SUCCESSOR PAYING AGENT........57 ARTICLE X SUPPLEMENTAL INDENTURES SECTION 1001. AMENDMENTS REQUIRING CONSENT OF REGISTERED OWNERS 58 SECTION 1002. AMENDMENTS NOT REQUIRING CONSENT OF REGISTERED OWNERS 58 SECTION 1003. DUTIES OF THE REMARKETING AGENT..........................59 SECTION 1004. EFFECT OF SUPPLEMENTAL INDENTURE .......................59 SECTION 1005. ENDORSEMENT OF BONDS...........................................60 SECTION 1006. AMENDMENT OF PARTICULAR BONDS...........................60 SECTION 1007. OPINION OF COUNSEL.................................................60 ARTICLE XI PURCHASE AND REMARKETING OF BONDS SECTION 1101. REGISTERED OWNERS'OBLIGATION TO TENDER BONDS FOR PURCHASE UPON RESET OR CONVERSION OR UPON WITHDRAWAL OF OR REDUCTION IN RATING OF BONDS.......................61 SECTION 1102. DEMAND AND MANDATORY PURCHASE OF BONDS..........61 SECTION 1103. REMARKETING AGENT................................................62 SECTION 1104. QUALIFICATIONS OF REMARKETING AGENT..................62 SECTION 1105. REMARKETING OF BONDS ...........................................62 SECTION 1106. PURCHASE OF BONDS DELIVERED TO TENDER AGENT.....63 SECTION 1107. DELIVERY OF BONDS...................................................64 SECTION 1108. DELIVERY OF PROCEEDS OF SALE.................................64 SECTION 1109. PLEDGED BONDS ........................................................64 SECTION 1110. EXCULPATORY PROVISIONS ........................................65 iii SECTION 1111. DESIGNATION kF TENDER AGENT.................................65 ARTICLE XII AMENDMENT OF DEVELOPER LOAN DOCUMENTS AND LETTER OF CREDIT SECTION 1201. AMENDMENTS TO DEVELOPER LOAN DOCUMENTS AND LETTER OF CREDIT NOT REQUIRING CONSENT OF REGISTERED OWNERS 67 SECTION 1202. AMENDMENTS TO DEVELOPER LOAN DOCUMENTS AND LETTER OF CREDIT REQUIRING CONSENT OF REGISTERED OWNERS . 67 SECTION 1203. REQUIRED OPINION OF BOND COUNSEL ........................68 ARTICLE XIIl DEFEASANCE SECTION 1301. DEFEASANCE.............................................................69 ARTICLE XIV MISCELLANEOUS SECTION 1401. CONSENTS, ETC., OF REGISTERED OWNERS...................71 SECTION 1403. SEVERABILITY ...........................................................71 SECTION 1404. NOTICES....................................................................71 SECTION 1405. PAYMENTS DUE ON OTHER THAN BUSINESS DAYS .........72 SECTION 1406. COUNTERPARTS.........................................................72 SECTION 1407. APPLICABLE LAW.......................................................72 SECTION 1409. COMPLIANCE CERTIFICATES AND OPINIONS..................72 SECTION 1410. SUCCESSORS.............................................................73 SECTION 1411. MODIFICATION OF SECTIONS 503, 504 AND 505 UNDER CERTAIN CIRCUMSTANCES..........................:............................73 APPENDIX A BOND FORM...............................................................A-1 iv THIS INDENTURE OF TRUST, dated as of December 1, 1991, between the City of Huntington Beach, a chartered city and municipal corporation, organized and existing under the laws of the State of California (the "Issuer"), and Dai-Ichi Kangyo Bank of California, a state banking corporation duly authorized to accept and execute trusts of the character herein set forth, as trustee (the "Trustee"). RECITALS : 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 (the "Act") to finance the construction of multifamily rental housing through the issuance of tax-exempt bonds; and WHEREAS,the Issuer has heretofore determined to make a loan (the "Developer Loan") to Five Points Seniors, L.P. (the "Developer"), to enable the Developer to finance the acquisition, construction and development of an approximately 164-unit multifamily residential development (the "Development"), to be located in the City of Huntington Beach, to be occupied partially (at least 20 percent of the dwelling units therein) by persons whose income is 50 percent or less of area median gross income within the meaning of Section 142(d) of the Internal Revenue Code of 19.86, as amended, all for the public purpose of assisting persons of very low income within the City of Huntington Beach (the "City") and surrounding areas to obtain decent, safe and sanitary housing; and WHEREAS,the Issuer has expressly determined and hereby confirms that the issuance of -the Bonds and the making of the Developer Loan will accomplish a valid public purpose of the Issuer by assisting persons of very low income in the City and surrounding areas in obtaining decent, safe and sanitary housing,to relieve unemployment and depressed economic conditions in the home construction industry,to expand the tax base of the State of California and the City, and to reduce public expenditures for crime prevention and control, public health, welfare and safety and for other purposes; and WHEREAS, the Issuer desires to issue, sell and deliver its Variable Rate Demand Multifamily Housing Revenue Bonds (Five Points Seniors Project), Series A of 1991, in the form hereinafter set forth and in the aggregate principal amount hereinafter set forth to finance the Development and to pay the costs of issuing the Bonds, all under and in accordance with the Constitution and laws of the State of California; and WHEREAS, in order to implement the making of the Developer Loan, the Issuer has concurrently herewith entered into the Loan Agreement with the Developer and the Trustee pursuant to which the Issuer has agreed to make, and the Developer has agreed to accept, a loan to enable the Developer to finance the Development and in connection with such loan the Issuer has agreed to cause to be delivered to the Trustee for the benefit of the Registered Owners a Letter,of Credit issued by Wells Fargo Bank, N.A.; and WHEREAS, the execution and delivery of this Indenture and the issuance and sale of the Bonds have been in all respects duly and validly authorized by a written resolution duly adopted by the Issuer, and WHEREAS, the Bonds, 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 attached hereto as Exhibit, with necessary and appropriate variations, omissions and insertions as permitted or required by this Indenture,to wit: 1 WHEREAS, the execution and delivery of the Bonds and of the Indenture have been duly authorized and all things necessary to make the Bonds, when executed by the Issuer and authenticated by the Trustee or the Tender Agent,valid and binding legal obligations of the Issuer and to make this Indenture a valid and binding legal instrument for the security of the Bonds,have been done. NOW, THEREFORE,THIS INDENTURE OF TRUST WITNESSETH: That the Issuer,in consideration of the premises,the acceptance by the Trustee of the trusts hereby created, the purchase and acceptance of the Bonds by the purchasers thereof, and of other good and valuable consideration, the receipt of which is hereby acknowledged, and in order to secure the payment of the principal of, premium, if any, and interest on all Bonds Outstanding hereunder from time to time, according to their tenor and effect, and to secure the observance and performance by the Issuer of all the covenants expressed or implied herein and in the Bonds, does hereby convey, pledge and assign unto the Trustee, and unto its successors and assigns forever and does hereby grant to it and them a security interest,together with all right, title and interest of the Issuer, in: GRANTING CLAUSE FIRST The Loan Agreement (except the Issuer's rights under Sections 5.1(d), 6.9 and 7.4 thereof) and the Developer Note, including all extensions and renewals of the terms thereof, if any,together with all right, title and interest of the Issuer therein including, but without limiting the generality of the foregoing,the present 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 thereunder, whether payable under the above referenced documents 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 is or may become entitled to do under said documents; GRANTING CLAUSE SECOND All payments to be received by, or on behalf of, the Issuer from or in connection with the Loan Agreement, the Letter of Credit and the Developer Note, together with all other Revenues; and GRANTING CLAUSE THIRD Any and all other property of each 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 anyone, to the Trustee, which is hereby authorized to receive any and all such property 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 trusts and assigns forever. IN TRUST NEVERTHELESS, upon the terms and trusts herein set forth for the equal and proportionate benefit, security and protection of all present and future owners of the Bonds, from time to time issued under and secured by this Indenture without privilege,priority or distinction as to the lien or otherwise of any of the Bonds over any of the other Bonds. 2 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 to become due thereon,at the times and in the manner mentioned in the Bonds, according to the true intent and meaning thereof, and shall cause the payments to be made into the Revenue Fund 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 all sums of money due or to become due to them in accordance with the terms and provisions hereof, then this Indenture and the rights hereby granted shall cease, determine and be void, otherwise this Indenture is to be and remain in full force and effect. The Trustee hereby acknowledges, approves, accepts and agrees to the terms, conditions, appointments and agencies of the Loan Agreement and the Regulatory Agreement as they relate to it and its participation in the transactions contemplated thereby. THIS INDENTURE OF TRUST FURTHER WTTNESSETH, and it is expressly declared, that all Bonds issued and secured hereunder are to be issued, authenticated and delivered and the Revenues hereby assigned and pledged are to be dealt with and disposed of under, upon and subject to the terms, conditions, stipulations, covenants, agreements, trusts, uses and purposes as hereinafter expressed, and the Issuer has agreed and covenanted, and does hereby agree and covenant, with the Trustee and with the respective owners from time to time of the Bonds, as follows: 3 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 or as it may from time to time be supplemented or amended by one or more 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 any particular Article, Section or other subdivision. (3)The terms defined in this 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 herein have the meanings assigned to them in accordance with applicable generally accepted accounting principles as in effect from time to time. (5) Every "request," 'order," "demand," "application," "appointment," "notice," "statement," "certificate," "consent," or similar action hereunder by the Issuer shall, unless the form thereof is specifically provided, be in writing signed by a duly authorized officer or agent of the Issuer with a duly authorized signature. (6) All other terms used herein which are defined in the Developer Loan Documents shall have the same meanings assigned to them in such documents unless the context otherwise requires. (B) For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires: "Account"means any one or more of the separate special trust accounts created by Article III hereof, and shall include any subaccount or subaccounts included in such account. "Act"means Chapter 7 of Part 5 of Division 31 of the Health and Safety Code of the State of California, as now in effect and as it may from time to time hereafter be amended or supplemented. "Act of Bankruptcy"means the filing of a petition in bankruptcy (or other commencement of a bankruptcy or similar proceeding) by or against the Developer, or any general or limited partner or guarantor of the Developer, or the Issuer, under any applicable bankruptcy, insolvency or similar law as now or hereafter in effect. "Act of Bankruptcy of Bank" means that the Bank has become insolvent or has failed to pay its debts generally as such debts become due (including its obligations to pay drawings made under the Letter of Credit) or has admitted in writing its inability to pay any of its indebtedness or has consented to or has petitioned 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 4 insolvency, reorganization, arrangement or liquidation proceedings (or similar proceedings) have been instituted by or against the Bank, unless the appropriate regulatory agency has confirmed in writing the effectiveness of the Letter of Credit. "Additional Bonds"means any Bonds issued pursuant to Section 216 hereof. "Adjustable Interest Rate"means the rate of interest determined in accordance with Section 211 hereof. "Adjustable Interest Rate Period" means (i) the initial period commencing on the Bond Issuance Date and continuing to and including , 1991, and (ii) thereafter, the period from and including Wednesday of each week to and including the following Tuesday; provided that the Adjustable Interest Rate Period shall be changed, upon at least two Business Days' prior written notice by the Remarketing Agent to the Trustee, the Bank and the Developer, to begin on any day of the week specified by the Remarketing Agent in such notice and end on the sixth day following such day, and in the event of such a change the Adjustable Interest Rate Period immediately preceding the effective date of such change shall end on the day immediately preceding such effective date. Such notice from the Remarketing Agent shall also specify that the change in the Adjustable Interest Rate Period will permit the Bonds to be remarketed at par. "Affiliated Party" means (1) a Person whose relationship with the Developer would result in a disallowance of losses under Section 267 or 707(b) of the Code or (2) a Person who together with the Developer are members of the same controlled group of corporations (as defined in Section 1563(a) of the Code, except that"more than 50 percent" shall be substituted for"at least 80 percent"each place it appears therein), (3) a partnership and each of its partners (and their spouses and minor children) whose relationship with the Developer would result in a disallowance of losses under Section 267 or 707(b) of the Code and (4) an S corporation and each of its shareholders (and their spouses and minor children) whose relationship with the Developer would result in a disallowance of losses under Section 267 or 707(b) of the Code. "Bank" means Wells Fargo Bank, N.A., acting as the issuer of the Letter of Credit, or the issuer of a Substitute Credit Facility, if one has been delivered as provided in this Indenture. "Bond" or "Bonds" means any one or more of the bonds authorized,authenticated and delivered under this Indenture. "Bond Counsel"means an attorney or a firm of attorneys of nationally recognized standing in matters pertaining to the tax status of interest on bonds issued by states and their political subdivisions, selected by the Issuer and duly admitted to the practice of law before the highest court of any state of the United States of America or the District of Columbia. "Bond Issuance Date"means the date of delivery of the Bonds,being December_, 1991. "Bond Year"means the one-year period beginning on the anniversary of the Closing Date in each year and ending on the day prior to the anniversary date of the Closing Date in the following year except that the first Bond Year shall begin on the Closing Date. "Business Day" means any day other than a Saturday, a Sunday, or a day on which banks in the city in which the principal corporate trust office of the Trustee is located or the office of the Tender Agent is located or a day on which the Bank is closed, or a day on which the New York Stock Exchange is closed. "Code" means the Internal Revenue Code of 1986, as amended, together with the Regulations. All references herein to sections, paragraphs or other subdivisions of the Code or the 5 Regulations shall be deemed to be references to correlative provisions of any applicable successor code or regulations promulgated thereunder. "Completion Date"means the date of completion of the Development as certified pursuant to Section 2 of the Regulatory Agreement. "Conversion"means the establishment of the interest rate on the Bonds at the Fixed Rate as provided in Section 213 hereof. "Conversion Date" means the date on which interest on the Bonds is converted to a Fixed Rate as provided in Section 213 hereof. "Cost of Issuance Fund"means the Fund created by Section 302 hereof. "Costs of Issuance"means all costs incurred in connection with the issuance of the Bonds, including, but not limited to, the Underwriter's fee or discount, attorneys' fees and expenses (including Bond Counsel, Issuer's counsel, Developer's counsel, Trustee's counsel, as well as other specialized counsel fees and expenses incurred in connection with the borrowing), Bank's origination and first annual Letter of Credit fee, fees and expenses of counsel to the Bank, financial advisor fees and expenses, rating agency fees, accountant fees related to the issuance of the Bonds, Trustee's initial fees and expenses, Issuer's initial fees and expenses, Tender Agent's initial fees and expenses, printing costs for the Bonds and any preliminary and final offering materials, costs incurred in connection with satisfying the public approval requirement of Section 147(f) of the Code and costs of engineering and feasibility studies necessary to the issuance of the Bonds, if any. "Counsel" means an attorney at law or a firm of attorneys (who may be an employee of or counsel to the Issuer or the 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 of the District of Columbia. "County"means the County of Orange,California. "Debt Service" means the scheduled amount of interest and amortization-of principal payable on the Bonds during the period of computation,excluding amounts scheduled during such period which relate to principal which has been retired before the beginning of such period. "Debt Service Fund"means the Fund created by Section 302 hereof. "Deed of Trust" means the Construction Deed of Trust, Assignment of Rents and Fixture Filing,executed by the Developer and granting a security interest in the Development to the deed trustee for the benefit of the Trustee and the Bank to secure the Developer's obligations under the Developer Note and the Reimbursement Agreement. "Default" or"Event of Default" means an occurrence or event specified in and defined by Section 801 hereof. "Demand Purchase Option" means the option of the Registered Owners to have Bonds Outstanding purchased by the Tender Agent in accordance with Section 1102 hereof. "Determination of Taxability"means (1)the failure of the Bank to consent in writing to any amendment to the Indenture,the Loan Agreement or the Regulatory Agreement within 45 days of receipt of the written opinion of Bond Counsel to the effect that such amendment is necessary to preserve the exclusion from gross income of interest on the Bonds for federal income tax purposes, or (2) enactment of legislation or a final judgment or order of a court of original 6 jurisdiction, a final order of any other court of competent jurisdiction, or a final ruling or decision of the Internal Revenue Service,in any such case to the effect that the interest on any of the Bonds (other than interest on any Bond for any period during which such Bond is held by a "substantial user" of any facility financed with the proceeds of the Bonds or a "related person," as such terms are used in Section 147(a) of the Code) is not excludable for federal income tax purposes from the gross income of the recipients thereof subject to federal income taxes as a result of action or inaction of the Developer during an Adjustable.Interest Rate Period and as a result of any action during a Reset Period or after Conversion. With respect to clause (2) above, a judgment or order of a court 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"means Five Points Seniors , L.P., and its successors and assigns. "Developer Letter of Credit"means an irrevocable letter of credit(which may be the Letter of Credit, the stated amount of which has been sufficiently increased) issued by a financial institution acceptable to, and in form and substance acceptable to, the Issuer and the Trustee in an amount equal to the amount of any premium payable on the Bonds required to be redeemed as the result of an election by the Developer to prepay the Developer Note during a Reset Period or after Conversion, which letter of credit shall be accompanied by (i) an opinion of nationally recognized bankruptcy counsel, acceptable to Moody's, if Moody's then rates the Bonds or Standard & Poor's, if Standard & Poor's then rates the Bonds, to the effect that proceeds of a drawing under the letter.of credit will not be subject to recapture under Section 547 of the Federal Bankruptcy Code or recoverable under Section 550 of such Code and (ii) written confirmation from the Rating Agency to the effect that delivery of the letter of credit will not adversely affect the then rating on the Bonds or cause the withdrawal of such rating. "Developer Loan" means the mortgage loan originated by the Issuer to the Developer pursuant to the Loan Agreement for the purpose of financing the construction and development of the Development. "Developer Loan Documents"means the Loan Agreement, the Regulatory Agreement,the Developer Note and the Deed of Trust. "Developer Loan Fund"means the Fund created by Section 302 hereof. "Developer Note" means the promissory note in a principal amount equal to the principal amount of the Developer Loan executed by the Developer in accordance with the provisions of the Loan Agreement. "Developer's Contribution Account" means the account in the Cost of Issuance Fund by that name created by Section 302 hereof. "Development" means the multifamily rental housing project to be constructed by the Developer, as further defined in the Regulatory Agreement. "Development Costs"means,to the extent authorized by the Code,the Regulations and the Act, any and all costs incurred by the Developer with respect to the acquisition, construction, and equipping, as the case may be, of the Development, whether paid or incurred prior to or after the Inducement Date, 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 of housing and 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 services, other expenses necessary or incident to determining the 7 feasibility of the Development, contractors' and developers' overhead and supervisors' fees and costs directly allocable to the Development, administrative and other expenses necessary or incident to the Development and the financing thereof(including reimbursement to any municipality,county or other entity for expenditures made, with the approval of the Issuer, for the Development), interest accrued during construction and prior to the Completion Date and all other costs approved by Bond Counsel. "Excess Investment Earnings" shall have the meaning assigned to such term in Section 504 hereof. "Excess Investment Earnings Fund" means the Fund by that name created in Section 504 hereof. "Extraordinary Services" and "Extraordinary Expenses" mean all services reasonably required to be rendered and all fees and reasonable expenses incurred by the Trustee, the Tender Agent, the Paying Agent or their counsel under this Indenture or agreements referred to herein other than Ordinary Services and Ordinary Expenses. "Fixed Rate" means the interest rate borne by the Bonds after Conversion and until the maturity date of the Bonds as provided in Section 213 hereof. "Fund"means any one or more of the separate trust funds created by Article III and Article V hereof. . "General Fund"means the Fund created by Section 302 hereof. "Government Obligations" means direct, general obligations of the United States of America, or any obligations unconditionally guaranteed as to the full and timely payment of principal and interest by the full faith and credit of the United States of America (including obligations held in book-entry form), but specifically excluding any mutual funds or unit investment trusts invested in such obligations. "Gross Proceeds"means the sum of the following amounts: (i) original proceeds, being the amounts received by the Issuer or held by the Trustee as proceeds of the original issuance of the Bonds (after payment of all expenses of issuing the Bonds); (ii) investment proceeds, being amounts received at any time by the Issuer,the Bank, the Developer or the Trustee,such as interest and dividends, resulting from the investment of proceeds of the Bonds (excluding amounts paid to the Bank under this Indenture), including profits and less losses received on such investment; (iii) amounts, other than original proceeds and investment proceeds, held in any fund or account and reasonably expected to be used to pay principal of or interest on the Bonds; (iv) 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 Bank under the Letter of Credit; (vi) amounts used to pay principal of or interest on the Bonds; and (vii) amounts received as a result of investing the amounts listed in clauses (i)through (vi). "Inducement Date" means July 29, 1991, the date of adoption of the Inducement Resolution. "Inducement Resolution" means the resolution adopted by the Issuer on July 29, 1991, indicating its intention to issue the Bonds. "Insurance Proceeds Account" means the account in the Revenue Fund by that name created by Section 302 hereof. 8 "Intercreditor Agreement" means the Intercreditor Agreement dated as of December 1991, among the Trustee, the Issuer and the Bank. "Interest Account" means the account in the Debt Service Fund by that name created by Section 302 hereof. "Interest Payment Date"means during an Adjustable Interest Rate Period, the first Business Day of each quarter commencing January 2, 1992, and, during a Reset Period and after Conversion,January 1 and July 1 of each year. "Investment Agreement"means any investment agreement with a bank or savings and loan association, insurance company or other financial institution (including, without limitation, the Bank) into which the Trustee may enter at the written direction of the Developer, with the written approval of the Bank, pursuant to the provisions of Section 501 hereof for the purpose of investing amounts in the Developer Loan Fund; provided, however, that the Trustee shall not enter into any Investment Agreement unless (a) a certification is provided to the Trustee to the effect that at least three (3) bids on the Investment Agreement have been solicited from persons other than those with an interest in the Bonds (including the Bank and the original purchaser of the Bonds), (b) a certification is provided to the Trustee by the person whose Investment Agreement bid is accepted stating that, based on such person's reasonable expectations on the date that the Investment Agreement is entered into, Nonpurpose Obligations will not be purchased pursuant to the Investment Agreement at a price in excess of their fair market value, (c) a certification is provided to the Trustee to the effect that the yield on the Investment Agreement is at least equal to the yield offered on the highest bid received from a noninterested parry and (d) a certification is provided to the Trustee to the effect that the yield on the Investment Agreement is at least equal to the yield offered on similar obligations under similar investment contracts (e.g., the yield on investment contracts entered into by issuers of qualified mortgage bonds), all as contained in applicable provisions of the Code and the Regulations. "Investment Year" means the twelve-month period beginning on the Bond Issuance Date and ending on the day preceding the first anniversary thereof and, thereafter, each twelve-month period commencing on an anniversary of the Bond Issuance Date and ending on the day preceding the next such anniversary. "Issuer"means the City of Huntington Beach. "Letter of Credit" means the letter of credit issued by the Bank or any Substitute Credit Facility substituted in accordance with the provisions of Section 214 hereof. "Letter of Credit Account"means the account in the Revenue Fund by that name created by Section 302 hereof. "Liquidity Account" means the account in the Purchase Fund by that name created by Section 302 hereof. "Loan Agreement" means the Loan Agreement among the Issuer, the Trustee and the Developer whereby the Issuer has agreed to make the Developer Loan to the Developer for the financing of the acquisition and construction of the Development. "Market Risk Event" means (i) legislation enacted by the United States Congress ("Congress"), or introduced in Congress, or recommended to Congress for passage by the President of the United States ("President") or the United States Department of the Treasury ("Treasury") or the Internal Revenue Service ("Service") or any member of Congress, or favorably reported for passage to either House of Congress by any Committee of such House to which such 9 legislation has been referred for consideration, or (ii) a decision rendered by a court established under Article III of the Constitution of the United States,or the United States Tax Court, or(iii) an order,ruling,regulation or communication (including a press release)issued by the Treasury or the Service, or(iv) any action taken or statement made by or on behalf of the President or the Treasury or the Service or any member of Congress which indicates or implies that legislation will be introduced in the current or next scheduled session of the United States Congress, in each case referred to in clauses (i), (ii), (iii) and (iv) above with the purpose or effect, directly or indirectly, of including interest to be received by any owner of the Bonds in gross income for federal income tax purposes; or (b) legislation enacted or any action taken by the Securities and Exchange Commission which, in the opinion of counsel to the Remarketing Agent, has the effect of requiring the remarketing of the Bonds to be registered under the Securities Act of 1933, as amended (the "Securities Act"), or any other "security," as defined in the Securities Act, issued in connection with or as part of the remarketing of the Bonds to be so registered or this Indenture to be qualified as an indenture under the Trust Indenture Act of 1939, as amended; or any event shall have occurred or shall exist which, in the reasonable judgment of the Remarketing Agent, makes or has made untrue or incorrect in any material respect any statement or information contained in any reoffering circular distributed in connection with the next succeeding Reset Date or the Conversion Date or is not or was not reflected in such reoffering circular but should be or should have been reflected therein in order to make the statements or information contained therein not misleading in any material respect; or(c) in the reasonable judgment of the Remarketing Agent, any event which makes it impractical or inadvisable for the Remarketing Agent to remarket or enforce agreements to remarket Bonds because (i) trading in securities generally shall have been suspended on the New York Stock Exchange or a general banking moratorium shall have been' established by federal, New York or State of California authorities, or (ii) the State of New York or the State of California shall have taken any action, whether administrative, legislative,judicial or otherwise which materially and adversely affects the Remarketing Agent's ability to remarket the Bonds, or (iii) a war involving the United States or other national calamity shall have occurred. "Maximum Permitted Rate"means twelve percent (12%) per year (computed on the basis of a 365 or 366 day year for the actual number of days elapsed); provided, however,that the Issuer shall designate a rate higher than 12 percent per year as the Maximum Permitted Rate if it receives (i) evidence satisfactory to the Trustee that the stated amount of the Letter of Credit has been increased by an amount equal to the principal amount of the Bonds Outstanding times the increase in the interest rate for the number of days of interest coverage then required to be maintained under the Letter of Credit, and (ii) an opinion of Bond Counsel to the effect that the designation of such higher Maximum Permitted Rate or the determination that no Maximum Permitted Rate shall be applicable to the Bonds will neither violate any provision of any law-,applicable to the Bonds or the Developer Loan nor cause the Bonds to be "arbitrage bonds" within the meaning of Section 148 of the Code; will not cause the Maximum Permitted Rate to exceed the maximum rate permitted,by applicable law and will not have any adverse impact on the tax-exempt status of the Bonds. "Moody's" means Moody's Investors Service, a corporation organized and existing under the laws of the State of Delaware, its successors and their assigns, and, if such corporation shall for any reason no longer perform the function of a securities rating agency, "Moody's" shall be deemed to refer to any other nationally recognized rating agency designated by the Issuer with the approval of the Developer and the Bank. "Nonpurpose Obligation" means any security or obligation (other than an obligation on which interest is excludable from gross income for federal income tax purposes under Section 103(a) of the Code) in which Gross Proceeds are invested and which is not acquired to carry out the governmental purpose of the Bonds. "Ordinary Services" and "Ordinary Expenses" mean those services to be rendered by and those reasonable fees and expenses, including without limitation,reasonable fees of counsel, to be 10 incurred by the Trustee, any persons engaged to enable the Trustee to perform its obligations under Article V of this Indenture, the Paying Agent or the Tender Agent in performing such duties as they may have under the Indenture, including,but not limited to, the cost of printing any Bond and any services rendered by the Trustee or any expenses incurred in connection with any exchange or transfer of Bonds provided for in Section 203 of this Indenture or under agreements referred to herein,for which the Trustee, any Paying Agent or Tender Agent shall be compensated. "Outstanding" or "Bonds outstanding" means, as of the time in question, all Bonds authenticated and delivered under this Indenture,except: A. Bonds theretofore cancelled or required to be cancelled under Section 209 hereof; B. Bonds which are deemed to have been paid in accordance with Article XIII hereof; C. Bonds in substitution for which other Bonds have been authenticated and delivered pursuant to Article II hereof; and D. Any Untendered Bonds. In determining whether the owners of a requisite aggregate principal amount of Outstanding Bonds have concurred in any request, demand, authorization, direction, notice, consent or waiver under the provisions of this Indenture, Bonds which are owned by the Developer, the Issuer or any other obligor on the Bonds, or any affiliate of any one of said entities (for the purpose of this 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;provided, however,that the Trustee shall not be deemed to have knowledge that any Bond is owned by any such obligor or affiliate unless the Issuer or the Developer is the Registered Owner or the Trustee has received written notice that any other Registered Owner is such an obligor or affiliate; provided, further, that Pledged Bonds shall be deemed Outstanding and voted by the Bank. 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. Bonds so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee shall establish to the satisfaction of the Trustee the pledgee's right to vote such Bonds and that the pledgee is not a Person directly or indirectly controlling or controlled by, or under direct or indirect common control with, the Developer, the Issuer or any other obligor on the Bonds. In case of a dispute as to such right, any decision by the Trustee taken upon the advice of Counsel shall be full protection to the Trustee. For the purposes of this paragraph, the Bank shall not be deemed to be an "obligor on the Bonds" unless it has been substituted in lieu of the Developer as obligor under the Loan Agreement and owner of the Development. "Paying Agent" means the Trustee or any commercial bank or trust company designated pursuant to this Indenture to serve as a successor paying agent or place of payment for the Bonds. 'Permitted Investments"mean any of the following which at the time are legal investments for the Issuer under the laws of the State for the moneys held hereunder then proposed to be invested therein: (i) Government Obligations; (ii) time or, deposits in any United States bank or trust company, including the Trustee, having aggregate capital and surplus of at least $50,000,000 and authorized to accept deposits of public funds (including the banking department of the Trustee and the Bank), which are secured at all times by bonds or other obligations which are authorized by law as security for public deposits; (iii) obligations, participations or other instruments of, or issued by, Federal National Mortgage Association, or issued by a United States 11 agency or instrumentality; (iv) evidence of indebtedness of corporations authorized by the provisions of Section 1364 of the California Financial Code, which include an affiliate of the Trustee,provided such indebtedness is rated, or is on a parity with obligations that are rated P-1 or A-1 by a nationally recognized rating agency; (v) repurchase agreements, which may include repurchase agreements of the Trustee, secured by any of the obligations referred to in (i), (ii) or (iii) above or bonds or obligations which are authorized by law as security for public deposits, provided that no proceeding under any applicable insolvency or reorganization law has been commenced by or against the issuer of such bonds or obligations and provided further that such bonds or other obligations and the debt of the issuer of the repurchase agreement bear the highest rating assigned by a nationally recognized rating agency; (vi) a promissory note (and the Investment Agreement, if any) of a bank holding company whose long-term obligations are rated at least as high as the then rating on the Bonds; (vii) any Investment Agreement; (viii) obligations the interest on which is excludable from gross income for federal income tax purposes under the Code and rated at least as high as the existing rating on the Bonds, including money market funds composed solely of such obligations; (ix) any taxable money market fund (including any money market fund sponsored by the Trustee or its affiliates) approved by the Bank; or (x) any other investment approved by the Bank. The Issuer shall provide the Trustee with written notice should any investment listed in clauses (i) through (x) of this paragraph cease to be a legal investment for the Bonds. 'Person" means a natural person, firm, partnership, association,-corporation, trust or public body. 'Pledge Agreement"means that certain Pledge and Security Agreement dated as of the date hereof between the Bank and the Developer with respect to the holding of Pledged Bonds by the Tender Agent. "Pledged Bond" means a Bond registered in the name of the Developer and in which the Bank has a security interest in accordance with the provisions of the Pledge Agreement as a result of such Bond having been purchased with funds drawn under the Letter of Credit pursuant to Section 1101 and 1102 hereof. "Prepayments"mean (a) any prepayments paid by or on behalf of the Developer, whether optional or mandatory, of the principal of the Developer Note together with any accrued interest paid thereon; (b) any prepayment premiums paid by or on behalf of the Developer on the Developer Note; and (c) any proceeds or other amounts obtained by the Trustee or the Issuer through the exercise of the remedies provided in the Developer Loan Documents upon the occurrence of an event of default by the Developer. "Principal Account" means the Account in the Debt Service Fund by that name created by Section 302 hereof. 'Principal Office"means (i) when used with respect to the Trustee, the principal corporate trust office of the Trustee, which as of the Bond Issuance Date is located in Seattle, Washington, and (ii) when used with respect to any Paying Agent, other than the Tender Agent, means the office of such Paying Agent as designated by notice given by the Trustee to the Registered Owners and(iii) when used with respect to the Tender Agent appointed pursuant to Section 1111 means the office of such Tender Agent as designated in Section 1111 or by notice given by the Trustee to the Registered 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 Registered Owners. 'Purchase Date" means any date on which Bonds are purchased pursuant to the tender provisions of Section 1101 hereof or pursuant to the Demand Purchase Option set forth in Section 1102 hereof. 12 "Purchase Fund"means the Purchase Fund created pursuant to Section 302 hereof. "Qualified Development Costs" means the Development Costs (excluding Costs of Issuance) incurred after the Inducement Date for items which either constitute land or property of a character subject to the allowance for depreciation under Section 167 of the Code or are chargeable to a capital account with respect to the Development for federal income tax and financial accounting purposes, or would be so chargeable either with a proper election by the Developer or but for the proper election by the Developer to deduct those amounts; provided, however, that only such portion of the interest accrued during the construction of the Development shall constitute a Qualified Development Cost as bears the same ratio to all such interest as the Qualified Development Costs bear to all Development Costs; and provided further that interest accruing after the Completion Date shall not be a Qualified Development Cost, and provided still further that, if any portion of the Development is being constructed by an Affiliated Party (whether as a general contractor or a subcontractor), "Qualified Development Costs" shall include only (a)the actual out- of-pocket costs incurred by such Affiliated Party in constructing the Development (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 Development, 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 Development or payments received by such Affiliated Party due to early completion of the Development(or any portion thereof). "Rating Agency" means Moody's, Standard &Poor's and any other nationally recognized rating agency agreed to by the Issuer,the Bank and the Developer. "Record Date" means, with respect to any Interest Payment Date during an Adjustable Interest Rate Period, the fifth day next preceding an Interest Payment Date and, during a Reset Period and after Conversion, the fifteenth day next preceding an Interest Payment Date. With respect to any payment of defaulted interest, a special Record Date shall be established in accordance with the provisions of Section 202 hereof. "Redemption Account"means the Account in the Debt Service Fund by that name created by Section 302 hereof. "Registered Owner" or "owner" means the person or persons in whose name or names a Bond shall be registered on the books of the Trustee kept for that purpose in accordance with the terms of this Indenture. "Regulations" means the income tax regulations promulgated or proposed by the Department of the Treasury pursuant to the Code from time to time. "Regulatory Agreement"means the Regulatory Agreement and Declaration of Restrictive Covenants dated as of the date hereof with respect to the Development, among the Issuer, the Trustee and the Developer and recorded in the official records of the County. "Reimbursement Agreement" means the Reimbursement Agreement dated as of the date hereof between the Bank and the Developer providing for the issuance of the Letter of Credit by the Bank; or,following the issuance of any Substitute Credit Facility, the Reimbursement Agreement or similar agreement supporting the issuance of the same. "Remarketing Account" means the account in the Purchase Fund by that name created by Section 302 hereof. 13 "Remarketing Agent" means the remarketing agent appointed in accordance with the provisions of Section 1103 hereof,initially Prudential-Bache Capital Funding. "Remarketing Agreement" means the Remarketing Agent Agreement dated as of the date hereof among the Issuer,the Developer and the Remarketing Agent, as amended and supplemented from time to time. "Reset Date"means the date upon which the Bonds begin to bear interest at a Reset Rate for the next succeeding Reset Period or at an Adjustable Interest Rate following a Reset Period. "Reset Period" means the period during which the Bonds bear interest at the Reset Rate or at an Adjustable Interest Rate following a Reset Period. "Reset Rate" means the interest rate to be borne by the Bonds in accordance with the provisions of Section 212 hereof. "Resolution"means the resolution duly adopted and approved by the Issuer authorizing the issuance and sale of the Bonds and the execution of this Indenture. "Revenue Fund"means the Fund created in Section 302 hereof. "Revenues" means the amounts pledged hereunder to the payment of principal of, premium, if any, and interest on the Bonds, consisting of the following: (i) all income, revenues, proceeds and other amounts,to which the Issuer is entitled, derived from or in connection with the Development and the Developer Loan Documents, including all scheduled payments of the principal of and interest on the Developer Note and drawings under the Letter of Credit, and all Prepayments, and including all amounts obtained through the exercise of the remedies provided in the Developer Loan Documents 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 (ii) moneys held in the Funds and Accounts, together with investment earnings thereon (except amounts on deposit in the Excess Investment Earnings Fund). "Seasoned Funds"means if and to the extent the Developer Letter of Credit is not provided for the payment of redemption premiums on the Bonds, moneys deposited by the Developer with the Trustee in the Seasoned Funds Account to pay premiums on the Bonds and so designated by the Developer, which moneys shall have been held by the Trustee in the Seasoned Funds Account for at least one year prior to the date notice of redemption of the Bonds is given by the Trustee, provided that no Act of Bankruptcy shall have occurred prior to or during the one year period after such moneys were deposited in the Seasoned Funds Account (the Trustee shall be entitled to rely on the 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 Revenue Fund. "Standard & Poor's" means Standard &Poor's Corporation, a corporation organized and existing under the laws of the State of Delaware, its successors and their assigns, and, if such corporation shall for any reason no longer perform the function of a securities rating agency, "Standard & Poor's shall be deemed to refer to any other nationally recognized rating agency designated by the Issuer with the approval of the Developer and the Bank. "State"means the State of California. 14 "Substitute Credit Facility"means any credit facility delivered to the Trustee to secure the Bonds, other than any extension of the expiration date of the Letter of Credit, which is approved by the Issuer and satisfies the criteria set forth in Section 214 hereof. "Substitution Date"means the date on which a Substitute Credit Facility is delivered to the Trustee with the effect that the existing rating on the Bonds is withdrawn or reduced. "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 Agent"means DKB Trust Company of New York acting in the capacity of Tender Agent under this Indenture, or any successor tender agent appointed in accordance with Section 1111 of this Indenture. "Trustee" means Dai-Ichi Kangyo Bank of California, or any successor trustee appointed in accordance with the terms of this Indenture. 'Trust Estate"means the property conveyed to the Trustee pursuant to the Granting Clauses hereof. "Underwriter"means Bancroft, Garcia&Lavell, Inc. and Prudential Securities,Inc. Such terms as are not defined herein shall have the meanings assigned to them in the Developer Loan Documents. 15 ARTICLE H THE BONDS SECTION 201. AUTHORIZED AMOUNT OF BONDS. No Bond 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 $9,500,000, except as provided in Sections 207 and 216 hereof. SECTION 202. ISSUANCE OF BONDS. The Issuer may issue the Bonds following the execution of this Indenture; and the Trustee shall, at the Issuer's request, authenticate such Bonds and deliver them or make them available for pickup. The Bonds shall be designated "City of Huntington Beach Variable Rate Demand Multifamily Housing Revenue Bonds (Five Points Seniors Project), Series A of 1991." The Bond shall mature on . During an Adjustable Interest Rate Period,the Bonds shall be issuable only as fully registered Bonds without coupons in a minimum denomination of$100,000 or any integral multiple thereof; and, during a Reset Period or after the Conversion Date, the Bonds shall be issuable only as fully registered Bonds without coupons in denominations of$5,000 or any integral multiple thereof. Unless the Issuer shall otherwise direct, the Bonds shall be numbered as determined by the Trustee. During a Reset Period and after the Conversion Date, the Bonds, the designation of the Bonds, the form of Bonds, the certificate of authentication to be endorsed on the Bonds and the form of assignment to be endorsed on the Bonds are to be in substantially the form set forth in Appendix A in the form of Bonds and hereby made a part of this Indenture, with necessary and appropriate variations, omissions and insertions as permitted or required by this Indenture. Bonds authenticated and delivered prior to the first Reset Date or the Conversion Date shall be dated as of the Bond Issuance Date. Bonds authenticated and delivered on and after a Reset Date or the Conversion Date shall be dated as of the Reset Date or the Conversion Date, as applicable. Bonds authenticated and delivered during an Adjustable Interest Rate Period following a Reset Period shall be dated as of the Reset Date following such Reset Period. Regularly scheduled interest on the Bonds shall be payable on the applicable Interest Payment Date. Each Bond will bear interest from the Interest Payment Date next preceding the date of authentication thereof to which interest has been duly paid or provided for, unless a Bond is authenticated before the first Record Date, in which case interest will accrue from the Bond Issuance Date, or unless authenticated as of a date during the period from the Record Date to and including the next Interest Payment Date, in which case it shall bear interest from such Interest Payment Date. The Trustee or the Tender Agent shall insert the date of authentication of each Bond in the place provided for such purpose in the form of certificate of authentication to be printed on each Bond. Each Bond shall bear interest on overdue principal at the rate then in effect on such Bond. The Bonds shall bear interest at the Adjustable Interest Rate, as the same shall be determined from time to time, unless and until a Reset Rate or a Fixed Rate is established pursuant to Section 212 or Section 213, respectively. The amount of interest to be paid on any Interest Payment Date on any Bond during an Adjustable Interest Rate Period shall be determined by (i) multiplying (A) the principal amount of such Bond by (B) the Adjustable Interest Rate in effect for each Adjustable Interest Rate Period since the last Interest Payment Date times the actual number of days from and including the last Interest Payment Date, (ii) dividing the resulting product by 365 (or 366 if the year in which such computation is being made has 366 days), and (iii)rounding the resulting figure to the nearest cent (half cents being rounded upward). Neither the Issuer nor the Trustee shall have any liability to any Registered Owner as a result of any error in calculation of the Adjustable Interest Rate. 16 . The amount of interest to be paid on the Bonds during a Reset Period and after Conversion shall be calculated at the Reset Rate or the Fixed Rate, as applicable, on the basis of a 360-day year comprised of twelve 30-day months. The principal of, premium, if any, and interest on the Bonds shall be payable in lawful money of the United States of America, being any coin or currency of the United States of America which, at the respective dates of payment thereof, is legal tender for the payment of public and private debts. Interest on each Bond shall be paid on each Interest Payment Date to the Registered Owner of such Bond at the close of business on the Record Date with respect to such interest payment and shall be paid by check or draft mailed on such Interest Payment Date to such Registered Owner at his address as it appears on the registration books of the Trustee or, upon the written request of a Registered Owner of at least $1,000,000 in principal amount of Bonds received by the Trustee not later than fifteen days prior to the Record Date for such payment, by wire transfer in immediately available funds to an account designated by such Registered Owner, 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. Payment of principal and premium,if any, due on any Bond shall be paid only upon surrender of such Bond at the Principal Office of the Trustee or its successor in interest. Payment of the purchase price of any Bond shall be paid only upon surrender of such Bond to the Tender Agent. In the event of any default in the payment of interest, such defaulted interest shall be payable to the Registered Owner of such Bond on a special Record Date for the payment of such defaulted interest, which date shall be established by the Trustee by notice mailed by or on behalf of the Issuer to the Registered Owners of Bonds not less than fifteen (15) days preceding such special Record Date. Notwithstanding any provision herein to the contrary,no interest shall accrue with respect to any Pledged Bond during the period when it is a Pledged Bond. No additional interest shall be payable on any Interest Payment Date in respect of any Bond purchased by the Tender Agent on such Interest Payment Date pursuant to Section 1102 or redeemed on such Interest Payment Date to the extent that interest is included in determining the purchase price or redemption price of such Bond. SECTION 203. REGISTRATION, TRANSFER AND EXCHANGE. The Trustee shall cause books for the registration of the transfer of the Bonds (the 'Bond Register") as provided in this Indenture to be kept at its Principal Office. The Bond Register shall at all times be open to inspection by a duly authorized employee or agent of the Issuer during normal business hours and upon reasonable notice. The registration of ownership of the Bonds may be transferred only on the Bond Register maintained by the Trustee. Upon surrender for registration of transfer of any Bond at the Principal Office of the Trustee, or the Tender Agent with respect to tendered Bonds, duly endorsed for transfer or accompanied by an assignment duly executed by the Registered Owner or his or her attorney duly authorized in writing, the Issuer shall cause to be executed and the Trustee shall authenticate and deliver or make available for pickup in the name of the transferee or transferees a new Bond or Bonds, of the same type and maturity and for a like aggregate principal amount. Upon surrender for registration of transfer of any Bond to the Tender Agent, the Tender Agent shall provide to the Trustee all necessary information to effect such registration by the Trustee. The signature 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 Bond in every particular, without 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. Bonds may be exchanged at the Principal Office of the Trustee for a like aggregate principal amount of Bonds of the same type and maturity of other authorized denominations. The Issuer shall cause to be executed and the Trustee shall authenticate and deliver, or make available for 17 pickup, Bonds which the Registered Owner making the exchange is entitled to receive, bearing numbers not then outstanding. The execution by the Director and the Secretary of the Issuer of any Bond of any authorized denomination shall constitute full and due authorization of such denomination, and the Trustee shall thereby be authorized to authenticate and deliver such Bond. The Trustee or the Tender Agent shall not be required to register the transfer of 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 (15) days next preceding the giving of such notice of redemption; provided, however,that the foregoing shall not apply to the registration or transfer of any Bond which has been tendered pursuant to the Demand Purchase Option set forth in Section 1102 hereof, and in any such case for purposes of selection for redemption,the Bonds so tendered and the Bonds issued to the transferee thereof pursuant to Section 1108 hereof shall be deemed and treated as the same Bond. If any Bond shall be transferred and delivered pursuant to Section 1108 hereof after such Bond has been called for redemption,the Trustee shall deliver to the transferee a copy of the applicable redemption notice,indicating that the Bond delivered to such transferee has been called for redemption. The Trustee shall not register the transfer of any Pledged Bonds unless it receives written notice from the Bank that the security interest of the Bank in and to such Pledged Bond has been released and that the principal amount of the Letter of Credit has been reinstated to an amount equal to the principal amount of all Bonds Outstanding plus 125 days of interest thereon calculated at the Maximum Permitted Rate per annum, or a Substitute Credit Facility meeting the requirements of Section 214 hereof has been delivered to the Trustee. Upon establishment of a Reset Rate or Conversion to a Fixed Rate or upon delivery of a Substitute Credit Facility pursuant to Sections 212, 213 or 214,respectively, of this Indenture,the Developer shall cause new Bonds reflecting the Reset Rate or the Fixed Rate or the issuer of the Substitute Credit Facility, as appropriate, to be prepared at its expense and shall furnish such Bonds to the Trustee. The Issuer shall execute and the Trustee shall authenticate and deliver such Bonds as provided in this Section 203 in exchange for Bonds bearing an Adjustable Interest Rate, a Reset Rate or a Fixed Rate, or identifying the Substitute Credit Facility, as the case may be, including Bonds not delivered to the Trustee or the Tender Agent and deemed to have been purchased in accordance with Section 1101 hereof. As to any Bond, the Registered Owner shall be deemed and regarded as the absolute owner thereof for all purposes; provided that the Bank shall be treated as the absolute owner of Pledged Bonds, except for purposes of payment of interest thereon, and payment of regularly scheduled interest on any Bond (other than a Pledged Bond on which the Trustee shall not pay interest) shall be made only to or upon the order of the Registered Owner thereof on the Record Date for such payment or of such Registered Owner's attorney duly authorized in writing, but such registration may be changed as hereinabove provided. As to Pledged Bonds, the Trustee shall make any payments of principal due to the Developer as the Registered Owner of such Pledged Bonds to the Bank. All such payments made with respect to a Bond or a Pledged Bond shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so paid. The Issuer or the Trustee shall not charge Registered Owners for any exchange or registration of transfer of Bonds, except pursuant to Section 207 hereof and except that in each case the Trustee shall require the payment by the Registered Owner requesting exchange or registration of transfer of any tax or other governmental charge required to be paid with respect thereto. The cost of printing any Bonds or any services rendered or any expenses incurred by the Trustee in connection with any transfer or exchange pursuant to this Section shall be paid by the Developer. 18 ~ SECTION 204. EXECUTION; LIMITED OBLIGATION. The Bonds shall be executed on behalf of the Issuer with the facsimile signature of the Director of the Issuer and attested with the facsimile signature of the Secretary of the Issuer and shall have impressed or printed thereon a facsimile of the seal of the Issuer. Any facsimile signature shall have the same force and effect as if the Director or the Secretary, as the case may be, 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,the same as if such officer had remained in office until delivery. The Bonds, together with interest thereon, shall be limited obligations of the Issuer,giving rise to no pecuniary liability of the Issuer, the State of California or any political subdivision thereof,nor any charge against its general credit, shall be payable solely from and shall be a valid claim of the respective owners thereof only against the Trust Estate. The Bonds shall not constitute an indebtedness or loan of the credit of the Issuer or the State of California or any political subdivision thereof within the meaning of any constitutional or statutory provisions. Neither the faith and credit nor the taxing power of the Issuer or the State or any political subdivision thereof is pledged to the payment of the principal of, premium, if any, or interest on the Bonds or any other costs incident thereto. No recourse shall be had for the payment of the principal of, or premium, if any, or interest on any of the Bonds or for any claim based thereon or upon any obligation, covenant or agreement contained herein, against any past, present or future member of the Board of the Issuer, officer, employee or agent of the Issuer, under any rule of law or equity, or statutory or constitutional .provision or by the enforcement of any assessment or penalty or otherwise,and all such liability of any such member of the Board of the Issuer,officer, employee, agent or member as such is hereby expressly waived and released as a condition of and in consideration for the execution of this Indenture and the issuance of the Bonds. SECTION 205. AUTHENTICATION. No Bond shall be valid for any purpose until the certificate of authentication on such Bond shall have been duly executed by the Trustee or the Tender 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 certificate of authentication on any Bond shall be deemed to have been executed by the Trustee or the Tender Agent if(a) signed by an authorized officer, signatory or agent of the Trustee or the Tender Agent, but it shall not be necessary that the same officer, signatory or agent sign the certificate of authentication on all of the Bonds issued hereunder, and (b) the date of authentication of the Bond is inserted in the place provided therefor on the certificate of authentication printed on such Bond. SECTION 206. FORM OF BONDS. The Bonds issued under this Indenture shall be in substantially the form hereinabove set forth 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 or temporary Bond is mutilated, lost, stolen or destroyed, the Issuer may cause to be executed and the Trustee may authenticate a new Bond of like date, maturity,type, interest rate and denomination as that mutilated, lost, stolen or destroyed; provided that, in the case of any mutilated Bond, such mutilated Bond shall first be surrendered to the Trustee, and in the case of any lost, stolen or destroyed Bond, there shall be first furnished to the Issuer and the Trustee evidence of such loss, theft or destruction satisfactory to them, together with indemnity satisfactory to them. In the event any such Bond shall have matured,instead of issuing a replacement Bond as provided above, the Trustee may pay the same. The Issuer and the Trustee shall charge the owner 19 of such Bond with their reasonable fees and expenses in this connection. The Issuer shall cooperate with the Trustee 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 may have to receive indemnification against liability, or payment or reimbursement of expenses, in connection with the issue of a replacement Bond. Every substituted Bond 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 stolen shall be enforceable at any time by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Bonds duly issued hereunder. All Bonds shall be held and 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 preclude any and all other rights or remedies. SECTION 208. TEMPORARY BONDS. Pending preparation of definitive Bonds, or by agreement with the purchaser of all Bonds, the Issuer may issue and, upon the Issuer's request, the Trustee shall authenticate, in lieu of definitive Bonds, one or more temporary printed or typewritten Bonds in any authorized denomination and of substantially the tenor recited above. Upon request of the Issuer, the Trustee, without any additional charge to the owners thereof, 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. SECTION 209. CANCELLATION AND DESTRUCTION OF SURRENDERED BONDS. Whenever any Outstanding Bond shall be delivered to the Trustee for cancellation pursuant to this Indenture, for payment of the principal amount represented thereby, or for replacement pursuant to Section 207 hereof, such Bond shall be promptly cancelled and destroyed by the Trustee and counterparts of a certificate of 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 or make them available for pickup to the purchasers as directed by the Issuer and as provided in this Section 210. Prior to the delivery by the Trustee of any of the Bonds there shall have been filed with the Trustee,in addition to the items required by Section 3.2 of the Loan Agreement: . (I) A copy, duly certified by the Secretary of the Issuer, of the Inducement Resolution and the Resolution of the Issuer authorizing the issuance of the Bonds and the execution and delivery of this Indenture. (2) Original executed counterparts of this Indenture, the Loan Agreement, the Developer Note, the Deed of Trust, the Letter of Credit, the Regulatory Agreement, together with evidence satisfactory to the Trustee, which may be telephonic notice from the title company, of the recordation thereof in the official land records of the County, and the Remarketing Agreement. (3) An opinion of Bond Counsel that the issuance of the Bonds and the execution of this Indenture have been duly and validly authorized, that all requirements under this Indenture precedent to the delivery of the Bonds have been satisfied and that the Bonds and the Indenture are valid and binding obligations,enforceable against the Issuer in accordance with their terms (subject to any applicable bankruptcy,reorganization, insolvency,moratorium or similar laws affecting the 20 enforcement of creditors'rights generally and subject also to the application of equitable principles if equitable remedies are sought). (4) A request and authorization to the Trustee on behalf of the Issuer directing the Trustee as to the amounts required to be deposited into the Cost of Issuance Fund. (5) A request and authorization to the Trustee on behalf of the Issuer to authenticate and deliver the Bonds to the purchaser(s) therein identified upon payment to the Trustee, but for the account of the Issuer, of a sum specified in such request and authorization. The proceeds of such payment shall be transferred and deposited pursuant to Article III hereof and as indicated in such request and authorization. (6) 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 148 of the Code. SECTION 211. DETERMINATION OF ADJUSTABLE INTEREST RATE. The Adjustable Interest Rate to be borne by the Bonds during an Adjustable Interest Rate Period shall be as provided in this Section: (a) For the initial Adjustable Interest Rate Period from the Bond Issuance Date to and including , 1991,the Adjustable Interest Rate shall be %per annum. (b)The Adjustable Interest Rate shall be determined by the Remarketing Agent on the last Business Day preceding each Adjustable Interest Rate Period. For purposes of this Indenture, "Adjustable Interest Rate" shall mean the minimum interest rate necessary to enable the Remarketing Agent in its best judgment,under then-prevailing market conditions,to remarket the Bonds at a price equal to the principal amount thereof and interest accrued thereon, and such interest rate shall be the Adjustable Interest Rate. (c) The Remarketing Agent shall give telephonic notice to the Trustee of the Adjustable Interest Rate no later than 12:00 noon,Los Angeles time, on the day the Adjustable Interest Rate is calculated, and such notice shall be confirmed in writing as soon as possible thereafter. (d)The Adjustable Interest Rate so determined shall become effective as the interest rate on the Bonds as of the first day of each Adjustable Interest Rate Period. (e)If the Remarketing Agent shall fail to determine the Adjustable Interest Rate as provided in subsection (b) above,then the Adjustable Interest Rate shall be in the following order of priority: (i) the rate equal to the rate for 7-day variable rate tax-exempt notes as most recently published by J. J. Kenny Information Systems or by any other nationally recognized service, (ii) the rate.for 60- day tax-exempt commercial paper published the afternoon of the Business Day preceding the first day of said Interest Period by Munifacts Wire System, Inc., or by any other nationally recognized service, or(iii) if no such rate is then published as described in (i) or (ii) above, 80 percent of the interest rate applicable to 13-week United States Treasury bills, determined on the basis of the average per annum rate at which such bills shall have been sold on a bond-equivalent basis at the most recent Treasury auction prior to the first Business Day of said Interest Period. (f) Notwithstanding subsections (b) or (e) hereof, in no event shall the Adjustable Interest Rate exceed the Maximum Permitted Rate. (g) The determination of the Adjustable Interest Rate by the Remarketing Agent shall be conclusive and binding upon the Issuer, the Developer, the Trustee, the Bank, any Paying Agent, the Tender Agent, the Remarketing Agent and the owners of the Bonds. 21 SECTION 212. RESET OF INTEREST RATE ON THE BONDS. The rate of interest on the Bonds (but not less than all Outstanding Bonds) may, with the written consent of the Bank, be established at a Reset Rate on any Interest Payment Date during an Adjustable Interest Rate Period or on any Reset Date as follows: (a) Provided that no Event of Default shall have occurred and be continuing, in order to effect the establishment of a Reset Rate,the Developer must deliver the written consent of the Bank and a written notice to the Issuer, the Trustee, the Tender Agent, the Remarketing Agent and the Bank of such election at least twenty (20) and not more than thirty (30) days prior to the Reset Date specifying (i) the proposed Reset Date; (ii) the proposed duration of the Reset Period, which shall be at least twelve (12) months and shall terminate on the date immediately prior to an Interest Payment Date; and (iii) the date on which the Reset Rate will be determined by the Remarketing Agent, which date shall be not less than eleven (11) days before the Reset Date. Such notice shall also be accompanied by (i) an opinion of Bond Counsel to the effect that the establishment of the Reset Rate is permitted under applicable law,is permitted by this Indenture, and will not adversely affect the exclusion of the interest on the Bonds from gross income for federal income tax purposes or its exemption from State personal income taxes, (ii) an irrevocable commitment from the provider thereof to issue a Substitute Credit Facility or to extend and amend as necessary,the then- existing Letter of Credit for the requisite period; (iii) a written statement from the Rating Agency then rating the Bonds to the effect that the rating expected to be assigned to the Bonds on the proposed Reset Date is in conformity with the requirements of Section 214(B)(4) of this Indenture; (iv) payment to the Trustee of such amount as the Trustee reasonably determines may be required in connection with the establishment of the Reset Rate, including, but not limited to, its own reasonable fees and expenses and the cost of printing new Bonds; and (v) the form of notice to be given by the Trustee to Registered Owners regarding the establishment of the Reset Rate. - (b) If on any day at least eleven (11) days before the applicable Reset Date (i) the Trustee receives written notice from the Developer to the effect that it no longer wishes to change the interest rate on the Bonds to the proposed Reset Rate, or (ii) the Trustee receives written notice from the Remarketing Agent or the Developer that a Market Risk Event has occurred, the Trustee shall promptly cancel such election to establish a Reset Rate and the Bonds will continue to bear interest at an Adjustable Interest Rate; provided, however, that to the extent that the Bonds will bear interest at an Adjustable Interest Rate, the Trustee shall have received a Substitute Credit Facility, conforming to the provisions of Section 214(A) hereof, or the Letter of Credit then in effect shall meet the requirements of such Section, which is effective on the date such Adjustable Interest Rate is to be effective. The Trustee shall have no liability as a result of any such cancellation. The Trustee shall also provide written notice of the cancellation to the Bank, the Issuer and the Remarketing Agent. (c) If the Trustee has not received a notice of cancellation as provided for in subsection (b) hereof by the date specified in said subsection, and the requirements of subsection (a)(ii) hereof have been satisfied,then, at least 10 days prior to the Reset Date, the Trustee shall send a notice to each Registered Owner by first class mail,postage prepaid, stating (i) the Reset Date; (ii) the Letter of Credit or Substitute Credit Facility expected to be in effect on the Reset Date; (iii) that all Outstanding Bonds not tendered for purchase at least seven (7) days before the Reset Date will be deemed to have been so tendered and shall be purchased on the Reset Date from the Registered Owners at a price equal to the principal amount thereof plus accrued interest to the Reset Date; and (iv) that all Bonds must be surrendered to the Tender Agent for purchase not later than 12:00 noon, New York City time, on the Reset Date. (d)From and after each Reset Date,until the last day of a Reset Period,the Bonds will bear interest at the applicable Reset Rate,payable January 1 and July 1 of each year, commencing on the Interest Payment Date next following the Reset Date, computed on the basis of a 360-day year of 22 twelve 30-day months. The Reset Rate shall be that rate,determined by the Remarketing Agent on the date specified in the notice from the Developer referred to in subsection (a) of this Section 212, which in the judgment of Remarketing Agent, having due regard for prevailing market conditions, would not exceed the interest rate which would be required to be borne by the Bonds in order for the market value (disregarding accrued interest) of the Bonds on the Reset Date to be 100 percent of the principal amount thereof. Notwithstanding the foregoing, the Reset Rate shall not exceed the Maximum Permitted Rate. (e) At least thirty (30) and not more than forty (40) days prior to the Interest Payment Date following the final day of a Reset Period, the Developer shall elect to have the Bonds bear interest from and after such Interest Payment Date at a Reset Rate for a new Reset Period or at an Adjustable Interest Rate or the Fixed Rate by giving written notice of such election to the Trustee, the Tender Agent, the Issuer, the Bank and the Remarketing Agent and shall'provide a Substitute Credit Facility conforming to the provisions of Section 214 hereof, or the Letter of Credit shall meet the requirements of such Section. If the Developer fails to make such election, or fails to supply the items required by this subsection by the dates specified in such subsection, the interest rate on the Bonds shall be an Adjustable Interest Rate determined in accordance with the procedures set forth in Section 211 commencing on the day immediately following the last day of the Reset Period. (f) The determination of a Reset Rate by the Remarketing Agent in accordance with the provisions of this Section 212 shall be conclusive and binding (in the absence of manifest error) upon the owners of the Bonds, the Issuer, the Bank, the Developer, the Tender Agent and the Trustee. (g) All obligations of the Bank under the Letter of Credit shall terminate as of a Reset Date except for obligations under any then-pending drawings under the Letter of Credit unless the Letter of Credit has been amended or extended in accordance with the requirements of this Section 212. SECTION 213. ESTABLISHMENT OF FIXED RATE. The interest rate to be borne by the Bonds (but not less than all Outstanding Bonds), with the written consent of the Bank,may be converted to the Fixed Rate on any Interest Payment Date during an Adjustable Interest Rate Period or on any Reset Date as follows: (a)Provided that no Event of Default shall have occurred and be continuing,the Developer may elect at any time that Bonds are Outstanding to have the Bonds bear interest at a Fixed Rate by giving written notice at least 20 but not more than 30 days prior to the Conversion Date to the Trustee, the Tender Agent, the Issuer, the Remarketing Agent and the Bank of such election and specifying: (i) the proposed Conversion Date, which shall be not less than twenty (20) days after the date on which such notice is received by such parties, and(ii)the date on which the Fixed Rate will be determined by the Remarketing Agent, which date shall be not less than eleven (11) days before the Conversion Date. Such notice shall also be accompanied by (i) an opinion of Bond Counsel to the effect that the Conversion to a Fixed Rate is permitted under applicable law, is permitted by this Indenture, and will not adversely affect the exclusion of interest on the Bonds from gross income for federal income purposes or the exemption of such interest from State personal income taxes, (ii) an irrevocable commitment from the provider thereof to issue a Substitute Credit Facility or to extend and amend, as necessary, the then-existing Letter of Credit; (iii) a written statement from the Rating Agency then rating the Bonds to the effect that the rating expected to be assigned to the Bonds on the proposed Conversion Date is in conformity with the requirements of Section 214(A)(4) of this Indenture; (iv)payment to the Trustee of such amount as the Trustee reasonably determines may be required in connection with the Conversion, including but not limited to its own reasonable fees and expenses and the cost of printing new Bonds, and (v) the form of notice to be given by the Trustee to the owners of the Bonds with respect to Conversion. All obligations of the Bank under the Letter of Credit shall terminate as of the 23 y Conversion Date except for obligations under any then-pending drawings under the Letter of Credit unless the Letter of Credit has been amended or extended in accordance with the requirements of this Section 213. (b) If a Substitute Credit Facility commitment is not delivered to the Trustee at least eleven (11) days prior to the Conversion Date, or if on any day at least eleven (11) days prior to the Conversion Date (i) the Trustee receives written notice from the Developer to the effect that it no longer wishes to proceed with the Conversion; or(ii)the Trustee receives written notice from the Remarketing Agent or the Developer that a Market Risk Event has occurred, the Trustee shall promptly cancel such election of Conversion and the Bonds will bear interest at an Adjustable Interest Rate; provided, however, to the extent that Bonds will bear interest at an Adjustable Interest Rate, the Trustee shall have received a Substitute Credit Facility conforming to the provisions of Section 214(A) hereof or the Letter of Credit then in effect shall meet the requirements of such Section, which is effective on the date such Adjustable Interest Rate is effective. The Trustee shall have no liability as a result of any such cancellation. The Trustee shall also provide written notice of the cancellation to the Bank,the Issuer and the Remarketing Agent. (c) If the Trustee has not received a notice of cancellation as provided for in subsection (b) hereof by the date specified by said subsection, and the requirements of subsection (a)(ii) of this Section 213 have been satisfied, then, at least 10 days prior to the Conversion Date, the Trustee shall send a notice to each Registered Owner by first class mail, postage prepaid, stating (i) that the interest rate on the Bonds will be established at the Fixed Rate and the date the Fixed Rate will become effective; (ii) the Letter of Credit or Substitute Credit Facility expected to be in effect on the Conversion Date; (iii) that all Outstanding Bonds not tendered for purchase at least seven (7) days before the Conversion Date will be deemed to have been so tendered and shall be purchased on the Conversion Date at a price equal to the principal amount thereof plus accrued interest to such date; and (iv) that all Bonds must be surrendered to the Tender Agent for purchase not later than 12:00 noon, New York City time, on the Conversion Date. Any Bond not tendered to the Tender Agent for purchase at least seven (7) days before the Conversion Date shall be deemed to have been tendered on the seventh (7th) day prior to the Conversion Date for purchase pursuant to Section 1102 hereof. (d) From the Conversion Date, the Bonds will bear interest at the Fixed Rate, payable January 1, and July 1 of each year, commencing on the Interest Payment Date next following the Conversion Date, computed on the basis of a 360-day year of twelve 30-day months. The Fixed Rate shall be that rate, determined by the Remarketing Agent on the date specified in the notice from the Developer referred to in subsection (a) of this Section 213, which in the judgment of the Remarketing Agent, having due regard for prevailing market conditions, would not exceed the interest rate which would be required, to be borne by the Bonds in order for the market value (disregarding accrued interest) of the Bonds on the Conversion Date to be 100 percent of the principal amount thereof. Notwithstanding the foregoing, the Fixed Rate shall not exceed the Maximum Permitted Rate. (e) The determination of the Fixed Rate by the Remarketing Agent in accordance with the provisions of this Section 213 shall be conclusive and binding, in the absence of manifest error, upon the owners of the Bonds, the Issuer, the Trustee, the Bank, and the Developer. The Trustee will, upon request of any owner of Bonds, notify such owner of the Fixed Rate to be in effect on and after the Conversion Date. SECTION 214. SUBSTITUTE CREDIT FACILITY. The Developer shall be permitted to provide the Trustee with a Substitute Credit Facility upon satisfaction of the requirements of this 24 Section. Except as otherwise provided in subsection (D) hereof, the Trustee shall send written notice to the Remarketing Agent and all Registered Owners not less than 10 days in advance of the date on which any Substitute Credit Facility shall take effect, identifying the issuer of the Substitute Credit Facility. Any Substitute Credit Facility provided to the Trustee as a replacement for any existing Letter of Credit during an Adjustable Interest Rate Period, or in connection with a reset to a Reset Rate or Conversion shall meet the requirements set forth in subsections (A), (B) and (C), respectively, below. (A) Any Substitute Credit Facility provided during an Adjustable Interest Rate Period shall be irrevocably delivered at least twenty-five 25 days prior to the then-scheduled expiration date of the Letter of Credit then in effect, and shall: (1) be for a term expiring not earlier than one year from the date of delivery thereof(or, if shorter,the remaining term of the Bonds); provided that any Substitute Credit Facility may provide that it shall terminate prior to its stated expiration date upon receipt by the Bank of a notice from the Trustee that no Bonds remain Outstanding or on the date of issuance and delivery of a Substitute Credit Facility; (2)each Substitute Credit Facility shall be in an amount 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 at least 125 days (or such greater or lesser period then required by the Rating Agency)calculated at the Maximum Permitted Rate; (3) be accompanied by one or more opinions of counsel from law firms acceptable to the Trustee and the Remarketing Agent addressed to the Trustee to the effect, singly or together,that: the Substitute Credit Facility (1) is a legal,valid and binding obligation of the issuer thereof except (a) as may be limited by bankruptcy, insolvency, reorganization, moratorium and other laws relating to, or affecting generally the enforcement of; creditors' rights and the rights of depositors of financial institutions, as the same may be applied in the event of the bankruptcy, insolvency, reorganization or similar situation of the issuer thereof or a moratorium applicable to such issuer, and (b) as may be limited by equitable remedies, including specific performance and injunctive relief, and (2) payments made by the Bank under the Substitute Credit Facility will not be voidable under Section 547 of the Bankruptcy Code; (4) be accompanied by a written statement, signed by a representative of either Moody's or Standard &Poor's as applicable, to the effect that the rating on the Bonds as a result of the delivery of such Substitute Credit Facility will not be lower than the rating of Aa3/VMIG-1,unless a lower rating is consented to by the Issuer, if the Bonds are, after giving effect to such substitution, to be rated by Moody's, or AA-/A-1+, unless a lower rating is consented to by the Issuer, if the Bonds are, after giving effect to such substitution, to be rated by Standard & Poor's, or a written statement by such representative that the rating will be reduced or withdrawn, and, if reduced, the rating expected to be in effect on the Substitution Date; (5) be accompanied by an opinion of Bond Counsel to the effect that the delivery of the Substitute Credit Facility will not cause interest on the Bonds to be includable in gross income for federal income tax purposes or adversely affect the exemption of interest on the Bonds from State personal income taxes. - (B) Any Substitute Credit Facility provided on a Reset Date following an Adjustable Interest Rate Period shall be irrevocably delivered at least twenty-five 25 days prior to the then- scheduled expiration date of the Letter of Credit, shall be effective from the Reset Date and shall: (1)be for a term expiring not earlier than at least the last day of the applicable Reset Period; provided that any Substitute Credit Facility may provide that it shall terminate prior to its stated 25 expiration date on the date the Bank receives notice from the Trustee that no Bonds remain Outstanding, or on the date of issuance and delivery of a Substitute Credit Facility; (2) be in an amount 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 188 days (or such greater or lesser period as required by the Rating Agency)calculated at the actual rate(s) of interest on the Bonds; (3) be accompanied by one or more opinions of counsel of the type set forth in subsection A(3) of this Section 214; (4) be accompanied by a written statement, signed by a representative of Moody's or Standard & Poor's, as applicable, to the effect that the rating on the Bonds as a result of the delivery of such Substitute Credit Facility will not be lower than the rating of Aa3,unless a lower rating is consented to by the Issuer, if the Bonds are, after giving effect to such substitution, to be rated by Moody's, or AA-, unless a lower rating is consented to by the Issuer, if the Bonds are, after giving effect to such substitution, to be rated by Standard &Poor's or a written statement by such representative that the rating will be reduced or withdrawn, and, if reduced,the rating expected to be in effect on the Substitution Date; (5) be accompanied by an opinion of Bond Counsel to the effect that the delivery of the Substitute Credit Facility will not cause interest on the Bonds to become includable in gross income for federal income tax purposes or adversely affect the,exemption of interest on the Bonds from State personal income taxes. (C) Any Substitute Credit Facility provided on the Conversion Date shall be irrevocably delivered at least twenty-five (25) days (if delivered during an Adjustable Interest Rate Period) or 45 days (if delivered during a Reset Period) prior to the then scheduled expiration date of the Letter of Credit then in effect, shall be effective from the Conversion Date and shall: (1)be for a minimum term of five years or a term expiring not earlier than the final maturity date of the Bonds, whichever is earlier; provided that any Substitute Credit Facility may provide that it shall terminate prior to its stated expiration date upon receipt by the Bank of a notice from the Trustee that no Bonds remain Outstanding or on the date of issuance and delivery of a Substitute Credit Facility; provided further that if the Substitute Credit Facility is provided for a term expiring prior to the final maturity date of the Bonds, and the Developer does not provide a Substitute Credit Facility within the time prescribed for such delivery as set forth in subparagraph (C) above, the Bonds shall be redeemed pursuant to Section 602(d) on such earlier expiration date; (2)be in an amount 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 at least one hundred eighty-seven (187) days (or such higher or lower number of days as may then be prescribed by the Rating Agency)calculated at the actual interest rate on the Bonds; (3) be accompanied by one or more opinions of counsel of the type set forth in subsection A(3) of this Section 214; (4) be accompanied by a written statement, signed by a representative of either Moody's or Standard &Poor's as applicable,to the effect that the rating on the Bonds as a result of the delivery of such Substitute Credit Facility will not be lower than the rating of Aa3,unless a lower rating is consented to by the Issuer, if the Bonds are, after giving effect to such substitution, to be rated by Moody's, or AA-,unless a lower rating is consented to by the Issuer, if the Bonds are, after giving effect to such substitution, to be rated by Standard & Poor's or a written statement by such 26 representative that the rating will be reduced or withdrawn, and, if reduced, the rating expected to be in effect on the Substitution Date; (5) be accompanied by an opinion of Bond Counsel to the effect that the delivery of the Substitute Credit Facility will not cause interest on the Bonds to become includable in gross income for federal income tax purposes or adversely affect the exemption of interest on the Bonds from State personal income taxes. (D) (1)In the event the Developer elects to provide a Substitute Credit Facility resulting in a reduction in or withdrawal of the existing rating on the Bonds as evidenced by a written statement to that effect pursuant to subsections (A)(4), (B)(4) or(C)(4) of this Section, then at least 20 days prior to the Substitution Date, the Trustee shall send a notice to each Registered Owner by first class mail, postage prepaid, stating or identifying (i) the Substitution Date, (ii)the Substitute Credit Facility and the provider thereof, (iii) the rating on the Bonds expected to be in effect on the Substitution Date and that the Moody's rating, if the Bonds are rated by Moody's prior to the Substitution Date, and the Standard & Poor's rating, if the Bonds are rated by Standard & Poor's prior to the Substitution Date, on the Bonds will be reduced or withdrawn on the Substitution Date, (iv) that the Bonds are subject to mandatory purchase on the Substitution Date, (v) that any Bond not delivered for mandatory purchase by the Substitution Date will nevertheless be deemed to have been delivered by and purchased from the Registered Owner at such price on the Substitution Date, . and from and after the Substitution Date any such Bond so deemed to have been thus delivered and purchased will cease to bear interest and(vi) such other information as is deemed necessary by the Trustee, the Remarketing Agent, the Bank or the Developer. (2) Bonds delivered or deemed to have been delivered to the.Tender Agent pursuant to the provisions of subsection (D)(1) hereof shall be purchased and paid for in accordance with Article XI hereof, and payment or provision for payment having been made, such Bonds shall cease to bear interest and shall not be deemed to be Outstanding for the purposes of this Indenture from and after the Substitution Date. (E) Within ten (10) Business Days after the delivery of a Substitute Credit Facility to the Trustee,the Trustee shall notify the Registered Owners thereof by first class mail,postage prepaid, of the delivery of the Substitute Credit Facility and of the rating on the Bonds. SECTION 215. VALIDITY OF THE BONDS. The validity of the authorization and issuance of the Bonds is not dependent on and shall not be affected in any way by any proceedings taken by the Issuer or the Trustee. The recital contained in the Bonds that they are issued in accordance with the Constitution and laws of the State and the laws of the Issuer shall be conclusive evidence of their validity and of compliance with the provisions of law in their issuance. SECTION 216. ADDITIONAL BONDS. Subject to receipt by the Trustee of the documents listed below, the Issuer may,with the written approval of the Bank and the Developer, issue one or more series of Additional Bonds to pay Development Costs on a parity with the Bonds (the "Additional Bonds"). Each series of Additional Bonds shall be issued pursuant to a supplement to this Indenture and shall be equally and ratably secured under this Indenture with respective original series and any series of Additional Bonds without preference, priority, or distinction of any Bonds over any other Bonds of the respective related series. All such Additional Bonds shall be in substantially the form, be of such denomination or denominations, bear such date or dates, bear interest at such rate or rates, have such maturity date or dates,redemption dates and redemption premiums and contain such appropriate series designation as shall be specified by such supplement to this Indenture. The Trustee shall authenticate and deliver such Additional Bonds,but only upon receipt of the following: (1) A certificate of the Issuer, dated as of the date of delivery of such Additional Bonds, stating that as of the date of such certificate to the best of the knowledge of the signer no event or 27 condition has happened or existed, or is happening or existing, which constitutes, or which, with notice or lapse of time or both,would constitute, an event of default under this Indenture; (2) A certificate of the Developer, dated as of the date of delivery of such Additional Bonds,requesting the issuance and approving the terms of the Additional Bonds and stating either (a) as of the date of such certificate no event or condition is happening or existing which constitutes, or which, with notice or lapse of time or both, would constitute, an event of default under the Developer Note or the Developer Loan Documents or (b) if any such event or condition is happening or existing, specifying such event or condition and stating in detail acceptable to the Trustee and the Issuer that such event or condition will be corrected promptly after the issuance of such Additional Bonds; (3) A certified copy of a resolution or resolution of the Issuer authorizing (a) the execution and delivery of such supplement to this Indenture, and (b) the issuance, award, execution and delivery of such Additional Bonds; (4) An originally executed counterpart of such supplement to this Indenture authorizing the issuance of the Additional Bonds; (5) Originally executed amendments or supplements to the Developer Note and the Developer Loan Documents increasing the installments of principal and interest payable by the Developer under the Developer Note to include amounts sufficient to provide for the payment of principal of, interest on and premium,if any, on such Additional Bonds as the same become due; (6) An amendment to the Letter of Credit or the delivery of a Substitute Credit Facility in an amount sufficient to pay the principal and interest on the Additional Bonds as the same shall become due; (7) A written opinion of Bond Counsel that the issuance of such Additional Bonds is permitted under the terms of this Indenture and has been duly authorized and that the issuance of such.Additional Bonds will not cause the interest on any Bonds to be includable in gross income for federal income tax purposes or adversely affect the exemption of interest on any Bonds then Outstanding from State personal income taxes; (8) A written statement from the Rating Agency then rating the Bonds that the existing rating on the Bonds will not be reduced or withdrawn as a result of the issuance of Additional Bonds; and (9)A Request of and authorization from the Issuer to the Trustee to authenticate and deliver such Additional Bonds to such person or persons named therein upon payment to the Trustee for the account of the Issuer of a specified sum plus accrued interest to the date of delivery. 28 ARTICLE III REVENUES AND FUNDS SECTION 301. SOURCE OF PAYMENT OF BONDS. The Bonds and all payments required of the Issuer hereunder are not general obligations of the Issuer but are limited obligations as described in Section 204 hereof. The Trust Estate is conveyed, pledged and assigned absolutely and as a first lien pledge as security for the equal and ratable benefit of the owners of the Bonds and shall be used for no other purpose than payment of the principal of, premium (if any) and interest on the Bonds,except as otherwise may be expressly authorized in this Indenture. SECTION 302. CREATION OF FUNDS AND ACCOUNTS. The following Funds and Accounts of the Issuer are hereby created and established with the Trustee: (a) the Developer Loan Fund; (b)the Cost of Issuance Fund, which shall include theDeveloper's Contribution Account; (c) the Revenue Fund, which shall include the Letter of Credit Account, the Insurance Proceeds Account, and the Seasoned Funds Account; (d) the Debt Service Fund, consisting of the Interest Account, the Principal Account, and the Redemption Account; (e) the General Fund; (f) the Purchase Fund, which shall include a Liquidity Account and a Remarketing Account; and (g) the Excess Investment Earnings Fund. Each Fund and Account shall be maintained as needed by the Trustee as a separate and distinct trust fund or account to be held, managed, invested, disbursed and administered as provided in this Indenture. All moneys deposited in the Funds and Accounts shall be used solely for the purposes set forth in this Indenture. The Trustee shall keep and maintain adequate records pertaining to each Fund and Account and all disbursements therefrom. SECTION 303. INITIAL DEPOSITS. On the Bond Issuance Date, as shall be more fully specified in a written request from the Issuer, the Trustee shall deposit the proceeds received from the sale of the Bonds as follows: (a) First, $ shall be deposited into the Cost of Issuance Fund, but shall be deemed to be disbursed under the Developer Loan; (b) Second, $ shall be deposited to the Developer Loan Fund. The Trustee shall also deposit $ received from the Developer to the Developer's Contribution Account in the Cost of Issuance Fund. SECTION 304. DEVELOPER LOAN FUND. (a) The Trustee shall deposit into the Developer Loan Fund (i) the amount required by Section 303(b) and(ii) all investment earnings on moneys on deposit in the Developer Loan Fund and the Cost of Issuance Fund (excluding amounts on deposit in the Developer's Contribution Account) prior to the Completion Date. Such moneys shall be held by the Trustee in trust and shall be applied or disbursed in accordance with this Section and the Loan Agreement. (b)The Trustee shall make the following disbursements from the Developer Loan Fund: (i) to the Bank immediately upon receipt by the Trustee of the proceeds of an interest drawing under the Letter of Credit an amount equal to such drawing representing interest on the Developer Loan; (ii) to such persons or entities, including the Developer and its contractors and subcontractors, in such manner of disbursement and subject to such conditions, including joint checks,payment upon vouchers, paid invoices or lien releases, as may be specified in writing by the Bank, after compliance with the provisions for disbursement under the Loan Agreement, funds to pay or reimburse the Developer for Development Costs; and (iii) to the Bank, immediately upon receipt by the Trustee of the proceeds of a drawing under the Letter of Credit to redeem Bonds in accordance with Section 602(a) or (b) an amount equal to the amount of such drawing which 29 amount shall be credited against the Developer's reimbursement obligations under the Reimbursement Agreement. (c) Any provision in this Indenture to the contrary notwithstanding, except pursuant to subsection (b)(iii) of this Section, the Trustee shall not disburse any funds from the Developer Loan Fund unless it has received a requisition complying with the terms of Section 4.2 of the Loan Agreement. SECTION 305. COST OF ISSUANCE FUND. On the Bond Issuance Date,the Trustee shall deposit into the Cost of Issuance Fund the amount required by Section 303(a) of this Indenture and to the Developer's Contribution Account the amount required by Section 5.1(c) of the Loan Agreement. Moneys on deposit in the Cost of Issuance Fund shall be applied to pay Costs of Issuance, including the Issuer's initial fee of percent of the principal amount of the Bonds Outstanding on the Bond Issuance Date, due and payable on the Bond Issuance Date. The Trustee shall disburse amounts from the Cost of Issuance Fund upon submission of a written request from a duly authorized officer or agent of the Issuer to the Trustee stating that the amount indicated thereon is due and owing, has not been the subject of another written request which has been paid, and is a proper cost of issuing the Bonds or implementing the financing for the Development. Interest earnings on amounts on deposit in the Cost of Issuance Fund (excluding amounts on deposit in the Developer's Contribution Account) shall be deposited to the Developer Loan Fund, and interest earnings on the Developer's Contribution Account shall remain in such Account. Any moneys remaining in the Cost of Issuance Fund (excluding amounts on deposit in the Developer's Contribution Account) on the 180th day following the Bond Issuance Date shall be deposited to the Developer Loan Fund; and any moneys on deposit in the Developer's Contribution Account on the 180th day following the Bond Issuance Date shall be paid to the Developer. SECTION 306. REVENUE FUND. (A)The Trustee shall deposit into the Revenue Fund all Revenues (exclusive of amounts payable on the Developer Note which have been deemed satisfied pursuant to Section 5.1(a) of the Loan Agreement) and any other amounts (other than remarketing proceeds) 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 and Accounts in accordance with the terms of this Indenture. The Trustee shall deposit all proceeds of drawings under the Letter of Credit for the payment of principal and interest on the Bonds (other than purchase price) in the Letter of Credit Account and in no other Fund or Account. The Trustee shall apply those moneys on deposit in the Letter of Credit Account, other than amounts representing the principal portion of Bonds to be redeemed and accrued interest related thereto, on each Interest Payment Date, in the order of priority and for the purposes as follows: (a) First, to the Interest Account of the Debt Service Fund, an amount sufficient to pay the interest becoming due and payable on the Bonds on such date; and (b) Second,to the Principal Account of the Debt Service Fund, an amount sufficient to pay the principal of the Bonds maturing on such date,if any. (B)The proceeds of drawings under the Letter of Credit deposited into the Letter of Credit Account representing the principal portion of Bonds to be redeemed and related accrued interest shall be immediately applied as follows: . (a) First, to the Interest Account of the Debt Service Fund, the accrued interest received with such Prepayment; and (b) Second, to the Redemption Account of the Debt Service Fund, the balance of the Prepayment. The Trustee shall not commingle amounts on deposit in the Letter of Credit Account with any other Revenues. The Trustee shall have the sole right of 30 u withdrawal from the Letter of Credit Account, and neither the Issuer nor the Developer shall have any legal,equitable or beneficial right, title or interest therein. (C) Moneys on deposit in the Revenue Fund which represent payments made to the Trustee by the Developer with respect to the Bonds shall be applied as follows: (a) The Trustee shall deposit into the Seasoned Funds Account moneys deposited by the Developer with the Trustee and designated by the Developer as moneys to be applied to the payment of premiums related to a redemption of Bonds pursuant to Section 602(B). Each deposit of moneys received by the Trustee shall be held in a separate subaccount in the Seasoned Funds Account in the Revenue Fund until such moneys constitute Seasoned Funds. Moneys on deposit in the Seasoned Funds Account which represent Seasoned Funds to be applied to the payment of premiums related to the redemption of Bonds pursuant to Section 602(B) shall be transferred to the Redemption Account on the date fixed for such redemption to the extent necessary to pay the premium on the Bonds as the same shall become due and payable on the redemption date. In any case,moneys shall be paid to the Registered Owners from the Seasoned Funds Account only if they constitute Seasoned Funds. Any moneys remaining in any subaccount of the Seasoned Funds Account following the redemption of Bonds with respect to which such deposit was made shall be paid to the Bank. (b) To the General Fund, moneys deposited by the Developer with the Trustee as payments of the amounts owing under Section 5.1(d) of the Loan Agreement for the fees and expenses of the Trustee, the Paying Agent, the Tender Agent, the Program Administrator and the Issuer. The Trustee shall deposit into the Insurance Proceeds Account of the Revenue Fund insurance or condemnation proceeds or other compensation received by it in the event of an involuntary loss,condemnation or a substantial destruction of all or any part of the Development. Moneys on deposit in the Insurance Proceeds Account shall be disbursed to the Developer upon requisition by the Developer in the same form and subject to the same restrictions as are applicable to requisitions from the Developer Loan Fund, for the restoration of the Development, subject to the express prior written consent of the Bank to each such disbursement, and subject to the following additional conditions: (i) within 90 days of the event giving rise to such taking, loss or destruction the Developer notifies the Trustee, the Bank and the Issuer in writing that the Development can be restored to a condition permitting the conduct of normal business operations within 18 months or that, if such event shall occur during the construction of the Development,completion of the Development will not be delayed for more than 18 months, and (ii) within 180 days of the event giving rise to such taking, loss or destruction the Developer commences to reconstruct the Development. Immediately upon the receipt of the proceeds of any drawing under the Letter of Credit to redeem Bonds pursuant to Section 602(f) hereof, the Trustee shall pay to the Bank all amounts on deposit in the Insurance Proceeds Account, which amount shall be credited against the Developer's obligations under the Reimbursement Agreement. SECTION 307. DEBT SERVICE FUND. The Trustee shall deposit into the Interest Account of the Debt Service Fund the amounts required by Section 306 of this Indenture. 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 Interest Payment Date, the Trustee shall remit to the respective Registered Owners 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. Upon presentment of Bonds for payment in the case of redemption, the Trustee shall remit to the respective Registered Owners an amount from the Interest Account sufficient to pay the interest on the Bonds due on such redemption date. 31 The Trustee shall deposit into the Principal Account of the Debt Service Fund the amounts required by Section 306 of this Indenture. Moneys on deposit in the Principal Account shall be applied solely to pay the principal of the Bonds as the same becomes due and payable at maturity. On the principal payment date 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 principal of the Bonds becoming due and payable on such date. The Trustee shall deposit into the Redemption Account of the Debt Service Fund the amounts required by Section 306 of this Indenture and the proceeds of any drawing under the Developer Letter of Credit to pay premiums on the Bonds. Moneys on deposit in the Redemption Account shall be applied solely to pay the principal of and premium, if any, on the Bonds as the same become due and payable by redemption. On each date fixed for such redemption, 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 Redemption Account sufficient to pay the principal of and premium, if any,on the Bonds becoming due and payable on such date. SECTION 308. GENERAL FUND. The Trustee shall deposit into the General Fund the amounts required by Sections 306 and 502, and all moneys deposited by the Developer with the Trustee as payment of the amounts owing under Section 5.1(d) of the Loan Agreement for the fees and expenses of the Trustee, the Tender Agent,the Paying Agent and the Issuer. 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: (a) to the Trustee, the Tender Agent and any Paying Agent for the cost of Ordinary " Expenses incurred and Ordinary Services rendered, upon receipt of a written request from any of such parties stating that the amount indicated thereon is justly due and owing, and has not been the subject of another written request which has been paid; (b) to the Issuer at the address set forth in Section 1404 hereof on each December 1, commencing December 1, 1992, an annual fee equal to percent of the principal amount of the Bonds on the Bond Issuance Date; (c) to the Trustee, the Tender Agent, and any Paying Agent for the cost of Extraordinary Expenses incurred and Extraordinary Services rendered; (d) to the Trustee or the Issuer for fees and expenses incurred in connection with the enforcement of the Regulatory Agreement and for the payment of annual rating agency fees; (e) to the Excess Investment Earnings Fund all amounts required to be deposited pursuant to Section 504 hereof. On each October 20 any moneys on deposit in the General Fund which the Trustee determines are not necessary to pay the amounts set forth above shall be transferred to the Bank. SECTION 308A. PURCHASE FUND. All moneys drawn by the Trustee under the Letter of Credit in connection with the purchase of Bonds pursuant to Section 1101 or Section 1102 hereof shall be deposited into the Liquidity Account of the Purchase Fund unless the Trustee directs the Bank to deposit or wire transfer such proceeds directly to an account held by the Tender Agent. All moneys received by the Trustee from the sale of Bonds pursuant to Section 1105 hereof shall be deposited into the Remarketing Account of the Purchase Fund. Moneys on deposit in the Purchase Fund shall be invested by the Trustee in accordance with the provisions of Section 501 hereof, and any proceeds of a drawing transferred to the Tender Agent shall be invested by the Tender Agent on behalf of the Trustee in accordance with the provisions of Section 501 hereof. Moneys remaining in the Purchase Fund after payment of the purchase price of Bonds purchased on each Purchase Date , or the setting aside for payment in accordance with Section 312 32 hereof, shall be paid to the Bank. Funds for the purchase of Bonds at the principal amount thereof plus interest accrued to the Purchase Date shall be paid from the Purchase Fund or by the Tender Agent in the order of priority indicated below: (i) moneys received from the remarketing of Bonds, in immediately available funds, pursuant to Section 1105 hereof; and (ii) moneys representing proceeds of a drawing by the Trustee under the Letter of Credit. The Trustee shall have the sole right of withdrawal from the Purchase Fund and neither the Issuer nor the Developer shall have any legal,equitable or beneficial right,title or interest therein. SECTION 309. DRAWINGS UNDER THE LETTER OF CREDIT. 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. Moneys derived from draws under the Letter of Credit shall be deposited in the Letter of Credit Account of the Revenue Fund or the Liquidity Account of the Purchase Fund, as applicable, and applied by the Trustee to pay the purchase price and the principal of and interest on the Bonds (other than Pledged Bonds). The Trustee shall draw moneys under the Letter of Credit in accordance with the terms thereof to the extent and at such time as may be necessary to make timely payments of the purchase price and the principal of and interest on the Bonds (other than Pledged Bonds), whether at maturity or upon earlier redemption. In accordance with the preceding paragraph, the Trustee shall draw moneys under the Letter of Credit to make payments on the Bonds by presenting an appropriate draw request to the Bank on the following dates: (a) No later than 12:00 noon, Los Angeles time, on the Business Day preceding each Interest Payment Date, in an amount which will be sufficient to pay (i) the interest becoming due and payable on the Bonds (other than Pledged Bonds) on such date, and (ii) the principal of the Bonds due on such date, if any; (b) No later than 12:00 noon, Los Angeles time, on the Business Day preceding each date fixed for redemption of the Bonds, in an amount which will be equal to the full principal amount plus accrued interest on the Bonds to be redeemed (other than the amount owing as a redemption premium,if any); and (c) No later than 12:00 noon, Los Angeles time, on the second Business Day preceding each Purchase Date established for any Bonds in accordance with Section 1106, in an amount which will be sufficient to pay the purchase price of all tendered Bonds on that Purchase Date. The Trustee shall send to the Developer a copy of any documents which are presented to the Bank in connection with a drawings under the Letter of Credit concurrently with its submission of those documents to the Bank. Upon the occurrence of any event having the effect under this Indenture of terminating the Letter of Credit,including Conversion,resetting of the interest rate on the Bonds to a Reset Rate, or receipt by the Trustee of a Substitute Credit Facility,the Trustee shall promptly (and in any event prior to the next drawing otherwise scheduled under the Letter of Credit) give written notice of such termination to the Bank. SECTION 310. FINAL BALANCES. Upon the deposit with the Trustee of moneys sufficient to pay all principal of,premium, if any, and interest on the Bonds, and upon satisfaction of all claims against the Issuer hereunder, including all fees,charges and expenses of the Trustee, the Issuer,the Tender Agent and any Paying Agent which are properly due and payable hereunder, or upon the making of adequate provisions for the payment of such amounts as permitted hereby, all moneys remaining in all Funds and Accounts, except amounts on deposit in the Excess Investment Earnings Fund and except moneys necessary to pay principal of,premium, if any, and interest on the Bonds, which moneys shall be held by the Trustee and paid to the Issuer pursuant to 33 Section 312 hereof, shall be paid to, the Bank for disbursement in accordance with the Reimbursement Agreement. SECTION 311. SECURITY OF FUNDS. All moneys deposited with the Trustee or with any agent of the Trustee appointed pursuant to.Section I I I I of this Indenture shall be held in trust and (except for moneys held by.the Trustee, as paying agent, or remitted to any Paying Agent or the Tender Agent for the payment of the purchase price or the principal of, premium, if any, and interest on the Bonds) shall, while held by the Trustee, constitute part of the Trust Estate and shall be and remain entitled to the benefit and shall be subject to the security of this Indenture for the equal and proportionate benefit of the owners of all Outstanding Bonds. SECTION 312. NON-PRESENTMENT OF BONDS. In the event any Bond shall not be presented for payment when the principal or purchase price thereof becomes due, either at maturity, upon the Conversion Date 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 or the Purchase Fund, as applicable, all liability of the Issuer to the owner thereof for the payment of such Bond shall forthwith cease,terminate and be completely discharged, and thereupon it shall be the duty of the Trustee to hold such moneys in trust, without liability for interest thereon to any Person,for the benefit of the owner of such Bond who shall thereafter be restricted exclusively to such moneys, for any claim of whatever nature on his or her part under this Indenture or on, or with respect to, said Bond. However, after four (4) years, such moneys shall be paid by the Trustee to the Issuer free from the trusts created by this Indenture, and thereafter Registered Owners shall be entitled to look only to the Issuer for payment and then only to the extent of the amount so repaid by the Trustee. The Issuer shall not be liable for any interest on the sums paid to it pursuant to this section 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 provisions of this Indenture shall be held by the Trustee in trust and applied for the purposes herein specified. 34 ARTICLE IV REVENUES AND APPLICATION SECTION 401. REVENUES TO BE PAID OVER TO 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 purchase price and the principal of, premium, if any, and interest on the Bonds as the same become due or for reimbursement to the Bank. 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. TRUST ESTATE TO BE HELD FOR ALL REGISTERED OWNERS; CERTAIN EXCEPTIONS. The Trust Estate shall, until applied as provided in this Indenture, be held by the Trustee for the benefit of the owners of all Outstanding Bonds and the Bank, except that any portion of the Trust Estate held pursuant to Section 312 hereof 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 or tendered (or deemed 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. 35 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 times as said moneys shall be needed for the purposes for which they were deposited. Moneys on deposit in all Funds and Accounts may be invested only in Permitted Investments; provided that (1) amounts drawn under the Letter of Credit, to the extent such amounts are held overnight, and amounts on deposit in the Seasoned Funds Account, the Revenue Fund (exclusive of amounts on deposit in the Insurance Proceeds Account), the Debt Service Fund and the Purchase Fund shall be invested and reinvested by the Trustee only in Government Obligations maturing when needed but not later than 30 days after the date on which they are acquired; and(2) amounts in the Insurance Proceeds Account of the Revenue Fund shall not be invested in any Permitted Investments bearing a credit rating by the Rating Agency of lesser quality than that of the Bank. Investments in all Funds and Accounts shall mature not 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 the proceeds of drawings under the Letter of Credit may be invested only with the consent of the Bank. The Trustee shall have no liability or responsibility for any loss resulting from any investment made in accordance with the provisions of this Section 501. The Developer may provide the Trustee with written requests, such requests to be received by 12:00 noon Los Angeles time, on the day prior to any such investment, as to specific Permitted Investments to be made with the moneys held in the Developer Loan Fund prior to the Completion Date unless the Developer has instructed the Trustee to invest such moneys pursuant to the Investment Agreement. The Trustee shall invest such moneys in accordance with such requests pursuant to Sections 503 and 504 of this Indenture, or if no request is received the Trustee shall invest such funds in Permitted Investments described in clauses (v) or(ix) of the definition thereof. The Trustee shall have no liability or responsibility for any loss resulting from any investment made in accordance with the provisions of this Section 501. All investments shall constitute a part of the Fund or Account from which the moneys used to acquire such investments have come. 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 pay the amounts required to be paid therefrom. The Trustee may transfer investments from any Fund or Account to any other Fund or Account in lieu of cash when required or permitted by the provisions of this Indenture. In computing the amount in any Fund or Account, Permitted Investments purchased as an investment of moneys therein shall be valued at the then market price of such obligations, excluding any accrued interest. If the market price of such obligations is not readily available,the Trustee shall determine the value of such obligations in any reasonable manner. Any other provisions of this Section 501 to the contrary notwithstanding, for purposes of the arbitrage requirements under Section 148 of the Code and the Regulations,in computing the amount in any 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, and if the amount of interest accruing in 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. The Trustee may rely conclusively upon and shall be fully protected from all liability if acting in conformity with and in good faith as to any opinion of Bond Counsel obtained by it and upon any analysis or advice of any independent certified public accounting firm engaged by it as to the permissibility of any investment proposed to be made pursuant to this Section 501. 36 SECTION 502. EARNINGS AND LOSSES. Earnings resulting from the investment of moneys in the Revenue Fund, Debt Service Fund, the Purchase Fund, the Developer's Contribution Account in the Cost of Issuance Fund, the General Fund and the Excess Investment Earnings Fund shall remain in such Funds. Prior to the earlier of the Completion Date of the Development and December 1, 1994 (or such later date for disbursements from the Developer Loan Fund as is permitted pursuant to Section 5.3 of the Loan Agreement), all earnings resulting from the investment of moneys in the Developer Loan Fund and the Cost of Issuance Fund (excluding the Developer's Contribution Account) shall be deposited into the Developer Loan Fund. Notwithstanding the foregoing, any portion of any investment earnings which represents the accrued interest paid in connection with the purchase of an investment shall be credited to the Fund or Account from which such investment was made. Any loss of principal purchase value resulting from the investment of moneys in any Fund or Account and any expenses incurred in making or disposing of the 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) of this Section, at no time 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 principal and interest due on the Bonds for such Investment Year. In addition,the Trustee shall assure that, beginning with the Investment Year following the Completion Date, 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 Bonds is reduced. In order to comply with the preceding sentence, the Trustee shall reduce said investment in Nonpurpose Obligations with a yield higher than the yield on the Bonds within a period not to exceed thirty (30) days following the payment of principal of the Bonds (by maturity, redemption, acceleration or otherwise); provided, however, that said reduction need not be made if the failure to make said reduction will not violate the 150 percent requirement set forth in the first sentence of this paragraph (a). (b) Paragraph (a) hereof shall not apply to Gross Proceeds which: (i) are original proceeds or investment proceeds (as defined in clauses (i) and(ii) of the definition of Gross Proceeds) invested until needed for accrued interest on the Bonds or for the governmental purposes of the Bonds; (ii) 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 (ii) of the definition of Gross Proceeds). (c) For the purposes of paragraph (a) of this Section,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 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 for its fair market value at the time such obligation or security becomes a Nonpurpose Obligation of the Bonds. The Trustee shall value Nonpurpose Obligations on the date of acquisition and need not revalue such Nonpurpose Obligations unless otherwise required in this Indenture. 37 (d) For the purposes of paragraph (a) of this Section, the Trustee shall compute the yield of the Bonds and the yield of Nonpurpose Obligations in accordance with Section 1.148-3T(d) 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 wholesalers) at which price a substantial amount of the Bonds were sold, or if 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 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 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 will be the weighted average rate of interest for such Nonpurpose Obligation during the preceding one year period (or portion thereof during which the Nonpurpose Obligation was outstanding). For a Nonpurpose Obligation purchased on its date of issue, the Trustee shall determine the yield for the 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 the 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 rate of interest on the Bonds will be the weighted average rate of interest as determined under Section 211 hereof for the Bonds during the preceding Investment Year. Paragraph (a) of this Section shall not be deemed to be violated if, after the expiration of the period ending with the date of completion of the Development or three years from the Bond Issuance Date (whichever is sooner), the Nonpurpose Obligations with a yield 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 of the Bonds and within thirty (30) days of any redemption of the Bonds resulting in a reduction in annual Debt Service on the Bonds. (f) For the purpose of paragraph (a) of this Section,the Trustee need not sell or dispose of Nonpurpose Obligations 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 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) if a payment under Section 504 were due at such time; provided, however, that the preceding sentence shall not apply to the extent that other Nonpurpose Obligations acquired with the Gross Proceeds of the Bonds may be 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 sale or disposition) at the time of such sale or disposition if a payment under Section 504 were due at 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 disposed of, said rule shall cease to apply thirty (30) days after the last day of the first computation period ending thereafter on which the Nonpurpose Obligation in question can be 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 sale or disposition, 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. SECTION 504. REBATE OF EXCESS INVESTMENT EARNINGS TO THE UNITED STATES. 38 (a) The Trustee shall calculate or cause to be calculated Excess 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 sum of: (i) the excess of (A)the aggregate amount earned from the Bond Issuance Date on all Nonpurpose Obligations in which Gross Proceeds of the Bonds are invested (other than amounts attributable to an excess described in this clause (ii)), 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 clause (i)) had been equal to the yield on the Bonds, plus(ii) any income attributable to the excess described in clause (i). (b) Within 30 days after the last day of the first Investment Year,the Trustee shall calculate or cause to be calculated the Excess Investment Earnings referenced in subparagraph (i) of paragraph (a) and shall transfer an amount equal to such Excess Investment Earnings into the Excess Investment Earnings Fund, such transfer to be derived from available moneys in the Developer Loan Fund and in the General Fund. In the event of any deficiency in available moneys for the purposes of such transfer, such deficiency shall be paid by the Developer upon demand of the Trustee. Thereafter, within 30 days after the last day of each Investment Year and on the date of the retirement of the Bonds, the Trustee shall calculate or cause to be calculated the amount of Excess Investment Earnings referenced in subparagraphs (i) and (ii) of paragraph (a) for such Investment Year and make corresponding transfers into the Excess Investment Earnings Fund. Said calculations shall be made by the Trustee in accordance with the following: (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 income realized under federal income tax accounting principles (whether or not the person earning such income is subject to federal income tax) with respect to such Nonpurpose Obligation and with respect to 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 limited to, gain or loss realized on the disposition of such Nonpurpose Obligations (without regard to when such gains are taken into account under Section 453 of the Code relating to the taxable year of inclusion of gross income), and income under Section 1272 of the Code (relating to original issue discount) and (ii) 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 obligation 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 determining the amount 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 Bond Issuance Date and the date the computation is made (with adjustments for discount or premium). 39 (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 account, whether or not that income exceeds the yield on the Bonds, and no amount may be 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 payment 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 same may be in time to time in effect, together with such reports and statements as may be prescribed by such Regulations. The Trustee shall make the full amount of each such payment unless the Trustee shall receive an opinion of Bond Counsel that a lesser payment is permitted without any adverse effect upon the exemption from federal income taxation of interest on the Bonds, in which event such lesser payment will be made. After the final payment, any funds remaining in the Excess Investment Earnings Fund shall be remitted promptly to the Developer. (d) In order to assure that Excess Investment Earnings are paid to the United States rather than to a third party, investments by the Trustee in certificates of deposit and in investment contracts (including, without limitation, any Investment Agreement) shall be made only in accordance with the Regulations therefor as from time to time 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 determinations made pursuant to this Section 504. (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 Fund and, to the extent of any deficiency therein for such purpose, shall be made from the General Fund. In the event of any remaining deficiency in available moneys for the purposes of such transfer, such deficiency shall be paid by the Developer upon demand of the Trustee. (g) In order to provide for the administration of this Section 504 and Section 503 hereof, the Trustee may provide for the employment of independent attorneys (including Bond Counsel), accountants and consultants compensated on such reasonable basis as the Trustee may deem appropriate, and the Trustee shall be entitled to the protection of Section 904 in respect of the advice given or actions taken by such attorneys, accountants and consultants, and in addition to and without limitation of Section 904, the Trustee may rely upon and shall be fully protected from all liability in relying upon the opinions,calculations, determinations and advice of such attorneys, accountants and consultants employed hereunder. The Trustee shall provide to the Developer a copy of the report of the Trustee, or any consultant engaged by the Trustee,as to the calculation of Excess Investment Earnings. SECTION 505. INVESTMENTS; ARBITRAGE; SPECIAL ARBITRAGE RESTRICTION. The Trustee may make any and all investments permitted by the provisions of Section 501 hereof through its own investment department. As and when any amount invested pursuant to this Article may be needed for disbursement,the Trustee may cause a sufficient amount of such investments to be sold and reduced to cash to the credit of such funds. The Trustee covenants that at any time that it has discretion as to such investments it will not knowingly use or invest the proceeds of the Bonds in any manner which will cause the Bonds to become "arbitrage bonds" within the meaning of Section 148 of the Code, and any lawful regulations proposed or 40 promulgated thereunder, including Section 1.103-13, 1.103-14 and 1.148-OT of the Regulations, as the same exist on this date, or may from time to time hereafter be amended, supplemented or revised. The Issuer covenants with all purchasers and 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 this Indenture, whether or not such moneys were derived from the proceeds of the sale of the Bonds or from any other source, will not be used in a manner which will cause the Bonds to be "arbitrage bonds" within the meaning of Section 148 of the Code, and any lawful regulations proposed or promulgated thereunder, including Section 1.103-13, 1.103-14 and 1.148-OT of the Regulations, as the same exist on this date, or may from time to time hereafter be amended, supplemented or revised. The Issuer reserves the right, however, for any investment of such moneys permitted by California law to be made, if, when and to the extent that said Section 148 or regulations promulgated thereunder shall be repealed or relaxed or shall be held void by final judgment of a court of competent jurisdiction, but only if any investment made by virtue of such repeal, relaxation or decision would not, in the written opinion of Bond Counsel, result in making the interest on the Bonds subject to being includable in gross income for federal income tax purposes. 41 ARTICLE VI REDEMPTION OF BONDS BEFORE MATURITY SECTION 601. LIMITATION ON REDEMPTION. The Bonds shall be subject to redemption prior to maturity only as provided in this Article VI. SECTION 602. REDEMPTION DATES, AMOUNTS AND PRICES. (A) The Bonds shall be subject to mandatory redemption at a price equal to 100% of the principal amount of the Bonds called for redemption (in each case with accrued interest to the redemption date) as follows: (a) in whole or in part on December 1, 1994 (or such later date as is established pursuant to Section 5.3(a) of the Loan Agreement), in the event and to the extent that the Developer Note is prepaid in accordance with Section 5.3(a)of the Loan Agreement; (b) in whole or in part on the first Interest Payment Date for which notice of redemption may be timely given, in the event and to the extent that the Developer Note is prepaid in accordance with Section 5.3(b) of the Loan Agreement upon completion of the Development; (c) in whole on the first day for which notice of redemption may be timely given after the Trustee has accelerated the amount due with respect to the Bonds or the Developer Note, as the case may be, as a result of an Event of Default occurring under this Indenture, the Loan Agreement or the Regulatory Agreement; (d) in whole on the first day for which notice of redemption may timely be given if within 60 days after receipt by the Trustee of written notice of the occurrence of an.Act of Bankruptcy of the Bank, or if at least 15 days (during the Adjustable Interest Rate Period) or 45 days (during a Reset Period or after Conversion) prior to the then-scheduled expiration date of the Letter of Credit, the Developer does not cause to be delivered to the Trustee a Substitute Credit Facility satisfying the criteria set forth in Section 214 hereof, except in no event shall such redemption occur later than five days prior to such expiration date of the Letter of Credit; (e) in whole on the first day for which notice of redemption may be timely given if the Bank fails or refuses to honor a drawing under the Letter of Credit and the Trustee has on deposit sufficient funds to effect such redemption; (f) in whole or in part on the first Interest Payment Date for which notice of redemption may be timely given in the event of an involuntary loss or the substantial destruction of the Development as a result of unforeseen events (e.g., fire, seizure, requisition, change in a federal law or an action of a federal agency after the date of issuance of the Bonds which prevents the Issuer from enforcing the requirements of Section 1.103-8(b) of the Regulations, or condemnation), if and to the extent that the Developer Note is required to be prepaid pursuant to Section 5.3(f) of the Loan Agreement; (g) in whole on the first day for which notice of redemption may be timely given after the Trustee has received written notice from the Bank that an event of default has occurred under the Reimbursement Agreement and requesting that the Bonds be called for redemption; (h) in whole on the first day for which notice of redemption may be timely given after receipt by the Trustee of notice from the Issuer of a Determination of Taxability; 42 (B)The Bonds shall be subject to optional redemption at the prices set forth below (in each case with accrued interst to the redemption date) as follows: (i) in whole or in part on any Interest Payment Date during an Adjustable Interest Rate Period with the consent of the Bank,in the event and to the extent the Developer Note is voluntarily prepaid during an Adjustable Interest Rate Period at a redemption price equal to 100% of the principal amount of the Bonds called for redemption; (ii) in whole or in part on any Interest Payment Date during a Reset Period or after the Conversion Date in the event and to the extent the Developer Note is voluntarily prepaid at the respective initial redemption prices set forth below expressed as percentages of the principal amounts of Bonds to be redeemed, such initial redemption prices declining 1% each year until such redemption price equals 100% of the principal amount of the Bonds: Term of Reset Period Initial or from Conversion Prepayment to Maturity No Call Period Price No Premium 15 or more years First 7 years 102.0% loth year after Reset or and there- Conversion Date after 10 or more years First 5 years 102.0% 8th year after Reset or and there- Conversion Date after 5 years or more First 3 years 102.0% 6th year (but less than 10) and there- after Reset or after Conversion Date Less than 5 years No call . The Bonds are also subject to mandatory purchase in the event the Developer elects to have the Bonds bear interest at a Reset Rate or the Fixed Rate or at any time the Developer elects to provide a Substitute Credit Facility causing a withdrawal of or reduction in the existing rating on the Bonds, all under the circumstances set forth in Sections 212, 213 and 214 hereof. SECTION 603. PARTIAL REDEMPTION. All or a portion of any Bond may be redeemed pursuant to Section 602, but only in a principal amount equal to $100,000 and any integral multiple thereof prior to the Conversion Date or any integral multiple of$5,000 after the Conversion Date. In the event that less than all of the Bonds Outstanding are to be redeemed, the Trustee shall first select for redemption any Pledged Bonds Outstanding, and thereafter shall select the Bonds to be redeemed by lot. Upon surrender of any Bond for redemption in part, the Issuer shall execute and the Trustee shall authenticate and deliver to the owner thereof, at the expense of the Developer, a new Bond or Bonds of authorized denominations of the same type and maturity and in an aggregate principal amount equal to the unredeemed portion of the Bond so surrendered. SECTION 604. NOTICE OF REDEMPTION; NOTICE OF DETERMINATION OF TAXABILITY; NOTICE OF SUBSTITUTE CREDIT FACILITY. The Trustee shall give notice of any redemption pursuant to this Article VI by sending such notice by first class mail, postage prepaid, in the case of a redemption on or prior to the Conversion Date,not less than five nor more 43 than seven days prior to the redemption date, and,in the case of a redemption after the Conversion Date,not less than 30 nor more than 60 days prior to the redemption date; provided, however, that with respect to a redemption pursuant to Section 602(e), the Trustee shall mail notice of redemption at least 7 days prior to the redemption date, and with respect to a redemption pursuant to Section 602(g)the Trustee shall set a redemption date not later than 7 days following receipt of the requisite notice from the Bank and shall mail a notice of redemption not more than 2 Business Days following receipt of such notice from the Bank; and provided further that in the case of a redemption from Seasoned Funds or from the proceeds of a drawing under the Developer Letter of Credit, the Trustee shall mail notice of redemption only when Seasoned Funds or such Developer Letter of Credit proceeds are on deposit in the Seasoned Funds Account of the Revenue Fund or the Redemption Account of the Debt Service Fund,respectively. All notices of redemption shall be mailed to the Bank, the Issuer,the Remarketing Agent and to the Registered Owner of each Bond to be redeemed in whole or in part at the address shown on the Bond registration books as of the date of mailing. Neither the failure of the owner of any Bond to receive a notice mailed nor any defect in any notice so mailed 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 on the redemption date, the place at which the Bonds are to be surrendered for payment, that from the redemption 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 or portions thereof to be redeemed. Any notice mailed as provided in this Section shall be conclusively presumed to have been duly given, whether or not the Registered Owner receives such notice. Upon receipt by the Trustee of written notice of a Determination of Taxability, the Trustee shall immediately send written notice by first class mail, postage prepaid to the Registered Owner of each Bond, at the address shown on the Bond registration books as of the date of mailing, advising all owners of Bonds of the Determination of Taxability. SECTION 605. PAYMENT UPON REDEMPTION. Prior to each redemption date, the Trustee shall make provision for the payment of 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 Redemption Account or otherwise received by the Trustee, or shall otherwise determine that it will have available proceeds from a drawing under the Letter of Credit to pay principal and interest on the Bonds and Seasoned Funds or proceeds of a drawing under the Developer Letter of Credit an amount sufficient to pay the premium,if any, 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, interest on and premium, if any, on such Bond from the moneys set aside for such purpose. Interest on any Bond called for redemption maturing prior to or on the date fixed for redemption shall be payable to the Registered Owner of such Bond on the Record Date for such Interest Payment Date. SECTION 606. EFFECT OF REDEMPTION. Notice of redemption having been given as provided in Section 604 hereof, the Bonds or portions thereof designated for redemption 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, thereon, such Bonds or portions thereof shall cease to bear interest from and after the date fixed for redemption whether or not such Bonds are presented and surrendered for payment on such date. 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 same. 44 ARTICLE VII PAYMENT; FURTHER ASSURANCES SECTION 701. PAYMENT OF PURCHASE PRICE, PRINCIPAL OR REDEMPTION PRICE OF AND INTEREST ON BONDS. The Issuer shall promptly pay or cause the Trustee to pay the purchase price, principal or redemption price of, and the interest on, every Bond issued hereunder according to the terms thereof,but shall be required to make such payment or cause such payment to be made only from the Trust Estate. SECTION 702. POWER TO ISSUE BONDS AND MAKE PLEDGE AND ASSIGNMENT. The Issuer is duly authorized pursuant to law to issue the Bonds and to enter into this Indenture and to pledge and assign the Trust Estate in the manner and to the extent provided in this Indenture and hereby does pledge and assign to the Trustee all Revenues and all other rights to the Developer Loan Documents to the extent set forth in the Granting Clauses hereof. The Bonds and the provisions of this Indenture are and will be legal, valid and binding limited obligations of the Issuer in accordance with their terms, and the Issuer and Trustee shall at all times, to the extent permitted by law, defend, preserve and protect said pledge and assignment of the Trust Estate and all the rights of the owners of the Bonds under this Indenture against all claims and demands of all Persons whatsoever and will take all reasonable actions contemplated under the Developer Loan Documents to preserve the exclusion of interest on the Bonds from gross income for federal income tax purposes. SECTION 703. FURTHER ASSURANCES. 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, the Bank or the Registered Owners may be impaired and shall, from time to time, execute and deliver such further instruments and take such further action as may be reasonably necessary or proper to carry out the purposes of this Indenture. SECTION 704. IMMUNITIES AND LIMITATIONS OF RESPONSIBILITY OF ISSUER. The Issuer shall be entitled to the advice of Counsel (who, except as otherwise provided, may be counsel for any Registered Owner), and the Issuer shall be wholly protected as to action taken or omitted in good faith in reliance on such advice. The Issuer may rely conclusively on any communication or other document furnished to it hereunder and reasonably believed by it to be genuine. The Issuer shall not be liable for any action (a) taken by it in good faith and reasonably believed by it to be within its discretion or powers hereunder, or(b) in good faith omitted to be taken by it because such ,action was reasonably believed to be beyond its discretion or powers hereunder, or(c) taken by it pursuant to any direction or instruction by which it is governed hereunder, or (d) omitted to be taken by it by reason of the lack of any direction or instruction required 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 for the application or misapplication of funds or for other acts or defaults by any person, except its own officers and employees. When any payment or consent or other action by it is called for hereby, it may defer 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 indemnity in a form acceptable to the Issuer is furnished for any expense or liability to be incurred in connection with such remedial action, other than liability for failure to meet the standards set forth in this Section. As provided herein and in the Loan Agreement,the Issuer shall be entitled to reimbursement for its expenses reasonably incurred or advances reasonably made, with interest at the interest rate determined pursuant to Section 211 prior to the Conversion Date and at the Optional Fixed Rate or Reset Rate thereafter, in the exercise of its rights or the performance of its obligations hereunder, to the extent that it acts without previously obtaining indemnity. No permissive right or power to act which the Issuer may have shall be construed as a requirement to 45 act; and no delay in the exercise of a right or power shall affect its subsequent exercise of the right or power. SECTION 705. ADDITIONAL INSTRUMENTS. The Issuer shall cause this Indenture or a financing statement or other similar document relating thereto to be filed in such manner and at such places as may be required by law, if any, to protect the right, title and interest of the Trustee in and to the Trust Estate or any part thereof. From time to time,the Trustee may obtain an opinion of Counsel setting forth what, if any, actions by the Issuer or the Trustee should be taken to preserve the lien of this Indenture upon 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 Registered Owners, and shall furnish satisfactory evidence to the Trustee of filing and refiling of such instrument and of every additional instrument which shall be necessary to preserve the lien of this Indenture upon the Trust Estate or any part thereof until the principal of, premium, if any, and interest on the Bonds issued hereunder shall have been paid. The Trustee shall, if necessary, execute or join in the execution of any such further or additional instruments and file or join in the filing thereof at such time or times and in such place or places as it may be advised by an opinion of Counsel will preserve the lien of this Indenture upon the Trust Estate or any part thereof until the aforesaid principal, premium, if any, and interest shall have been paid. SECTION 706. EXTENSION OF PAYMENT OF BONDS. The Issuer shall not directly or indirectly extend or assent to the extension of the maturity of any of the Bonds or the time of payment of any of the claims for interest by the purchase or funding of such Bonds or claims for interest or by any other arrangement, and in case the maturity of any of the Bonds or the time of payment of any such claims for interest shall be extended, such Bonds or claims for interest shall not be entitled, in case of any default hereunder,to the benefits of this Indenture,except subject to the prior payment in full of the principal of all of the Bonds then Outstanding and of all claims for interest thereon which shall not have been so extended. Nothing in this Section shall be deemed to limit the right of the Issuer to issue bonds for the purpose of refunding any Outstanding Bonds, and such issuance shall not be deemed to constitute an extension of maturity of the Bonds. SECTION 707. AGAINST ENCUMBRANCES. The Issuer shall not create, or permit the creation of, any pledge, lien, charge or other encumbrance upon the Trust Estate while any of the Bonds are Outstanding, except the pledge and assignment(if any) created by this Indenture and the Deed of Trust and except for any further encumbrance upon the Development property (which shall not be deemed an encumbrance on the Trust Estate). Subject to this limitation, the Issuer expressly reserves the right to enter into one or more other indentures for any of its corporate purposes, including the financing of multifamily residential developments other than the Development, and reserves the right to issue other obligations for such purposes. SECTION 708. ACCOUNTING RECORDS AND REPORTS. 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 Bank,the Developer, by any Registered Owner or agent or representative thereof duly authorized in writing, at reasonable hours, upon reasonable notice and under reasonable circumstances. The Issuer shall file with the appropriate government agency all notices and reports required to be filed under Section 147(f) of the Code and the Act. Not later than 45 days following each Interest Payment Date,the Trustee shall prepare and file with the Issuer, the Bank and the Developer a report setting forth: (i) amounts withdrawn from and deposited in each Fund and Account; (ii) the balance on deposit in each Fund and Account as of the Interest Payment Date for which such report is prepared, (iii) a brief description of all obligations held as investments in each Fund and Account; and (iv) the amount applied to the payment or redemption of Bonds and a description of the Bonds or portions of Bonds so paid or redeemed. 46 Copies of such reports may be mailed or delivered to any owner of any Bond upon request at a cost not to exceed the Trustee's actual costs of duplication and mailing or delivery. SECTION 709. PAYMENT OF TAXES AND CLAIMS. The Issuer shall pay, from time to time,or cause the Trustee to pay, but only out of funds, if any, made available by the Developer expressly for such purposes, any property taxes, assessments or other governmental charges that may be lawfully imposed upon the Trust Estate, when the same shall become due if not paid by the Developer, as well as any lawful claim which, if unpaid, might by law become a lien or charge upon the Trust Estate or which might impair the security of the Bonds. SECTION 710. RIGHTS UNDER THE DEVELOPER LOAN DOCUMENTS. The Developer Loan Documents set forth certain covenants and obligations of the Issuer, the Trustee and the Developer and reference is hereby made to such documents for a detailed 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 their part to be performed and observed under the Developer Loan Documents. Except as expressly permitted by this Indenture and the Developer Loan Documents, the Issuer and the Trustee covenant not to knowingly take any action,knowingly permit any action to be taken by others within their control and shall not knowingly omit to take any action, which action or omission might release the Developer or the Bank from their respective liabilities or obligations under the Developer Loan Documents or result in the surrender, termination, amendment or modification of, or impair the validity of, such documents. The Issuer covenants to enforce diligently all covenants, undertakings and obligations of the Developer under the Developer Loan Documents and hereby authorizes and directs the Trustee (subject in all cases to the provisions of Article IX hereof)to enforce any and all of its rights under the Developer Loan Documents on behalf of the Issuer and the owners of the Bonds. The Issuer covenants to enforce diligently all of the undertakings and obligations of the Developer under the Regulatory Agreement as set forth therein. The Trustee shall not be responsible for monitoring or verifying compliance by the Developer with the terms of the Developer Loan Documents. The Trustee shall retain possession of one set of the executed originals of the Developer Loan Documents and shall release same only in accordance with the provisions thereof. The Developer Loan Documents shall be available for inspection at reasonable times,under reasonable conditions, by the Issuer, the Bank,the Developer and any owner of any Bond. SECTION 711. TAX COVENANTS. (a) The Issuer shall not use or knowingly permit the use of any proceeds of Bonds or any other funds of the Issuer, directly or indirectly, to acquire any securities or obligations, and shall not use or knowingly permit the use of any amounts received by the Issuer or Trustee with respect to the Developer Loan in any manner, and shall not take or permit to be taken any other action or actions,which would cause any Bond to be an "arbitrage bond"within the meaning of Section 148 of the Code. (b) The Issuer shall not use or knowingly permit the use of any proceeds of Bonds or any other funds of the Issuer, directly or indirectly, in any manner, and shall not take or permit to be taken any other action or actions, which would result in any of the Bonds being treated as an obligation not described in Section 103(a) of the Code by reason of classification of such Bond as a "private activity bond"not meeting the requirements of Section 142(d) of the Code. 47 (c) The Issuer shall not use or permit the use of any proceeds of the Bonds or any other funds of the Issuer, directly or indirectly, in any manner, and shall not take or permit to be taken any other action or actions which would result in any of the Bonds being treated as federally guaranteed within the meaning of Section 149(b) of the Code. SECTION 712. COMPLIANCE WITH INDENTURE, CONTRACTS, LAWS AND REGULATIONS. The Issuer shall faithfully observe and perform all the covenants, conditions and requirements of this Indenture, shall not issue any Bonds in any manner other than in accordance with this Indenture, and shall not exercise its discretion in any way that might materially weaken, diminish or impair the security intended to be given pursuant to this Indenture. Subject to the limitations and consistent with the covenants,conditions and requirements contained in this Indenture, the Issuer and the Trustee shall comply with the terms, covenants and provisions, express or implied, of all contracts concerning or affecting the application of proceeds of the Bonds or the Revenues. The Issuer and the Trustee shall comply promptly, fully and faithfully with and abide by any statute, law, ordinance, order, rule or regulation, judgment, decree,direction or requirement now in force or hereafter enacted, adopted,prescribed, imposed or entered by any competent governmental authority or agency applicable to or affecting the Development. SECTION 713. MAINTENANCE OF POWERS. As long as any of the Bonds are Outstanding, the Issuer shall preserve its existence as a public body corporate and politic of the State, and will not be dissolved or lose its right to exist as such or lose any rights necessary to enable it to function and to maintain the Revenues. The Issuer shall at all times use its best efforts to maintain the powers, functions, duties and obligations now reposed in it pursuant to law, or assure the assumption of its obligations under the Loan Agreement,the Regulatory Agreement and this Indenture by any corporation or political subdivision succeeding to its powers,and will not at any time voluntarily do, suffer or permit any act or thing the effect of which would be to hinder, delay or imperil either the payment of the indebtedness evidenced by any of the Bonds or the observance of any of the covenants herein contained. 48 ARTICLE VIII DEFAULT PROVISIONS AND REMEDIES OF TRUSTEE AND REGISTERED OWNERS SECTION 801. DEFAULTS; EVENTS OF DEFAULT. If any of the following events occurs, it is hereby defined as and declared to be and to constitute a Default and an Event of Default: (a) Failure to make due and punctual payment of any installment of interest upon any Bond when the same shall have become due and payable; (b) Failure to make 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 declaration; (c) Any representation or warranty made by the Issuer in this Indenture or the Bonds shall be determined by the Trustee to have been untrue in any material respect when made or any failure by the Issuer to observe and perform any covenant, condition or agreement on its part to be observed and performed under the Indenture or the Bonds, other than as referred to in subsections (a) or (b) of this Section, for a period of 60 days after written notice specifying such breach or failure and requesting that it be remedied, given to the Issuer and the Registered Owners by the Trustee or by the owners of not less than 25 percent 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 within the applicable period and is being diligently pursued; (d) Failure to pay the purchase price for the Bonds delivered pursuant to Article XI hereof; (e) Failure of the Bank to reinstate the full amount of interest coverage on the Letter of Credit upon a drawing under the Letter of Credit to pay interest on the Bonds. SECTION 802. ACCELERATION OF MATURITIES. Upon the occurrence of an Event of Default (other than an Event of Default described in subsection (c) of Section 801 hereof), the Trustee shall, or in the case of an Event of Default described in subsection (c) of Section 801 hereof, the Trustee may (but so long as the Letter of Credit is outstanding and the Bank is not in default of its payment obligations thereunder, only in accordance with the Intercreditor Agreement), declare the principal of all of the Bonds then Outstanding, and the interest accrued to the redemption date, established pursuant to Section 604 hereof, to be due and payable immediately, and upon any such declaration the same shall become and shall be immediately due and payable, anything contained in this Indenture or in the Bonds to the contrary notwithstanding. Upon such acceleration, the Trustee shall provide the Registered Owners with an appropriate notice of redemption and the Trustee (i) shall immediately draw on the Letter of Credit as provided below and, (ii) immediately after the Bank honors the Trustee's request to draw upon the Letter of Credit, shall transfer all Seasoned Funds then on deposit in the Seasoned Funds Account to the Bank (except any amounts drawn on the Letter of Credit and any amounts representing Seasoned Funds to be applied to such redemption), and (iii) shall take such action as is necessary to pay the Bonds out of such moneys at the earliest possible date after providing the Registered 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 fixed by the Trustee. The Trustee also shall take whatever additional action at law or in equity may appear necessary or desirable to the Trustee to collect the moneys necessary to pay the redemption price of the Bonds. 49 Nothing contained in this Section, however, shall be construed to allow the Trustee to permit its rights on behalf of the Registered Owners under the Letter of Credit to be reduced, to lapse or otherwise be extinguished. SECTION 803. APPLICATION OF MONEYS. All moneys received by the Trustee pursuant to any right given or action taken under the provisions of this Article shall, after payment of the reasonable costs and expenses of the proceedings resulting in the collection of such moneys and of the reasonable expenses, liabilities and advances incurred or made by the Trustee and its Counsel and of all other amounts then owing for any Ordinary Services, Ordinary Expenses, Extraordinary Services and Extraordinary Expenses, be deposited in the Revenue Fund and all such moneys in the Revenue Fund shall be applied to the payment of the principal(and premium,if any) and interest then due and unpaid upon the Bonds, without preference or priority of any kind, ratably, according to the amounts due and payable on such Bonds for principal (and premium, if any) and interest, respectively, to the persons entitled thereto without any discrimination or privilege; provided, however, that Seasoned Funds on deposit in the Seasoned Funds Account in the Revenue Fund, funds drawn under the Letter of Credit and amounts on deposit in the Debt Service Fund and the Purchase Fund shall be used only to pay the purchase price, principal of, premium, if any, and interest on the Bonds and shall not be applied to pay any other expenses. Whenever moneys are to be applied pursuant to the provisions of this Section, such moneys shall be applied at such times, and from time to time, as the Trustee shall determine. Whenever the Trustee shall apply such moneys, it shall fix the date in accordance with Section 802 upon which such application is to be made and upon such date interest on the amount of principal to be paid on such date shall cease to accrue. The Trustee shall give such notice as it may deem appropriate of the deposit with it of any such moneys and of the fixing of any such date. Whenever all principal of, premium,if any, and interest on all Bonds have been paid under the provisions of this Section and all expenses and charges of the Trustee have been paid, any balance remaining in all Funds and Accounts, except amounts on deposit in the Excess Investment Earnings Fund, shall be paid to the Bank as provided in Section 310 hereof. SECTION 804. TRUSTEE TO REPRESENT REGISTERED OWNERS. The Trustee is hereby irrevocably appointed (and the successive respective Registered Owners, by taking and holding the Bonds shall be conclusively deemed to have so appointed the Trustee) as trustee and true and lawful attorney-in-fact of the Registered Owners for the purpose of exercising and prosecuting on their behalf such rights and remedies as may be available to such Registered Owners under the provisions of the Bonds and this Indenture, as well as under the applicable provisions of any law. Except as provided in Section 802 hereof, and as long as the Letter of Credit is outstanding and the Bank is not in default of its obligations thereunder, subject to the terms of the Intercreditor Agreement,upon the occurrence and continuance of any Event of Default or other occasion giving rise to a right in the Trustee to represent the Registered Owners, the Trustee in its discretion may,and upon the written request of the Bank or the Registered Owners of not less than 25 percent in aggregate principal amount of the Bonds then Outstanding, and upon being indemnified to its satisfaction therefor, shall, proceed to protect or enforce its rights or the rights of the Registered Owners by such appropriate suit, action, mandamus or other proceedings as it shall deem most effectual to protect and enforce any such right, at law or in equity, either for the specific performance of any covenant or agreement contained herein, or in aid of the execution of any power herein granted, or for the enforcement of any other appropriate legal or equitable right or remedy vested in the Trustee or in the Registered Owners under this Indenture, the Bonds or any law; and upon instituting such proceeding, the Trustee shall be entitled, as a matter of right, to the appointment of a receiver of the Revenues and other assets pledged under this Indenture, pending such proceedings. 50 All rights of action under this Indenture or the Bonds or otherwise may be prosecuted and enforced by the Trustee without the possession of any of the Bonds or the production thereof in any proceedings relating thereto, and any such suit, action or proceeding instituted by the Trustee shall be brought in the name of the Trustee for the benefit and protection of all the Registered Owners, subject to the provisions of this Indenture. In addition, subject to the provisions of the Intercreditor Agreement the Trustee may, without the consent of the Issuer or the Developer, after giving them at least five days' written -notice of any intended action, exercise any and all remedies afforded the.Issuer under the Developer Loan Documents in its name or the name of the Issuer. SECTION 805. REGISTERED OWNERS' DIRECTION OF PROCEEDINGS. Anything in this Indenture to the contrary notwithstanding, and as long as the Letter of Credit is outstanding and the Bank is not in default of its obligations thereunder, subject to the terms of the Intercreditor Agreement, the Registered Owners of a majority in aggregate principal amount of the Bonds then Outstanding shall have the right, by an instrument or concurrent instruments in writing executed and delivered to the Trustee and upon tendering to the Trustee indemnification satisfactory to it, to direct the method of conducting all remedial proceedings taken by the Trustee hereunder, provided that such direction shall not be otherwise than in accordance with law and the provisions of this Indenture and the Intercreditor Agreement, and that the Trustee shall have the right to decline to follow any such direction which in the opinion of the Trustee would be unjustly prejudicial to Registered Owners not parties to such direction. In forming such opinion, the Trustee may rely on the opinion of Counsel. SECTION 806. LIMITATION ON REGISTERED OWNERS' RIGHT TO SUE. No Registered Owner shall have the right to institute any suit, action or proceeding at law or in equity, for the protection or enforcement of any right or remedy under this Indenture or any applicable law with respect to any Bond, unless (A) such Registered Owner shall have given to the Trustee and the Bank written notice of the occurrence of an Event of Default; (B) the Registered Owners of not less than 25 percent in aggregate principal amount of the Bonds then Outstanding shall have made written request upon the Trustee to exercise the powers hereinbefore granted or to institute such suit, action or proceeding in its own name; (C) such Registered Owners shall have tendered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; and (D) the Trustee shall have refused or omitted to comply with such request for a period of 60 days after such written request shall have been received by, and said tender of indemnity shall have been made to,the Trustee. Such notification,request, tender of indemnity and refusal or omission are hereby declared, in every case, to be conditions precedent to the exercise by any Registered Owner of any remedy hereunder or under law; it being understood and intended that no one or more Registered Owners shall have any right in any manner whatever by his or their action to affect, disturb or prejudice the security of this Indenture or the rights of any other Registered Owners, or to enforce any right under this Indenture, or other applicable law with respect to the Bonds,except in the manner herein provided, and that all proceedings at law or in equity to enforce any such right shall be instituted, had and maintained in the manner herein provided and for the benefit and protection of all owners of Outstanding Bonds, subject to the provisions of this Indenture. Nothing in this Indenture, however, affects or impairs the right of any Registered Owner to enforce the-payment of the principal of, premium, if any, and interest on any Bond at or after the maturity thereof, or the obligation of the Issuer to cause to be paid the principal of, premium, if any, and interest on each of the Bonds issued under the Indenture to the respective owners thereof at the time and place, from the sources and in the manner expressed in the Bonds and in the Indenture. SECTION 807. LIMITED OBLIGATION OF ISSUER. Nothing in Section 806 or in any other provision of this Indenture, or in the Bonds, contained shall affect or impair the obligation of 51 the Issuer, which is absolute and unconditional, to pay the purchase price, the principal or redemption price of and interest on the Bonds to the respective Registered Owners of the Bonds at their respective dates of maturity, or upon call for redemption, as herein provided, but only from the Trust Estate pledged therefor, or affect or impair the right of such Registered Owners, which is also absolute and unconditional,to enforce such payment by virtue of the contract embodied in the Bonds. SECTION 808. TERMINATION OF PROCEEDINGS. In case any proceedings taken by the Trustee or any one or more Registered Owners on account of any Event of Default shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Trustee or the Registered Owners, then in every such case the Issuer, the Trustee and the Registered Owners, subject to any determination in such proceedings, shall be restored to their former positions and rights hereunder, severally and respectively, and all rights,remedies,powers and duties of the Issuer, the Trustee and the Registered Owners shall continue as though no such proceedings had been taken. SECTION 809. REMEDIES NOT EXCLUSIVE. No remedy herein conferred upon or reserved to the Trustee or to the Registered Owners is intended to be exclusive of any other remedy or remedies, and each and every such remedy, to the extent permitted by law, shall be cumulative and in addition to any other remedy given hereunder or now or hereafter existing at law or in equity or otherwise. SECTION 810. NO WAIVER OF DEFAULT. No delay or omission of the Trustee or of any Registered Owner to exercise any right or power arising upon the occurrence of any Event of Default shall impair any such right or power or shall be construed to be a waiver of any such default or an acquiesence therein; and every power and remedy given by this Indenture to the Trustee or to the Registered Owners may be exercised from time to time and as often as may be deemed expedient. SECTION 811. WAIVERS OF EVENTS OF DEFAULT. Provided that all payments of interest and principal due and owing on the Bonds have been paid and provided further that the Letter of Credit is then in full force and effect and has been reinstated to its full face amount and the Bank is not in default of its payment obligations thereunder, the Trustee in its discretion may or, upon the written demand of the Bank or the owners of not less than a majority in aggregate principal amount of all Bonds Outstanding shall; waive any Event of Default hereunder and rescind its consequences; provided, however, that the Trustee may not waive any Events of Default which constitute a breach of a covenant set forth in Section 503 or 711 hereof or any other covenant with respect to the exclusion from gross income for federal income tax purposes of interest on the Bonds unless there has been delivered to the Trustee an opinion of Bond Counsel to the effect that such waiver will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds. In the case of any such waiver and rescission, the Issuer, the Trustee and the Registered Owners shall be restored to their former positions and rights hereunder, respectively, but no such waiver and rescission shall extend to any subsequent or other default, or impair any right consequent thereon. All waivers under this Indenture shall be in writing and a copy thereof shall be delivered to the Issuer,the Bank and to the Developer. 52 ARTICLE IX THE TRUSTEE AND THE PAYING AGENT SECTION 901. APPOINTMENT, DUTIES, IMMUNITIES AND LIABILITIES OF TRUSTEE. (a) The Issuer hereby appoints Dai-Ichi Kangyo Bank of California, as Trustee and principal Paying Agent and designates the Principal Office of the Trustee as the principal place of payment for the Bonds, such appointment and designation to remain in effect until notice of change is filed with the Trustee. The Trustee is authorized and directed to execute and deliver the Intercreditor Agreement. The Trustee shall,prior to an Event of Default, and after the curing of all Events of Default which may have occurred, perform such duties and only such duties as are specifically set forth in this Indenture, the Loan Agreement and the Regulatory Agreement. The Trustee shall, during the existence of any Event of Default (which has not been cured), exercise such of the rights and powers vested in it by this Indenture, the Loan Agreement and the Regulatory Agreement and 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. All references to the Trustee in this Article IX include references to the Trustee when it is acting as Paying Agent and Bond Registrar. (b) The Issuer may remove the Trustee at any time unless an Event of Default shall have occurred and then be continuing, and shall remove the Trustee if(i) at any time requested to do so by an instrument or concurrent instruments in writing signed by the Registered Owners of not less than a majority in aggregate principal amount of the Bonds then Outstanding (or their attorneys duly authorized in writing), (ii) if requested to do so by the Developer or the Bank upon a showing of good cause for such removal, as determined solely by the Issuer, or (iii) if at any time the Trustee shall cease to be eligible in accordance with subsection (e) of this Section,or shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or its property shall be appointed, or any public officer shall take control or charge of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation; in each case by giving written notice of such removal to the Trustee, the Bank, the Remarketing Agent and the Developer, and thereupon shall appoint a successor Trustee by an instrument in writing. The Issuer shall provide to the Bank and the Developer for their approval the names of three trustee banks, from which list, after such approval, the Issuer shall select the successor Trustee. (c) The Trustee may at any time resign by giving written notice of such resignation to the Issuer, the Developer and the Bank by registered or certified mail, and to the Registered Owners by first-class mail. Upon receiving such notice of resignation, the Issuer shall promptly appoint a successor Trustee by an instrument in writing pursuant to the procedure set forth in subparagraph (b) above. (d) Any removal or resignation of the Trustee and appointment of a successor Trustee shall become effective upon acceptance of appointment by the successor Trustee and upon transfer of the Letter of Credit to the successor Trustee in accordance with the provisions of the Letter of Credit and the Reimbursement Agreement. Promptly upon such acceptance, the Issuer shall notify the Registered Owners, the Developer, the Remarketing Agent and the Bank in writing. If no successor Trustee shall have been appointed and have accepted appointment within 45 days of giving notice of removal or notice of resignation as aforesaid, the resigning Trustee or any Registered Owner(on behalf of himself and all other Registered Owners) may petition any court of competent jurisdiction for the appointment of a successor Trustee, and such court may thereupon, after such notice (if any) as it may deem proper, appoint such successor Trustee. Any successor Trustee appointed under this Indenture shall signify its acceptance of such appointment by executing and delivering to the Issuer and to its predecessor Trustee a written acceptance thereof, 53 and thereupon such successor Trustee, without any further act, deed or conveyance, shall become vested with all the moneys, estates, properties, rights, powers, trusts, duties and obligations of such predecessor Trustee, with like effect as if originally named Trustee herein;but, nevertheless at the request of the Issuer or the request of the successor Trustee, such predecessor Trustee shall execute and deliver any and all instruments of conveyance or further assurance and do such other things as may reasonably be required for more fully and certainly vesting in and confirming to such successor Trustee all the right,title and interest of such predecessor Trustee in and to any property held by it under this Indenture and shall pay over, transfer, assign and deliver to the successor Trustee any money or other property subject to the trusts and conditions herein set forth. Upon request of the successor Trustee, the Issuer shall execute and deliver any and all instruments as may be reasonably required for more fully and certainly vesting in and confirming to such successor Trustee all such moneys, estates, properties, rights, powers, trusts, duties and obligations. The Trustee's rights to indemnification hereunder and to payment of its fees and expenses shall survive its resignation or removal and the final payment or defeasance of the Bonds. (e) Any Trustee appointed under the provisions of this Indenture shall (1) be a trust company or commercial bank having trust powers and having a corporate trust office located within or without the State, having a combined capital and surplus of at least one hundred million dollars ($100,000,000), and subject to supervision or examination by federal or state authority, and (2) as long as the Letter of Credit is in effect shall execute the Intercreditor Agreement as a condition to appointment hereunder. If such bank or trust company publishes a report of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority above referred to, then for the purpose of this Section the combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. In case at any time the Trustee shall cease to be eligible in accordance with the provisions of this subsection (e), the Trustee shall resign immediately in the manner and with the effect specified in this Section. - (f) Any company into which the Trustee may be merged or converted or with which it may be consolidated or any company resulting from any merger,conversion or consolidation to which it shall be a party or any company to which the Trustee may sell or transfer all or substantially all of its corporate trust business, provided such company shall be eligible under subsection (e) of this Section, shall be the successor to such Trustee without the execution or filing of any paper or any further act, anything herein to the contrary notwithstanding. (g) The permissive right of the Trustee to do things enumerated or contemplated by this Indenture or by the Regulatory Agreement or the Loan Agreement shall not be construed as a duty and the Trustee shall not be liable in the performance of its obligations hereunder except for its negligence or willful misconduct. (h) The Trustee shall not be required to take notice or be deemed to have notice of any Event of Default or breach of covenant hereunder or under the Regulatory Agreement or the Loan Agreement or any other agreement to which the Trustee is a party except failure by the Issuer to cause to be made any of the payments to the owners of Bonds required to be made by Article III or XI hereof or an Event of Default under Section 8.01(e) hereof, unless and until the Trustee shall be specifically notified in writing of such Event of Default by the Issuer, by the Registered Owners of at least twenty-five percent(25%) in aggregate principal amount of all Bonds then Outstanding or by the Bank. (i) The Trustee shall not be required to give any bonds or surety in respect of the execution of its trusts and powers hereunder. 0) Except for the actions required to be taken by the Trustee pursuant to Sections 309 and 802 hereof as to drawings under the Letter of Credit, before taking any action under Article VIII 54 Y hereof or this section at the request or direction of the Bank, the Registered Owners or the Developer, the Trustee may require that a satisfactory indemnity bond be furnished by the Bank, the Registered Owners or the Developer, as the case may be, 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 negligence or willful misconduct in connection 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, be held in trust for the purposes for.which they were received and shall not be commingled with the general funds of the Trustee or any Paying Agent, but need not be segregated from other funds except to the extent required by law; provided, however, that pursuant to Section 306 hereof, amounts on deposit in the Letter of Credit Account may not be commingled with any other funds or accounts. (1) No provision of this Indenture shall be construed to relieve the Trustee from liability for its own 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 subsection (a) or(h) of this Section; (2) 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 to the time, method and place of conducting any proceeding or any remedy available to the Trustee, or the exercise of any trust or power conferred upon the Trustee, under this Indenture and not contrary to the provisions of the Intercreditor Agreement; and (3) 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 under the Regulatory Agreement or the Loan Agreement, or in the exercise of any of its rights or powers,if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. (m) The immunities and protections from liability granted to the Trustee hereunder shall extend to its directors, officers and employees. (n) The Trustee shall have no responsibility with respect to any information, statement or recital in any official statement, offering memorandum or other disclosure material prepared or distributed with respect to the Bonds. (o) No implied covenants or obligations shall be read into this Indenture or the Developer Loan Documents against the Trustee, other than the implied covenant of good faith and fair dealing. (p) The Trustee will not be responsible for the recording, re-recording, filing of financing statements, continuation statements, and other documents with respect to the Indenture and Developer Loan Documents. (q) Whether or not herein or therein expressly provided, every provision of this Indenture and the Developer Loan Documents relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Article IX. SECTION 902. FEES, CHARGES AND EXPENSES OF TRUSTEE AND PAYING AGENT. The Trustee and any Paying Agent shall be entitled to payment and/or reimbursement 55 from the Issuer, but only out of funds made available from the Developer pursuant to Section 5.1(d) of the Loan Agreement,for reasonable fees for its Ordinary Services rendered hereunder or under the Regulatory Agreement or the Loan Agreement and all advances, Counsel fees and other Ordinary Expenses reasonably made or incurred by the Trustee and any Paying Agent, in connection with such Ordinary Services hereunder and, in the event that the Trustee or any Paying Agent performs Extraordinary Services, it shall be entitled to reasonable extra compensation therefor from the Developer, and to reimbursement from the Developer for reasonable Extraordinary Expenses in connection therewith; provided, that if such Extraordinary Services or Extraordinary Expenses are occasioned by the negligence or willful misconduct of the Trustee or any Paying Agent it shall not be entitled to compensation or reimbursement therefor. To secure payment of the Trustee's fees and expenses, whether by the Issuer or the Developer, the Trustee shall have a lien against the Trust Estate, which lien shall be subordinate to the lien of the Deed of Trust and the lien of the Registered Owners,except that upon the occurrence of an Event of Default(which has not been cured or waived), the lien of the Trustee shall be prior to the lien of the Deed of Trust and the lien of the Registered Owners, provided only that the Trustee's lien shall not extend to the proceeds of the Letter of Credit, Seasoned Funds or moneys on deposit in the Purchase Fund. SECTION 903. LIABILITY OF-TRUSTEE. The recitals of facts herein and in the Bonds, the Loan Agreement and the Regulatory Agreement contained shall be taken as statements of the Issuer, and the Trustee assumes no responsibility for the correctness of the same, and makes no representation as to the validity or sufficiency of this Indenture, the Loan Agreement, the Regulatory Agreement or of the Bonds or as to the value or condition of the Trust Estate or as to the title of the Issuer thereto or as to the security afforded thereby or as to the financial ability of the Development, and shall incur no responsibility in respect thereof, other than in connection with the duties or obligations herein, in the Loan Agreement, the Regulatory Agreement or in the Bonds assigned to or imposed upon it. The Trustee shall, however, be responsible for its representations contained in its certificate of authentication on the Bonds. The Trustee shall not be liable in connection with the performance of its duties hereunder or under the Regulatory Agreement or the Loan Agreement, except for its own negligence or willfull misconduct. The Trustee is not responsible for and makes no representation or warranty concerning the sufficiency, validity or priority of this Indenture, the Developer Loan Documents, the Bonds, the Letter of Credit or the transfer of the Revenues and other assets of the Trust Estate to the Trustee hereunder. The Trustee makes no representation or warranty concerning and has made no independent investigation as to the financial or technical feasibility of the Development, the creditworthiness of the Developer or the Bank, or the validity or adequacy of the Letter of Credit. The Trustee shall not be responsible for the application of any moneys disbursed upon requisition to or at the order of the Developer in accordance with the terms and conditions hereof and of the Loan Agreement. The Trustee may become the owner of Bonds with the same rights it would have if it were not Trustee, and, to the extent permitted by law, may act as depositary for and permit any of its officers or directors to act as a member of, or in any other capacity with respect to, any committee formed to protect the rights of Registered Owners, whether or not such committee shall represent the Registered Owners of a majority in principal amount of the Bonds then Outstanding. SECTION 904. RIGHT OF TRUSTEE TO RELY ON DOCUMENTS. The Trustee shall be protected hereunder or under the Regulatory Agreement or the Loan Agreement in acting upon any notice, resolution, request, consent, order, certificate, report, opinion, bond or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties, including, without limitation, all funding and disbursement requisitions and notices. The Trustee shall not be bound to make any investigation into facts or matters stated in any such notice, resolution, request, consent, order, certificate, report, opinion, bond or other paper or document, but the Trustee, in its discretion,may make such further inquiry or investigation into such facts or 56 matters as it may see fit. The Trustee may consult with Counsel, who may be Counsel of or to the Issuer, with regard to legal questions, and the advice or opinion of such Counsel shall be full and complete authorization and protection in respect of any action taken or suffered by the Trustee with respect to such legal questions in good faith and in accordance therewith. The Trustee shall not be bound to recognize any Person as the Owner of a Bond unless and until such Bond is submitted for inspection, if required, and his title thereto satisfactorily established, if disputed. Whenever in the administration of the trusts imposed upon it by this Indenture or pursuant to the Regulatory Agreement or the Loan Agreement the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a certificate of the Issuer, and such certificate shall be full warrant to the Trustee for any action taken or suffered in good faith under the provisions of this Indenture in reliance upon such certificate, but in its discretion the Trustee may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as to it may seem reasonable. SECTION 905. INTERVENTION BY TRUSTEE. In any judicial proceedings 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 in its discretion intervene on behalf of Registered Owners and,upon being indemnified to its satisfaction therefor, shall do so if requested in writing by the owners of a majority in aggregate principal amount of all Bonds then Outstanding. SECTION 906. DESIGNATION OF AND SUCCESSOR PAYING AGENT; AGREEMENT WITH PAYING AGENT. The Trustee shall be a Paying Agent for the Bonds, and the Trustee is hereby authorized to appoint one or more other Paying Agents in New York, New York, with the prior consent of the Bank. Any Paying Agent appointed under the provisions of this Section shall be a commercial bank or trust company. The Trustee may remove or replace any Paying Agent by written instrument, which removal or replacement shall not require any consents or approvals. The Trustee shall notify all Registered Owners by mail of any appointment, removal or replacement of the Paying Agent, such notice to include the name and address of the then appointed Paying Agent, if any. Any commercial bank 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 the successor of such Paying Agent for the purposes of this Indenture. If the position of Paying Agent shall become vacant for any reason, the Issuer may appoint a commercial bank or trust company located in the same city as such Paying Agent to fill such vacancy. The Paying Agent shall enjoy the same protective provisions in the performance of its duties hereunder as are specified in Sections 901, 902, 903 and 904 hereof with respect to the Trustee insofar as such provisions may be applicable. 57 ARTICLE X SUPPLEMENTAL INDENTURES SECTION 1001. AMENDMENTS REQUIRING CONSENT OF REGISTERED OWNERS. This Indenture and the rights and obligations of the Issuer,the Registered Owners and the Trustee may be modified or amended at any time by a Supplemental Indenture which shall become effective upon receipt of the consent of the Bank, the Developer and when the written consents of the owners of more than 50 percent in aggregate principal amount of the Bonds then Outstanding shall have been filed with the Trustee; provided, however, the consent of the Developer shall not be required with respect to any amendment which in the opinion of Bond Counsel is necessary to preserve the exclusion from gross income for federal income tax purposes or the exemption from State personal income taxes of interest on the Bonds. No such modification or amendment shall (1) extend the stated maturity of any Bond, or reduce the amount of principal thereof, or reduce the rate of interest thereon, or alter the method for determining the applicable interest rate, or extend the time of payment of interest thereon, or reduce any premium payable upon the redemption thereof, or (2) reduce the aforesaid percentage of Bonds the consent of the owners of which is required to effect any such modification or amendment, or (3) permit the creation of any lien on the Trust Estate prior to or on a parity with the lien created by this Indenture (except as provided in Section 216 hereof),or deprive the Registered Owners of the lien created by this Indenture upon the Trust Estate (except as expressly provided in this Indenture), without in each case the consent of the Registered Owners of all Bonds then Outstanding. If at any time the Issuer shall request the Trustee to enter into any such Supplemental Indenture for any of the purposes allowed by this Section, 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 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 Registered Owners. If, within 60 days or such longer period as shall be prescribed by the Issuer following the mailing of such notice, the owners of more than 50 percent 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 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 Trustee or the Issuer from executing the same or from 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 Registered Owner. SECTION 1002. AMENDMENTS NOT REQUIRING CONSENT OF REGISTERED OWNERS. This Indenture and the rights and obligations of the Issuer,the Registered Owners and the Trustee and Paying Agent may also be modified or amended at any time by a Supplemental Indenture, without the consent of any Registered Owners, upon receipt of the consent of the Issuer, the Bank and the Developer unless in the opinion of Bond Counsel such amendment is required to preserve the exclusion from gross income for federal income tax purposes or the exemption from State personal income taxes of interest on the Bonds, in which case the consent of the Issuer and the Developer shall not be required, which amendment shall become effective upon execution (or such later date as may be specified in such Supplemental Indenture), but only to the extent permitted by law and only for any one or more of the following purposes: (1) to add to the covenants and agreements of the Issuer contained in this Indenture other covenants and agreements thereafter to be observed, to pledge or assign additional security for the Bonds, or to surrender any right or power herein reserved to or conferred upon the Issuer, 58 provided, that no such covenant, agreement, pledge, assignment or surrender shall materially adversely affect the interests of the Registered Owners; (2) to make such provisions for the purpose of curing any ambiguity, inconsistency or omission, or of curing or correcting any defective provision, contained in this Indenture, or in regard to matters or questions arising under this Indenture, as the Issuer may deem necessary.or desirable and not inconsistent with this Indenture, and which shall not materially adversely affect the interests of the Registered Owners; (3) to modify, amend or supplement this Indenture in such manner as to permit the qualification hereof under the Trust Indenture Act of 1939, as amended, or any similar federal statute hereafter in effect, and to add such other terms, conditions and provisions as may be permitted by said act or similar federal statute, and which shall not materially adversely affect the interests of the Registered Owners; (4) to modify, amend or supplement this Indenture in any manner which,in the reasonable judgment of the Trustee, does not materially adversely affect the interests of the Registered Owners of Bonds Outstanding,and in making such determination, the Trustee may conclusively rely on the advice of Counsel; or (5) to provide for the substitution of the Substitute Credit Facility in accordance with the requirements of Section 214 hereof. (6) to modify, amend or supplement the provisions herein relating to the calculation of Excess Investment Earnings; or (7) to modify, amend or supplement this Indenture in any other respect, including amendments which would otherwise be effected in Section 1001 hereof if notice of the content of the proposed supplemental indenture is given to the owners of all Outstanding Bonds (in the same manner as notices of redemption are given) at least 30 days prior to the effective date of the supplemental indenture and, on or before such effective date, the owners of the Bonds have the right to demand purchase of their Bonds pursuant to Section 1102 hereof, during an Adjustable Interest Rate Period and provided further that any offering circular prepared by the Remarketing Agent for distribution following the effective date of the supplemental indenture is provided to the Issuer. Before the Issuer shall execute any Supplemental Indenture,there shall have been filed with the Trustee an opinion of Bond Counsel stating that such Supplemental Indenture: (i)is authorized or permitted by this Indenture and complies with its terms; (ii) will be valid and binding upon the Issuer in accordance with its terms after its execution by the Issuer and the Trustee; and (iii) will comply with the Act and will not impair the exclusion from gross income for federal income tax purposes of interest on the Bonds. Anything in this Indenture to the contrary notwithstanding,any amendment or supplement to this Indenture which affects any rights, powers, liability or obligation of the Trustee and the Tender.Agent shall not become effective unless and until the Trustee and the Tender Agent shall have consented to such amendment or supplement. SECTION 1003. DUTIES OF THE REMARKETING AGENT. The rights, duties and obligations of the Remarketing Agent under this Indenture shall not be modified or amended in any manner without its written consent,which consent shall not be unreasonably withheld. SECTION 1004. EFFECT OF SUPPLEMENTAL INDENTURE. From and after the date any Supplemental Indenture becomes effective pursuant to this Article, this Indenture shall be 59 deemed to be modified and amended in accordance therewith, and the respective rights, duties and obligations under this Indenture of the Issuer, the Trustee and all owners of Bonds Outstanding shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modification and amendment, and all the terms and conditions of any such Supplemental Indenture shall be deemed to be part of the terms and conditions of this Indenture for any and all purposes. SECTION 1005. ENDORSEMENT OF BONDS; PREPARATION OF NEW BONDS. Bonds delivered after any Supplemental Indenture becomes effective pursuant to this Article may, and if the Trustee so determines shall, bear a notation by endorsement or otherwise in form approved by the Issuer and the Trustee as to any modification or amendment provided for in such Supplemental Indenture, and, in that case, upon demand of the owner of any Bond Outstanding at such effective date and presentation of his Bond for such purpose at the Principal Office of the Trustee, or at such additional offices as the Trustee may select and designate for that purpose, a suitable notation shall be made on such Bond. If the Issuer or the Trustee shall so determine, new Bonds modified as to conform, in the opinion of the Issuer and the Trustee, to any modification or amendment contained in such Supplemental Indenture, shall be prepared and executed by the Issuer and authenticated by the Trustee, and upon demand of the owner of any Bond then Outstanding shall be exchanged at the Principal Office of the Trustee, without cost to any Registered Owner, for Bonds then Outstanding, upon surrender for cancellation of such Bonds in equal aggregate principal amounts of the same maturity. SECTION 1006. AMENDMENT OF PARTICULAR BONDS. The provisions of this Article shall not prevent any Registered Owner from accepting any amendment as to the particular Bonds held by him,provided that due notation thereof is made on such Bonds. SECTION 1007. OPINION OF COUNSEL. The Issuer and the Trustee may rely upon an opinion of Bond Counsel to the effect that any proposed Supplemental Indenture will comply with the provisions of this Article X. 60 ARTICLE XI PURCHASE AND REMARKETING OF BONDS SECTION 1101. REGISTERED OWNERS' OBLIGATION TO TENDER BONDS FOR PURCHASE UPON RESET OR CONVERSION OR UPON WITHDRAWAL OF OR REDUCTION IN RATING OF BONDS. Upon receipt of a notice of reset to a Reset Rate pursuant to Section 212 hereof or of Conversion to a Fixed Rate pursuant to Section 213 hereof, or a withdrawal of or a reduction in the existing rating on the Bonds due to the delivery of a Substitute Credit Facility pursuant to Section 214 hereof, each Registered Owner, other than the Issuer, the Trustee, the Tender Agent or the Developer or any general partner thereof, shall tender its Bonds for purchase. All Bonds which are not tendered for purchase prior to a Reset Date,the Conversion Date or the Substitution Date, as applicable, shall be deemed purchased on the Reset Date, the Conversion Date or the Substitution Date, as applicable, at a price of 100 percent of the principal amount thereof plus accrued interest to the Reset Date, the Conversion Date or the Substitution Date, as applicable. On or prior to the first Business Day after the seventh day immediately preceding a Purchase Date, the Tender Agent shall give written notice to the Remarketing Agent specifying the Bond numbers and the principal amount of Bonds to be purchased on a Purchase Date. Failure of the Tender Agent to give such notice shall not affect the obligation to purchase Bonds or any of the obligations of the Tender Agent, the Remarketing Agent,the Developer,the Bank or the Trustee in relation thereto. In the event that as of a Substitution Date (but not a Reset Date or a Conversion Date which is not also a Substitution Date), there are Pledged Bonds which are Outstanding hereunder, the drawing made under the existing Letter of Credit to provide for the purchase price of tendered Bonds, if any, shall be reimbursed to the Bank upon the Substitution Date from either (i) cash provided by the Developer directly to the Bank or(ii) a payment under the Substitute Credit Facility (or an advance made by the substitute Bank under its Reimbursement Agreement) in the full amount of such drawing. In the event that Pledged Bonds are not purchased with either of the sources listed above, the former Bank shall have the right, immediately following a Substitution Date, to tender its Pledged Bonds for purchase in the same manner and with the same effect as would be the case if the former Bank were not the beneficial owner of said Pledged Bonds. SECTION 1102. DEMAND AND MANDATORY PURCHASE OF BONDS. Any Bond, other than Pledged Bonds, shall be purchased by the Tender Agent, at the option of the owner thereof, on any Business Day during which the Bonds bear interest at an Adjustable Interest Rate at a purchase price equal to 100 percent of the principal amount thereof plus accrued interest, if any, to the date of purchase,with such payment to be made in immediately available funds,upon: (a) in the case of a demand purchase during an Adjustable Interest Rate Period,delivery to the Tender Agent, not less than seven Days prior to the applicable Purchase Date of a notice of exercise of right to tender Bonds in substantially the form set forth on the Bonds, duly completed and executed by the Registered Owner of the Bond or Bonds to be purchased (which notice shall be effective upon receipt); and (b) in all cases, delivery to the Tender Agent of the Bonds to be purchased, such Bonds to be in negotiable form by 12:00 noon, New York City time, on the Purchase Date specified in the notice. All Bonds shall be mandatorily purchased by the Tender Agent on every Substitution Date and on the day after the last day of every Reset Period until and including the date the Bonds bear interest at an Adjustable Interest Rate or the Conversion Date at a purchase price equal to 100 percent of the principal amount thereof plus accrued interest, if any, to the date�of purchase, all in accordance with Section 1101 hereof. 61 SECTION 1103. REMARKETING AGENT. The Developer, with the consent of the Issuer and the Bank, which consent shall not be unreasonably withheld, shall appoint the Remarketing Agent for the Bonds in accordance with the provisions of the Remarketing Agreement, subject to the conditions set forth in Section 1104 hereof. The Remarketing Agent shall designate to the Trustee and the Tender Agent its principal office and signify its acceptance of the duties and obligations imposed on it hereunder by a written instrument of acceptance delivered to the Issuer, the Trustee and the Tender Agent and satisfactory in form and substance to the Issuer,the Trustee and the Tender Agent under which the Remarketing Agent will agree to perform the obligations of the Remarketing Agent set forth in Section 1105 hereof. The Issuer shall cooperate with the Trustee, the Tender Agent and the Developer to cause the necessary arrangements to be made and to be thereafter continued whereby funds from the sources specified herein will be made available for the purchase of Bonds and whereby Bonds executed by the Issuer and authenticated by the Tender Agent shall be made available to the Remarketing Agent to the extent necessary for delivery pursuant to Section 1107 hereof. The Remarketing Agent shall keep such books and records as shall be consistent with prudent industry practice and to make such books and records available for inspection by the Bank, any Paying Agent, the Tender Agent, the Issuer,the Trustee and the Developer at all reasonable times and upon reasonable notice. SECTION 1104. QUALIFICATIONS OF REMARKETING AGENT. The Remarketing Agent shall be a member of the National Association of Securities Dealers, Inc., or a banking corporation having a capitalization of at least $100,000,000 and authorized by law to perform all the duties imposed upon it by this Indenture. The Remarketing Agent may be removed from, and may at any time resign and be discharged of, the duties and obligations created by this Indenture, under the circumstances and in the manner described in the Remarketing Agreement. SECTION 1105. REMARKETING OF BONDS. (a) Upon receipt of a notice under Section 1102 hereof, the Tender Agent shall immediately provide telephonic notice thereof to the Trustee and the Trustee shall give the Bank,the Developer and the Remarketing Agent telephonic, facsimile or telegraphic notice of such receipt. Upon receipt of a notice given under Section 1101 or Section 1102, the Remarketing Agent shall use its best efforts to remarket those Bonds affected by such notice. Any such remarketing shall be made at a price equal to the principal amount of the Bonds remarketed, plus interest accrued to the Purchase Date. In no event shall the Remarketing Agent remarket any Bonds to the Developer,any general or limited partner of the Developer, or the Issuer. (b) By 9:00 a.m.,Los Angeles time, on the Business Day prior to each Purchase Date, the Remarketing Agent shall give telegraphic or telephonic notice, promptly confirmed by a written notice, to the Tender Agent, the Trustee, the Bank and the Developer (A) directing the Tender Agent to make.available to the Remarketing Agent in New York,New York, any Bonds which the Remarketing Agent has remarketed pursuant to this Section 1105 for delivery to the new purchasers thereof or their agents, as identified by the Remarketing Agent, against payment therefor on such Purchase Date, (B) stating the principal amount of Bonds remarketed pursuant to subsection (a) of this Section 1105, and (C) directing the Tender Agent to pay the appropriate purchase price to the Registered Owner who tendered its Bonds pursuant to Section 1101 hereof or who demanded payment pursuant to Section 1102 hereof. By 12:00 noon, San Francisco time, on the second Business Day preceding the Purchase Date, the Trustee shall draw on the Letter of Credit in an amount sufficient, together with proceeds of the remarketing of the Bonds, to make payment on the Purchase Date for all the Bonds tendered pursuant to Section 1101 or Section 1102 hereof and shall wire transfer or cause to be wire transferred such proceeds to the Tender Agent for deposit with the Tender Agent by 12:00 noon, New York, Los Angeles time, on the Purchase Date. By 12:00 noon, New York City time, on the Purchase Date, the Remarketing Agent shall deliver to the Tender Agent the principal of and interest accrued to the Purchase Date of the Bonds 62 which have been remarketed. In the event that the Trustee does not receive notice from the Remarketing Agent of the amount of Bonds remarketed, the Trustee shall draw on the Letter of Credit in an amount sufficient to make payment on the Purchase Date for all Bonds tendered pursuant to Section 1101 or 1102 hereof. (c) Any Bonds tendered for purchase under Section 1101 or Section 1102 after the date notice is given of the Devleoper's election to reset to a Reset Rate or convert to the Fixed Rate or of a reduction or withdrawal of the existing rating on the Bonds shall not be remarketed except to a buyer who agrees in writing delivered to the Tender Agent concurrently with the written notice of sale described in subparagraph (b), at the time of such purchase either(i) to accept the Reset Rate or the Fixed Rate when the Reset Rate or Fixed Rate becomes effective and/or to accept the reduction or withdrawal of the existing rating on the Bonds, or (ii) to tender the Bonds for repurchase at par plus accrued interest on the Business Day preceding the Reset Date, the Conversion Date or the Substitution Date, as applicable. SECTION 1106. PURCHASE OF BONDS DELIVERED TO TENDER AGENT. (a) There shall be deposited into the Liquidity Account of the Purchase Fund all moneys drawn by the Trustee under the Letter of Credit in connection with the purchase of Bonds pursuant to Section 1101 or Section 1102 hereof, and into the Remarketing Account all moneys received from the sale of Bonds pursuant to Section 1105 hereof. Moneys remaining in the Purchase Fund after payment of the purchase price of Bonds purchased on each Purchase Date, or provision for payment made pursuant to Section 312 hereof, shall be paid to the Bank. (b) Funds for the purchase of Bonds at the principal amount thereof plus interest accrued, if any,to the Purchase Date shall be paid from the Purchase Fund in the order of priority indicated below: (i) moneys received from the sale of Bonds, in immediately available funds, pursuant to Section 1105,hereof, and (ii) moneys representing proceeds of a drawing by the Trustee under the Letter of Credit. (c) The Tender Agent shall: (i) hold all Bonds and moneys delivered to it pursuant to Section 1101 or Section 1102 hereof in trust for the benefit of the respective owners which shall have so delivered such Bonds until moneys representing the purchase price of such Bonds shall have been delivered to or for the account of or to the order of such owners; and (ii) deliver to the Developer, the Remarketing Agent, the Bank and the Trustee a copy of each notice delivered to it in accordance with Section 1101 or Section 1102 hereof and, immediately upon the delivery to it of Bonds in accordance.with said Section 1101 or Section 1102, give telephonic, facsimile or telegraphic notice to the Developer, the Bank and the Trustee specifying the principal amount of the Bonds so delivered. (d) The Tender Agent shall hold all moneys delivered to it pursuant to Section 1108 in trust for the benefit of the respective purchasers until the Bonds purchased with such moneys can be delivered to such purchasers. 63 SECTION 1107. DELIVERY OF BONDS. (a) Bonds purchased with funds in subsection (b)(i) of Section 1106 hereof shall be authenticated by the Tender Agent and delivered by the Tender Agent in the manner requested by the Remarketing Agent or the purchaser thereof, (b) Bonds purchased by the Tender Agent with moneys described in subsection (b)(ii) of Section 1106 shall be registered by the Tender Agent in the name of the Developer and held by the Tender Agent in accordance with Section 1109 hereof. SECTION 1108. DELIVERY OF PROCEEDS OF SALE. The proceeds of the sale of Bonds by the Remarketing Agent in conjunction with a demand for purchase pursuant to Section 1102 hereof shall be deposited in the Remarketing Account of the Purchase Fund and used as provided in Section 1106. The proceeds of the sale of any Pledged Bonds by the Remarketing Agent shall be delivered in accordance with the Pledge Agreement. If any Pledged Bonds are subsequently remarketed, upon release by the Bank of the security interest of the Bank in and to the Pledged Bonds and the principal amount of the Letter of Credit has been reinstated to an amount equal to the principal amount of all Bonds Outstanding plus 125 days' interest thereon calculated at the Maximum Permitted Rate, or a Substitute Credit Facility meeting the requirements of Section 214 hereof, has been delivered to the Trustee, the Trustee shall thereupon register such Pledged Bonds in such names and deliver them to such new owners as shall have been specified to the Trustee by the Remarketing Agent. SECTION 1109. PLEDGED BONDS. Bonds that are from time to time purchased by the Tender Agent for the account of the Developer pursuant to Section 1101 or Section 1102 hereof with the funds described in Section 1106(b)(ii) hereof shall be registered in the name of the Developer and held by the Tender Agent under the provisions of the Pledge Agreement. The Remarketing Agent shall remarket such Pledged Bonds in accordance with the provisions of Section 1105(a) hereof, except that Pledged Bonds will not be deemed to accrue interest. Upon remarketing of any Pledged Bonds, the Remarketing Agent shall immediately give telegraphic or telephonic notice, promptly confirmed by a written notice,to the Tender Agent,the Developer and the Bank (A) directing the Tender Agent to deliver in New York, New York, any Pledged Bonds which the Remarketing Agent has remarketed pursuant to this Section 1109 hereof to the new purchaser thereof or their agents against payment therefor on the date specified by the Remarketing Agent, (B) stating the principal amount of Pledged Bonds remarketed pursuant to this Section 1109, and(C) directing the Trustee to pay to the Bank the proceeds received from the purchaser of such Pledged Bonds; provided, however, that, notwithstanding the foregoing, the Trustee or the Tender Agent shall not release such Pledged Bonds or transfer such Pledged Bonds on its bond registration books unless the security interest of the Bank in and to the Pledged Bonds has been released and the principal amount of the Letter of Credit has been reinstated to an amount equal to the principal amount of all Bonds Outstanding (including such Pledged Bonds) plus 125 days' interest thereon calculated at the Maximum Permitted Rate, or a Substitute Credit Facility meeting the requirements of Section 214 hereof. As long as Pledged Bonds are registered in the name of the Developer, the Demand Purchase Option set forth in Section 1102 hereof shall not be available with respect to such Bonds. The Trustee shall direct the Tender Agent to cancel any Pledged Bond upon the occurrence of any of the following: (i)the Trustee receives a written request from the Developer and the Bank to cancel such Pledged Bond; 64 (ii) the Trustee receives written notice from the Bank to the effect that an Act of Bankruptcy has occurred and requesting Pledged Bonds be cancelled; (iii) the Issuer shall have paid, caused to be paid,or made provision for payment of all Bonds Outstanding pursuant to Article XHI hereof; or (iv) the maturity,redemption or acceleration of the maturity of such Pledged Bond. SECTION 1110. EXCULPATORY PROVISIONS. Neither the Trustee nor any of its officers, directors, employees, agents, attorneys-in-fact or affiliates shall be liable for any action lawfully taken or omitted to be taken by it or any such person hereunder or in connection with the Pledged Bonds (except for its or any such person's own negligence or willful misconduct). Subject to the foregoing, and without limiting the generality of Section 6.8 of the Loan Agreement, the Developer hereby indemnifies the Trustee from and against any and all claims, losses, damages, liabilities and expenses which may be imposed on, incurred by or asserted against the Trustee in any way related to or arising out of the subject matter of this Article XI. SECTION 1111. DESIGNATION OF TENDER AGENT; AGREEMENT WITH TENDER AGENT. The Trustee hereby appoints DKB Trust Company of New York, as Tender Agent(the "Tender Agent"). The Tender Agent may at any time resign by giving thirty (30) days' notice to the Trustee. The Tender Agent may be removed at any time by an instrument in writing delivered by the Trustee to the Tender Agent. In no event, however, shall the Tender Agent resign or be removed until a successor Tender Agent shall have been appointed. In case the Tender Agent shall resign or be removed, or be dissolved, or shall be in the course of dissolution or liquidation, or otherwise become incapable of acting as Tender Agent, or in case it shall be taken under the control of any public officer or officers, or of a receiver appointed by a court, a successor shall be appointed by the Trustee in accordance with this Section. The Trustee shall notify the Issuer, the Bank and the Developer in writing of the resignation or removal of the Tender Agent and.the Tender Agent to be appointed as successor Tender Agent by the Trustee. Unless the Issuer,the Bank or the Developer objects in writing to the appointment of the successor Tender Agent within ten (10) days of notice thereof, such Tender Agent shall be appointed by the Trustee. Notwithstanding the requirements for Tender Agent set forth in this Section, if no successor Tender Agent is so appointed,the Trustee shall become the Tender Agent but only if the Trustee has an office in New York, New York. Every successor Tender Agent appointed pursuant to the provisions of this Section shall be, if there be such an institution willing, qualified and able to accept the duties of the Tender Agent upon customary terms, a commercial bank or trust company within or without the State, in good standing and having reported capital and surplus of not less than $5,000,000. Any such successor shall have an office in New York, New York. Written notice of such appointment shall immediately be given by the Trustee to the Issuer, the Developer, the Remarketing Agent and the Bank and, at the Developer's expense, the Trustee shall cause written notice of such appointment to be given to the owners of the Bonds. Any successor Tender Agent shall execute and deliver an instrument accepting such appointment, and thereupon such successor, without any further act, deed or conveyance, shall become fully vested with all rights, powers, duties and obligations of its predecessor, with like effect as if originally named as Tender Agent, but such predecessor shall nevertheless, on the written request of the Trustee or the Issuer, or of the successor Tender Agent, execute and deliver such instruments and do such other things as may reasonably be required to more fully and certainly. vest and confirm in such successor all rights,powers, duties and obligations of such predecessor. Any corporation or association into which the Tender Agent may be converted or merged, or with which it may be consolidated, or to which it may sell or transfer its trust business and assets as a whole or substantially as a whole, or any corporation or association resulting from any such conversion, sale, merger, consolidation or transfer to which it is a party, shall be and become 65 the successor Tender Agent hereunder, without the execution or filing of any instrument or any further act, deed or conveyance on the part of any of the parties hereto, anything herein to the contrary notwithstanding. The Tender Agent shall enjoy the same protective provisions in the performance of its duties hereunder as are specified in Article IX or Section 1110 hereof with respect to the Trustee insofar as such provisions may be applicable. 66 ARTICLE XII AMENDMENT OF DEVELOPER LOAN DOCUMENTS AND LETTER OF CREDIT . SECTION 1201. AMENDMENTS TO DEVELOPER LOAN DOCUMENTS AND LETTER OF CREDIT NOT REQUIRING CONSENT OF REGISTERED OWNERS. The Issuer, the Trustee and the Developer may, subject to the provisions of Section 1203 hereof and with the written consent of the Bank and the Trustee,but without the consent of or notice to any of the Registered Owners, enter into any amendment, change or modification of the Developer Loan Documents and the Letter of Credit as may be required (a) by the provisions of the Developer Loan Documents, the Letter of Credit or this Indenture, (b) for the purpose of curing any ambiguity or formal defect or omission, (c) so as to add additional rights acquired in accordance with the provisions of the Developer Loan Documents and the Letter of Credit, or (d) in connection with any other change therein which, in the reasonable judgment of the Trustee, is not to the prejudice of the Trust Estate or the owners of the Bonds, but only if the Issuer and the Trustee receive an opinion of Bond Counsel acceptable to the Issuer and the Trustee to the effect that such amendment, change or modification is authorized or permitted by this Indenture, will comply with this Indenture and the Act, and will not impair the exclusion from gross income for federal income tax purposes of interest on the Bonds. In making a determination under (d) above, the Trustee may conclusively rely on an opinion of Counsel. The Issuer and the Developer shall, without the consent of or notice to any of the Registered Owners but after notice to the Bank and the Trustee and only with the prior written consent of the Bank (which consent shall not be unreasonably withheld),enter into any amendment,change or modification of the Developer Loan Documents,or the Letter of Credit as may be 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 Treasury or the Internal Revenue Service pertaining to obligations issued under Section 142(d) of the Code. Notwithstanding anything herein to the contrary, the Reimbursement Agreement may be modified or amended without notice to or the consent of the Registered Owners, the Issuer or the Trustee. SECTION 1202. AMENDMENTS TO DEVELOPER LOAN DOCUMENTS AND LETTER OF CREDIT REQUIRING CONSENT OF REGISTERED OWNERS. Except for the amendments, changes or modifications as provided in Section 1201 hereof and subject to the provisions of Section 1203 hereof, neither the Issuer,the Trustee nor the Developer shall enter into any other amendment, change or modification of the Developer Loan Documents or the Letter of Credit without the written consent of the Bank, and without mailing of notice and the written approval or consent of the owners of more than 50 percent in aggregate principal amount of the Bonds at the time Outstanding given and procured as provided in this Section; provided, however, that nothing in this Section or Section 1201 hereof shall permit or be construed as permitting (a) an extension of the time of the payment of any amounts payable under the Loan Agreement or the Letter of Credit, or(b) a reduction in the amount of any payment or in the total amount due under the Loan Agreement or the Letter of Credit without the consent of the owners of all Bonds then Outstanding. If at any time the Issuer and the Developer shall request the consent of the Trustee to any such proposed amendment, change or modification of the Developer Loan Documents or the Letter of Credit, the Trustee shall, at the request of the Issuer and upon being satisfactorily indemnified with respect to expenses, cause notice of such proposed amendment, change or modification to be given in the same manner as provided by Section 604 hereof with respect to redemption of Bonds. Such notice shall briefly set forth the nature of such proposed amendment, change or modification and shall state that copies of the instruments modifying the same are on file with the Trustee for inspection by all Registered Owners. If, within 60 days, or such longer period as shall be prescribed by the Issuer, following the mailing of such notice, the owners of more than 50 percent in aggregate principal amount of the Bonds Outstanding at the time of the execution of any such amendment, change or modification shall have consented to and approved the execution thereof as herein provided, no owner of any Bond shall have any right to object to 67 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 Developer or the Issuer from executing the same or from taking any action pursuant to the provisions thereof, or the Trustee from consenting thereto. The Issuer shall have the right to extend from time to time the period within which such consent and approval may be obtained from Registered Owners. Upon the execution of any such amendment, change or modification as in this Section permitted and provided, the Developer Loan Documents or the Letter of Credit, as the case may be, shall be and be deemed to be modified,changed and amended in accordance therewith. SECTION 1203. REQUIRED OPINION OF BOND COUNSEL. The Issuer and the Trustee shall not enter into or consent to any amendment, change or modification to any one or more of the Developer Loan Documents unless the Issuer and the Trustee have received an opinion of Bond Counsel to the effect that such amendment will not impair the exclusion from gross income for federal income tax purposes of the interest on the Bonds and the exemption from State of California personal income taxation. The Issuer and the Trustee may rely upon an opinion of Bond Counsel to the effect that any such proposed amendment, change or modification will comply with the provisions of this Article XII. 68 ' ARTICLE XIII DEFEASANCE SECTION 1301. DEFEASANCE. 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 and owners of the Bonds from any source of funds including refunding bond proceeds, the principal, premium, if any,and interest due or to become due thereon at the time and in the manner stipulated therein, and if the Issuer shall keep, perform and observe all covenants and promises in the Bonds and in this Indenture expressed as to be kept, performed and observed by it or on its part, and shall pay or cause to be paid to the Trustee,the Tender Agent,the Remarketing Agent 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 and interests created hereby shall cease, determine and become null and void(except as to any surviving rights of registration, transfer or exchange of Bonds herein provided for and except for any rebate obligations under Section 504 hereof), whereupon the Trustee shall cancel and discharge this Indenture, and execute and deliver to the Issuer such instruments in writing as shall be requested by the Issuer and requisite to discharge this Indenture, and release, assign and deliver unto the Issuer any and all the estate, right, title and interest in and to any and all right assigned or pledged to the Trustee or otherwise subject to this Indenture, except moneys or securities held by the Trustee for the payment of purchase price and the principal of, premium, if any, and interest on the Bonds. Any Bond or portion thereof in principal amounts of$100,000 and any integral multiple thereof during an Adjustable Interest Rate Period (or$5,000 or any integral multiple thereof during a Reset Period and after Conversion) shall, prior to the maturity or redemption date thereof, be deemed to be paid and defeased within the meaning of this Indenture when payment of the principal of and the applicable redemption premium, if any, on such Bond or portion thereof, plus interest thereon to the due date thereof(whether such due date be by reason of maturity or upon redemption as provided in this Indenture, or otherwise), either: (i) shall have been made or caused to be made in accordance with the terms thereof, but only from proceeds of the Letter of Credit, to the extent the Letter of Credit or any Substitute Credit Facility so provides, or (ii) shall have been provided for by irrevocably depositing with the Trustee, in trust and irrevocably setting aside exclusively for such payment: (a) moneys which shall be sufficient to make such payment when due,or (b) moneys_ and/or non-callable Government Obligations maturing as to principal and interest in such amounts and at such times as to insure the availability of sufficient moneys, as verified by a certified public accountant acceptable to the Issuer, to make such payment, 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. Moneys or Government Obligations deposited with the Trustee under this Section shall be used to pay and defease Bonds only if they constitute proceeds from a drawing under the Letter of Credit or if the Trustee receives an opinion from nationally recognized bankruptcy counsel, acceptable to Moody's, to the effect that such amounts will not be subject to recapture by a trustee in bankruptcy under Section 544 or 547 of Title 11 of the United States Code or recoverable under Section 550(a) of such Code. If such moneys or Government Obligations are deposited prior to the Conversion Date, such moneys or Government Obligations shall be sufficient to pay interest on the Bonds at the Maximum Permitted Rate. 69 Notwithstanding the foregoing, no deposit under clause (ii) of the second preceding paragraph shall be deemed a payment of such Bonds or portion thereof as aforesaid until: (1) proper notice of redemption of such Bonds or portions thereof shall have been previously given in accordance with Article VI hereof to the owners of the Bonds or portions thereof, or in the event that such Bonds are not by their terms subject to redemption at such time, the Issuer shall have given to the Trustee, in a form satisfactory to it, irrevocable instructions to mail a notice to such owners that the deposit required by(ii)above has been made with the Trustee and that said Bonds or portions thereof are deemed to have been paid and stating such maturity or redemption date or dates upon which moneys are to be available for the payment of the principal or redemption price, if applicable, on said Bonds; or (2) the maturity of such Bonds. 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 purposes of Sections 203 and 207 hereof and of any such payment from such moneys or Government Obligations. Any moneys deposited with the Trustee by the Developer as provided in this Article may at the direction of the Developer be invested and reinvested in non-callable Government Obligations maturing in the amounts and times as hereinbefore set forth, and all income from all such- Government 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, if any, thereon, with respect to which such moneys shall have been so deposited, as verified by a certified public accountant acceptable to the Trustee,shall be deposited in the Revenue Fund as and when realized and collected for use and application as are other moneys deposited in that Fund. Notwithstanding any provisions of any other Article of this Indenture which 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, if any) shall be applied to and used solely for the payment of the particular Bonds (including interest and premium thereon, 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 for the payment of Bonds and interest and premium thereon, if 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 owner of each Bond affected thereby. 70 a ' ARTICLE XIV MISCELLANEOUS SECTION 1401. CONSENTS, ETC., OF REGISTERED OWNERS. Any consent, approval,direction or other instrument required by this Indenture to be signed and executed by the Registered Owners may be in any number of concurrent writings of similar tenor and may be signed or executed by such Registered Owners in person or by agent appointed in writing. Proof of the execution of any such consent, approval, direction or other instrument or of the writing appointing any such agent, if made in the following manner, shall be sufficient for any of the purposes of this Indenture, and shall be conclusive in favor of the Trustee with regard to any action taken under such request or other instrument, namely: (a) The fact of ownership of Bonds and the amount or amounts, numbers and other identification of such Bonds, and the date of holding the same shall be proved by the registration books maintained by the Trustee pursuant to Section 203 thereof. SECTION 1402. LIMITATION OF RIGHTS. With the exception of rights herein expressly conferred, nothing expressed or mentioned in or to be implied from this Indenture or the Bonds is intended or shall be construed to give to any Person other than the parties hereto, the Bank, the Developer, the Remarketing Agent and the owners of the Bonds any legal or equitable right, remedy or claim under or in respect to this Indenture. This Indenture and all of the covenants, conditions and provisions hereof are intended to be and are for the sole and exclusive benefit of the parties hereto, the owners of the Bonds,the Bank, and the Developer as herein provided. SECTION 1403. SEVERABILITY. If any provision of this Indenture 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 circumstance, or of rendering any other provision or provisions herein contained invalid,inoperative, or unenforceable to any extent whatever. The invalidity of any one or more phrases, sentences, clauses or Sections in this Indenture contained, shall not affect the remaining portions of this Indenture, or any part thereof. SECTION 1404. NOTICES. Except as otherwise provided in this Indenture, all notices, certificates or other communications shall be sufficiently given and shall be deemed given on the earlier of(i) the date of actual receipt or(ii) the second day following the date on which the same have been mailed by certified mail,return receipt requested,postage prepaid, addressed as follows; If to the Issuer to City of Huntington Beach, 2000 Main Street, Huntington Beach, California 92648 Attention: Department of Economic Development; if to the Developer, to Five Points Seniors, c/o Institutional Property Investors, Inc., 19800 MacArthur Boulevard, Suite 680,Irvine, California 92715, Attention: David R. Michelson with a copy to Bret H. Reed, Jr., A Law Corporation, 1300 Dove Street, Suite 200, Newport Beach, California 92660 (which copy shall not constitute notice to the Developer); if to the Trustee, to Dai-Ichi Kangyo Bank of California, 770 Wilshire Boulevard, 5th Floor, Los Angeles, California 90017, Attention: ; and if to the Bank, to Wells Fargo Bank, N.A., Real Estate Industries Group Community Affairs, 333 South Grand Street, 12th Floor, Los Angeles, California 90071, Attention: Gary Steffens, Vice President; if to the Tender Agent,to DKB Trust Company of New York, One World Trade Center, Suite 5031, New York,New York 10048, Attention: Municipal Bond Underwriting. A duplicate copy of each notice,certificate or other communication given hereunder shall also be given to each of the above. All other documents required to be submitted to any of the foregoing parties shall also be submitted to such party at its address set forth above. Any of the foregoing parties may, by notice given hereunder, designate any further or different addresses to which subsequent notices, certificates,documents or other communications shall be sent. 71 f T. In addition to all other notices required by this Indenture, the Trustee shall provide to Moody's Investors Service, Inc. at 99 Church Street, New York, New York 10007, Attention: Public Finance Department, Structured Finance Group, if Moody's then rates Bonds, or to Standard & Poor's Corporation, 25 Broadway, New York, New York 10007, if Standard & Poor's then rates the Bonds, notice of the following events: (1) any change in the Trustee, (2) provision of a Substitute Credit Facility by the Developer, (3) any amendment to this Indenture or the Developer Loan Documents, (4) any redemption of Bonds pursuant to Section 602, (5) any extension, termination or expiration of the Letter of Credit, (6) any change in the mode of determining the interest rate on the Bonds, (7) any change in the Remarketing Agent, (8) any changes in the Reimbursement Agreement of which the Trustee has actual notice, (9) the defeasance of all the Bonds, (10) non reinstatement of the stated amount of the Letter of Credit to an amount equal to the principal amount of Outstanding Bonds, plus the required interest component, or(ii) conversion of the interest rate on the Bonds to a Reset Period of three (3) years or more. SECTION 1405. PAYMENTS DUE ON OTHER THAN BUSINESS DAYS. In any case where the date of maturity of interest on or principal of the Bonds or the date fixed for redemption of any Bonds shall be,in the location of the Principal Office of the Trustee,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 Business Day, and no additional interest shall be due and owing as a result of the payment on the next succeeding Business Day. In any case where the date upon which the Tender Agent is to pay the purchase price of the Bonds under the terms of this Indenture shall be, in the location of the Principal Office of the Trustee, a day other than a Business Day, then payment of such purchase price need not be made on such date but may be made on the next succeeding Business Day. SECTION 1406. COUNTERPARTS. This Indenture may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. SECTION 1407. APPLICABLE LAW. This Indenture shall be governed by and construed in accordance with the laws of the State of California. 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. COMPLIANCE CERTIFICATES AND OPINIONS. Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include: (a) a statement that the Person or Persons making such certificate or opinion have read such covenant or condition and the defmitions herein relating thereto; (b) 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; (c) a statement that, in the opinion of the signers, they have made or caused to be made such examination or investigation as is necessary to enable them to express an informed opinion as to whether or not such covenant or condition has been complied with; and 72 t (d) a statement as to whether or not, in the opinion of the signers, such condition or covenant has been complied with. SECTION 1410. SUCCESSORS. Whenever in this Indenture either the Issuer or the Trustee is named or referred to, such reference shall be deemed to include the successors or assigns thereof, and all the covenants and agreements in this Indenture contained by or on behalf of the Issuer or the Trustee shall bind and inure to the benefit of the respective successors and assigns thereof whether so expressed or not. SECTION 1411. MODIFICATION OF SECTIONS 503, 504 AND 505 UNDER CERTAIN CIRCUMSTANCES. Notwithstanding any provision of this Indenture, if the Developer shall provide to the Trustee and the Issuer an opinion of Bond Counsel that any action required by Sections 503, 504 or 505 hereof is no longer required, or that some further action is required to maintain the exclusion from gross income for federal income tax purposes of interest on the Bonds,the Trustee and the Issuer may rely conclusively on such opinion in complying with the requirements of Sections 503, 504 and 505 hereof, and the covenants contained therein shall be deemed to be modified to that extent. 73 IN WITNESS WHEREOF, the City of Huntington Beach has caused these presents to be signed in its name and on its behalf by its Director, and its seal to be hereunto affixed and attested by its Secretary, and to evidence its acceptance of the trusts hereby created the Trustee has caused these presents to be signed in its name and behalf by one of its duly authorized officers all as of the date first above written. CITY OF HUNTINGTON BEACH By: Mayor [SEAL] ATTEST: City Clerk Approved as to form: By: City Attorney DAI-ICHI KANGYO BANK OF CALIFORNIA, as Trustee By: Authorized Officer 74